Chapter 4: The University Grants Committee

4.1 Because it is the author of this report, and also because it in practice allocates more than 90% of the public funds devoted to higher education, we think it appropriate to describe in rather more detail than in paragraph 3.3 the functioning and role of the UGC. The terms of reference of the Committee are given in Annex B.

4.2 When the University Grants Committee was established in 1965, it was closely modelled on the UK body of the same name. UGCs had by that date already been founded in a number of other Commonwealth countries. Although the Hong Kong UGC has been adapted to local needs over the last three decades, it has probably remained truer to the original concept than that in any other part of the Commonwealth.

4.3 The key word in the title is "grants". As was explained in paragraph 3.3, the UGC recommends a triennial "block grant" for each institution. Although there is much discussion between the UGC and the institutions, based upon academic and other plans and opportunities, and much discussion between government and the UGC about available finance and community need, once the block grant is settled, each institution has very wide discretion as to its use.

4.4 The granting to the institution the capacity to spend its recurrent grant at will, either along the lines of the plans discussed with the UGC or otherwise, is not solely based upon philosophies of "academic freedom" or "autonomy". It is also concerned with efficiency and effectiveness. The period between the settlement of a triennial grant and the end of the triennium to which it refers is about four years. In that period the needs of the community and the institutions, and the opportunities available to both, may change significantly. Higher education institutions, and more particularly departments within institutions, can react quickly and effectively to new situations, provided that their financial accountability is after the event and not subject to prior approval in detail.

4.5 Although, as its title implies, the UGC is in practice (although not in law) a funding body, spending on behalf of government very substantial sums of public money, it has since its inception in 1965 also, in the absence of a better alternative, had to adopt a planning role. The Committee has advised government on the founding of new institutions and the upgrading of existing ones, on major subject developments to meet community needs, on employment matters, and many other subjects relevant to tertiary education in Hong Kong.

4.6 One inheritance which the UGC acquired from its UK predecessor in 1965 was an agreed interpretation of its status. The UGC was to be independent - independent of government and independent of the universities. It was to listen, and offer impartial advice, to both. The UGCs in the UK and most other Commonwealth countries have long since changed their titles and functions, but in Hong Kong we still do have an independent and impartial UGC, standing between the government and the universities, listening carefully to both, and being heeded by both.

4.7 The Committee's position with respect to funding requires a very delicate balancing act: it needs to give the institutions sufficient flexibility (not licence) for them to be able to use resources effectively, while retaining its own capacity to assure government and the Hong Kong taxpayer that it is spending public money wisely. The UGC's planning role (of which this report is an example) requires an increasing dialogue with many different sectors of Hong Kong society.

4.8 It has become common in recent years for organisations to publish "mission statements", giving their own view of their purpose and present and future activity. The University Grants Committee's current mission statement is reproduced on the next page. It emphasizes Hong Kong's unique position as a meeting place of differing cultural and economic systems and the need to provide its citizens with the high level skills required to respond to challenge and change in our society. There is emphasis on excellence, innovation, cost-effectiveness and public accountability within a context of minimal intervention in institutional affairs.

4.9 The details of mission statements require updating fairly frequently to meet developing circumstances, but the broad thrust of this mission statement is unlikely to require amendment except in one particular. The UGC has hitherto concentrated almost entirely upon the demand for and supply of higher education in Hong Kong. With the rapidly growing movement of both work opportunities and workers across the border with China, however, the Committee will increasingly have to take account of comparable provision and needs in South China. The UGC has recently had useful discussions in Beijing, with Vice-Premier Li Lanqing and officials from the State Education Commission and the Hong Kong and Macau Affairs Office, and in Guangzhou, with officials from the Provincial Government, the Guangdong Higher Education Bureau and the Provincial Commission for Restructuring the Economic Reform, on cross-border manpower problems and opportunities: and the Grants Committee will clearly have to take notice of educational and employment developments in South China in its future planning. Reports on our visits to Beijing and Guangdong have been published. We return to links with China in Chapter 33.


Having regard to Hong Kong's dual role as a leading metropolis and business hub of South China and as a regional and international financial and service centre and hence its need for an adequate supply of high quality and bilingual manpower and an engine-room of innovative science and technology;

Considering the rapid changes happening in Hong Kong and worldwide, and hence the need for people with intellectual capability, international outlook, flexibility and leadership skills who can take up the political, economic, social and cultural challenges of the time;

Drawing on Hong Kong's uniqueness as the meeting point of different cultural, social, economic and business systems;

Recognizing the merits of, and the need to preserve, academic freedom and institutional autonomy subject to appropriate financial and public accountability as well as the different and complementary roles of the UGC-funded higher education institutions;

The University Grants Committee, in performing its function as the advisory body to the Hong Kong Government on the developmental and funding needs of higher education in Hong Kong, will:

  1. support the institutions in -

    1. the provision of appropriate internationally recognized academic and professional programmes to meet the manpower and education requirements as stated above;

    2. the conduct of research and development;

    3. becoming centres of academic excellence in the region; and

    4. technology transfer;

  2. encourage institutions' collaboration and consultation with the various education sectors in the planning of the provision and structure of higher education;

  3. encourage and reward excellence in each of the institutions' activities, including teaching, research and other scholarly activity in accordance with its specified role and mission;

  4. promote efficiency and cost-effectiveness in the activities of the institutions; and

  5. avoid undue intervention in the affairs of the institutions, subject to this being commensurate with the need for the Committee and the institutions to be publicly accountable.

4.10 Whether, and in what form, the UGC will continue after the transfer of sovereignty will be a matter for the new government. Relevant articles of the Basic Law are:
Article 65 The previous system of establishing advisory bodies by the executive authorities shall be maintained
Article 136 On the basis of the previous educational system, the government of the Hong Kong Special Administrative Region shall, on its own, formulate policies on the development and improvement of education, including policies regarding the educational system and its administration, the language of instruction, the allocation of funds, the examination system, the system of academic awards and the recognition of educational qualifications.

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