Foreign and Commonwealth Office London SW1
Telephone 01- 930 8440 In 632
LM Davies Esq CMG OBE Security for Security Hong Kong
Your reference
Our reference
Date 17 April 1975
147
Dear Bim,
DEFENCE COSTS
1.
During one of the meetings of the Working Party the Colonial Secretary asked David Jones whether we would be able to give any indication of the likely cost of the Hong Kong garrison at April 1976 prices, ie the effective date of the first contribution under the new defence agreement. David's initial reaction was that the rate of inflation would be very difficult to predict, but that he was not sure of the relevance of April 1976 prices because Hong Kong Government estimates for 1976/77 would be based on prices ruling in the autumn of 1975. He promised, however, to seek advice on his return to London.
2. After consulting the Treasury, David has asked me to confirm that we are not able to make any sort of prediction on this matter. AS you may know, it is envisaged that the cost of the garrison, and hence the Hong Kong Government's contribution, will be revalued anually in line with the movement of a composite index made up of the various agreed UK and Hong Kong pay andprices indices.
The UK indices are published regularly; and with your knowledge of Hong kong pay and price changes you should have little difficulty in updating the forecast of your contribution to a current price basis.
3. Although the forthcoming negotiations will be based on 1975/76 estimates prices (ie those ruling in September 1974) we could if you wish send you in the autumn, as soon as the MoD's own sketch estimates have been prepared, their best estimate of the cost of the garrison at 1976/77 estimates prices.
David Jones in fact suggested that we might be able to put these points to the Governor when he was in London last week. However, I am afraid a suitable opportunity for this did not arise.
Your
ever, Imee
B Dinwiddy
Hong kong & Indian Ocean De; t.
No comments yet.
Private notes are available after approval.