TNAG-0475-FCO40-540-Contributions-of-Hong-Kong-for-costs-on-maintaining-military-1974 — Page 85

ce Mr.

Strank

SECRET

SECRET

MO 8

MINISTRY OF DEFENCE

PIA

Copy No 3 of 23 Copies

Page 1 of 3 Pages

WHITEHALL LONDON SW1A 2HB

TELEPHONE 01-930 7022

RECEIVED IN REGISTRY No. 51

21 MAR 1974

CHANCELLOR OF THE EXCHEQUER

2.

5. Senelain of State.

Ps/sh Lunals PS/ Aatishg Ps 1.12. Roberts.

PS/PUS Szib-A

DEFENCE EXPENDITURE 1974/75

Thank you for your minute of 13th March.

3/6/1

Defence dept.

12. Wilford/SEAD

SLIPA TWICEL. /WORD

I note your proposal that the Defence Budget Estimates for 1974/75 should be cut by a further £72m. on top of the reduction of £178m. announced by our predecessors last December (both figures at 1973 Survey prices). I am examining as a matter of urgency the consequences for the defence programme of this further saving; and I shall give you a substantive reply within the next few days.

3.

I wish to say at once, however, that I see very considerable objections to your proposal to announce in the Budget Speech on 26th March an intention to withdraw the forces now in Singapore in support of the Five Power defence arrangements and perhaps to reduce some naval and air capabilities East of Suez. I very much question whether the Budget Speech is an appropriate occasion on which to announce a major decision of defence policy; nor do I think that it would be wise to take or to announce such a decision so soon after we have returned to office.

4.

You are,

of course, quite right to recall that in 1968 we took and announced a decision to end our military presence East of Suez (other than in Hong Kong). Moreover, the detailed proposals which I have authorised my officials to put forward for the conduct of the forthcoming "defence review" envisage that the group of commitments or capabilities to be considered first as a candidate for abandonment or for reduction should be our commitments and forces East of Suez. I would not therefore dispute that the probability that we shall wish to resume the implementation of our 1968 decision is high,

4

/5.

SECRET

SEODET

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