Mizure
Miss Neale
Miss
RESTRICTED
COVERING CONFIDENTIAL
Reference......
GNN 340/393/1
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BN(O) PASSPORTS FOR HONG KONG: COSTS
1.
In their telno 1586 of 6 August, Hong Kong suggested that they bear the costs of producing and issuing passports to BN(0)s in Hong Kong and retain the balance between this and the fee to be charged under the Consular Fees Order (currently £15). We put this to Finance Department via my minute of 9 August which updated my previous one of 7 August. Mr Escritt, Finance Department, minuted on 23 September to the effect that it would be unacceptable for the Hong Kong Government to keep this profit since, with effect from 1 April 1986, all consular fees must be surrendered as consolidated fund extra receipts. However the Treasury have agreed that Hong Kong may retain their administrative costs and indicate, in the postscript to Mr Nelson's letter of 24 September, that there might be some scope for compromise. After consulting Hong Kong Department, MVD and Finance Department, we decided that we should seek confirmation from Hong Kong of their full costs in issuing passports before consulting the Treasury again on the proportion of the fee to be retained by Hong Kong, and then seek the latter's agreement; after this we should be in a position to submit our recommendations to the Foreign Secretary.
2.
Hong Kong have now confirmed that the cost to them in issuing their passports is forty percent of the fee charged (their telno 2372 of 31/10 below). This means that, in sterling terms and on the basis of £15 per BN(0) passport, the profit accruing to the Hong Kong Government would be £7; their current profit on a BDTC passport (at the equivalent of £20) is £12.
3. MVD have been unable to uncover any papers giving the basis for our arrangement with the Hong Kong Government whereby the latter perform visa, entry certificate and other work for us, keeping the balance between what they charge under the UK Consular Fees Order and their own administrative costs. However they did provide a lead to a minute written by Mr Streeton of Finance Department to Exchequer and Audit Department on 28/9/81, an extract of which is
Mr Streeton's attached to Mr Minter's minute of 11 November below. minute evidently put the case at the time for not claiming from the Hong Kong Government the difference in cost between our services for them and theirs for us. Interestingly, in para 7, he stated that there was no agreement covering this reciprocal arrangement, but that it followed the lines of a commonwealth convention on these services, under which those performed for dependent territories were normally gratis (see also Mr Minter's minute of 11 November).
4.
We believe that Hong Kong currently issue 130,000 passports a year producing a total income of £2.6 million (on the basis of passport cost at HK $200 = £20) and an after-costs profit of £1.56 million. If Hong Kong are right in estimating that 2.5 million BDTC's will apply for BN(O) passports, ie including the present holder then the average annual income between 1987 and 1997 will be roughly £3.75 million (if consular fee No 12 for the issue of a passport remains at £15) and the after-costs profit will be £1.75 million.
CODE 18-77 AWO Ltd. 7/84
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