8.
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SECRET UK EYES A
A
Agreement is likely to average out at about £8.5M. In 1971 this
represented about 30% of the cost of the present garrison (6 teeth arm
units), which was about £28 at prices then current. It is less than
20% of the cost of the same garrison now, (about £50M at September 1974
(4) prices). The Governor had stated his view that in the successor to
the present Agreement the largest contribution to the cost of the
"reduced" garrison that could be negotiated with the Executive and
Legislative Councils would be £17M at September 1974 prices. This
represented a doubling in cash terms (though not in real terms) of the
present average annual contribution of about £8.5M and about half the
cost (about £34M) of the "reduced" garrison expressed at the LTC 1974
(ie September 1973) price level. But it was little more than 40% of the
cost of the "reduced" garrison expressed at September 1974 prices
(£41M). On the other hand the Governor has not disputed the proposal
that the annual sun eventually agreed as the Hong Kong contribution at
September 1974 prices should be increased during the period of the
successor Agreement to take account of movements in the level of pay and
prices.
There was therefore a gap of some £14M between the estimated cost of the
garrison on the one hand (£41M) and the sum of the UK contribution implied by
UK Ministers decision (£10M) and the Hong Kong contribution offered by the
Governor (£17M) on the other. This could be reduced only by one or a
combination of the following means:
(a) trimming the estimated cost of the "reduced" garrison;
(b) removing from the costing any elements that might be considered to
serve UK rather than Hong Kong interests;
(c)
cost;
a further cut in the size of the garrison and consequently in its
(4) Hong Kong 853 of 23 Aug 74
4
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UK EYESSECRET
HK EYES A
UK