TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 43

CONFIDENTIAL

4. Assurances given in the past to HMOCS have not

distinguished between those serving in different places,

and I cannot see how we could justify introducing such a distinction now. Moreover since we have accepted that constitutional change in Hong Kong raises comparable problems for HMOCS to those raised in territories becoming independent, we could not justify declining to attempt to set up comparable arrangements to deal with them. However since Hong Kong is well able to afford to finance these arrangements without

subsidy from HMG, I consider that our policy should be that

these arrangements should be financed before 1997 by the Hong Kong Government and after 1997 by the SAR government. In default of this, there would be pressure on HMG to finance the arrangements themselves. This should be resisted as long as possible, but in the last resort the liabilities are not so

large that it would be impossible for HMG to take them on.

Summary of Conclusions

5. My conclusions are that:

(a)

we should aim for arrangements whereby HMOCS officers

in Hong Kong are eligible for compensation from local

revenue. We should proceed to discuss these with the

Hong Kong Government. [Estimated maximum cost is a

one-off payment of £25 million at current prices and

exchange rates.]

(b) We should aim to negotiate safeguards for the sterling

value of pensions earned under HMOCS up to 1997, the

cost being met by the Hong Kong (SAR) Government.

Further study should be given to the nature and timing

of such safeguards, and there should be discussion with

the Hong Kong Government. [Estimated cost, on worst case

assumptions, is £10.5 million per year.]

CONFIDENTIAL

/(c)