CO885-11 — Page 385

PUBLIC RECORD OFFICE

Reference :-

C.O.882/11

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

PUBLIC RECORD OFFICE, LONDON

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It is true that for the past 15 years the percentage limit of the contribution, which is alternative to the limit of the cost of the garrison, has been inoperative, but it must be remembered that the contribution on its present basis has been in force for 30 years, and for the first 15 years of that period the Colony paid very considerably less than the cost of the garrison. It would seem hardly reasonable to argue that now that the cost of the garrison is likely to rise and that the alternative limit of 20 per cent of the Colony's revenue is likely to be reached, this percentage has lost its original significance. The Unofficial Members' scheme would fix the contribution at a sum reached during a period when only one limit of the contribution has been in operation.

The proposals of His Majesty's Government recognize the change in conditions and take to Imperial charge a very considerable expenditure for which the Colony is liable under the strict interpretation of the agreement upon which it entered when the Ordinance of 1899 was passed. The War Office. will meet the full capital expenditure, amounting to millions, necessary for the provision of land, works, armaments, etc., for the con- struction of the new military defences. In addition, with a reduced percentage of 17 per cent in force, the War Office can have no assurance that it will eventually be reimbursed for the full cost of the maintenance of the garrison. It should also be observed that in addition to the military expenditure on the defences of Singapore the Imperial Exchequer will expend a much larger sum on account of the naval and air force require- His Majesty's Government feel that the relatively small portion of the financial burden of the new defences which the Colony is asked to bear is not in any way incom- mensurate with the interest it has in these defences.

ments.

6. In addition to the two main points there are a number of minor points in the Unofficial Members' memorandum:-

(i) In paragraph 5 complaint is made that the Colony is not supplied with any detail by which some check can be made on the "bill" for the contribution. The War Office are not clear what is wanted in this connexion. The estimate given to the Colony each year is based on the statement of the cost of the Malaya Command (i.e., the cost of the Straits Settlements garrison so far as War Office funds are concerned) shown in Appendix III of Army estimates together with an addition for Home Effective Charges and Non- Effective Charges. When the account for the year is complete and the exact cost is known the contribution paid on the estimate is adjusted and the Colony is given a Statement by Votes showing how the expenditure has been incurred.

The War Office have always been ready to give an explanation of the reasons for fluctuations in the cost of the garrison, and if there is any expansion of the account statement or amplification of the estimate that is thought desirable they would willingly consider any proposal to that effect.

(ii) In paragraph 6 complaint is made that in 1927 the Colony was charged £142,000 for capital expenditure on land, works, and armaments for the Military defences of the new Base. This sum is, strictly speaking, under the terms of the Ordinance, a part of the cost of the Imperial garrison and according to routine practice was, pending the result of the communications between Ministers referred to at (4) above, included by the War Office in the estimate of the cost of the garrison on which advances of contribution were to be made by the Colony. The amount has not been credited to Army Votes and is held by the War Office in suspense while the discussion on the proposals of His Majesty's Government are proceeding.

(See also (vi) below.)

The argument in paragraph 6 of the memorandum, which seems to imply that the cost of the garrison does not include capital expenditure on works or armaments, is not cost of the garrison "; this includes all understood. The Ordinance provides for the expenditure whether capital or maintenance. The significance of the references to capital expenditure on lands and buildings dates from the time when the contribution was raised from 17 per cent. to 20 per cent. of the revenue to cover the Colony's. liability for such expenditure, which had always been met by the Colony though not included in its contribution under the Ordinance. The fact that capital expenditure on armaments and works is not mentioned in the Ordinance could never have meant that it was excluded.

(iii) In paragraph 9 the Unofficial Members presume that if the Base is doubled in size in a few years the Colony will be expected to pay the cost because the proposed settlement only refers to exclusion from the cost of the garrison of expenditure on the initial If the situation formation of the Base. This presumption is of course pure conjecture. envisaged by the Unofficial Members should ever arise, there appears no reason to think that His Majesty's then Government would approach such a hypothetical position in any less generous spirit than it is showing in regard to initial capital expenditure on the Base as planned at present.

(iv) In paragraph 10 the Unofficial Members state in connexion with the Statement accom. panying the despatch that "a comparison of percentages of military and other expenditure to total revenue in the United Kingdom with those of the Colony is apt to be misleading. They point out that such services as hospitals, police, education, etc., in the United Kingdom wholly or partly form a charge on authorities other than the Home Government, and that if the contributions of the Colony towards these items were excluded as in the United Kingdom, the revenue of the Colony would be considerably smaller and the percentage payable for local defence correspondingly increased."

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It is agreed that some adjustment is necessary, in comparing percentages, to allow for differences of incidence between central and local revenue and expenditure in the United Kingdom and Straits Settlements respectively. What the precise adjustment should be depends on a detailed examination of estimates but it is not thought that the result obtained by such a laborious inquiry would be such as to invalidate the broad inferences to be drawn from the table. It should be pointed out that the United Kingdom expenditure does include a large sum (about £80,000,000 a year) for police, medical, and educational services.

(v) In paragraph 14 of their memorandum the Unofficial Members draw attention to the expenditure by the Colony in respect of the local forces (Volunteer Defence Organization). This point has been brought forward on several occasions and the answer was given by the Secretary of State for the Colonies in a despatch of 17th May, 1904, when he observed that the Colonial Defence Committee (now the Overseas Defence Committee) had not failed to take into account the numbers of Volunteers and had laid stress on the employment of the local forces to man the mobile armament for defence with a view to reducing the number of Regular troops required.

The numbers of local forces are thus taken into consideration when fixing the size

of the garrison and it will be apparent that the expenditure on the local Volunteer Force obviates the necessity of an increase in the garrison at possibly a much greater cost to the Colony.

(vi) In paragraph 15 a refund is asked for of all expenditure in connexion with the Base and its defence charged to the Colony between 1925-28. The only payments made by the Colony in respect of capital expenditure in connexion with the defences of the new Base during the four years 1925-28, or at any other time, were the advances of £142,000 which the Colony paid on account for the year ended 31st March, 1927. The actual expenditure, as compared with the estimate of £142,000 on which the Colony advanced, proved to be £87,320 only, and, directly the difference was known, the Colony was asked (in April, 1929) how the balance should be refunded. Assuming acceptance of the proposals regarding the future basis of the contribution, the £87,320 would also be repaid; inquiry had already been made (in April, 1928) how in that event this should

be done.

The above note deals with the memorandum of the Unofficial Members in the light of the policy regarding the scheme for the Base and its defences as it existed at the time of the memorandum.

The Unofficial Members will, however, doubtless be aware that on 13th November, 1929, His Majesty's Government announced in the House of Commons that in view of the, then forthcoming, London Naval Conference, 1930, the Government had decided " that all the work already contracted for at Singapore shall be slowed down as much as possible, that all work that can be suspended shall be suspended and that no new work shall be embarked on pending the results of the work of the Five Power Conference." The scheme for the Base is now being considered in the light of the proceedings of the Naval Conference and in the meantime the slowed down " programme is being

continued.

It will be appreciated that the decision to be taken by His Majesty's Government on the whole policy and scheme of the Base may naturally have a practical bearing on the question with which the note is concerned, but in view of the request contained in the Governor's despatch No. 298 of 21st May, 1928, it has been decided to transmit the note forthwith.

C. 82093/31 [No. 4].

No. 18.

STRAITS SETTLEMENTS DEFENCE CONTRIBUTION.

NOTE OF CONFerence at the COLONIAL OFFICE ON 23RD JANUARY, 1991.

Present:

SIR G. GRINDLE (in the Chair).

SIR C. CLEMENTI.

MR. G. C. UPCOTT (Treasury).

MR. A. P. WATERFIELD (Treasury).

MR. J. B. CROSLAND (War Office).

COLONEL C. G. LIDDELL (War Office).

MR. G. D. ROSEWAY (War Office). MR. W. D. ELLIS.

MR. CALDER. MR. MARTIN.

SIR CECIL CLEMENTI explained that the dispute with the Unofficial Members of the Straits Settlements Legislative Council arose from no desire on their part to withhold their contribution: it was simply a question of the manner of its imposition. If there were no settlement, there would be a constitutional crisis and an attempt to test the legality of

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