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could communist interference - see paragraph 4 below). The Urban Council's record of performance in the limited range of functions it undertakes is, with all its long experience, not an impressive one.
4. In the aftermath of communist confrontation the Minister, the Governor and to a considerable extent local opinion accept the need for caution in extending the local authority system. The dangers are that in present circumstances:-
(a) China may react to local government changes (although
we do not think this is likely, particularly if changes are made gradually and piecemeal);
(b) local communists may seek to control or disrupt local
authorities, infiltrating a large number, if not a majority, of elected members (they made an attempt to gain control of the New Territories Advisory Council in the late fifties).
5. It is in these circumstances that the Minister's interest
has turned to improving the consultative committee system which forms an integral part of the machinery of government in Hong Kong (see paragraph 12 (a) of Background Note). Although the Governor has undertaken to initiate a review of this system, Mr. Moreton reported on his return that "the Governor was not keen on this idea as a substitute for local government reform". Indeed it is not, and cannot be, a substitute for changes in local administration; some changes in the latter are overdue and must be made now. The department sees the evolution of an extended system of local administration and of the consultative committee system as two parallel lines of development towards the objectives noted in paragraph 2 above.
6. As indicated in paragraph 13 of the Background Note, the Governor is now formulating proposals for local government reorganisation. They are likely to be modest; in fact it will be surprising if they go so far as the Dickinson Report proposals (paragraph of Backgroună Note). Before going to Hong Kong Lord Shepherd envisaged further talks on this
CONFIDENTIAL
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