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MDHOAN 0830
5.
VCDS nominated the Under-Secretary dealing with finance in the MOD, Mr Brace, to follow-up in more detail. Sir T Daunt and I had a session with him today. Sir T Daunt emphasised again the two points about declining costs and transparency, and raised the specific examples of spectacular expenditure which you had cited (the visitors and the cars). In response, Brace reiterated points already made by Mr Rifkind and Sir C France to the Governor. But we detected some progress on a number of fronts:
The MOD finance people have now hoisted in the importance in Hong Kong of showing a declining trend in costs. They seem to be willing to show flexibility in achieving that, even if it means rolling forward some costs again into FY 94/95.
They have also taken to heart the need for greater transparency. They are aiming by the end of this year to have discussed in detail with HKG the cost profile for the garrison u to July 1997 and intend to use the six-monthly DCA review meetings in London in May and Hong Kong in November to go throug all this with you (they make the point that this will be dependent on political decisions about the garrison run-down).
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They accept the need to scrutinise support costs and to answer your questions about spectacular expenditure. On the two specific examples, they assured us that very few of the 700 official visitors would be chargeable to the DCA, and that the 168 vehicles represent a routine replacement of a wide variety of garrison vehicles (not just staff cars EXCLAM) as previously discussed with HKG. More detailed replies will apparently come to your direct.
6. In short, Sir T Daunt and I had the impression that the MOD are taking seriously the need to find workable solutions and to justify to you the costs of the garrison. They are hoping for flexibility on all sides to cope with the requirements on your part for LegCo approval of estimates and on theirs for repayments due to them under DCA.
7. They undertook to keep us as well as you in touch with their thinking on cost-cutting.
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