4
7.
The actual cost of erection of both the flats dealt with in the application in (1) and the more extended initial programme of 2500 flats for which C.D. and W. assistance of nearly £250,000 will be needed, will be met by loans from the Hong Kong Government estimated to total nearly £1,000,000. These loans will doubtless be made to the Improvement Trust when that body is constituted. As noted above, however, the Governor proposes to entrust the erection of the 370 flats in the pilot scheme to the Hong Kong Housing Society and he wishes therefore to make a loan to this body for this purpose; the amount of the loan is to be approximately $2,000,000 (i.e. £125,000) and the Governor seeks our approval for this. I have looked through the aims and objects of the Hong Kong Housing Society in Appendix 'E' to (1) and they appear to meet the points as to efficient management, etc., which we made in our despatch at (10) on 12818/17/51. As
(i) the Governor proposes to require the Society to become incorporated and assuming that in the incorporating ordinance aims and objects similar to those in Appendix 'E' to (1) are given legal force and
(ii) the Society is prepared to merge itself into the
Improvement Trust when that body is formed (this should presumably be laid down in the incorporating ordinance too),
I can see no objection to the Society being responsible for the pilot scheme when the sites have been developed and I think subject to (i) and (ii) above we should convey our agreement to the Governor making the necessary loan to the Housing Society.
8.
This is rather a complicated matter to deal with as it involves one or two points of principle. I suggest that the simplest method of handling it is for a normal C.D. and W. memorandum for the pilot scheme to be agreed in the Office and put to the Treasury as soon as possible. This will throw up all the points of principle involved not only in the pilot scheme but also in the more extended subsequent programmes. Once therefore that we have Treasury approval for a C.D. and W. scheme in some form for the pilot scheme we shall be able to reply to (1)
(a)
on the specific point of the pilot scheme
(b)
on the general points of principle raised in respect of which our approval is sought
(c) on the question of the loan to the Housing Society.
9. I therefore attach the draft of a C.D. and W. memorandum as a first shot. Finance Department may wish to adopt the alternative approach I have suggested above as a matter of tactics. Otherwise ? as in draft.
10,
Perhaps you will pass the file on to Mr. Hall and Mr. Armitage-Smith when you have dealt with it?
B. Pandang h
dough
17. 4. 51.