TNAG-2962-FCO40-4241-Future-of-Hong-Kong-British-Consulate-General-building-incl-1993 — Page 161

Reference..................................................................

Treasury. Current practice was entirely against this approach

we could not come up with any examples of overseas facilities shared with the British Council where the Council paid no rent to us. Also the point about giving the British Council an extra advantage in the provision of non grant in aid services would be very difficult to combat. (Please see the attached letter from the Treasury to the Secretary of State in which Mr Dorrell requests that "in monitoring the operation of the British Council" officials should check that, where the FCO provides the Council with services, the charges

(eg rent in jointly occupied buildings) reflect full costs." Mr Dorrell adds "I am sure you will agree that there can be no possibility of subsidising unfair competition by the British Council, which would be a waste of its grant in aid."

4.

After further discussion, we concluded the only course open to us was to ensure that the British Council was fully aware of the stipulations of the Treasury explaining that while we had dealt in good faith with the British Council, we could not dictate to the Treasury and stressing the advantages the British Council would still get (purpose built building of superior quality, more space very likely at no more cost than their old premises). We agreed that I should brief Mr Hum and see whether he felt that he might appropriately brief his own opposite number at the Council. I commissioned from OED estimates of the rent that the British Council might be expected to pay for the new building (I understand that there are two formulae which can be used to work this out, both approved by the Treasury, OED will give us figures for both). OED also undertook to look again at the running costs for the British Council's part of the building, and to prepare a "worst case scenario" giving a rough idea of the delays and costs which a British Council decision to pull out would give rise to.

5. I went over the ground with Mr Hum. He agreed that he would need to spell out to the British Council the Treasury's stipulation that the Council should pay rent. I agreed to pull the papers together. He requested that we press the British Council one more time for a breakdown of the running costs they envisage for the new building (CRD one last approach please).

I Dates Jones.

Deborah Barnes Jones

8 September 1993

CC:

Mr Wootton, RFD

Mr Davey,

Mr Smith, )

CRD

Mr Whittle) OED

min.terms.NAT

JEB

CODE 18-77