CO129-606-1 Treasury control over Hong Kong finances 28-9-1944 - 23-12-1947 — Page 2

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1. Conf. Circular

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28/9/44

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Mr. Bryant.

Mr. Boss. D. C.A.

The question arises as to the form of control to be exercised by the Treasury over Hong Kong Government finances as from 1st April 1947. For the first period of the Civil Government (1st May 1946 to 31st March 1948) the control was of a quite general nature under which we secured Treasury agreement to any additional expenditure involving some point of principle. No provision has been made in the C.&.M.E.S.Vote 1947 for a grant in aid to Hong Kong although it is not certain whether in fact Hong Kong will be able to pull through without Treasury assistance. In these circumstances I trust Treasury will not insist on applying the full Treasury control set out in No.1 on this file but will be prepared to agree to a control somewhat more on the lines set out in No. 2 which is applied to Sin_apore. The objection to full Treasury control in the case of these liberated F.E.Colonial Territories is that it involves the local Government in a large amount of clerical work at a time when the local Governments are short of staff. Also the control is based on Estimates which should approximate much more closely to the final expenditure than is yet possible in the case of Hong Kong. It is clear from correspondence that Hong Kong has not yet sorted out all its liabilities which have resulted from the Japanese occupation and one hesitates to put any work on to the Government which is not absolutely essential.

I should, therefore, be inclined to try for a more general, but equally effective, form of control as in draft herewith, but the comments of Mr.Bryant, D.C.A., and Mr. Boss would be welcomed on this point. If it were eventually decided to apply full Treasury control I assume as Hong Kong has had no experience in this matter that a much more detailed despaton would be required than that at No.1.

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