OL DEGREE. I
5. Possibility of further cost reduction: Whilst the composition of the cost of the new garrison had clearly been carefully determined, there were a number of aspects that on examination might yield reductions. For example; air trooping, the capitation charge, calculation of LOA and equipment costs. There was also the question of abating the gross cost of the garrison by
offsetting income tax payable to HMG.
6. Apart from the content and cost of the capital works programme, it would also be necessary to explore how the programme would be related to the early release of land which was, presentationally at least, important to the Hong Kong
Government.
7.
The Question of inflation: This would have to be examined
in the light of:-
(a) UK's recent experience of inflation, and
(b) the suggestion that there should be an open-ended
commitment.
8.
Various ways in which the effects of differential inflation on the basic cost might be limited were:
(a) reduction of sterling content of supplies;
(b) reduction of the UK element of support personnel
and the extent to which there was scope for economy or substitution particularly in the medical and
education fields.
Alternatively:
(c)
a formula might be devised whereby Hong Kong's liability to bear the cost of differential inflation
was limited.
3
SCOPET
19.