i
SECRET
value to Hong Kong of land released by the concentration of the 'reduced' garrison in a smaller number of sites.
UK EYES A
from the present to the "reduced" garrison.
Costs arising on
this account outside the £41M average figure amount to about
2.7
£/ M, in 1976/77, comprising the gross extra costs of retaining a second infantry battalion until accommodation for the fourth
Gurkha battalion can be provided in Hong Kong (and for the UK battalion itself in the UK) and the extra cost of the present
over the proposed new command structure, which cannot be fully
introduced until trained Gurkha signallers are available in
early 1977. Costs of transitional works services required
To scele to accommodate/the different mix and ueployment of the reduceú garrison and included within the £41 average figure amount to
some £8.5M in gross terms but were not referred to specifically
Anothe point not raised
by the Hong Kong representatives./during the discussions the
The Hong Kong contribution
12. The Hong representatives were not authorised to discuss
either the size of the Hong Kong contribution or the possibility referred to during the meeting between the Governor and DUS(P)
in London on 18 December, of reducing the buruen of the
increased contribution on the Hong Kong economy in the early
years of the new Agreement by graduating the annual payments
so as to give an average contribution of 75% over a period.
Inflation
13.
Broad agreement was reached on a mechanism of calculating
the additions to be made to the Hong Kong contribution on accoun
of inflation (see paragraph 6(c)). Annex G sets out the
proposed arrangements.
B. Other Liscussions.
14. The discussions in formal session may be held to have
achieved the first of the two main objectives of the visit
(paragraph 1), namely the provision of detailed costing and
other explanatory material to Hong Kong. But they diu little
-7-
A
$
}