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officials might be prepared to recommend to the Chief
Secretary a compensation scheme costing £40 million (ie
splitting the difference), and a sterling safeguard scheme
with a rate of 16:1 using the Treasury's proposed mechanism.
We consulted the Governor on whether he wished us to explore.
further a compromise on this basis and/or seek a decision at
OPD (K) on 1 July. The Governor replied that although he
remained firm on the substance of the package for HMOCS
members, he was open to advice on the tactics for achieving
this. He was content to accept our judgement on whether
it would be useful to raise this matter at OPD (K).
4. Mr Goodlad agreed with our advice that OPD (K) would probably either fail to take a decision or favour splitting the difference, which the Governor could not accept. He
therefore decided that we should not include HMOCS on the
agenda for OPD (K) at this stage, but should instead suggest to the Chief Secretary that if he was willing in principle to show some flexibility in order to reach a settlement, officials should be instructed to come up with proposals quickly. If the Secretary of State agrees with this approach, he may wish to speak to Mr Portillo, and possibly also to the Chancellor, in the margins of this week's Cabinet. To lay the foundations for this Mr Goodlad agreed that Special Advisers
should should brief the Chancellor's Private Office; he would
also speak personally to Mrs Keswick.
The Secretary of State's meeting with the Governor on 1
July would be a chance to have a further word about this.
5.
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PF Ricketts
sub.hmocs.PR
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