Foreign and Commonwealth Office Annual Report

Transcription

1 House of Commons Foreign Affairs Committee Foreign and Commonwealth Office Annual Report Second Report of Session Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 21 January 2009 HC 195 [Incorporating HC 964-i,ii,iii Session ] Published on 8 February 2009 by authority of the House of Commons London: The Stationery Office Limited 0.00

2 The Foreign Affairs Committee The Foreign Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Foreign and Commonwealth Office and its associated agencies. Current membership Mike Gapes (Labour, Ilford South), Chairman Rt Hon Sir Menzies Campbell (Liberal Democrat, North East Fife) Mr Fabian Hamilton (Labour, Leeds North East) Rt Hon Mr David Heathcoat-Amory (Conservative, Wells) Mr John Horam (Conservative, Orpington) Mr Eric Illsley (Labour, Barnsley Central) Mr Paul Keetch (Liberal Democrat, Hereford) Andrew Mackinlay (Labour, Thurrock) Mr Malcolm Moss (Conservative, North East Cambridgeshire) Sandra Osborne (Labour, Ayr, Carrick and Cumnock) Mr Greg Pope (Labour, Hyndburn) Mr Ken Purchase (Labour, Wolverhampton North East) Rt Hon Sir John Stanley (Conservative, Tonbridge and Malling) Ms Gisela Stuart (Labour, Birmingham Edgbaston) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at Committee staff The current staff of the Committee are Dr Robin James (Clerk), Dr Edward Waller (Second Clerk), Ms Adèle Brown (Committee Specialist), Dr Brigid Fowler (Committee Specialist), Miss Elisabeth Partridge (Group Manager), Miss Jennifer Kelly (Committee Assistant), Mrs Catherine Close (Committee Assistant) and Mr Alex Paterson (Media Officer). Contacts All correspondence should be addressed to the Clerks of the Foreign Affairs Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is ; the Committee s address is foraffcom@parliament.uk

3 Foreign and Commonwealth Office Annual Report Contents Report Page Conclusions and recommendations 5 1 Introduction 14 Form of the Departmental Annual Report and related papers 15 2 New Strategic Framework 16 New priorities 17 Conflict prevention funding 18 Reduced FCO policy responsibilities 18 Drugs and crime 19 Sustainable development 21 Science and innovation 21 Impact of reduced FCO responsibilities 22 Overseas Territories 23 3 Performance measurement 25 Performance against PSA targets during Performance against targets during CSR Conflict prevention target 29 Activity recording 30 4 Global Network 32 Shape of the network 32 Relations with other Government Departments 35 Overseas Posts and the FCO Estate 36 Problems relating to project management 38 Housing in Pakistan 38 Marlay Grange 39 5 Essential Services 41 Overseas passport operation 41 Visa service 43 Security of services 43 UKTI 44 6 FCO Services 45 Activities during Trading Fund status 46 Assessing performance in Efficiency targets and their impact on staff 49 7 Personnel Issues 52 Staffing and human resource management 52 Local staff strategy review 55

4 2 Foreign and Commonwealth Office Annual Report Rt Hon Jack McConnell MSP 55 Allegations of abuse at the British Embassy in Iraq 57 8 Transparency and Openness 59 Rules for diplomats 59 Freedom of Information requests 60 Flow of information to the Committee 60 Rendition 61 Top Risks Register 61 9 Financial Management 63 Five Star Finance programme 63 Efficiencies and the FCO s financial position 65 Shared services programme Public Diplomacy and Communication 70 Communications Directorate 70 FCO website 71 Public diplomacy initiatives 72 Commonwealth Scholarships British Council 76 Activities in Performance against targets in Overall impact 77 Audience 78 Customer satisfaction 79 High priority regions 79 Europe 81 Challenges 82 Russia 82 China 83 Administration 84 CSR 07 settlement 84 Value for money 86 Impact of strategic changes on staff BBC World Service 91 Performance in PSA measure: global radio audience 91 PSA measure: online audience 92 PSA measures: presence and audibility 93 Overall performance against PSA targets 94 Challenges 94 China 94 Russia 95 India and Pakistan 96 Afghanistan 97 Iran 97

5 Foreign and Commonwealth Office Annual Report Zimbabwe 98 New media 98 BBC Arabic television 99 BBC Persian television 100 Online and mobile technology 101 Financial management and efficiency savings 102 Formal Minutes 106 Witnesses 107 List of written evidence 108

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7 Foreign and Commonwealth Office Annual Report Conclusions and recommendations 1. We welcome the move towards a single conflict prevention pool of funding and the creation of the Stabilisation Aid Fund which we trust will reduce the risk that resources earmarked for longer-term projects to prevent conflict are siphoned off into crisis management. (Paragraph 20) 2. We are concerned that funding for the FCO s Drugs and Crime Programme is being progressively cut to fund new policy goals such as tackling climate change, without replacement funding having been identified from home Departments. We conclude that it is unacceptable that a shortfall of funding appears to have developed following the transfer of lead responsibility for these issues from the FCO to the Home Office. This is a far from auspicious start to more joint working. We recommend that in its response to this report, the FCO should set out what it is doing to address this issue with its partners across government. (Paragraph 25) 3. We recommend that in its response to our Report, the FCO should set out what progress it has made with its Whitehall partners on defining the threat from drugs and crime to the UK, and in deciding how and where it should be tackled overseas. We further recommend that in its response the FCO should also clarify whether it is still the UK lead department in discharging the UK s obligations under that part of the mandate of the United Nations Office on Drugs and Crime (UNODC) concerned with terrorism, and, if so, how the FCO is discharging those obligations. (Paragraph 29) 4. We regret that the FCO s ability to draw upon broad-based, in-house scientific support and advice has been decreased at a time when it is promoting action on climate change and a low-carbon, high-growth economy. We recommend that in its next Annual Report the FCO should clarify and justify the role of its new part-time scientific adviser. (Paragraph 34) 5. We conclude that it is not yet clear whether transferring responsibility for three policy areas to home Departments, deemed to be better placed to direct HMG s international priorities, will be successful in practice. Clear lines of responsibility must be established, and changes should not marginalise the FCO s role abroad, lead to duplication of effort, or reduce overall government commitment in these three areas. We recommend that in its next Annual Report the FCO should provide a detailed assessment of how well the new arrangements are working. (Paragraph 37) 6. We welcome the FCO s continuing commitment to the Overseas Territories. It is important that this is emphasised, lest the omission of any mention of the Territories in the FCO s new statement of its priorities, the Strategic Framework, be taken as an indication of a lack of focus on them within Government. We reiterate the conclusion set out in our report on the Overseas Territories, published in July 2008, that the Government must take its oversight responsibility for the Territories more seriously. (Paragraph 40)

8 6 Foreign and Commonwealth Office Annual Report We recommend that in future the FCO should, where relevant, specify in the Annual Report why assessments of progress against targets have changed in the course of the reporting year. (Paragraph 43) 8. We reiterate the conclusion in last year s Report that the system of performance targets used in the Spending Review 04 (SR04) period was less appropriate for the FCO than it was for other Departments where outcomes can be more easily measured. While we welcome the FCO s prompt acceptance of the National Audit Office recommendations in respect of the data systems which underpinned several of its SR04 PSA targets, we conclude that these failings significantly vitiated the usefulness of those targets and made it more difficult objectively to judge the FCO s performance. (Paragraph 48) 9. We welcome the clear alignment between the FCO s new PSA target on reducing the impact of conflict, on which it takes the lead within government, and its Departmental Strategic Objective 6 on preventing and resolving conflict. We note that there is a high degree of dovetailing between most of the other new PSAs and the eight DSOs, which will assist the FCO in giving a clear sense of direction to its staff. (Paragraph 56) 10. We recommend that the FCO in its response to this report states whether its performance against PSA targets will be damaged by a depreciation of sterling and, if so, what mechanisms it has established, or is seeking to establish, to protect itself, or to be compensated for, a significant fall in sterling. (Paragraph 57) 11. We welcome the progress that has been made on developing, on a cross- Departmental basis, indicators for the FCO s conflict prevention target. We recommend that in its response to this Report, the FCO should clarify which data systems and baselines are being used to measure whether the desired outcomes have been achieved, in respect of this and the FCO s other four main PSA targets. (Paragraph 62) 12. We recommend that in its response to this Report the Government should explain what progress has been made in ironing out the technical problems which prevented the full roll-out of new activity recording software, what feedback the FCO has received from staff on both the new and interim systems, what information has been gleaned about activity patterns and how this will feed into management decisionmaking. (Paragraph 66) 13. We conclude that the reasoning behind the shift of diplomatic staff away from European Posts to Asia, the Middle East, parts of Africa, and Russia is understandable, but we are concerned that the increased focus on climate change may overshadow other equally important aspects of FCO work. We recommend that, in its response to this Report, the FCO should give details of staff reductions in European Posts, post by post, with a brief account of the rationale behind each specific decision. (Paragraph 72) 14. Bearing in mind the FCO s tight financial situation, its desire to operate in particularly difficult places and the prospect of future staff reductions, we conclude that there is a serious risk of over-stretch in some areas. (Paragraph 75)

9 Foreign and Commonwealth Office Annual Report We welcome the FCO s desire to consider innovative approaches to diplomacy as exemplified by its unembassy project. However, we recommend that future such initiatives should be subject to rigorous cost-benefit appraisal, to ensure that this mode of working does not become a conduit for diplomacy on the cheap or a means to avoid desirable longer-term capital investment projects in order to make shortterm savings. We conclude that staff welfare must also be a paramount consideration, particularly in the case of assignments to what the FCO describes as difficult and dangerous places. (Paragraph 78) 16. We recommend that FCO Ministers should give greater priority to visiting Asian countries which are major trade and investment partners of the UK. (Paragraph 80) 17. We conclude that the proposed deepening of the relationship between the FCO and other Departments, in particular DfID, and the ambitious plans now being implemented for co-location of FCO and DfID overseas offices, are to be welcomed. We are disappointed that it is not yet possible for the FCO to estimate the costsavings likely to accrue from the co-location programme. We recommend that the FCO should supply us with this estimate as soon as it is available. (Paragraph 88) 18. We conclude that the Treasury s decision to raise the FCO s revenue targets mid-year effectively amounts to a shifting of the goalposts and has the potential to undermine the FCO s commitment to consider the sale of each Estate asset on its merits. This could cause particular difficulties at a time of global economic downturn. (Paragraph 93) 19. We conclude that the housing construction project in Pakistan highlighted a series of regrettable failures in FCO processes and management. We welcome the FCO s acknowledgement that lessons must be learned and recommend that in its response to this Report it sets out what further progress it has made in implementing its action plan. (Paragraph 100) 20. We are grateful to the FCO for supplying us with further information about the sale and repurchase of the British Ambassador s residence in Dublin. We conclude that this dispiriting saga must be brought to a swift conclusion, and we recommend that in its response to this Report, the FCO provides up-to-date details of the costs incurred since 1999 as well as an assessment of what lessons the FCO has learned. (Paragraph 105) 21. We conclude that it is vital that the merger of the FCO s overseas passport operation with the Home Office s Identity and Passport Service is carefully managed to ensure that neither the quality nor the scope of the existing service are compromised and that the FCO s reputation is not damaged. (Paragraph 109) 22. We conclude that it remains a matter for concern that British citizens overseas may have to travel unacceptably long distances to supply biometric data and attend interviews. We recommend that in its response to this Report, the Government should detail the estimated numbers of overseas applicants who will be required to attend interviews, the criteria for selecting them, the countries which may be affected, and the steps it is proposing to take to alleviate potential problems. (Paragraph 114)

10 8 Foreign and Commonwealth Office Annual Report We conclude that, where the FCO has a continuing involvement with the work of the UK Border Agency, we will continue to scrutinise the FCO and question Ministers on this subject. (Paragraph 118) 24. We conclude that the theft of a large quantity of blank passports and visas from a delivery van in July 2008 represented a worrying failure of the FCO s security arrangements. We recommend that in its response to this Report, the Government should supply us, if necessary on a confidential basis, with a further update on the results of the police investigation into the theft, and on the action being taken by the FCO to mitigate any adverse consequences arising from this particular criminal act and to improve future security of services. (Paragraph 121) 25. We recommend that in its next Annual Report, the FCO provides a clear picture of the extent to which having access to the full network of UKTI services has, or has not, bolstered the UK defence and security trade. (Paragraph 124) 26. We conclude that FCO Services existing target for measuring profitability is wholly inappropriate. We recommend that FCO Services sets itself an internal profitability target that is more suitable and challenging. (Paragraph 139) 27. We conclude that FCO Services has made a promising start following its transformation to a Trading Fund. However, it is still very early days, and there must be concerns about its ability to expand into wider markets under current economic conditions. We shall continue to monitor its performance. (Paragraph 141) 28. We welcome FCO Services commitment to reduce its reliance on external contractors and to focus on increasing the capabilities of its permanent staff. We recommend that in its next annual report, FCO Services should explain what progress it has made towards this goal. We also recommend that the FCO should take steps to ensure that the pressure on FCO Services to secure efficiency savings does not compromise the quality of the work it undertakes. (Paragraph 146) 29. We welcome FCO Service s recognition that staff engagement and satisfaction is crucial to the future success of the change process which is currently underway. We recommend that in its response to this Report the FCO provides us with an update on how FCO Services is addressing concerns identified in staff surveys. (Paragraph 149) 30. We accept that sometimes HR departments are a target for staff anger for no other reason than that they dispense bad news or implement unpopular policies. However, we conclude that the sheer scale of dissatisfaction revealed by the recent Cultural Audit of the FCO, as well as in other FCO-commissioned reports, suggests that something is genuinely amiss. It would appear that FCO that staff have substantive and deep-rooted concerns about the HR support they receive. We recommend that the FCO should reconsider its decision not to undertake the urgent and thorough review of HR that was recommended by the 2008 Cultural Audit. (Paragraph 159) 31. We understand that operational needs can necessitate changes to staff postings, often at short notice. However, the evidence we have received suggests that these may sometimes be poorly handled, and that staff and their dependents can occasionally

11 Foreign and Commonwealth Office Annual Report be insensitively treated and materially inconvenienced. We recommend that in its response to this Report the FCO should set out the action it is taking, as a good employer, to minimise the likelihood of these unfortunate situations arising. (Paragraph 162) 32. We recommend that in its response to this Report, the Government should set out where greater alignment in the conditions offered to local staff and those for UKbased staff may be likely to occur, and what progress is being made towards achieving this. (Paragraph 165) 33. We conclude that the affair of Mr McConnell s two appointments has not been well handled by the Government. We further conclude that it is likely that the uncertainty and delay over the timing of Mr McConnell s appointment as High Commissioner to Malawi, followed by the abrupt announcement that the appointment would not after all proceed, is regrettable, and is likely to have caused concern or even offence in Malawi. (Paragraph 171) 34. We conclude that the appointment of non-diplomats to diplomatic posts is a matter which requires public and parliamentary scrutiny. We recommend that in its response to this Report, the Government should accept that major diplomatic or consular appointments of a person from outside the diplomatic service should in principle be subject to pre-appointment hearings by this Committee. We further conclude that, irrespective of the Government s response, such appointments undeniably fall within our area of responsibility, and we shall continue to exercise that responsibility. (Paragraph 173) 35. We conclude that although the FCO feels it has acted conscientiously and effectively in its handling of recent allegations relating to the British Embassy in Baghdad, we do not believe that it is appropriate in such circumstances for the investigation of complaints against contractors staff to be entrusted solely to the contractors. We recommend that the Government should introduce more effective means of monitoring the behaviour of Embassy contractors including through the inclusion of relevant provisions in its contractual agreements with future suppliers of services. (Paragraph 180) 36. We welcome the FCO s decision to revise the wording of Diplomatic Service Rule 5 to ensure former diplomats are not prevented from making informed contributions to public debate on foreign policy issues. (Paragraph 185) 37. We welcome the fact that the FCO continues to meet Freedom of Information requests in the vast majority of cases. We are also pleased to see that the number of referrals to the Information Commissioner s Office have reduced quite significantly. (Paragraph 189) 38. We recommend that in future the FCO adopts a more open and proactive approach to providing information to us on rendition and related matters. (Paragraph 192) 39. We understand the sensitive nature of the material contained in the FCO s Top Risks Register and note the FCO s concern that disclosure could inhibit frank discussion in

12 10 Foreign and Commonwealth Office Annual Report the FCO. For these reasons we recommend that the FCO should make a copy of the Register available to us in confidence, as was done in (Paragraph 195) 40. We conclude that the changes that the FCO has introduced with a view to improving its financial management are to be welcomed. We commend the FCO for resisting the temptation to gild the lily when self-assessing its financial performance under the Five Star Finance programme. (Paragraph 202) 41. We are deeply concerned that as a result of the Treasury s decision to withdraw its support for the Overseas Price Mechanism, the FCO may not be able to meet higher international subscriptions over the next two financial years unless it cuts its activities. We conclude that it is deplorable that the FCO should have to shoulder the financial burden from within its already tight budget to pay for subscriptions which also benefit other Government departments, and we recommend that additional non-discretionary costs should properly be met by the Treasury. (Paragraph 214) 42. We recommend that in its response to this Report the Government should set out what lessons it has learnt from the failure to implement a shared services programme, and what progress it has made on setting up its new corporate services programme. (Paragraph 218) 43. We note the creation of a unified FCO Communications Directorate and recommend that in its next Annual Report, the FCO provides details as to how well this is working and what benefits, if any, it has led to. (Paragraph 225) 44. We note that the FCO web project appears to have been delivered on time and to budget, and we recognise the valuable role that the website can play in helping to deliver the Department s policy goals and essential services. However, we conclude that increased interactivity and multimedia applications should not be achieved at the expense of the unglamorous but important function of information delivery, which is of particular value to researchers and policy professionals. We recommend that the FCO website should be modified to incorporate a chronological archive of press releases and an improved Search function. (Paragraph 230) 45. We recommend that in its next Annual Report the FCO explains what progress it has made towards creating and evaluating a new framework for evaluating public diplomacy efforts. (Paragraph 235) 46. We conclude that the FCO s decision to end its funding of the Commonwealth Scholarship programme is regrettable. The ensuing saving of 2 million is very small in relation to the Department s overall funding, and has caused damage to the UK s reputation in the Commonwealth. (Paragraph 242) 47. We note the view of the British Council that, at a time when it is undergoing a series of important changes, investing in a common customer relationship management tool may not be the best use of its resources. We recommend that the Council should supply us with a summary of its assessment of its pilot projects in Hong Kong and elsewhere in China aimed at tracking how it engages with its customers. (Paragraph 255)

13 Foreign and Commonwealth Office Annual Report We conclude that the British Council s commitment to provide in future reporting years fuller information about how it is performing against its customer satisfaction target is to be welcomed. (Paragraph 257) 49. We welcome the British Council s pilot programmes in India, aimed at developing new models of teaching provision. We recommend that in its response to this Report, the Government should inform us what steps the British Council is taking to assess the success of these programmes and to roll out similar schemes in other countries; and that in particular it should inform us of the extent to which this will enable an extension of the provision of cheap or free English language lessons in high-priority countries such as Afghanistan. (Paragraph 263) 50. We conclude that the British Council s continuing commitment to Bulgaria, Romania, Turkey and the Balkans, at a time of reduced spending elsewhere in Europe, is to be welcomed. (Paragraph 268) 51. We conclude that the failure to reach agreement upon a Cultural Centres Agreement with Russia, largely as a result of Russian intransigence, is deeply regrettable. We note that this situation impacts most directly upon Russian people, a million of whom used British Council services in Russia in the course of the last year. We hope that recent tentative signs of a rapprochement in UK-Russian relations will lead to some easing of the pressures upon the British Council in that country. (Paragraph 275) 52. We conclude that the British Council has had mixed fortunes during in its operations in China. We reiterate our recommendation in last year s Report that the Council should not neglect China when focusing on its high priority regions. (Paragraph 279) 53. We conclude that the drive to secure savings demanded under the current Comprehensive Spending Round combined with the removal of the Overseas Price Mechanism and increasing security costs could place the Council s future delivery of key activities at risk. We are concerned to hear that work in Europe is likely to be reduced as a consequence and that office closures are a possibility. We recommend that in its response to this Report the Government should supply us if need be on a confidential basis with information as to which Council operations in which countries are at risk of being curtailed as a consequence of the increasing costs of security coupled with the removal of the Overseas Price Mechanism. (Paragraph 285) 54. We welcome the fact that the National Audit Office accepted our previous recommendation that an urgent value-for-money study be carried out into the work of the British Council. We note that the Council has accepted many of the NAO s criticisms of aspects of its administration. We recommend that the Council should report on its progress in implementing the reforms called for by the NAO in its next Annual Report. (Paragraph 294) 55. We conclude that the British Council s change programme has had an extensive impact on staff, not all of which has been positive. We recommend that the Council should continue to track levels of staff satisfaction and should report the findings,

14 12 Foreign and Commonwealth Office Annual Report together with any remedial action it has taken, in its annual report for (Paragraph 301) 56. We conclude that during the World Service s performance was good, and in some cases very good, in respect of all its main PSA targets with the exception of that relating to audibility, where there were a series of problems largely arising from factors outside the BBC s control. We further conclude that the BBC s continuing capital investment in upgrading its distribution systems is to be commended. (Paragraph 314) 57. We conclude that the jamming of BBC broadcasts to China, and the obstruction of internet access, are highly regrettable and detrimental to the Chinese people. It would be particularly unfortunate if the partial liberalisation of media access during the Olympic Games were to prove a temporary phenomenon. We recommend that the Government should continue to make strong representations to the Chinese authorities with a view to encouraging a less restrictive policy. (Paragraph 318) 58. We conclude that it is regrettable that the World Service s partnership with Voice of Russia to provide BBC Russian programmes on FM was forcibly terminated. However, we congratulate the BBC World Service on the success of its Russian website which is attracting some 3 million Russian users a week. We further conclude that, under current circumstances, refocusing effort onto medium wave and online services remains the best way to reach for the World Service to reach Russian audiences. (Paragraph 323) 59. We conclude that there are some encouraging signs of a lessening of restrictions on the work of the World Service in both India and Pakistan. (Paragraph 326) 60. We conclude that the World Service can take pride in its contribution to stability and the dissemination of accurate news and information in Afghanistan. We will examine further its role in that country in our forthcoming inquiry into Global Security: Afghanistan. (Paragraph 328) 61. We are encouraged to hear that the World Service has plans in place to move quickly to reinforce its presence and increase its audibility in Zimbabwe, should a more favourable situation arise in that country. (Paragraph 333) 62. We conclude that the development of the World Service s new BBC Arabic television service is strongly to be supported. We welcome the introduction of 24 hours a day / 7 days a week coverage. We recommend that, in its response to this Report, the FCO should give us updated information on the expansion of BBC Arabic and on the response in the Arab world. (Paragraph 344) 63. We welcome the launch of the BBC Persian service, which has great potential. We recommend that in its response to this Report, the FCO should update us on progress in developing the service. (Paragraph 348) 64. We welcome the success thus far of the new Content Delivery Service that is being used by the World Service and are encouraged by the savings it appears to be providing. (Paragraph 353)

15 Foreign and Commonwealth Office Annual Report We conclude that the closure of some existing BBC World Service services, although regrettable, may be necessary from time to time as a result of changing priorities. We recommend that, in its response to this Report, the FCO should update us on the state of its negotiations with staff in relation to enforced moves from London to South Asia and elsewhere; and inform us how it arrives at decisions as to the optimum balance between London-based and overseas-based staff. (Paragraph 362)

16 14 Foreign and Commonwealth Office Annual Report Introduction 1. Since 1981 the Foreign Affairs Committee has conducted an annual inquiry into the expenditure plans of the Foreign and Commonwealth Office (FCO), and into wider administrative matters relating to the FCO. In 1991, Government Departments first began publishing annual Departmental reports setting out their work for that year and expenditure plans for the future. Since that time the Committee, like most other Departmental select committees, has used these reports as a basis for its scrutiny of the FCO s administration and expenditure. This Report continues this annual series of inquiries, examining the FCO s Annual Report for the period 1 April 2007 to 31 March In our Report on the FCO s Annual Report we commented and made recommendations on a wide range of issues. 2 These included the FCO s Comprehensive Spending Review settlement, its performance against efficiency and Public Service Agreement targets, its role in conflict resolution and the work of the overseas network. We also considered the work of British Council and the BBC World Service. 3. This year a key area of interest has been the new Strategic Framework which has been adopted by the FCO and which has guided its work since April Our Report is structured to reflect this new framework. In addition to returning to many of the issues we have scrutinised previously, we also focus on the introduction of a new series of performance targets for the FCO which will apply between 2008 and 2011; address a range of personnel-related issues; and consider the work of FCO Services and its transformation to a Trading Fund. 4. As part of our inquiry we have taken oral evidence on three occasions: on 9 July 2008 from Chris Moxey, Chief Executive, Clive Heaphy, Finance Director, and Steven Rymell, ICT Director, FCO Services, accompanied by Keith Luck, Director General, Finance, FCO; on 15 October from Rt Hon Lord Kinnock of Bedwellty, Chair, Martin Davidson, Chief Executive, and Bidesh Sarkar, Director of Resources, British Council, and Nigel Chapman, Director, and Richard Thomas, Chief Operating Officer and Finance Director, BBC World Service; and on 29 October 2008 from Sir Peter Ricketts, Permanent Under-Secretary (PUS), James Bevan, Director General, Change and Delivery, and Keith Luck, Director General, Finance, FCO. We are grateful to them for their evidence. 5. Over the last year we have received a considerable amount of written evidence. We are grateful to all the individuals and organisations who took the time to submit their views. As well as receiving quarterly management letters from Sir Peter Ricketts, we also initiated correspondence with the FCO on a variety of aspects of its finance and administration. We extend our thanks to staff in the FCO s Parliamentary Relations Team for their assistance in dealing with the considerable volume of correspondence between us and the FCO. 1 Foreign and Commonwealth Office, Departmental Report 1 April March 2008, Cm 7398, May Foreign Affairs Committee, First Report of Session , Foreign and Commonwealth Annual Report , HC 50

17 Foreign and Commonwealth Office Annual Report We wish to note that in addition to our formal evidence sessions, our programme of visits to overseas posts and informal meetings both at home and abroad enable us to canvass views and opinions from Ministers and officials in the FCO and its agencies, and those of external interested parties including the local users of the services provided by Posts. We are grateful to all those who have provided us with helpful feedback. Form of the Departmental Annual Report and related papers 7. The FCO s Annual Report was published in May At 182 pages, it is a similar length to the report. Part one is sensibly arranged by the three elements of the FCO s new Strategic Framework (see para 9 below) and includes a helpful section on how the FCO s new framework relates to its Public Service Agreements (PSAs). Part two considers the FCO s corporate governance, communication and public diplomacy work, and change programmes. Part three contains a section reporting progress on meeting Spending Review 2004 (SR04) efficiency targets, core financial tables and tables on performance against CSR04 PSA targets. A summary table at the end shows the rating given for each target over the last two years, both for annual reports and for Autumn Performance Reports We have also received a number of other documents from the FCO which related to its financial performance and its expenditure proposals. These include the FCO s Supplementary Estimates Memoranda, in which the FCO explains why it is seeking approval of changes in the spending plans already agreed. 3 Foreign and Commonwealth Office, Departmental Report 1 April March 2008, pp

18 16 Foreign and Commonwealth Office Annual Report New Strategic Framework 9. In July 2007 the Foreign Secretary announced a review of the FCO s strategic priorities. This review led to the creation of a new Strategic Framework for the FCO, which was reported to the House in January 2008 and which has guided the FCO s work since April The Framework itself is relatively brief. Speeches and statements by Government ministers and FCO officials have provided additional information about the Government s vision of a flexible but focused FCO, which seeks to influence not just governments but business, the media and citizens too. 5 In a detailed speech in March 2008, the Foreign Secretary argued that the FCO must retain its traditional focus on political reporting, sound analysis and close contact with foreign governments whilst also adding value through an enhanced and more flexible global network The Foreign Secretary has described the new Framework, which will cover the Comprehensive Spending Review 2007 (CSR 07) period ( ), as an attempt to inject a sharper and more strategic focus to the FCO s work. 7 In accordance with a recommendation in our last Report, the FCO has simplified and reduced its priorities. 8 We welcome this decision. Instead of its previous ten strategic priorities, the new Strategic Framework has three key elements, all falling under a new mission statement, Better World, Better Britain : 9 (1) a flexible global network of staff and offices; (2) three essential services which support the British economy, support British nationals abroad, and managed migration for Britain, and (3) four policy goals to: counter terrorism and weapons proliferation, and their causes; prevent and resolve conflict; promote a low carbon, high growth global economy; and develop effective international institutions in particular the UN and the EU The three elements of the Strategic Framework and their sub-points form the basis for a new list of eight Departmental Strategic Objectives (DSOs), which the FCO has agreed with the Treasury. The purpose of these DSOs is to set goals for CSR 07 and provide a framework against which Ministers and the FCO Board can hold DSO owners (generally FCO policy/ Service Directors) to account for delivery HC Deb, 23 January 2008, col 52 3WS 5 See for example, Gordon Brown, Kennedy Memorial Lecture, 18 April 2008, 6 David Miliband, Speech at FCO Leadership Conference, 4 March 2008, 7 HC Deb, 23 January 2008, col 52 3WS 8 Foreign Affairs Committee, Foreign and Commonwealth Office Annual Report , para 69 9 Foreign and Commonwealth Office, Foreign and Commonwealth Office Departmental Report 1 April March 2008, p 8 10 Ibid., p Foreign and Commonwealth Office, Departmental Strategic Objectives (DSOs)

19 Foreign and Commonwealth Office Annual Report Although billed as a new basis for foreign policy, it is clear that many aspects of the Strategic Framework nevertheless represent a continuation of previous FCO practice. For instance, issues that were previously considered to be important and which are still covered include: weapons of mass destruction (WMD); terrorism; conflict prevention; the EU; a high-growth economy; support for UK business; energy security; climate change; human rights; and migration and consular work. New priorities 14. In a Written Statement in January 2008, the Foreign Secretary told the House that under the Strategic Framework FCO resources would be shifted to support work relating to counter-terrorism, climate change, Afghanistan and other conflict regions as well as key international institutions. 12 The FCO subsequently provided us with more details. It told us that very substantial increases in resources would be provided by , as follows: an additional 39.5 million per annum on counter-terrorism, in particular to fund more staff (primarily in key posts abroad) and programmes ; an additional 15 million for Afghanistan; an additional 21.5 million for climate change; as well as increases for counter-proliferation (additional 3.5 million), conflict (additional 4.1 million) and international institutions (additional 0.6 million) We queried with the FCO where these resources were coming from. In response, Sir Peter Ricketts told us that the FCO s settlement under the Comprehensive Spending Review has provided some new money for work to counter terrorism and to pursue the Government's counter-radicalisation agenda. Sir Peter told us that as a result, that there would be a significant growth in total funds from 66 million in to 109 million in However, he added that resources had become available mainly as a result of the efficiency programme agreed with the Treasury which was intended to ensure that the FCO will have the money we need to make a difference on the most important foreign policy issues, to continue to deliver excellent services to the public, and to modernise. 15 We consider the issue of efficiencies in more detail in Chapter 9 below. 16. In respect of the new policy goals, Sir Peter told us that programme spending would grow significantly, with total funds available rising from 66 million in to 109 million in He stated: We aim to deliver a strategic shift in resources to deliver the new policy goals. [ ] This will be matched by big increases in front-line staff numbers working on these key policy areas in priority countries [and] will involve moving staff away from developed countries, primarily Europe, to those where they can add greater value, primarily in Asia and the Middle East, where we plan to increase UK-based policy staff by about a third HC Deb 23 January 2008, c52 3WS 13 Ev Ev Ev Ev 57

20 18 Foreign and Commonwealth Office Annual Report Conflict prevention funding 17. Conflict Prevention is now a key FCO policy priority. In our last Report, we expressed concern that almost half of the total budget for the Global Conflict Prevention Pool was spent in Iraq and Afghanistan in We concluded that the FCO should not have to direct funds away from long-term conflict prevention into crisis management and recommended that the FCO should receive funding from the Treasury contingency reserve for the civilian costs of crisis management in Iraq and Afghanistan In April 2008, the Africa and Global Conflict Prevention Pools were merged to become a single Conflict Prevention Pool. The FCO told us that this was in order to reduce bureaucracy, focus effort on where it can deliver best returns and ensure that the new single Pool remains an effective instrument for long term conflict prevention. 18 A new Stabilisation Aid Fund has also been created to fund civil conflict stabilisation activities in volatile or hostile areas where the security situation does not yet permit the roll-out of programmes such as the Pools have traditionally funded. 19 This currently focuses on Iraq and Afghanistan and will make some 269 million available over the three-year Comprehensive Spending Review period. 20 Sir Peter Ricketts told us that this will help prevent Pool Spending becoming skewed towards funding current operations at the expense of investment in long term conflict prevention We asked the FCO whether the new structure for conflict prevention funding would result in more targeted long-term conflict prevention. The FCO responded in the following way: There are now fewer and larger programmes, focused on those areas of most interest to the UK and where the UK can make the greatest impact. [ ] We have also established a reserve to deal with emerging needs as and when they arise, thereby avoiding the need to cut long term activity in the face of a crisis We welcome the move towards a single conflict prevention pool of funding and the creation of the Stabilisation Aid Fund which we trust will reduce the risk that resources earmarked for longer-term projects to prevent conflict are siphoned off into crisis management. Reduced FCO policy responsibilities 21. Under the Strategic Framework the FCO will no longer lead on three policy areas: international crime and drugs, sustainable development, and science and innovation. 23 Sir Peter Ricketts told us that we identified subjects in those three areas in which we thought 17 Foreign Affairs Committee, Foreign and Commonwealth Office Annual Report , para Ev Ev Ev Ev Ev Foreign and Commonwealth Office, Foreign and Commonwealth Office Departmental Report 1 April March 2008, p 86

21 Foreign and Commonwealth Office Annual Report there was better synergy for the home Department to be leading on international as well as domestic policy. 24 Drugs and crime 22. We were told during the early stages of our inquiry that, as a result of the Framework s new focus, FCO spending in the area of drugs and crime will taper off over the next two to three years, as the Home Office progressively assumes responsibility for co-ordinating the UK s international efforts on drugs and crime and as the Serious and Organised Crime Agency (SOCA) gradually increases its own programme spend in this area. 25 The FCO has already started this process, and we were told on 20 November 2008 that funding for the FCO s Drugs and Crime Programme (DCP) has been halved for the next financial year, down from 6 million in to 3 million in The allocation will reduce further to 2 million in and before ceasing completely in In oral evidence to us, Sir Peter Ricketts acknowledged that: We have reduced our programme spending by a certain amount. I do not think that that has been fully made up by the Home Office and SOCA, so there is some loss of programme funding in that area. That has obliged everyone to prioritise more sharply, which is not a bad thing The FCO told us that the run-down in DCP funding over five years gives the FCO s Partners across Government [ ] a timescale within which to seek alternative sources of funding for activities traditionally funded by the FCO s Drugs & Crime Programme. However, the FCO added that we understand that no replacement funding has yet been identified We are concerned that funding for the FCO s Drugs and Crime Programme is being progressively cut to fund new policy goals such as tackling climate change, without replacement funding having been identified from home Departments. We conclude that it is unacceptable that a shortfall of funding appears to have developed following the transfer of lead responsibility for these issues from the FCO to the Home Office. This is a far from auspicious start to more joint working. We recommend that in its response to this report, the FCO should set out what it is doing to address this issue with its partners across government. 26. Some of the consequences of the loss of the FCO lead in this area have already been felt in the FCO s Drugs & International Crime Department, which previously supervised the Drugs and Crime Programme (DCP). Staff posts have been cut (from 18 members of staff to 9 by September 2008), 29 and in the future the FCO will maintain a smaller Drugs and 24 Q Ev Ev Q Ev Ev 106

22 20 Foreign and Commonwealth Office Annual Report Crime Team, tasked with providing policy advice to operational agencies and tasking our network to help deliver HMG s objectives. 30 Sir Peter Ricketts explained that: Our focus is now at the strategic level, where the FCO can best add value (foreign policy expertise, building relationships with partner countries, and creating effective multipliers through EU). We are working closely with Partners across Government to define the threat from drugs and crime to UK and decide how/where best to tackle it overseas The FCO told us that remaining DCP funds will be targeted at reducing harm to the UK from Class A drugs (heroin and cocaine) and financial crimes, and that it is giving priority to projects in the Caribbean, Latin America, South Asia and West Africa. We were assured that funding for counter-narcotics work in Afghanistan does not fall under the DCP and was not affected by the FCO s decision to change its strategy We asked the FCO about the extent to which transferring responsibility for drugs and crime to home Departments would affect the work undertaken by the FCO through the United Nations Office on Drugs and Crime (UNODC). This office is based in Vienna with a mandate to assist Member States in their struggle against illicit drugs, crime and terrorism. 33 The UK has a Mission to UNODC headed by a Permanent Representative. The FCO told us that it remains engaged in the Government s work on drugs and crime and that the UK Mission to the UN in Vienna devotes a significant part of its effort to working with UNODC. 34 It added that in 2008, the UK had contributed US $4.3m ( $3.8m from the FCO), making it the seventh largest donor to UNODC. 35 The FCO also stated that the UK is also: doing more work than before with UNODC on harm reduction in the HIV/AIDS context and on corruption, with DfID s funding of a new expert slot in the UK Mission to steward these issues. increasing our activism on UNODC issues in Vienna in assuming the Chairmanship of the UNODC Major Donors Group. This enables us to play a leading strategic role in guiding and redefining the work of the Group in such a way that it stimulates the UNODC Secretariat to higher standards of delivery, more strategic coherence in its development of thematic and regional programmes, and more transparency and responsiveness in its work with its biggest funders. taking over the Vice Chair of the Commission on Crime Prevention & Criminal Justice, giving us even more visibility and impact with UNODC Ev Ev Ev Ev Ev Ev 195

23 Foreign and Commonwealth Office Annual Report We recommend that in its response to our Report, the FCO should set out what progress it has made with its Whitehall partners on defining the threat from drugs and crime to the UK, and in deciding how and where it should be tackled overseas. We further recommend that in its response the FCO should also clarify whether it is still the UK lead department in discharging the UK s obligations under that part of the mandate of the United Nations Office on Drugs and Crime (UNODC) concerned with terrorism, and, if so, how the FCO is discharging those obligations. Sustainable development 30. It has been decided that the Department for the Environment, Food and Rural Affairs (DEFRA) will assume responsibility for international as well as domestic policy making in the field of sustainable development, working directly with Posts. The FCO will focus its resources only on promoting a Low Carbon High Growth global economy, where there is more scope for the FCO to make a real difference and add greatest value. As a result the FCO has wound up a six-person team which was working on the environmental aspects of sustainable development. The contribution from the Strategic Programme Fund to the Sustainable Development programme ( 1.45 million in ) is also going to end, although this is being phased out to enable a number of multi-year projects to be completed, thereby maximising the impact of earlier investment. 37 FCO funding has reduced to 440,000 in this financial year. However, the FCO told the Committee that its contribution to the Overseas Territories Environmental Programme would continue ( 500,000 per annum), as would its work on International Environmental Governance and sustainable forest management. 38 Science and innovation 31. The third area in which the FCO will no longer lead is science and innovation. 39 The Department of Innovation, Universities and Skills (DIUS) will take responsibility from the FCO for managing and tasking the Science and Innovation Network. 40 The FCO s Science and Innovation Group (responsible for recruitment and tasking of the Network) became part of DIUS during the first half of this financial year, with the FCO transferring about 240,000 to DIUS as a contribution to the administrative costs of the Group. (Officers of the Group remain employed by the FCO.) The FCO is still covering all the costs of the Network in the present financial year, but in , DIUS will contribute 25% of the direct costs and in , this will rise to 50%. The FCO s contribution from the Strategic Programme Fund (formerly called the Global Opportunities Fund) to support projects run by the Network decreased from 1.3 million to 1 million in the present financial year, and will reduce to 500,000 in and to nothing in , to be replaced by additional programme funding from DIUS, with no net loss at all Ev Ev Ev Ev Q 150