17305Z
REFERRED TO MR HUM FOR DISTRIBUTION ADVICE ADV TO HKD//HD TO INMUAN 0210 HMLNAN 3029
DO FCO
FM HO
TO FCOLN
17103OZ MAY
GRS 992
EM HONG KONG
TO IMMEDIATE FCO
TELNO 774
OF 17103OZ MAY 93
INFO PRIORITY PEKING, UKREP JLG HONG KONG
PERSONAL FROM GOVERNOR TO HUM, AUSS AND RICKETTS, HKD.
OUR TELNO 456: HMOCS.
1.
THANK YOU FOR SIGHT OF THE DRAFT CABINET OFFICE PAPER AND FOR FLAGGING UP SUGGESTIONS ON A POSSIBLE NEGOTIATING BRIEF FOR THE SECRETARY OF STATE.
2.
I HAVE TO SAY THAT I AM NOT HAPPY THAT EITHER THE CABINET OFFICE PAPER OR THE COVERING LETTER SETS OUT THE FACTS AND THE POINTS ON WHICH DECISIONS ARE REQUIRED IN A SUFFICIENTLY BALANCED WAY. THE PAPER IS CAST IN THE LIGHT OF SEEKING A COMPROMISE BETWEEN THE TREASURY AND THE FCO PROPOSALS RATHER THAN SEEING THE -CO PROPOSAL AS A REASONABLE COMPROMISE BETWEEN THE TREASURY POSITION AND THE DEMANDS OF THE HMOCS ASSOCIATION. IF A COMPROMISE BETWEEN THE TREASURY AND FCO POSITIONS HAD BEEN DESIRABLE OR ACCEPTABLE, IT WOULD NOT HAVE BEEN NECESSARY TO PUT THIS SUBJECT TO THE PRIME MINISTER FOR DECISION.
3.
THE CENTRAL ISSUE, AS I SEE IT, IS ONE OF PRINCIPLE AND THAT IS, WHETHER IN THE CASE OF HONG KONG, AND HONG KONG ALONE, HMG SHOULD DEPART FROM THE ESTABLISHED HMOCS COMPENSATION AND STERLING PENSION SAFEGUARD ARRANGEMENTS INTRODUCED FOR EVERY OTHER HMOCS TERRITORY. IN PARTICULAR IT IS WHETHER HMG SHOULD SEEK TO INTRODUCE A NEW PRINCIPLE OF UK COMPARABILITY AND THEREBY REDUCE THE TERMS OF THE COMPENSATION AND STERLING SAFEGUARD PACKAGE FOR HONG KONG HMOCS OFFICERS. THIS ALSO NEEDS TO BE VIEWED IN THE CONTEXT OF HONG KONG HMOCS OFFICERS HAVING A LEGITIMATE EXPECTATION OF THE SAME GENERAL ARRANGEMENTS AS THOSE INTRODUCED FOR THEIR HMOCS COLLEAGUES ELSEWHERE.
4.
I BELIEVE THAT THE PAPER ITSELF SHOULD START WITH AN EXPLANATION OF THE AMOUNTS INVOLVED IF THE STANDARD HMOCS PRACTICE WAS APPLIED TO HONG KONG. THIS WOULD MEAN A TRADITIONAL COMPENSATION SCHEME USING FULL FACTORS WITH A CAP AT ABOUT POUNDS 200,000 AT 1992 PRICES AND A STERLING PENSION SAFEGUARD RATE SET AT ABOUT 12 HONG KONG DOLLARS: ONE POUND STERLING. THE PAPER COULD THEN GO ON TO ELABORATE ON THE FCO PROPOSALS AND EXPLAIN WHY THEY ALREADY REPRESENT A SIGNIFICANT COMPROMISE WHICH TAKES INTO ACCOUNT THE INTEREST OF UK TAXPAYERS. THE ADVANTAGE OF SUCH AN APPROACH WOULD BE TO PRESENT THE TWO EXTREMES OF THE TRADITIONAL HMOCS PRACTICE AND THE TREASURY POSITION WITH THE FCO PROPOSAL AS THE COMPROMISE SOLUTION. THE PRESENT PAPER IMPLIES THAT IS IS REASONABLE TO TAKE UK SALARY AND PENSION RELATIVITIES INTO ACCOUNT AND THAT ONLY THE TREASURY PROPOSAL DOES THIS. THIS IS OF COURSE FAR FROM THE TRUE POSITION. THE FCO PROPOSAL IS ALREADY AT A 35 PERCENT DISCOUNT ON STANDARD HMOCS ARRANGEMENTS.
5.
MY CSB EXPERTS HAVE SOME POINTS OF DETAIL ON THE CABINET