Defence expenditure, before crediting United States aid, is estimated at £1,640 million, or roughly the same as the corresponding figure in the original Estimates for last year. But the budgetary support from American aid is expected, this year, to be only £85 million, as compared with £140 million for which last year's Budget could take credit. The net cost of defence to the Budget this year will, therefore, be £1,555 million, as compared with £1,497 million 12 months ago —the increase of £58 million which I have already mentioned. Moreover, our defence commitments impose a considerable strain on our balance of payments. The overseas element in defence expenditure is probably at least £350 millions a year.
The general policy governing our Defence expenditure this year has already been explained in the White Paper "Statement on Defence, 1954." I shall not go into it in detail again but, as that White Paper said,
"It will be the Government's aim to take advantage of all new developments which appear likely to increase fighting strength and to promote economy of effort."
We must be up to date; but we must have economy too. During the coming year we must see to it that we obtain some definite relief from the Defence burden.