d)
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A separate inflator: It had been agreed that
a separate inflator should be applied to
the air-tooping item, which was at present
inappropriately, included with equipment
from the UK.
3.
Arising from disucssion on the capitation charge
F.S. said that it had been agreed that a balance sheet
should be drawn up of those items for which neither side
charged the other. HK did not claw back income tax or
national insurance; and did not charge HMG rates, interest
on captial works or landing fees at the airport. The UK
did not include higher formation costs, pensions and UK
training; the cost of new eqipment was spread over a
period of years and not amortised, whilst old equipment was
taken on without charge.
It was
4.
On the question of inflation, the F.S. accepted
that HK had over-estimated the sterling component.
now agreed that it should be of the order of 30 to 32%
not 48 to 50% (assuming that LOA would be reviewed regularly).
Even at 30%, differential inflation remained a worry and would
almost certainly occur in the early stages of the agreement
but would not necessarily be there indefinitely. Although
clauses 9 and 10 of the agreement provided for information
to be called for and for review, differential inflation was
still a matter of concern to HK.
5.
The F.S. said that there was some small comfort in the
fact that UK costs would not escalate much between now and
1 April, 1976, since, as far as pay was concerned, October to
March was not a pay adjustment period.
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