TNAG-2484-FCO40-3615-UK-Hong-Kong-Scholarship-Scheme-donation-to-the-UK-Governme-1992 — Page 70

CONFIDENTIAL

UK/HONG KONG JOINT FUNDING SCHEME

1. The Hong Kong Government have asked us to increase our contribution to the Joint Funding Scheme (currently £2 million) in line with inflation. This would cost £100,000 if the increase was anncunced for FY 1990/91; and about £200,000 if it took effect from 1991/92.

2. The UK/Hong Kong Joint Funding Scheme (like other fee support schemes for Malaysia, Cyprus, Bermuda and the Cayman Islands) was established in 1933/84 when full cost fees were introduced for overseas students. The scheme is designed to offset the difference between the "home" and "overseas" tuition fee for Hong Kong students reading for first degrees in British universities. There is still a severe shortage of university places in Hong Kong. HMG and the Hond Kong Government each contribute £2 million per annum to provide grants for eligible students. The scheme is means-tested. Most of the beneficiaries live in public housing estates with a relatively low disposal income. Since 1983/84 the number of Hong Kong students coming to the UK under this scheme has risen from some. 1,200 a year to around 1,600 a year.

3.

Inflation has eroded the value of the sums originally committed to this project by HMG and the Hong Kong Government. Because of inflation and increased numbers assisted under the scheme, a loan element was introduced for the first time in 1987/88 and now accounts for 25% of total assistance. The loan element is likely to increase even further because of inflation. On current trends it will rise to 30% in 1990/91 and 38% in 1991/92.

4. When the Executive Council considered the Scheme in late January, they expressed concern that the objective of the scheme would be undermined if the amount of grant available to each studen- decreased any further and the loan element came to predominate. The Hong Kong Government have therefore asked if HMG's contribution could be increased at least to take account of inflation. The Hong Kong Government would be prepared to match any upward adjustment that HMG is prepared to make.