HL Deb 28 March 1979 vol 399 cc1580-2

2.51 p.m.

Lord NOEL-BAKER

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will appoint a Royal Commission to study and report on the causes of world inflation, and to assess the extent to which the "unproductive" expenditure by all Governments on armaments and armed forces has been the principal cause.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, Her Majesty's Government do not consider that a Royal Commission in the United Kingdom would be the appropriate forum in which to examine an international issue of this sort. Such a study would be more appropriate to international bodies such as the OECD, IMF and EEC. Inflation is a complex phenomenon, but there is no evident correlation between arms expenditure as a proportion of GNP and the rate of inflation.

Lord NOEL-BAKER

My Lords, do the Government realise that 70 million to 80 million men in the armed forces and arms factories of the world produce no usable or purchasable form of wealth; that they receive a colossal revenue of purchasing power—£200,000 million a year—which means that too much money is chasing too few goods (the economists' definition of inflation); and that this huge unproductive military expenditure creates far greater inflationary pressures than the wage claims of low-paid workers?

Lord McCLUSKEY

As I have already indicated, my Lords, these are very complex matters, but I would say to my noble friend that wealth is not the only consideration; those who spend money on defence or arms generally, including ourselves, will have regard to other matters, such as security.

Lord BROCKWAY

My Lords, while this problem is complex, may I ask my noble and learned friend whether that fact does not present a greater need for some kind of international research investigation of the problem? When the world is spending such enormous sums on armaments, which have no monetary return except for the export trade, is it not clear that that is inevitably and obviously a cause of inflation in the world?

Lord McCLUSKEY

My Lords, I cannot say it is necessarily and obviously a cause of inflation. Arms expenditure may be inflationary if it is not financed in a non-inflationary way, but that is true of any item of Government expenditure. I can only repeat that wealth is not the only consideration and that in the light of its circumstances each country must endeavour to make up its own mind on the proportion of its expenditure that should go on arms. In relation to initiatives by this Government, as your Lordships will be aware from attending the debate in this House on 21st February, this Government have taken many initiatives at the United Nations.

Lord NOEL-BAKER

My Lords, will the Government propose to the United Nations that they should make a high-powered study of the causation of inflation, which has created such chaos in the whole economic system of the world?

Lord McCLUSKEY

My Lords, I do not think the Government will make any such proposal to the United Nations, because it is not thought that the United Nations is the body best equipped to make that kind of economic study. Studies of world inflation, which of course include regard to arms expenditure, are made from time to time by the bodies I have mentioned, particularly by the OECD, and indeed the matter to which my noble friend refers is always on the agenda of both the United Nations and this Government.

Baroness GAITSKELL

My Lords, would my noble and learned friend agree in regard to the approach of my noble friend, whose work on disarmament I salute, that it is a snare and delusion to propose a Royal Commission, because we have the facts? The World Bank and many institutions have the facts.

Lord McCLUSKEY

I am happy to agree with the general thrust of that, my Lords. If the result of such a study were to demonstrate a link between this kind of expenditure and inflation, I do not suppose your Lordships would imagine that that would inhibit countries from spending money on arms.