APPENDIX I.

MEMORANDUM OF THE SECRETARY OF STATE RELATING TO

THE ARMY ESTIMATES FOR 1907-08.

TOTAL ESTIMATES.

The sum which Parliament is asked to vote for Army Services in 1907-08 compares with the total of the Estimates for 1906-7 as follows::

This decrease, however, does not represent the total of the savings that have been effected, as it has again been necessary to find money to meet the automatic growth of certain charges, viz. :

Amount by which the Estimates of 1906-07 were reduced,
owing to the depletion of the Regular Infantry in that
year

Increased cost of Army Reserve

Increased charge for stores and clothing, due to the reduc-
tion of the surplus stocks available from the South
African War

£

90,000

141,000

.. 187,000

Increased cost of the Militia (including Reserve)
Increase of the Vote for Works, owing to closing of loan

35,000

The reductions effected thus amount in total to some 2,600,0001.

This figure includes a decrease of 699,000l. in the amount provided for the Re-armament of the Horse and Field Artillery with quick-firing guns. The progress of expenditure on this scheme has been more rapid than was originally anticipated; and the sum of 488,000l. to be voted in 1907-08 will complete the equipment of the Artillery with these guns. The total cost will have been 3,116,000l.

The total reduction in the Estimates would have been still larger but for the fact that a reduction of etablishments does not at once produce a saving equal to the whole cost of the officers and men reduced. They cannot be summarily struck off the books, but must be allowed to finish their engagements; nor can all share of promotion be denied to them. The reduction of actual strength must be effected by taking fewer cadets and fewer recruits; but here again the stoppage cannot be made abruptly. Everything practicable has been done during the year 1906-07 to bring the actual strength of the Army to the level of its new establishment, but provision has to be made in the Estimates of 1907-08 for considerable numbers of supernumeraries Recruiting as a whole continues to be good, and one result of this has been that the depletion of Line Infantry battalions at home, due to the efflux of three years men to the Reserve, is rapidly disappearing.

VOL. CLXX. [FOURTH SERIES].

3 K

1

LOAN EXPENDiture.

Besides the reduction of the Estimates, the restriction of expenditure of borrowed money calls for notice. In the ten years from 1896-97 to 1905-06, the total amount spent under Army Loans was 15,754,000l., an average of 1,575,000l. a year. It was decided early in 1906 not to exhaust our borrowing powers under existing Acts, but to wind up the Military Works Loan as soon as certain indispensable services had been finished. The expenditure in 1906-07 will amount to some 650,000l. and in 1907-08 probably to a similar sum.

GROWTH OF ARMY EXPENDITURE, 1896-1907.

During 1905-06 and 1906-07, the Estimates of which years were of practically the same total, the peace expenditure of the Army may be said to have reached high-water mark; and I have been at some pains to analyse the causes of the great growth which took place between the years 1896-97 and 1906-07. In that period the Estimates, for peace services only, increased by 11,741,000l., of which 11,231,000l. was for effective services, and 510,000l. for pensions.

GROWTH OF PENSIONS.

This growth of the pension charges is of course largely due to the South African war, but by no means entirely so. Increases in the numbers of the Army and in scales of pension take many years before they produce their full effect on the non-effective votes; and, in regard to officers especially, the pensions now being paid pertain to a period when the Army was much smaller than at present. There is a further growth of 38,000l. in the non-effective votes this year, which now account for no less than 3,596,000l. out of the total Estimate of 27,760,000l.; and unfortunately there is every prospect of this growth continuing for some years to come.

COST OF PERsonnel.

Of the 11,231,000l. by which the Estimates for effective services in 1906-07 exceeded those for 1896-97, 9,301,000l. was due to the increased cost of personnel. After allowing for the increases on Medical Services (402,000l.), Army Reserve (405,000l.), Staff Departmental Services and Schools of Instruction (842,000l.), Militia (487,000l.), Yeomanry (424,000l.) and Volunteers (625,000l.),* there remains 5,916,0007. as the increased cost of the Regimental units of the Regular Army. Of this sum, 3,300,000l. represents the cost of 1,660 officers and 41,800 men added to the Army; while the numbers existing in 1896-97 cost more by 2,616,000l. in 1906-07 than in the earlier year, the increase per head being about 231. for officers and 171. 7s. 6d. for men. Among the causes of these increases may be mentioned the additions made to the more expensive corps (Artillery, Engineers, Foot Guards, &c.), the larger force maintained at the most expensive station (South Africa), and the better scale of barrack accommodation, &c., now provided. But besides these causes, which apply to both officers and men, the average cash payments to the individual soldier have been increased, by the grant of messing allowance, kit allowance, and service pay, to the extent of some 10l. a year, after allowing for the abolition of deferred pay. The question of the soldier's emoluments is further dealt with below, under the head of Service and Proficiency Pay. Meanwhile, it may be mentioned that a sum of 49,000l. is included in the Estimates of 1907-08 for the provision of better furniture for married soldiers' quarters; for the furnishing of separate dining rooms for the rank and file in barracks where the necessary space can be found, and of rooms for the use of the Army Temperance Association; and for improving the furniture of serjeants' messes. In the years 1902-03 to 1906-07 a total sum of 135,000l. was provided for similar purposes.

Owing to an alteration in the date of payment of Capitation allowances amounting to 200,0007. in 1896, the sum actually voted for the Volunteers in 1896-97 was less by 825,0007. than in 1906-07.

On the other hand, the pay of regimental officers has remained practically unchanged. The lieutenant-colonels commanding regiments of Cavalry and battalions of Infantry, with their heavy responsibility and the many calls to which they are exposed, are badly paid as compared with the officers serving under them; and I hope to be in a position to effect some improvement in the pay of these and possibly other lieutenant-colonels in the coming year.

CHARGES OTHER THAN PERSONNEL.

The chief factors of the increase of 1,930,000l. under this head were the growth of Loan annuities (894,000l.), the larger numbers of horses maintained (544,0007.) and the increased charge for warlike stores arising from the special provision in 1906-07 of 1,187,000l. for new Horse and Field Artillery equipments.

1907-08 COMPARED WITH 1906-07.

Without entering upon an exhaustive analysis of the Estimates of 1907-08 on the above lines, the savings of 2,036,000l. in those Estimates may be allocated approximately as follows:

STAFF, COMBATANTS AND DEPARTMENTAL SERVICES.

The total effective charge for personnel of the Regular Army (excluding the War Office and the Army Reserve) in 1907-08 is 15,261,000l., of which 400,000l. is for Staff, 12,391,000l. for Cavalry, Artillery, Engineers and Infantry, and 2,470,000l. for Medical and Departmental Services (including Labour Establishments).

ESTABLISHMENTS OF THE REGULAR ARMY.

The establishments of the several arms of the Regular Army have been subjected to a methodical examination, special attention having been directed to the two chief determining factors, viz., the Colonial and Indian garrisons to be maintained in peace, and the force which can be put into the field in an organised form.

FIELD FORCE.

An Order was published in January last providing for the reorganisation of the Home part of the Regular Army. The basis adopted was simply that of taking the number of combatant units actually in existence at Home and necessary for the maintenance of the Colonial and Indian garrisons, and organising these units into a force containing a due proportion of all arms; the size of the Field Force thus being limited by the establishment which it is necessary to preserve in order to find drafts and reliefs for the force abroad.

The Army at Home, so organised, will furnish a Cavalry Division of four Brigades, six Infantry Divisions of three Brigades each, and a complement of Army troops and troops for lines of communication. The Divisions have been arranged on a larger scale of three Brigades in order to make them correspond with the organisation of the British Army in India. To make the new organisation possible, it has been necessary carefully to consider what parts of the existing organisation were defective. It was found that, owing to the deficiency in administratve elements, such as Ammunition Columns, Army Service Corps, and Army Medical Corps, it would be, as things at present stand, impossible to mobilise as a fully organised force much more than half of the existing combatant units. With a view, among other things, to making possible the provision of these deficiencies reductions have been made in Regular combatant establishments, surplus to what is required for the organisation of their six Divisions, amounting to about 16,000 men.

Of the ninety-nine batteries of Field Artillery now at Home, only sixty-six are required for the mobilisation of the six Divisions; though of these, owing to the present deficiency of reservists to complete ammunition columns, only forty-two can bə mobilised. The thirty-three surplus batteries it is proposed to form into training brigades which will train men on a non-Regular basis, to bring the personnel of the Artillery up to its full requirements, including the ammunition columns now lacking.

No reduction, however, of the establishments of the Regular Artillery can properly be made until personnel, trained on a nonn-Regular basis to the requisite extent, is ready to fill the gap. All the battery establishments of Horse and Field Artillery consequently remain for the present unchanged; certain economies wholly unconnected with this question have, however, been effected in the establishments of Artillery depots.

Of the other troops surplus to the requirements of the new organisation, two battalions of Foot Guards have been dispensed with, and disbandment has been ordered. One has already ceased to exist, but the other, the 3rd Battalion Coldstream Guards, is usefully employed in temporarily strengthening the British Force in Egypt. The necessity of finding, with due regard to economy, the money necessary for making good the deficient elements in the new force renders it impossible to maintain units of any arm in excess of its due proportion.

Eight battalions of the Line have been reduced from the Colonial Establishment as described below, but as the Home battalions perform the vital function of providing drafts for battalions abroad, no more could be dispensed with while the force abroad remains at its present establishment.