Australian High Commission, London, 3 May 1967
5326. Secret For Prime Minister Alone
Yesterday at a reception we gave at Stoke Lodge for the Governor-General a number of Cabinet Ministers came including Callaghan, George Brown, Bowden, Crossman, and Peart. Elwyn Jones and Judith Hart were also there.1 (All Ministers except Bowden, were elated by Wilson’s E.E.C. announcement that afternoon to the Commons).2
2. I had a long talk alone with Callaghan. He and I have good personal relations, but what he said was profoundly disturbing from our point of view. Callaghan said they must cut their coat according to their cloth. The price of entry to the E.E.C. for the first few years would be great. It could amount to as much as £300 million or even £400 million. Obviously the advantages lay in the long–term; there were none in the short-term. So the initial period would be difficult and costly.
This meant, he continued, that they must prune severely the defence bill. It was just impossible for Britain to remain in Malaysia. He hoped they could save £100 million a year in that direction alone. The Government, in order to pay the price of entering the Common Market, must economise on defence. Moreover, the British people had been denied benefits for too long. He was determined before 1970 to do more for the people in the way of improved services, concessions, and standards (there was a hint of higher social services in this). All this would be impossible if Britain entered the E.E.C. whilst simultaneously retaining present defence commitments. He was going to try to reduce the figure by as much as £500 million by June 1968.
3. This, of course, is a candid admission that Britain’s global defence responsibilities are going to be sacrificed to getting into Europe, and fiscal concessions at home.
4. I told Callaghan that in unfolding their new defence proposals to us they had hit us between the eyes, and we were shocked. They were now going back on their previous assurances to us, reiterated as recently as late February by Bowden in Canberra. Callaghan replied that they had made a re-assessment of Britain’s circumstances. He then mentioned vaguely a joint base in Australia. I said that we felt emphatically a base should be in forward areas to be of any real use. I warned him of the adverse effects on Australian public opinion, and indeed on Anglo-Australian relations, if his Government fulfilled their new intentions. He seemed quite unmoved by this, but said no final decisions had been taken by the Cabinet.
5. For myself, I am certain they have made up their minds on these proposals, and only very powerful and persuasive pressure by yourself, New Zealand, and the United States will deflect them from that course.
6. I must also report a lively conversation with George Brown in the drawing-room shortly afterwards. He was ebullient, friendly, but not drunk. He was highly excited by Wilson’s statement. ‘Tell Holt’, he shouted ‘that he need only be concerned with Wilson and me. He must trust us more. I had a row with Hasluck in Washington. But you can trust us’, he continued, ‘we will always look after you. You don’t need undertakings from us signed on the dotted line. We won’t let you down’. As these words were echoing down the room, Mrs Peart, wife of the Agricultural Minister, Fred Peart, interjected, ‘Don’t you believe a word of it’ ‘Take this woman away’, roared the Foreign Secretary imperiously.
7. Jim Forbes3 was also at the reception and had a revealing talk with Crossman. which apparently was brutally frank on these subjects. I have suggested to him he should see you immediately on his return.
8. I am gradually forming the opinion that if you can possibly manage it there would be great advantages if you could stay in London longer than you propose in June. This could be one of the most important missions in your life.
1 Richard Crossman was Lord President of the Council, 1966–68; Fred Peart was Minister for Agriculture, 1964–68; Judith Hart was Minister of State at the Commonwealth Office, 1966–67; Elwyn Jones was Attorney-General, 1964–70.
2 That the UK intended to lodge a formal application to open negotiations for entry to the EEC. See Document 228.
3 Dr Jim Forbes, Australian Minister for the Army, 1963–66.
[NAA: M1003, DEFENCE—EAST OF SUEZ]