CONFIDENTIAL
2.
Having discussed this with the Foreign Secretary and having taken into account the Governor's assessment of reaction in Hong Kong, the Home Secretary is convinced that we should not try to offer British citizenship (outside the normal provisions of the 1981 Act) as an encouragement to Hong Kong businessmen to invest here. However such an offer was presented it would be widely interpreted in Hong Kong and elsewhere as an arrangement to sell British citizenship to people who had no personal links with this country.
The Home Secretary recognises, however, the strength of the Prime Minister's point that while we want to encourage investment in this country, we ought not to appear to be encouraging people to leave Hong Kong. The Home Secretary believes this is best handled in the way he presents the Government's response to Sir Michael Sandberg. He will be seeing Sir Michael on 2 July when he will be able to discuss this with him. He proposes to explain that our legislation is framed on the basis that British citizenship is not granted to people who are not settled and living here. While he would be careful not to appear to encourage businessmen to leave Hong Kong or withdraw their investments there, he would make clear that there are recognised arrangements permitting the entry and eventual settlement of businessmen who decided they wanted both to invest in and live here. Such steps could lead in due course to British citizenship under the terms of the 1981 Act, which provides the Home Secretary with some flexibility. Not to make these points would, in the Home Secretary's view, make his response less helpful than it need be.
The Home Secretary has agreed this approach with the Foreign Secretary and would be grateful to know if, in the light of the further information in this letter, the Prime Minister agrees it should be handled in this way.
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With Fillll
CD Powell, Esq.
W R FITTALL
CONFIDENTIAL
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