(DEFENCE AND EXTERNAL AFFAIRS SUB-COMMITTEE)
February, 1975.]
Mr. A. P. HOCKADAY, C.B., C.M.G., Mr. T. CULLEN, Mr. D. M. EVANS, Mr. G. C. B. Dodds, and Rear Admiral A. S. MORTON.
product is 50 per cent. higher than ours. It might be 10 per cent.-not 50 per cent.?- -I am afraid it is something of the order of 50 per cent.
Mr. Roper.] Perhaps we could have a note on that point in due course.
These
Chairman.] We have quite a number of paragraphs to get through. are rather more introductory.
Mr. Roper.] As Mr. Hockaday knows, I do not believe in percentage-mongering particularly.
There are four points I would like to make. Firstly, does the difference in provision of service pen- sions, if one has a regular force as dis- tinct from having conscripts, make a sig nificant difference, or is this cleaned out by the NATO definitions? Secondly, as far as the comparison with Germany is concerned, does the fact that we enjoy the luxury of having a strategic nuclear force affect the comparison? If so, to what extent? Thirdly, as far as the pro- jections for 1983-84 made in the Mini- ster's statement are concerned-the reduction from 51 per cent. towards 4 per cent.—are these not, of course, con- ditional on the expected rate of growth of 3 per cent.? Is there a certain amount of crystal ball gazing by the Department? If the rate of growth were 2 per cent. what would be the percentage share going to defence? Finally, with regard to the per capita expenditure on defence, cal- culated not necessarily on the basis of the exchange rate but on the purchasing parity exchange rates established by the German Government Statistical Offices, what would be the comparison?
Chairman.] I think you have gone on to the next section. Have we finished with paragraphs 1 to 4?
Mr. Finsberg.] I think the first ques- tion comes into that.
Chairman.
43. All right, we will go with Mr. Roper's question, then on to the next section?- On the first of Mr. Roper's questions, the cost of service pensions is included in
in the
the British expenditure shown here. On the second question, the cost of the strategic nuclear force, or the difference that our possession of a strategic nuclear force makes, would
[Continued.
37
be decidedly less than one quarter of 1 per cent., perhaps between 0-1 and 0.2. As to the third question, yes, the broad statement that by the mid-1980s the fore- cast defence expenditure should amount to about 4 per cent. of our gross national product is based on an assump- tion that gross national product would grow at an annual rate of 3 per cent. which is, of course, the central of the three projections taken in the recent public expenditure white paper. Mr. Roper asked what would be the effect on this if GNP increased at only 2 per cent. a year instead of 3 per cent. that we agree broadly with the estimate that Mr. Greenwood made to you, that the difference would be something like one half of 1 per cent. of GNP. The fourth question, as to what would be the effect of applying purchasing power parity calculations,
calculations, I cannot answer. We could perhaps look into this if you would like us to.
On
44. I take it the 3 per cent. growth rate is in real terms and an average over ten years. Say it does not come out at 3 per cent.-for example, this year may be bad-have you formed any sort of graph, starting possibly even below the line and ending above?-Inevitably assumptions as to the rate of growth of GNP are rather speculative and this is why the public expenditure white paper includes three different projections. We took the central one of these and, of course, in talking about 41 per cent. we were talking in terms of a broad guide- line rather than attempting to say that it was going to be precisely 4.5 per cent. and neither 4-45 per cent. nor 4-55 per cent. But there is an element of uncer- tainty. This is clear and, if gross national product did not grow at this projected rate, then the expenditure involved in sustaining the programme foreseen in the Secretary of State's proposals would necessarily be in the mid-1980s somewhat higher than 41 per cent., and the point in time at which it would be contain- able within 4 per cent. might be two or three years later.
45. I want a very simple answer to this. Whatever complexion the Govern- ment had been (and the Conservative Government had imposed cuts already) there would have had to be, because of
No comments yet.
Private notes are available after approval.