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8.
Comment. This exchange confirmed the continuing
validity of Carr-Robertson, but the Treasury avoided any commitment to the principles of compensation or sterling
safeguards: their agreement to them was subject to HKG's
agreement to pay.
9. In 1988 the Foreign Secretary proposed that the
compensation arrangements should provide a strong incentive
to HMOCS officers to stay on for say 10 years after 1997.
The estimated total cost would be between £10 m and £20 m
with average compensation per officer being very roughly
£40,000, significantly less than a scheme offering full compensation (but these figures were very rough). He had concluded that it would not be right to ask HKG to bear the
costs: the obligation was for HMG not HKG; it would be
politically untenable for HKG to introduce a scheme for such expatriates only; China would not accept it and there would be no way to proceed without their agreement. He hoped the Chancellor would agree that the starting point for the PES negotiations for the years in question should include sums
to cover the additional costs of the scheme. (He did not mention sterling safeguards.)
10.
The Chief Secretary (Mr Major) recognised that it was desirable that sufficient numbers of HMOCS officers should
stay on after 1997 but said that deciding whether further inducement was necessary and if so what form of inducement should be effective were difficult matters of judgement. "However I understand your reasons for believing that a General Compensation Scheme for expatriate officers should be drawn up and announced shortly, and that the scheme should be funded by HMG." He noted that we expected the scheme to cost £10-20m over 10 years. He agreed that diversion of aid funds would not be defensible but did not think he could give an undertaking on the source of funds so far in advance of requirement. "If we commit ourselves to a
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