TNAG-2687-FCO40-3889-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1993 — Page 44

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Confidential

FCO proposal as a compromise between the demands of the HMOCS

Association and the interests of the UK taxpayer. He made

clear, and has since confirmed to Mr Ricketts who is in Hong

Kong, that the FCO proposal (with some minor modifications) is

likely to be the minimum acceptable to the HMOCS Association

and that it represents his bottom line. He told Mr Ricketts

that he would publicly oppose any offer to HMOCS falling short of the FCO proposal.

4.

At the Secretary of State's bilateral with the Prime

Minister on May, the Prime Minister said he would support a

package which involved splitting the difference in cost between the FCO and Treasury proposals. However, as this would not provide a package acceptable to the Governor, the

Secretary of State decided not to propose it to Mr Portillo. One loose end is that PS/Mr Portillo is expecting the

Secretary of State to broach this issue with the Chief

Secretary. The draft seeks to finesse this point by trailing Mr Goodlad's visit to Hong Kong.

5. I have spoken to Mr Dinham, Government House about possible next steps. One option would be for a final decision on HMOCS to be taken at a meeting of OPD (K). (The Governor has it in mind to suggest a meeting with Ministers in June to

discuss electoral matters, so HMOCS might dovetail into that). But Mr Dinham thinks the Governor is likely to prefer a

meeting with the Prime Minister, Secretary of State and Chief

Secretary, on the grounds that an OPD (K) meeting would be more

likely to favour the Treasury view. Mr Goodlad will have an

opportunity to discuss these ideas during his visit. In the

meantime, we should endeavour to keep the Prime Minister

engaged.

Then

J C Morris

sub.hmocs24.ADMIN

JEB

Confidential