CONFIDENTIAL
3. Within the allocation, which would be operated effectively as a single ceiling over the expenditure from both Votes, the Foreign Office and the Commonwealth Office would exercise a substantial degree of choice as to its distribution. The precise extent of delegation of authority remains to be worked out between the Treasury and these Departments, if Ministers approve the proposal in principle; but, in general, the Treasury would aim to confine themselves to broad matters
of administration.
40 The Treasury makes no precise proposal at this stage on the size of the allocation for 1968-69 and beyond, which would have to be realistically assessed with due regard to the likely development of expenditure. But in view of the continued urgent need to make reductions in Government expenditure overseas, the aim would be to secure some reduction in present levels of expenditure over the period, though one of the factors to be taken into account will be the effect on the civil votes of increased loan charges for flying personnel (see paragraph 6 below) to the extent to which it does not prove possible to pass these
on to the Governments concerned.
5.
If it should be proposed to give increased military technical assistance to an overseas Government as a direct corollary of British Forces reductions in its area, consideration would be given to the need for this to be (subject to Ministerial agreement) additional to the existing military technical assistance allocation.
Charges for aircrew loaned to foreign and Commonwealth Governments 60 It is proposed that Ministry of Defence Vetes should be more fully refunded for the costs of flying personnel, of all three Services, who aro lent to foreign or Commonwealth Governments by the inclusion in their charges of an element for amortised flying training costs. (Ne additional charges for other personnel are contemplated.) The Commonwealth Office consider that in few if any cases should any attempt be made to pass these increased charges on to Commonwealth Governments. It is proposed that when for any reason the increased charges cannot be passed on to the Government concerned, they should be regarded as a form of military technical assistance and treated as discussed above; consideration would have to be given to the provision to be made for them in the allocation. Any such costs which were directly attributable to the sale or projected sale, of aircraft (or other equipment for military use), however, would not, any more than any other defence sales promotional costs, be classed as military aid, but would fall on the Defence Budget. (Any disputes as to such attribution would be referred to tho Official Committee.)
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