(DEFENCE AND EXTERNAL AFFAIRS SUB-COMMITTEE)
21 January, 1975.]
Mr. DAVID GREENWOOD.
general view of the likely growth of GNP, among those objectives or pur- poses in the light of its own expression of priorities. If in fact one has a machine with budgetary proposals arising at Government initiative and the activities of the Expenditure Committee, this Sub- Committee, and the whole of the House of Commons are exercised on debating those priorities and ensuring that in framing its proposals Government is responsive to Parliament, public opinion and hence reflects what people believe national priorities should be, then the taxpayer is satisfied. What else can you ask for?
10. Let me put a final point to you. Is it a fair comparison to compare the expenditure of this country by com- parison with the GNP with that for, say, our neighbours in NATO, Germany, France, Belgium and the rest?- -I think that comparisons of defence as a percentage of GNP
are themselves extremely vulnerable and difficult because of different definitions of expenditure and different means of cal- culating GNP. Moreover, I do not think that equating burdens measured in this kind of way is an appropriate test for Government to apply in approaching budgeting in a particular area. I do not believe, for example, that in defence keeping down with the Europeans is a rational criterion for planning expendi- tures any more than in household bud- geting of my own I would regard keep- ing up with the Jones's.
Mr. Roper.
11. Could I pursue that point. You say somewhere in your own paper that even some of the statistics you have produced for us are not altogether justified, that the Germans for example have recal- culated their own figures which show that if they have a professional army as distinct from a conscript army they would involve something like 6.2 per cent. of their GNP. Can you confirm that percentage and give us what the French figure might be? We have heard that their pay is even more miserable?
I have not a comparable calcula- tion for the French at my finger tips. One can take it that, since the pro- portion of conscripts is almost high as for the West Germans and the differences between market rates
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of remuneration and conscript pay are greater in France, that the discrepancy between the money value of defence ex- penditure as a percentage of GNP and such a real terms calculation would, if anything, be greater than in the German case. That is following through the logic of the numbers.
12. You have taken the figures as has the Government, on the basis of 3 per cent. growth in GNP. I am no good at compound arithmetic, but in my bath last night I was doing some sums and it seemed if we grew at only 2 per cent. over the next 10 years, instead of 3 per cent., the same expenditure on defence at the end of the period would at that stage represent something just over 5 per cent. of our GNP rather than 4 per cent. I do not expect you off the cuff to confirm those figures, but is that the sort of variation which a change in our GNP growth might bring?—Yes, I think so. It is a matter of the precise arithmetic, and I would not like to be held to decimal points.
13. Perhaps you could submit a note to us after the meeting suggesting what the figures would be if we grew at 2 per cent. rather than 3 per cent. so we had it for the record. Could I pursue the question of the matter you raised on the balance of payments. Again I think this is something on which there is a good deal of misunderstanding. You do say in paragraph 19: "In relation to the size of the current deficit and the scale of the United Kingdom's international indebted- ness the benefit to the balance of pay- ments from reductions in overseas de- fence expenditure on stationing is likely to be trivial ". You go into details, rather limited details, on this in the annex at paragraph 7. It is commonly thought by our colleagues in the House of Com- mons that there is a very serious balance of payments drain on this country through defence expenditure. It would be useful if you expanded the point you make there, in which you say the reduc- tions would merely be trivial. A number of our colleagues would assume it to be more substantial?- -First I make a distinction between the element of over- seas defence expenditure which arises on account of stationing and that which arises on account of overseas procure- ment of equipment. On the latter there
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