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and Geoffrey Howe in 1988, and leaving the pensions issues
for further consideration.
3. We have duly opened consultations in Hong Kong on the compensation proposals. Initial HMOCS reactions are very critical of the limited nature of the proposals, and we can
expect some difficult discussions and public controversy. In the light of these consultations we shall need to look carefully at our proposals before promulgating a scheme. Apart from the political and financial aspects, we shall need to consider carefully how a scheme would be likely to fare in the event of an application for judicial review.
4.
Meanwhile we now need to reach decisions on pensions.
David Mellor wrote to me on this point on 19 March. In view
of his paragraph 5 I should make clear that we do not assert that HMG are necessarily under a legal obligation to safeguard the sterling value of HMOCS pensions, but we are
in no doubt that the White Papers and subsequent practice constitute a strong moral and political commitment by successive British governments (decisions in respect of which could well be the object of an application for judicial review) to ensure that such a safeguard is provided and, if the government of the territory concerned is unable or refuses to provide it, to step in and provide it
ourselves. I enclose a note setting out the precedents, of
which Hong Kong HMOCS officers are well aware.
5. I would take issue with other points in paragraph 5 of
David Mellor's letter too. For example, since 1984 Hong
Kong HMOCS have been expecting us to announce how we intend to fulfil our commitments regarding pensions, ie the matter
has by no means been settled in their or our minds. However
the key point is whether or not the Hong Kong Government can provide a pensions safeguard or whether HMG will have to provide it.
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