E
SECRET
- 7 -
P DO TA 14
replacement could be made available for HMS Chichester, whether the refit estimate of £2.4m. for IIMS Mermaid could be reduced and whether the refit could not be carried out in Hong Kong.
HONG KONG'S BUDGETARY SITUATION
15.
It was noted that Mr. Hansford would meet the Financial Secretary separately to discuss the budgetary situation.
16.
Though graduated percentage contributions were discussed in general terms, Mr. Wiggham reiterated that the Ilong Kong Government's contribution would be determined by available funds, and referred to the Governor's personal view, made during his visit to London in December 1974, that 217m. per annum was the maximum that the Hong Kong Government could bear. This figure represented a doubling in cash terms of the notional 1974/5 contribution of £8m. A graduation approach may help Hong Kong's budgetary situation, though it would depend on the amount payable not only in the first year but in succeeding years: the Government's recent financial forecast had shown difficiencies extending beyond 1976/7.
17.
Mr. Davies thought that 5 years was likely to be the acceptable period for the agreement. Mr. Stuart remarked that there might be a political advantage in negotiating a longer agreement.
THE "INFLATOR"
18.
The Defence Review Team agreed a redraft of the Hong Kong Government's "proposed formula for escalation clause ALTERNATIVE GARRISON
19,
11
Mr. Bryars agreed that a number of items had been identified and set aside for more detailed study in an attempt to reduce the overall cost still further; but he felt that the effect such items could have would only be marginal, and the "gap" would still remain. A paper would be prepared for Ministers examining the three points of the Garrison. On the first, the UK contribution, he said he would be able, as a result of the discussions, to introduce one or two special considerations in Hong Kong's favour Garrison's transitional costs and income tax. On the second, Hong Kong's contribution, he hoped to be able to make use of information provided by the Financial Secretary, including his reaction to the graduation approach. The third corner of the "triangle", however, the size of the garrison, seemed at this stage to be a fixed point because of professional advice on the minimum safe size. 5 2/3 units was the level which CBF and HE had agreed, and it had been endorsed by the Chiefs of Staff. Anything less, therefore, could not be ‹fficially recommended as an option. However, rough costings could be applied to certain units, bearing in mind that the reduction in costs are primarily dependent on teeth arm units with their appropriate share of support elements. For example, of the annual naval costs of £4m., about £21⁄2m. is for the frigate, and about 1an. for the three patrol craft.
C SECRET
SECRET 高度機密 20./...