HKD
SECRET
PS/ Larc Caithness PS/PUS Bird Coles
Mr Burns
FCS/91/118
DEFENCE SECRETARY
1415
HKB 063/1
62
21/5
14/5/ Mostarc
My's Cogin
1.
Hong Kong Royal Naval Presence Afloat
We had a brief word in the margins of Cabinet on 11 April about how to resolve the question of the funding of the Royal Naval Presence in Hong Kong after 1992. I
asked the Governor to consider ways to reduce the costs, or whether it would be possible for Hong Kong to contribute more than the agreed share (65%) to enable the vessels to remain in Hong Kong.
2.
The Governor recognises your Department's budgetary difficulties. He has looked again at ways of finding
more money to meet your requirements. He has concluded
that there is no practicable way to do so without
reverting to the Finance Committee. He sees no prospect
of the Finance Committee agreeing to further funding and indeed sees this as a recipe for precipitating a major row, with damaging consequences for HMG's position in
Hong Kong.
3. He has therefore concluded that the only way to
reduce the costs to HMG is to reduce the number of
vessels from three to two. This would be less than ideal
from an operational point of view. But it would save HMG an estimated HK$8.75 million per year: or over £3 million in the period 1992/1997. I understand this compares with
a total estimated costs to HMG for the three craft of
£15 million in the same period.
/4.
SECRET