Michael Suen Ming-yeung may as well have poked a wasp's nest with a stick. Earlier this month, Hong Kong's education secretary proposed scrapping the English Schools Foundation's HK$283 million annual subsidy. The ESF's funding, Suen said, was a problem arising from an historical legacy, which needed to be resolved. Ever since, the editorial page of the South China Morning Post has been abuzz with angry letters, either denouncing the subsidy as an undeserved handout for privileged foreigners, or defending the government's funding of the foundation's 15 English-speaking schools as essential if Hong Kong is to maintain its competitiveness as an international business centre. But while our correspondents' views are obviously deeply held, they are sometimes clouded by emotion. So at the risk of incurring a few stings, it may be worth trying to take a more dispassionate look at the ESF and its subsidy. Starting from first principles, almost everyone believes that the government should play a role in funding schools. Education is seen as a service that benefits society as a whole, so it is right that the public purse should bear at least some of the cost. Certainly, the Hong Kong government agrees. Last year, it spent 20 per cent of its entire budget on education. So the question is not whether the government should pay for schooling full stop, but whether it should subsidise the ESF specifically. If the ESF really did cater exclusively to the spoilt children of rich white expatriates, who after two years in Hong Kong, return with their families to London, Sydney or New York, then there might indeed be a strong case for scrapping the subsidy. But that is hardly the case. According to the ESF's breakdown of its pupils' ethnic origin, 45 per cent are Chinese and another 20 per cent are other East Asians or 'Eurasians'. Just 20 per cent are classed as 'Caucasian', by which the ESF means of European descent rather than hailing from Armenia or Azerbaijan. The vast majority are Hong Kong permanent residents. So, assuming we accept the principle of public funding for education and given that the families of most ESF pupils are not transients but have strong local ties, the next question to ask is whether or not the government and Hong Kong as a whole get good value for money for paying the ESF subsidy. Divided among the ESF's 12,772 pupils, last year's HK$283 million subsidy works out at a shade over HK$22,000 per pupil. As my colleague Lai See has pointed out, that certainly looks like good value compared with the HK$300 million the government spent last year sending the children of senior civil servants to posh British boarding schools. But the yardstick we should be looking at here is Hong Kong's other government-funded schools. According to government figures, in 2009 and 2010 the Education Bureau spent a total of HK$33.9 billion on primary and secondary schooling. Stripping out the ESF subsidy, that means HK$33.6 billion of public money was spent educating the 783,000 pupils attending government schools, direct subsidy schools and bought place scheme schools. That works out to a cost per head of almost HK$43,000; nearly twice as much as the ESF subsidy. So in terms of the cost to the public purse per head, the ESF subsidy does appear to be good value for money. Critics of the ESF will counter that that is not the point. They argue the government would save money if it scrapped the subsidy and required parents of ESF pupils to pay the whole cost of educating their children. But it is doubtful whether the government would save money. The ESF has estimated that scrapping the subsidy would push fees up by 20 per cent. But if the ESF were to become a purely private sector organisation, it is unlikely the increases would stop there. It would take an increase of at least 30 per cent to bring ESF fees into line with those charged by the English streams of the French International School or the German Swiss International School. And considering the heavy demand for private English language education in Hong Kong, the foundation would have every incentive to ramp up its fees to fund investment in better facilities, which would allow it further to increase its fees in a continuous upward spiral. (If you think that's unlikely, it pretty much describes what has happened recently to private school fees in Britain, where market demand has no difficulty supporting annual fees of HK$360,000 or more.) Now, if the fees charged by a newly private ESF did spiral upwards in this way, pupils' families would have three options. The richest could shoulder the increases. But for many the higher fees would quite simply be beyond their means. Of those, some would leave Hong Kong for countries where education is more affordable. But given the strong local roots of most ESF families, many would have little choice but to pull their children out and put them instead into government-run or direct subsidy schools. And as we have already established, in contrast to the HK$22,000 a head subsidy they get now at the ESF, in government-run schools, each pupil would cost the public purse some HK$43,000 a year. In other words, if the fee increases triggered by scrapping the ESF subsidy were to force any more than half its pupils to switch to government-run schools - which appears plausible - the government would actually end up losing money, not saving it. And that is before you even begin considering the impact on Hong Kong's international competitiveness. So, although there are many ways Hong Kong's education system could be reformed for the better, scrapping the ESF subsidy is not one of them. There, now I've poked the wasp's nest, and I fully expect a vicious stinging.