TNAG-0942-FCO40-1161-Visit-by-Lord-Carrington--Secretary-of-State-for-Foreign-and-1980 — Page 54

CONFIDENTIAL

SECRETARY OF STATE'S VISIT TO HONG KONG:

26-29 SEPTEMBER

SUPPLEMENTARY BRIEF TO BRIEF NO.5 DEFENCE COSTS AGREEMENT (DCA)

1. The third and, it is hoped, final round of discussions on the

cost of the Hong Kong garrison will take place in Hong Kong in the

week beginning 6 October.

2. MOD will be seeking Hong Kong Government's agreement to a

revised costing of the garrison of £136 million in 1981/82 rising

to £155 million in 1985/86, with the Hong Kong Government paying

75% of the cost from the outset, i.e. over £100 million in 1981/82

(more than 75% because Hong Kong pay 100% of capital works costs)

against £45 million last year.

3. MOD will also be seeking agreement that the cost is recalculated

annually. Under the existing DCA, it was simply increased by

Lord

standard inflators. This suited Hong Kong since it meant that

neither officials nor Unofficials got involved in detailed scrutiny

of the defence estimates which could prove embarrassing.

Privy Seal has said to the Prime Minister that we hope it will be

possible to maintain this.

4. Hong Kong Government will be seeking to stage the increase in

their contribution as happened when the present DCA started.

are prepared if necessary to concede this.

MOD

Hong Kong and General Department

September 1980

CONFIDENTIAL