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XCS(71)3
Local costs of Army (plus heli- copters) and of such RAF/RN costs as can be directly related to the defence of Hong Kong (estimated at 50% of total RAFRN costs) over 5 years including
£ million
recurrent maintenance and capital costs (see paragraph 15)
82.40
50% of the above (see paragraph 16)
41.20
Annual Contribution related to the above
8.24
Add 3% per annum for increases
in recurrent costs (other than maintenance) over the period (see paragraph 17(b))
0.34
£ 8.58
(Say)
£ 8.50
1
It is suggested that the figure of £8. 58 might be rounded down to £8. 5 million. If such a figure were acceptable the intention would be to make a cash contri- bution of £6.3 million annually, and make a contribution in kind by the provision of maintenance services at an estimated cost of £2. 2 million, based on the current maintenance contract, which expires in September 1973.
19
The division of RAF/RN costs by a factor of two is not intended to imply that half the costs of each service are included. In fact, only a small part of RAF activities can be said to be immediately related to Hong Kong defence, while a larger part of RN activities are co-related. It has, however, been very difficult to arrive at a decision between these costs, and it must be acknowledged that the factor of two used to arrive at a figure can only be described as a rough guess,
20
The result of such an offer if made and accepted would be to increase the annual defence contribution from £5 to £8 million which is a substantial increase in money terms. It is however no more than proport- ionate to the increase in Hong Kong's receipts of public revenues during the period (allowance being made for increases in taxation) and as a proportion of the total cost of the garrison to HMG is probably bwer than at present, It is thought that these points may be useful in making a public presentation of whatever decision is finally made.
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