CAB129-37 — Page 65

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Page oftes mentioned in the lastpabe66 ofrographs

total £43.5 million, making a total of the economies

a recommended of £86.5 million.

Defence

15.

Thoro romains the question of defence. The defcnco ostimatos for the current year vero £760 million, and supplementaries vero in prospect for £30 million (apart from the effects of re-valuation), for certain. now commitments (e.. Hong Kong and Western Union), and for further paylento arising out of ver-time settlo- nonts. It is not rrcticable at the present moment to

scttlo the provision of defonce estimates for next

your.

16.

人人

The Service Ministers, however, have in hand a series of administrative economies in the Services which will produce reductions of expenditure of £122 million in the remaining five months of the current year, i.e. at the rate of £30 million a year.

17.

These economies will continue in the following year, but no decision can be reached at the moment as to what the resulting defence figure will be.

Summary

18.

The total economies recommended in this part of this paper, counting defence for this purpose at £30 million, amount to £116.5 million, or with the reduction of £140 million in the capital investment programme, £256.5 million in all. This is some £20 million short of the middle figure of the range of from £250 million to £300 million mentioned carly in this paper and the Chancellor of the Exchequer takes the view that it is necessary that some further economy of about this. amount should be secured. He suggests that this should come by decreasing the subsidy on milk by d a pint.

, Downing Street, S. . 1.

20TH OCTOBER, 1949.

C. R. A.

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