TNAG-2099-FCO40-2988-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 114

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S Rew Esq

HM Treasury

Parliament Street

LONDON

"CONFIDENTIAL

Foreign and Commonwealth Office

London SW1A 2AH

RODAAD

SW1P 3AG

4 June 1990

HuB 431

Y

R

190

Dear Simon,

11

Taken

5

HONG KONG: COMPENSATION/INCENTIVE SCHEME FOR MEMBERS OF HMOCS

4t

1. Thank you for your letter of 18 May 1990 in which you raise a

I number of important points about the costing of this scheme. agree that we need to try to sort these out before consulting the Governor and certainly before submitting to Ministers.

2.

You expressed particular concern about the basis for calculating the numbers of HMOCS members who may be eligible to benefit from the scheme; the financial implications of further sizeable salary increases for Hong Kong civil servants before 1997; the reason for proposing a ten year period of payments rather than a much shorter period; and the reason for aiming at an early announcement. I shall try to deal with these points in

turn.

(i) Number of eligible HMOCS officers

3.

I had independently come to the conclusion that it would be better to present Ministers with a range of possible costings based on alternative scenarios since there are so many imponderables involved that it is virtually impossible to come up with any precise estimate. As you suggest, I therefore intend to set out projections for the number of eligible HMOCS officers based on three alternative scenarios and the detailed assumptions underlying them in the form of an annex to the OD (K) paper. We are now preparing the first draft of such an annex in consultation with Dave Fish (ODA).

(ii)

4.

Further large increases in civil service salaries

This

You draw attention to the possible need for the Hong Kong Government to continue to increase salaries for civil servants above the level of inflation in order to keep them in place. is indeed a legitimate concern and has been borne out by substantial salary increases over the last two years. It is possible that this trend may not continue to the same extent as in recent years because the Hong Kong economy has now taken a severe

CONFIDENTIAL