MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE
32
4 February, 1975.]
[Continued.
Royal Ordnance Factories
44. A detailed revision of future manpower requirements in the Royal Ordnance Factories cannot yet be made, but the factories carry out a substantial amount of defence work for overseas customers and in addition, scope may exist for them to carry out more commercial work if necessary. It is hoped, therefore, that the overall level of employment in the factories will not be seriously affected by the Defence Review.
The Royal Dockyards
45. Warship repairs and refitting will remain the main task of all four Dockyards and the total load of such work will not be greatly reduced (the percentage of dockyard capacity allocated hitherto to MOD shipwork requirements is around 75 per cent.). The programmes for nuclear submarines are unaffected and will take up an increasing proportion of dockyard capacity as more enter service. The reductions in previously planned numbers of surface ships and conventional sub- marines should however release some capacity, mainly from 1977-78 onwards. It is expected that work taken on to absorb any capacity released from warship work will be mainly naval, notably refits of Royal Fleet Auxiliaries, most of which are presently undertaken by commercial yards. The effect on employment in civil yards will be taken into account in deciding the allocation of R.F.A. refits. There are prospective demands for the use of capacity in the Royal Dockyards for other work of national importance.
VIII. FINANCIAL EFFECTS
The Cost of the Programme
46. As a result of the measures described above, the forecast of defence expenditure completed early last year (LTC 74) is reduced as follows:
£ million: 1974 Survey Prices
1975-76
1976-77
1977-78
1978-79
1979-80 to 1983-84
a. LTC 74
4,000
4,070
4,150
4,300
4,450
b. Defence Review
3,700
3,800
3,800
3,800
3,790
c. Savings
300
270
350
500
660
47. The figures in line b. of the table above, are provisional for 1976-7 to 1978-9, pending final decisions on the Review after the consultations with our Allies. An up-to-date costing will be made in the Spring.
48. Average annual figures are shown for the five years 1979-80 to 1983-4. The year by year distribution of cost this far ahead is necessarily tentative; but the level of cost over the five years as a whole is expected to be of the order shown. The programme is consistent with a reduction from the previous plan of £750 million in the final year (that is, to £3,750 million).
49. GNP is assumed for the purpose of the Review to grow at an average rate of about 3 per cent. a year over the period as a whole. On this basis the share of resources pre-empted by defence falls from its present level of 5 per cent. of GNP to 41 per cent. of GNP after 10 years; and whereas defence expenditure