TNAG-2428-FCO40-3530-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 155

Mr Ricketts

to

I told Dave Fish that we would wish the S of S

press

for 16:1, at least for the moment. Our aim would be to get the

RESTRICTED

Treasury to concede the principle- we can then argue about the figure. Fish is concerned that

we put the Sof I inte hat in this basis, we should make him aware that the figure of 16.1

il-

being

has no rationale apart from La figure which acceptable to the Assonation.

Mr M Stone

ei 21/10

HKA 253/1 may

ine

Hong Kong Department/FCO

HONG KONG THE OPTIONS PAPERS

1.

Reference

From: D S FISH

(Ext 3444)

565

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Date: 20 October 1992

cc Mr Kerby

This

We spoke today about the latest version enclosures which the Secretary of State will Secretary.

2.

four pont,

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I understand why you wish to continue to press for a safeguard at 16:1. The current strength of the Hong Kong dollar makes our proposal look considerably less generous than it appeared a month or so ago. Nevertheless, I am certain that if, the Treasury concede the principle of a safeguard, they will fight 4 very hard to ensure that it is set much lower than 16:1. They will do so on the basis that HMG is under no obligation to protect pensions at a level which provides Hong Kong civil servants with significantly better benefits than their UK counterparts. I believe that their arguments are likely to find political favour in the UK and wonder to what extent the Secretary of State, or even Mr Patten, would

would wish to press for arrangements which preserve the financial advantages enjoyed by HMOCS officers.

3.

As you know, 16:1 was my suggestion, put forward because that was the historical exchange rate before the £ began to float, and because it would go some way towards redressing the effects of the imbalance between UK and Hong Kong servants pay and conditions of service. I have always shied away from a more scientific way of bringing UK and Hong Kong pension benefits into line, because I thought it would be an administrative nightmare which would result in never ending

ending wrangles with the HMOCS officers about job comparisons. However, we (and the Treasury)

(and the Treasury) now have the GAD letter of 16 September. This brings out very clearly the extent to which Hong Kong public servants are better off than their UK counterparts, both before and after retirement. I am sure that the Secretary of State would have difficulty arguing for generous treatment than the GAD letter implies, and the same could be said for the politicians who would feel inclined to support HMOCS officers on the principles at stake.

4.

As a

member

member of the FCO/ODA negotiating team, I have been conscious that we would have difficulty adducing persuasive arguments in favour of 16:1. A safeguard based on a policy of protection in

in line with the benefits available to UK public servants would at least be based on something tangible and, for that reason, could well be more defensible. Clearly a safeguard of 20 or 22:1 would provoke a massive outcry in Hong Kong, but then so would 16:1.

/5. I suggested