TNAG-0541-FCO40-636-Strength-of-garrison-in-Hong-Kong-1975 — Page 47

CONFIDENTIAL

ANNEX A

DRAFT MEMORANDUM OF UNDERSTANDING AS PROPOSED BY GOVERNMENT DEPARTMENTS IN LONDON

1.

This Memorandum of Understanding embodies arrangements which have been agreed to by Her Majesty's Government and the Hong Kong Government.

2. During the financial years beginning 1976/77 the Hong Kong Government will make a Defence Contribution in Hong Kong dollars as follows:-

3.

(Details of the amounts and duration to be inserted)

The amounts shown above are at a (September 1974) price level and they will be adjusted annually to reflect changes in price levels ruling in Hong Kong and the United Kingdom as appropriate. so that the actual payment each year will be made at prices approximating to the outturn prices of that year. The indices to be used in making this adjustment are set out at Annex and the adjustment will be calculated each year on the basis of the movement in the relevant indices from end-September of the previous year to end-September of the current year. At the same time as this adjustment is calculated, a calculation will be made of the provision to be included in the Estimates of the Hong Kong Government for the forthcoming year.

4. The contribution assumes that works services for the garrison will continue to be determined by the UK Government and undertaken by the Hong Kong Government to normal UK Government standards and scales. The Hong Kong Government will be responsible for carrying out all minor new works and maintenance and will generally carry out major new works although by agreement the Property Services Agency may undertake major new work for the convenience of either the Hong Kong Government or the Government in the UK. The total value of the work to be carried out for each forthcoming year will be assessed at the same time as the procedure in paragraph 3 is under- taken.

5. The estimated total amount in paragraph 4 above will be deducted from the gross assessed annual contribution and the balance will be paid quarterly in Hong Kong dollars to the Command Paymaster Headquarters British Forces.

6. When figures are available for actual capital works expenditure undertaken in any Financial Year, a comparison will be made with the estimate used for that year and the amount of the next annual contribution reduced or increased accordingly. No such variation will apply in the case of minor works and maintenance. At the end of the last year of this agreement a settlement will be made of any underpayment or overpayment by the Hong Kong Government in respect of capital works.

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CONFIDENTIAL