Mr Simon Rew
HM Treasury
Parliament Street
LONDON
CONFIDENTIAL
RODAAD
SW1P 3AG
23 May 1990
A
HONG KONG: COMPENSATION/INCENTIVE SCHEME FOR MEMBERS OF HMOCS
1.
Thank you for your letter of 18 May 1990 dealing with some helpful points. As you will have gathered this is a very involved subject on which it is not possible to say definitively how much it will cost. I appreciate that this is a factor which will give the Treasury cause for concern. You raise four questions:
(a) you are concerned to see set out in more detail the best worst and most likely case scenarios of the numbers of HMOCS members who may be involved in the scheme,
(b) you are concerned about the level of Hong Kong Civil Service salaries in 1997 and whether we could introduce some sort of caveat into the scheme to limit our liabilities;
(c) you wish to know further why we have proposed a ten year period of payments rather than say three years; and
(d) you wonder whether it is in fact necessary to promulgate the scheme in the near future.
I shall try to answer these questions seriatim.
2.
On the question of the number of HMOCS members that are likely to be involved, we had separately also come to the view that it would be best to present this problem to Ministers by way of best, median and worst case scenario. I attach an Annexe which sets out what we think the scenarios are. You will appreciate that it is extremely difficult to make accurate predictions on this. There are so many factors at work. The figure of 585 was arrived at after fairly detailed consultation and consideration with the Hong Kong Government of existing wastage rates and other factors. remains our best guess scenario.
It
3. On civil service salaries and our ability to limit our potential commitment, you will have seen from the paper that a number of possible options are in fact open. All the options have drawbacks. In terms of being able to foretell accurately our commitment, in respect of everything except the number of HMOCS
CONFIDENTIAL