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CONFIDENTIAL
Elements of a Package
(A) Compensation
7.
In 1988 Ministers accepted the need for a compensation scheme funded by HMG. Detailed proposals could not be taken forward immediately, but officials have now refined earlier proposals, in consultation with the Hong Kong Government.
Details of the proposed low-cost scheme and extra background
are at Annex C.
8.
This scheme is more modest than a traditional
compensation scheme and may fall short of HMOCS members' expectations, but meets the White Paper obligation to provide compensation. The cost of the scheme is difficult to predict. The most likely figure is between £20-30
million, with a maximum of £44 million. The scheme at Annex
C has been designed to form part of a package, with a
sterling safeguard (see next section). But if no such
safeguard scheme can be agreed, one option would be to
introduce a compensation scheme only. Views differ on the impact this would have. It might buy some time with HMOCS
Alternatively, however, HMOCS officers might see
it as so inadequate that it would only fuel pressures for a
full safeguard scheme as well. There is also a risk of salami tactics by HMOCS officers first pressure for a full traditional compensation package, then pressure for sterling
safeguards.
officers.
(B) Sterling Safeguards
9. Despite the present strength of the Hong Kong economy,
all Civil Servants in Hong Kong are worried about the possibility of the Hong Kong dollar declining in value: but
HMG's interest is limited to HMOCS members. The
compensation scheme outlined in Annex B will do nothing to allay these worries. There are essentially six possible ways of addressing this issue:
NC3AAV/3
CONFIDENTIAL