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XCS(71)12
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The principal considerations which led Ministers to this decision are set out in the attached papers. They are summarised below for convenience,
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Defence costs in Hong Kong
estimated at £24 million
next year, excluding capital expenditure are rising for HM Government. (This is partly because, as a result of the rundown in Singapore, it is now necessary to station here one additional major unit, plus a small number of supporting officers and men, previously held in Singapore primarily as a first reinforcement for Hong Kong). The Colony should help meet the add- itional costs. It could reasonably be expected to contribute at least as great a proportion of the overall garrison costs in 1971/72 as was agreed in respect of costs for 1967/68. There was, in Ministers' view, no evidence to show that this would in any way be an unfair burden. It would not involve paying a larger proportion of the Colony's revenue than has previously been paid; and there could be no justification for paying proportionately less.
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These considerations had at one time led Ministers to hope for a contribution substantially larger than £8,5 million a year. Knowing however of the heavy future financial commitments Hong Kong faces they were last February willing to regard that amount annually over the next five years as acceptable. But at the same time they made clear their opinion that it was the very minimum to which they could reasonably agree.
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Ministers however recognised the seriousness of the presentational and political problems which an increase from £5 million to £8.5 million a year might cause, as revealed by the representations made to them. For this reason they are now prepared, as indicated above, to accept an arrangement which would produce an average annual contribution of £8 million over a period of five years, in an endeavour to go some way towards meeting the views of Unofficial Members.
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The arrangement would be subject to the following conditions:
(a) review at any time
(i)
(ii)
if the costs of capital works at April 1970 prices were to go up or down by 50% or more; or
if there were an increase or decrease in the size of the garrison by more than one major Army unit or the equiv- alent; or
(iii) if the economy of Hong Kong were to
suffer such a serious adverse change that the continued payment of a con- tribution at this level could be shewn to be an unreasonable burden on the Colony's finances;
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