TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 51

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I cannot in fact recollect that we ever

specifically agreed at the meeting to go back

to the Governor asking him to increase his offer

of £8 million, although we did agree to go back

to him with certain queries in order to clarify

the position. It was also agreed that the MOD

would prepare the draft of a letter to the

Governor and this they have now sent us. Their

draft makes no bones about asking the Governor

to increase his offer (despite the fact that

that offer was based on a Garrison of 7 and not

6 major Army units). It seems therefore that

the first question to be decided is whether we

prepared to do this; or whether we are going to

stand firm on the £8 million already offered by

the Governor.

4: In their draft letter the MOD are proposing

that we should ask the Governor not only to

increase his initial offer of £8 million but in

addition to agree to annual increases in the

contribution over the period of the agreement

to cover pay and price increases.

I do not see

how we can agree to put both propositions to the

Governor having regard to the facts that:-

(i) His offer of £8 million represents

6020

a 6 increase on the current annual

contribution of £5 million and

(ii) it was based on a Garrison of 73

major Army units.

But I think that the Ministry of Defence and the

Treasury have a point when they argue that

general cost increases over the period of the

agreement causes a fixed rate of contribution to

decrease in value to a noticeable degree od.....

over the period....

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