(DEFENCE AND EXTERNAL AFFAIRS SUB-COMMITTEE)
11 February, 1975.]
[Continued.
59
3. Because of substantial one-time redundancy payments and cancellation charges which would be incurred in the early years it would be necessary to reduce manpower levels and the equipment programme more than proportionately to the net money saving.
Effects on the Military Programme
4. Similarly the effects of a reduction of £1,000 million on our military capability would be disproportionately severe. An immediate cut of a quarter to a third of the present budget would not leave three-quarters to two-thirds of our present forces intact. The economies of scale in major equipment runs would be lost and military overheads on training, research and development and support, even if pared to a minimum, would cost proportionally more. The front line would therefore suffer much more than a superficial assessment of the savings would suggest. The main effects of such reductions in the early years could be as follows:-
(a) Some 140,000 Servicemen would have to be discharged out of a total of 360,000 and also some 100,000 directly employed civilians out of a total of 310,000.
(b) The UK contribution to NATO's maritime forces would be reduced to less than half the present level. In these circumstances it would no longer be possible to safeguard adequately the Eastern Atlantic and Channel through which all Europe's trans-Atlantic supply lines pass and where Britain has hitherto provided the bulk of NATO's ready maritime forces to counter the growing Soviet threat at sea.
(c) It would be impossible to maintain the British Army of the Rhine which guards a key 65 kilometre sector of the North German Plain on NATO's Central Front. This would leave a gap in the Central Front which could only be filled, if they were willing and able to do so, by our Allies.
(d) The Royal Air Force would have to abandon the MRCA, the most important European collaborative project at present and would be left with a drastically reduced offensive capability, based on Buccaneers and a reduced. force of Jaguars, and an outmoded maritime reconnaissance force.
Industrial and Employment Repercussions
5. It is extremely difficult to estimate the impact that would be made on employ- ment in defence industries by the changes to the equipment programme which would be required by savings of £1,000 million per annum. There are a number of variables involved, including the assumed rate of growth of productivity in these industries, and their ability to diversify into export sales and into other lines of business. There might, however, be a substantial reduction in the present employment of some 240,000 people in the defence industries, by about 100,000. In the longer term, a switch in resources from defence industries would of course make a sizeable contri- bution to meeting other high priority claims including those for the balance of pay- ments and industrial investment: in the short-term, however, it would cause serious problems of transition for particular industries and areas. The loss of jobs would not be evenly spread but would fall particularly on the aircraft industry, where 50 per cent. of current workload is for the Ministry of Defence, and shipbuilding where defence contracts account for 20 per cent. of total workload and where nearly all the first affected are in development areas with poor prospects of alternative employment.
The Military and Political Consequences
6. The consequences of so sharp a reduction in UK defence spending would go. well beyond the military effects described above. Domestically the morale of the forces would be gravely impaired to the extent that voluntary recruitment might well be jeopardised. Abroad a reduction in the UK's contribution to the Alliance of the size needed to secure early savings of £1,000 million per annum could, at a time when the Warsaw Pact already enjoys a marked superiority in conventional forces in all the major European theatres, be highly damaging to the North Atlantic Alliance and might put at risk both NATO's current military strategy and its political cohesion.