4. This may not be enough, and there is some risk that the
It is difficult British Group will be beaten in this round.
Lazards
to see what the Government can do in this situation. have floated the suggestion that the British Government should take over the risk of cost cecalation above an agreed figure,
I do not and so enable the Group to quote a ceiling price. think this is a starter. The very generous credit terms offered already imply a high Government subsidy to our exportera;
and we insurance against cost escalation is bad in principle; should be doing it just at the time when we have persuaded the French to nake a significant move towards dismantling their scheme.
5. The time has probably come for the political link with the Governor to be exploited. I suggest that, after the talks with the Britich Group have been completed this weekend and we have their assessment of their chances, you telephone the Governor to take up the suggestion for a talk made in his personal letter to you of 9 August. This would be justified anyway, since the
You will understanding we had before seems no longer to apply. remember that the suggestion wae that, if the British Group did not make a sufficiently competitive bid, the package would be broken up and put out to tender. However, this way out no longer secma possible because the Hong Kong Government is now publicly committed to the package approach.
or
6. In speaking to the Governor, you could ask him how he now sCCS the st Auction. Depending on his reaction, you could either invite him to come down from Scotland to see you next week, take up his alternative suggestion and call in Mr Haddon-Cave (the Financial Secretary who is in charge of the project) while he is in London next week,
7. If you do not manage to see the Governor yourself, I think that Lord Limerick should try to see him during the few days, 12-24 September, when he is in London.
FW Glaves-Smith
OFF
V/S R 407 Ext 3649
29 August 1973
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