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Welcome steady progress in work of JLG and Land Commission.

DEFENCE COSTS AGREEMENT (DCA)

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[With Governor]

New agreement must be quickly finalised, within agreed

apportionment of costs.

[With ExCo]

Difficult for you.

This is in interest of both sides.

But we too have had greatest difficulty in

adjusting apportionment in Hong Kong's favour.

Hope concluded agreement can now quickly be put to Legco Finance Committee with your support.

[General use]

We have basis for new apportionment of costs.

to be finalised.

Details now need

EMIGRATION

[General use]

Acknowledge problem. No room for complacency.

force.

Welcome task

Key to containing emigration of middle class talent is to

maintain Hong Kong as attractive place to live in or to return to.

AIR SERVICES

[General use]

Welcome progress in ASA separation.

Confirm aim to conclude review of bilateral air services soon

and achieve more balanced civil aviation relationship.

NATIONALITY AND IMMIGRATION QUESTIONS

[General use]

No discrimination against Hong Kong passport holders seeking

entry to UK. Investigating recent entry refusal cases.

B (0) passport is fully valid passport. of passport in Hong Kong will grow in time.

Confident acceptance

CIVIL SERVICE QUESTIONS

[With Governor] Morale of civil servants?

General compensation scheme. Agree some form of scheme needed, funded by HMG. Difficulty will be convincing colleagues.

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