CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 83

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3. GOVERNMENT EXPENDITURE OVERSEAS (Previous Reference: OPD (66) 41st Meeting, Item 1)

oversea

The Committee had before them a memorandum by the Chancellor of the Exchequer (OPD(67) 15) on the saving of £100 million in Government

expenditure.

As

THE CHANCELLOR OF THE EXCHEQUER said that his report of progress

towards achieving the saving of €100 million in Government oversea

expenditure announced the previous July was for the information of the

Committee. Although the intention had not been made precise publicly, the

saving related to the planned level of oversea expenditure in 1967-68 and not its absolute level by comparison with the previous year.

regards economic aid, which was under our own control, the planned saving

of about £20 million seemed likely to be achieved. There had also been

substantial progress towards the proposed saving in oversea defence expenditure outside Germany. Savings in 1967-68 were expected to be

£47.5 million, rising to a rate of £74.5 million by the end of that year,

in both cases the target was £80 million. But within these totals £12.5

million from additional orders of equipment by the United States was once for all, Malta was now, in consequence of the current discussions, likely

to cost more than had been estimated and, if Germany contributed only

£22.75 million civil offset, the net saving on defence account would be

reduced to about £20 million in 1967-68 compared with the target of

£80 million. At worst, our net costs in Germany could prove to be such

that all savings made elsewhere on defence account would be counterbalanced.

It was crucial to achieving adequate growth in the economy that we

should relieve the strain imposed by our recurrent difficulties in our

balance of payments: to that end it was essential to reduce governmental

oversea expenditure. In 1966-67 this expenditure had totalled

£593 million compared with 150 million in 1950 and about £20 million

before the last war. The trend of this expenditure still appeared to be rising and, although the various measures planned for reducing defence

expenditure overseas would improve the situation by 1970, more needed to

be done if our policies were to be successful. Our contribution to world

peace and security should not be greater as a percentage of our Gross

National Product than those of other countries. The Cabinet should have

an opportunity to consider the problems involved.

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