TNAG-2367-FCO40-3440-British-Dependent-Territories-(British-Overseas-Territories)-1991 — Page 67

CONFIDENTIAL

OFE

4.

However, the impact on St Helena of abolition would be severe in economic, social and political terms and would increase pressure on the aid budget. The ODA have estimated that over the proposed 5 year phase-out period, the cumulative total cost to the Island would be £300,000 through unemployment payments and lost remittances from the UK. Thereafter the annual cost could be around £100,000. These are costs which HMG will have to offset. Unfortunately the Department of Employment's suggestion that St Helena might make more use of the existing arrangements for training and work experience in the UK, the details of which were kindly provided by Bob Niblett with his letter of 22 March, would not go very far to compensate for the loss of the quota. The existing rules for the training and work experience scheme set a standard of suitability (and educational or professional qualifications needed) which the majority of the St Helena workforce would at present find it difficult to meet.

5. From St Helena's viewpoint the best solution would be for their part of the quota to continue indefinitely. But exempting St Helena would pose problems for our Hong Kong interests. Although we might announce that the quota scheme was being abolished for all dependent territories other than St Helena, we would not be able to conceal for very long (the Hong Kong press is very persistent) the fact that in recent years only Hong Kong and St Helena have been using the quota. We would then be thrown back on our original difficulty of explaining why in practice we were discriminating against Hong Kong.

6.

In view of the clash of Hong Kong and St Helena considerations we have tried to identify a possible compromise. Our Ministers have approved the following proposals:

(a) that, in order to solve the presentational problem, we would, as discussed informally, agree to an announcement of a 5-year phase-out of the Quota for all dependent territories;

(b) but, because of St Helena's unique problems and the likely recurrent costs to HMG of abolition in that territory, we should need to review its position after 2 years (ie end of 1992). The announcement could say (as in the enclosed draft line to take) that the review would be to establish whether the phasing out was posing significant difficulty for any dependent territory.

(c) the quota for Hong Kong could be phased out progressively (reducing by 30 places per year), but the St Helena quota should be retained in full, or reduced only slightly, for the first 2 years and (subject to the review) tail off more steeply thereafter.

POPAIR

CONFIDENTIAL