REED IN
REGISTRY No.51FROM R J SMITH
19A 1971
பட்டுக 1ப1116த
CONFIDENTIAL
DSO 1112/30
T J Brack Esq
Treasury
Great George Street
SW1
Dear Porada.
PA
DEPARTMENT OF THE ENVIRONMENT
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LAMBETH GRIDGE HOUSE, LONDON S.E.!
Telephone: 01-735 7611
EXT 2188
LAST
on defence contribution ALG
file
18 August 1971
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18
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(139) (141) +146
DEFENCE AGREEMENT HONG KONG
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I have mentioned to you in the past the few urgent works services which we have had to get on with in Hong Kong and we managed to devise a form of works which avoided our agreement to pay for them from UK funds being treated as prejudicial to the new Defence Agreement.
We are now 42 months into the first year of the new Agreement which has not
In our considerations yet been made and it is anybody's guess when it will be made. we are, of course, assuming that its provisions will be retrospective to 1 April 1971. Though cash payments can be made with retrospective effect this is obviously not so with execution of works services.
There is now a build up of small services totalling some £45,000 which have not been fed into the PWD because we have not been able to specify them as urgent. Worse, several services of Part 1 dimensions, which have been with PWD some time in planning will very soon be ready for contract letting and I do not see the PWD letting the contracts unless they get from us some undertakings about payment in sterling in the absence of a Defence Agreement etc.
Worst of all I am now told by our people in Hong Kong that as a result of their attempts to get the PWD to start recruiting staff to cope with the increasing works programme and particularly the programme for 850 married quarters, that there is quite a likelihood that the HK Government will refuse to sanction recruitment unless some special financial guarantee is forthcoming from UK.
It is anybody's guess whether this is an arm twisting exercise by them in relation to the Agreement as a whole. But whether it is or not it is going to put HMG into a very embarrassing position when you consider the terms that we are trying to write into the Agreement about the capital works programme ie HMG loses if £m17 is not spent in 5 years if HMG is at fault.
As you know, MOD and we have said all along that the justification for the capital works programme is simply that it is to meet military requirements at military standards appropriate to Hong Kong. There is really no other justification and whether the Hong Kong pays for some or all of it is not very relevant but if we state or imply to them that it is, this will inevitably destroy their belief that our capital works demands do amount to our necessary military requirement.
I believe that we can (and should) now do no other than simply say to the Hong Kong Government and PWD that HMG will pay for present and future capital works
I hope you can agree to this unless the new Defence Agreement provides otherwise.
fairly quickly as I feel certain that otherwise HMG is going to be the loser.
I am sending a copy of this to Winnard, Thorp and Gaminara.
Yours smerily
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