SECRET
strength these costs could be upwards of £11 million a
year, and I regard this as an unrealistic figure.
I consider £8-9 million to be the maximum the
Governor is likely to be able to persuade his unofficials
to accept. This would represent an increase of 60-80%
in the contribution. It would lift expenditure on
Defence and Internal Security from about £20 million p.a.
to £23-24 million (§.e. from about 15% of the budget to
17-18%). A contribution of this order happens to
equate with the current estimate of "local costs" of that
part of the garrison designated by the MOD as having an
internal security role. In spite of our dislike of
the designation formula (and its unreality), this seems
to be the only "rational" basis that can be devised for
calculating a contribution of the order likely to be
negotiable.
But at this stage I am very doubtful about putting
any proposition to the Governor. We can hardly do so
without appearing to take up a negotiating position from
the start- and this could build up undesirable resistance
at official level before these preliminary exchanges
get off the ground. My strong inclination therefore is
to leave the Governor to put forward his own ideas about
"rationalising" the basis of the contribution. His lack
of the necessary costs data will almost certainly detract
from the value of his first proposals; but equally
it could provide us with val id and reasonable grounds for
questioning them and offering our own counter-proposals.
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