TNAG-2099-FCO40-2988-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 117

CONFIDENTIAL Mr Jaul

I have revised and shortened

Mr Stone's draft. Mr Fist's comments

have also

been incorporated.

I

would be

happy

h

explain there

crelly.

S Rew Esq

HM Treasury

Parliament Street

Report 16

RODAAD

LONDON

SW1P 3AG

June 1990

Ms Marsden Mr Stone

Биси

letter has issued

4/6

IT IS

POSSIBLE

THAT

HONG KONG: COMPENSATION/INCENTIVE SCHEME FOR MEMBERS OF HMOCS

1.

Thank you for your letter of 18 May 1990 in which you raise a number of important points about the costing of this scheme. I agree that we need to try to sort these out before consulting the Governor and certainly before submitting to Ministers.

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

I

INDEPERDOVRLY

INTENO

3. We had also come to the conclusion that it would be better to present Ministers with a range of possible castings based on alternative scenarios since there are so many imponderables involved that it is virtually impossible to cet up with any precise estimate. As you, therefore propose 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. are now preparing the first draft of such an annex in consultation with Dave Fish(opm).

(ii)

4.

Further large increases in civil service salaries

We

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. This is indeed a legitimate concern and has been borne out by substantial salary increases over the last two years. This trend may not continue to the same extent as in recent years because the Hong Kong economy has now taken a severe downturn and the Hong

CONFIDENTIAL