TNAG-2923-FCO40-4198-Visits-and-proposed-visits-by-Alastair-Goodlad--Minister-of--1993 — Page 84

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MR GOODLAD'S VISIT TO HONG KONG: 11-12 OCTOBER 1993

Background

British Council co-location in British Consulate General building.

1.

The decision to acquire a substantial building on a prestigious site for Britain's official representation in the future SAR was taken by the then Prime Minister in 1989. Ministers subsequently decided that this presence would be best secured by the co-location of the British Council with core functions of the Consulate and immigration and passport sections. The Private Treaty Grant laying down conditions for the grant of the land on which the Consulate is to be built was drawn up to allow the inclusion in the building of the British Council.

2. These arrangements, enabling the British Council to occupy high quality purpose built premises, were welcomed by the Council who would in any case have been looking for new premises in 1996/7. But they made it clear that the British Council would not be able to pay a commercial rent for the space they would be occupying (about 6,000 square metres out of a total of 19,000). The Treasury were aware of the plans for co-location when we made our initial PES bid, and it was our understanding that they had accepted the bid as a joint British Council/FCO bid, with the FCO leading. As such, there would be no requirement for the British Council to pay rent - although in the case of a cost overrun, we would have to look to the British Council to contribute a pro-rata share of the extra cost.

3. The Treasury have now told us that they expect to see the British Council pay rent in Hong Kong. They have commented that there can be no question of a subsidy to the non grant in aid activities of the British Council in Hong Kong (their English language teaching activities now amount to 75% of their total activity in Hong Kong).

4.

This causes real problems for the Council; the running costs in the new building are likely to be more than four times what they are paying now, which does not leave much over to pay rent at the rate the Treasury would expect.

5. We are working closely with British Council officials to find an equation which will satisfy both the Council and the Treasury. While it is not fair that the British Council should be penalised for complying with Ministers' wishes, they should expect to pay more than they do now for improved and expanded accommodation.

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