TNAG-1154-FCO40-1434-Visits-by-Members-of-Parliament-(MPs)-to-Hong-Kong-1982 — Page 160

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THIRD REPORT FROM THE EXPENDITURE COMMITTEE

902, col 814-5). The garrison will include in future four infantry battalions (three of them Gurkha), a Gurkha engineer squadron, five naval patrol craft and a RAF helicopter squadron. At current prices the cost will be £42 million a year, which is some £20 million less than that of the present garrison. The Hong Kong government will meet 50 per cent of the cost of the garrison in the first year of the new Agreement (1976–77), 621 per cent in the second year and 75 per cent in the third and succeeding years, compared with a contribution in the current financial year of about £11 million under the present agreement. The new Agreement will run for seven years initially and will be renewed for further periods of five years on the same terms unless either government wishes to vary them. Payments to the United Kingdom will be adjusted for changes in price levels, and the Agreement makes provision for reviews of any aspect of the costs or composition of the garrison, including the cost of the support elements, with any savings being shared in the same proportion as the contributions. At the same time the Government have undertaken to release land currently occupied by the Services at Kai Tak (about 120 acres) and at Victoria Barracks (43 acres) in the years in which the Hong Kong contribution increases to 624 per cent and 75 per cent (1977-78 and 1978-79 respectively), subject to the reprovision elsewhere of essential Service facilities by the Hong Kong Government.

4. We welcome the satisfactory conclusion of the defence costs negotiations. We think it reasonable that the major part of the cost should be borne by the Colonial administration since the major military role for British forces in Hong Kong and indeed the only role for which they will now be properly equipped is internal security where they provide essential backing for the local police. On the other hand we could not justify the continued retention of important sites centrally situated which remained from days when the Services were present in much greater numbers and had wider responsibilities. We were concerned that in the negotiations the Governor of Hong Kong might have had difficulty in carrying with him the unofficial members of the Executive and Legislative Councils with whom the Minister of State did not negotiate directly. Our Sub-Committee in Hong Kong found no evidence to support the suggestion that the negotiations had been anything but hard and we do not underestimate the problems which the Governor was facing in gaining popular acceptance for the agreement in Hong Kong (Q 8). We regard the result as fair to all concerned and congratulate the Minister of State and the Governor on their conduct of the negotiations.

5. We consider that the continued presence of British Forces in Hong Kong is vital to the continued existence and the economic well-being of the Colony. In international law, title to the Colony exists in a series of treaties ceding Hong Kong Island and part of Kowloon in perpetuity and leasing the New Territories until 1997. It was acknowledged that the Peoples' Republic of China, like their nationalist predecessors, consider that Hong Kong's cession was founded on unequal treaties dating from a period of internal weakness. In Chinese eyes the settlement of questions raised by the treaties was in no way dependent on the ending of the lease for the New Territories, and the future of Hong Kong, Kowloon and the New Territories was indistinguishable. For the moment, it is clear that the Chinese government acquiesce in the status

1 The price base for these estimates is September 1975.