TNAG-0542-FCO40-637-Strength-of-garrison-in-Hong-Kong-1975 — Page 54

SECAPTUR EYES A

forward programme of expenditure rising (at Defence Review prices levels i.e.

those obtaining in September 1974) from £4000 million in 1975/76 to an average

of £4.450 million from 1979/80 to 1983/84. I will not here go into the details

of these commitments. It is sufficient to say that the situation was such that

To them

only a searching and fundamental review of all our defence commitments, against

the background of the economic resources available, would provide the basis of

a future defence policy geared to our essential defence requirements and our

ability to meet them. The review was set in hand at once and proceeded from a

careful appraisal of the strategic priorities and the implications

military,

political, economic and industrial- of different resource allocations, to

allo caticis do conclusions for the future

defence resources. In strategic terms

the conclusion could only be that NATO- the area of prime importance to

British and European Security - must be our first and overriding charge on defence

here

That resources though even were significanteconomies were necessary; and

our

commitments outside the NATO Alliance must be reduced as far as was possible.

It is not necessary to rehearse in detail the various measures of reduction and

withdrawal on which the Government decided and which were subsequently announced

to Parliament and public. We announced our intention to reduce defence expenditure

as a proportion of GMP from the 5.8% implied by the plans existing when we came

into office to 41% over the next 10 years. In economic terms this meant that

substantial savings would be made rising from £300 million in 1975/76 to about

£500 million a year by 1978/79, and to some £750 million a year by 1983/84; and

at a total saving of £4700 million over the period.

4. I must emphasise that in military terms these were painful steps to take;

and that our NATO allies, while sympathetic to our economic difficulties, felt

and expressed considerable concern at the scale of reduction we proposed and

their effect on NATO's political and military capabilities. I want to make it very

h clear that even our first line of defence our military contribution to NATO

Cuts

Wande

- could not be exempted from enemy and that our economic situation was such as

SECRET UK IVES A