IMMEDIATE
GPS 850
SECRET
KOD N
CYPHER/CAT A
2 1 NOV 1975
380
FM F C 0 201415Z
SECRET
11017122
368 ૧૪૬
TO IMMEDIATE HONG KONG TELNO 896 OF 20 NOVEMBER
YOUR TELNO 1144: DEFENCE COSTS.
1. YOUR PARA 2A. JONES LEFT YOUR SIDE A REVISED BREAKDOWN OF
COSTS AND THE RESULTS OF OUR EXAMINATION OF POSSIBLE FURTHER
ECONOMIES. SEE ALSO HQ BF'S LETTER OF 4 NOVEMBER. SINCE THEN COSTS
HAVE BEEN REDUCED TO HK DOLLARS 454 MILLION AFTER REASSESSING THE
COSTS OF NAVY PERSONNEL AND ARMY LEP. WE CANNOT YET SAY WHAT IS
NECESSARY TO REDUCE TO HK DOLLARS 450 MILLION, BUT THIS SHOULD BE
ACHIEVED BY NORMAL STAFF INSPECTIONS AND FINANCIAL SCUTINY COUPLED
WITH PROBABLE SAVINGS FROM THE HEADQUARTERS RELOCATION. HONG
KUNG'S FINANCIAL CONTRIBUTION WILL BE BASED ON THE ASSUMED FIGURE
OF HK DOLLARS 450 MILLION AND EVERY EFFORT WILL BE MADE TO GET
DOWN TO THIS FIGURE SOON. MOD ASSUME THAT YOU WILL BE CONTENT WITH
THIS AND THAT NO FURTHER JOINT WORK WILL BE NECESSARY. YOU WILL
OF COURSE BE KEPT CLOSELY IN TOUCH WITH HQBF'S CONTINUING
INTERNAL SEARCH FOR ECONOMIES AND INFORMED IF COSTS ARE BROUGHT
BELOW HK DOLLARS 450 MILLION.
2. YOUR PARA 2B. MOD AGREE THAT SUCH AN EXERCISE WOULD BE OF VALUE.
THE NEW MOU MAKES PROVISION FOR THIS. FOR PRESENTATIONAL REASONS, HOWEVER, A REVIEW SHOULD ACHIEVE WORTHWHILE RESULTS AND MOD
DO NOT BELIEVE THIS WOULD BE POSSIBLE IN THE TIMESCALE YOU SUGGEST.
REDUCING COSTS TO HK DOLLARS 450MILLION IS LIKELY TO LEAVE LITTLE
SCOPE FOR SIGNIFICANT FURTHER SAVING, ALTHOUGH MOD WILL OF COURSE LOOK CAREFULLY AT THE RELOCATION PLANS. SAVINGS ALREADY IDENTIFIED
TAKE ACCOUNT OF THE REDUCED FORCE LEVEL. BUT RECOGNISING YOUR
PRESENTATIONAL NEED, MOD PROPOSE THE FOLLOWING FORMULA FOR PUBLIC
USE:
THE COSTS HAVE BEEN RIGOROUSLY STUDIED BY BOTH SIDES AND
USEFUL SAVINGS MADE:
(11) BOTH SIDES HAVE AGREED ON THE IMPORTANCE OF ACHIEVING THE
MAXIMUM ECONOMIES IN RUNNING THE GARRISON AND HAVE MADE PROVISION
WHEREBY DURING THE PERIOD OF THE NEW AGREEMENT THE HONG KONG
GOVERNMENT MAY CALL FOR REPORTS AND SHARE IN ANY RESULTING SAVINGS: (1/1) HQBF WILL KEEP CLOSELY IN TOUCH WITH THE HONG KONG GOVERNMENT
SECRET
/TO ENSURE