TNAG-0540-FCO40-635-Strength-of-garrison-in-Hong-Kong-1975 — Page 128

20

MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE

21 January, 1975.]

Mr. DAVID GREENWOOD.

Mr. Finsberg.] There is so much one still wants to put to Mr. Greenwood that I am hoping we may decide to have another session on this.

Chairman.] The Clerk has said to me it might be a good idea if we take our evidence from the Ministry of Defence and in the light of that, ask Mr. Greenwood to come back.

Mr. Kershaw.] I think that would be preferable.

Chairman.] I always find that after six o'clock people have other things to do.

[Continued.

Dr. Miller.] It is good to have it established that we go on until six and no longer.

Chairman.] If that is the general view I would like to thank you very much Mr. Greenwood for coming. This is a new experience for this Committee having someone from outside. Usually we have officials from the Ministry of Defence and we pay visits and see the services in action. You have not got the inside information although you have been working extremely well if I may say so. We would like to thank you very much for coming, and if pos- sible, although we have a fairly tight schedule, we would like you to come and visit us again. Thank you very much.

FURTHER OBSERVATIONS ON THE DEFENCE REVIEW (D.50)

Supplementary Memorandum submitted by Mr. David Greenwood, University of Aberdeen

1. Certain further observations on the Defence Review are necessary following my appearance before the Sub-Committee on 21st January, 1975. These relate to: (a) the implications of less than 3 per cent. growth for the achievement of the Government's target reduction in the proportion of GNP allotted to defence, on which I undertook to submit a note. (Evidence Qs. 12 and 13);

(b) the manpower consequences of the provisional proposals, on which there is

a lack of clarity in parts of the Evidence. (Qs. 27 and 28.)

Slower growth

2. Attempts at precise calculation of the implications of slower growth for achievement of the Government's target reduction in "the proportion" would be misleading. Ministerial statements on the inherited position, and on that which it is planned to reach. by 1983-84, have been cast in the most general terms. However, a simple calculation confirms the soundness of Mr. Roper's arithmetic, viz.:

-the Secretary of State for Defence's statement that by 1983-84 the revised Defence Budget-£3,750 million at 1974 prices should be around 4.5 per cent. of GNP implies a GNP in that year of c.£82,000 million (also at 1974 prices, of course). This is the level that would be reached were the economy to grow at 3 per cent. per annum for the next 8 years.

-a growth rate of 2 per cent. would take us to a GNP of around £77,000 million. A £3,750 million Defence Budget would be fractionally less than 5 per cent. of this.

One might add that, at the lower GNP figure, "4-5 per cent. for defence" would require a 1983-84 Defence Budget of just less than £3,500 million. This indicates the scale of further reduction that would have to be sought if the Government wished to maintain its aim of reducing the proportion in the face of a downward revision of growth expectations.