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Falkland Islands

Volume 26: debated on Tuesday 29 June 1982

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14.

asked the Secretary of State for Defence what is his latest estimate of the cost to public funds of the Falkland Islands campaign, including the cost of ships, aircraft and equipment lost and destroyed.

It is not yet possible to be precise about the costs of the campaign and of replacing equipment lost or consumed. But a preliminary assessment of the broad order of costs incurred by 4 June—which was, of course, before the end of hostilities—is about £500 million in 1982–83, £250 million in each of the two following years and lesser amounts thereafter. But these figures will need to be revised in the light of more recent information and of decisions about how and when equipment is to be replaced.

Do not the figures show that the failure to interpret intelligence and the failure to take preventive action have led to one of the costliest blunders by the Ministry of Defence this century? Do not honour and integrity demand that the Secretary of State should now resign?

I seem to have heard that somewhere before. I have no doubt that all these matters—especially a study of intelligence—will be considered by any inquiry that takes place on the Falklands covering many years.

Does my right hon. Friend agree that the figures show that the cost of the Falklands war to 4 June is well within line for many forms of public expenditure on individual items that we take for granted—for example, the costs of British Rail, which are nearly £1,000 million a year?

I take my hon. Friend's point, but I do not know whether I should like to compare the costs of British Rail with the cost of the Falkland Islands campaign. We must not reduce our defence effort, our NATO effort, our defence of the United Kingdom and everything that the West stands for by the diversion of funds from that main defence effort to the Falklands campaign. I have already made a general statement on the Government's policy in that respect.

Will the right hon. Gentleman tell us—we have, of course, been reading press reports—whether the cost that he has mentioned will come out of the Contingency Fund, with the Treasury's agreement, or, ultimately, out of the defence budget?

The costs will be met as an addition to the defence budget, which is already planned to increase by 3 per cent. per annum.

Does my right hon. Friend agree that if the policy decisions that are contained in his White Papers had been implemented some years earlier it is reasonable to suppose that some of the ships lost during the Falklands expedition would not have been lost, because the new equipment for defence measures would have been available?

I do not know whether I can go quite as far as that. However, the large programme that we now have in progress for upgrading the weapons systems on Royal Navy ships—especially the decisions that we have taken in the past year on the new satellite, on Sea Wolf and on the new heavyweight torpedo—will greatly increase our capability. These upgradings will come into effect in future.