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labour relations, child labour, the Hong Kong Government's application of ILO conventions and our own relations with the TUC over Hong Kong); financial matters (Hong Kong's budget for 1977/78, the taxation system and the level of public expenditure); the composition of the Hong Kong Legislative and Executive Councils; and social matters such as Hong Kong's public assistance scheme, the development of secondary education and the problems of drugs and corruption.
4. The Committee fulfils the purpose for which it was established in two ways: by ensuring that the Hong Kong Government is kept continually aware of our concern that they should make the fastest possible progress in social and labour affairs; and by offering advice and encouragement on specific matters, where it is thought this would be help- ful. The existence of the Committee has also helped to bring about more consultation with the Hong Kong Government over a wider field; the lack of "communication" between the Hong Kong Government and ourselves was one of the weaknesses in the previous handling of Hong Kong's affairs. As it is, there is now a continuing dialogue between Hong Kong and the FCO about measures which should be taken in the best interests of the population of Hong Kong.
5. I am not satisfied about the progress that the Hong Kong Government are making, although a good deal has been achieved and the results over the past year are, I think, to a considerable degree due to the contribution that the Standing Committee has made. I have asked the Committee to continue to keep a close watch on the Hong Kong Government's progress in implementing their plans and to bring any short- comings to my notice, particularly your own concern, which I share, about child labour, as well as to look out for other ways of improving the lot of the ordinary people in Hong Kong.
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/ 6.