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inpalatable.

There would be no way to proceed without

their agreement, because the greater part of the funds would not be paid until after 1997 and would therefore

have to come from the Hong Kong Special Administrative

Region.

The Hong Kong Government are already making a

Substantial contribution to the total cost of Compensation arising from the change of sovereignty in

.397. Two schemes to meet very particular requirements .

have seen set up. A limited compensation scheme will

facilitate the localisation before 1997 of senior civil

sarvice posts. The money will go to expatriates who have

bean required to retire early to make way for local

officars. In addition, a covert extension of the scheme

will cater for Special Branch officers (expatriate and

local) required to retire in advanca of 1997 because of

the very sensitive nature of their work. The cost to the

Hong Kong Government of these two schemes (which are of

course essentially different from the General

Compensation Scheme in that they benefit local as well s

expatriate officers) is likely to be almost £40 million,

substantially more than the estimated cost to us of our

proposed General Compensation Scheme. I believe it is

right for HMG to play their part by funding what will be

an exclusively expatriate scheme.

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