20

review it would be only possible for the revenue to be carried out in Hong Kong.

the

If the above view is accepted, question arises whether Secretary of State should approve these estimates as would be done in normal times. Such an approval could only in existing circumstances be a formality and might, I feel be a misleading formality. If however it is thought desirable to approve "them then this can only be done on the assumption that:-

(a) all personal emolument items are on pre-war

scales plus such amendments as have been separately approved by the Secretary of State; (b) all items of "other charges" are generally

of a normal pre-occupation character with such inevitable additions as are necessitated owing to the present circumstances in Hong Kong; (c) all other major items of expenditure have already been approved by the Secretary of State separately or will now be submitted to him by the Governor for approval. In our telegram No.600 we asked that we should be kept informed of any major new commitments in order that Treasury might be consulted before any substantial expenditure is incurred.

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I suggest therefore that we send a copy of the estimates, to the Treasury and obtain their agreement to inform the Governor that in the circumstances existing this year it is not felt possible that the estimates can be approved, but that shall be glad of the Governors confirma assumptions referred to at (a), (b) and (c) above. We should add that detailed control of the expenditure on the normal lines of a Treasury controlled Colony (see 54126/5/46) would not be workable, as such control is based primarily on estimates which have been examined in detail by us and the Treasury, and accepted as close approximations of the probable expenditure on lines approved by the Colonial Office and the Treasury. It will also be appreciated that

in normal times the estimates of a Colony do not differ greatly from those of a previous year, except

for a few items which are normally the subject of separate consideration and approval. This position

certainly does not obtain so far as the current year's Hong Kong estimates are concerned and whether they will obtain next year can be left until then. No question of normal Treasury control is thus in my view practicable this year.

?Approach Treasury on above lines.

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