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(ii) An Rages&infthe9ntensity of the Cold War what ZAQ Af Wout the forces necessary to meet the threat. Experience in the Far East during recent months has shown the dangers which this would involve. (iii) At sea, the much reduced strength of the peacetime Navy would consider- ably slow up the speed of mobilisation of the fleet, while the strength of our maritime Air Forces would only provide for limited air cover for the sea approaches to the United Kingdom.

(iv) On land our forces in the Middle East would be dangerously inadequate, and during the next few years we could not provide any land reinforce- ments for the initial battle in Western Europe.

(v) It would be necessary to abolish Transport Command, R.A.F., and to reduce the air transport in the United Kingdom by two-thirds. This would make it impossible to re-instate the R.A.F. component of the Berlin Air Lift. (vi) So far as the Ministry of Supply aspect is concerned not only will the re-equipment of the Forces be delayed but the development of new or improved weapons and aircraft will be materially set back. A rising level of expenditure on research and development had been envisaged by current Service requirements and in the plans made by the Ministry of Supply to meet them, but the allocation of money now proposed for the Ministry of Supply does not provide for the necessary increase.

13. The Defence Committee will note that it has not been possible to meet completely the man-power limits referred to in paragraph 7, namely 700,000 by 1st April, 1951, and 650,000 by 1st April, 1953. The actual strengths postulated in the plan are :

By 1st April, 1951

By 1st April, 1953

682,000 677,750

The short-fall in 1951 is to be welcomed from the man-power point of view. I am satisfied that the excess of some 25,000 in the target for 1st April, 1953, is

unavoidable.

14. The figures of National Service intake on this basis will be :-

Intake for 1950-51

Intake for 1951-52

Intake for 1952–53

158,550

170,690 164,700

It would appear, therefore, that the problem of controlling the National Service intake is not going to be so grave as was supposed when the Harwood report was first under discussion, and it may well be possible to avoid any radical adjustment in the scheme in order to control the intake and to absorb any suplus by deferring one or two additional registrations over the next three years.

15. I draw attention to the recommendation made by the Working Party that, within the total allocations to each Department, adjustments between one year and another should be permitted. I recognise that serious difficulties in principle for the Chancellor of the Exchequer are involved here. Equally, however, regard must be paid to the difficulty of ensuring that payments fall due at the proper date for a programme as complex as that which we are now discussing. To tell the Service Departments that money which cannot be spent by a prescribed date must be surrendered to the Exchequer and become a complete loss to the three-year scheme is to make a difficult problem into an intractable one. It is most important that ways and means should be found of giving effect to this proposal.

16. All these proposals were worked out before devaluation took place. The extent of the adjustment entailed is not yet known, but it will be essential that the additional money required to cover any increases should be provided.

CONCLUSION

17. The proposals now before the Committee in the Reports of the Working Party and of the Chiefs of Staff represent the culmination of many months of intensive work. They are the outcome of a thorough-going attempt to evolve a balanced three-sgevice Oppán a represent an integrated dePage 78em Th

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wilptake us 10yer1the next three years. The forcep we shall hayogf the plan is approved, are not as large as those which the Chiefs of Staff consider necessary on purely military grounds, but equally, they are not so small as to lead to the frustration, if not abandonment, of some of the major objectives of our foreign policy, such as would have been entailed by the Harwood proposals. Risks- considerable risks-will still have to be taken; numerically smaller forces; the slowing-up of Army re-equipment in order to concentrate on its Cold War rôle; and, in particular, the reduction of the air forces far below the level which we should normally deem prudent. If a major war came with inadequate warning, these risks would be particularly grave. To counterbalance these we shall and must develop a substantial arms export trade to enable us to maintain the indus- trial war potential on which we can call and, if necessary, rapidly expand in emergency.

18. Over all these anxious studies of the pattern of our defence services in the next few years there has loomed the thought of what was the proper burden that the country should be asked to carry in its own interests and also in the common interest of the peoples who share our political, religious and cultural inheritance. Put shortly, the problem has seemed to me to be whether, after the exhaustion of the war years, the United Kingdom has the power and the resources to maintain armed forces equipped to modern standards such as are required to permit us to play the part of a Great Power. I have always conceded, în public and in private, that the prime necessity for our survival is that we should win the battle for economic recovery. That is fundamental. But what is no less important is to ensure that, in taking the necessary measures to deal with the economic situation, no such crippling penalties are inflicted upon the Services as would render them inefficient for their manifold current duties and incapable of forming the basis of rapid expansion in time of war. For armed forces are organic bodies--they cannot be mutilated to-day and be recreated by the pen and the cheque book to-morrow. Drastic measures now would work themselves out inexorably in the years ahead when we as individuals have passed from the scene. Principally, owing to British initiative, Western Union has come into being and, though still far from having reached its full potential, is already a factor in the world. From this basis the United States have gone on to accept wide responsi- bilities under the Atlantic Pact and the present programmes of military aid. Failure to approve the proposals I am now putting forward will make it impossible to redeem the promises we have made to our allies, and thus, in my opinion, imperil the whole structure we have been building up together.

To my mind the essence of the matter is this. Only by avoiding war can we hope to realise our economic strength; if war should come, we shall surely lose all that we have planned and struggled for in the last few years. To avoid war our best hope lies in the provision of adequate defence services which afford clear evidence to the world of our strength, determination and resolve.

RECOMMENDATION

19. I accordingly invite the Committee-

(a) to endorse the proposal that a sum of £810 million (with any upward adjustment rendered necessary by the devaluation of the £) be allocated to defence in each of the three financial years 1950-51, 1951-52, 1952-53;

(b) to approve the underlying strategic conceptions on which it is based as

set out by the Chiefs of Staff; and

(c) to seek the approval of the Cabinet to the proposals outlined in the two

reports..

Ministry of Defence, S. W. 1,

18th October, 1949.