TNAG-2240-FCO40-3219-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 8

CODE 18-77

Mr. Cox

I have confined

with the MOD that they

extra

have bean given provision and expect ich to continue in subsegment year.

I have croomed Mr Gass.

Confidental

From:

Date:

Reference

J A Dew, RMD

3 December 1991

CC:

190

Mr Grant, Finance Dept watch.

Mr Dowse, NPDD

Mr Muir

74/12 HKB 063

Mr Stone, Hong Kong Department

FUTURE RN PRESENCE IN HONG KONG

1.

2.

63/1

189

iPa

Thank you for your minute of 2 December (not to all).

must

By chance I was about to send you the attached copy of a letter I had just seen from the MOD dealing with the replacement of HMS Endurance, which states at the end that

"the extra costs to HMG of retaining the Hong Kong Patrol

Craft, for which there is no longer a military requirement, were covered in the additions to the Defence Budget agreed in this year's PES settlement"

•

This is a clearer formula than that in Mr Webb's letter of 29 November to Mr Gass.

that

3. Taken together I read these two letters as indicating that the MOD have allocated a (small) proportion of the (significant) extra money they obtained in this year's PES to maintaining the Patrol Craft in Hong Kong. It would be reasonable to assume they have allocated money through this year's Survey for each of the years covered in this year's Survey, ie 1992/3, 1993/4 and 1994/5, with the expectation that the funding will roll on beyond into 1995/6 and 1996/7.

4.

a)

b)

I believe, to address your two questions, that

there is no untoward significance to the reference to this year's PES Round. The assumption is that the MOD have sorted this matter out for the future too.

I think it is unlikely that the MOD specifically sought extra money for this, given the of inter-departmental exchanges during the Summer, but they may have quoted it informally to the Treasury in the closing stages of the PES negotiation as one of a number of inescapable demands for which they did not have provision. I doubt if the Treasury would have agreed that it was not an appropriate charge to the Defence Budget (they would scarcely have agreed to fund it on those terms).

5. I think it would be most effective (and pose least risk of reopening the issue) if you were to approach your own MOD contacts directly on the basis of Mr Webb's letter of 29 November and Mr Bevan's letter of 22 November, and ask them to confirm the understanding in para 3 above.

Jai

J A Dew

Resource Management Department 3M 316 210 8295

при бубле

Thank

you

.

for the record

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you

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