TNAG-2685-FCO40-3886-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1993 — Page 152

18012

Uselil

Reference

points

HKA 23311 NOPED IN R

here.

22 JAN 1993 ill

Pains 2116

DESK

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REGISTRY

INLEX

PA

Adion Taken

1911

From: D S FISH

(Ext 3444)

Date: 19 January 1993

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G Whitney

Hong Kong Department/FCO

(8)

HONG KONG HMOCS MR PORTILLO'S LETTER OF 15 JANUARY 1993

1. The Treasury response is exactly as described to me last week by Don Rayson who had done most of the drafting. I mentioned to you that Mr Rayson had indicated that the Governor's letter of 17 December had left Treasury Ministers disinclined to make any concessions; he recognised and had so advised Mr Portillo that the latest Treasury proposals would not commend themselves to Mr Patten.

2.

As

an

You asked for my initial comments on the letter itself. you know I have more sympathy for the principle of comparability than does Mr Patten, but I would be against a strict post by post comparability exercise. The Treasury offer of 26:1 is clearly not acceptable and I do not believe that we could honourably open negotiations on this basis. The 26:1 figure arises from attempt to equalise both salary and pension accrual differentials and even then fails to recognise the fact that salary differentials are far from uniform. The pension accrual rates for colonial servants have always been more attractive than those of the PCSPS and we have never previously penalised HMOCS officers as a result. What makes Hong Kong HMOCS officers different from their predecessors is the salary levels. GAD estimated that the sterling safeguard would need to be set at between 18 and 22:1 to neutralise the greater Hong Kong salary benefits. If we could secure a sterling safeguard at the upper end of this range, I would regard that as a satisfactory outcome; Mr Patten, we know, feels differently.

3. The Treasury comments on SPOS are a red-herring. It is true that for many of our earlier retirees, SPOS now represents the greater part of their pension income. But for recent and future retirees, the basic pension is the critical element and this is what the sterling safeguard debate is about. The Treasury are wrong to say that in 'past cases' the sterling safeguard arose when HMG stepped in to pay. In all past cases HMG ensured that a sterling safeguard was provided as an element of the constitutional transition process. Later, in 1971, as an aid measure, HMG stepped in to pay on behalf of those countries who could not afford to do so. The fact that Hong Kong and its HMOCS officers are currently well off is irrelevant as far as the principle is concerned.

14. On compensation

A

THIC