TNAG-0765-FCO40-969-Minting-of-coins-for-Hong-Kong-1978 — Page 185

CONFIDENTIAL

HKK13811

Reference.

~ 5 JAN 1973

4

Mr Thompson HKGD K245)

HONG KONG COINAGE

1.

INE

With reference to paragraph 1 of your minute of 24 January, governments (quite rightly) do not always simply buy the cheapest on the market. There are other non-economic considerations which governments, but not firms, consider: Britain would not buy Russian MIGs even if they were the cheapest planes of their class available; or, a non-strategic example, governments do not necessarily buy the cheapest nuclear power stations available if they fear it is not quite as safe as another one. Thus the statement "governments are not always in the same position as commercial firms" would seem to be correct. As I attempted to explain in my minute of 17 January, one of the costs of Hong Kong's present relationship with its Sovereign is that it mints its coins in the Royal Mint.

2. My tentative belief that this applied to all other colonies was based on enquiries within the Office and at the Royal Mint. Your subsequent and more thorough enquirieis with the Crown Agents dispece this.

3.

rove

As I explained on the phone, I think the Hong Kong order represents somewhere around 10% of the Royal Mint's total sales, but this figure could be wrong. Consequently, I have arranged for a copy of the Mint's latest published accounts to be sent to you. From this you can work out the approximate potential unemployment caused in Llantrisant (knowing, as we do, the value of Hong Kong's orders) though I think everyone agrees that the total number of people involved is of the order of 100. This puts the problem in perspective - we are talking about the possible loss of 100 jobs in Llantrisant (though not necessarily to the UK) and the allocation of a quarter of one percent of the Hong Kong Government's expenditure.

4.

In paragraph 5 of my minute I put the Treasury argument for not putting the Hong Kong order out to commercial tender. Like you I am not wholly satisfied with this argument (you recall we discussed whether "designs" of coins would belong to firms and if so whether they contribute substantially to total costs) so I suggest you raise the matter directly with Mr Arnold of the Treasury.

26 January 1978

Mark Hall

Mark Hull

Economists Department

CODE 18-77

SS 10/76

CONFIDENTIAL