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£1 m per annum at present exchange rates, or £2 m if the dollar fell to HK$16 to £1. But the present inequity is a source of strong complaint to the Overseas Service
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Pensioners' Association, and tackling it would help significantly to reduce the immediate heat of the HMOCS
issue in the UK.
9.
The
We should need additional PES provision for the Superannuation vote for 1992-93 to finance the revision to the SPOS calculation: this is a matter of long-standing UK pensions legislation and it would not be proper to divert Aid or Diplomatic Wing funds for the purpose. (Nor is there any possibility of the Hong Kong Government now starting to contributing special support for expatriate officers). compensation obligation will also require separate provision in due course: Hong Kong's continued prosperity and stability are an interest of the Government as a whole; and the costs for Britain of a break-down there would be very high. But if you prefer I am content to stick to the position that Ministers should decide on this nearer to
1997.
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10.
In
There are drawbacks to proceeding step by step. the interests of reducing the costs to the taxpayer and of encouraging HMOCS officers to stay on in Hong Kong, both our compensation and our sterling safeguards proposals are more limited than in other Dependent Territories. If we announce only one element, rather than a full package, and particularly if we have to keep our options open on the principle of a sterling safeguard, there is likely to be
more disappointment among HMOCS officers and they may try to use salami tactics to get more out of us. But I believe the
situation will be manageable and the risks involved less serious than if, by failing to make any early announcement, we provoke a bitter political row.
11. I enclose the draft text of an announcement I should like Lord Caithness to be able to make in Hong Kong.
Could
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