CONFIDENTIAL
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IN CONFIDENCE
Office of Information and the External bervices of the BBC: This PESC limit, standing now at £33.8 million, must be accepted as non-expandable apart from rising costs; consequently, the Whitehall Wing contribution to the Council cannot be increased except at the expense of the other Information agencies. The ODA contribution is found from within the FESC aid limit, which benefits from certain agreed annual increases, but these increases have to absorb rising costs. On the other hand, because of the much larger size of the limit and the nature of aid expenditure, there is some room within the limit for increasing the ODA contribution. Since, however, the contributions have been fixed in the ratio mentioned above, it has hitherto been impossible to increase the ODA contribution because a matching increase in the Whitehall contribution could not simultaneously also be made. The ratio was fixed in 1965 to correspond with what was then assessed to be the proportions of the various kinds of Council work which could be regarded as "informational" and "aid" in character. A recent analysis of expenditure under the Council's mixed budget has indicated that if the calculations on which the ratio was fixed in 1965 were to be repeated today, a different ratio, namely 65:35 per cent would be reached; that is to say that about 2 million contributed by the Whitehall Wing in respect of the "informational" interest in the Council's work is in fact going to pay for the "aid" interest for which the ODA should contribute. This situation has been put to the Treasury, with the proposal that it should be rectified by keeping the Whitehall Wing contribution at its present level but adjusting the ODA contribution by an increase to correspond with the present day "aid" element in the present pattern of the Council's work, thereby increasing the mixed budget of the Council as a whole without increasing either PESC expenditure limit. It remains to be seen whether and to what extent the Treasury will accept this proposal. If they were to accept the proposal in full, this would enable the major proposals at paragraph 2(a) and (b) to be funded without difficulty and leave over perhaps £400,000 for further expansion. It cannot yet be assumed that they will go so far; they might accept it only to the extent of £4 million, permitting (a) and (b) to be carried out but nothing else.
4. If the Treasury accept the proposal in full and thus enable us to deploy up to a further £400,000, we should need to draw up an order of priority of candidates for this sum from among the suggestions made by Ambassadors/High Commissioners etc. doing so however the following points should be borne in mind:
In
CONFIDENTIAL
/(a)