SECRET
Draft Telegram to Governor, Hong Kong
To follow on from existing paragraph 1 of Foreign Office draft reply to Telegrams 249, 250, 266.
I can see absolutely no hope of acceptance here of a
seven year agreement at the level you suggest in your
Telegram 266.
2.
Under your proposal HMG would receive £5M less in the
first five years. In years six and seven it would receive
£1M less than if a contribution of £8.5M were continued for
these years. We should have expected that by 1976 there would
be valid grounds for a contribution of £8.5M being revised up-
wards in the light of generally arising costs since 1971/72.
3. We agree that capital works programme as it stands at
present begins to tail off after 1974/75 but as you know from
my Telegram 43 of 15 January paragraph 7 some £2.5M remains to
be spent in 1976/77 on married quarters alone. For fairly
obvious reasons it is normal for works programmes to appear to
tail off so many years ahead and it would not be realistic to
assume negligible spend in the seventh year. Thus possibility
of stretch of £17M for capital works over seven instead of five
years is not a reasonable assumption for suggesting some ground
exists for a lower contribution than that which we have been
considering.
4. We must remind you that we obtained approval here from
Ministers concerned to an annual contribution of £8.5M for five
years against your assurance that it was a figure you felt able to support and which had some hope of a majority endorsement.
It was not as much as was thought appropriate in many quarters
/and
SEGRET