TNAG-0540-FCO40-635-Strength-of-garrison-in-Hong-Kong-1975 — Page 174

66

MINUTES OF EVIDENCE TAKEN BEFORE THE EXPENDITURE COMMITTEE

11 February, 1975.] Mr. A. P. HOCKADAY, C.B., C.M.G.,

[Continu

Rear Admiral A. S. MORTON, Mr. T. CULLEN, Mr. D. M. EVANS, Mr. G. C. B. Dodds, Mr. A. R. M. JAFFRAY, Mr. J. D. BRYARS and Mr. T. C. G. JAMES, C.M.G.

spent. If you have not yet spent much you cannot make much saving. Can you elaborate?

What we are talking about when we say savings relates to the expenditure that we plan to make in the future. If you consider equipment ex- penditure you will find that in the short term, in the imminent years, the great bulk of equipment expenditure is on pro- jects which are either in service already or which are now in production or which are now in a very advanced stage of development. So these are projects in which a substantial amount of money has already been invested and to make cuts in projects of that kind would mean that a good deal of your investment had been wasted. If you think of the pro- gramme as a series of lines on a graph you would find that as you got towards the end of the ten year period the amount of expenditure planned to be spent on projects which are in service now or in production now would be get- ting less and that a greater proportion of the expenditure in the further out years would be on projects which are presently at an early stage of develop- ment and on which, therefore, we have spent very little, or even in some cases perhaps the planned expenditure might consist of allowance for projects which we have not thought of. So we have directed the cuts rather more towards those projects on which at the moment we have spent very little, on which, therefore, we would not be wasting a good deal of investment, and which are projects the bulk of whose expenditure would come in the later years.

160. Really you mean to look at them rather more carefully than you have ever done in the very early stages and perhaps you are starting at 10 or 12 and now you might cut it to 6 or 8, in round terms?

That is the general sort of intention, and this is one reason why we have found some difficulty in being too specific about exactly which projects we should be cut- ting out at the far end, because it is rather early yet for us to be clear on which are going to be winners and which are not, and we would obviously want to concentrate on the winners. But it does mean that we shall be rather more ruth- less in our pruning of the programme

than perhaps it has been necessary for us to be in the past.

161. The Committee have always felt this is a rather difficult decision for any chief of staff. You have a project team, they live with a project and say, "Give us £100,000 more and we will solve it ", but you do not know whether they will. It is like the general crossing the river with one more battalion, then he does not get across. We were very impressed with Sir Derek Rayner when he came here and spoke about this and said they were looking at procurement projects and examining them more often than they use to. I suppose what you are say- ing here is following up what he was say- ing to us some year and a half ago? Yes. We would certainly agree with you these are some of the most difficult decisions we have to take.

Mr. Finsberg.

162. At some stage you have to start a project. What new criteria are you going to use before you start any of these new projects?I do not think the criteria at the very start would be different except to the extent that the implications of the Defence Review for the kind of commitment we shall have to undertake might affect our require- ments. For example, in the past with many sorts of equipment we have had to take considerable account of their suitability for operating in the jungle, the desert, and so on, as well as in Europe. This would be something that we would not have to worry about now, as part of the implications of the review of strategic requirements. It is not so much a matter of the criteria we would apply at the start as that we would per- force, in order to keep within the pro- gramme sketched out in the paper, have to be more ruthless in our scrutiny as projects go along the road.

163. But you have just said that, for example, you would not have to be quite so interested as to whether a new piece of equipment would operate in the jungle or elsewhere. Have you thought of a spin-off on sales of this equipment to other countries which do operate in jungles and deserts? Would this not in fact mean that you are cutting out one