SECRET
I cannot in fact recollect that we ever
specifically agreed at the meeting to go back
to the Governor asking him to increase his offer
of £8 million, although we did agree to go back
to him with certain queries in order to clarify
the position. It was also agreed that the MOD
would prepare the draft of a letter to the
Governor and this they have now sent us. Their
draft makes no bones about asking the Governor
to increase his offer (despite the fact that
that offer was based on a Garrison of 7 and not
6 major Army units). It seems therefore that
the first question to be decided is whether we
prepared to do this; or whether we are going to
stand firm on the £8 million already offered by
the Governor.
4: In their draft letter the MOD are proposing
that we should ask the Governor not only to
increase his initial offer of £8 million but in
addition to agree to annual increases in the
contribution over the period of the agreement
to cover pay and price increases.
I do not see
how we can agree to put both propositions to the
Governor having regard to the facts that:-
(i) His offer of £8 million represents
6020
a 6 increase on the current annual
contribution of £5 million and
(ii) it was based on a Garrison of 73
major Army units.
But I think that the Ministry of Defence and the
Treasury have a point when they argue that
general cost increases over the period of the
agreement causes a fixed rate of contribution to
decrease in value to a noticeable degree od.....
over the period....
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