§ Lord BOYD-CARPENTERasked Her Majesty's Government:
Whether, in calculating the additional provision for defence to be made as the result of the decision to increase defence expenditure in real terms by 3 per cent., any allowance has been made for the 736WA increases in VAT imposed in last June's Budget; and if so by what amount in cash terms the provision has been increased.
§ The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal)The defence cash limit for 1979–80 was increased by £140 million in November 1979. This included full provision for the cost to the Defence Budget of the increase in VAT (£175 million) and also provided for other increased costs, offset by the over-spending on the cash limit in 1978–79. The Defence Estimates for 1980–81 will make full allowance for the increased rate of VAT. The volume programme, which is the basis of calculating increases in real defence spending, is not affected.