TNAG-0543-FCO40-638-Strength-of-garrison-in-Hong-Kong-1975 — Page 55

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CONFIDENTIAL

AMMEX A

EXPLANATION OF CHANGRS IN GARRISON COSTS

1. The estimated garrison cost of $33.3m was arrived at by

the cost of the various reductions in force

subtracting

levels from the original estimate of £1m 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 costs is due to

inflation and the falling value of sterling; the main increases

being:

a.

p.

The Services pay rise effective from 1 April 1975 (22%).

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 changes in prices

and patterns of expenditure in the UK and Hong Kong since

that time. The revised allowance also reflects the

increase in .LOA required as a result of the change in

the Forces Fixed Rates of exchange made on 1 July 75.

The increase adds some 60% to the LOA bill.

-1-.

CONFIDENTIAL