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At the end of the First World War Britain had the largest navy in the world, a brand new Royal Air Force (RAF) and an army that had enormously extended its technical, tactical and operational adroitness in warfare. Sir Eric Geddes was appointed to chair the Committee on National Expenditure. It examined all government departments, but the biggest spenders of the period - the armed forces - naturally came under the closest scrutiny.
With peace seemingly assured, in 1919 it was decided that for planning purposes the armed forces should abide by the ten-year rule and not plan on fighting a major war for ten years. Cuts in expenditure had to be made if Britain's external economic relations were to return to their pre-war range and extent, and it was deemed highly unlikely that there would be a serious threat to peace within ten years. The concept was also supposed to allow equipment programmes to be smoothed out over the medium-term, with an aim of having the armed forces ready in ten years.
Winston Churchill made the rule permanent in 1928, with the result that each year the ten-year clock would be reset back to year one; the armed forces would never get any closer to the ten-year target, so therefore there was no need to spend money on modernising them. The Treasury was satisfied - but the armed forces were deeply worried.
As it required the greatest industrial infrastructure, the ten-year rule hit the Royal Navy particularly hard. With orders for warships at a low level it had an impact on a wide variety of industries - shipbuilding, steel and engineering, as well as specialised manufacturers of guns, ammunition and naval equipment. The political decision to pursue a policy of disarmament by international agreement only made the problems faced by the armed forces, and especially the Navy, even worse.
The goal of international disarmament was preserved in Woodrow Wilson's 14 points and implicit within the League of Nations framework. The first act of international disarmament was the Washington Naval Conference of 1921-1922. The conference agreed parity between the British and American navies, setting a lower quota of battleships for the Japanese, French and Italian navies. The conference also agreed a ten-year building holiday for major warships and set down the maximum size of battleships, aircraft carriers and cruisers as well as the size of the gun armament. The conference was supposed to be the first of a series of treaties limiting not just navies, but land and air forces too. However, the subsequent conferences never took place so Britain, as the world's predominant naval power, suffered more than a land power such as France.
In 1927 a further conference in Geneva failed, the difficulty being agreement on the number and size of cruisers needed by Britain for trade defence. In 1930 the London Naval Conference extended the terms of the Washington conference to 1936 and Britain agreed to reduce the number of cruisers to 50 - against the wishes of the Admiralty. Finally, the British took the lead in the wide-ranging Geneva Disarmament Conference (1932-1934) that sought land, sea and air reductions. It too was a failure, and its collapse was a spur to Britain's rearmament.
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