movements in land prices (and until the future of the New Territories become s clear, there could be a tendency for them to start falling in a few years' time).
On the basis of the specific assumptions referred to in paragraphs 12-13 above, the financial implications of the present proposals are that their additional discounted cost is not offset by the additional discounted revenue until 1989/90, even if land prices are assumed to rise at 10% a year (which, as pointed out at paragraph 13(a) above, may become increasingly unlikely).
15
As these financial considerations are very sensitive to changes in the assumptions, the Government must pay particular attention to the one assumption it can influence, that is the rate at which land is made available for exchanges (paragraph 13(a) above). The Working Group also recognised this was essential for the success of the new scheme (see paragraphs 5. 14. 1 and the recommendation at 8.8 of their report).
16
All the transactions in respect of the changes proposed to the Letter B system would continue to be dealt with through the Government's normal accounting arrangements. In other words compensation pay- ments would be charged to appropriate subheads of expenditure by project, while premia would be credited to the appropriate revenue subhead. But special arrangements would be necessary to record the transactions in such a way as to facilitate monitoring so as to demonstrate clearly the extent to which the cost is recouped. Also, given the size of the initial outlays, it will be necessary to consider the method by which the new scheme should be financed (for example by means of loan finance).
17
On the economic side, the advantage of the proposals is that they forestall a slowing down in the supply of land as a result of an increasing resistance to resumption that would accompany a con- tinuation of the present letter B system.
Procedural and other proposals
18
Honourable Members will note that the Working Group's report contains comments, recommendations and proposals in respect of the procedure for resumptions, and the implications outside of the New Towns of adopting the compensation and exchange proposals referred to above. The Secretary for the New Territories and the Secretary for the Environment are studying these other proposals and a further memorandum covering them will be put to this Council shortly.
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