cst.ps/dr/21dm28.2
CONFIDENTIAL
possible measure of support by HMG. The HKG has, after all, every incentive to make such a scheme work, with financial assistance on their part if necessary.
5. I continue to have some difficulty therefore with the revised draft of the statement which you proposed. The HMOCS have been told that there can be no presumption that HMG will step in to provide a sterling safeguard at UK taxpayers' expense if
the HKG fails to adopt one of the solutions available to it. It is important that the statement creates no expectations about HMG's position. If you wish to indicate that the question of sterling safeguards remains under consideration, the onus for doing this should be laid at the HKG's door.
6. I attach a suggested revised draft which would achieve this objective. On the basis of this drafting, I would be prepared to say that we will give further thought to the SPOS question, though without any commitment as to timing. My officials have taken much care in an effort to find a formula on pensions questions which is non-prejudicial to HMG's position. If this formula does not commend itself to you, it might be better to say nothing at all on the subject of pensions next week.
7.
We both suggested that officials should look quickly at the details of the proposed compensation/incentive scheme. I understand that they have done so, and that a number of useful and productive points were discussed about the scope and structure of the proposals, and their handling in negotiations. I shall be happy for my officials to continue to assist yours, where we can, in considering your proposals.
ل
DAVID MELLOR
CONFIDENTIAL