TNAG-1910-FCO40-2714-Financial-assistance-from-the-UK-Government-to-Vietnamese-re-1989 — Page 14

CONFIDENTIAL

the difference between the

-

is found from the FCO's

(b) the sum of £0.25 million

approved and annnounced figures

Unallocated Provision.

3.

Finance Department agree.

Background

A

4.

C

The Chief Secretary's letter of 6 June gave agreement to a discretionary claim of up to £4.25 million from this year's Reserve

to provide emergency temporary accommodation for Vietnamese boat

people in Hong Kong. Up to £4 million was for the conversion of the

barracks at Lei Yue Mun, and £0.25 million was for tents.

5. The Hong Kong Government have decided not to proceed with their plan to convert Lei Yue Mun: the barracks there are serving

a holiday home for local people and there would be strong local

opposition to its use for boat people. They have identified various alternative projects that would provide emergency accommodation for some 23,000 people at a cost of up to £4.5

million. They are seeking our agreement to the reallocation of the

approved HMG funds to these projects.

6.

Two problems have now arisen:

(a) The Treasury cannot accept that the current proposal falls within the terms of the Chief Secretary's agreement. They say that

the Chief Secretary's original authority was based on the need to

provide accommodation for 7,000 people. They are only prepared to authorise expenditure of £2.5 million, based on earlier estimates of

the cost of the Whitehead project, which alone would provide accommodation for 9,000 people, thereby meeting the original accommodation objective. In fact the Hong Kong Government have

already covered two thirds of the cost of the Whitehead project from their detention centre project vote.

CONFIDENTIAL