§ Mr. Churchill
asked the Secretary of State for Defence what is the estimated effect on the defence budget of the increase in value added tax announced in the Budget; and what is the net increase in defence expenditure proposed for the current year?
§ Mr. Pym,
pursuant to his reply—[Official Report, 28 June 1979; Vol. 969, c. 300]—gave the following answer:
The cost to the defence budget of the increase in VAT is estimated at £175 million in 1979–80, plus a further £3 million for increased oil duties. On 26 June my right hon. Friend the Chief Secretary to the Treasury announced increases in the defence cash limit for 1979–80 totalling £409 million (Cmnd. 7604). These increases were not specifically related to VAT or oil ditties. My Department will endeavour to contain expenditure within the revised cash limits, subject to such further changes as may be agreed, and will thereby contribute to the search for greater efficiency and economy throughout Government. The tax increases in the Budget will not lead to cuts in the defence programme. The cash limits will be adjusted as necessary to achieve this objective, subject to parliamentary approval for any additional funds required.