CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 114

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CABINET

DEFENCE AND OVERSEA POLICY COMMITTEE

CONFIDENTIAL ANNEX

(OPD(67) 14th MEETING, ITEM 2)

WEDNESDAY, 22nd MARCH,1967 at 4.30 p.m.)

DEFENCE EXPENDITURE STUDIES

The Committee had before them an interim report by the Official Committee (OPD(67) 22) on the defence expenditure studies.

THE DEFENCE SECRETARY said that the interim report on the defence

expenditure studies showed that the scope for savings in the defence

budget by 1970-71 was of the order of £100-125 million, on the assumption

which had been agreed for the studies that our existing external policies

remained broadly unaltered. The saving would be perhaps £20 million

greater in 1970-71 if, in addition to assuming a reduction by half in our forces in the Far East, we also set a firm planning date of 1975-76 for withdrawing from Singapore/Malaysia whilo establishing by then a minimum

military presence in Australia. The savings from a reduction of our

forces by half would be greater by some £25 million a year in the years

after 1970-71 and larger still if the Ministry of Defence could work to a firm date of 1975-76 for withdrawal from Singapore/Malaysia. The saving

for 1970-71, which related to the defence budget and took no account of any additional offsetting expenditure on economic aid that might be needed, fell far short of the £200-300 million at which the defence

studies had been broadly aimed and which was being assumed as a contri-

bution on defence account to a reduction in future public expenditure as

a whole of £500 million by 1970-71.

Further guidance was therefore urgently needed from the Committee

so that the defence studies could if required be redirected on more

drastic assumptions to indicate what would have to be done, and with what

consequences, to achieve a larger saving in defence expenditure by

1970-71 so that consultation with our friends and allies, which must

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