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6.
CONFIDENTIAL
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It was confirmed that it would now be necessary to include in the MOU some reference to the existence of the Statement of Working Principles on the works programme and the Statement of Financial Procedures: document for the latter - in particular for purposes of review provided for in paragraph 10 of the MOU - would be the manpower and costing tables. Hong Kong will forward a suitable draft paragraph to MOD.
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7. On the question of the figure included in paragraph 5 of the MOU it was felt although the implications may need to be considered further that a single figure would be more appropriate than the minimum and maximum hitherto intended: this should cover both new capital works and maintenance (although the latter would be kept at £2 m.) and may be stated as an intended average annual expenditure.
8. . Mr. Wiggham advised the meeting of some minor corrections to paragraph 8 and 9 of the MOU. These were agreed.
Land Releases
9.
S for S proposed that, in the light of discussions in the plenary sessions, an additional paragraph should now be included in the MOU covering land releases and referring to a schedule which would include dates for those areas be released as part of the works programme as well as the particular areas of Kai Tak and Victoria. This was acceptable to MOD representatives who agreed likewise that separate provision should be included for review of progress on reprovisioning and land releases. will provide a draft for consideration.
Inflation
Hong Kong
10. With reference to Hong Kong's concern for the amount of the total cost still subject to UK differential inflation, Mr. Jones suggested that one possibility which he would be prepared to take advice on in London was that Item (vi) in the inflator groupings, namely equipment from the UK, should be subject to a Hong Kong index rather than the UK index originally proposed; but that the cost would need first of all to be converted to its Hong Kong dollar equivalent. Another possibility would be to work out the increases on both bases i.e. using the two different indices separately then working out some compromise. Hong Kong side agreed to put these proposals to the F.S.
L.0.A.
11.
The
Mr. Jones confirmed that he would send further information on the machinery for LOA reviews together with considered advice on the ratio of sterling and dollar drawings. He also confirmed that the note referred to in paragraph 1 above would suggest that, for the patrol craft replacements, the cost sharing should be on the same basis as that agreed for the garrison as a whole.
Security Branch,
Colonial Secretariat CONFIDENTIAL
Hong Koug
4th November, 1975.
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