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10/11/70.
DEPARTMENT OF TRADE AND INDUSTRY
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SC
9 November 1970
01-222-7877 Ext 2240
J K Blackwell Esq CBE
Senior British Trade Commissioner
British Trade Commission
Hong Kong
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Ken Price has shown me the correspondence about the Hong Kong mase, transit scheme in particular your letters of 16 and 20 October. You may be sure there is no lack of interest in this project either on the part of the companies concerned or in official circles. I think this is amply demonstrated by the attention we have all paid here to Williams and Shephard. We must however keep our feet firmly on the ground.
If the Hong Kong Government are not going to decide before the of 1971 whether or not to go ahead (and in this connection I suspect that Laird's letter of 15 October did not reach you until after you had written to Price) then neither we nor the Japanese are going to be able to make worthwhile progress on the connercial side in the interim. (But see para 6 below).
If it is also true that the Financial Secretary Designate is as unenthusiastic about the scheme as his predecessor (and he is due to come to the DTI shortly, which will give us a chance to form our own opinion) then I think it is certain that the protagansits of the mass transport solution will have to work very hard at converting the financial side to their point of view. This will take time and even if they are ultimately successful the debate will have made the Treasury the more determined to insist on value for money as a condition of approval. A reluctant Treasury in a rich Colony is unlikely to be swayed simply by an attractive offer of finance. Although some thought will undoubtedly be given in a general way to finance in the course of the study, it is only when the conjunction of price and terms can be evaluated ie, at the tender stage when a pre-emptive bid would be a move to be
considered.
W
Against this background I do not see how in the words of your letter of 16 October, "progress can only be made on a government to government basis". It would be as impracticable for us at the moment to say to the Hong Kong Government "Tell us what terms you require and we will see if we can offer them" as it would be to offer to match whatever the Japanese offer let alone to cust. them before we knew the terms they were prepared to offer and in what respects the Government wished to see them improved. (But this is why we are interested in the Kai Tak arrangements,)
C
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