Quote from Smedley:
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Another thing that always troubled me was the absence of The Home Fleet, with Battleships, Cruisers, and Desrtroyers covering the operation, and hammering the Germans at the same time.
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From what I've gathered I think the main reason the Home Fleet were kept away from the Channel during the Dunkirk period was the fact the channel is not conducive to large fleet operations. In the relative narrow confines of the channel, with little room to manoeuvre the fleet would have provided an ideal target. With the main threat coming not from the air (although still a significant threat) but from the rapid motor torpedo E-boats. I think there was a very real worry that the fleet could have easily been lost.