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12
Reference..
Sir L, Monson.
Mr
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Copies to: Mr Wilford
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HONG KONG DEFENCE CONTRIBUTION
1.
You will wish to know the latest state of play in this matter following receipt of the Governor's telegram
49.
no.
2. I have discussed the situation with Messrs Thorpe (MOD), Smith (DOE), and Brack (Treasury), whose reactions have been as follows:
3.
Mr Thorpe is hoping to clear the matter at official level some time this afternoon. He thinks that MOD will be ready to go along with the Governor's offer to try and negotiate a contribution of £81⁄2 m.
Mr Brack. The Treasury's attitude at the official level is not to object to the Governor's offer, provided that the other departments concerned are prepared to fall in with it.
Mr Smith is more concerned with the details of the matter than with the policy involved.
But DOE, too, for what it is worth, would likewise probably fall in with the Governor's offer.
In conveying this information to me over the telephone each of the persons concerned mentioned certain points which they would wish to raise. These points are as follows:
(1) They are not keen on the Governor's suggestion (para- graph 5 of his telegram) of showing a notional figure of £3 million for capital works. They will probably agree to a figure of £2 million for the purpose. To accept the £3 million figure would mean that only £3.3 million would be allocated for current expenditure. They consider that this figure would be too low for presentational purposes.
(2) They would like the Governor to be asked to confirm that his paragraph 3 includes minor works as well as
I am quite sure that it does, but we will maintenance.
need to check.
(3) What happens if maintenance and minor works costs are more than the £2.2 million allowed for? Does Hong Kong bear the extra costs? I said that if the terms of the existing agreement were anything to go by, they would do so. Although, under the terms of that agreement a notional figure of £475,000 per annum was allowed for maintenance purposes, Hong Kong had, in fact, been
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