TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 126

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C

whereby HMOCS officers in Hong Kong would be eligible for

compensation from local revenue. In 1988, however, Ministers decided that it would not be right or feasible to ask the Hong Kong

Government to bear the costs of a General Compensation Scheme

because a locally financed scheme for expatriates only would be

highly divisive within the Hong Kong civil service and would place

the Hong Kong Government in a politically untenable position.

Ministers also acknowledged that the Hong Kong Government was already making a substantial contribution to the total cost of compensation arising from the change of sovereignty in 1997 by funding a limited compensation scheme (to facilitate localisation of senior civil service posts before 1997) and a special scheme for

Special Branch officers at a combined cost of some £40 million.

B 13. In his minute of 24 November 1988 to the Chancellor of the

Exchequer, Sir G Howe proposed that a General Compensation Scheme

costing an estimated £10-20 million, at mid 1988 prices, over 10

years from 1997 should be funded by HMG from the ODA Overseas Superannuation Vote; and that the starting point for the PES negotiations for the years in question should include sums to cover

the additional cost of the scheme. In December 1988, Mr Major, the

then Chief Secretary to the Treasury, agreed that the proposed scheme should be financed by HMG. He declined to give any

undertaking about how the cost of the scheme should be met in PES

terms so far in advance but agreed that it would not be an appropriate charge for the aid programme. Following this exchange with the Treasury, however, Sir G Howe decided that the time was not

right to put the proposal to the Prime Minister as there were a

number of other financially contentious issues involving Hong Kong

which remained to be resolved.

What form of Scheme?

14. One option which was previously considered, and rejected, by

Ministers is to introduce a "traditional" form of General

Compensation Scheme (see paras 4 to 5 above) which would provide all

WEDABH/5

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