TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 62

NOTHING TO BE WRITTEN IN THIS MARGIN

W(B)L 51-7406

is physically

And financially uspensible fu proporing

ス

it

the

SECRET

the Colony, pays a share (about

6.475 million-

the cost

prarf of the

of minor works and maintenance

carries out on behalf of the

Services by the P.WD. has

worked satisfactorily and is a

system which we should all

presumably be happy to continue.

Is this your intention?

4. The difficulty about a fixed annual

contribution for 5 years is that its value

would inevitably decrease in real terms

over the period. This is an objection to

the present agreement.

It would be more

acceptable here if we could at any rate

have a provision for annual adjustments

to cover pay and price increase, so as to

maintain the real value of the contribution.

I note that this was a suggestion which

was mooted in the course of the negotiations

over the existing contribution and which

you regard as reasonable although you pointed

out that the Hong Kong Government would

have no control over increases in costs.

An alternative which we should be very

willing to look at would be a proposal by

which the contribution increased by a

predetermined amount each year. We would

welcome your views on this.

I

. Finally, our major difficulty is over

the starting amount of the contribution.

am sure you appreciate that in the context

of the public expenditure discussions here,

and the particular problems of the cost of

Defence, Ministers will want to be satisfied

that the amount offered is as much as it is

reasonable to expect. In the light of these

/considerations...