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CONFIDENTIAL
4.
civilians who have slightly different increases.
b.
Gurkha Pay + 30%
This increase consists of real improvement and exchange rate adjustment.
C. LEP/LEC
15% plus
I propose that the Command Secretary should make the detailed re-assessment. Figures we have here indicate a 25% increase for LEP of which only about 5% relates to exchange rates and 15% for LEC most of which is attributable to exchange rates. The ratio of LEP: LEC is about 1:32.
d. LOA for a above. + 60%
Again I propose we ignore FSA for UK based civilians. Just over half the increase is attributable to real changes since 1971 when LOA was last reviewed (the most significant increase being in servants - something not to be mentioned to HK officials!) and the balance to exchange rates. The loss of purchasing power of basic pay is reflected in the LOA calculation.
Gurkha LOA + 30%
as b above.
T
+20%
f. Equipment ex UK. + 20%
This is not related to movement in the UK price of manufac- tured goods, but is our first assessment of likely movement in the prices of Army equipment. The serial also includes air trooping for which no updated prices are yet available. Hope- fully any increase will be covered by the blanket 20% increase.
§. Equipment from elsewhere, Works & Hirings
Price changes for these items are based on Hong Kong indices, but to arrive at an approximate total garrison cost I have assumed a 20% increase, of which would arise from changing exchange rates.
The effect of applying the above indices is summarised in the attached table at Annex A. The approximate new total comes to £41m. or an increase of just below 25%. Because of the uncertainties surrounding these figures, it would be safer to quote a bracket of £40m. £42m. During the detailed up-pricing exercise we will need to sort out the apparent inconsistencies in exchange rates which have come to light.
+
5. As to conversion to outturn prices, we have the £5 per week limit on pay and LOA rates should be firm for some time following the recent review, but before offering any possible forecast I think we should wait until our own Estimates for 1976/7 have been revalued
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CONFIDENTIAL