CONFIDENTIAL
private sector option has been fully explored.
(iii) On compensation, Mr Portillo may maintain that the original proposal (Option A) is adequate when combined with a sterling safeguard. However, he knows that this has already been rejected by the HMOCS Association, and may be prepared to accept that HMG's offer on compensation should be revised to
make it more attractive to officers. He is likely to prefer Option D as its estimated cost of £40 million is £14 million
less than Option C (our preferred option).
Exchange (iv) to accept that changes should be made to the
mulls regulations for Supplementary Pension for Overseas Service boy (SPOS), but that they should be implemented as part of an agreed package of benefits. If he does concede the principle of a sterling safeguard, he may wish to re-examine the SPOS
amendment, in case combined with a sterling safeguard it
results in a double benefit.
ways
3. Against this background, I recommend that our strategy
should be to reach an agreed package if possible, and if not
to narrow down the options as far as possible. The elements of a package which we believe would meet our objectives and
would also meet the Governor's criterion of an "honourable"
settlement are set out below. If Mr Portillo offers to settle
but on less favourable terms, we recommend that the Secretary
of State reserve his position in order to discuss the offer
with the Governor next week. If necessary we could then get a quick paper to OPD (K) to reach final decisions on a package. Specifically, we should press Mr Portillo to agree that:
(i) HMG should in principle provide a sterling safeguard
along the lines of Option A (Fixed Trigger). We should not
agree to a level of worse than 16:1, without reference to the
Governor.
sub.overs.civils.ADM CONFIDENTIAL
JEB