HC Deb 17 February 1969 vol 778 cc38-40W
Mr. Sheldon

asked the Secretary of State for Defence (1) what is the reason for the difference between the North Atlantic Treaty Organisation definition of defence expenditure and Her Majesty's Government's definition of defence expenditure within the defence budget;

(2) what proportion of the gross national product has been devoted to expenditure within the defence budget for the period 1959 to 1968 using North Atlantic Treaty Organisation definitions and including expenditure on military defence other than expenditure on defence within the defence budget;

(3) what was the total expenditure on military defence other than military defence as denned for the national income accounts statistics for the years 1959 to 1968;

(4) if he will prepare a table showing for the years 1948 to 1968, respectively, defence expenditure within the defence budget, military expenditure other than expenditure on defence within the defence budget, defence expenditure on North Atlantic Treaty Organisation definitions, expenditure on military defence as defined for the National Income Accounts' statistics and expenditure on military defence other than expenditure on military defence as defined for the national income accounts statistics, all figures expressed as a proportion of the gross national products.

Mr. Healey

There are two definitions of military defence expenditure currently in use in the United Kingdom, the Defence Budget and "military defence" as defined for the national income accounts statistics.

The Defence Budget represents the substantive cost to the Exchequer of programmes for which I am directly responsible. The national accounts on the other hand classify as military defence the following additional items, none of which is a charge to the Defence Budget and some of which are not a charge on the the Exchequer at all in the year concerned:

  1. (a) Military aid to overseas countries, which because it is primarily related to objectives of foreign rather than defence policy is the responsibility of the Foreign and Commonwealth Secretary;
  2. (b) the cost of Allied Services e.g. civil superannuation and headquarters buildings, which are provided as common services to all Government Departments by certain civil departments with whom the financial responsibility rests;
  3. (c) expenditure financed from cash aid received from overseas governments in certain of the earlier years up to 1960–61, e.g. Federal German Republic contributions and United States Defence Aid. This aid which was appropriated to Defence Budget Votes reduced the burden on the Exchequer;
  4. (d) net balances on the MOD (Army) and Ministry of Technology Purchasing (Repayment) Services Votes, which fluctuate considerably from year to year but which over time are designed to balance out;
  5. (e) loan drawings under the Military Aircraft (Loans) Act 1966, offset by a deduction in respect of the interest 40 payments and capital repayments charged to the Defence Budget. The effect of this treatment is to show what the budgetary position would have been had credit for the purchase of the aircraft not been obtained. By contrast, the cost of these aircraft as it appears in the Defence Budget represents the actual burden on the Exchequer and on United Kingdom resources;
  6. (f) Various minor accounting adjustments required to bring the Defence Budget on to the basis on which public expenditure is calculated in the national income accounts. These are mostly of a notional character and therefore do not involve any cost to the Exchequer.

Apart from these two definitions, the North Atlantic Treaty Organisation has established, mainly for purposes of international comparison, a classification comprising the Defence Budget plus the items listed at a, b and c above.

Information under these three classifications is shown in the table below:

MILITARY DEFENCE EXPENDITURE AS PROPORTION % OF GNP AT FACTOR COST
Financial Year Defence Budget Calendar Year ''Military Defence" NATO definition
1948–49 6.9 1948 7.2 —
1949–50 6.7 1949 7.2 7.0
1950–51 6.6 1950 7.3 7.2
1951–52 8.5 1951 9.1 8.9
1952–53 9.7 1952 11.2 11.1
1953–54 8.9 1953 10.9 11.2
1954–55 8.9 1954 10.1 9.9
1955–56 8.1 1955 9.1 9.2
1956–57 8.1 1956 8.8 8.8
1957–58 7.3 1957 8.2 8.1
1958–59 7.1 1958 7.6 7.8
1959–60 6.9 1959 7.4 7.4
1960–61 6.9 1960 7.2 7.3
1961–62 6.9 1961 7.1 7.0
1962–63 6.8 1962 7.2 7.1
1963–64 6.5 1963 7.0 6.9
1964–65 6.5 1964 6.8 6.8
1965–66 6.5 1965 6.7 6.7
1966–67 6.4 1966 6.8 6.6
1967–68 6.4 1967 7.0 6.7

Notes:

  1. (1) Figures for "Military Defence" are not available by financial years for the complete period back to 1948. They are therefore shown by calendar years. Because figures on the NATO definition are used primarily for purposes of international comparison they are collected on a calendar year basis and not by national financial years. Defence Budget figures are available only for financial years.
  2. (2) In republishing the series of Defence Budget figures for the first time in three years, the opportunity has been taken to incorporate marginal changes arising from subsequent revaluations of Gross National Product.