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20% and 25%. There would be a reduction in the quality
and effectiveness of R&D support overall and insufficient
resources to design, develop and support certain
equipments still required by the Services even at this
level of reductions.
Measures to reach the Second and Third levels
119. The measures necessary to reach the Second and Third levels of
expenditure are indicated in paragraphs 7 and 8 of Annex N, in the
form of "add-backs" to the Baseline reductions so as to achieve these
lower levels of savings. The extent of these "add-backs" therefore
fully take account of the fact that the Second level requires
progressively less reductions than the Baseline level from 1978/9
onwards; and that the Third level has a significantly smaller impact
on the defence programme in the middle years because it does not,
as distinct from the Second level, require such crash action to
effect reductions by 1978/9.
Measures to reach the Fourth level
120. The further measures needed to reduce the Services and the
Procurement Executive to the Fourth level of savings are summarised
in paragraph 9 of Annex N. The consequences, the severity of which
results not just from the size of the cuts but from the speed with
which they would be made, would be of the following broad character
(though they are difficult to describe from the military point of
view):-
8.
Royal Navy . The Fleet would be little larger than those,
for example, of the Dutch and the Germans whose main
contribution has traditionally been to continental defence
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