element of compulsion to serve on after 1997. The most promising seem to be:
(a) to pay compensation according to full traditional factors, phased over 5 or 6 years from 1997, with 5% interest; use of 1992 salaries and UK RPI as before; but cap of £120,000 to keep costs down.
COST: Probably £37-£43m.
Maximum, with all contract officers: £68m.
(b) to pay compensation according to half traditional factors, phased as above. No cap (use of £120,000 cap would not reduce costs significantly in this case).
COST: Probably £27m-£31m.
Maximum with all contract officers: £49m.
It might be possible to limit the costs to the "probable" figures by minimizing the number of contract officers who transfer to HMOCS or by denying them the right to "buy back" service for HMOCS compensation purposes.
Other options might make only eg 80% of the notional total payable to those who decline to serve on for a couple of years after 1997; or to offer an additional incentive payment to those who stay on.
Way forward
-Decision in principle to revise proposal ? -When to put new ideas to Treasury ?
First make progress on sterling safeguards ? Package ? First discuss with Treasury officials ?