E.R.

CONFIDENTIAL

(b) each application will be attributed points on the basis of standard weighted factors. The details will be fed into a computer, which will print the names out in order of points scored. There will then be a process of adjustment of weightings to order to correct any bunching effects. A line will be drawn under the top 50,000 names. HKG will begin to send out refusal letters, working up from the bottom of the list;

(c) those above the line will be interviewed and checked against criminal indexes etc. A few may fall out at this stage and be replaced from a reserve list of those who were just below the line;

(d) the Governor will forward a list of names to UK officials in Hong Kong, who will register them as British citizens on behalf of the Secretary of State. There will be discretion to reject a recommendation if not satisfied that someone was of good character but the Governor will already have carried out his own checks so this discretion will rarely be exercised. Registration certificates will be issued by either the UK team or the Hong Kong Government acting as their agents.

Spouses and children under 18 of beneficiaries will also be entitled to citizenship, subject again to a discretion to withhold citizenship if the Secretary of State is not satisfied that a person is of good character. Existing dependants will normally apply on the same form as the head of household. After the initial rush, however, there will be a steady trickle of applications from dependants, for example, because of marriages contracted by beneficiaries after becoming citizens. Applications from dependants will be checked by HKG and forwarded to S of S with advice on eligibility and any evidence of bad character.

HKG envisage setting up a unit of about 130 staff, with a new computer system, to handle the initial competition. The unit will be scaled down after the initial rush but expanded again to tackle the second round. HKG are preparing an estimate of costs.

We envisage that the Secretary of State's role will be carried out by a small team of UK officials seconded to Hong Kong - perhaps two officials with locally engaged clerical support. A calculation on the back of an envelope suggests that the annual costs could range from 50,000 to 300,000 per annum, depending on whether the team need to be in place continuously or only intermittently.

The fee mechanism

We have agreed with HKG officials that the aim will be to recover the costs of the citizenship scheme through fees, as happens now with citizenship awarded in the UK by our Nationality Division and in Hong Kong in relation to grants of British Dependent Territories Citizenship by the Governor.

CONFIDENTIAL

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