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should announce only the compensation proposal; that we
should leave SPOS to be settled at the same time as
final decisions on sterling safeguards; and that
Lord Caithness should say that both these questions were still under consideration and that we expected to
be able to take decisions within three months.
A
4.
The Chief Secretary's letter of 4 March again rejected
HMG funding of sterling safeguards; proposed an
alternative paragraph for the draft statement by Lord
Caithness, placing the onus for any sterling safeguard
on the Hong Kong Government and saying that we continue
to study SPOS; but suggested that if this formula did
not commend itself to us it might be better to say
nothing at all on the subject of pensions at this
stage. He suggested no amendments to the passage of our draft covering the compensation scheme (from which
he agreed there could be no rowing back).
The Treasury draft statement was not completely accurate
and would have caused us serious difficulties in Hong Kong. However their fall-back position of saying nothing at all on
pensions (ie sterling safeguards and SPOS) was in effect acceptance of the most important point in the compromise proposed by the Secretary of State: that Lord Caithness
should make a statement confined to the compensation scheme
and forthcoming consultations on this. (In contacts with
Treasury officials last week we secured oblique confirmation
that this was the meaning of the Chief Secretary's letter:
we said that we expected Lord Caithness would make the
compensation announcement in a low-key way). This was our immediate objective under the two-pronged approach advocated by the Governor during his calls on Ministers in January,
when he argued that news on compensation should take the immediate heat out of the issue in Hong Kong and buy us some time while we continue to pursue sterling safeguards.
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