CONFIDENTIAL
kare. He will not
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FCEIVE
MK.B 431/6
00001990
تھے
FROM:
A R Paul
Hong Kong Department
he crailclle
reporvent
the Treasury
/n
т
DATE:
13 July 1990
mich
beginnig
73
August.
RM 24/7
CC:
Mr McLaren Mr Burns
Miss Marsden
HONG KONG: GENERAL COMPENSATION SCHEME
1.
We have now received comments from Mr Fifoot (his minute of 11 July) and from Mr Kerby (ODA) (his minute of 12 July) on my draft submission of 6 July. I have also spoken to Mr Fish (ODA) and you have had a word with Miss Flint
(Treasury).
2.
It is clear from all this that further work will need to be done on the submission before it is ready to be considered by Ministers. I had hoped to be able to do this before going on leave, but the unavailability of the ODA and Treasury officials concerned (not to mention pressure of other business) has made this impossible. I am afraid that you will therefore have to take matters forward in my absence.
3. The comments received so far suggest a number of ways in which the structure and contents of the submission could be improved. In addition, there are a number of fundamental issues which need to be resolved:
(a) Should we, as the ODA want, get right away from the concept of a "Compensation Scheme" and talk in terms of an "Incentive Scheme"? I think we must present clear options. with, if possible, a recommendation. But whatever format we go for I would be most surprised if the Treasury and ODA would be prepared to agree to a recommendation that was substantially more expensive than the one approved by Ministers in 1988.
(b) How should the issue of sterling safeguards be covered in the submission? I think we are agreed that we cannot realistically hope to resolve the sterling safeguard issue now, and to hold up a decision on the Scheme until we had decided what to do about sterling safeguards would be a recipe for indefinite delay. But we should clearly flag up the fact that Ministers will have to consider sterling safeguards at some point and that this could well involve a financial commitment substantially greater than that involved under the Scheme.
(c) Consulting the Chinese. Mr Maude has suggested that we might carry out a 'model' consultation with the Chinese
BIFADQ
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