TNAG-0625-FCO40-773-Trade-missions-to-UK-from-Hong-Kong-1977 — Page 37

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d) if in addition the charter rate from the

shipping subsidiary involved a subsidy, this too would be seen by the GCBS as a direct breaking of the under- taking to operate commercially;

e) if the guaranteed charter is not given through British Shipbuilders it is difficult to see any other body undertaking to do it. The BSC or any other public sector body would only charter on commercial terms, and would require a subsidy to meet any additional costs involved in entering into an arrangement of this nature. The Government itself could not guarantee a charter income unless there was a definite customer in mind, otherwise it would be indulging in speculative charter ventures. If this were done through the British Shipbuilders' ship- ping subsidiary it would again be contrary to assurances given in the debate.

Conclusions

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There are potential difficulties in the proposals of the Hong Kong owners as we understand them. We must be careful not to offer anything which will be scen by UK owners as damaging their prospects or as giving foreign owners preferential treatment.

16 At the same time, if these people are prepared to place orders, perhaps using their own credit facilities, albeit with the help of a subsidy, we must be prepared to see what can be done to bring this about.

SBP May 1977

CONFIDENTIAL