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(a) Accept the offer of the Unofficial Members (£7
million a year over a period of 7 years).
5. It was understood that the Foreign and Commonwealth
Secretary would almost certainly be recommended to support
the Governor's proposals. The Treasury and MOD would like
us however to exclude specific recommendations from the paper
for DOP.
6. As expected, the Treasury welcomed Mr Royle's idea of
reviewing the agreement after 5 years. We already have a
condition dealing with any increase or decrease in the costs
of capital works, and under the latest proposals the Hong
Kong Government would be entirely responsible for maintenance
and minor works, no matter what the cost; it was therefore
suggested that there would be no need to include a condition
to the effect that if inflation in Hong Kong were to go beyond
On the other 4 per cent the arrangements should be reviewed.
hand, it was agreed that there should be a clause covering
increases in salaries and allowances. The MOD will work
out a formula to meet this point.
7.
We undertook to clear 2 outstanding points with the
Governor
(a)
From what the Governor said last week his idea
seemed to be that the Hong Kong Government should
be completely responsible for the capital works programme totalling £19.6 million at April 1970
prices and that any increase in costs of that
programe up to 50 per cent would also be borne by that Government (the Governor thought that
4.
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/prices