IMMEDIATE

Following for Prime Minister:-

My telegram Circular B. 77. [1]

Following are the provisional terms of the passage relating to
rearmament:-

His Majesty's Government have accordingly considered proposals for
increasing the production and accelerating the completion of the
rearmament programme. The details of that programme have been from
time to time laid before Parliament. Recently in connection with
the estimates for the defence departments, statements have been
submitted to the House of Commons as to steps to be taken in the
next financial year. The existing programme however has been
carried out with the intention of interfering as little as
possible with normal trade. In fact notwithstanding this
limitation an increasing degree of priority over civil work has
been gradually accorded to rearmament orders with the result that
in some cases the execution of the orders for home and export
trade has been delayed. The additional skilled and semi-skilled
labour required by the programme has occasionally had to be
provided at the cost of withdrawing labour from other activities.

Only by such means has it been possible to undertake large scale
programme of production which in spite of some delays is now
continuous and rapidly increasing in volume.

We had hoped that further acceleration with its consequent
interference with normal commercial work might have been avoided
but, as the House knows, we have always made it clear that the
defence programme was flexible and was subject to review from time
to time in the light of changes in the international situation.

We have now come to the conclusion that in the present
circumstances acceleration of existing plans has become essential
and moreover that there must be an increase in some part of the
programme especially that of the Royal Air Force and Anti-Aircraft
defence. In order to bring about progress which we feel to be
necessary, men and material will be required and rearmament work
must have first priority in nation's effort. The full and rapid
equipment of the nation for self-defence must be its primary aim.

I gratefully acknowledge the way in which workers and employers
have co-operated in carrying out the programme hitherto. Such a
co-operation will be even more necessary for bringing to practical
and early fruition the plans to which I have referred and the
Government are confident that they can rely on the continued help
and goodwill of all concerned. In the view of the Government it is
not for them to try to dictate to great industries the detailed
action which will be necessary for overcoming difficulties. It is
in accordance with our traditions that these industries themselves
through their joint machinery should work out details in which
each is most likely to be effective. Steps are already being taken
to inform organised workers and organised employers of the nature
of the demands which the accelerated plan will make upon their
industries and thus place them in a position to devise practical
methods for meeting those demands by mutual arrangements and with
a minimum Government interference. By such means it is expected
that the volume of production which, in the new circumstances, is
not sufficient for our needs will be substantially increased. The
building operations necessary for the expansion of the three
Services will be expedited. This will facilitate the process of
recruitment of naval, military and air force personnel. The action
already indicated will serve to accelerate the production of naval
equipment. Similar measures will be taken for completing at the
earliest date possible the erection of new factories. Further
capacity with a view to advancing the output of anti-aircraft and
other guns will be put in hand.

This priority will also enable us to expedite the programme of air
raid precautions. The satisfactory response to the appeal for
recruits in connection with air raid precautions is evidence of
the widespread interest that is being taken throughout the country
in this urgent question.

By these and other measures within the Defence Departments
themselves for the purpose of ensuring full and adequate co-
operation with industry, we are satisfied that we shall be able to
facilitate production and secure the necessary acceleration of the
Defence programme.