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whereby HMOCS officers in Hong Kong would be eligible for
compensation from local revenue. In 1988, however, Sir G Howe
agreed with Mr Major, then Secretary of State, 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
C
13. In his minute of 24 November 1988 to the Chancellor of the
Exchequer, Sir G Howe proposed that compensation/incentive arrangements 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.
14. It is even more clear now than it was in 1988 that there is no
prospect of getting HKG/SARG to fund compensation arrangements for HMOCS members. Such funds would have to be approved by the Legislative Council which, even now, would reject such a proposal outright. After the 1991 elections even the theoretical ability of the Governor to control and hence direct a majority of the Council
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