CONFIDENTIAL
- I again pointed out the possible contingent liabilities
for HMG; the awkwardness of the alliance between the Chinese Government and the civil service unions; the political sensitivity here of pensions post-Maxwell; and the fact that although UK public service pensions are not funded, they are fully portable.
5. As for other approaches, Civil Service Branch gave me the attached papers, summarising their work on the four options mentioned in their telegrams. This makes even clearer the objections to each. You will note in particular that Mr Margolis has revised his figures, after you exposed the holes in them, and the burden to Government of his scheme is now even more evident. (It is surprising it did not fall earlier on his blithe assertions about being able to guarantee a higher rate of return on the fund than the cost of borrowing.) ExCo have not yet been consulted (ie neither of the two draft papers has issued). It seems that decisions will not be taken until after the Governor-designate's arrival.
6.
Could you please prepare a short briefing note for Mr Patten, summarising the problem, HKG's approach so far (not concealing the differences between SCS and FS), the reasons for our interest, our proposal and the state of play. He will then be able to seek advice from an informed background after his arrival in Hong Kong.
аг
N J Cox.
CONFIDENTIAL
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Private notes are available after approval.