cst.ps/dz/5dm18.2
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CONFIDENTIAL
Mr Ricketts HUD
acten sein Cox & Stone.
taken by
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25/2
CHIEF SECRE
SECRETARY
TO
THE
TREASURY
Ps/hard Gaithrea
Si Jlden Mr Burns
Treasury Chambers, Parliament Street SWIP 3AG
071-270 3000
Fax 071-270 5456
The Rt Hon Douglas Hurd CBE MP Secretary of State for Foreign Affairs Foreign & Commonwealth Office
King Charles Street
London
SW1A 2AH
22yks
HONG KONG: HMOCS
HKA 233/1
Thank you for your minute of 11 February,
am
น
February 1992
50
2. I suggest that we take this forward in the following way. I prepared in principle to agree a compensation/incentive scheme and amendments to SPOS regulations provided that we agree now that this would represent all that HMG should do, at a cost to the UK taxpayer, to address the sterling safeguards issue. The onus should be placed firmly on the HKG to fund any further measure to protect the value of pensions which they consider desirable.
3. Our officials have, as you know, demonstrated to the HKG a practicable, costed scheme for capitalising the value of HMOCS pensions. The HKG accepted that this proposal was in principle the cleanest way of meeting HMOCS's concerns. (It is also unquestionably the best deal for the UK taxpayer.} The HKG did not deny that they could afford this, at a total cost of £170-370m or phased annual payments of £37-80m over the next 5 years. They acknowledged that, far from representing 'asset-stripping', our proposal would relieve HKG/SARG of a significant liability, potentially on attractive terms.
4.
are
It
The HKG's obstacles to implementing this proposal political. But Chinese reaction to it has not been tested. remains available to the HKG to pursue at any time if they wish to meet the HMOCS's concerns. On this and on numerous other measures which we have taken recently to help the HKG, I cannot avoid the impression that the flexibility and positive thinking has much more evident on our part than theirs.
been
CONFIDENTIAL
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