SECRET
inform the Steering Committee that such a review is being put in hand now. Any submission to Ministers should explain this review and the reasons why it has not been possible to provide answers to the questions asked by OPD.
5. The Governor has also recommended that consultations with Executive Council for an increased defence contribution in 1976 and thereafter should not be begun until May 1975, by which time the Hong Kong budget for 1975 will be completed. It may not be possible to wait so long. But the FCO recommend that the first consultations with Executive Council should be delayed until as late as is seen to be politically possible after the UK elections. The Hong Kong Executive Council will already have to be brought to agree to substantial extra taxes.in 1975, in order to pay for the vital social programme which is backed by HMG. If they are confronted at the same time with demands for substantially more money for Defence in subsequent years, both negotiations will become much more difficult.
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