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SUMMARY AND CONCLUSIONS
44. The defence expenditure studies were set in hand to see whether our
broad policy objectives, as agreed in the Defence Review, could be
achieved with smaller forces. Savings on the planned expenditure for
1970-71 of a range of £200-300 million were envisaged. The studies
are based on cuts in Defence Review force levels of one-third in Germany,
half in the Far East, reconsideration of our position in the Middle
East and cuts in supporting forces and facilities in the United Kingdom. Additional studies were commissioned on total withdrawal by 1970-71
from the Far East and withdrawal from Malaysia and Singapore while retaining a minimum military capability in the Far East theatre;
and
on the relationship of the proposed reduction in the level of our forces in Europe to our approach to the EEC. The timetable for the completion of the studies was designed to permit Ministers to reach conclusions by the middle of 1967.
45. The general background to the studies is that we should achieve substantial budgetary savings which would relieve the balance of payments. Since the studies were commissioned the economic and political pressures to reduce defence expenditure have increased. At the same time a number
of developments have made the achievement of the savings even more difficult. Problems have arisen over the foreign exchange costs of our
forces in Germany; we have had to make concessions on the rundown in
Malta;
and recent events in Aden have emphasised the difficulties involved
in military withdrawal.
46. Given the vital importance of our forces in Germany to our national security, possible reductions there cannot make a large contribution to
the £200-300 million. Savings we can achieve in the Mediterranean and Middle East are not likely to be large in the period up to 1970-71; in any case our defence costs there are small in relation to Germany and
the Far East.
47. The Far East alone offers any substantial possibility of direct defonce savings in this time scale. The extent of the savings in the Far East will significantly affect the size of savings in the United Kingdom and in the
forces that can be disbanded. We cannot estimate those until docisions are
taken on the Far East. However, a tentative assessment on the basis of the work so far done on the studies as a whole (including those not concerneâ directly with the overseas theatros) shows that the total savings on the assumptions made (apart from total. withdrawal or minimum prosence in the Far East) will be some £100-125 million only by 1970-71 (though the same plans might produce up to £20-25 million additional savings in subsequent years), without taking account of transitional defence expenditure that would arise in the United Kingdom or of any net increase in aid.
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