TNAG-0476-FCO40-541-Strength-of-garrison-in-Hong-Kong-1974 — Page 76

XIII OPTION E

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REDUCTIONS BY THE SERVICES AND THE PROCUREMENT EXECUTIVE

TO THE BASELINE, 3ECOND, THIRD AND FOURTH LEVELS OF

DEFENCE EXPENDITURE

Measures to reach the Baseline level

117. The Baseline represents a level of defence expenditure of 4% of

GNP by 1978/9 and 4% by 1983/4. It follows the Second Level to

1978/9 and joins the Third and the Fourth levels in 1983/4. То

reach the Baseline level the Ministry of Defence would have to reduce

the defence budget as planned in the 1974 Long Term Coatings by a

total of 25%, or £1083m in 1978/9; and by 29%, or £1307m, by 1983/4.

Each of these figures are £400m below the First level of expenditure;

and £600m and £550m respectively below the Critical level. The

Baseline level also gives a good indication to Ministers of the

consequences of reducing expenditure to the Second, Third and Fourth

levels. However, these have been the subject of a detailed examination

which has been presented to the DSWP by the Ministry of Defence and

which is summarised in Annex N.

118. It is clear from the summary of measures set out in Annex N that

the military capabilities of each of the three Services would be so

reduced that the United Kingdom's contribution to every aspect of

Alliance strategy would be drastically curtailed. The confidence

of our Allies in the seriousness of our commitment to the Alliance

would be undermined significantly more even than would be the case

if we were to reduce to the First level of savings. The facts

perhaps speak for themselves:-

Я.

Royal Navy. We would be reducing our naval contribution

to the Alliance by up to 40% of the planned strength of

the Fleet, and in the case of submarines by 50%.

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STAN KAT.