TNAG-0545-FCO40-640-Strength-of-garrison-in-Hong-Kong-1975 — Page 127

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(NOTE: COSTS CONVERTED AT SEPTEMBER AVERAGE MARKET RATE OF HONG KONG DOLLARS 10.55 EQUALS 1 POUND STERLING)

YOU SHOULD NOTE THAT THIS BREAKDOWN, BUT NOT THE TOTALS, MAY BE AFFECTED MARGINALLY BY THE SEARCH FOR FURTHER ECONOMIES REFERRED

TO IN PALMER'S LETTER OF 4 NOVEMBER TO DAVIES. PLEASE PASS THIS

BREAKDOWN TO HQ BF,

2. YOUR PARA 4. WE DO NOT CONSIDER, EVEN ALLOWING FOR THE USE OF THE WORD QUOTE REQUIRE UNQUOTE, THAT YOUR PARA 5(B) ADDS MUCH OF SUBSTANCE TO THE EXISTING 5(A) BEYOND THE INTRODUCTION OF SPECIFIC DATES WHICH, FOR THE REASONS EXPLAINED IN OUR TEL NO 896, WE ARE RELUCTANT TO AGREE. WE ASSUME THAT YOUR 5(B) IS DRAFTED WITH AN

EYE TO THE PRESENTATIONAL CONSIDERATIONS WHICH WE HAD ACKNOWLEDGED

IN PROPOSING THE FORMULA AT PARA 2 OF OUR TELNO 896. WE SHOULD

BE GRATEFUL TO KNOW IN WHAT WAY OUR FORMULA FALLS SHORT OF YOUR NEEDS. IN THE MEANTIME WE MUST RESERVE OUR POSITION ON YOUR 5(B).

IF YOU STILL WISH TO PRESS THE POINT IT WILL HAVE TO BE RESOLVED

AT THE MEETING BETWEEN THE GOVERNOR AND THE MINISTER ON 4 DECEMBER.

A

3. YOUR PARAS 6 8. THERE APPEARS TO BE A MISUNDERSTANDING OF THE

PURPOSE OF LO A REVIEWS. THE NEEED FOR PROMPT ADJUSTMENT OF LOA AS POSTULATED IN YOUR PARA 8 WOULD NOT ARISE UNLESS BASIC PAY ROSE MUCH MORE QUICKLY THAT COSTS IN HONG KONG AND WE EXPLAINED IN PARAS 3 - 5 OF OUR TELNO 896 WHY THIS WAS UNLIKELY AT LEAST IN THE

SHORT TERM. A RISE IN BASIC PAY RATES ALONE IS NOT A SUFFICIENT CONDITION FOR AN LO A ADJUSTMENT AND WE THEREFORE CANNOT ACCEPT THE

FORMULA IN YOUR PARA 8. RECOGNISING THAT SOME MEANS MUST HOWEVER BE FOUND OF OFFERING YOU TANGIBLE REASSURANCE ON THIS POINT WE

WOULD PREFER TO TAKE UP THE IDEA PROPOSED IN OUR TELNO 896, OF INCLUDING SUITABLE PROVISION IN THE MOU. WE SUGGEST THAT PARA 11(B) OF THE M O U BE AMENDED TO READ:-

QUOTE THE INDICES IN ANNEX B PRODUCED RESULTS MATERIALLY OUT OF LINE WITH THE ACTUAL MOVEMENT OF COSTS (IF BASIC RATES OF PAY AND ALLOWANCES OF UNITED KINGDOM BASED SERVICE AND CIVILIAN PERSONNEL RISE DURING THE PERIOD OF THE AGREEMENT MORE

RAPIDLY THAN COSTS IN HONG KONG, WITHOUT AN OFFSETTING /ADJUSTMENT

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