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C. The receipts accruing from civilian use of the BMH are now estimated at £0.2m pa.
The earlier figure of £0.4m was an arbitrary first assessment.
5. The majority of the cost increases are due to inflation and the falling value of sterling. In detail these are:
a.
The Services pay rise effective from 1 April 1975 (22%) For Hong Kong this has worked out rather higher than the global average (18%).
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 in 1 July 1975. The increase adds some 60% to the JOA bill.
Ca
Similar but smaller increases in pay and allowances for Gurkhas and locally recruited Chinese, both uniformed and civilian. (15% - 20%)
d. An increase in UK equipment costs of about 20% and air charter costs by almost 40%.
e. The falling value of sterling against the Hong Kong dollar. The average September 75 market rate was 10.55 dollars to the £ as compared with about 11.8 in October 74 when the earlier estimates were drawn up. This is a reduction of over 10%.
6. It is inevitable that there will be minor variations in strength as plans are finalised. These should, however, have very little effect on overall costs. However, there are a number of uncertainties which might have a bearing on total costs. Apart from the naval presence (frigate refit, costs of new patrol craft) which is covered in paragraphs 4a and 4b above these are:
7.
Air Trooping. Although air trooping arrangements are not yet finalised it is unlikely that the cost estimate will be varied by the oventual solution.
Works Services. Because of doubts about whether the works maintenance programme can be accommodated within a cost ceiling of £2m, it may be necessary to control or defer the capital works programme to keep within the agreed total works ceiling of £5m (now revalued to £53m liK £ 59m).
The charges from the rough update to Sept 75 prices are relatively minor, Those worth mentioning are:
3.
Pay of UK Uniformed Personnel. The revised figures are assessed on
a more detailed basis than the global all ranks average used earlier.
b. Air Trooping costs have increased by more than the arbitrary 20% assumed for the rough update of inflator category 6.
C.
Detailed re-assessment has led to the transfer of some items of expenditure (eg some movement and freight costs) from inflater category 7 to category 6.
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