10
MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE
21 January, 1975.]
66
Mr. DAVID GREENWOOD.
I
you would like to give a very short open- ing statement? -(Mr. Greenwood.) Yes, I would. First of all I would like to apologise for the fact that the text of my note did not reach Members of this Sub- Committee until yesterday. I have been experiencing what the Defence White Papers used to call over-stretch ". I have found it difficult to decide on the precise form of the paper given that I wanted it to be as helpful as possible to this Sub-Committee. In the end I decided I should concentrate on what I feel com- petent about. My parent discipline is economics. In recent years my main interest has been in public expenditure analysis and the economic aspects of the United Kingdom and European defence with defence budgeting as the link. thought, therefore, that I should begin by examining the Defence Review as a case history in public expenditure planning, stressing three things: first, the setting in which it has taken place, second, the purpose of the exercise, and third, the principles and procedures which appear to have guided the Government in carry- ing it out. That is what the first half of my paper is about. Then I thought it would be helpful to offer an appreciation of the Government's proposals trying to follow the rationale of their proposals, and in particular trying to see whether a consistent pattern of defence priorities emerges, accepting for the time being a weight for defence among national priorities much as the Government has it. There is a section on that with my own summary of the proposals as an annex to the memorandum. Finally, since the Government appears to expect a direct and definite contribution to the solution of present economic problems as a result of this exercise, I thought you would expect a defence economist to have something to say about that. I am afraid I have said very little. That is because we know insufficient detail at this stage to make a really thorough- going examination of this aspect. Some of the work which we have been able to do at Aberdeen recently has I think shed light on the character of the defence impact on the economy in vari- ous ways, and so a few general reserva- tions can be entered, and this I have done in the concluding paragraphs of the paper you have had. If I could just make a final disclaimer it would be to say that parts of what I have put together are a
[Continued.
little fragile. This is because at many points one has really had to make bricks without the kind of straw one needs. Hence my parting shot about informa- tion in the closing sentences. I know that the Sub-Committee itself has definite views on the Ministry of Defence's infor- mation policy, and so in a sense those closing remarks are also a blatant attempt to win your sympathy before you begin asking me questions.
2. Perhaps I should say at this stage that we normally try to finish our sitting by six o'clock. You might help in spac- ing your remarks to that time. Members have other committees they have to go
to.
Would you please begin by telling us why, in your opinion, the Defence Review was necessary and what were the principal economic factors which had to be taken into account?- -I think it was necessary in that the main outlines of the defence programme and budget that we had at the beginning of 1974 had been framed in 1972 essentially, and the economic assumptions against which this plan had been set out had begun to go wrong by 1974. Hence the sequence of cuts in 1974 on which your Com- mittee has already commented. I think by the time of the February election there was a clear need to reconstruct the defence programme and budget, in the light of the revised growth forecasts and the revised view of the development of the economy. Indeed, this would have happened in the context of the annual Public Expenditure Survey in any event, simply to keep defence's place in the balance of priorities among public ex- penditure as it originally was. That is, as it were, the economic element in the argument.
Mr. Kershaw.
3. I did not follow that last sentence, Mr. Greenwood. You say to keep defence's place, but some of the other Government expenditures were inevitable for reasons for which we do not con- sider here, so in order to keep defence's place is it necessary to cut it?- -I was really trying to make a distinction be- tween the economic character of the exercise and what I would call the poli- tical character of the exercise. asks the question, why was it necessary, it was necessary, I think, to take a fresh view of the place for defence in a revised
If one