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safeguard scheme is put in place which can be defended as fair, the courts would allow the Government wide scope to decide its terms. In particular, they are unlikely to consider it unreasonable for the Government to have regard to Hong Kong: UK relativities, given that the safeguarding scheme cannot in any case be based wholly on precedent (unlike in previous cases it is being put into place well in advance of transfer of sovereignty).
Timing
19. The issues have been under discussion since 1984. The HMOCS Association were promised consultations last Autumn, which have yet to take place. They had expected that the matter would be resolved during the Governor's visit in April. They are pressing for a solution, and can be expected to increase their lobbying of MPs and others. An extraordinary general meeting is scheduled for [?] May, and the Association chairman is threatening to resign.
Conclusions
20. The Governor has stated that the FCO's package represents the minimum he could accept or defend. Anything less could undermine the commitment of the staff concerned, distract from more important issues, and at the margin make it more difficult to maintain stability.
21. The HMOCS Association might gain some support in Parliament in arguing that the FCO package is the minimum consistent with fair treatment on the basis of precedent. Whether it would win general sympathy either in Hong Kong or in the UK given the favourable position of HMOCS staff is more questionable.
22.
The Treasury argue that it is unnecessary, to achieve the Governor's objectives and achieve a publicly defensible position, to offer payments and guarantees which would substantially exceed those available to comparable UK officers. They argue that that would be poor value for money at a time of heavy pressure on UK public expenditure.
23.
The sum at issue between Treasury and FCO on compensation £2m a year for 6 years is relatively small. That at issue on pensions safeguard is much more significant at some £150m, but would be payable only in the event of economic collapse in Hong Kong.
24.
were
The available legal advice is that, if the Treasury approach
adopted, the Government could be at greater risk
of
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