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F W Glaves-Smith Esq
Department of Trade and Industry
1 Victoria Street
London SW1
Treasury Chambers
Great George Street
London SW1P 3AG
Telephone 01-930 1234 ext 288
10 July 1973
138
HONG KONG MASS TRANSIT SYSTEM
I was concerned to note at c. of Ken Cotterill's letter of 2 July that at a very late stage, the UK civil works consortium had disclosed that they thought they might not have sufficient capacity to undertake all the work in the project themselves, and proposed to bring in contractors from EEC countries to carry out up to 30% of the value of their contract.
2. At the outset of our consideration within HMG of UK participation in the project, we asked for assurances about the strength of UK industry's interest in the project, and their capacity to do the whole job themselves. This point was put quite clearly at the meeting chaired by Raymond Bell here on the 24 August 1972, and was dealt with in the note attached to the letter of 25 September 1972 by the Secretary of State for Trade and Industry.
3. There are two points to be made here. The first is that the credit terms already provisionally agreed by Ministers took into account the assertion that considerable importance attached to the project being seen to beawholly UK effort. The second is, to the extent that this eleventh-hour development reduces the UK content, we should certainly not wish to add to the subsidy implied in the credit proposals by guaranteeing finance for other countries' exports.
4. Since the proportion of the civil works involved is as high as 30%, I think that other Departments are entitled to some explanation which reconciles your earlier assurances with this development.
of
5. You have seen the calculation/implied foreign exchange preference which the Bank have circulated, and, unless Departments have any comments to make on them, these are the figures which we shall use in arriving at a decision on the proposals contained in the ECGD letter of 2 July.
6. I should be grateful for some further information about the UK share in the Anglo/Franco/German bid. I understand that GKN are the the UK firm involved, but should be grateful for a note on the type of business for which they are bidding (a value of £40m has been mentioned) and an assessment of the support which DTI think should be given to it, and the chances of that consortium remaining in the running for the business.
(R JONES)
cc.
K Cotterill Esq TJ Wilshire Esq
ECGD
ODA
AL Ryan Esq A C Stuart Esq
Bank of England
FCO
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