TNAG-0544-FCO40-639-Strength-of-garrison-in-Hong-Kong-1975 — Page 155

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3.

have more than halved the UK Government's contribution and this position would have been well within HMG's publicly stated position which is a substantial increase in Hong Kong's contribution. I also think such equality of burden sharing would have been acceptable to the population. However, with cost inflation in the sterling content of the garrison even this proposition is becoming increasingly difficult

I therefore suggest that in the

course of the negotiations we will now undertake we should make every effort to see if some compromise cannot

be found that will close the gap between us.

The major issue is the burden sharing formula, but there are other aspects of the agreement we would like to discuss with you that might make their contribution towards narrowing the gap. In particular we are concerned at

ways of limiting any differential rates of inflation that may develop between the two economies so as to make the commitment involved in the inflator less open-ended;

the overheads of the garrison, and in particular the UK content of support and headquarters personnel and its sterling expenditure generally, and the methods by which it is calculated.

Though this is not related to the mathematics of the agreement I agree that its presentation would be assisted by the release of land now occupied by the Services, so I suggest that we look too at the possibilities of achieving either in the short or long term something fairly dramatic.

I now thank the Minister for his statement and Hon. Members for the very frank way they have recorded their views on it. The meeting is

adjourned.

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