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with the recent budget and was inclined to think the Financial Secretary had shown himself insensitive to the known concern of
HMG. Is there, for instance, a chance of seeing fiscal prgress next year? If not, he may be reinforced in his view that the Financial Secretary should be replaced which may create a very
difficult situation indeed. So far, it has been assumed that
Mr Haddon-Cave is irreplaceable but as he does not retire until
1980, there seems little chance of progress along the lines suggested by the Governor unless Mr Haddon-Cave is prepared to be less rigid.
7. Any attempt to change the Financial Secretary would face us
with three separate problems:-
(a)
(b)
it might be difficult to find him another job;
there would be difficulty in finding a replacement
of sufficient calibre;
(c) the change might well cause an excessive reaction in
Hong Kong.
The only post in sight which could be represented as a promotion for Mr Haddon-Cave is the Governorship of Bermuda which falls
vacant in the Spring of 1977. There is, however, no guarantee that he would get this and no guarantee that he would take it if it were offered. It would, we understand, be contrary to Colonial Service practice to direct an officer to take up a post in another dependent territory. Furthermore, it is unlikely that we could find a Financial Secretary of sufficient calibre from the Colonial Service to replace him and any promotee from within the Hong Kong Service might well share his general economic philosophy. Even on the assumption that an appropriate figure could be found he would have difficulty for some years in changing the principles which Mr Haddon-Cave and his predecessor have so firmly established. Finally, Hong Kong business opinion, and perhaps also overseas investors would regard fir Haddon-Cave's replacement with a great deal of suspicion.
8. The Governor might be asked for his views on this possibility which we would regard as one of last resort, unless of course it
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could be adroitly managed by our offering, and Mr Haddon-Cave's accepting, the Governorship of Bermuda. Is there any other possibility which the Governor could suggest, eg the appointment of an economic adviser to dilute the strong but one-sided influence of the present Financial Secretary? This possibility was raised
in the correspondence with Sir Duncan Watson but was not proceeded
with.
Line to Take
9. The recent budget caused Lord Goronwy-Roberts some concern
and cast doubt on our ability to encourage internal policies in Hong Kong which the Secretary of State would regard as defensible
here. The success of our proposed policy of postponing any
consideration of the long term future of Hong Kong may well depend on continuing progress towards a more socially just society there. Are the views expressed during the budget debate by the Financial Secretary as immutable as they sound? We would be reluctant to contemplate removing Mr Hadd on-Cave but pressure to do so may well increase unless he proves more flexible. Removal would, we judge, cause serious difficulties in our relations with Hong Kong; but in the last resort, Ministers may conclude that this is the only
course.
HONG KONG AND INDIAN OCEAN DEPARTMENT
28 April 1976
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