TNAG-1754-FCO40-2474-Future-of-Hong-Kong-Parliamentary-debates-1988 — Page 187

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1.

ROZAGI

DEFENCE COSTS AGREEMENT

General

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The House will understand that the Defence Costs Agreement with Hong Kong is primarily a matter for my rt hon Friend the with Hong Kong is a matter for my rt hon Friend the Secretary of

State for Defence.

I am very pleased that a new agreement has been reached with

the Hong Kong Government on sharing of defence costs.

The new apportionment of 65:35 in place of 75:25 is fair and realistic. It was the outcome of long and tough negotiations I believe it recognises the constraints and meets the needs of both

sides.

2.

Costs to Britain, Savings for Hong Kong?

It is impossible to quantify the cost to Britain of the new

agreement with any high degree of accuracy, not least because we expect the strength of the garrison to be decreasing over the period of the agreement. But the Hong Kong Government have calculated that

the savings for Hong Kong under the new apportionment more than balance the cost of expanding local services to assume some of the duties now carried out by the garrison.

3.

Perceptions in Hong Kong, passage through Finance Committee

It is understandable that some in Hong Kong should have wished for a more favourable outcome for Hong Kong. But the new agreement is the outcome of genuine and tough negotiations, at a time when our defence budget is coming under increasing pressure.

Our defence budget has declined by 6% in real terms since

1986, and we expect that it will remain static in real terms in the

next few years. At the same time, our worldwide defence commitments

have not been reduced.

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