CONFIDENTIAL
Defence Costs
Manpower Strengths and Costs of the proposed garrison at September 1975 prices
Notes on discussions of a working group held on 28th and 29th October 1975
Present H.K. :
Mr. Haddon-Cave, Mr. Davies, Mr. Wiggham, Mr. Jenney.
1.
U.K.
Mr. Andrew, Mr. Jones, Mr. O'Keeffe, Mr. Thorpe, Mr. Ward.
Service : Major Gough
Adviser
Pay and Allowances
(a) U.K. Personnel. The U.K. side explained that LOA
was determined by reference to a budget based on expenditure by a soldier in the U.K. That budget was then converted into a budget for Hong Kong expressed in Hong Kong dollars. When the LOA was under review, basic pay was deducted from the budget in Hong Kong dollars in order to determine whether an adjustment in LOA was necessary. There was a further adjustment to LOA whenever the Forces Fixed Rate of exchange was altered in order to maintain the Hong Kong dollar value of pay and allowances. In recent years pay increases had been on an annual basis while the LOA adjustment occurred every 3 to 4 years. It was noted that the lags between pay increases and LOA adjustments could mean that personnel would enjoy a higher real standard of living than was justified. It was accepted by the U.K. side that it was desirable that there should be more frequent adjustments of LOA. The U.K. side said that adjustments to the budget took account of a fall in the standard of living in the U.K. which occurred when increases in pay did not keep pace with the rate of inflation. The U.K. side undertook to provide further detailed information on the methods used for determining LOA.
(b) Gurkha pay.
The basic pay was determined in accordance with a trilateral U.K./India/Nepal agreement. The Gurkha addition was related to an accepted standard of living of a Gurkha in the British Army.
CONFIDENTIAL
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