UUNFLUENTINE
to outturn prices. Hong Kong's basic need at the moment is for figures which will be comparable with their own estimates. Subse- quent price changes arising solely from changing Sterling/Hong Kong dollar parities should not affect the dollar value of these estimates.
6. I propose to send most of the above detailed information to the Command Secretary and will invite him to report back on his assessment of garrison costs at Sept 75 prices which he will pre- sumably make in conjunction with Hong Kong officials.
7. At Annex B I attach a draft reply to paras 1-3 of tel no 797. This has not been cleared with copy addressees apart from Head of F1 (Air).
8.
As regard HMS Mermaid, the annual saving from adopting the 5 patrol craft option as compared with the frigate would be £0.8m. This assumes no financial provision for the eventual replacement of patrol craft. Unless patrol craft were treated as a wasting asset or their life could be extended until the mid-80s I would be neces- sary to make some provision in 1980/81 or before for their replace- ment. Expenditure would thus arise during the new agreement which is shortly to be negotiated.
22 Aug 75
Dily. four
D G JONES DS1
MB ext 7700
3
CONFIDENTIAL