TNAG-0446-FCO40-511-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1975 — Page 50

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Note of an informal meeting held in MOD on 18 December 1974

between the Governor of Hong Kong and Whitehall Officials

to discuss the financing of the proposed Hong Kong garrison

Those Present:

Mr A P Hockaday

Sir M Maclehose

Mr A C Stuart

Mr R Westbrook

Mr J Hansford

Mr JD Bryars

Mr A F Thorp

Cdre B C Perowne

Mr D G Jones

DUS(P)

In the Chair

26/

HE the Governor of Hong Kong

FCO HK IOD

FCO Defence Dept

Treasury

MOD AUS(GS)

MOD Head of F1 (Air) HOD D of D Fol(C)

MOD DS 1

1.

>

Opening the discussion, the Governor explained the difficult budgetary situation now facing him. There was a major new social expenditure programme and a budget deficit of HK $2000m

of which would have to be met by increases in taxation. This contrasted strongly with the situation in earlier years when despite budget surpluses, HG had accepted a much smaller proportionate Hong Kong Defence Contribution than was now proposed. The Governor stressed that his offer of doubling the present contribution was not an opening bid but the maximum he considered the Hong Kong Government could bear. The contribution could not be trebled at once and if HG insisted on Hong Kong paying 75%, there would be no alterative to cutting further the size of the garrison. Without commitment, the Governor agreed to examine a suggestion that the proportionate contribution might be increased gradually over a number of years, but stated that even after 5 years, a 75% contribution would be too high based on a garrison costing about £40m at September 74 prices.

2.

In response to questions about the proposed garrison, DUS(P) explained that force levels had been cut substantially already and with the possible exception of the Frigate, to which the Governor attached great importance, there was very little scope for further economies without a major change in the role and responsibilities of the garrison. It was agreed, however, that an examination of the sort of force which could be provided for £25m - £30m should be made to highlight the implications of a situation in which HMG insisted on 75% and the Hong Kong Government could find no more than £20m.

- 1.

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