TNAG-0542-FCO40-637-Strength-of-garrison-in-Hong-Kong-1975 — Page 159

SECRET

DRAFT

We have consulted other Departments on the points in your 797 and answers

are as follows:-

(a) Your pares 1

IN

3:-

Your officials have now received a breakdown of the £33.5m garrison

"(your reko 810 refers) shelf

by inflator categories We will not be able to let you have the

detailed garrison costs at 1976/77 estimates prices ie a Sept 75

price base until November, but by the use of indices an approximate

figure can be assessed. On this basis the estimated increase on

the serials of the inflator related to UK supplied indices (items 1,2,4,

5, 6) is £4.5m or about 25%. This takes into account both real increases

and changes in exchange rates.

Our Command Secretary has details of the individual indices and has

been instructed to discuss them with your officials. Until the

serials related to Hong Kong price movements have also been up

priced we can only guess at the total garrison cost at September

1975 prices, but we would expect it to be in the region of £40m

£42m. We would be grateful for your early confirmation of this.

The validity of the inflator can only be proved after it has been

in operation for some time and the MOU makes provision for adjustment.

It would be better aot to attempt to forecast outturn prices until

we have a firm garrison cost on which to base the indices, which

in some instances are not yet available in MOD.

(b) Your para 4:-

will remain open mah? Or completion of the fortcoming negitatione; it will not be forecloud

We can confirm that the alternative option of 5 patrol craft/only

open (and is not fore-closed by the planned departure of 2 of the

SECRET

lesafte