CONFIDENTIAL
FM FCO
TO IMMEDIATE HONG KONG
TELNO 1534
OF 23173OZ AUG 91
CONFIDENTIAL
121 032261
MDHOAN 9254
TOP CO
Q DIST?
HKB 233/1
FOR SHIPLEY, CSB
HMOCS MATTERS: COMPENSATION/INCENTIVE SCHEME
вли
1 AS YOU ARE AWARE, WE ARE ABOUT TO APPROACH THE TREASURY AGAIN ON HMOCS MATTERS. WE SHALL BE TAKING UP THREE ISSUES: THE COMPENSATION/INCENTIVE SCHEME: STERLING SAFEGUARDS: AND AMENDMENTS TO THE SPOS REGULATIONS. ON THE
COMPENSATION/INCENTIVE SCHEME, WE HAVE SLIGHTLY CHANGED THE FINANCIAL ENVELOPE WE ENVISAGE FOR THE SCHEME AND WOULD LIKE TO LET YOU KNOW THE DETAILS TO ENSURE THAT YOU SEE NO DIFFICULTIES
2.
WE HAD PREVIOUSLY CONCLUDED THAT TO GET THE PROPOSALS THROUGH THE TREASURY, WE SHOULD PUT A STERLING CEILING AT CURRENT PRICES ON THE AMOUNT OF FUNDS THAT HMG WOULD BE PREPARED TO DISPERSE. WE HAD THOUGHT OF A FIGURE OF POUNDS STERLING 25 MILLION. ON REFLECTION, WE HAVE CONCLUDED THAT IN PRESENTATIONAL TERMS THIS WOULD BE VERY DIFFICULT. WE COULD NOT TELL HMOCS MEMBERS HOW MUCH THEY WOULD BE LIKELY TO GET UNTIL WE HAD A CLEAR IDEA OF HOW MANY WERE LIKELY TO STAY ON. WE HAVE THEREFORE DECIDED TO DROP THIS. HOWEVER, WE STILL BELIEVE THAT THE TREASURY WILL WISH TO HAVE SOME LIMIT ON HMG'S LIABILITIES. WE THEREFORE PROPOSE TO INFORM THE TREASURY THAT WE INTEND TO LIMIT THE FINANCIAL COMMITMENT BY STATING THAT THE COMPENSATION WAS BASED ON 1991 HONG KONG SALARY LEVELS AND WOULD BE PAID IN STERLING AT THE AVERAGE EXCHANGE RATE FOR 1991. THE VALUE THUS DERIVED WOULD THEN BE UPRATED ANNUALLY TO TAKE ACCOUNT OF THE MOVEMENT IN THE UK RETAIL PRICE INDEX. FOR THE HONG KONG CIVIL SERVANT THIS WOULD HAVE THE ADVANTAGE OF THEM KNOWING PRETTY CLEARLY HOW MUCH THEY WERE GOING TO GET: AND KNOWING THAT THE REAL VALUE IN STERLING TERMS WOULD BE MAINTAINED. IT WOULD NOT OF COURSE ALLOW THEM TO BENEFIT FROM ANY REAL SALARY INCREASES IN HONG KONG BETWEEN NOW AND 1997 - BUT CIVIL SERVANTS MAY NO LONGER BE ANTICIPATING THIS. FROM THE POINT OF VIEW OF THE TREASURY, IT WOULD ENSURE THAT THEY WERE IMMUNE FROM THE HONG KONG GOVERNMENT RACKING UP SALARIES.
3.
WE WOULD BE GRATEFUL FOR CONFIRMATION THAT YOU SEE NO
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