CONFIDENTIAL
4. In the absence of reserved powers, it would remain possible for HMG to bring legislation into force in Hong Kong without the assent of LegCo, but only by use of an Order in Council made in London under the prerogative right which is preserved by the Letters Patent.
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5. When this issue was considered by Ministers in 1985 (in the context of the introduction of indirect elections into
the legislature) the then Secretary of State recommended, and the Prime Minister agreed, that reserved powers should not be introduced. That reflected the clear view of the then Governor, Sir Edward Youde that this would be politically unacceptable in Hong Kong.
THE CASE FOR RESERVED POWERS
6. The main argument in favour of introducing reserved powers for the Governor is that, at some stage before 1997, we might face a hostile LegCo in Hong Kong which refused to pass legislation which HMG considered essential, for instance in relation to defence, or our international relations. Alternatively, LegCo could refuse to vote funds, thereby making it very difficult for the Governor and his officials to govern the territory effectively. The Governor needs the cooperation of LegCo to pass Appropriation Bills in order to pay the cost of public administration and the public service, and indeed his own emoluments. It is arguable that the absence of reserved powers would make it more likely that LegCo would take a strongly defiant attitude. In such circumstances, to impose such legislation
from London would be highly undesirable. It would be comparable with direct rule and would set a very bad precedent for post 1997. It would run counter to our general aim of making sure that Hong Kong stands on its own, separate from the UK, by 1997.
BIFADM/2
CONFIDENTIAL
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