CAB129-37 — Page 782

Page 782

ANNEX B··

[D.E./P. (49) 17]

INTER-DEPARTMENTAL COMMITTEE ON DEFENCE ESTIMATES

Report

The Committee was set up to prepare for the consideration of Ministers a co-ordinated Defence Budget for three years from April 1950 to March 1953. Our terms of reference placed a limit of £810 million annually on defence expenditure over this three-year period and laid down that the uniformed man- power strength of the Forces should be reduced to 700,000 by 31st March, 1951, and to 650,000 by 1952–53.

2. In submitting its preliminary report on 15th August, the Committee drew attention to the fact that, after all possible savings had been made, departmental estimates of the minimum expenditure necessary to provide for present planned forces so far exceeded £810 million annually, particularly towards the end of the three-year period, that no agreed allocation of money among departments could then be put forward. Further progress depended upon strategic guidance from the Chiefs of Staff, which would indicate in which Services and in what proportions cuts should be made and risks taken. A series of questions, aimed at obtaining this guidance in a form which would enable the Committee to proceed with its task, were accordingly put to the Chiefs of Staff.

3. Subsequent discussions by the Chiefs of Staff and in the Committee have resulted in agreement as to where the necessary reductions can best be made so far as expenditure by the Service Departments themselves is concerned. The resultant allocation of resources would give an average annual defence budget of £810 million over the next three years provided that it proves possible to ensure that there is no more than a moderate rise in the defence element of Ministry of Supply expenditure. During the present year this amounts to £57.75 million. Estimates for the three years ahead are, however, £66 million, £72 million and £74.5 million respectively, totalling £212.5 million, and to these figures is to be added the cost of the unrequited Western Union expenditure, which will fall on the Ministry of Supply Vote, which, in 1950-51 and 1951-52, may amount to £2.25 million and £1.5 million respectively. The Committee has agreed, and the Chiefs of Staff have endorsed this view, that efforts should be made to reduce Ministry of Supply Defence expenditure to no more than £185 million over the three-year period. Since the size of this part of the Ministry of Supply expenditure is determined in the main by the requirements which have to be fulfilled on behalf of the Service Departments, reductions can only be made if requirements are cut. Urgent consultations are therefore taking place between the Ministry of Supply and the Service Departments to see whether, if risks are taken in research and development by the Ministry of Supply of the same order as those which are proposed in the case of the armed forces and the Admiralty research and development programme, defence expenditure in the Ministry of Supply can be reduced to a total of £185 million over the next three years. On this assumption the allocation of money to departments, together with the uniformed man-power strength of the three Services over the next three years, would be as follows:-

(a) Money—

1949-50 (for comparison

only)

1950-51 1951-52

1952-53

(£ million)

Totals

Royal Navy

(189.25)

201

201

201

603

Army

(304·70)

307

304

302

913

R.A.F.

(207.45)

233

237

244

714

Western Union unrequited pro- duction (a) of air equipment...

7.5

4.5

0.5

12.5

(b) In the Ministry of Supply

Vote

2.25

1.5

X

1.75+X

Ministry of Supply and Ministry

of Defence

Totals

(58.46)

60.25

61.0

62.5-X

Page 782-86)

811.00

809.00

183.75-X

810 age 782 of 6097

37949

C

10

(b) Manager-83 of 1097