CANEYDENTAL
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ANNEX A
To be revised when the recosting is completed 7
EXPLANATION OF CHANGES IN GARRISON COSTS
1.
The estimated garrison cost of £33.3m was arrived at by subtracting the cost
of the various reductions in force levels from the original estimate of £41 m which
was prepared for the January 1975 talks. While the maximum possible account was
taken of consequential changes in levels of support, only rough estimates were
available at the time. However, the revision of costs, as well as moving from
September 74 to September 75 prices, takes account of the much more detailed planning
which has since taken place.
2. The great majority of the increase in cost is due to inflation and the falling
value of sterling; the main increases being:
3.
8.
b.
The Services pay rise effective from 1 April 1975 18% 7
The increase in Local Overseas Allowance for UK Servicemen effective
from 1 July 1975. This was the first review since 1971 and takes account of
both increased costs in Hong Kong as well as the reduced purchasing power of
Overall the increase adds some 60% 7 to the LOA bill.
basic pay.
C.
Similar but smaller increases in pay and allowances for Gurkhas and locally
recruited Chinese, both uniformed and civilian 15% - 20%_7
d.
The falling value of sterling against the Hong Kong dollar. The rate
is now 10.57 dollars to the £ as compared with about 11.8 in October 74 when
the earlier estimates were drawn up. This is a reduction of over 10% 7.
The real (constant price) changes in garrison costs are much less significant.
The more important are:
a.
A revision of the works maintenance figure by the Hong Kong Government;
Can additition of £1m 7 or/HK$ 12.5m 77
b.
the omission of works costs in Nepal from earlier estimates £ m7
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