TNAG-0477-FCO40-542-Strength-of-garrison-in-Hong-Kong-1974 — Page 91

ANNEX C TO 6060 HQBF

DATED 2 JUL 74

ILLUSTRATION OF POSSIBLE FINANCIAL IMPLICATIONS UNDER OPTION C

LUSTR 25% CUT IN GARRISON STRENGTH

1. The annual contribution towards defence costs made by the Hong Kong Government, under the present (1971-76) Defence Costs Agreement, is broken down as follows:

2.

a.

b:

C.

£4M for capital works costs.

£2.4M as a cash contribution.

£2.2M for minor works and maintenance (as this work is the responsibility of the Hong Kong Public Works: Department, this component is not considered further).

The annual costs of the Services in Hong Kong, excluding works repair and maintenance, the pay and allowances of the UK based military and civilian element and the cost of provision items actually paid for in the United Kingdom, amount to an estimated £15M.

3.

it may From the figures given in paragraphs 1 and 2 above, be seen that the local costs and contribution statement is expressed as below:

Costs

*

Contributions

X.

Annual Running Costs £15M

) Total

Annual Capital Works Costs £4M) £19M

(£6.4M from Hong Kong

(

Government

(£12.6M from UK Government

*. In the event of an arbitrary 25% cut in the Garrison strength the units capable of acting in the infantry role would be reduced from 6 to 4; this is due to the high proportion of civilians, in the already very lean administrative units. Such

a force reduction would entitle the Hong Kong Government to invoke the Defence Costs Agreement Review Clause and it would be difficult for HMG to argue against a proposal that the Hong Kong contribution should be reduced by one third, ie in line with the reduction in field force units. In spite of the savings arising from the reduction, the costs and contribution statement would then be as below:

Costs

Annual Running Costs £12.5M ) Total Annual Capital Works Costs, 4M) £16.5 (

(Note 1)

Contributions

(£4.27M from Hong Kong

Government (ie less 3) (£12,23M from UK Government

(Note 1) Although the priorities of the capital works programme

would' change, for such a reduced Garrison, remaining - requirements for new buildings would absorb the entire capital works contribution for the present and successor defence costs agreements.

5. The outcome of this Option could be that the UK Government could be paying Virtually the same in local costs (£12.23M instead of £12.6M), for the reduced Garrison, as it is currently paying for the existing Garrison.

a ason, in

X

わく

HK £8-6m

Casta

Tital ₤21.2m

pand

ima

- SECRET

Ime ₤12.6m