TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 11

(a) Capital Works

You have suggested earmarking a maximum of £2 million p.a.

for non-recurrent capital works which would remain the property

of the Hong Kong Government and would be selected from works which

are agreed by them to be of potential value to Hong Kong if no

longer needed for use by the Services. Our understanding of

this is that within an annual contribution of £8 million there

would be a varying amount of up to £2 million annually for capital

works of that description. Depending on what is regarded as of

potential value to the Colony, it would seem that the amount

could be appreciably short of £2 million in some years, but we

assume that this would not affect the overall amount of the

contribution and that, as in the case of the existing agreement,

there could, by mutual consent, be virement between the capital

and recurrent elements of the contribution.

confirm that this is your intention.

(b) Minor Works and Maintenance

4.

Perhaps you would

The existing arrangement whereby the Colony is physically

and financially responsible for a proportion of the minor works

and maintenance it carries out on behalf of the Services has

worked sati sfactorily and is a system which we should all

presumably be happy to continue. Is this your intention? And are we right

that, as under thepresent memora, "I am figure of

of moerstanding, the cost would be incluated in your The fficulty about a fixed annual contribution for five years

period.

is that its value would inevitably decrease in real terms over the

This is an objection to the present agreement. It would be

more acceptable here if we could fat any rate have a provision for

annual adjustments to cover pay and price increases so as to maintain

with possibly a progressive increase of the four portion of the expenditure borne by the Calmy.) the real value of the contribution, I note that this was a 6 coun

suggestion which was mooted in the course of the re gotiations over

and price incress late

price

provision

SECRET

/the existing