TNAG-0540-FCO40-635-Strength-of-garrison-in-Hong-Kong-1975 — Page 142

34

MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE

4 February, 1975.]

[Continued.

The division between, on

The proviso in paragraph 51 applies to this table also. the one hand, manpower and other savings (much of which is manpower related) and, on the other, equipment savings, is about :}.

53. Of the savings by principal resources:-

Manpower: About one third of the total in line a. of the table in paragraph

52 is accounted for by civilian staff reductions.

Equipment: Savings in R and D amount to some £20 million in 1976-7, £30 million in 1977-8, £40 million in 1978-9 and £55 million on average from 1979-80 to 1983-41

Other: A substantial element of the savings in line c. is accounted for by

works services.

Foreign Exchange

54. There will be direct savings in foreign exchange from withdrawals (the budgetary savings from withdrawals from non-NATO and the Mediterranean are estimated to be £100 million a year); there may be indirect savings as a result of the cuts in the planned equipment programme, because of a reduction in the import content of defence purchases from domestic industry. Until the process of consultation has been completed and the changes have been fully worked through the savings cannot be quantified. We aim to increase the Hong Kong Government contribution to UK costs. Overall there should be a substantial reduction in foreign exchange against the previous programme, but this cannot, as yet, be quantified.

Major Items

55. A list of the major items of equipment by the three Services on which savings of more than £5 million are expected in any one year by deferments, reductions, or cancellations, is at Annex A.

ANNEX A

SUPPLEMENTARY MEMORANDUM BY THE MINISTRY OF DEFENCE (D.52)

Although the figures given in paras. 32-37 and para. 53 of D.40 reflected up-to-date estimates at the time the memorandum was originally submitted, it has sub- sequently emerged, as a result of the continuing process of refining the equipment programme referred to in paras. 36 and 37, that the R & D programme is more likely to reduce by about 9 per cent. over the whole 10 years of our costings, rather than the 7 per cent. suggested in para. 32 of the memorandum. Consequently there is a need to amend certain figures in the paper. These amendments are shown as follows:-

Later assessments indicate that the following amendments are required to the R & D and equipment figures given in D.40:-

**

Para. 32, line 5, delete "7 per cent. (about £360 million) ", insert "9 per cent.

(about £440 million)".

Para. 34, line 1, delete " £360 million ", insert " £440 million ".

line 3, delete "£270-280 million ", insert " £330 million ".

line 5, delete " £80 million-£90 million ", insert "£110 million ".

line 6, delete "£50 million ", insert "£80 million ".

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1 But see revised figures page 35.

2 See Evidence pages 29-30, and above.