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continue bilateral negotiations with them, we would probably find ourselves back to square one, with the Treasury back in stone-walling mood.

One further point to bear in mind is that when the next round of consultations are held with the Association, they will have to be on the basis of detailed draft schemes. These schemes, which your and our officials have been working on, are complex and Leave plenty of room for the Treasury to save money at the margins and be difficult if they so wish. Thus, even if we did get a decision in our favour at OPD (K) that would not necessarily be the end of the story and it could still be some time before a detailed scheme was worked up and an announcement could be made and further consultations held.

5.

As against that, we cannot guarantee that we will be able to extract an acceptable deal after a further two months or

so of official-level haggling with the Treasury. If you conclude that in the circumstances it would be better to try and get the political decisions made at OPD (K) we will ensure that the issue is put on the agenda, and will produce a minute from Douglas Hurd to Colleagues making our case. To prepare the ground, I would be prepared to speak to the other members to explain to them as fully as possible our case and to seek

case and to seek their support. You and Douglas Hurd would also need to be armed with some degree of flexibility for deployment at the meeting if we are to get a positive ruling. We can consider this further once a decision has been taken on the inclusion of this question on OPD (K)'s agenda.

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