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Treasury are not minded to offer a guarantee, but they may
consider subsidising the costs involved in a private sector
scheme. Mr Portillo may argue that more work needs to be done
on this option to obtain costings, and perhaps seek views from
a second financial institution.
(iii) On compensation, Mr Portillo may maintain that the
original proposal (Option A) is adequate when combined with a
sterling safeguard. However, he knows that we cannot
agree to this and will, I believe, accept that HMG's offer on
compensation should be revised to make it more attractive to
officers. He is likely to prefer Option D as its estimated cost of £40 million is £14 million less than Option C (our
preferred option).
(iv) Agree that changes should be made to the SPOS
regulations, but that they should be implemented as part of an agreed package of benefits.
4. Against this background, I recommend that our strategy
should be to narrow down the options as far as possible with a view to inviting OPD (K) to reach final decisions on a package.
Specifically, we should press Mr Portillo to agree that:
(i) HMG should provide a sterling safeguard along the lines of Option A (Fixed Trigger). As he will not agree to a level of 16:1, OPD (K) can be asked to decide on the appropriate trigger level.
sub.overs.civils.ADM
JEB
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