TNAG-0308-FCO40-344-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 41

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3.

THE IDEA I HAVE BEEN TURNING OVER THEREFORE IS TO SUGGEST A

7-YEAR AGREEMENT ON THE FOLLOWING BROAD LINES:-

4.

(1)

RECURRANT (UNDERLINE LAST WORD)

(A) (UNDERLINE NEXT TWO WORDS) IN CASH - £2.8 MILLION £3.3 MILLION FOR THE

P.A. FOR THE FIRST 5 YEARS:

REMAINING 2 YEARS, TO TAKE INCREASES IN COSTS

PARTIALLY INTO ACCOUNT.

(B) (UNDERLINE NEXT TWO WORDS) IN KIND

RECURRENT

MAINTENANCE COSTS AND MINOR WORKS AS FIXED BY

CONTRACT FROM TIME TO TIME: NOTIONALLY £2.2 MILLION

P.A.

(11) CAPITAL. (UNDERLINE LAST WORD) MAJOR WORKS TO A TOTAL

VALUE OF £17 MILLION, BEING NOTIONALLY £2 MILLION THE FIRST YEAR (WHEN ACTUAL EXPENDITURE IS LIKELY TO BE LESS) AND £2.5 MILLION P.A. THEREAFTER.

IT WOULD BE AGREED HOWEVER THAT (AS UNDER THE 1967/8 - 1970/71 AGREEMENT) THE COST OF CAPITAL WORKS UP TO THE FIGURE OF £17 MILLION WOULD BE MET AS AND WHEN EXPENDED: IN OTHER WORDS, THERE WOULD BE NO OBJECTION TO THE PROGRAMME BEING COM- PLETED AND PAID FOR IN RATHER LESS THAN 7 YEARS.

5. UNDER THIS ARRANGEMENT, HOWEVER, VIREMENT FROM CAPITAL TO RECURRENT EXPENDITURE WOULD NOT SEEM POSSIBLE.

6. THE TOTAL NOTIONAL CONTRIBUTION WOULD THEN BE £7 MILLIONS IN 1971/72, £7.5 MILLIONS IN 1972/3 TO 1975/6, AND £8 MILLIONS IN 1976/7, 1977/8. THE ACTUAL CONTRIBUTIONS WOULD OF COURSE VARY FROM THIS ACCORDING TO ACTUAL MAINTENANCE COSTS AND THE

DISTRIBUTION OF EXPENDITURE ON CAPITAL WORKS. HMG WOULD BE RECEIVING £53 MILLION OVER 7 YEARS INSTEAD OF £42.5 MILLIONS OVER 5 YEARS SEMICOLON THE LOWER AVERAGE PER YEAR (£7.57 MILLION. AGAINST £8.5 MILLION) BEING ACCOUNTED FOR BY THE STRETCHING OF THE CAPITAL EXPENDITURE OVER A LONGER PERIOD.

IT IS TO BE

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/ OBSERVED