TNAG-1941-FCO40-2767-Future-of-Hong-Kong-defence-and-public-order-1989 — Page 170

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the use of subsidies. (It might seem administratively preferable, and more in keeping with the spirit of the New

Management Strategy, for subsidies as well as budgets to be

allocated to budget holders. It is essential, however, that the DPF and DSF should continue to be managed separately in order to ensure that overall defence interests are met).

13. The Transition.

Successive studies have confirmed that

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for the time being at least supply and demand for F&C training are broadly in balance (except for a few prestige

courses, such as RCDS, where we would not want to increase the

supply even if there was the scope to do so). Provided the training establishments collectively make provision for F&C training along the lines and to roughly the scale of the

last few years, this should be sufficient to bridge the transition period until the New Management Strategy becomes fully operational. It will not, therefore, be essential to

identify F&C training as a separate item in the LTC. It is

likely in any event that attempts to do so would be

unsuccessful partly, as DUS (F)'s studies have shown, because

our information about the "hidden" subsidy is inadequate for us to express it in this way, and partly because at present it is difficult enough to estimate the true cost of our own

training activities, let alone that of training we provide for

others. There will, however, be a continuing need to ensure that mismatches between supply and demand do not develop, and that F&C training activities, including those that arise at short notice from the defence sales programme, properly reflect defence and foreign policy priorities. DMAO and Head of Sec(0) (C) will therefore chair a committee to coordinate all interests in this area and conduct a year-on-year review of training resources and priorities.

14. Charges and Subsidies. We will need coherent policies

for charging and subsidising customers for F&C training both now and when the New Management Strategy is in place. The present guidelines were built on the principle of "no net extra cost" and there is concern that the consequent level of

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