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CONFIDENTIAL
6.
In a spirit of compromise I am prepared to accept that we leave the SPOS question to be settled at the same time as
we take final decisions on sterling safeguards. But I am not prepared to leave the compensation question unresolved until then: it remains my view that Malcolm Caithness should
make an announcement about this in Hong Kong next week. I
enclose a revised text of such an announcement: it will be
essential to indicate that sterling safeguards and SPOS are
under active consideration, but the language used is not
prejudicial.
7.
The
You propose that officials should discuss further the details of our compensation proposal. I am sceptical that it will be possible to fulfil our obligations and meet our
objectives at significantly lower cost. Our proposal was the fruit of many months' reflection and discussion.
financial basis of the scheme needs to be defensible in
terms of past schemes and of Hong Kong's special circumstances; the principle that the maximum payable should
be 50% of the traditional sum calculated on actuarial
factors meets this criterion. The alternative concept of individual targeting, which your officials have sometimes
mentioned, seems to ignore both the principle that all
members of HMOCS have the same rights and duties and the
objective of maximising the number of HMOCS officers who stay, irrespective of grade etc, in order to maintain an expatriate back-bone in the public service. Nonetheless I am content for officials to discuss our August proposal
further, if they can now do so rapidly: we cannot afford
further delays on this.
8.
I hope you can accept this compromise which effectively involves no new decision from what John Major
and Geoffrey Howe agreed in 1988. If you cannot accept it, I think that we should meet quickly. If we can still not
reach agreement, we will need to convene OD(K).
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CONFIDENTIAL.
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