TNAG-0480-FCO40-545-Strength-of-garrison-in-Hong-Kong-1974 — Page 40

5.

6.

2.

SRET

(f) materials, equipment, etc., bought neither

locally nor in the United Kingdom; and

(g) local capital works.

I suggest that the following indices be used to determine the escalation in prices and pay from the base date (the listing below corresponds to that in paragraph 4):

(a)

(b)

(c)

(d)

(e) and (f)

the monthly index of average earnings for all industries in the UK;

the six-monthly index of wage rates in Hong Kong;

the monthly index of wholesale prices of manufactured goods (excluding food, drink and tobacco) in the UK:

the monthly consumer price index in Hong Kong;

it may well not be possible to identify these items in the base costings and even if they can be separately identified, there are no obvious indices. In practice, these items may have to be lumped in with others;

(g) the monthly building cost index compiled (but

not published) by P.W.D. in Hong Kong.

The

I can provide detailed notes on (and justification for) the proposed indices if necessary. indices in (a), (b), (c), (d) and (g) are readily available, with only a short time-lag before publication. None of the indices are direct measures of actual costs (e.g. forces' pay, military equipment, etc): the indices are general ones. (I assume this is what you had in mind: this approach is the only way of using generally available statistics, rather than relying on figures of actual (or notional) defence costs from the M.O.D.).

7.

In principle items (a) and (c), being determined by trends in the UK, should be payable in sterling; while items (b), (d) and (g) would be payable in Hong Kong dollars. Items (e) and (f) are more difficult: to avoid undue complications they could be expressed in

sterling.

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