B
Sir L Monson
Miss Deas
CONFIDENTIAL
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EQUIPMENT FOR TECHNICAL INSTITUTES IN HONG KONG
Mr. Royle proposes to have a meeting with Mr. Wood to discuss the latter's letter of 4 January.
1.
2. The £400,000 for the two universities is part of a CD & W grant for education. The £400,000 was originally made available in 1959 but for some reason of which I am not aware the grat was not taken up at the time. The proposal was revived towards the end of 1969 and it is expected that the grant will be utilised during the next 2 years. I suspect that this old grant was picked up by the ODA a year ago when the proposals for winding up the CD & W were being considered. As far as I can discover the £50,000 for the Hong Kong Technical College is in much the same category. I understand that the proposal for making this grant was first put forward in 1965 but that the grant itself was not made until March 1970; it was for an extension of the College.
3. As regards paragraph 3 of Mr Wood's letter, the only authoritative figure we have for income per head is about US$600 for the year 1968 (this figure was included in a reply given by Sir J Cowperthwaite to a question in the Legislative Council). However, real wages have been increasing at the rate of 5.7 per cent per annum in recent years and I think therefore that the estimate of "more than US$700" now is probably pretty near the mark.
4.
I suggest, with the greatest respect, that in considering Mr. Royle's request Mr. Wood and the ODA have dismissed far too lightly the fact that the proposal came in the first place from Unofficial Members of the Executive and Legislative Councils at a meeting with Mr. Royle. They explained that the Japanese were not donating their equipment simply because they wanted to help Hong Kong. It was a clear example of the use of aid to further national interests. In the circumstances, it was very much in Britain's interests to counter this Japanese move.
5. Much the same considerations applied in the case of the Hong Kong request for a loan from HMG for the extension of the airport. The ODM then argued that they had not got the money, which should in any case come from the Board of Trade. The BOT had no funds and, in the event, the Japanese got the contract for the extension.
6.
Even on straightforward financial grounds there is a strong case for disputing the argument in paragraph 3 of Mr. Wood's letter. We have recently received the Hong Kong Government's Annual 5-Year Forecast of Revenue and Expenditure covering the
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CONFIDENTIAL