T h e circulation of this paper h a s b e e n strictj
It is issued for t h e personal u s e of
T O P
.-:
SECRET
C o p y N o .
C[66
Ilth
Februai
CABINET
EC^E^MUCTULJE
DEFENCE BS^jpNh^BJTUEE
Memorandum b y t h e S e c r e t a r y o f S t a t e f c r D e f e n c e
The d e f e n c e
r e v i e w aimed a t r e d u c i n g d e f e n c e e x p e n d i t u r e
in
1969/70 from about £2,400 m i l l i o n a t 1964 p r i c e s , which would have
b e e n t h e c o s t o f t h e programme we i n h e r i t e d f r o m t h e p r e v i o u s
to £2,000 m i l l i o n .
Administration,
foreign
exchange c o s t o f defence,,
I t also
aimed a t r e d u c i n g t h e
On 5 t h A u g u s t l a s t
t h e H o u s e t h a t we h a d m a n a g e d t o r e d u c e t h e f o r e c a s t
£2,180 m i l l i o n .
a
total
The D e f e n c e
overseas defence
the
about
present,
and O v e r s e a P o l i c y Committee h a v e r e v i e w e d
all
c o m m i t m e n t s a n d h a v e a g r e e d t h a t we s h o u l d make
some c h a n g e s w h i c h w o u l d e n a b l e t h e c o s t o f t h e f o r c e s
reduced.
to
told
I now s u b m i t p r o p o s a l s f o r t a l c i n g t h e r e v i e w a s
f a r as i t can be taken at
2
year I
A detailed
statement of t h e r e s u l t i n g force
to be
structure,
a s s u m p t i o n s on which i t i s b a s e d and i t s c o s t i s c o n t a i n e d
Annex A .
( i )
in
The m a i n a s s u m p t i o n s o n c o m m i t m e n t s a r e ­
o u r c o m m i t m e n t s t o NATO i n Germany w i l l
continue
as
a t p r e s e n t p l a n n e d b u t w i t h some r e d u c t i o n I n t h e
provision of strike
( i i )
i t w i l l b e p o s s i b l e t o agx-ee w i t h t h e U n i t e d S t a t e s
sufficiently
limit
firm b a s i s f o r joint
secure
entry;
i n t h e M i d d l e E a s t we s h a l l h a v e n o o b l i g a t i o n s
Aden o r t h e South A r a b i a n F e d e r a t i o n a f t e r
b e c o m e s i n d e p e n d e n t in. 1 9 ^ 8 ,
to
Aden
and t h e commitment t o
a s s i s t Kuwait w i l l b e l i m i t e d t o t h e p r o v i s i o n
air
of
s u p p o r t u n l e s s t h e R u l e r g i v e s u s t i m e t o move
l a n d f o r c e s f r o m t h e U n i t e d Kingdom o r t h e F a r E a s t
to
Kuwait;
-1-
TQP
SECRET
a
action i n Libya to
o u r commitment t o t h e p r o v i s i o n o f a
point of
( i i i )
aircraft;
( i v )
in the Indo/Pacific
a r e a we s h a l l p r o v i d e a v i s i b l e
m i l i t a r y p r e s e n c e o f s e a , l a n d and a i r f o r c e s
based
on A u s t r a l i a .
The d e f e n c e r e v i e w h a s t h r o u g h o u t b e e n b a s e d on t h e a s s u m p t i o n
that
t h e c o n f r o n t a t i o n o f M a l a y s i a b y I n d o n e s i a w i l l have ended b e f o r e
1969/70.
3,
The f o r c e
wing a i r c r a f t
s t r u c t u r e d e s c r i b e d i n Annex A would c o n t a i n
fixed
c a r r i e r s u n t i l 1975? b u t n o n e w c a r r i e r s , w o u l d b e b u i l t .
The Army w o u l d b e r e d u c e d t o 1 7 6 , 0 0 0 a n d t h e Gurkhas
J
F o r t h e k o y a l A i r F o r c e 50 3? l l l A s
disbanded.
would b e b o u g h t and t h e P 1127
provided.
4.
Annex A shows t h a t t h i s f o r c e
s t r u c t u r e would r e q u i r e
budget o f £2,060 m i l l i o n i n 1969/70 at 1964 p r i c e s .
a
defenoe
The f o r e i g n
e x c h a n g e c o s t i n 1 9 6 9 / 7 0 w o u l d amount t o a b o u t £ 1 9 5 m i l l i o n
for
s t a t i o n i n g f o r c e s o v e r s e a s and a b o u t £ 8 0 m i l l i o n f o r t h e p u r c h a s e o f
equipment,
a total
present plans,
o f £275 m i l l i o n compared w i t h £355 m i l l i o n
our foreign
e x c h a n g e c o s t s i n Germany
o r w i t h t h e American Government t o o f f s e t
All these figures
w i l l be i n f u l l
,
w i t h o u t t a k i n g account o f any arrangements w i t h t h e
German G o v e r n m e n t t o o f f s e t
purchase.
on
t h e c o s t o f t h e F 111A
assume t h a t t h e r e v i s e d
e f f e c t by 1 s t April 19^9,
In f a c t ,
deployment
however,
u n c e r t a i n t y a b o u t when c o n f r o n t a t i o n b y I n d o n e s i a w i l l
physical d i f f i c u l t i e s
the
end, the
o f r e d e p l o y m e n t and r e o r g a n i s a t i o n ,
added t o
o t h e r p o s s i b l e d e l a y s b e f o r e t h e r e v i s e d p a t t e r n o f commitments c a n
be put i n t o
effect,
may w e l l make t h i s
assumption u n r e a l i s t i c ,
i s n o t p o s s i b l e t o e s t i m a t e t h e amount o f t r a n s i t i o n a l
It
expenditure
involved.
5,
Annex A a l s o
shows t h a t
in the years
a f t e r I969/7O t h e r e
be a small i n c r e a s e i n t h e s i z e of t h e defence budget,
would
Whatever
we d e c i d e a b o u t 1 9 6 9 / 7 0 i t i s i m p o r t a n t t h a t t h e M i n i s t r y o f
Defence
s h o u l d b e a b l e t o p l a n on t h e a s s u m p t i o n t h a t i f i t p r o v e s t o b e
n e c e s s a r y some s m a l l i n c r e a s e
i n l a t e r y e a r s w i l l be p e r m i t t e d ,
p e r h a p s r e l a t e d t o t h e r a t e o f g r o w t h o f t h e G-ross N a t i o n a l
6,
I have c o n s i d e r e d what f u r t h e r
order to eliminate
e c o n o m i e s m i g h t b e made i n
t h e gap o f £60 m i l l i o n b e t w e e n t h e e s t i m a t e d
c o s t o f t h e d e f e n c e programme i n I 9 6 9 / 7 O and t h e t a r g e t
£2,000 m i l l i o n .
Product.
This difference
i s in fact
of
accounted f o r by
t h e c o n t i n g e n c y a l l o w a n c e w h i c h we h a v e a d d e d t o t h e c a l c u l a t e d
cost
o f t h e programme t o c o v e r u n e x p e c t e d r e q u i r e m e n t s
in
c o s t s o t h e r t h a n t h o s e due t o r i s e s
and i n c r e a s e s
i n p a y and t h e p r i o e
level,
when we h a v e t h e r e s u l t s o f t h e 1 9 6 6 Long Term C o s t i n g i n J u n e
may b e p o s s i b l e t o make some f u r t h e r
reduction i n t h i s
it
contingency
allowance,
7,
The o n l y way o f a c h i e v i n g
grave danger of f a i l i n g
be t o cancel
substantial
further
savings
without
t o meet t h e commitments now e n v i s a g e d
t h e P 1127,
T h i s would save £35 m i l l i o n ' i n 1969/70*
though i t would i n c r e a s e f o r e i g n exchange c o s t s b y £5
million.
T h e r e i s n o o t h e r p r o j e c t w h i c h c o u l d b e g i v e n up w i t h o u t a
risk that
8,
would
serious
commitments c o u l d n o t b e m e t ,
The a s s u m p t i o n s a b o u t c o m m i t m e n t s o n w h i c h t h e c o s t i n g i s
may w e l l p r o v e t o b e u n r e a l i s t i c .
This i s p a r t i c u l a r l y true
t h e a s s u m p t i o n s about t h e e n d i n g o f c o n f r o n t a t i o n
ment o f f o r c e s
in Australia,
i f we h a v e t o l e a v e
that,
My d i s c u s s i o n s
A u s t r a l i a by then; moreover,
poned,
even i f
i n Canberra
It follows,
redeployment were o n l y
there
in
post­
agree
of the s i z e proposed should be based i n A u s t r a l i a ,
therefore,
that
o n c e we l e a v e
s h o u l d b e a b l e t o a c h i e v e some f u r t h e r
and, i f t h e t o t a l
expenditure
showed
of the s i z e proposed
i t i s u n l i k e l y t h a t t h e A u s t r a l i a n Government would
that land forces
of
and t h e r e d e p l o y ­
S i n g a p o r e and M a l a y s i a b y 1 9 6 9 / 7 0 ,
i s no p o s s i b i l i t y o f r e d e p l o y i n g f o r c e s
based
also.
size of the forces
S i n g a p o r e a n d M a l a y s i a , we
savings i n foreign
can b e reduced,
i n budgetary
H o w e v e r we a r e c o m m i t t e d t o r e m a i n i n g
S i n g a p o r e and M a l a y s i a a s l o n g
on e x p e n d i t u r e t h e r e ,
as p o s s i b l e .
exchange
in
We c a n n o t b a s e
and p a r t i c u l a r l y works e x p e n d i t u r e ,
decisions
o n an
assumption t h a t t h e f o r c e s w i l l have been withdrawn by a p a r t i c u l a r
We c a n o n l y a s s u m e t h a t ,
date.
until
confrontation
ends, t h e f o r c e s
t h e r e cannot be s u b s t a n t i a l l y reduced,
9.
There a r e a l s o o t h e r p o s s i b i l i t i e s
which might y i e l d f u r t h e r
ending of the r e s i d u a l
reduction in our forces
NATO s t r a t e g y
offset
o f changes i n
s a v i n g s i n due c o u r s e .
commitments
They i n c l u d e t h e
c o m m i t m e n t t o t h e R u l e r o f K u w a i t a n d some
i n BAOR e i t h e r a s a r e s u l t
or because the Federal
the foreign
,
exchange
costs*
-3­
of a revised
German G o v e r n m e n t f a i l s
to
10,
If
we can a g r e e t h a t t h e P 1127
not he d i f f i c u l t
t h e P 1127
should
t o c l o s e t h e r e m a i n i n g gap of £25 m i l l i o n .
continues
vrell he n e c e s s a r y .
to
should he cancelled i t
If
some f u r t h e r m a j o r s a v i n g s o n c o m m i t m e n t s may
In either case,
however,
a t t e m p t t o d e c i d e now which o f t h e s e v e r a l
might he c l o s e d should he
it
would he
unwise
ways i n which t h e
adopted.
Recommendations
11,
I i n v i t e my c o l l e a g u e s
­
a,
t o d e c i d e w h e t h e r t h e P 1127
should he
cancelled;
h,
t o a g r e e t h a t we s h o u l d n o t a t t e m p t t o
decide for
t h e p r e s e n t how t h e r e m a i n i n g gap b e t w e e n t h e
o f t h e d e f e n c e programme i n 1 9 6 9 / 7 0 a n d t h e
should he
closed.
D H.
0
Ministry- of Defence,
11th
February,
S W,l,
a
1966,
-4­
the
cost
target
gap
ANNEX A THE.. EEVISED FORCE,3TOUGTURE Assumptions on Commitments The revised, force structure has been costed on the following assumptions about overseas commitments a.
Berlin - Our tripartite commitment in Berlin will continue
0 "b-
Ojermajry - Our commitments to NATO in Germany will continue as at present planned. While we shall be able to rely on the use of
the forces in Germany for reinforcement in
real emergency, we should not rely on using,
them for such purposes any more than at present.
c.
Cajcibb^jin ­ V/e shall withdraw our forces
from the Caribbean, except for a company in'
British- Honduras and a frigate which will be
in the Caribbean part of the time, to meet
internal security commitments in our
remaining dexoendenc ies.
d.
S^ojith^Ajblantic and S^oul^Afrijga ­ We shall make
arrangements with "the" South African authorities
to retain the use of facilities under the
Simonstown Agreement without having to maintain
a naval presence there, exce-pt a n ice patrol
vessel in the Falkland Islands and in the
Antarctic,
e.
Gibjialtjijg ­ We shall maintain a garrison,
airfield and other facilities, but there may be
minor savings on naval facilities.
The
dockyard will continue to operate.
f.
MsdiJ^erran^ean ­ There will be no naval force
("or maritime patrol aircraft) permanently in
the Mediterranean and our maritime commitment
We shall
to NATO will be renegotiated.
continue to retain a commitment to provide
nuclear support for CENTO.
So
Mjilta ­ Malta will be reduced to a staging post
with an RAF reconnaissance squadron.
h.
Li/bjya ­ V/e shall secure a point of entry only
by stationing one infantry company, an armoured
car squadron and a stockpile of one squadron s
-worth of tanks in the El Adem/Tobruk area.
RAF El Adem will be retained as a staging post
but with minimum facilities only.
T
2
j .
Qll!£vjL - Akrotiri will "be retained as a Sovereign Base Area (SBA) from which we shall provide nuclear support for CENTO.
On the assumption that this commitment is to continue after the CANBEARAS phase out, it will he met "by V-bombers stationed at Akrotiri. V/e shall have no obligations to Libya which require forces or facilities in the Dhekelia SBA. *
Aden - After Independence in 1 9 6 8 , we shall
have no obligations to, or defence facilities
or forces in, Aden or the South Arabian
Federation.
1 .
Persian Gulf - Our obligations to the other
Persian Gulf States will continue and our
commitment to come to the assistance of
Kuwait will he renegotiated so that it is
limited to the provision of air support,
unless the Ruler gives us adequate time to
move in the land forces from the United
Kingdom or Par East to Kuwait.
The force
structure in this area should include a
second battalion, and additional capital
expenditure should not exceed £ 1 O m .
k
m
"
n.
,
Hong Kong - We shall continue to provide a
garrison of 6 f major units with a few
coastal minesweepers, hut no aircraft.
It
is assumed that the Hong Kong Government will
increase their present defence contribution
from £ 1 . 5 m to £ 5 . 5 n u
Indo/Pacific Area We shall provide a visible
military presence based on Australia, including
naval and amphibious forces, with 7"? Army
major units (including RM Commandos) and
appropriate RAP aircraft for strike, maritime and
Army support roles., Our forces will he
unaccompanied.
The Gurkhas will he disbanded.
Assumptions on Equipment 2.
The following equipment assumptions have been taken
to form the basis of a revised force structure related
to these commitments
a.
The new carrier CVAO 1 will not he built.
The present carrier force will continue until
1975.
5 5 PHANTOMS will he bought for the
Royal Navy, those remaining when the carrier
force is phased out ( 3 h ) being handed over
to the RAF.
The carrier strike component will
he reduced so there will he only a total buy of
9 6 BUCCANEER 2 s , 5 2 of which will he available
for the RAP in 1 9 7 5 .
b.
A total of 5 0 P 1 1 1 A aircraft will he purchased..
3
c.
The P 1 1 2 7 will continue with PGB.
d.
The Type 8 2 destroyer will he provided.
e.
The LANCE weapons system will "be provided for BAQRc
f.
There will be naval reprovision, above that in existing plans, fors­
(i)
(ii)
escort cruisers to succeed the TIGER
class;
the short-range anti-ship missile. Force Structure Royal Navy 3 c
The carrier force would remain in being -until 1 9 7 5 ?
reducing from four to three ships in 1 9 7 1 *
The
abandonment of carriers would make it necessary to
continue with a programme of ships to follow the
These ships
converted TIGERS in the m i d - 1 9 7 0 s
would reprovide the ASW capability and the fleet command
facilities which would otherwise be lost with the
carrierso
The strength of the destroyer and frigate fleet
would be reduced by nearly 2 0 % .
In detail, the changes
in fighting units are, for 1 9 6 9 / 7 0
0
Unit
Current Plan
New Plan
Commando/Assault Ships
h
k
h
k
Cruisers
3
3
8
8
Other Destroyer/Frigates
86
70
Submarines
36
33
Mine-Count ermeasures
Vessels
72
U5
213
167
Carriers
GM Destroyers
(a)
(COUNTYS)
Reductj
-
-
16
3.
27
reducing to 3 in 1971 and nil in 1 9 7 6 ,
Army ho
One of the assumptions upon which the force structure
is based is that it will be possible to agree with the
United States a sufficiently firm basis for joint action
in Libya for us to limit our commitment to the
provision of a secure point of entry.
k
5.
The reduction in the total of the Army's fighting
units would he k%, or i1$ including the Gurkhas.
At the
moment there is the greatest difficulty in meeting the
requirement for battalions to go on unaccompanied
emergency tours overseas.
This is having a had
effect on re-engagement and is causing other difficulties.
Under the new proposals, five battalions will have to be
stationed permanently overseas on planned unaccompanied
tours apart from any additional battalions required for
emergencies.
If the infantry is to maintain itself up
to strength under these circumstances, it is essential
that a good sized pool of battalions is maintained in the
UK to support unaccompanied battalions overseas, and the
Army in the UK has been tailored to meet this requirement.
In detail the reductions in units would he of the
following order, subject to detailed study later:
Current Plan
Infantry Battalions
61
Gurkha Units
9i(a)
RAC Regiments
23i
RA Regiments
RE Regiments
16
Total
1h2 New Plan
60
Reduction (2%)
1
9i
(100$)
21 f
1f
, (7fo)
31.f
f
131
24r
(2%)
(15%)
Nil
127
15
(11$)
Reduction in other Supportin
Supporting
g Arm
Arms
s and Services would he
approximately 5%
(a) Includes 8 Gurkha battalions, 1 Gurkha
Engineer Regiment, 1 Parachute Company,
Note
Royal Air ' Force" 6.
The Royal Air Force front line would be reduced by
1 9 6 9 / 7 0 from the present planned force of 8U5 to 810.
The main features of the new force structure would he
a
;
*
Trans jport :f o.rce,s.
There would be no reduction
in -capability because the requirement to move
the Strategic Reserve remains unaltered and
indeed increased reliance is to he placed on the
principle of overseas reinforcement.
In addition
to the front line of U£ C 1 3 0 s to replace the
HASTINGS and the BFVERLEY, nine C 1 3 0 s have
been included to offset shortcomings in the
BELFAST; the total C 1 3 0 buy would he 6 6 .
b
Air."Defence. The global fighter force would be
reduced b y "2h aircraft to a front line of 9 6 by
1 9 7 5 and to a front line of 8 h by 1 9 7 6 , as V
LIGHTNINGS are replaced gradually by PHANTOMS
released by the build-up of the JAGUAR force.
" -
5
G
*
Tactical Strike/Rec onna is sance .
The present
force of 150""CANBS?dlAS would start to be phased
Their replacement
out of service in 1 9 6 8 / 6 9 .
would be confined to 3 6 front "lines m A s
(from the buy of 50-)', supplemented by 9 6 front
line V-bombers retained in a tactical role
until the introduction of the Anglo/French variable
geometry strike aircraft.
1
d.
Ground Attack.
The planned buys of 1 4 8 RAF
PHANTOMS and 1 1 0 P 1 1 2 7 to give front lines of
8 4 and 6 0 respectively would be unchanged, but
the JAGUAR would progressively replace the
PHANTOM in this role from 1 9 7 3 (see b . above);
provision is made for a second stage development
of the P 1 1 2 7 .
e
Maritime Tasks.
The SHACKLFTON M k . 2 force would
be replaced by 3 0 HS. 8 0 1 s (from a buy of 3 8 ) ;
only 18 SHACKLETON M k . 3 s would be retained in the
front line instead of the 2 4 envisaged until
recently.
3 6 front line PHANTOMS (making use
of those made available by the RN) will be
provided for maritime tasks after the withdrawal ;
of the carriers.
3 6 front line ex-RN BUCCANEERS
will also be provided for maritime tasks in
1975-77 until this role is taken over by the
VG aircraft.
-
To provide a tactical reserve of personnel for overseas
reinforcement, 2 , 0 0 0 extra men have been added to UK
establishments.
Manpower 7.
The Service strength (adult male) of the Forces would be
as follows in 1 9 6 9 / 7 0
Current Plan
RN
Total
(UK)
Other
3,400
181,130
176,000
5,130
(a)
121,670
119,990
1,680
(b)
398,200
387,990
10,210
24,560
Total Reduction 92,000
95 , 4 0 0
Army
Revised Force
Structure 1+22,760
1U,160
1 0,400
2^,370
398,390
(a) All Gurkha' units (now planned to run down by 1 9 6 9 / 7 0
from about 1 4 , 0 0 0 to 10,000) will have been disbanded..
It has been assumed that the new Army Volunteer
Reserve (establishment 50,800) will have taken the
place of the existing Army Emergency Reserve and
Territorial Army.
(b)
\
There will in fact be a reduction in RAF strength
overseas of 6,535, but this is offset by an increase
in the UK of 4,855.
./8
­
N
8.
Numbers of women and boys would be reduced as follows :380
Royal Navy
1,567
Army
Royal Air Force
-
Total
1,9U7
There would be reductions in civilian numbers at home and overseas as follows Royal Navy Army Royal Air Force 3 9 30-:
Total
5
Works Fror^ramme 9o
A comparison of the works programme on present plans
and for the revised force structure offers savings of about
£ 1 0 0 m between 1969/70 and 1975/76,
A comparison for the
first and last years is
£m (1965
prices)
Present Plans
Rgvisejl For;eg
Structure
1969/70
208
1
9
1975/76
153
138
Sayings
k
Ik
15
1 0 - For the purposes of this study it has been assumed
that capital facilities in Australia will not have to be
provided at UK expense.
It has also been assumed, for
costing purposes, that service in Australia will be
unaccompanied and that, in general, units will change over
The cost of the accommodation, storage
once a year.
and operational facilities required in Australia cannot be
accurately estimated without detailed consultation with the
Australian authorities.
A rough estimate is that the
provision of permanent accommodation for 2 2 , 0 0 0 military
and civilian personnel, together with repair and storage
facilities, airfield improvements, etc. would cost some
£1.00m.
This would obviously be a long term programme
spread over perhaps as much as ten years, depending on the
capacity of the building industry in the chosen sites. F o r
the first few years after the establishment of a base in
Australia the majority of the facilities would have to be
in temporary construction.
/ivhirristrv
of Aviation
7
Ministry
of A v i a t i o n . R & D Programme
11.
I t h a s h e e n assumed t h a t t h e r e w i l l he no development
o f a n AM7 a i r c r a f t .
In a d d i t i o n t h e r e w i l l he no
f u r t h e r d e v e l o p m e n t o f t h e BUCCANEER 2 a l t h o u g h p r o v i s i o n
i s m a d e f o r f i t t i n g A J 1 6 8 t o t h e BUCCANEER 2 a n d P 1 1 1 A .
T h e r e i s a l s o p r o v i s i o n f o r t h e d e v e l o p m e n t of a s h o r t
range s u r f a c e - t o - s u r f a c e ship-horne weapon.
I t has
heen assumed that the r e d u c t i o n s in the research
field
r e c o m m e n d e d i n t h e P l o w d e n Re-port w i l l a m o u n t t o £6m
p e r annum.
Allowing for v a r i a t i o n s and adjustments i n
t h e r e s t o f t h e MCA p r o g r a m m e s i n c e t h e 1 9 6 5 L o n g T e r m
C o s t i n g i t i s e s t i m a t e d t h a t t h e e f f e c t of t h e r e v i s e d
p r o g r a m m e w o u l d h e t o r e d u c e MOA e x p e n d i t u r e i n 1 9 6 9 / 7 0
t o £199m.
Qther^Fxjoeiidatur^e
12.
O t h e r e x p e n d i t u r e w i t h i n t h e D e f e n c e B u d g e t i s now
f o r e c a s t a t £60m (1965 p r i c e s ) i n 1 9 6 9 / 7 0 a n d from
a b o u t ,S50ra t o £ 3 0m a y e a r i n t h e s u b s e q u e n t
period.
Since the str-ategic n u c l e a r f o r c e plans and p l a n s for
n u c l e a r p r o p u l s i o n r e m a i n u n c h a n g e d and. c a p i t a l
charges
incurred in the past by the Atomic Energy A u t h o r i t y have I
to he r e p a i d , t h e r e i s l i t t l e scope f o r manoeuvre i n t h e
f o r e c a s t s f o r f i s s i l e m a t e r i a l c o s t s which r a n g e from
£23m i n 1 9 6 9 / 7 0 t o a c r e d i t of £hm i n 1 9 7 5 / 7 6 .
AEA
r e s e a r c h expenditure ( c u r r e n t f o r e c a s t £6.5m in 1969/70)
w i l l d e p e n d on s t r a t e g i c n u c l e a r p o l i c y f o r t h e 1970s
and l a t e r ;
a r e d u c t i o n t o £5m a y e a r h a s h e e n a s s u m e d .
F i n a l l y , t h e r e i s t h e M i n i s t r y of Defence C e n t r a l V o t e ,
a l a r g e p a r t cf which c o v e r s i n t e r n a t i o n a l
defence
o r g a n i s a t i o n s a n d NATO i n f r a s t r u c t u r e .
At p r e s e n t no
r e d u c t i o n s i n o u r NATO c o m m i t m e n t c a n h e f o r e s e e n a n d ,
s i n c e l a s t summer n o p r o v i s i o n was made f o r
satellite
c o m m u n i c a t i o n s w h i c h now a p p e a r t o h e a d e f i n i t e
r e q u i r e m e n t , t h e M i n i s t r y of Defence C e n t r a l f o r e c a s t
h a s b e e n i n c r e a s e d , b y .£3m a 3 ^ e a r t o a l l o w f o r t h e m .
Defence
Buclget
13.
The c o s t , a t 1 9 6 5 c o s t i n g s p r i c e s ( £ m ) , of t h e
revised force s t r u c t u r e i s e s t i m a t e d to he as f o l l o w s :
1969/70
1970/1
1 9 2 1 / 2
1972/3
1 9 7 3 / 4
1 9 X ^ / 5
­
1975^
Navy
Army
RAP
538
546
589
577
558
558
528
551
552
555
555
5 6 1
567
572
566
606
586
642
194
1 9 3
185
571
1h9
591
MPBW
MOA
586
166
142
138
1 9 9
183
190
190
190
190
190
5
5
5
5
5
16
5
1k
-4
-4
-4
-4
31
30
30
30
30
30
2132
2154
2105
2060
2079
2101
AExi.
5
Special
23
Materials
32
MOD
Central
Total
2 i 08
/It
8
It is usual to add to these figures a contingency allowance for cost growth and to cover unforeseen objects of The assessment of a expenditure in the later years.
sensible contingency allowance is by nca means an exact science.
The most reasonable assumption to take at this stage would appear to he en addition of £ 6 0 m in 1 9 6 9 / 7 0
rising hy £ 2 5 m a year to £210m in 1 9 7 5 / 7 6 .
On this basis
the forecast, at 1 9 6 5 costings prices ( £ m ) , would he best
expressed as 1969/70
Total
1970/1
1971/2
1972/5
1973/4
19Jit/5j
1975/6
+60
-f85
+110
+135
+160
+185
+210
2168
2217
2264
22h0
2220
2264
2311
1 9 6 5 costings price levels were,
hov/ever, almost exactly 5%
( £ 1 0 4 m on £ 2 0 0 0 m ) higher than Defence Review price levels
( 1 9 6 4 prices).
At Defence Review prices (£m), the overall
Defence Budget estimate is therefore:­
1962/20
2060
1225a
197V2
1972/2
197JA
1924/5.
2106
2151
2128
2109
2151
1975/6
2196
Foreign Exchange 14.
The latest forecast of foreign exchange costs in
which -would result from the stationing of Forces
overseas under present plans is as follows (,£m 1 9 6 5
costings prices) :­
1969/70
B/lediterranean
^ -. . ^
T
36
94
7
IndS/
Aden/
p.Gulf
Pacific
35
71
Hong
Konre
Other
Total
10
14
260
Deployment in accordance with the revised assumptions would
reduce foreign exchange in 1 9 6 9 / 7 0 hy about £ 6 5 m , giving
a total of ah out £195m- as follows %Germany Mediterranean Persian Indo/
pa cijCic
Gulf
Tex.H.K
1
RN
17
5
" 11
Army
62
3
3
8
11
Other 21
(v/orks Central MOA) 3
3
8
94
19
15
RAF
Total
K
including Aldahra
Other Tota:
3
1
27
7
3
89
-
2
35
3
2
7
44
42
12
13
195
11
s
Hong
Kong
15.
Other defence foreign exchange expenditure, including
the purchase of foreign military equipment, would on current
plans he about £ 9 5 m net in 1 9 6 9 / 7 0 , and about £ 8 0 m net
under the revised plans.
Thus the total estimated foreign
exchange costs in 1 9 6 9 / 7 0 are £ 3 5 5 m (current plans) and
about £ 2 7 5 m (revised plans).
Conclusion 16.
a.
Without the addition of a contingency allowance,
the cost of the revised force structure in
1 9 6 9 / 7 0 is about £ 2 0 0 0 m but with the addition of
an . allowance of £ 6 o m , the cost is £ 6 0 m above
the ceilinr
b,
Local stationing costs (foreign currenay) would
be reduced by £ o 5 m ih 1 9 6 9 / 7 0 ,
The corresponding
reductions for other foreign exchange costs
(largely for the purchase of foreign equipment)
would, be £ 1 5 m .
c.
It would not be possible to contain expenditure
at the 1 9 6 9 / 7 0 level in subsequent years without
further reductions in commitments or capabilities
but expenditure could be contained within a
rate of increase lower than the forecast rise in
GNP.
: