TNAG-0571-FCO40-704-Planning-paper-on-Hong-Kong-1976 — Page 43

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that a general statement along the lines he had indicated would be sufficient for Ministers to reply adequately to Parliamentary Questions on the subject.

3. Mr Larmour replied that Mr Lipsey had advised that a reference to a minimum wage would need to be rather more specific, although he could understand why some delay in introducing the necessary legislation was probable. Mr Cortazzi said that he thought Ministers would also need to be kept informed of how planning was proceeding on the minimum wage and also on statutory hours of work, at least for their own information and perhaps also for use in confidential discussions with the TUC and the NEC. Sir M MacLehose said that he had already agreed with Mr Lipsey that Mr Lipsey would attempt a formula to meet the need for a more specific reference to minimum wages in a confidential document to be shown to the UC, and suggested that it would be a good idea to wait to see what he could produce. Sir M MacLehose remained convinced that any specific reference in Hong Kong to a minimum wage would have adverse effects on the programme for labour legislation. He agreed that Ministers might wish to have something to say in private to the TUC but he was concerned about the possibility of leaks from this source. The recent leaking of news about the Turner Study by the Tailors and Garment Workers Union had been most unfortunate.

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Mr Cortazzi drew attention to the need for Hong Kong labour legislation to pay due regard to the need for adherence to ILO conventions to which the UK was party. Sir M MacLehose replied that he expected fairly constant progress over the five year time table. He said there was some criticism in Hong Kong of the slowness of the procedure for registering declarations which the Hong Kong Government wished to make. It was agreed that the Hong Kong Government's communications on this should be routed through the Department who would keep a watching brief on this.

5. Sir M MacLehose drew attention to the passage in Annex C of the Planning Paper recommending that a further examination of the relation- ship between the Hong Kong Government and banks should take place. He said that there had been much progress in recent years in establish- ing greater control over the banking system. The matter had been examined by a Mr Tompkins of the Bank of England who had made five recommendations, all of which had been adopted. Banking affairs were now concentrated in the Monetary Affairs Office and the Government, as the Hong Kong and Shanghai Bank's most important client, had a good deal of influence over its affairs. The Governor had recently received assurances from the Bank of England that the theoretical conflict of interest in the Hong Kong and Shanghai Bank's activities was no cause for concern in actual practice. As to foreign exchange dealings, the Hong Kong and Shanghai Bank operated in the market on the instructions of the Government although this was not generally known Additionally, the recently enacted Securities Ordinance had established greater control over the stock market; and the Governor believed that there would be a gradual evolution of a monetary authority.

CONFIDENTIAL

Mr Cortazzi

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