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DEFENCE EXPENDITURE STUDIES
Report by the Official Committee
We have considered the attached interin report by the Defence Review
Its conclusions are summarised Working Party on the further defence studies.
in paragraphs 44-57 of the report. We have the following comments.
2.
The issues raised are critical to the whole of our future defence policy.
Guidance is They concern the course that we are to follow in the Far East.*
needed from Ministers on the path which further defence studies should take and on the basis for the early consultations that will be required with our allies, so that thereafter we can be prepared for decisions on the completed review by the middle of the year.
3. The defence studies so far undertaken assumed no change in our existing external policies, save for a study of total withdrawal from the Far East. They looked to a maximun saving on the Defence Budget by 1970-71 (and ignoring any offsetting increase in our economic aid) of £200 to £300 million at 1964 Subsequent prices: this was however an arbitrary not a calculated figure. consideration of future public expenditure as a whole has emphasised the need
Officials are now studying to achieve the maximum saving on defence account. what reductions are necessary to achieve a total saving in the present planned programmes of public expenditure by 1970 of £500 million, on the basis that
To the extent that the defence £200-300 million would be found on defence.
savings fall short of the maximum envisaged by Ministers, the pressure to contain civil expenditure will be intensified.
4.
The defence studies show that the maximum saving which we can expect to achieve by as early as 1970-71, with the drastic reduction of our forces postulated in the assumptions for the studies but without a major change in our oversea policies, is unlikely to be substantially above £100 to £125 million, though in subsequent years this rate of saving should be somewhat increased. The Ministry of Defence also estimate that even if we were to make a najor change in our policies by aiming to withdraw from Singapore and Malaysia in an orderly fashion as soon as practicable, while establishing a minimum defence presence in Australia, then the rate of saving by 1970-71 would probably still be in the same region (perhaps of the order of £20 million greater); but there would then be a much higher rate of saving in subsequent years.
*NOTE: For present purposes we have not contemplated withdrawal from Hong Kong.
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