TNAG-2269-FCO40-3268-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 53

CLEARED WITH MR. FISH CDA (with one amendment - of para 12)

NOT SENT TO TREASURY

CONFIDENTIAL

RECORD OF A MEETING ON COMPENSATION/INCENTIVE SCHEME AND PENSIONS ARRANGEMENTS FOR HM OVERSEAS CIVIL SERVICE IN HONG KONG: 12 NOVEMBER 1991 AT 1130

Present:

FCO Diplomatic Wing

ODA

Treasury

Mr Burns

Mr Kerby

Ms Brown

Mr Cox

Mr Fish

Mr Dew

Mr Foy

Mr Rayson Mr Rew

Mr Brancen

Miss Williams

1.

Mr Burns said that we had provided the Treasury with much detail about our package of three proposals a compensation/incentive scheme providing limited compensation phased over up to eight years but no early payment of pension, a sterling safeguard for pensions, and amendments to the regulations governing Supplementary Pensions for Overseas Service (SPOS) to make them more equitable. He thought this set of proposals would be just satisfactory to those in Hong Kong and would meet the obligations for HMG enshrined in the two White Papers of 1954 and 1960. We now needed to make progress.

2.

Ms Brown agreed that much attention had been devoted to this subject over the years. The Treasury were now very ready to address the substance of our proposals. We would also need to address questions of strategy and tactics eg, which decisions were necessary, and what announcements we should make and when. On substance the Treasury saw the situation as follows: Ministers had accepted that there should be some sort of inducement to persuade HMOCS members to stay in Hong Kong. HMG needed to find a "least cost" as well as an effective solution. No presumption had been made about how it would be funded. There was no statutory obligation and no obvious binding or relevant precedent in the case of Hong Kong. Hong Kong was an affluent territory, whose civil servants often received better salaries than their UK counterparts. The HMOCS officers in Hong Kong had worked for several years conscious of the forthcoming transfer of sovereignty in 1997. The case for an inducement rested on the general political situation.

3.

Ms Brown expressed concern about the very general and non-discriminatory nature of the FCO compensation proposal. The Treasury would prefer to see something more targetted, ie providing an inducement for those individuals we wanted to retain, surely not all the 666 mentioned.

4. Ms Brown said that there seemed no clear case for HMG to protect the value of HMOCS officers' pensions.

WADAAM

CONFIDENTIAL