SECRET
Treasury Chambers
Great George Street, London S.W.I
Telephone: 01-930 1234, ext. REGISTRY No. $1
555
Our reference: 2DM 415/01
Your reference:
A W Gaminara Esq
Hong Kong Department
HICK 10/9
Foreign and Commonwealth Office
London SW 1
Dear Gaminara,
HONG KONG DEFENCE CONTRIBUTION
1 January 1971
LAST
RFF
108 One
NEA
REF.
In your letter of 31 December to Thorp you asked for my comments your draft telegram to the Governor of Hong Kong.
2 To take your main point (your paragraphs 2i and ii) I fear that you cannot say - "the revised figure has Treasury approval in principle". You reflect our position correctly in your letter but we are not yet at the point of saying whether we do approve the expanded building programme (whether or not we get a good contribution from Hong Kong might well have a bearing on this). the phrase "Treasury approval in principle" could well be misleading and meaningless.
No He 13
Marely, Conveyed agreement
wt our
draft:
In any event
I understand Thorp has already spoken to you about this and suggested that you put it to the Governor that the £27m is quoted on the same basis as was the £19m in the telegram of 10 April - ie that it is a current MOD planning figure rather than a firm figure. The fact is that even if it had "Treasury approval" or at least Treasury cognisance of its inclusion in Defence Long Term Costings, it is still open to MOD to rephase the programme within Defence Budget ceilings or to defer or cancel it. For example the £19m programme (which may well contain elements not specifically agreed by the Treasury in the time available I have not been able to check on this) was included in the 1970 Defence Long Term Costing but, as paragraph 38 of the Supplementary Statement on Defence Policy (Cmnd 4521) shows, savings of £132m will need to be found on the Long Term Costings total in the year 1974/75: thus reductions could be made on any of the Defence programmes currently planned for that year. So we agree with Thorp's approach here, and Smith, to whom I have spoken, is very much of the same mind also. I observe incidentally that there is a suitable lead in to mention of the married quarters expansion in paragraph 3 i of the earlier telegram.
4 I am unhappy with some of the wording of the opening paragraph of the draft. It is surely the convention that differences within HMG should not be revealed too explicitly to third parties. Thus I would prefer not to see MOD and Treasury itemised here. Also I suggest the phrase "for the following reasons" is inappropriate in the next sentence. The rest of the telegram deals with just one "reason". you know we have several other reasons why we consider Hong Kong should be asked to pay substantially more.
5
As
In view of the points which you make about the timescale we cannot object to the procedure you recommend in paragraph 2 iv of your
SECRET
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