TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 109

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SECRET

He have sent the Governor figures (which he is now studying) provided by the Ministry of Defence, which the latter state are the best estimate that they can make of the costs of the increased post-1971 garrison as detailed above. These fig- ures put the estimated annual running costs at about £20 m. in 1971-72. (This figure includes the sum of nearly £12 m. for estimated local costs.) In addition, the Ministry of

Defence have provided estimates for capital works costs which total some £19 million over a five-year period begin-

ning in 1971-1972. A breakdown of these estimates is given

in Annexes A and B to this Note.

4. In providing the estimates, the Ministry of Defence

have entered several caveats. They have stated:

(a) that the costs would increase if the proportion

of British troops in the garrison were increased; (b) that the figures do not allow for any price

increases between now and 1971 (let alone during the currency of the new agreement);

(c) nor do they allow for the increased cost of the

new Services pay structure to be introduced this year, but which (so far as we know) has not yet been accepted;

(d) that, in addition to the running costs in Hong Kong, there would be very considerable running costs of the support provided by the UK base

and the Gurkha Line of Communications.

The Treasury have commented that they have not as yet had any chance to subject the estimates for capital works costs

to detailed serutiny and that they are therefore in no pos- ition to say that the figures will in fact prove acceptable to them. At the request of the Treasury we have accordingly emphasised to the Governor that the figures may well be subject to amendment,

SECRET

15.