TNAG-2077-FCO40-2957-Hong-Kong-culture-1990 — Page 181

CONFIDENTIAL

Mr Paul

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still waiting for comment

from RMD/ Finance

Dep.

in the meantime.

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Marsden,

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1. We spoke. I have suggested some amendments to your draft as on the attached copy.

2.

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20

In the last few days, and since your submission was drafted, the British Council has decided not to proceed with the idea of the Education Trust Fund. Finance Department pointed out before the Council's 6 March Board Meeting that if £ million of last year's PES award to the Council was to be invested in a trust fund, the Treasury would have to be consulted. There was a question of propriety and principle. Should public money be used in this way? According to Finance Department, recent experience indicated that the

To be Treasury was unlikely to reach a quick decision. convinced of the value of the scheme, the Treasury would need a great deal more detail than the Council had prepared. The PUS therefore asked the Council to stall. At the meeting it was acknowledged that further discussion would be required between the Council, the Treasury and ourselves.

3. During these further discussions Mr Elam expressed our reservations about going to the Treasury with the trust fund idea. He said the Treasury would be bound to ask why we had not made it clear to them from the beginning that the PES money allocated last November for the Council's use in Hong Kong was to be used in this way. They would accuse us of bad faith or of having misled them. But most important of all, the Treasury would certainly not be inclined to look favourably at this year's substantial PES bid for the Council. John Hanson, Deputy Director General, needed little persuading that against that background the Education Trust Fund proposal should be withdrawn. He said the Fund would not be viable if the only official pump-priming were the Council's own £250,000 already in Hong Kong. This would not attract the very big sponsorship that was available.

References to the Trust Fund can therefore be deleted from changed

the draft submission.

4.

The endowment of the Research Centre at the new Hong Kong University of Science and Technology remains an oustandingly attractive opportunity. Subject to the views of SEND I think it is right to go for the most expensive option ie set up cost of £10 million over 2 years with £0.5 million recurrent costs over 5 years. It is a once in a

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CODE 18-77

ST8AGW

CONFIDENTIAL

/lifetime