2
MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE
21 January, 1975.]
[Continued.
no information about the Conservative Government's intentions beyond 1974-75 had been made public. Thus the programme inherited by the first Labour Govern- ment of 1974 was that framed in the context of the 1973 Public Expenditure Survey, for which the first few years figures had been published in Public Expenditure to 1977-78 (Cmnd. 5519), subject only to these first year amendments'.
3. The new administration imposed a further cut of £50 million (at 1973 prices, equivalent to £55 million at 1974 Estimates prices) on the budget for 1974-75 and formally announced that the rest of the future programme would be reviewed. The purpose of this was not only to bring the planned defence effort into line with revised (by now surely much revised) growth expectations but also to secure a reduction in the proportion of national resources devoted to defence. In this, of course, the new party in power was declaring its different pattern of public expenditure priorities, which it had expressed in its manifesto and made explicit in an undertaking to effect reductions in defence spending, measured against its predecessors' plans, amounting to several hundred million pounds over a period of years.
4. Two points arise from this sketch of the background to the review. First, the benchmark was the 1973 Survey projections: these have, therefore, been used by the Government as the point of reference for its announced Savings'. This, as more than one speaker in the Defence Debate observed, is deceptive to the layman, even though it may not deceive the cognoscenti. In particular it masks the fact that on the proposals the defence budget at constant prices will be higher in 1975-76 and 1976-77 than in 1974-75, levelling out thereafter. The intention in fact appears to be to stabilise the Defence Budget at c. £3,800 million (at 1974 prices), much as in the mid-1960s an earlier defence review took holding spending to c. £2,000 million (at 1964 prices) as its target. Secondly, the underlying purposes of the exercise are seen to have been:
(a) to bring the planned defence effort into line with a much revised view of
the resources likely to be available for all purposes.
(b) to impose a modified pattern of public spending priorities.
It is worth being explicit about this for it helps to keep (or get) in perspective the significance of defence as a proportion of national resources'. A reduction in this measure was adduced as the central aim or purpose of the review: it would be more constructive to regard this as a guideline used by the Government or as an expression of its judgment on the appropriate allocation of resources to defence.
Stated Aims, Guidelines and Procedure
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5. Be that as it may the proportion' was assigned a key role in the review and has been part of the currency of the debate surrounding it. The stated aims of the exercise at the outset were to assess how best to achieve the required balance between continuing to meet essential defence needs while securing a necessary reduction in the proportion of our resources we devote to defence ". (Emphasis added). In putting the matter thus in his Budget Speech (26th March, 1974) the Chancellor went on to say:
(a) We remain firmly committed to the North Atlantic Alliance... [but] Outside Europe we shall examine the contribution made. . . by our mili- tary presence recalling the decision taken by the Government in 1968 that our forces should be withdrawn from South East Asia ”.
•
and
(b)"... Britain with her unique economic difficulties should not bear a proportionately larger burden in supporting the alliance than her major European partners "5
I take these to be amplifications of essential defence needs and the necessary reduc- tion of the proportion and, in effect, the guidelines for the conduct of the review: priority for NATO roles and missions on the one hand, 'keeping down with the Europeans' in the matter of burden on the other.