}
CONFIDENTIAL
AMMEX A
EXPLANATION OF CHANGRS IN GARRISON COSTS
1. The estimated garrison cost of $33.3m was arrived at by
the cost of the various reductions in force
subtracting
levels from the original estimate of £1m which was prepared
for the January 1975 talks. While the maximum possible account
was taken of consequential changes in levels of support, only
rough estimates were available at the time. However, the
revision of costs, as well as moving from September 74 to
September 75 prices, takes account of the much more detailed
planning which has since taken place.
2. The great majority of the increase in costs is due to
inflation and the falling value of sterling; the main increases
being:
a.
p.
The Services pay rise effective from 1 April 1975 (22%).
The increase in Local Overseas Allowance for UK
Servicemen effective from 1 July 1975. This was the first
review since 1971 and takes account of changes in prices
and patterns of expenditure in the UK and Hong Kong since
that time. The revised allowance also reflects the
increase in .LOA required as a result of the change in
the Forces Fixed Rates of exchange made on 1 July 75.
The increase adds some 60% to the LOA bill.
-1-.
CONFIDENTIAL