(a) Capital Works
You have suggested earmarking a maximum of £2 million p.a.
for non-recurrent capital works which would remain the property
of the Hong Kong Government and would be selected from works which
are agreed by them to be of potential value to Hong Kong if no
longer needed for use by the Services. Our understanding of
this is that within an annual contribution of £8 million there
would be a varying amount of up to £2 million annually for capital
works of that description. Depending on what is regarded as of
potential value to the Colony, it would seem that the amount
could be appreciably short of £2 million in some years, but we
assume that this would not affect the overall amount of the
contribution and that, as in the case of the existing agreement,
there could, by mutual consent, be virement between the capital
and recurrent elements of the contribution.
confirm that this is your intention.
(b) Minor Works and Maintenance
4.
Perhaps you would
The existing arrangement whereby the Colony is physically
and financially responsible for a proportion of the minor works
and maintenance it carries out on behalf of the Services has
worked sati sfactorily and is a system which we should all
presumably be happy to continue. Is this your intention? And are we right
that, as under thepresent memora, "I am figure of
of moerstanding, the cost would be incluated in your The fficulty about a fixed annual contribution for five years
period.
is that its value would inevitably decrease in real terms over the
This is an objection to the present agreement. It would be
more acceptable here if we could fat any rate have a provision for
annual adjustments to cover pay and price increases so as to maintain
with possibly a progressive increase of the four portion of the expenditure borne by the Calmy.) the real value of the contribution, I note that this was a 6 coun
suggestion which was mooted in the course of the re gotiations over
and price incress late
price
provision
SECRET
/the existing