CONFIDENTIAL
5. Accommodation. MOD explained that in 1975 fuel costs had been included under the heading of Equipment/Stores/Supplies. The receipts shown in the costing consisted of payments made by British personnel for their domestic fuel costs.
6.
Amortized Training. HKG sought clarification of the per capita costs shown under this heading. MOD said that these represented the cost of the UK training organisation divided by throughput and weighted to allow for professional life-span. Both basic and follow-up training had been included. The aim was to reflect the fact that Hong Kong received ready trained personnel.
7.
Higher Formation Costs. MOD explained that these reflected MOD Headquarters support for the Hong Kong Garrison.
8. Interest, Consumable Stores, Fixed Capital. HKG expressed disa- greement with the valuation used in the costing of consumable stores issued, interest on working capital and fixed capital and deprecia- tion charges. MOD explained that it was now UK Government account- ing policy to use current costs so as to take account of inflation and there was also the practical point that in most cases figures for historical costs were not available. (Subsequently, having consulted the Treasury, MOD proposed that a different concept should be applied in this area. This involved valuing stocks at current prices and then applying a fair rate of return which would be substantially lower than current interest rates. This would be simple to operate and would produce a result not far removed from that sought by the HKG and would be acceptable to the UK financial authorities. undertook to consider this).
HKG costs
9.
HKG
HM
HKG tabled a paper identifying the sums involved on rates. Treasury explained that by long-standing principle the British Crown could not accept the jurisdiction of any other rating authority, although it was not unknown for occasional exgratia payments to have been made on the basis of an assessment by the Treasury Valuer. Pay- ment for beneficial services was a different matter, but HKG pointed out that rates revenue was not hypothecated for such services. MOD acknowledged that rates had featured in the rough justice' exclusions from the 1975 DCA and that they needed to be considered in the context of a new DCA which re-opened these exclusions.
Future Carrison
10. MOD explained that the forward assumptions for the Garrison included both projected enlargement and other changes which might be required over the next 5 years. Not all of the assumptions had yet been approved.
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