CONFIDENTIAL AND PERSONAL
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£1-2 million per annum. The Governor believes that amendment to the SPOS Regulations is essential if the HMOCS Association are to accept the overall package of benefits.
The Treasury's position is that once a sterling safeguard is in place, pensioners will have protection at a level equivalent to or better than their UK counterparts, and that to amend the operation of SPOS as the Foreign Secretary proposes would provide an additional level of safeguard which they consider unjustified.
Way Forward
The Foreign Secretary has explored with the Chief Secretary the full range of options for compromise on the sterling safeguard rate and on SPOS but has been unable to reach agreement. The Hong Kong Government, who wish to push ahead with other related Civil Service matters, and the HMOCS Association are pressing for a decision. The Governor has asked for the subject to be included on the agenda for OPD(K) on 10 November.
If you agree, the Foreign Secretary will tell the Governor that the Prime Minister is prepared to discuss HMOCS
in the margins on the condition that the Governor will accept the Committee's decision and will not oppose it in public.
The Foreign Secretary will warn the Governor of the difficulties we face on public expenditure and that this is likely to affect the outcome of the discussion. He will also seek his acquiescence in a compromise package involving: splitting the difference on compensation; and agreement on the SPOS amendment (which would be of some practical benefit to present and future Hong Kong pensioners), even if this means accepting a rate between 16:1 and 26:1 for the sterling pension safeguard.
Roderic Lyne Esq CMG 10 Downing Street
Yours
ever,
Skagrum
(J S Smith) Private Secretary
CONFIDENTIAL AND PERSONAL