CONFIDENTIAL
DEFENCE CONTRIBUTION
6.
The Governor considered that if HMG decided to impose a settlement in this matter in the event of failure to reach an agreement with Hong Kong, reaction in the Colony would depend
on:
the size of the contribution imposed.
(1)
(2)
the method employed to impose.
SIZE OF CONTRIBUTION
7. He considered that if there was to be any hope of reaching agreement HMG would have to reduce their demand for a contribution of £8.5 million per annum over a five year period. He thought that there might be a possibility of negotiating (with difficulty, particularly in Legislative Council) a settlement with the Unofficial Members for an agreement covering a seven year period on the following basis:
(a)
(76)
(၁)
Years
£m
1
2
3
4 5
10
6
N
7 Total
Cash
2
2
2.5 2.5 2.5 3 3 17.5
Maintenance and
2.2
2.2
2.2
2.2 2.2 2.2 2.2 15.4
Minor Works
Capital
Total
2.8 2.8
£7m 7m
2.8 2.8 2.8 2.8 2.8 19.6
7.5m 7.5m 7.5m 8m 8m £52.5m
The figure of £15.4 million for maintenance and minor works would be notional and Hong Kong would meet the cost of all maintenance and minor works no matter how
great this cost might be. The maintenance work would
be carried out in accordance with the scales laid down
by the Military authorities, as it had been done in the past (although it had then been more difficult in that Hong Kong had carried out only part of the maintenance and minor works programme). The minor works programme would be carried out in accordance with the normal controls exercised by HM Treasury.
The costs (as estimated by MOD) of the total capital works programme over a five year period were of the order of £17 million plus a further total of £2.5 million during the 6th and 7th years making a grand total of £19.5 million.
2
CONFIDENTIAL
/The Governor
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