CONFIDENTIAL
Their
4. The paper sets out the facts and the points on which decisions are required in a fair and balanced way. But frankly the result is a cop-cut by the Cabinet Office. covering minute invites Ministers to consider whether they want to compromise, and says that if they do, officials could
produce options to meet whatever total sum Ministers are
prepared to spend.
5.
The Cabinet Office therefore seem to envisage further
haggling between FCO and Treasury Ministers. This is unlikely to advance matters. A meeting chaired by the Prime Minister will almost certainly be necessary to resolve the deadlock. It was central to the Governor's strategy to engage the Prime Minister. If the Secretary of State agrees,
I therefore recommend that the Private Office should
encourage No 10 to convene a meeting under the Prime Minister's chairmanship, taking the Cabinet Office paper as basis.
6. If the Prime Minister does decide to convene a trilateral meeting, it is important that we are able to send the Secretary of State in with a negotiating hand to play. That in turn will require the Governor to show some flexibility. Set out below is a brief comparison of our and the Treasury's respective positions:
FCO Proposal
(1) Compensation using full
factors (cost £48M over 6
years)
(2) Pension safeguard scheme
at a rate of HK$16: £1 (max contingent liability £250M over 50 years).
Treasury Proposal
(1)
Compensation using half
factors (cost £33M over
6 years).
(2) Pension safeguard scheme
at HK$26: £1 (max contingent liability £100M over 50
years).
sub.hmocs.ADMIN
JEB
CONFIDENTIAL