SECRET
(D) A REASSURANCE THAT ALL UK PAY INCREASES WILL BE FOLLOWED BY
AN AUTOMATIC ADJUSTMENT TO THE HONG KONG LOA (WE ARE AWAITING - FURTHER INFORMATION FROM MOD ON THE LOA REVIEW MACHINERY, INCLUDING DETAILS OF THE BASIC BUDGET)
(E) MOD'S CONFIRMATION THAT, AS DISCUSSED HERE IN THE FINANCE
WORKING GROUP, HONG KONG SHOULD BE PROTECTED FROM THE EFFECTS OF DIFFERENTIAL INFLATION IN THE PARTICULAR CASE OF SERIAL (VI) OF THE INFLATOR GROUPINGS 1.E. EQUIPMENT FROM U K
(F) AGREEMENT THAT BY THE ADOPTION OF A SUITABLE, ALBEIT ARBITRARY
FORMULA, THE EXTENT TO WHICH HONG KONG IS CALLED UPON TO MEET THE FULL EFFECTS OF DIFFERENTIAL INFLATION WILL BE LIMITED.
3. SUB-PARAGRAPH 2(B) REFLECTS OUR FEELING (NOT DISPUTED BY H.Q.)
THAT:-
(1)
IT WILL ONLY BE POSSIBLE TO TAKE A CLEAR NEW LOOK AT SUPPORT COSTS WHEN REDUCTIONS ALREADY AGREED FOR TEETH AND SUPPORT UNITS ARE FAR ADVANCED.
(11) THAT A FIRM ATTEMPT SHOULD BE MADE TO USE THE HOUSE-MOVING
FROM KAI TAK AND VICTORIA BARRACKS TO DISCARD SOME ADDITIONAL
U.K. PERSONNEL.
MACLEHOSE
FILES
HKIOD (3)
DEF DEPT
SWPD
PS
PS/LORD GORONWY-ROBERTS
SIR D WATSON
MR MALE
COPIES TO:
MR WARD DS(6) MINISTRY OF DEFENCE
MR HANSFORD TREASURY
MR BRYERS CABINET OFFICE
MR AGGLETON PSA/DOE
MR THOMSON
-2- SECRET