30
MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE
4 February, 1975.]
[Continued.
35. Overall, R and D expenditure is divided between extramural and intramural effort in a ratio of about 2:1. About £260 million1 of savings will be found extramurally and £100 million1 intramurally; intramural savings rise steadily through- out the period until by 1983-84 they account for over 30 per cent. of the total.
36. Cancellation and deferments of projects which contribute to this saving in development costs are mentioned in paragraphs 16-31 above and listed in Annex A. These do not, however, account for the full amount which we are proposing to save on development. Our approach has been to avoid, wherever possible, short-term cuts in projects that are well advanced and instead to find savings from the more distant projects on which little or nothing has yet been spent. We have left open precisely which of these more remote projects will be cancelled or deferred since experience shows that requirements change as time passes. In any case, the cost of developing sophisticated weaponry is not predictable within narrow limits. and therefore the constraints of a limited equipment budget will require continuing flexibility in the make-up of the long term equipment programme.
37. For the equipment budget as a whole, comprising R and D (about 30 per cent. of the total), capital production (40 per cent.) and support for in-service equipment (30 per cent.), pre-Defence Review planning postulated an increase from about £1,300 million in 1974-75 to about £2,000 million in the early eighties. We are now planning for a much smaller rise to about £1,550 million', involving a saving over the Review period of some £3,000 million'. Reductions in commitments outlined earlier in this note substantially facilitate these savings but it is no use to pretend that cutting the equipment budget to this extent will be wholly painless. There will be a continuing need for the Services' equipment requirements to be scrutinised more stringently than ever and the quality of research and technical management support will inevitably suffer some decline. Nevertheless our studies have indicated that Services' essential requirements for modern equipment can be met within the financial provision we have proposed.
Collaboration
38. In the longer term we hope to see more effective use of R and D resources as a result of more co-operation with our allies in the procurement of equipment; increased standardisation would also offer direct military advantages through inter- operability and scope for further economy in logistics and training. A good deal of our equipment is already procured co-operatively, and we have allowed in our forward costings for collaboration on future specific projects where this has already been arranged or can already be expected; but we believe that there is important scope for widening and deepening co-operation, and thus for achieving further economies in due course. To this end we keep in close touch with individual allies and play our full part in the various NATO and Eurogroup activities that are designed to promote co-operation; and it was as a result of a British initiative that Eurogroup Ministers agreed in December 1974 the need for comprehensive joint examination of countries' forward plans for the procure- ment of equipment to ensure that all worthwhile opportunities for collaboration are taken up.
39. RS 80 is the only collaborative development project from which we propose to withdraw as a result of the Review though, as has been indicated above, our proposals, which are of course subject to full consultation with our collaborative partners, do in some cases involve reductions in the numbers of equipments to be procured and of the rates of delivery.
VI. MANPOWER
40. On front line numbers and equipments, it was considered most helpful to Parliament, our Allies and the public to be told of the effect of the Defence Review on the Services' future plans; so these reductions were expressed in terms of the difference between the forward plans current before the Review and the new
1 See also revised figures, pages 34-35.