Annex B to D/DS1/303/10/9 dated 22 Aug 75
Your officials have now received a breakdown of the £33.5m garrison by inflator categories. We will not be able to let you have the detailed garrison costs at 1976/7 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 inflater 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 £4.2m.. We would be grateful for your early confirmation of this, in the fegint ý your direnssions with the Command Secretary.
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 not to attempt to forecast outturn prices until
have a firm garrison cost on which to base the indices, which in some instances are not yet available in MOD.
OM
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