House of Commons Foreign Affairs Committee

Foreign and Commonwealth Office Annual Report 2005–06

Eighth Report of Session 2005–06

Report, together with formal minutes, oral and written evidence

Ordered by The House of Commons to be printed 1 November 2006

HC 1371 Published on 8 November 2006 by authority of the House of Commons London: The Stationery Office Limited £20.00

Foreign Affairs Committee

The Foreign Affairs Committee is appointed by the House of Commons to examine the administration, expenditure and policy of the Foreign and Commonwealth Office and its associated agencies.

Current membership Mike Gapes (Labour, Ilford South), Chairman 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 John Maples (Conservative, Stratford-on-Avon) 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) Richard Younger-Ross (Liberal Democrat, Teignbridge)

The following member was also a member of the committee during the parliament.

Rt Hon Mr Andrew Mackay (Conservative, Bracknell)

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 www.parliament.uk.

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 http://www.parliament.uk/parliamentary_committees/foreign_affairs_committee.cfm.

Committee staff The current staff of the Committee are Steve Priestley (Clerk), Gosia McBride (Second Clerk), Kit Dawnay, (Committee Specialist), Kevin Candy (Committee Assistant), Catherine Jackson (Secretary) and Chintan Makwana (Senior Office Clerk).

Contacts All correspondence should be addressed to the Clerk of the Foreign Affairs Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 6394; the Committee’s email address is [email protected]

Foreign and Commonwealth Office Annual Report 2005–06 1

Contents

Report Page

Conclusions and recommendations 3

1 Introduction 7 Form of the Departmental Annual Report and related papers 7

2 Relations with Parliament 9 Transparency and openness 9 The Hogarth report: an example of over-protective marking 10 Freedom of Information 11 Data protection 12

3 Management and leadership 14 The Collinson Grant review 14 Developments since Collinson Grant 15 The capability review 17 More professional senior management 17

4 Performance and efficiency 19 Financial management and efficiency 19 Prism 19 Capital underspend 20 Auditing arrangements 21 Staff numbers 21 Risk management 22 PSA targets 24 Misalignment of targets and strategic priorities 24 ‘Scoring’ performance against targets 25 Fraud 27

5 Consular services 30 Emergency response 30 Crisis in Lebanon 30 World Cup 2006 31

6Diplomatic representation overseas 32 Global network 32 Strategic direction 32 Shuffling the pack 33 Small Posts 34 Overseas estate 34 Sales and purchases 34 Security 35

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7 Public Diplomacy 37 Measuring effectiveness and value for money 37

8 British Council 41 Work in 2005–06 41 Annual report for 2005–06 42 Measuring performance 42 Efficiency, effectiveness and value for money 44 Representation overseas 46 Board of trustees 46

9 BBC World Service 48 Work in 2005–06 48 Radio audiences 49 Financial management 50 Foreign language television services 51

Formal minutes 54

List of witnesses 56

List of written evidence 57

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Conclusions and recommendations

1. We recommend that the FCO explain why it has discontinued cost-benefit analyses in its Departmental Reports and that it reintroduce them in its Report for 2006–07. (Paragraph 6)

Relations with Parliament 2. We conclude that the FCO’s over-cautious attitude towards publication or disclosure of documents or information about its management practices is a relic of a bygone age, when secrecy was endemic in public life. There is now a culture of freedom of information, and a presumption that information will be disclosed unless there are very strong, valid reasons not to disclose it, such as security or personal confidentiality. We recommend that the FCO reappraise its policy on disclosure, to bring it more into line with modern attitudes. We further recommend that the FCO take a critical look at the way it applies the Whitehall-wide protective marking criteria to information about its internal management or administration, and that it ask itself whether in some cases these are being used over-protectively. (Paragraph 17)

3. We recommend that the FCO adopt the methodology used by the Department for Constitutional Affairs when reporting on its handling of freedom of information requests. (Paragraph 21)

4. We recommend that FCO managers review the practice of recording personal information in FCO files, in order to ensure that in future it is well-founded, relevant to the context in which it is recorded, and properly expressed, and that in its response to this Report the FCO set out the steps it has taken towards this end. We further recommend that serious breaches of good practice be treated as a disciplinary offence. (Paragraph 25)

Management and leadership 5. We recommend that in its response to this Report the FCO provide statistical information for the calendar year 2006 on: (a) how many heads of mission have participated in the leadership programme; (b) how many senior managers have held how many one-to-one coaching sessions; (c) how many SMS and Band D officers have participated in the performance management programme; and (d) how many members of the FCO Board have participated in how many coaching and developmental events. We further recommend that the FCO provide us with a copy of the agenda for a typical four-day leadership programme, with further information on the performance management programme, and with details of the coaching and development events held for the Board. (Paragraph 28)

6. We recommend that in its response to this Report the FCO set out what it has done to follow up each of the recommendations in the 2006 stakeholder survey. (Paragraph 34)

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7. We reiterate our conclusion of March 2006 that the FCO should bring itself into line with the rest of Whitehall, by recruiting more professionally qualified, experienced people to top and middle roles in management and we recommend that in its response to this Report the FCO set out what it is doing or will do to achieve this. (Paragraph 38)

Performance and efficiency 8. Poor programme management was one of the major failings identified in the Collinson Grant study and we conclude that improving it must be a priority for the new Permanent Under-Secretary. (Paragraph 46)

9. We conclude that the FCO Board is right to seek input from the private sector and from the NAO into its financial control and auditing arrangements. We recommend that the FCO inform this Committee of the outcomes of these exercises as soon as they are available. (Paragraph 48)

10. We recommend that in its response to this Report the FCO provide information on posts outside the senior management structure that have been created or abolished in the past year. (Paragraph 51)

11. We recommend that the FCO Board ensure that, in focusing on the top five risks it faces at any one time, it has full information on the broad range of risks facing it, including those that relate to existing hot-spots such as Iraq and the Middle East. (Paragraph 57)

12. We recommend that the FCO keep this Committee informed of progress towards aligning its Public Service Agreement targets with its strategic priorities. (Paragraph 61)

13. We recommend that the FCO share its draft Public Service Agreement with this Committee, before the negotiation process with HM Treasury is completed. (Paragraph 69)

14. We recommend that the FCO inform this Committee promptly, and if appropriate before it is made public, of any fraud which is significant in terms of the sum lost, or which involves important questions of principle, or which raises doubts about the effectiveness of existing systems, or which contains lessons which might be of wider interest. (Paragraph 76)

Consular services 15. We conclude that FCO Ministers and diplomatic, cultural and consular staff— including many locally engaged staff—in London, Cyprus and Lebanon, as well as HM Forces, should be congratulated on their rapid reaction to events in Lebanon and on the successful evacuation away from danger of thousands of British and other nationals. (Paragraph 80)

16. We intend to look more closely at the new opportunities, risks and priorities referred to by the FCO, in the course of our forthcoming inquiry into the strategy White

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Paper, Active Diplomacy for a Changing World. Meanwhile, we recommend that in its response to this Report the FCO provide more information on how it carried out the zero-based review of its European Posts, what the outcome of that review has been, and whether the FCO has any plans to carry out a zero-based review of its entire global network. (Paragraph 85)

17. We recommend that the FCO provide this Committee with full and accurate information about its plans for changes in representation overseas, as early in the process as possible. (Paragraph 89)

18. We conclude that whilst having just one permanent UK-based diplomat may be reasonable in some subordinate posts, we do not consider that this is adequate at an embassy in a European state aspiring to EU membership, such as Montenegro. We recommend that the FCO review its policy towards one-person UK-based diplomatic representation at Embassy and High Commission posts. (Paragraph 90)

19. We conclude that any further round of sales of parts of the FCO estate should be based, not on a revenue raising target but on the merits of each case. We recommend that, if further sales such as that recently concluded in Bangkok can be made without disproportionate impact on the quality of diplomatic, consular or commercial representation they should be considered solely on their merits. We further recommend that the proceeds of the Bangkok sale should count against any target for asset sales which may be agreed between the Treasury and the FCO as part of the Comprehensive Spending Review. (Paragraph 96)

20. We recommend that the FCO inform this Committee immediately of any obstacle, including within government, to implementing necessary security measures, such as a shortage of resources. (Paragraph 100)

Public Diplomacy 21. We recommend that in its response to this Report the FCO set out the progress made so far by the new Public Diplomacy Board on identifying geographical priorities, target audiences, priority themes, action plans and measurable outcomes for public diplomacy work. We further recommend that the FCO explain how the Government proposes to measure the overall value and effectiveness of its public diplomacy expenditure and how it intends to assess the opportunity costs of public diplomacy expenditure vis-à-vis work undertaken by the Government and its Non- Departmental Public Bodies. (Paragraph 112)

British Council 22. We recommend that in response to this Report the FCO provide a full assessment of the British Council’s performance in measuring the impact and value of its work and that it outline what, if any, improvements are necessary to the way the Council’s performance is assessed. (Paragraph 122)

23. We recommend that in its response to this Report the FCO explain the basis for the proposed closures of the British Council’s teaching centres in Kosice, Varna,

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Chittagong, Istanbul and Tel Aviv, whether it has approved each closure, and what assessment it has made of the effects of the British Council’s withdrawal from these cities in terms of the benefit that language teaching brings to the overall public diplomacy effort. (Paragraph 129)

BBC World Service 24. We recommend that in view of the central importance of BBC World Service’s new television service in Arabic to a range of key government policies, the Government make an exceptional grant, outside of the regular Spending Review process, of the £6 million required to enable the Arabic service to broadcast, not for only 12 hours a day as planned initially, but for 24 hours a day from its inception. (Paragraph 147)

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1 Introduction

1. In our Report on the Foreign and Commonwealth Office (FCO) Annual Report 2004– 05 we commented on a wide range of issues related to the expenditure and administration of the FCO.1 Chief among these were issues arising from the January 2005 Collinson Grant study of efficiency and effectiveness, which was highly critical of the FCO’s management and leadership.2 We also commented on a number of other important matters, including relations with Parliament, consular services, diplomatic representation and personnel issues; and we issued a separate Report on Public Diplomacy, in which we commented on the review of the work of the FCO, the British Council and the BBC World Service by Lord Carter of Coles.3

2. This year, we return to further consideration of all those issues in this, our Report on the FCO’s Departmental Annual Report for the period 1 April 2005 to 31 March 2006.4 The context for our inquiry has moved on. Most notably, the Government’s Comprehensive Spending Review (CSR) is now under way, along with work on setting new Public Service Agreement (PSA) targets for the FCO and for other Departments of State. We will comment in detail on the outcome of the CSR and on the new PSA targets next year.

3. Another significant development in the FCO’s administration has been the retirement of Sir Michael Jay as Permanent Under-Secretary (PUS) in July 2006 and the appointment of Sir Peter Ricketts as his successor. Sir Michael and two of his colleagues appeared before us to give oral evidence a few weeks before he retired. We are grateful to Sir Michael for assisting our work during his five years as PUS and in various ambassadorial and other roles prior to that. We also welcome Sir Peter, whom we know well from his previous roles as Political Director in the FCO and as Permanent Representative to NATO, and we look forward to his appearances before the Committee.

Form of the Departmental Annual Report and related papers 4. The Departmental Report for 2005–06 was published on 17 May 2006. Its appearance was delayed as a consequence of the reallocation of ministerial responsibilities which occurred earlier that month. At 168 pages, it is some 30 percent shorter than the 2004–05 Report.5 The reduction in size was achieved by the novel (for a FCO Departmental Report) expedient of including a 7-minute video summary on DVD of some of the FCO’s work during the period covered by the Report. We welcome this innovation as a means of supplementing, not replacing, the information presented in the Report.

5. The printed Report maintains the generally high standard set by previous years’ publications. The main section is very clearly set out, with a well-judged balance between

1 Foreign Affairs Committee, Second Report of Session 2005–06, Foreign and Commonwealth Office Annual Report 2004–05, HC 522 2 Collinson Grant Limited, Efficiency, effectiveness and the control of costs in the Foreign and Commonwealth Office: Phase 2–Analysis and the development of opportunities for change, 14 January 2005, see www.fco.gov.uk 3 Foreign Affairs Committee, Third Report of Session 2005–06, Public Diplomacy, HC 903 4 Cm 6823 5 Cm 6533

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prose, pictures and tables and good use made of boxes. Some of the tables at the back of the Report are substantially improved over those from previous years. However, too many of them still remain difficult for the lay reader to understand.

6. We were pleased to see that the ‘lessons learned’ sections have been continued, but we also note that this year there are no cost-benefit analyses. Such analyses were introduced as a feature of the FCO’s Departmental Reports following recommendations by our predecessor Committees in 1999 and in 2001.6 We appreciate that the substantial section on performance assessment against PSA targets sets out much of the information which one would expect to see in such analyses. However, we are disappointed that this feature has been discontinued without consultation or explanation. We recommend that the FCO explain why it has discontinued cost-benefit analyses in its Departmental Reports and that it reintroduce them in its Report for 2006–07.

7. In our previous Report, we noted with approval the FCO’s use in its Autumn Performance Report 2005 of a ‘traffic light’ depiction of progress against its PSA targets.7 We were pleased, therefore, that this system was adopted for the presentation of similar information in the 2005–06 Departmental Report. We welcome this step, although as we discuss later in this Report we still have concerns about how the ‘traffic light’ system functions.8

8. We have also received from the FCO various other documents, reporting on its financial performance or on its expenditure proposals. In last year’s Report, we commented on the FCO’s Estimates memoranda, in which it seeks to explain to the Committee the reasons for asking Parliament to approve changes in the spending plans already agreed.9 We noted that these memoranda had been “uninformative and difficult to understand” and were “less clear and helpful than those of some other departments.”

9. The FCO’s memorandum on the 2006 Spring Supplementary Estimates was disappointing in that it failed, in our view, to comply fully with Treasury guidelines or to explain adequately the background to or the effects of the changes being proposed. Our exchange of correspondence with the FCO is published with this Report.10 We will monitor the quality of the FCO’s Estimates memoranda closely over the coming year and if we do not see an improvement we will take the matter up with the Permanent Under-Secretary.

6 Foreign Affairs Committee, Fifth Report of Session 1998–99, FCO Resources, HC 271, para. 47; Ninth Report of Session 2000–01, FCO Annual Report 2001, HC 428, para 21 7 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, paras 4 and 5 8 See paras 62-65 9 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 8 10 Ev 80–81

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2 Relations with Parliament

Transparency and openness 10. In our Report on the 2004–05 Departmental Report, we referred to “evidence of a disturbing aversion on the part of FCO management to proper scrutiny of its activities.”11 We reached this conclusion on the basis of a series of failures by the FCO to inform Parliament, through this Committee, of information which would facilitate effective scrutiny of its expenditure and administration. We also noted, however, that Sir Michael Jay had written to us in November 2005, informing us that in future there would be a presumption in favour of “proactive disclosure of decisions or activity” of the Board, subject to the need to “take into account personal and commercial confidences, and any impact on the conduct of international relations.”12 In our Report, we undertook to evaluate this new policy in the light of experience.

11. Among the relevant documents (other than regular or routine publications) that we have received without having to put in a request are: x Review of FCO’s discretionary programme budgets x Freedom of Information after 12 months x FCO staff survey and Board Assessment

12. Documents we have requested and been supplied with are: x Top Risks Register x The Hogarth Report on Ministerial private offices

The FCO has not refused to supply any FCO Board papers that we have requested, although we continue to experience problems gaining access to other classes of FCO documents. For example, we requested a copy of the valedictory e-gram sent by the outgoing Ambassador to Baghdad, William Patey, extracts from which appeared in the press in August 2006. That request was turned down, and three days later the press reported that the practice of allowing outgoing Heads of Mission to send valedictory dispatches has been discontinued.13

13. When he appeared before us for the final time in June 2006, Sir Michael Jay agreed that this aspect of the relationship between the Committee and the FCO was not satisfactory. He developed his previous policy of a presumption in favour of proactive disclosure of information, and offered to send the Committee a quarterly report on “the main management issues that have been at the top of our agenda in the previous three months.”14 He told us that these reports should give the Committee “a fair and up to date

11 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 23 12 Ibid; Ev 51 13 “Rebel ambassador takes parting potshot at Blair”, Sunday Times, 24 September 2006 14 Q 2

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view of the range of challenges we face.”15 In addition, Sir Michael offered informal briefings on FCO management or policy issues.

14. It is disappointing to have to inform the House that, more than three months later, we have yet to receive one of these quarterly reports. We are not in a position, therefore, to judge whether they represent the increase in accountability which is their purpose. We expect to have seen several of these reports by the time we make our Report on the FCO for 2006–07.

The Hogarth report: an example of over-protective marking 15. An example of where the new policy of proactive disclosure has failed to operate in practice is the Hogarth Review of ministerial private offices, which was completed in October 2004. The report arising from the review was alluded to in a parliamentary question tabled by Andrew Mackinlay MP in January 2006. We asked for and received a copy in March. The report is classified ‘Confidential’. This means that someone in the FCO has judged that to release the report would have important consequences, such as impeding seriously the development or operation of major government policies, or shutting down or otherwise substantially disrupting significant national operations.16 When we saw the report, there appeared to us to be no good reason why it should have been classified ‘Confidential’, and absolutely no reason why it should remain classified. We therefore asked the FCO to publish the report.

16. The Foreign Secretary, Margaret Beckett, replied that “Protective marking criteria govern handling arrangements for the transmission and storage of classified documents.”17 Thus it was not the classification of the report—the reason for which remains unexplained—that prevented its disclosure. Instead, the FCO used the criteria that apply under the Freedom of Information Act. The Foreign Secretary continued,

As a Minister I depend upon the ability to commission and receive full and candid advice in order to make informed decisions in the interests of the effective running of my Department. Further disclosure of this recent report would I believe constrain candour and undermine internal effectiveness.18

In our view, the Foreign Office is being too cautious in this, as in so many instances where it refuses to release information. We regard the Hogarth report as an interesting and worthwhile study of part of the machinery of government but we cannot agree that publication of it would constrain the candour with which officials offer advice, or would undermine the effectiveness of the FCO.

17. We conclude that the FCO’s over-cautious attitude towards publication or disclosure of documents or information about its management practices is a relic of a bygone age, when secrecy was endemic in public life. There is now a culture of freedom

15 Ev 38 16 A full description of the Government’s protective marking system is available at www.cabinetoffice.gov.uk 17 Ev 17 18 Ev 17

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of information, and a presumption that information will be disclosed unless there are very strong, valid reasons not to disclose it, such as security or personal confidentiality. We recommend that the FCO reappraise its policy on disclosure, to bring it more into line with modern attitudes. We further recommend that the FCO take a critical look at the way it applies the Whitehall-wide protective marking criteria to information about its internal management or administration, and that it ask itself whether in some cases these are being used over-protectively.

Freedom of Information 18. In its response to our Report on the FCO Departmental Report for 2004–05, the FCO undertook to provide the Committee with a copy of its Board information paper on “FOI after 12 months”.19 We received the paper in June 2006 and have reproduced it with this Report.20 The following table is taken from the paper:

ICO Complaints (Workload Multiplier = 3 x new request)

Internal Reviews (Workload Multiplier = 2 x new request)

Unresolved from prev. Quarter

New Requests

700

600

500

400

Cases 300

200

100

0 1st 2nd 3rd 4th 1st Quarter 2005/06

The table shows a marked increase in FoI applications and internal reviews in the first quarter of 2006.

19. Statistics and information on the performance of all Whitehall departments under the Freedom of Information (FoI) Act were published by the Department for Constitutional Affairs (DCA) in May 2006.21 This publication shows that the FCO received 1,315 requests under the Act in 2005. Of these requests, 61 percent were dealt with inside the statutory 20- day period and a further 25 percent were dealt with under the provisions allowing for an extension of that period, giving the FCO an 86 percent ‘success’ rate overall. We note from

19 Cm 6791, p 5 20 Ev 95–98 21 Freedom of Information Annual Report 2005, Operation of the FOI Act in Central Government, available at www.dca.gov.uk

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the DCA report that the number of permitted extensions for the FCO was the highest of any Whitehall department.

20. The FCO told us that in the last quarter of 2005 its performance in dealing with FOI requests within the statutory period had improved to 93 percent, although it did not mention the high proportion of extensions.22 The FCO also pointed out that its refusal rate in 2005 was only slightly above the average for Whitehall. However, the FCO’s figure for this rate of 22 per cent differs from that given by the DCA, which is 28 per cent. The difference can be attributed to the FCO including in its calculation all requests received, whereas the DCA discounts requests that cannot be resolved, such as those for information which is not actually held by the FCO. In our view, the basis of the DCA’s calculation is more legitimate than that used by the FCO, although we accept that for the purposes of making comparisons between departments either figure is valid and that the evidence shows that the FCO responded more positively to FoI requests throughout 2005 as a whole than it did in the early stages of implementation of the Act.

21. We recommend that the FCO adopt the methodology used by the Department for Constitutional Affairs when reporting on its handling of freedom of information requests.

Data protection 22. Data protection can be seen as part of the freedom of information regime, in that it gives individuals access to information held about them by corporate bodies. However, as the phrase suggests, it is also about protecting information from unwarranted disclosure. The Foreign and Commonwealth Office, as a public body holding a large amount of personal data, is obliged under the Data Protection Act to disclose those data only to persons entitled to see them.23 We were therefore dismayed to discover an incident of unauthorised and unredacted disclosure to a third party of ‘personal data’ within the meaning of the Data Protection Act. Our dismay was compounded by the fact that the data were wholly untrue and entirely irrelevant to the context in which they had been recorded.

23. We found the FCO response to this error, which we drew to its attention, to be wholly unsatisfactory. Our specific concerns are these: x The information was based on hearsay and was not attributed; it should not, therefore, have been recorded at all. x The information was irrelevant to the context in which it was included in a FCO file. x The language in which the information was recorded was very poorly drafted, allowing for more than one interpretation but tending to suggest something extremely defamatory. x The information was not excised when the file was quite properly provided to a third party under the Data Protection Act; this failure was a breach of the terms of the Act.

22 Cm 6791, p 5 23 Data Protection Act 1998, section 7

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x When the unauthorised disclosure was drawn to the attention of the FCO, they failed to appreciate the severity of the case and they at first failed to apologise adequately to the person concerned.

24. This incident damaged our confidence in the FCO’s senior management of the time, which showed failures of judgment, drafting, compliance with legal requirements and simple courtesy.

25. We recommend that FCO managers review the practice of recording personal information in FCO files, in order to ensure that in future it is well-founded, relevant to the context in which it is recorded, and properly expressed, and that in its response to this Report the FCO set out the steps it has taken towards this end. We further recommend that serious breaches of good practice be treated as a disciplinary offence.

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3 Management and leadership

The Collinson Grant review 26. In our Report on last year’s Departmental Report, we commented on a review carried out by consultants Collinson Grant, which criticised the management and leadership of the FCO. We noted the consultants’ conclusions that,

The leaders of the FCO focus primarily on their diplomatic and political duties, rarely on the efficient management of the organisation. There is a clear vision of Strategic Priorities, but the need for robust management to allow core duties to be conducted effectively is neither accepted nor properly understood. People are frustrated and impeded in the execution of critical tasks by the weaknesses of the organisation, yet are unwilling to tackle the root causes that are entrenched in and reinforced by the established culture. The entire organisation needs to be challenged and reformed, but the leadership lacks the skills needed and the will to upset the status quo.24

We also noted Sir Michael Jay’s robust response, in which he rejected some of these comments and set out what the FCO management were doing to implement those changes which they accepted were necessary.25

27. We asked the FCO to tell us more about how they would implement the changes. In their response to our Report, they set out the specific steps they are taking: x For all new Heads of Mission—a four day leadership programme which forms the core of their preparation for their new roles. This is supported by one to one coaching for their first six months in post; x For all Senior Management Structure (SMS) officers—six one to one coaching sessions with an external coach to help improve their skills in leadership and delivery through others; x For SMS and Band D officers—a Performance Management Programme designed to tackle the criticisms made by Collinson Grant and others about the Performance Management culture in the FCO; x For the FCO Board—a programme of coaching and developmental events throughout the year facilitated by external coaches.26

We welcome all these steps.

28. We recommend that in its response to this Report the FCO provide statistical information for the calendar year 2006 on: (a) how many heads of mission have

24 Collinson Grant Limited, Efficiency, effectiveness and the control of costs in the Foreign and Commonwealth Office: Phase 2–Analysis and the development of opportunities for change, 14 January 2005, p 8 25 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 41 26 Cm 6791, response to recommendation 12

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participated in the leadership programme; (b) how many senior managers have held how many one-to-one coaching sessions; (c) how many SMS and Band D officers have participated in the performance management programme; and (d) how many members of the FCO Board have participated in how many coaching and developmental events. We further recommend that the FCO provide us with a copy of the agenda for a typical four-day leadership programme, with further information on the performance management programme, and with details of the coaching and development events held for the Board.

Developments since Collinson Grant 29. In April, the FCO supplied us with a copy of an ‘Employee Engagement Survey’ of the FCO carried out by ORC International early in 2006.27 The survey revealed that very high proportions (over 90 per cent) of FCO staff say they have a good understanding of their role and that they are highly motivated. However, much lower scores are achieved in respect of management and leadership, with only 28 percent of staff agreeing with the statement that “The FCO as a whole is well-managed” (full figures: 28 per cent favourable; 34 per cent neutral; 38 per cent unfavourable). Staff are also very critical of the way change is managed in the FCO, with only 25 percent feeling it is managed well (full figures: 25 per cent favourable; 32 per cent neutral; 44 per cent unfavourable). The FCO Board noted in February that it needs to focus on these areas.28

30. ORC International listed three “key areas for improvement”: x Perceptions of senior management and leadership x Effective change management and communication x Reward and recognition

The FCO Board has also carried out its own assessment of staff perceptions of its performance among a random selection of FCO staff at all levels. Returns were received from 106 personnel—just over half of those to whom it was sent. The assessment has not been published, but it has been supplied to the Committee in confidence.29 Its findings are consistent with those of the employee engagement survey.

31. We asked Sir Michael Jay what conclusions he had drawn from these exercises. He said,

This is not just a Foreign Office problem. We have had collective discussion among permanent secretaries about how we square the circle between the number of government departments in which people seem to feel they are doing a good job but do not feel that the leadership is of the quality that it should be, and I think this raises a problem for a number of us and I do not think we have quite got to the bottom of it. People feel that their line management is quite strong but the higher up you get, the less confidence people seem to have in the overall management. I think this is

27 The survey is available at www.fco.gov.uk 28 Minutes of FCO Board meetings are available at www.fco.gov.uk 29 Ev 77–78

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partly because we are operating at a time of change, people feel uncertain of the changes which are going on and they tend inevitably to see the leadership as responsible for the uncertainty they feel. The management is improving, it has got further to go and I take a good deal of comfort from the surveys that you have mentioned but I am also conscious that they provide me, the board of management and our successors with lessons to learn.30

32. To strengthen its management, the FCO has established a ‘Senior Leadership Forum’, which meets every six months. The Forum is comprised of the Board, plus about 20 Heads of Mission. In an interview with Whitehall and Westminster World in March 2006, Sir Michael described the purpose of the Forum as being to “give a sense of strategic direction throughout the Foreign Office as a whole.”31 We asked Sir Michael to explain more about the work of this Forum. He replied:

The purpose behind it is to get a sense of collective leadership of the leadership in London and our senior ambassadors overseas so that they meet together to form a collective leadership which will then discuss and take decisions as necessary on how the office should be run. We get away from the sense of them and us and get a clearer sense of collective leadership. That has been going now for about—I think we have had three meetings, every six months—18 months, we have got another one in a couple of weeks time. I believe that is proving genuinely useful in getting a sense of collective leadership for the organisation as a whole. It is new and it is positive and it is changing things. It is making our ambassadors abroad be part of the collective leadership and responsible for communicating the change to their people.32

33. We welcome this attempt by the FCO’s leadership to engage senior Heads of Mission in the process of setting the strategic direction of the FCO’s management and organisation. The divide between ambassadors in the field and administrators in Whitehall—a divide which is both physical and psychological—has been a longstanding problem for the FCO. The Senior Leadership Forum, together with the annual gathering of Heads of Mission in London, will be a very worthwhile step if it helps to break down that divide. We intend to monitor progress in this area.

34. The FCO has also carried out a study of the views of its ‘key stakeholders’, among whom it numbers this Committee. The survey revealed an “overwhelmingly positive” view of the FCO among the organisations with which it deals (the biggest single group of these is other Whitehall departments, followed by business, NGOs, Parliament and the media). Nevertheless, as Sir Michael Jay acknowledged, there was also a “clear message” that the FCO could do better still.33 The consultants who carried out the survey suggested that the FCO should: develop clearer objectives, recruit more from outside the organisation, improve its support services, engage more with its ‘stakeholders, and present a “more open, clear and confident external image.”34 Sir Michael told us that he expected the FCO “will

30 Q 11 31 ‘Our man in the Foreign Office’, Whitehall and Westminster World, Issue 51, March 2006 32 Q 16 33 Ev 84 34 Stakeholder Survey 2006: A Report for the Foreign and Commonwealth Office from Indepen and Accent, 29 June 2006, available at www.fco.gov.uk

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want to accept all the action points set out in the report.”35 We recommend that in its response to this Report the FCO set out what it has done to follow up each of the recommendations in the 2006 stakeholder survey.

The capability review 35. The FCO Board minutes for 20 May show that there was a brief discussion of the forthcoming ‘capability review’, currently being carried out for the Prime Minister’s Delivery Unit:

Anne Pringle drew the Board’s attention to the Capability Review that will take place from October 06–February 07. External reviewers will assess the leadership, strategic capability and delivery of the FCO with a particular focus on the senior leadership. The Board agreed that the Review is an opportunity for the FCO to demonstrate its abilities and contribution, and that a Director-led team to staff the review would need to be in place by early September.36

The FCO undertook in their response to the Committee’s Report on the 2004–05 Annual Report to ensure that the Committee is briefed on the review’s conclusions.37 We look forward to that briefing.

More professional senior management 36. In our previous Report in this series, we called on the FCO to “catch up with the rest of Whitehall, by recruiting professionally qualified, experienced people to the top roles in finance, human resources and estate management.”38 We recommended that the FCO do this “without delay.” In reply, the FCO stated that it would consider opening two further posts up to suitably qualified external applicants, but added that it has to “make a balanced judgement, taking into account the need to have professional qualifications in key positions, the need for senior staff to have a knowledge of the business needs of the organisation, and the need to develop talent within the FCO in the field of corporate management.”39 We were disappointed with this response. Other government departments face very similar challenges to those faced by the FCO, but as we showed in our previous Report they have been much readier to recruit from outside the organisation, thus bringing in new skills and fresh ways of thinking.40

37. We took this up with Sir Michael Jay. He told us that the FCO: is seeking to appoint through open competition a new finance director by the end of this year; intends to recruit externally a new chief information officer; has already brought in—through open competition—a new legal adviser; and has also appointed from the private sector a new

35 Ev 84 36 Minutes available at www.fco.gov.uk 37 Cm 6791, response to recommendation 15 38 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 57 39 Cm 6791, response to recommendation 16 40 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 54

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head of FCO Services.41 Sir Michael did not, however, feel that it would be appropriate to appoint a new human resources director from outside the FCO, on the grounds that the FCO has “very deep” experience in this field. We are concerned that Sir Michael, in focusing on open competition, may not have grasped the point we were seeking to make, which was in favour of professional qualifications for specialist service managers. Those managers could well be found in other Whitehall departments.

38. In its response to our previous Report, the FCO stated that “We expect to see a step change in the quality of leadership across the FCO by 2008.”42 Presiding over this step change will be the new Permanent Under-Secretary, Sir Peter Ricketts. One of the steps we hope Sir Peter will take is to move more swiftly towards the recruitment into key management positions of experienced people with appropriate professional qualifications. We reiterate our conclusion of March 2006 that the FCO should bring itself into line with the rest of Whitehall, by recruiting more professionally qualified, experienced people to top and middle roles in management and we recommend that in its response to this Report the FCO set out what it is doing or will do to achieve this.

41 Q 38 42 Cm 6791, response to recommendation 12

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4 Performance and efficiency

Financial management and efficiency

Prism 39. In its Report on the 2004–05 Departmental Report, the Committee criticised the FCO for failings in its management of the Prism management information project.43 The FCO responded, informing us of a number of steps that have been taken both to improve the performance of Prism and to avoid a recurrence of the problems with other large IT or procurement projects.44

40. The minutes of February’s FCO Board meeting show that there were continuing problems with Prism. For example, the system did not have sufficient memory to function properly and further memory had to be installed. The minutes record that the FCO was pursuing with the contractors, Capgemini, the possibility of compensation for the problems that the lack of sufficient memory caused.45 The minutes of May’s Board meeting show that the Prism project was still experiencing so many severe difficulties that its performance was assessed at ‘red’:

The [Prism] system was increasingly flexible and the support provided in London had noticeably improved. But performance was still a serious problem and this should remain at red in the table of Key Programme Indicators. A timetable letting staff know when they can expect improvements would be helpful.46

41. In June, we asked Sir Michael for a progress report on Prism. His response was cautiously upbeat:

We now have Prism rolled out across the whole network so it is operating everywhere except in one or two posts where it is not feasible, and we are beginning to get the benefits from that. It is also operating in the United Kingdom and we are getting benefits from that. We are getting benefits in terms of greater efficiency in our operation and better management information. Where we still have problems, and I am conscious of this because they are raised with me each time I go abroad, is in the performance of Prism in a number of posts: it is too slow, it is too complicated and that we are working to address in order to speed it up because that is causing some difficulty for us. Overall, I think Prism started business critical, started badly, is going much better, is over budget but not by a huge amount, is delayed but not by a huge amount and is beginning to bring us real benefits.47

In our recent visits to Posts overseas, we have also detected a more positive attitude and a reduced level of frustration over Prism among FCO staff.

43 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, paras 62 to 69 44 Cm 6791, response to recommendations 19, 20 45 Minutes available at www.fco.gov.uk 46 Minutes available at www.fco.gov.uk 47 Q 21

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42. Table 5 on page 80 of the Annual Report shows that more than a quarter of all efficiencies planned for 2006–07 and 2007–08 are to be achieved from information and computer technology. However, only five per cent of efficiencies came from computer technology in 2005–06. Explaining this, FCO Finance Director Ric Todd told us that delays in the implementation of Prism and other IT projects such as Future Firecrest mean that the savings made by these programmes have “moved to the right”—that is, they will be realised later than had been predicted, but they will be realised.48

43. It does appear that after a number of difficult years the FCO is now closer to getting a grip on its IT programmes. In its response to our last Report, the FCO undertook “to provide regular written updates” on Prism.49 We will monitor these reports as well as assessing progress on other IT projects, and we will be ready to follow up any matters of concern.

Capital underspend 44. At its meeting in May 2006, the FCO Board considered a paper on how to address the FCO’s continued capital underspend. Analysis of figures contained in the Estimates and in the Departmental Report carried out for us by the Scrutiny Unit of the House of Commons Committee Office suggested the underspend could be of the order of £23 million, or 13 per cent of the total provision.50 Mr Todd told us that in fact the underspend would be even higher—£39 million.51

45. The minutes of the May 2006 Board meeting state:

Delayed big IT and estates projects were responsible for a large proportion of underspend, and it is difficult to quickly reallocate funds from one project to another, especially when project managers don’t give up underspend in time to allow re-allocation. There was also some confusion about the definition of capital, which could lead to errors in profiling spend. Better forecasting by managers and clearer accountability are also important factors.52

Delays in the Future Firecrest IT programme and in some estate projects had led to most of the underspend.53 The underspend is not of itself a huge problem because, Mr Todd told us, it can be carried over to the following financial year.54 More worrying, as the Board has acknowledged, is what the scale of the underspend tells us about FCO’s management practices:

48 Qq 93, 94 49 Cm 6791, response to recommendation 19 50 Compared with a 'Capital DEL' provision of £175.5m the FCO’s estimated outturn is £152.5m. See Main Estimates, HC 1035, bottom of page 335 and Departmental Report Table 8 and last part of Table 15. 51 Q 80 52 Minutes of the May 2006 FCO Board meeting, available at www.fco.gov.uk 53 Q 80 (Ric Todd) 54 Q 82

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The Board agreed that underspends and overspends are both evidence of poor programme management, and that the Investment Committee and other capital spenders throughout the FCO should be more open to sensible risk management.55

46. The Board includes non-executive members from the private sector, including BUPA and KPMG, and Sir Michael told us that he would take advice from these experienced business practitioners “about how we try to get this right.”56 It is important that the FCO gets this right. Poor programme management was one of the major failings identified in the Collinson Grant study and we conclude that improving it must be a priority for the new Permanent Under-Secretary.

Auditing arrangements 47. When Sir Michael Jay appeared before us in June, we discussed whether the FCO’s internal financial control and audit procedures were up to professional standards.57 Sir Michael later wrote to us, stating that the FCO was about to enter into a partnership arrangement with a private sector audit firm to “enhance and support” the FCO’s in-house auditing structures.58 He also told us that the National Audit Office had been invited by the Board of the FCO to conduct a review of its internal financial control systems in the Autumn of 2006. We welcome these developments.

48. We conclude that the FCO Board is right to seek input from the private sector and from the NAO into its financial control and auditing arrangements. We recommend that the FCO inform this Committee of the outcomes of these exercises as soon as they are available.

Staff numbers 49. The FCO has a target during the 2004 Spending Review period (2005–08) of reducing the headcount of United Kingdom-based staff by 310. This staff reduction regime appears to exclude locally-engaged staff overseas—whose numbers increased by 400 last year to 9,600—and United Kingdom-based staff working in entry clearance and consular services, whose numbers are also set to increase, by 500 by 2008.59

50. Sir Michael explained the reason for excluding these staff from the reduction target.

[T]here is a distinction drawn between the two businesses we have, consular business and UK visas, which are self-funded. In other words, the staff who carry out that business are funded from the fees from carrying out that business. It would be wrong to include those in the reduction figure. The figure of 321, I think it is, applies to the rest of our UK-based staff in London and around the world. As far as local staff is concerned, we do not have a staff reduction ceiling, we have a figure of funds

55 Minutes of the May 2006 FCO Board meeting, available at www.fco.gov.uk 56 Q 82 57 Qq 52–54 58 Ev 39 59 Cm 6823, p 81 and Table 13

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available for local staff from which each of our Heads of Mission abroad has to work out within the allocation he or she gets.60

Mr Todd elaborated on this:

In the case of UK-based staff we have a ceiling on both numbers and pay bill. For LE staff the ceiling is only on pay bill. In both cases that does not apply to staff who are UK visas and Consular, therefore the increase in the number of LE staff will be the consequence of rising demand for visa and consular services. The way in which Heads of Mission are able to give their LE staff a pay rise is by having fewer of them.61

51. In response to our previous Report, the FCO provided information on which senior management structure posts have been abolished or regraded.62 We found this information helpful in reaching an understanding of where the cuts in senior posts are likely to have an impact. We recommend that in its response to this Report the FCO provide information on posts outside the senior management structure that have been created or abolished in the past year.

Risk management 52. For any large organisation, management of risk is an essential responsibility of senior management. For the FCO, which has stewardship of substantial public funding and is charged with protecting and projecting the national interest, the dangers posed by the risky political, strategic and commercial environments in which it operates are potentially huge. The Office therefore maintains elaborate structures and procedures designed to ensure that its senior managers are aware of the main factors which might lead to a reprioritisation of goals or reallocation of resources.

53. The FCO has an Audit and Risk Committee, the purpose of which is to advise the Permanent Under-Secretary on: x the strategic processes for risk, control and governance and the Statement on Internal Control (SIC); x FCO accounting policies and resource accounts, including the process for their review prior to submission for audit and the levels of error identified; x the planned activity and results of both internal and external audit; x the adequacy of management response to issues identified by audit activity, including the NAO Management Letter; x assurances relating to the corporate governance requirements of the FCO (e.g. Home and Overseas Self-Audit);

60 Q 84 61 Q 85 62 Cm 6791, Annex A

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x proposals for tendering for Internal Audit services or for purchase of non-audit services from contractors who provide audit services; and x the arrangements in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting and other matters (“whistle- blowing”). The Committee’s objective is to ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action.63

The Committee meets at least four times a year.

54. The FCO also has a system of internal control to manage risk:

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of FCO policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.64

55. To assist this work, the FCO maintains a Top Risks Register and various subsidiary risk registers. According to the Resource Accounts for 2004–05, the top risks in that year were “security (both of staff and physical assets); ICT project risk; and responsiveness to international crises, whether consular (e.g. tsunami) or political in nature.” The Board Minutes for May 2006 record that “There are now fewer risks, with both operational and strategic risks focused on the impact on the FCO. … although there were still finely balanced arguments for different risks being included or not.”65 The Board now reviews the register on a quarterly basis.66 We asked for, and received, a copy of the Top Risks Register for July 2006.

56. We asked the FCO why the July version of the register did not identify Iraq and the Middle East as two of the five strategic risks listed. The FCO replied that “since [these] were already the subject of intense policy focus, and considerable FCO resources, they were left out of the Top Risk Register in order to make room for other types of risks, such as an energy or major humanitarian crisis.”67 The risk register is intended to focus on those risks “which, if they occurred, would have corporate implications for the FCO (requiring decisions on shifting resources to deal with them).”68

57. The need to be prepared for a major humanitarian crisis was underlined in August, when the situation in Lebanon produced a sudden requirement for FCO consular

63 FCO Audit & Risk Committee terms of reference, available at www.fco.gov.uk 64 FCO Resource Accounts 2004–05, HC 776, December 2005, p 6 65 Minutes available at www.fco.gov.uk 66 Board Minutes for July 2006, available at www.fco.gov.uk 67 Ev 120 68 Ev 120

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assistance with the evacuation of British and other citizens from that country.69 However, the humanitarian emergency was a consequence of a wider threat to stability in the region, caused by armed conflict between Israeli defence forces and Hizbollah fighters. If that conflict had escalated further, it too would have placed great demands on FCO resources. We therefore welcome the fact that the Board will be looking at the register’s coverage of strategic risks in the Autumn.70 We recommend that the FCO Board ensure that, in focusing on the top five risks it faces at any one time, it has full information on the broad range of risks facing it, including those that relate to existing hot-spots such as Iraq and the Middle East.

PSA targets

Misalignment of targets and strategic priorities 58. All government departments are obliged to measure their performance against a series of Public Service Agreement (PSA) targets, agreed between the department and the Treasury. The FCO’s Departmental Report for 2005–06 provides on page 12 an overview of its strategic priorities and explains how these relate to its PSAs:

In 1998 the Government introduced PSAs, setting out what government departments plan to deliver in return for the resources allocated by the Treasury.

During 2005–2006, we have been working towards two different sets of PSA targets (see Table 1). These are the 12 targets set during the 2002 spending review (SR 2002) covering 2003–2006 and the nine targets set during the 2004 spending review (SR 2004) covering 2005–2008. In this departmental report we are reporting progress against two sets of targets as both spending reviews overlap in this financial year. This report provides final progress assessments against the 2002 targets (pages 125– 153) as well as details of progress towards achieving the 2004 targets (pages 110– 124).

We are committed to providing regular and reliable progress assessments towards meeting our PSA targets. The Treasury also monitors our progress to make sure we have used the resources allocated to us effectively.

59. The FCO had nine strategic priorities at the time the Departmental Report was produced (a tenth, on ‘climate security’, has since been added by Mrs Beckett). Of these, three have no related PSA targets under the SR04 framework, although they did have targets under the SR02 framework. These are: x Strategic Priority 2: Protection of the UK from illegal immigration, drug trafficking and other international crimes x Strategic Priority 7: Security of UK and global energy supplies x Strategic Priority 8: Security and good governance of the UK’s Overseas Territories

69 See para 78-80 70 Ev 120

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60. The Departmental Report does not state why there are no current targets for these priorities. We therefore asked Sir Michael to explain the discrepancy. He told us,

You have hit upon an issue which has been quite a difficult one for us, certainly for the time I have been in this job, which is the need to get the PSA targets and the strategic priorities in sync with each other, and that has not been straightforward. At the moment we have PSA targets which were a result of SR 2004 and agreed there, which we are charged with fulfilling, but not all of the PSA targets agreed as part of SR 2004 do reflect the new strategic priorities.71

Ric Todd, the FCO’s Director, Finance, added that,

We also have the situation in which 2005–06, the report which we have here, was a so-called crossover year in that we were reporting both against the 12 PSAs from the 2002 SR and the nine from the 2004 SR at a time when ministers had also decided that they wanted to give us strategic priorities. In a sense, we have brigaded the PSA targets in SR04 … with our strategic priorities, but our suggestion to the Treasury that we very closely align the PSAs with the strategic priorities was refused by them on the grounds that there would then be a sort of sudden break in terms of PSAs. We think that in SR07, which is the next one—like buses they keep coming round—will actually give us an opportunity to look again at our PSAs and to make them much more closely related to the strategic priorities. I think that is a genuine opportunity for us. It is not a crossover year, unlike 2005–06.72

61. We recommend that the FCO keep this Committee informed of progress towards aligning its Public Service Agreement targets with its strategic priorities.

‘Scoring’ performance against targets 62. A look at the scores for performance against some of the targets in the Departmental Report illustrates the difficulties involved in assessing the FCO’s performance, particularly against targets which depend on external factors that may be outside the FCO’s control or even, in some cases, beyond their capacity to influence.

63. For example, the Departmental Report 2005–06 notes that following the US–India agreement on nuclear energy development, the United Kingdom is relaxing its ban on nuclear dual-use exports to India, which is a nuclear-armed state.73 It also notes that Iran is the FCO’s “top counter-proliferation priority.” Given that the period covered by the Report ended on 31 March 2006, when the prospects for a successful resolution of the Iran nuclear issue were perhaps even less good than they are now, we find it surprising that the FCO assessed progress on PSA-1A (the target relating to weapons of mass destruction), which is couched in terms of “rolling back [WMD] programmes,” as ‘amber’ rather than ‘red’. Similarly, progress on the PSA on securing “more robust action by the international community” on weapons of mass destruction, PSA-1B, was assessed as ‘amber’, rather than

71 Q 69 72 Q 69 73 Cm 6823, p 110

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‘red’, although the Non-Proliferation Treaty (NPT) Review Conference failed to reach a substantive agreement.74

64. The FCO’s Finance Director, Ric Todd, told us that,

… the rating which we give is the product of a set of assessments against a number of indicators and statistical measurements and judgments. We put them together, build it up from the bottom, review it from the top down and come up with a rating, the result was the one which we made at the time which we felt was justified.75

Sir Michael Jay followed this up in writing, explaining that in the FCO’s view the ‘amber’ assessment of this target was justified, given the progress made in areas other than the NPT. He conceded, however, that “we remain seriously concerned about the risks of proliferation, especially with respect to Iran and DPRK [North Korea].”76 This exposes one of the limitations of the exercise, which is that the set of assessments used to build the rating can and often will incorporate contradictory measurements of progress.

65. Another example of this, also taken from the FCO’s Departmental Report for 2005–06, is the rating of performance on SR04 PSA-7 (understanding of and engagement with Islamic countries and promotion of reform). This, too, is shown as amber, or ‘on course’. However, four of the seven ‘reform’ scorecards are red, and none is green. Among the red scorecards is perhaps the most important one, “promoting a moderate version of Islam in Islamic countries and the UK.”77 Sir Michael told us that the disparity between the individual scorecard markings and the overall rating had much to do with the fact that, although governments in North Africa and the Middle East had signed up to commitments to introduce democratic and other reforms, they had so far failed to implement them.78 Of course, a target couched in terms of engagement with the Islamic world, and promoting a moderate version of Islam, is essentially about inputs, not about outcomes. In scoring its performance against this target as ‘red’, the FCO may therefore have been a little hard on itself.

66. In the case of many departments—particularly those providing services to the public, such as health and education—it is possible to devise targets that are quantifiable and measurable, even for outcomes. For the FCO, devising such targets has been more of a problem. We were critical in our last Report of the fact that too many of the FCO’s targets are expressed in terms of outcomes which are beyond its ability to secure.79 We suggested to the FCO that it discuss with the Treasury a move to targets based more on inputs and outputs than on outcomes.

67. In reply, the FCO told us that:

74 Cm 6823, p 110 75 Q 75 76 Ev 39 77 Cm 6823, p 121 78 Ev 39 79 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 12

Foreign and Commonwealth Office Annual Report 2005–06 27

From 1 April 2006, the FCO is working towards achieving nine PSA targets, which were agreed with Treasury during the 2004 Spending Review. These targets are based on outcomes and are fixed until 31 March 2008, when the spending review period expires. As part of the Comprehensive Spending Review (CSR07) negotiations, the FCO will be required to draw up a new Public Service Agreement for the next spending review period (2008–11). This will involve consulting a wide range of stakeholders before agreeing a new set of PSA targets and performance indicators with Treasury. As part of this process, we will be discussing whether targets defined in terms of inputs and outputs are more appropriate, and how we might devise a performance management framework that accounts for outcomes where the FCO has limited leverage.80

We will certainly wish to monitor this process.

68. The FCO will have to negotiate new PSAs with the Treasury as part of the Comprehensive Spending Review process now under way. Sir Michael hinted that some of the less useful current PSA targets might have been dictated, or at least heavily influenced, by the Treasury.81 If this is so, we would expect FCO Ministers to support their officials in negotiating specific, measurable, achievable, realistic, time-related targets. They would certainly have the support of this Committee if they were to do so. The FCO has told us: “We welcome the FAC’s interest in and views on our PSA targets. PSAs are proposed to HMT and we will take into account any views made. We will start negotiations with HMT later this year on the 2008–2011 PSA.”82 The FCO has also undertaken to provide this Committee with full details of the 2008–2011 PSA as soon as it has been agreed. However, we would rather see the draft PSA before it has been agreed, so that we may comment on it.

69. We recommend that the FCO share its draft Public Service Agreement with this Committee, before the negotiation process with HM Treasury is completed.

Fraud 70. In our Report on last year’s Departmental Report, we commented on cases of fraud carried out at Posts overseas.83 We were surprised that the FCO had not informed us of the largest identified loss by fraud in its history—even though it had occurred at an Embassy we were about to visit—and we were very concerned that the National Audit Office had found that weaknesses in financial control and failure to apply correct procedures had allowed this and other frauds to take place.

71. In its response, the FCO apologised and told us that procedures had been put in place “to ensure that the FAC are advised, promptly, of any significant FCO frauds, in parallel with reporting to the PAC [Public Accounts Committee].”84 It also informed the Committee of a further large fraud by persons unknown involving the loss of satellite

80 Cm 6791, response to recommendation 3 81 Qq 72–3 82 Ev 6 83 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, paras 47 and 48 84 Cm 6791, response to recommendation 13

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‘phones in Iraq, resulting in a loss of £594,000, and of a fraud carried out by a British Council employee in Bahrain in 2004, in which £148,000 was lost.85

72. Since then, the FCO has informed us about two further cases of fraud. In Ulaanbaatar, Mongolia, eleven locally-engaged staff were dismissed in May after it was discovered they had been under-declaring their social insurance contributions, thus incurring their employer, the Embassy, a liability of more than £20,000.86 In August, we were given details of a further fraud at the Embassy in Santo Domingo, Dominican Republic, where the locally employed accountant stole £200,000.87

73. In both cases, it appears that the frauds remained undiscovered, not because of any lack of procedures or mechanisms to prevent them, but because the procedures were not followed. The Ulaanbaatar fraud came to light only after the FCO reminded all Posts to ensure they were following local regulations. In September 2005, the Embassy checked records going back to January 2003 and discovered that monthly returns to the Mongolian authorities since that date had been falsified by locally-engaged staff, without the knowledge of FCO staff.88 In the case of Santo Domingo, the FCO was alerted by a local bank in July 2006, following which fraud was discovered dating back to July 2004. The FCO told us that “the fraud was allowed to take place because of non application of prescribed procedures rather than gaps in the control framework.”89

74. In its response to our earlier Report, the FCO set out the steps it has taken to prevent recurrences of such frauds: x the introduction of the Prism “purchase to pay” system. This provides a good assurance that payments are valid before they are made; x the annual programme of home self audit and self audit for Posts. This provides an additional annual check that the most important controls are in place; x the end of month checking regimes at Posts have been revised to make them more analytical and risk-based in approach, to highlight issues promptly; and x there is a major initiative in place to remove cash from the FCO’s payments and receipts systems.

Procedures for the payment of satellite (and mobile) ‘phone bills and for sending ‘phones to Posts have also been changed, and the Finance Director wrote to all Heads of Mission reminding them of the need to ensure that prescribed procedures are in place.90 Sir Michael Jay told us that he attached huge importance to ensuring that Ambassadors realise they are accountable as sub-accounting officers for financial propriety at their Posts.91

85 The Iraq fraud was also noted in the FCO’s Resource Accounts. See HC (2005–06) 1495, pp 57–60. 86 Ev 92 87 Ev 94 88 Ev 92–93 89 Ev 94–95 90 Cm 6791, response to recommendation 13; see also Ev 4 91 Q 52

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75. We hope that these various steps will achieve a reduction in the number of cases of fraud, but we do not suppose they will eliminate fraud completely. As we noted above, external advice or oversight may be helpful in ensuring that the FCO’s internal financial management and auditing procedures are up to the highest standards.92

76. There remains the FCO’s undertaking to inform this Committee as well as the PAC of “significant” frauds. Government accounting guidelines require departments to inform Parliament, and to give details in their accounts, of any individual frauds involving the loss of more than £250,000.93 However, departments are obliged to consult the Treasury on “any cases, irrespective of the amount of money concerned, which involve important questions of principle; raise doubts about the effectiveness of existing systems; or contain lessons which might be of wider interest.” We agree that the scale of a fraud is not necessarily the only or even the best indicator of its significance or its seriousness. For example, a fraud may also be significant or serious because, although a relatively small sum has been lost, it is perpetrated by a senior official, or it involves high political sensitivity, or it exposes a serious lapse in procedure, or it risks creating a danger to national security. We would not, therefore, be content for the FCO to limit its reporting of frauds to this Committee to cases involving a loss above a particular threshold, and certainly not to those greater than £250,000. We recommend that the FCO inform this Committee promptly, and if appropriate before it is made public, of any fraud which is significant in terms of the sum lost, or which involves important questions of principle, or which raises doubts about the effectiveness of existing systems, or which contains lessons which might be of wider interest.

92 See paras 47 and 48 93 See www.government-accounting.gov.uk

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5 Consular services

Emergency response 77. This Committee has previously been critical of the failings of the FCO’s response to the Indian Ocean Tsunami and—to a lesser extent—to Hurricane Katrina, but we have also acknowledged the successes, particularly the hard work and dedication of many FCO staff.94 The FCO has responded by supplying us with updates on the ‘lessons learned’ from these events. For example, the FCO has set up rapid deployment teams, and has improved its procedures for working with other government departments.95 It also published, in March, a new Consular Guide, Support for British Nationals Abroad.96 The Guide sets out the services British nationals are entitled to when overseas, and the circumstances in which exceptional assistance can be provided in the event of a disaster such as a hurricane. We welcome publication of this guide, which is in line with our previous recommendations.

Crisis in Lebanon 78. So far in 2006, there has been no natural disaster involving large numbers of British citizens comparable to the hurricanes of 2005 or to the tsunami of 2004. In July, however, the sudden outbreak of conflict in Lebanon precipitated an evacuation exercise which placed demands on the FCO similar in many respects to those arising from a natural disaster. The Minister for the Middle East, Kim Howells, told us that, initially, “we were extremely worried that if everybody who had British citizenship wanted to leave Lebanon we would be very, very severely stretched to get them all to Cyprus or to a safe place.”97 As the exercise went on, however, demand lessened and it was possible for the naval task force to evacuate non-British nationals too. Dr Howells said that the main concern was for the safety of the British vessels, who were vulnerable to attack either from radical Islamic factions or from the constantly patrolling Israeli aircraft.98

79. As well as the naval vessels and other armed forces units that were deployed to Lebanon, or to Cyprus in support of the operation in Lebanon, the FCO itself sent 114 additional staff to the region and its response team handled 600 telephone calls a day in the early stages of the emergency.99 FCO and British Council staff in Beirut worked very hard to put in place the necessary arrangements for the evacuation. Over a period of a few days, about 4,600 people were evacuated by the United Kingdom, of whom 2,230 were British nationals and 500 were nationals of other EU member states. The additional cost to the FCO was about £0.5 million.100

94 Foreign Affairs Committee, Fourth Report of Session 2004–05, Human Rights Annual Report 2004, HC 109, para 61 95 Qq 50, 51 (Sir Michael Jay) 96 Support For British Nationals Abroad: A Guide, available at www.fco.gov.uk 97 Oral evidence taken before the Foreign Affairs Committee on 13 September 2006, HC 1583–i, Q 24 98 Ibid, Q 30 99 Statistics taken from the FCO staff magazine News & Views, September 2006 100 Oral evidence taken before the Foreign Affairs Committee on 13 September 2006, HC 1583–i, Q 31

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80. We conclude that FCO Ministers and diplomatic, cultural and consular staff— including many locally engaged staff—in London, Cyprus and Lebanon, as well as HM Forces, should be congratulated on their rapid reaction to events in Lebanon and on the successful evacuation away from danger of thousands of British and other nationals.

World Cup 2006 81. The Minister responsible for consular policy, Lord Triesman, wrote to us in October 2006 with a very full report on the FCO’s work to achieve its consular objectives for the FIFA World Cup 2006 in Germany.101 These objectives were: x to prepare for a safe and trouble-free World Cup for travelling British fans; and x to ensure that those who do get into difficulty during the tournament, and their families, get the most effective consular support possible.

The Minister felt that the work for the tournament had helped to improve the FCO’s consular service and that lessons had been learned that could be applied to future major sporting events overseas. The Report prepared for us by the FCO identified a number of ‘lessons learned’ in a very fair and objective analysis of its performance.

82. We thank Lord Triesman and the FCO for supplying us with its report on the consular aspects of the World Cup 2006, and we congratulate all FCO staff involved on doing such a good job in the face of strong media and public interest.

101 Ev 112–18

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6 Diplomatic representation overseas

Global network

Strategic direction 83. The FCO’s new strategy paper, Active Diplomacy for a Changing World, includes a short section on the FCO’s ‘global network’ of Embassies, High Commissions, Consulates and other Posts. The FCO paper states:

The network must change and adapt to new opportunities, risks and priorities. Opening, closing and restructuring Posts is essential to maintaining our global flexibility. We also need to use the network more innovatively. In some regions administrative functions are being centralised in single Posts. In others, Posts have taken on responsibilities for a number of countries.102

Beyond this, the strategy paper does not set out a rationale for structuring or managing the network; and in contrast to the 2004–05 publication, the FCO’s Departmental Report for 2005–06 does not discuss the network at all.

84. There is nothing to suggest that the FCO has had a fundamental look at the reason why it has the Posts it has, and why those Posts are where they are. The network is constantly subject to adjustment and fine tuning, but there is a perception that this is occurring as a reaction to events and to other pressures—particularly pressure on resources—rather than as part of a thought-out strategy for pursuing the United Kingdom’s interests and for achieving the FCO’s goals. We were interested, therefore, to be told by Sir Michael that as part of the Comprehensive Spending Review there is taking place a “zero-based review” of the FCO’s network of European Posts. However, Sir Michael’s explanation of what he meant by a zero-based review surprised us:

The issue there is are there ways in which we could release resources from within our European network by more efficient working, for example, perhaps by outsourcing certain operations which are now done within missions or perhaps by transferring resources from subordinate posts to other parts of the network. That is something we are considering at the moment.103

This strikes us as a description of something less than a zero-based review. Instead of starting with a blank piece of paper, the FCO appears to be taking as its starting point the current network of European Posts, and to be reviewing only how some of the work of those Posts could be carried out more efficiently—a worthwhile exercise in itself, but hardly a zero-based review.

85. We intend to look more closely at the new opportunities, risks and priorities referred to by the FCO, in the course of our forthcoming inquiry into the strategy

102 Cm 6762, p 45 103 Q 40

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White Paper, Active Diplomacy for a Changing World. Meanwhile, we recommend that in its response to this Report the FCO provide more information on how it carried out the zero-based review of its European Posts, what the outcome of that review has been, and whether the FCO has any plans to carry out a zero-based review of its entire global network.

Shuffling the pack 86. Whatever strategic direction there may or may not be to the network of Posts, we accept that it is inevitable that evolving priorities, the need to make economies and other pressures will have a continuing impact on that network, and that it is right that the FCO should react by adjusting its overseas representation accordingly. In our Report on the 2004–05 Departmental Report, we encouraged the FCO to make greater efforts when adjusting its priorities or looking for economies in the network to consider options other than outright closure, such as co-location. The FCO replied that it already does this, and added that “There are currently no plans for further post closures.”104

87. When we discussed this with Sir Michael, he suggested that the statement that there are currently no plans for further post closures “probably” referred only to plans affecting sovereign Posts—Embassies, High Commissions and Missions to international organisations such as the UN.105 Sir Michael continued, “there is an option open there to try to reduce some of our subordinate posts and to transfer the resources from them to the priorities elsewhere in the network.” This was not how we had read the FCO’s response, which made no distinction between sovereign and subordinate Posts.

88. In September 2006, the Minister for Trade, Ian McCartney, informed us of the closure or scaling down of a number of trade representative offices in the United States.106 We have also become aware, in the course of our visits to European states such as the Czech Republic and Finland, of substantial reductions in the number of UK-based trade promotion officials in some Embassies. It would be surprising if there were not further developments of this kind, reflecting a shift in the emphasis of UK Trade and Investment (UKTI) away from North and South America and Europe, and towards South and East Asia. We regret the closure of British trade missions in Seattle and Denver and will pursue this further with UKTI. We also regret the closure on 13 October 2006 of the British Embassy in East Timor, although this had been announced some time previously.107

89. The closure of any Post is regrettable, but at least it is understandable when it occurs as part of a coherent strategy—as is the case with UKTI’s changes in representation. Changes in FCO representation, on the other hand, appear to be driven more by the need to cut costs than by foreign policy priorities, and they lack any clear rationale. We were concerned and disappointed to be told by the FCO in May 2006 there were no plans for further Post closures, only to be informed the following month that this referred only to sovereign Posts. We recommend that the FCO provide this Committee with full and

104 Cm 6791, response to recommendation 29 105 Q 40 106 Ev 126 107 Ev 83

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accurate information about its plans for changes in representation overseas, as early in the process as possible.

Small Posts 90. When Sir Michael Jay gave evidence, we asked him about Posts abroad staffed by a single UK-based diplomat.108 He later told us that two High Commissions (those in St Lucia and in Antigua and Barbuda) and a further twelve subordinate Posts are staffed in this way.109 We wondered what happens when the lone diplomat takes annual leave. Sir Michael said that “He would be supported by local members of staff who would take charge of it, that would be the normal practice. This does happen.”110 We conclude that whilst having just one permanent UK-based diplomat may be reasonable in some subordinate posts, we do not consider that this is adequate at an embassy in a European state aspiring to EU membership, such as Montenegro. We recommend that the FCO review its policy towards one-person UK-based diplomatic representation at Embassy and High Commission posts.

Overseas estate

Sales and purchases 91. For some years, this Committee and its predecessors have taken a close interest in the FCO’s programme of asset sales. The main earner for the FCO is the sale of prestigious properties overseas. There have been strong pressures on the FCO to sell off the cream of its overseas assets and the Treasury has insisted on annual targets for the amount of revenue to be raised by such sales. In our Report on the 2004–05 Departmental Report we were sceptical about how the FCO would meet its target of raising £10 million per annum from property sales.111 The FCO responded that it was confident of raising this sum through “routine sales”, mainly of surplus staff accommodation.112

92. The high value of some of the FCO’s overseas estate was underlined when, in May 2006, a far-from-routine sale was announced of just over 3.5 acres of the British Embassy compound in Bangkok, for £50 million.113 The FCO told us that this was its largest ever property sale. About a fifth of the proceeds of the sale will be reinvested in the compound, which occupies a nine acre prime site in the business district of Bangkok. In a positive development, the FCO informed us of its plans, in confidence, in advance of the sale going through.

93. This Committee has previously been critical of some of the FCO’s estate sales. That criticism was made primarily on two grounds. First, some of the sales, such as that of the Consul-General’s residence in San Francisco, had in our view been unwise, and risked

108 Q 45 109 Ev 38 110 Q 46 111 Foreign Affairs Committee, Second Report of Session 2005–06, HC 522, para 128 112 Cm 6791, response to recommendation 32 113 Ev 79–80

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diminishing the effectiveness of the United Kingdom’s representation.114 Second, there were regrettable errors, notably in the sale of the residences of the Ambassador to Ireland and of the Consul-General in New York, which lost money, thus entirely defeating a main objective of the exercise.115

94. In the case of the sale of part of the Bangkok compound, however, we agree that this was the right thing to do and we have no evidence which suggests that it was handled other than well. Indeed, we were told by Dickie Stagg, the FCO’s Director-General of corporate affairs, that the FCO had been able to hedge the sale so as to save £2 million which would otherwise have been lost due to fluctuating currency values.116 We therefore congratulate the FCO on achieving a good price for the land sold, while maintaining the overall character of the compound, which contains several fine buildings and historic monuments.

95. Despite the justified criticisms made in our past Reports, we have sympathy with the FCO, which has come under strong Treasury pressure to sell its assets. As Sir Michael Jay told us, some of the more prestigious properties are of “unquantifiable but real value.”117 It cannot be left to accountants to determine their true worth. We were alarmed, therefore, to be told by Mr Stagg that the Treasury has been pressing for the FCO to sell off a further £140 million of assets over the next spending period (the period to 2011).118 It was not clear at the time whether the proceeds of the Bangkok sale—which far exceeded the previous target—would count towards this total.

96. We conclude that any further round of sales of parts of the FCO estate should be based, not on a revenue raising target but on the merits of each case. We recommend that, if further sales such as that recently concluded in Bangkok can be made without disproportionate impact on the quality of diplomatic, consular or commercial representation they should be considered solely on their merits. We further recommend that the proceeds of the Bangkok sale should count against any target for asset sales which may be agreed between the Treasury and the FCO as part of the Comprehensive Spending Review.

97. Since May 2006, the FCO has included information on estate purchases as well as on sales in its quarterly reports to us.119 We welcome this step.

Security 98. This Committee and its predecessors have taken a close interest in the safety and security of diplomats and others working in the United Kingdom’s Posts overseas. In the course of the past year, we have been able to discuss this with officials on the ground in sensitive locations such as Jerusalem, Baghdad, Basrah and Riyadh. Some of us have been

114 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, paras 66–75 115 Foreign Affairs Committee, Eighth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003–04, HC 745, paras 87–92 116 Q 47 117 Q 48 118 Q 47; see also Ev 38 119 Ev 78–82

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able to stay overnight in the hardened accommodation which is home to many staff for months at a time, and to appreciate both the basic conditions in which they work and live and the threat they face from incoming fire. We therefore understand and support the decision on 30 October to evacuate non-essential staff from the Basrah Palace compound, following an increase in mortar and rocket attacks.120

99. The conclusions and recommendations of the FCO’s March 2004 review of overseas security, carried out in the aftermath of the Istanbul bombing, have largely been implemented. The FCO set out what it has done to date in response to our last Report in this series:

Following the terrorist attack on the Consulate General at Istanbul in 2003, the Treasury met in full the security element of the FCO SR 2004 bid. The SR2004 settlement gave an additional £200 million for FCO security for 04/05, 05/06, 06/07 and 07/08. The funds are allocated to provide enhanced security measures at all overseas missions and, where our missions are in the vulnerable locations in the more dangerous parts of the world, for new Embassy buildings. FCO expenditure on security works has risen from an average of £2 to £3 million per year in 2003 to £16.7 million for the 05/06 F/Y. There are strong security regimes to protect out staff serving in Iraq and Afghanistan. In these two very high threat countries, all FCO staff work and live in bomb blast protected buildings located within fortified compounds. Staff are protected by an armed guard force when they travel off compounds. Security managers at the compounds regularly review security procedures. Overseas Security Advisers based in London travel regularly to Iraq and Afghanistan to support the work of the security managers.121

100. We are satisfied that the FCO itself takes very seriously its responsibility to protect those who work for it and that steps have been taken to reduce risk, although in situations such as Iraq it cannot be eliminated altogether. It is important that Parliament and the Treasury take their responsibilities no less seriously. We recommend that the FCO inform this Committee immediately of any obstacle, including within government, to implementing necessary security measures, such as a shortage of resources.

120 Beckett Statement on Foreign Office staffing in Basra, FCO news release, 30 October 2006 121 Cm 6791, response to recommendation 34

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7 Public Diplomacy

Measuring effectiveness and value for money 101. Last year, Lord Carter of Coles completed a review of the Government’s public diplomacy work.122 In light of his findings, we decided to hold a short inquiry into public diplomacy and reported our conclusions to the House on 7 April 2006.123 The Carter Review recommended that public diplomacy work, funded through Government, should be defined as:

Work aiming to inform and engage individuals and organisations overseas, in order to improve understanding of and influence for the United Kingdom in a manner consistent with governmental medium and long term goals.124

102. The Carter Review found that a need existed for a new framework for the oversight of government-funded public diplomacy work, recommending the establishment of a smaller Public Diplomacy Board and a new Public Diplomacy Unit within the FCO to support the new Board. The Government accepted this recommendation. The new Public Diplomacy Board is now responsible for co-ordinating and appraising the Government’s overall public diplomacy effort.125 A member of the British Council’s staff has been seconded to the FCO to head the new Public Diplomacy Unit which supports the Board. 126

103. The new Board is chaired by Lord Triesman of Tottenham, the Foreign Office Minister with responsibility for public diplomacy, and he is supported by an independent vice-chair. Other Board members include the Director of the BBC World Service (who has observer status in view of the BBC’s editorial independence), the Director-General of the British Council, senior officials from the Foreign Office and a further independent member with relevant experience and expertise of public diplomacy work.127 The Board has adopted Lord Carter’s definition of public diplomacy.128 The remaining members of the defunct Public Diplomacy Strategy Board such as DFID and UKTI have regrouped as an advisory panel called the Public Diplomacy Partners Group, under the chairmanship of VisitBritain.129

104. In our Report on Public Diplomacy, we agreed with Lord Carter that the Government’s public diplomacy strategy should be aligned with the FCO’s strategic global priorities and the Government’s medium and long term goals. We also came to the conclusion that more needed to be done to measure the impact and effectiveness of the

122 Public Diplomacy Review, 15 December 2005, available at www.fco.gov.uk 123 Foreign Affairs Committee, Third Report of Session 2005–06, Public Diplomacy, HC 903 124 Public Diplomacy Review, 15 December 2005, p 8, para 2.5 125 Ev 40 126 Ev 62 127 Ev 104 128 See: Public Diplomacy Board, Terms of Reference, as agreed in April 2006, available at www.fco.gov.uk 129 Ev 40–41

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British Council’s, the BBC World Service’s and the FCO’s public diplomacy work to account for and appraise the public funding they receive.130

105. We shared Lord Carter’s opinion that a government Minister chairing the Public Diplomacy Board would in future bolster accountability to Parliament for government- funded public diplomacy expenditure and that the Board’s reduced membership would by nature make it a more focussed and effectual mechanism for co-ordinating overall activity.131 All the same, we accepted wholly the importance and the significance of the BBC World Service’s editorial independence and the British Council’s operational independence from Government as we made clear to the House.132 In response to our Report, the Government agreed that these constitutional principles of independence for both the BBC World Service and the British Council respectively should be preserved.133

106. In April, Lord Triesman wrote to inform us that the Board had embarked on the task of setting a list of priority countries for government-funded public diplomacy activity and that it had begun formulating specific objectives within pilot countries.134 The Public Diplomacy Board is of the view that public diplomacy resources should be targeted particularly “on those countries which are of most relevance to the UK and where public diplomacy can make the most significant difference.”135 As a result the Board stated that resources would be allocated geographically and thematically in line with the Government’s international priorities.136 We agree with this approach.

107. When the BBC World Service appeared before us, we asked its Director, Nigel Chapman, what changes he thought were likely in the way the World Service operated in the advent of the strengthened Public Diplomacy Board. Mr Chapman did not see the new Board leading to “a fundamental shift in resources and priorities”, but thought it was legitimate for public diplomacy partners to sit round together to be clear that money being spent on public diplomacy was spent “in the right places” and “in the right way”.137 Mr Chapman went on to say:

what you would hope would come out of it [the new Board], standing back now not as a World Service Director but as somebody who is concerned about spending all that public money, you would be looking for alignment, definitely in terms of geographical priorities, it strikes me. It would be pretty strange if one organisation is saying it is really important that we spend more money and have greater impact in the Middle East and the Islamic world and then another organisation is spending loads of money in other places and is not realigning its effort and energy to broadly fit within those strategic priorities […] That does not mean that each organisation

130 HC (2005–06) 903, see: paras 15 & 62–65 & 103 131 Ibid, paras 28–29 132 Ibid, see: para 15 133 Response of the Secretary of State for Foreign and Commonwealth Affairs to the Foreign Affairs Committee’s Third Report of Session 2005–06, Cm 6840, p 3 134 Ev104–05 135 Public Diplomacy Board—Record of Strategy Day, 27 June 2006 136 Ibid 137 Q 127

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does not have its own job to do but you do need, I think, to be aware of the overall picture...138

108. We put the same question to Sir David Green, Director-General of the British Council. He believed that the initial signs were good in terms of the way partners were co- ordinating their work but emphasised that each organisation had “different things to bring to the table”.139 Sir David told us:

…we are not trying to homogenise public diplomacy but we are recognising that the British Council has something different that it can offer to the BBC World Service. I think there is also recognition that it is a more complex area of activity than perhaps was first thought. I welcome that because public diplomacy is very nuanced and it is a complex activity. What progress we [the Board] have made so far is to start talking about how we interpret the international priorities in terms of geographical priorities and see which organisations can best contribute in those countries.140

109. Another key finding of the Carter Review was the need for an improved central system to measure the impact of public diplomacy activity in order to assess overall performance in terms of value for money.141 The development of effective systems to do this will be a substantial challenge. On this point, the FCO recognises that it is very difficult to measure the effectiveness of public diplomacy because of it being “often indirect and long-term in nature” and concedes that it needs to do better on this.142 We were told by Dickie Stagg, the FCO’s Director-General of corporate affairs, that there were some very important and interesting questions to be examined about a large amount of FCO expenditure, both internal to the FCO and money spent by its NDPB partners.143

110. In 2005, the Carter Review even considered recommending that the ring-fencing around the BBC World Service’s and British Council’s grant-in-aid be removed but concluded that “the better approach was to make an attempt to improve matters through improved collective arrangements”.144 We agreed.

111. In line with Lord Carter’s Review, the FCO commissioned a consultancy exercise, which was taken on by River Path Associates, to scope the design and development of common performance measures to assess the public diplomacy work undertaken by the FCO, the British Council and the World Service.145 It is envisaged that any new central measures would complement rather than replace the measures already employed by the BBC World Service and the British Council.146 Clearly, any new means of measuring overall performance will need to be worth its cost.

138 Q 129 139 Q 188 140 Q 188 141 Public Diplomacy Review, 15 December 2005, p 58, para 9.3 142 Ev 40 143 Q 99 144 Public Diplomacy Review, 15 December 2005, Executive Summary 145 Ev 105 146 Terms of Reference for Public Diplomacy Performance Measurement Unit, FCO

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112. We recommend that in its response to this Report the FCO set out the progress made so far by the new Public Diplomacy Board on identifying geographical priorities, target audiences, priority themes, action plans and measurable outcomes for public diplomacy work. We further recommend that the FCO explain how the Government proposes to measure the overall value and effectiveness of its public diplomacy expenditure and how it intends to assess the opportunity costs of public diplomacy expenditure vis-à-vis work undertaken by the Government and its Non-Departmental Public Bodies.

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8 British Council

Work in 2005–06 113. As is customary, the British Council submitted a comprehensive written memorandum to our inquiry and this year provided us with an advance copy of its annual report for 2005–06, which we found particularly helpful. We took oral evidence from Sir David Green, the Director-General, Martin Davidson, Deputy Director-General, and Margaret Mayne, Director of Finance and Resources, British Council, in July.147 In addition, over the year, the British Council submitted evidence to our inquiry on East Asia and supplied us with several country briefs which outlined its ongoing work in countries where we had shown a particular interest.148 We are grateful for this assistance.

114. The British Council believes its work last year contributed to a range of overseas priorities as set out by the Government in its new foreign policy strategy document, Active Diplomacy for a Changing World. 149 Sir David Green told us that the strategic priorities where the British Council could make the biggest difference were, “making the world safer from global terrorism; preventing and resolving conflicts with a very strong international system; supporting the UK economy; and achieving climate change.”150

115. The written submission to our inquiry gives an account of the programmes, priorities and initiatives undertaken by the British Council over the past year.151 Some of the work and activities which it highlighted were: x the conclusion of the Connecting Futures programme which brought together young people from 44 countries, directly involving 30,000 participants and a further 350,000 participants through intermediaries; x the Dreams and Teams programme which was active in 30 countries and designed to develop leadership and volunteering skills of young people; x work with government ministries in Afghanistan providing teacher training for English and support for its higher education sector; x the InterAction leadership programme which provided transformation leadership skills in Africa to more than 1,400 leaders and engaged 40,000 wider change agents in areas such as English language capacity building; x the ZeroCarbonCity programme which included exhibitions, city debates, public talks, youth conferences, online discussions, and school events on climate change; x education road shows on climate change in India reaching 100,000 people;

147 Ev 63–71 148 Foreign Affairs Committee, Seventh Report of Session 2005–06, East Asia, HC 860–II, Ev 306–11 149 Active Diplomacy for a Changing World, FCO, March 2006, Cm 6762, available at www.fco.gov.uk 150 Ev 59 and Q 175 151 Ev 59–63

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x the building of exchange and cooperation links between United Kingdom and Chinese schools; x the production of a media guide on British Muslims in collaboration with the Association of Muslim Social Scientists; x implementing 141 international developments contracts to a total value of £51 million in more than 40 different countries; and x work in a broad range of human rights, education and governance projects.

Annual report for 2005–06 116. The latest annual report has been structured around the British Council’s 13 global regions, including one covering its work in the United Kingdom.152 Each section gives case studies illustrating how the British Council has achieved impact in a region against one of the Council’s five core corporate outputs. These narratives on activity are accompanied by regional performance, audience and income data. The income data are broken down by country, which we found to be of particular value. We would encourage the British Council to continue producing information in this fashion. Sir David told us that for the first time the annual report really tried to be as transparent as possible in terms of showing success or indeed instances where the British Council had not done as well as it might.153 We would suggest that the British Council continues to take this approach with next year’s report.

117. Following its last annual report, we recommended that the British Council should present performance results in a format that would clearly demonstrate success or failure. This we are pleased it has done by means of a traffic-light system, similar to those used by other government departments and agencies, where red indicates failure, amber a target being partially met, and green a target being achieved. We are also pleased that the scorecard system which the British Council uses to mark its performance outputs has been simplified. It now uses an index on a 0–100 basis which makes its results easier to interpret. It is apparent that a real effort has been made this year to explain the methodologies and mechanisms the British Council uses for measuring performance: this has been done throughout the report very clearly.

Measuring performance 118. The British Council says its operational work is designed to make an impact against one of five corporate outputs (which are given in the table overleaf).154 These five outputs form the foundation stone of the Council’s five-year strategy.155 The Council’s effectiveness against these outputs is measured by gathering data from its customers and clients through questionnaires. Their responses establish their views on various propositions about the

152 Annual Report 2005–06: Measuring Success, British Council, July 2006, available at www.britishcouncil.org 153 Q 165 154 Annual Report 2005-06: Measuring Success, British Council, July 2006, p 2 155 Making a world of difference, British Council, 2006, available at: www.britishcouncil.org

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United Kingdom and how these views have changed as result of participation with the British Council.

Internationalism: Relationships brokered by the British Council broaden the international view of young people.

Long-term An increase in the number of quality relationships relationships: between the UK and other countries.

Positive partnerships: The UK is increasingly recognised as a country of choice for partnering positive social change.

Self development: The UK is increasingly recognised as a country able to satisfy aspirations for self development.

Creative ideas: The UK is increasingly recognised for its creative ideas and achievements.

119. The annual report shows that the British Council met its Positive Partnerships target, partly met its Self-development target but missed its Long-term Relationships and Creative Ideas targets.156 The internationalism category was new and so did not have an associated target for 2005–06. The British Council also has several other public service agreement targets. It missed its customer satisfaction target but exceeded its satisfaction target as marked by the heads of missions within the FCO. An area where the British Council has had significant success was in the numbers of people using its services. Its results show that last year 35.4 million people used its information resources, either through the internet or by visiting its offices, and 15.1 million were recorded as having participated in one of its programmes. However, its target for students and examination candidates attending its teaching centres was missed by a fairly narrow margin.157

120. When we questioned the British Council on its performance in 2005–06, the Director- General told us that he suspected that the British Council might have been “a bit overambitious in terms of setting the targets” given the degree of change the organisation experienced.158 However, for 2006–07, the Council believes that its targets reflect “a more realistic view of the impact of change”.159 We will examine its performance against these next year. Commenting on its disappointing result in maintaining Long-term

156 Annual Report 2005–06: Measuring Success, British Council, July 2006, p 68 157 Ibid, p 69–70 158 Q 185 159 Annual Report 2005-06: Measuring Success, British Council, July 2006, p 67

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Relationships, the British Council admits that while it was successful in reaching new audiences it gave less attention to strengthening long-term relationships.160

121. Another factor which the British Council suggests affected its impact was the negative perceptions of the United Kingdom arising in some parts of the World from the military presence in Afghanistan and Iraq.161 This rationale underlines the difficulty there is in measuring the British Council’s work objectively and in distinguishing its impact from the more general swings in perceptions of the United Kingdom. Martin Davidson told us, what is important is the specific question that the British Council asks survey respondents when measuring performance, which is: “has your involvement with the British Council changed your perception?”162 Nonetheless, Dickie Stagg of the FCO questioned the true value of the results obtained from the survey-based system used by the Council. He remarked:

How effective it is as a tool is a very fair question to ask in that if you are brought to the UK on a visit you probably should have a fairly positive view of the place. It may not necessarily be so much to do with the particular way in which your visit was organised or by whom.163

As we have noted above, an independent consultant is reviewing the way in which the British Council currently measures the impact and value of its work.

122. We recommend that in response to this Report the FCO provide a full assessment of the British Council’s performance in measuring the impact and value of its work and that it outline what, if any, improvements are necessary to the way the Council’s performance is assessed.

Efficiency, effectiveness and value for money 123. The grant-in-aid provided to the British Council last year amounted to £184 million and represented approximately one-third of its turnover of £512 million. The Director- General told us that every pound the British Council received in grant-in-aid it turned into ǧ2.74.164 Nonetheless, he could not foresee a time when the British Council would become self-financing.165 Sir David was keen to emphasise to us that the teaching of English through the Council’s language schools and the examinations it promotes on behalf of examination boards were in no way subsidised by grant-in-aid.166

124. In the 2004 spending review, the British Council was asked to make efficiency savings of £5 million in 2005–06. We are pleased that this target was exceeded, albeit by a narrow margin. The Council says that when savings of a further £2.1 million on revenue earning activity are included, the total saving achieved last year was £7.2 million.167 It is to be

160 Ibid 161 Ibid 162 Q 187 163 Q 98 164 Q 199 165 Q 198 166 Q 199 167 Annual Report 2005–06: Measuring Success, British Council, July 2006

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commended for the progress made so far in fulfilling its spending review commitments. The Council told us that for 2006–07 it will implement “radical proposals for effective, leaner structures” in order to deliver further efficiency gains.168 In June, the Council informed us that it would be closing several of its regional offices in view of the significant fall in the numbers of government-funded overseas scholars coming to the United Kingdom needing its support.169

125. When Sir Michael Jay appeared before us we asked him what he considered the British Council’s purpose to be. Sir Michael thought that the Council did “an extraordinarily good job in most of the world in presenting aspects of Britain and British society in ways which embassies quite often cannot.”170 He went on to say that it carried out “a good function” which was “a legitimate function for the British taxpayer to fund.”

On the same question, Sir David Green replied:

[The British Council’s] purpose is to win friends for the UK and to win friends who are going to be friends for the long term. Traditional diplomacy is no longer sufficient in the world in which we live and public diplomacy is therefore a very important tool in order to build a constituency of support for the UK, and I believe vital to our long-term prosperity and security. What the British Council does is to build friendships and long-term relationships with people who are going to be in positions of authority and influence in the future…”171

126. Earlier this year, we recommended that the FCO commission an independent review of the British Council’s work to examine “what the Council does, why it is doing it, what it should be doing, and whether any of its activity would be better conducted in other ways or by different organisations”.172 However, in its response to us, the Government did not judge that it was the right time for such a review to take place but said that it would undertake to look at our recommendation again in due course.173

127. We also recommended that the National Audit Office urgently consider a value for money examination of the British Council.174 We were pleased to receive a positive response to our recommendation.175 On the timing of the review, Sir John Bourn, the Comptroller and Auditor General, wrote in July to inform us that he intended to start his examination of the British Council in the first half of 2007 in order to allow any changes resulting from the external review of public diplomacy measurement to work through.176 We agree that this seems a sensible timetable.

168 Ev 58 169 Ev 58 170 Q 101 171 Q 165 172 HC (2005–06) 903, para 72 173 Cm 6840, p 7 174 HC (2005–06) 903, para 83 175 Cm 6840, p 9, para 19 176 Ev 74

46 Foreign and Commonwealth Office Annual Report 2005–06

Representation overseas 128. In 2005–06, the British Council operated from 238 towns and cities in 110 countries worldwide and taught 1.1 million class hours of English to over 325,000 students in 53 countries. This teaching work earned the Council an income of £81 million.177 The Council also invigilated 1.3 million UK examinations to over 925,000 candidates overseas.178 During our inquiry into public diplomacy, the British Council told us that it used the surpluses it raised from its revenue-earning operations to fund the teaching of English in countries where there were more difficult operating environments.179 It pointed out that few private sector schools would undertake teaching in challenging environments where there were “severely limited business prospects and serious security risks.”180 However, in its Corporate Plan for 2006–08, the Council states that it intends to introduce a new business model which will see a small number of teaching centres, which cannot be brought to break-even, close.181 During evidence, Sir David told us that there was a handful of teaching centres which make a significant loss, and where the public diplomacy benefit was not that considerable, and therefore the Council proposed to close such centres.182 We subsequently learnt that the Council is considering the closure of its teaching centres in Kosice, Varna, Chittagong, 183 Istanbul and Tel Aviv.184

129. To take just the case of the British Council’s presence in Istanbul, we fail to understand how this city can be deemed of low significance in terms of public diplomacy and the Government’s wider strategic goals given Turkey’s relevance to several of these objectives and its geopolitical importance. We recommend that in its response to this Report the FCO explain the basis for the proposed closures of the British Council’s teaching centres in Kosice, Varna, Chittagong, Istanbul and Tel Aviv, whether it has approved each closure, and what assessment it has made of the effects of the British Council’s withdrawal from these cities in terms of the benefit that language teaching brings to the overall public diplomacy effort.

Board of trustees 130. In April, to avoid any perception of a conflict of interest arising from the position of the Permanent Under-Secretary (PUS) acting as the principal accounting officer of the British Council and his membership of the Council’s board, we recommended that the FCO should be represented on the Council’s board by another member of the FCO’s board of management.185 In its response to us, the Government said it was reviewing this position “as part of discussions aimed at refreshing and strengthening co-operation with and

177 British Council Annual Report 2005–06: Measuring success, page 8 178 Ibid 179 HC (2005–06) 903, Ev 44 180 Ibid 181 British Council Corporate Plan for 2006–08, p 15, available www.britishcouncil.org 182 Q 200 183 Kosice (Slovakia), Varna (Bulgaria) and Chittagong (Bangladesh) 184 Ev 72 185 HC (2005–06) 903, para 38

Foreign and Commonwealth Office Annual Report 2005–06 47

oversight of the British Council”.186 However, more recently the FCO informed us that the PUS would no longer sit on the British Council board but instead there would be enhanced co-ordination and oversight at a senior official level and directly by FCO Ministers.187 Sir Michael told us:

My own view, which I expressed at the last meeting of the [British Council] Board, is that it does cause a degree of confusion in the Board to have a representative of the sponsoring department, as it were, present, and it is better to have the relationship between the FCO and the British Council through a separate series of relationships at ministerial and senior official level, including the question of ensuring that we are getting value for money from the money we are putting into it, and for the Board of Trustees to be looking at the overall management of the British Council, at its relationship with the FCO and other stakeholders… That is the direction in which I think we are going.188

We welcome this step.

186 Cm 6840, p 5 187 Ev 40 188 Q 101

48 Foreign and Commonwealth Office Annual Report 2005–06

9 BBC World Service

Work in 2005–06 131. Like the British Council, the BBC World Service provided us with a detailed account of its work during 2005–06 as well as an advance copy of its annual report.189 In July, Nigel Chapman, the Director, and Alison Woodhams, the Chief Operating Office and Director of Finance, BBC World Service, gave evidence before us.190 Also, in July, we visited the World Service at Bush House which gave us a valuable opportunity to speak to several of its staff in its newsroom and its Arabic radio service.

132. Over the year, the BBC World Service says it has made the biggest strategic shift in priorities in its 70-year history but, nevertheless, it achieved a record-breaking audience figure. Nigel Chapman told us that the World Service’s overall global audience had risen to its highest ever in 2005–06 despite the Service having to ride a “tiger of change” following its reprioritisation.191 In 2006, the World Service closed ten of its languages services on radio in order to release £10 million of funds for reinvestment.192

133. In terms of the UK’s international strategic priorities, Nigel Chapman believed the BBC World Service had a “pretty big role to play” in many of these.193 He told us:

I think we [the World Service] have a role to play in enabling, for instance, the world to be made safer from terrorism, improving governance and sustainable development. I think a strong media source of information for people in many societies helps that to happen, so I do think we have a central role to play.194

134. The BBC World Service also reports on a range of major new stories which it has covered over the year from Hurricane Katrina to the South Asia earthquake.195 Last year its programmes received a number of awards. It won a Sony Gold award in a news feature category for a special series, Return to Sarajevo, and a best radio documentary award for an assignment, Message from Mavembo, at the One World Media awards.196 Other areas highlighted included: x the number of users of BBC’s international online sites rose by 50 per cent in 12 months; x FM coverage was attained in 150 capital cities, up from 145 a year ago; and

189 Ev 42–48 190 See: Ev 48–58 191 Q 109 192 Ev 42 193 Q 123 194 Q 123 195 Ev 44 196 Ev 44

Foreign and Commonwealth Office Annual Report 2005–06 49

x the continuation of efficient management, ensuring maximum allocation of resources to programme making.

Radio audiences 135. The World Service is required to report on a number of public service agreements to the FCO annually as part of the accountability process. These measures underpin the World Service’s aspiration to be the best-known and most respected voice in international radio and online broadcasting. National surveys are carried out in a range of countries in order to update the global audience figure and to assess performance against its targets. For 2005–06, the BBC World Services told us that its overall weekly radio audience reached a record 163 million listeners, an increase of 10 million on the previous high recorded in 2001.197 Audiences grew significantly in Indonesia, India and Sri Lanka, although they fell back in Bangladesh, Egypt and Pakistan.198 Audiences for the English language service have risen to 42 million, up from 39 million last year. In Africa and the Middle East, the number of listeners has increased by 7.6 million to 73.6 million.199

136. During evidence, we asked the World Service what the reasons were behind the reductions in its audiences in Pakistan and Bangladesh. In Pakistan, we were told, the Pakistani regulator had prevented one of the World Service’s main partner stations from broadcasting BBC Urdu’s programmes.200

On the decline in Bangladesh, Nigel Chapman explained:

The audience in Bangladesh has always been volatile. It went down quite a lot after the Iraq War, it then came back up again and it then went down again. What we are finding there is that, partly through the impact of television, people are listening every month but they are not listening every week […] so they are not being counted, they are falling off the edge, and we have got to get them to listen more often. The second issue about Bangladesh is distribution. We need to be on FM distribution in Bangladesh.201

197 Ev 43 198 Ev 43 199 ‘BBC World Service records its best listening figures despite cuts’, The Independent, 15 May 2006 200 Q 133 201 Q 133

50 Foreign and Commonwealth Office Annual Report 2005–06

Global weekly radio audience people listening at least once a week to any BBC World Service programme (Millions)

165

160

155

150

145

140 2004-05 (actual) 2005-06 (target) 2005-06 (actual)

137. The World Service says its programmes continued to command the highest scores for reputation, trust and objectivity in most markets when compared with its international competitors.202 The exception was Egypt where CNN was ahead on objectivity among opinion formers.203 In 2005–06, the World Service exceeded its targets for reach, objectivity and relevance but narrowly missed the target for awareness. Nigel Chapman told us:

Reputation is as important as reach […] we are the leading international broadcaster in most of the markets that we measure, for things like objectivity, trustworthiness, relevance to the audience. Those qualitative values […] are as important in assessing your success as the sheer number of people who use you. If we start to see deterioration in those performance indicators, even if it meant we got lots more people using us, that would not be a satisfactory story.204

It is evident to us that, in 2005–06, the BBC World Service maintained its first class reputation for the quality of its programmes and news coverage.

Financial management 138. In 2005–06, the World Service’s grant-in-aid funding increased by £14 million to £239.1 million.205 Its operating expenditure for the year reflected savings of £7.1 million which arose from new digital working practices and savings in distribution and transmission costs.206 As a result of these savings, additional money was invested in enhancing programming and services in the Middle East and the wider Islamic World,

202 Ev 43 203 BBC Annual Report and Accounts 2005/2006, page 51, available at www.bbcgovernors.co.uk 204 Q 119 205 BBC World Service Annual Review 2005/2006, July 2006, p 43 206 Ibid, p 42

Foreign and Commonwealth Office Annual Report 2005–06 51

expanding online support of language services and extending distribution on FM around the world.207

Foreign language television services 139. The BBC World Service believes there is now a strong case for a television presence in languages other than English in markets where radio is being superseded as the main means of receiving information, and where new media still have limited impact.208 For this reason, the introduction of an Arabic television channel has been a key goal for the World Service for several years. The FCO has acknowledged that the World Service will need to react to changing audiences’ demands and, in its response to Lord Carter’s review, indicated that the BBC should explore options for developing a television arm of the World Service.209 On the funding needed for these new services, the Government told us that the FCO and the Treasury would maintain a regular dialogue over “the opportunities and costs associated with various projects”.210

140. The World Service says the Arabic television service is a crucial and necessary step for the BBC in order for it to remain successful in a market where television is becoming the preferred medium for news and information.211 Initially, the plan is for the new channel to broadcast for 12 hours daily throughout the Middle East, although the World Service sees its “ambition” as extending this to 24 hours.212 The channel is scheduled to go live in the autumn 2007. We were told, it is “on track and on time”.213 But, as Nigel Chapman remarked, the question will be whether in a year’s time this remains to be the case. Over the course of the next year we will follow the progress being made in setting up the new Arabic network with interest.

141. The World Service believes the quality of the BBC Arabic television service will be better than that of its rivals in terms of the independence and impartiality of its news coverage and the international perspective it will bring to world news.214 The problem is, of course, if the Arabic news service runs for only 12 hours a day, what happens if a news story breaks outside its broadcasting hours. On this point, Mr Chapman told us:

It would depend upon the scale of the story. On the morning of a major story, if it was flagged up in advance, I think we would have to rush things together and start early on that particular morning. The trouble with news is that it is not predictable, it is unexpected, and you do not have that kind of nice easy run-in period, and therefore I would very much like to see this gap closed, yes, I think it would add strength to the offer. All I can say to you is that I keep on arguing the case.215

207 Ibid 208 Ev 43 209 Cm 6840, p15, para 18 210 Cm 6840, p 10 211 Ev 43 212 HC (2005–06) 903, Ev 51, para 3.2.1 213 Ev 142 214 HC (2005–06) 903, Ev 56 215 Q 148

52 Foreign and Commonwealth Office Annual Report 2005–06

142. In 2007, a 12-hour television service is expected to cost £19 million per annum to produce and the World Service has calculated that it would cost an extra £6 million to move from a 12 to a 24 hour service.216 Following a reprioritisation, the Service has found only the money to broadcast for 12 hours a day with the funding coming from a combination of efficiency savings and the monies released from the closure of several of its radio language services.217 On finding the extra monies to fund a 24-hour service from the Service’s existing budget, Nigel Chapman told us:

I think we have gone far enough in terms of reprioritisation inside the World Service’s limited resources. £6 million on one level does not sound very much but it is the budget for eight or nine language services in the World Service. There is neither a case nor an appetite for further closures of language services to fund that gap.218

The cost of increasing to 24-hours would largely be made up of staffing costs and would equal around one-third of the current running costs of £19 million (in the region of £6 million); around 30 per cent extra funding would give twice the broadcast time.219

143. In our Report on Public Diplomacy, we recommended that the BBC World Service explore the potential for subsidising the costs of the new Arabic television service through generating income via advertising and syndication.220 The Government said that the BBC World Service had explored the potential for subsidising costs of the 12-hour service but that it had judged that commercial funding options were not feasible at that time. However, the Government said that it had no objection in principle to the World Service as a whole exploring options for generating such additional revenue.221 When we explored this funding option further with the World Service, Nigel Chapman explained:

We did consider the whole issue of commercial funding when we put forward the bid in the first place and the truth is that the range and source of commercial advertising revenue that is in theory available to the BBC for an Arabic TV service is limited, and even taking money to do a hybrid to get some of it funded by commercial and some of it funded by public money, raises all sorts of issues and given the source of a lot of the advertising revenue and the societies which it would come from, I think it would cause us editorial difficulties.222

When we asked the World Service whether it had sought a supplementary grant from either the FCO or the Treasury to cover a full 24-hour service Nigel Chapman told us, “We have over the last two years made a number of requests in this area and they [the Government] are very aware of our request.”223

216 HL (2005–06) 128–II, Q 858 217 HC (2005–06) 903, Ev 51 and Ev 57 218 Q 147 219 HL (2005–06) 128–II, Q 858 220 HC (2005–06) 903, para153 221 Cm 6840, p 10 222 Q 155 223 Q 157

Foreign and Commonwealth Office Annual Report 2005–06 53

144. In April, we recommended that the BBC World Service together with the FCO review the new Arabic channel’s funding and performance in the period leading up to its first anniversary to ensure that it was adequately resourced and to determine whether extra funding should be provided by government to enable the channel to become a 24-hour service.224 The Government said it would keep the funding position under close review.225 However, we are concerned that not funding a full round-the-clock service from the beginning risks jeopardising the service’s long-term success. Al Jazeera and Al Arabiya both broadcast 24 hours a day, seven days a week.

145. In addition to starting an Arabic television channel, the World Service has also been holding separate discussions with the FCO about a BBC Farsi television service. We were told that both parties agreed that, prima facie, there was a strong broadcasting case for its introduction.226 However, Nigel Chapman said it was now up to the FCO to “persuade the Treasury” that it was a “good idea” and for the Treasury to grant the additional funding required as he could not reprioritise any further.227

146. In July, in our Report on Foreign Policy Aspects of the War Against Terrorism, we recommended that the Government “seriously consider funding a Farsi BBC television service”.228 We therefore wholly welcome the announcement by the Chancellor on 12 October that the Government has agreed to grant the World Service an extra £15 million a year to cover the costs of a new Farsi television service from 2008. The channel will be a free satellite service and it will broadcast initially for eight hours each evening.229

147. We believe that the Government was right to recognise the special case of the Farsi service in granting it funding outside of the comprehensive spending review but we believe a similar exceptional case exists for allowing the Arabic service to extend to 24 hours a day from its outset. In an environment where there are already well established news broadcasters, we believe it will be essential that the BBC World Service competes from day one with them on an even-footing. What is by the standard of public expenditure a small amount of money, could have a potentially huge benefit. We recommend that in view of the central importance of BBC World Service’s new television service in Arabic to a range of key government policies, the Government make an exceptional grant, outside of the regular Spending Review process, of the £6 million required to enable the Arabic service to broadcast, not for only 12 hours a day as planned initially, but for 24 hours a day from its inception.

224 HC (2005–06) 903, para153 225 Cm 6840, p 10 226 Ev 43 227 Q 160 228 HC 573, Foreign Policy Aspects of the War against Terrorism, Foreign Affairs Committee, Fourth Report of Session 2005–06, para 361 229 ‘World Service gets £15 million to launch Farsi TV Service for Iran’, The Financial Times, 11 October 2006

54 Foreign and Commonwealth Office Annual Report 2005–06

Formal minutes

Wednesday 1 November 2006

Members present:

Mike Gapes, in the Chair

Mr Fabian Hamilton Sandra Osborne Mr David Heathcoat-Amory Mr Greg Pope Mr Eric Illsley Mr Ken Purchase Andrew Mackinlay Sir John Stanley

The Committee deliberated.

Draft Report (Foreign and Commonwealth Office Annual Report 2005–06), proposed by the Chairman, brought up and read.

Ordered, That the Chairman’s draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 23 read and agreed to.

Paragraph 24 read, amended and agreed to.

Paragraphs 25 to 56 read and agreed to.

Paragraph 57 read, amended and agreed to.

Paragraphs 58 to 75 read and agreed to.

Paragraph 76 read, amended and agreed to.

Paragraphs 77 to 79 read and agreed to.

Paragraph 80 read, amended and agreed to.

Paragraphs 81 to 84 read and agreed to.

Paragraph 85 read, amended and agreed to.

Paragraphs 86 to 89 read and agreed to.

Paragraph 90 read, amended and agreed to.

Paragraphs 91 to 97 read and agreed to.

Paragraph 98 read, amended and agreed to.

Paragraph 99 read and agreed to.

Paragraph 100 read, amended and agreed to.

Foreign and Commonwealth Office Annual Report 2005–06 55

Paragraphs 101 to 146 read and agreed to.

Paragraph 147 read, amended and agreed to.

Resolved, That the Report be the Eighth Report of the Committee to the House.

Ordered, That the Appendices to the Minutes of Evidence taken before the Committee be reported to the House.

[Adjourned till Wednesday 8 November at 9.00 am

56 Foreign and Commonwealth Office Annual Report 2005–06

List of witnesses

Wednesday 28 June 2006 Page

Sir Michael Jay K CMG, Permanent Under-Secretary, Mr Richard Stagg CMG, Director-General, Corporate Affairs, Mr Ric Todd, Director, Finance, Mr David Warren, Director, Human Resources, Foreign and Commonwealth Office Ev 17

Wednesday 12 July 2006

Mr Nigel Chapman, Director and Ms Alison Woodhams, Chief Operating Officer and Director of Finance, BBC World Service Ev 48

Sir David Green KCMG, Director-General, Mr Martin Davidson, Deputy Director-General, and Ms Margaret Mayne, Director of Finance and Resources, British Council Ev 63

Foreign and Commonwealth Office Annual Report 2005–06 57

List of written evidence

BBC World Service Ev 42–48

British Council Ev 58–63 & Ev 72–77

FCO Board Objectives and Performance Survey Ev 77–78

FCO Estate Ev 78–83

FCO Staff Survey Ev 83

FCO Stakeholder Survey Ev 83–84

Financial Management Ev 84–95

Freedom of Information Ev 95–98

Hogarth Review Ev 16–17

Public Diplomacy Ev 119

Review of Consular Services Ev 98–118

Risk Management Ev 119

Supplementary evidence to the FCO’s oral evidence Ev 38–41

UK Trade and Investment Ev 126

Written answers from the FCO to FAC questions Ev 1–16

Written evidence submitted by Christian Solidarity Worldwide Ev 120–1 26

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Foreign Affairs Committee: Evidence Ev 1 Oral evidence

Taken before the Foreign Affairs Committee

on Wednesday 28 June 2006

Members present:

Mike Gapes, in the Chair

Mr Fabian Hamilton Mr Greg Pope Mr John Horam Mr Ken Purchase Mr Eric Illsley Sir John Stanley Mr Paul Keetch Ms Gisela Stuart Andrew Mackinlay Richard Younger-Ross Mr John Maples

WRITTEN QUESTIONS AND ANSWERS

Letter to the Head of the Parliamentary Relations and Devolution Team,FCO ,from the Clerk of the Committee,dated 8 June 2006 Dear Chris, I attach a list of questions to which I would be grateful to receive answers prior to Sir Michael Jay’s appearance before the Committee later this month. If the answers are to feed into the preparations for the oral evidence session, I will need them not later than close of play on Thursday 22 June. In the event that some answers are not ready by that date, it would still be helpful to receive a response on those that are ready, with the remainder following as soon as possible thereafter. In view of this truncated timetable, which is a result of the late publication of the DAR 2005–06, I have attempted to reduce the burden on those dealing with the response to these questions by limiting their number. I will, however, need to write further on a number of possibly less urgent but nonetheless important issues, to which we will be seeking a response by the Summer recess. The Committee also wishes to receive: — Acopy, or summary, of the regulatory reform “simplification plan” [the FC O’s submission to the Committee of 3 October 2005 noted that this was expected by to be ready in January 2006.] — Acopy of the conclusions of the FCO’s Financial Management Review [in the FCO’s submission to the Committee, a “final report” was anticipated in November 2005.] — The results of the formal review of the Global Opportunities Fund [this was anticipated in the FCO’s submission to the Committee to take place “at the end of 2005–06”.] Yours, Steve Priestley Clerk of the Committee

Questions Arising From the FCO Response to the Committee’s Report 1. In reply to Recommendation 13, the FCO response states that an internal investigation into the satellite telephone fraud “is nearing completion”. The Committee wishes to receive a copy of the report of this investigation, if possible before the oral evidence session on 28 June. What are the revised procedures that the FCO has put in place to avoid a recurrence of the Bahrain fraud? 2. In reply to Recommendation 23, the response publishes the red, amber, green list of FCO activities. Who drew up the list? Which of the “red” activities does the FCO agree should be stopped completely? Which of the “amber” activities does the FCO agree should be curtailed or reviewed? With specific reference to activities related to the work of Members of Parliament, under which colour group would the FCO place: (a) briefing for MPs undertaking their oYcial Parliamentary duties, including overseas trips with select committees, CPAdelegations or IPU delegations; (b) briefing for MPs travelling with all-party Parliamentary groups; and (c) briefing for MPs acting in their own capacity? 3471161001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 2 Foreign Affairs Committee: Evidence

3. The overall response rate during the data collection phase of the Collinson Grant review was 89% in the UK and 93% overseas. What was the response rate (a) among members of the Senior Management Service and (b) among Board members? 4. The Committee wishes the FCO to reconsider its response to Recommendation 36 and to release the documents about the Embassy to the Holy See, referred to in that Recommendation.

Questions Arising From the Departmental Annual Report 2005–06 5. The March 2006 White Paper (Active Diplomacy for a changing World, Cm 6762) identified nine new “strategic international priorities” (p 28), and brigaded under each of these a number of “specific aims” (pp 52–59). Why does the DAR not address these new priorities and aims? To what extent does the FCO expect these to be the basis of any new PSAtargets in the 2007 Spending Revie w? What are the FCO’s proposals for involving the Committee in formulating those objectives and targets? 6. In regard to the SR–2002 PSA–4C, the FCO reports that it has been unable to develop a new tool for measuring conflict levels (2006 Annual Report, p 137). The Report notes the “inherent diYculties in measuring potential sources of future conflict and conflict prevention outcomes” and that a “final assessment . . . will be made in Spring 2008” (p 112). What work is the FCO doing to develop a means of being able to make that assessment of the outcomes of its Conflict Prevention work in 2008? 7. The SR–2002 PSAon Conflict Prevention included assessments which used s tatistics on the number of casualties and refugees, although most of these were not carried over into the SR–2004 PSAs. Why do SIPRI/IISS casualty statistics still form part of the assessment of the situation in Nigeria (2006 Report, p 114), and why not for other conflict areas? 8. SR–2004 PS–A4AK envisages agreement on EU financing arrangements for 2006–13, with spending at 1% of EU GDP (2006 Report, p 117). With the UK Presidency having overseen a budget deal in 2005, why is this PSAstill assessed as “amber/on course” rather than as a (red or g reen) settled outcome? Similarly, why is PSA–4AL still amber, when changes to the CAP were agreed in December 2005 and a commitment secured for a review of CAP in 2008–09 (which falls after the PSAtime- horizon)? 9. SR–2002 PSA–7A1 is assessed as “red—not met” because there were 99 “functioning democracies” at the end of the SR–2002 PSAperiod, compared with the target of 105 (2006 Repo rt, p 140). The 2005 Autumn Performance Report, only six months before the end of the PSAperiod, also a ssessed the number to be six short of the target. On what basis did the APR assess this as “amber—generally on course”? What six countries did the FCO expect to become functioning democracies during that last six months of the PSA period? Similarly, which four countries did the FCO expect to achieve impartial judiciaries during the last six months of the PSA period in order to avoid the PSA–7A3 assessment becoming red by the time of the Annual Report? 10. What changes took place in the six months between the 2005 Autumn Performance Report and the 2006 Annual Report to support an improvement in the assessment for constitutional reform of the Overseas Territories from “red” to “amber/green—met/ongoing” (Annual Report p 152; APR p 52)? Why were the APR and Annual Report assessments not “red”, given that the target related explicitly to a position that had to be reached by March 2005? Conversely, what changes in that six month period supported a revision from “amber” to “red” for Overseas Territories’ environment commitments (SR–2002 PSA–11B)?

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 22 June 2006

The FAC’s Report on the FCO’s DR 2004–05 Dear Steve, Thank you for your first letter of 8 June requesting information in advance of Michael Jay’s appearance before the Committee on 28 June. I have pleasure in providing the information you requested and for ease of reference I have included our responses immediately below your questions. We are working on the additional questions covered in your second letter of 8 June and we will respond as you requested before the Summer adjournment. 3471161002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 3

Documents/Summaries/Conclusions that the Committee Wishes to Receive:

A copy, or summary, of the regulatory reform “simplification plan” [the FCO’s submission to the Committee of 3October 2005 noted that this was expected by to be ready in January 2006. ] As part of the Government’s Better Regulation programme, the first drafts of departmental simplification plans were submitted to the Better Regulation Executive (BRE) of the Cabinet OYce in January 2006. This was followed by a period of redrafting in consultation with the BRE. On 5 June 2006, BRE issued revised guidance to all Departments which makes a further redraft necessary. The FCO simplification plan is therefore not ready. We are working to a deadline of November 2006 for clearance by the Panel for Regulatory Reform (PRA) and for publication of the final plan. A copy of the plan will be made available to the FAC as soon as it is agreed by PRA. As the FCO has little legislation, our simplification plan is focussed on simpler services to the public (mainly visa and consular services), and the burdens on our front line consular and visa staV. As consular and visa services are self financing, the savings resulting from the plan will accrue to users of our services, and will be reflected in the level of fees charged to recover the costs of running the services rather than appear as cash savings to the FCO.

A copy of the conclusions of the FCO’s Financial Management Review [in the FCO’s submission to the Committee, a “final report” was anticipated in November 2005.] I attach a summary of the main themes and conclusions arising from the Financial Management Review conducted with HM Treasury, which was the document that was distributed to the FCO Board. Asimilar review was carried out by the Treasury with all government departments. These reviews were carried out on the basis of finding a mutual understanding between the Treasury and the Department concerned of how financial management could be improved and were not for publication. Anumb er of committees have been similarly provided with a summary of the main themes and recommendations. The FCO Financial Management Review (FMR) is part of a cross-government review of financial management announced at the time of SR 2004. It was carried out using an agreed financial management framework for all departments, focusing on: — Accountability structures, planning and budgeting. — Production and use of financial information. — The eVectiveness and eYciency of the finance function. — Relationships with HM Treasury. The FCO review was carried out from August to November 2005 by a team consisting of oYcials from HM Treasury, the National Audit OYce, Food Standards Agency and FCO. It was a collaborative exercise carried out in consultation with FCO oYcials. The Review concluded that the FCO have made good progress in improving their ability to manage resources against objectives and that a large number of further reforms are in train which have the potential to deliver a step-change in performance. The Review Team noted that recent improvements and reforms already underway included: — The FCO’s 2003 strategy set out clearly its strategic priorities and associated PSAtargets. The priorities were well understood and provided a framework for resource allocation. Policy and resource responsibilities would be aligned from April 2006. — The Board’s committee structure and corporate governance represented best practice with skilled non-executive Directors playing a leading role. — The Board was receiving a monthly management information pack that had a high-quality structure, with the content improving as the Prism Oracle system was implemented. — The commitment to faster closing of the 2005–06 accounts, aimed at bringing forward the audit completion date by four months. — Support for the Board’s plans to devolve most pay budgets to DGs from 2007–08. — Evidence of lessons learnt from the early stages of the Prism programme, of firm Board control of the remaining global rollout project and of benefits starting to be delivered. — Recognition of the need to simplify and standardise many of the FCO’s business processes and of steps being taken to do so. The report concluded that the key challenge was to ensure the practical delivery of this high-level vision. This required leadership and commitment not just to the vision but also to the significant changes in behaviour and working practices that would be needed to deliver it. In terms of areas for improvement, the four overarching themes for the FCO were: — Astronger, more strategic role for the Board in financial management and b usiness planning. 3471161002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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— Better project management and Board impetus to work on cross-cutting business change, ICT and eYciency initiatives. — High quality management information, appropriate skills and incentives at all levels to improve the way the FCO is run. — The Board needed to be supported by a better and stronger finance function with wider reach and greater weight. On the first theme—the role of the Board—the FMR underlined the need for full financial analyses of costed options, as better quality management information from Prism was generated and used. The Review supported further work and early decisions, supported by robust business cases, on “hub and spoke” options for service delivery currently being piloted in Italy and Spain and planned for the US. In relation to driving business change and eYciencies, the Review highlighted that the Board should intensify eVorts to get full benefits from ICT investments, including Prism and future projects. It also expressed support for measures to identify and spread finance and HR processeYciencies across the FCO network. The Review also looked at the production and use of management information. It concluded that there should be less use of “oV line” and instead the global network of PRISM should be fully exploited. The report noted the importance of spreading and embedding financial skills throughout the organisation in line with the rest of Whitehall using the new Professional Skills for Government framework. Accredited resource management experience was especially important at senior level. The final main theme was the role and status of the finance function within the FCO. The Review recommended that resource management units should be accountable to the Finance Director as well as individual Directors General. There were also recommendations about the role and status of the new Finance Director who should be a finance professional in line with HMT recommendations. The report recommended that the FCO carry out its own review of the finance function. The FCO is actively pursuing all the Review’s recommendations, in timescales agreed with HM Treasury.

The results of the formal review of the global opportunities fund [this was anticipated in the FCO’s submission to the committee to take place “at the end of 2005–06”.]

The review of the FCO’s discretionary programme budgets, including the Global Opportunities Fund, will shortly be finalised, and the FCO Board will discuss it on 7 July. We will share it with you thereafter.

Questions Arising From the FCO Response to the Committee’s Report

1. In reply to Recommendation 13, the FCO response states that an internal investigation into the satellite telephone fraud “is nearing completion”. The Committee wishes to receive a copy of the report of this investigation, if possible before the oral evidence session on 28 June.

The FCO’s Financial Compliance Unit report forms part of the ongoing consideration of disciplinary action and cannot be released without prejudice but the Comptroller and Auditor General’s formal report on the matter to the House of Commons will, we understand, be issued shortly.

What are the revised procedures that the FCO has put in place to avoid a recurrence of the Bahrain fraud?

FCO procedures have been put into place to tighten our management of the Chevening scheme. We now require all FCO Chevening OYcers to maintain a database of selected scholars separate to that kept by the British Council. The authority to administer an award form (Chev 2) has been amended. The FCO Chevening OYcer’s signature is now counter-signed by another Diplomatic Service oYcer confirming that the expenditure of £20,000 or more can take place. Both oYcers are now required to initial all pages of the form. This ensures that no details can be substituted. The British Council must only administer awards approved on Chev 2 forms. FCO Chevening OYcers have been instructed that award letters must be prepared on headed notepaper by the Post. Details must be checked with the selection database beforehand. Letters of congratulation sent by Ambassadors or High Commissioners must not be sent out until the award letter has been prepared and the details checked. 3471161002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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2. In reply to Recommendation 23, the response publishes the red, amber, green list of FCO activities. Who drew up the list? Which of the “red” activities does the FCO agree should be stopped completely? Which of the “amber” activities does the FCO agree should be curtailed or reviewed? With specific reference to activities related to the work of Members of Parliament, under which colour group would the FCO place: (a) briefing for MPs undertaking their oYcial Parliamentary duties, including overseas trips with select committees, CPA delegations or IPU delegations; (b) briefing for MPs travelling with all-party Parliamentary groups; (c) briefing for MPs acting in their own capacity? The Red Amber and Green List referred to was produced by oYcials inside the FCO during 2004–05. It was intended to suggest areas that might be stopped or given less priority by geographical departments in London. The list was seen by Collinson Grant who calculated the potential savings if the list were implemented in full. However the Board did not adopt the list and it is not FCO policy. The FCO does not “classify” activities on the list according to any colour scheme (Red, Amber, Green). Activities directly impacting on external stakeholders, such as the work of Members of Parliament, have continued as usual. Geographic departments have been free to use the list for internally focused activities and have stopped a formal requirement for Annual Reviews, facilitating former ambassador travel/access and devising programmes for visiting Heads of Post. Our relationship with Parliament and its Members is a high priority for the FCO and we always seek to be open and helpful to Committees, delegations, all party groups and individual Members. We do not use the red/amber/green classification in the Collinson Grant report in deciding what briefing to give Members. Our policy on briefing the diVerent categories of Members the Committee asks about is as follows: (a) Briefing for MPs undertaking their oYcial Parliamentary duties, including overseas trips with select committees, CPA delegations or IPU delegations OYcials should provide written or oral briefings when requested by select committees travelling abroad and by outgoing IPU or CPAdelegations. (b) Briefing for MPs travelling with all-party Parliamentary groups OYcials should help all-party Parliamentary groups where practicable. They should be ready to oVer unclassified written briefing and an oral briefing if specifically requested. (c) Briefing for MPs acting in their own capacity OYcials should be as helpful as possible in providing factual oral and written briefings, while being careful not to compromise their oYcial impartiality. OYcials should judge the resources they are able to allocate to such briefings in the light of their strategic priorities and the potential benefits to their objectives of such work.

3. The overall response rate during the data collection phase of the Collinson Grant review was 89% in the UK and 93% overseas. What was the response rate (a) among members of the Senior Management Structure and (b) among Board members? (a) The data set produced by Collinson Grant at the end of their review indicates that responses were received from 85.5 Senior Management Structure (SMS) oYcers based in the UK. Details are not available of the total number to whom forms were sent. Hence it is not possible to give a precise figure for the SMS response rate, although it was in excess of 80%. (b) Responses to the Collinson Grant review were treated anonymously. Hence the dataset that was produced for the FCO at the end of the review does not allow identification of individuals, nor does it give details of who did not respond. This means that Board members cannot be identified.

4. The Committee wishes the FCO to reconsider its response to Recommendation 36 and to release the documents about the Embassy to the Holy See, referred to in that Recommendation. We have re-considered the decision not to release documents about the Embassy to the Holy See. The reasons given earlier for declining to release the documents still stand and, as such, we consider that it remains inappropriate to release these documents.

Questions Arising From the Departmental Annual Report 2005–06

5. The March 2006 White Paper (Active Diplomacy for a changing World, Cm 6762) identified nine new “strategic international priorities” (p 28), and brigaded under each of these a number of “specific aims” (pp 52–59). Why does the DAR not address these new priorities and aims? To what extent does the FCO expect these to be the basis of any new PSA targets in the 2007 Spending Review?

What are the FCO’s proposals for involving the Committee in formulating those objectives and targets? The FCO’s Departmental Report is an account of the FCO’s performance from 1 April 2005 to 31 March 2006 and during the reporting period the FCO was working to its eight Strategic Priorities identified in the 2003 White Paper. On 28 March 2006 the Foreign Secretary published a new White Paper 3471161002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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revising the strategic international priorities—Active Diplomacy for a Changing World (Cm 6762). These will be reported on in next year’s Departmental Report, which covers the period 1 April 2006 to 31 March 2007. Sir Michael Jay wrote to the Chairman of the FAC on 12 January 2006 to advise the FAC that the FCO were reviewing the strategic priorities, and to invite the Committee’s views. We continue to welcome the FAC’s interest in the strategic international priorities, and in particular their announcement that they will conduct a review of the White Paper to assess its continuing relevance to a constantly changing international situation. We expect the 2006 White Paper and the subsequent announcement of a Strategic Priority on climate change to form the basis of the 2008–11 PSA(as the 2003 white paper informed the 2005–08 PSA). The next review of strategy is due in 2008 and it is possible that any significant changes would be reflected in our new PSA(the FCO is committed to reviewing the UK’s international priorities ( FCO’s strategic priorities) every two years to ensure they remain relevant). We welcome the FAC’s interest in and views on our PSAtargets. PSAs are proposed to HMT and we will take into account any views made. We will start negotiations with HMT later this year on the 2008–11 PSA.

6. In regard to the SR–2002 PSA–4C, the FCO reports that it has been unable to develop a new tool for measuring conflict levels (2006 Annual Report, p 137). The Report notes the “inherent diYculties in measuring potential sources of future conflict and conflict prevention outcomes” and that a “final assessment . . . will be made in Spring 2008” (p 112). What work is the FCO doing to develop a means of being able to make that assessment of the outcomes of its Conflict Prevention work in 2008? Conflict prevention is a complex area in which to measure outcomes. The SR02 report underlined the inherent diYculties. In the light of this experience, and accepting the limitations, FCO, MoD and DFID, the three Departments who jointly own the Conflict PSA, decided in agreement with HM Treasury, to report against the SR04 target using primarily narrative reporting, assessed against a narrative, rather than a statistical, baseline. To inform this reporting, the three Departments are drawing on a wide range of sources, both from within HMG and from international organisations and NGOs. Separately, HMG is working with partners in the framework of the OECD Development Assistance Committee, to examine how to develop improved methodologies for evaluating the impact of conflict prevention interventions.

7. The SR–2002 PSA on Conflict Prevention included assessments which used statistics on the number of casualties and refugees, although most of these were not carried over into the SR–2004 PSAs. Why do SIPRI/ IISS casualty statistics still form part of the assessment of the situation in Nigeria (2006 Report, p 114), and why not for other conflict areas? Given the diYculties in measuring conflict prevention outcomes in purely statistical terms, FCO, MOD and DFID, the three Departments who jointly own the Conflict PSA, decided, in agreement with HMT, to report against the SR04 using primarily narrative reporting, drawing on a wide range of sources. But for some of the PSAsub-targets, statistical reports from SIPRI/IISS continu e to be a source of relevant data. In the specific case of Nigeria, the number of conflict related deaths was considered a useful indicator of the eVectiveness of Nigeria’s local and central government institutions in mediating in and managing conflict. SIPRI/IISS reports were used because they were seen as a reliable way of measuring that. This statistical reporting is accompanied, as the recent FCO Departmental Report shows, by a broader narrative assessment of political developments bearing on conflict risk in Nigeria.

8. SR–2004 PS–A4AK envisages agreement on EU financing arrangements for 2006–13, with spending at 1% of EU GDP (2006 Report, p 117). With the UK Presidency having overseen a budget deal in 2005, why is this PSA still assessed as “amber/on course” rather than as a (red or green) settled outcome?

Similarly, why is PSA–4AL still amber, when changes to the CAP were agreed in December 2005 and a commitment secured for a review of CAP in 2008–09 (which falls after the PSA time-horizon)? The amber rating for SR–2004 PS–A4AK reflects the fact that whilst significant progress has been made towards achieving the objective, we will continue to pursue budget discipline, regional policy reform, and protection of the UK net position in discussions between now and the end of PSAperiod. These include discussions to give eVect to the revenue side of the December agreement (known as the Own Resources Decision), and our preparatory work for the 2008–09 review of the EU budget. Similarly, the amber rating for SR–2004 PSA–4AL reflects the fact that we will continue to make the case for reform of the Common Agricultural Policy in various fora. These include discussions about individual CAP regimes (eg reform of the EU fruit and vegetables regime), discussion in the WTO, in preparation for the 2008 review of the 2003 CAP reforms, and in preparation for the 2008–09 budget review. 3471161002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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9. SR–2002 PSA–7A1 is assessed as “red—not met” because there were 99 “functioning democracies” at the end of the SR–2002 PSA period, compared with the target of 105 (2006 Report, p 140). The 2005 Autumn Performance Report, only six months before the end of the PSA period, also assessed the number to be six short of the target. On what basis did the APR assess this as “amber—generally on course”? What six countries did the FCO expect to become functioning democracies during that last six months of the PSA period?

Similarly, which four countries did the FCO expect to achieve impartial judiciaries during the last six months of the PSA period in order to avoid the PSA–7A3assessment becoming red by th e time of the Annual Report?

The Committee correctly notes that these targets were highly unlikely to be achieved before the end of the PSAperiod. The indicator was shown in error as amber. Nonetheless, the assessments in the Autumn Performance Report were intended to reflect the fact that there had been real progress made towards achieving both indicators. The narratives were intended to bring out the fact that an exclusive focus on the headline target figures did not capture the positive trends on both targets to which FCO activity had contributed. For example, under indicator A1 the APR stated: “While we would not currently expect to achieve this target, the overall trend over the period of the PSAhas been po sitive and there has been a significant increase in the number of countries implementing systems, processes and procedures widely accepted to be necessary in a fully functioning democracy”. We are grateful to the committee for this opportunity to correct this error.

10. What changes took place in the six months between the 2005 Autumn Performance Report and the 2006 Annual Report to support an improvement in the assessment for constitutional reform of the Overseas Territories from “red” to “amber/green—met/ongoing” (Annual Report p 152; APR p 52)? Why were the APR and Annual Report assessments not “red”, given that the target related explicitly to a position that had to be reached by March 2005?

Conversely, what changes in that six month period supported a revision from “amber” to “red” for Overseas Territories’ environment commitments (SR–2002 PSA–11B)?

On the indicator relating to constitutional reform in the Overseas Territories target, as a result of a typographical error in the internal guidelines, “amber/green” was incorrectly included as the traYc light. The correct colouring should have been “red” because, as the narrative explained, the target dates could not be met. The error also aVected the colouring of the traYc lights for the overall assessment of the Overseas Territories target and the fourth target indicator (on economic development). Both of these should have been “amber/red” and not “amber/green”, as some of the target/target indicator elements were met but not others. Again the narrative to which the traYc lights were attached set out correctly the position in terms of meeting the target/indicators. The decision on extension of the relevant multilateral environment agreements to the individual territories rests with the OT Governments, rather than the UK Government. During the reporting period, despite earlier hopes, it became clear that the extension of the Conventions could not be achieved in 2006. Therefore the traYc light was moved from “amber” to “red”. We are grateful to the committee for the opportunity to correct this error. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team

Letter to the Head of the Parliamentary Relations and Devolution Team,FCO ,from the Clerk of the Committee,dated 8 June 2006 Dear Chris, Further to my letter of earlier today, I am now able to enclose a list of further questions on matters arising from the Departmental Annual Report 2005–06, to which the Committee would appreciate answers before the Summer adjournment. There is also one question (Q9) for which a longer timeframe may be appropriate. Yours, Steve Priestley Clerk of the Committee 3471161003 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Questions Arising From the FCO Response to the Committee’s Report 1. According to Table 5 [p 80] of the 2006 Departmental Annual Report, in 2005–06 “information and computer technology” eYciencies were £2.3 million compared with a planned figure of £4.7 million. What are the factors behind this shortfall? To what extent are delays with the Prism computer system reducing the level of otherwise expected ICT eYciencies, in each year 2005–06 to 2007–08? 2. In the 2006 Annual Report, two classes of “Administration” costs show large increases in provision for 2006–07, compared to that given for 2005–06 in last year’s Departmental Report. The “centrally controlled administration budget” (£571 million) increase by 20% and “locally controlled administration costs” (£257 million) by 50% (Table 15, p 89). To what extent are these increases the result of changes in the way costs have been brigaded under diVerent Administration headings, and to what extent do the changes represent additional cost? 3. The 2006–07 provision for receipts for visa and other services provided at Consular OYces (2006 Report, Table 15) shows a 77% increase on 2005–06 given in last year’s Departmental Report. To what extent is the increase attributable to: (a) increases in visa applications; and (b) the restructuring of visa fees? The budgeted receipts of £254 million are expected to be less than costs of £285 million (2006 Report, p 90). To what extent are costs planned to be covered by receipts in 2006–07 for: (a) visa services; and (b) other consular services? What was the actual coverage of costs under each of these headings in 2005–06? The fees charged for visa applications were restructured in the Consular Fees Order 2005, which came into force on 1 July 2005. Why did the FCO not undertake a Regulatory Impact Assessment of the changes (2006 Report, p 82)? 4. The 2005 Departmental Report did not include details of the “iVisas Biometrics Programme” (valued at £70 million) because it had not then started (2005 Report, Table 16, footnote 4). Similarly, the 2006–07 capital projects table (Table 16) in the 2006 Departmental Report does not include it, although the Report reaYrms the FCO’s commitment to a global roll-out of biometric visas from October 2006 (p 24). With the project expected to be underway in 2006–07, why does Table 16 not include details of this project? What progress has been made to date on the iVisas Biometrics Programme? What is the estimated average cost of collecting and processing biometric data for biometric visas? What proportion of the £254 million visa/consular service budgeted receipts and £285 million costs (2006 Report, p 90 and 91) are for providing biometric visas? The Committee would like cost and timescale details for the Visas Biometrics Programme, brigaded under the same heading used in Table 16. 5. The 2006 Annual Report notes that revenue from property sales is now fully “recycled” back into the estate (p 75). Against that background, what are the factors producing a fall in the value of residential land and buildings and fixtures and fittings of over £200 million between 2004–05 and 2005–06 (Table 11)? 6. Three estate building projects in Table 16 of the 2006 Annual Report have start dates prior to 2005, but had not been listed in the previous 2005 Report—Colombo, Sana’a, and Doha. Why were these projects not reported in the 2005 Report? 7. Table 18 of the 2006 Departmental Report notes the contributions of diVerent government departments to various UN programmes. To what extent do the figures in Table 19, on non-UN programmes, include contributions made by government departments other than the FCO? The Table 19 non-UN programme costs for 2005–06 are £133.5 million (2006 Report, p 101). To what extent does this reflect a real increase in expenditure from the £26.3 million reported for the previous year in the 2005 Report (Cm 6533, Tables 19 and 20 combined)? How, if at all, do the non-UN programmes listed in Table 19 of the 2006 Report diVer from those covered in the 2005 Report? 8. SR–2002 PSA–2 on reducing tensions subsumes individual assessments for a range of regions, many of which are rolled over into the SR–2004 PSAs. Why were Sri Lanka, Ethiopia/Eritrea, Ivory Coast and Angola—which were assessed as “red”—dropped from the SR–2004 PSAs? SR–2004 PSA–3 on Conflict Prevention includes the security situation in nine regions/countries, but excludes India/Pakistan and Sri Lanka which were assessed in the similar PSA–2 of SR–2002. Why were these two regions left out of the SR–2004 PSA? Overall, the SR–2004 PSAis assessed as “amber” (“on course”), despite “re ds” for three areas. What would the FCO’s assessment have been had the situation in India/Pakistan and Sri Lanka still been included in the PSA? 3471161003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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9. The Committee wishes to receive a finalised assessment of the EYciency Programme performance for 2005–06 (2006 Annual Report, Table 5), once the FCO has been able to complete its assessment by the Autumn, along with any revision to the planned savings for 2006–07 and 2007–08 made at that time. The Committee wants an explanation about the process involved and timescales needed in estimating and then finalising the eYciency assessments. If, once the firmer data are available, some classes of eYciency continue to show a fall in cumulative annual savings (as is currently the case in regard to “reductions in low priority activity”), the Committee would wish to have an explanation.

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 12 July 2006

FCO Departmental Report 2005–06 Dear Steve, I have pleasure in providing detailed responses to the questions you raised in your second letter of 8 June.

Q1. According to Table 5 [p 80] of the 2006 Departmental Annual Report, in 2005–06 “information and computer technology” eYciencies were £2.3million compared with a planned figure of £4.7 million. W hat are the factors behind this shortfall? To what extent are delays with the Prism computer system reducing the level of otherwise expected ICT eYciencies, in each year 2005–06 to 2007–08?

Answer The reason for the shortfall in ICT eYciencies in 2005–06 is that the ICT target set at the beginning of the implementation period double counted some of the benefits delivered by Prism which had also been included in other eYciency projects eg Procurement eYciencies and HR reductions within Corporate Services. EYciencies enabled by Prism in 2005–06 totalled £4.4 million against a planned outturn figure of £4.7 million set at the beginning of the implementation period. Of the £4.4 million, £2.3 million is shown in the table under ICT eYciencies and the remaining £2.1 million appears under other projects. The ICT projects are now expected to deliver £8.2 million of eYciencies in 2007–08 against an initial planned outturn figure of £24.7 million. This shortfall is not due to delays in Prism. It is caused by the double counting in the targets of some Prism benefits and the delay in Future Firecrest implementation due to additional security requirements. The FCO has introduced a number of new eYciency projects to bridge this gap and is confident of meeting its overall target.

Q2. In the 2006 Annual Report, two classes of “Administration” costs show large increases in provision for 2006–07, compared to that given for 2005–06 in last year’s Departmental Report. The “centrally controlled administration budget” (£571 million) increase by 20% and “locally controlled administration costs” (£257 million) by 50% (Table 15, p 89). To what extent are these increases the result of changes in the way costs have been brigaded under diVerent Administration headings, and to what extent do the changes represent additional cost?

Answer The main reason for the increase in gross expenditure is the increasing costs of the consular and visa operations, which are fully funded by income, and the uplift in the FCO’s administration budget in Spending Review 2004. The diVerences between the methodology used in each year account for some of the increases on the individual lines mentioned. The split in the table dates back to the old Estimates structure when more expenditure was centralised. For 2006 we therefore categorised the information by budget holder type to reflect devolution of budgets. The Estates line, for example, now only includes expenditure for which Estates Directorate hold the budget and not all estates related expenditure. This has the eVect of increasing the local administration costs in the table. Locally controlled administration costs have also risen because of the transfer of £20 million from non-cash to cash to compensate for the reclassification of furniture from capital to administration. 3471161004 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Q3. The 2006–07 provision for receipts for visa and other services provided at Consular OYces (2006 Report, Table 15) shows a 77% increase on 2005–06 given in last year’s Departmental Report. To what extent is the increase attributable to (a) increases in visa applications and (b) the restructuring of visa fees?

Answer The 2005–06 Main Estimate figures took a conservative view of consular and visa income, and matching expenditure, in drawing up the Main Estimate to ensure that we did not end up with an income shortfall leading to an overspend. Forecasts of activity are regularly reviewed in the light of actual demand and a final adjustment was made in the Spring Supplementary to reflect our final expectation of increased cost and income. The initial income of £144 million in the Main Estimate was increased to £197 million in the 2005–06 Spring Supplementary. This compares to a forecast income of £254 million in the 2006–07 Main Estimate. The increased income over 2005–06 is due to both continued increase in demand for visas, currently running at 8% growth per annum, and the rise in both consular and visa fees implemented on July 2005 to fund initiatives such as biometrics, control strengthening and increased quality assurance. We will provide a quantification of the individual impact of these once the 2005–06 Accounts are finalised.

Q3. Cont. The budgeted receipts of £254 million are expected to be less than costs of £285 million (2006 Report, p 90). To what extent are costs planned to be covered by receipts in 2006–07 for (a) visa services and (b) other consular services?

Answer The budgeted receipts are less than the forecast costs because the FCO has £32 million in its baseline allocation from Treasury to reflect the Consular premium element of passport fees collected by the UK Passport Service which are paid into the Consolidated Fund. The FCO’s budget will be adjusted by any change in consular premium collected by the UKPS in the 2006–07 Spring Supplementary. In addition there are some £7 million of visas issued for which no fee is recovered. Under Fees and Charges Guidelines, fees have been set to recover the full economic cost of providing the service.

Q3. Cont. What was the actual coverage of costs under each of these headings in 2005–06?

Answer The schedule 5 costs and income for 2005–06 are currently being prepared and are due to be finalised and signed of by the Permanent Under Secretary in July 2006. We will provide these figures to the FAC once the 2005–06 Accounts have been finalised.

Q3. Cont. The fees charged for visa applications were restructured in the Consular Fees Order 2005, which came into force on 1 July 2005. Why did the FCO not undertake a Regulatory Impact Assessment of the changes (2006 Report, p 82)?

Answer Increases in visa fees are not a result of a new policy proposal needing primary legislation and Cabinet OYce guidance states that Regulatory Impact Assessments are not required if statutory fees are increased by a predetermined formula. UKvisas is mandated by HM Treasury to cover the costs of issuing visas and HM Treasury has agreed the formula used to set fee increases.

Q4. The 2005 Departmental Report did not include details of the “iVisas Biometrics Programme” (valued at £70 million) because it had not then started (2005 Report, Table 16, footnote 4). Similarly, the 2006–07 capital projects table (Table 16) in the 2006 Departmental Report does not include it, although the Report reaYrms the FCO’s commitment to a global roll-out of biometric visas from October 2006 (p 24). With the project expected to be underway in 2006–07, why does Table 16 not include details of this project?

Answer The Biometrics programme was omitted from Table 16, as the FCO does not have any capital provision for the Biometrics project in the Main Estimates. However, the Home OYce plans to include a £10 million transfer to the FCO in the Winter Supplementary Estimate to cover capital expenditure on Biometrics in 2006–07 and a further transfer is expected to be included in the Spring Supplementary Estimate, pending Home OYce Group Investment Board consideration of the Full Business Case in November. 3471161004 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Q4. Cont. What progress has been made to date on the iVisas Biometrics Programme?

Answer Initial proof of concept pilots in Sri Lanka and East Africa were set up in 2003–04, with Vietnam, the Netherlands and the Democratic Republic of Congo added in 2005. The results of these pilots have been invaluable in informing the design of the global system. The major diVerence in the pilots and what is proposed in the global roll-out is the tranfer mechanism and the time it takes to match fingerprints against the Home OYce Immigration and Asylum Fingerprint Service database and relay the results back to our overseas posts. Since the UKvisas Biometrics Programme was set up in April 2005, a fast and secure system has been developed, together with the supporting business process changes. The global system will ensure accessibility, quick, simple and discreet data capture from applicants and biometric information matching that enables responses to be sent back to Posts within 30 minutes of the applicants’ data being entered on the system. Plans for global roll out are now being finalised and we are presenting these to Ministers in July. Roll out will begin in Autumn 2006 and will continue until the end of 2007.

Q4. Cont. What is the estimated average cost of collecting and processing biometric data for biometric visas?

Answer We estimate that the average incremental cost of processing a biometrically enabled visa (as opposed to a non biometric one) will be between £5–£6. We are undertaking an activity based costing exercise to further validate this costing.

Q4. Cont. What proportion of the £254 million visa/consular service budgeted receipts and £285 million costs (2006 Report, p 90 and 91) are for providing biometric visas?

Answer In agreement with HMT we set worldwide fees to recover costs. We do not expect to create either a surplus or a deficit at this time. Under HMT Fees and Charges Guidelines we are not allowed to cross-subsidise diVerent visas. Under Net Administration Costing Regime principles, we expect the costs of providing the service to equal income. Actual costing information by post for 2005–06 are not yet available to confirm this figure. This actual data should be available in September 2006.

Total income from global visa fees 2005–06 £163,361,565 Total visa income for the 11 Posts taking part in the biometrics “proof of concept” pilot £9,111,815 Pilot posts’ income as a percentage of global visa fee receipts 5.58%

Q4. Cont. The Committee would like cost and timescale details for the iVisas Biometrics Programme, brigaded under the same heading used in Table 16.

Answer Long term capital projects 2006–07 (capital costs only)

Project: UKvisas Biometrics Programme: Year started 2005 Current estimate of completion End–2007 Current estimate of capital cost *£65.6 million Expenditure in previous year *£3.2 million Estimated provision 2006–07 *£31.8 million To be spent in future years *£30.6 million

*As part of an evolving programme and in developing the full business case we are currently evaluating our costs and looking closely at projected expenditure. 3471161004 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 12 Foreign Affairs Committee: Evidence

Q5. The 2006 Annual Report notes that revenue from property sales is now fully “recycled” back into the estate (p 75). Against that background, what are the factors producing a fall in the value of residential land and buildings and fixtures and fittings of over £200 million between 2004–05 and 2005–06 (Table 11)?

Answer The forecast value of residential land and buildings shown in the 2005–06 report was not updated during the preparation of the report, and is therefore incorrect. We regret the error and apologise for any inconvenience caused. I attach a table (annex A) showing the provisional figures for 2005–06. The FCO’s draft Resource Accounts 2005–06 show that the value of residential land and buildings has increased from £554 million at 31 March 2005 to £697 million at 31 March 2006. The change reflects acquisitions and disposals and changes in property values recorded in the property revaluation process. Given the many uncertainties in this area (RICS guidelines specifically preclude surveyors from providing projections of future property values) we will base this table on a steady state assumption in respect of property assets for future years.

Q6. In regard to the SR–2002 PSA–4C, the FCO reports that it has been unable to develop a new tool for measuring conflict levels (2006 Annual Report, p 137). The Report notes the “inherent diYculties in measuring potential sources of future conflict and conflict prevention outcomes” and that a “final assessment . . . will be made in Spring 2008” (p 112). What work is the FCO doing to develop a means of being able to make that assessment of the outcomes of its Conflict Prevention work in 2008?

Answer We covered this question in my reply to you of 22 June.

Q7. Three estate building projects in Table 16 of the 2006 Annual Report have start dates prior to 2005, but had not been listed in the previous 2005 Report—Colombo, Sana’a, and Doha. Why were these projects not reported in the 2005 Report?

Answer The start dates prior to 2005 given for the estate building projects in Colombo, Sana’a and Doha indicate when preliminary work commenced. These projects were not included in the list of long term capital projects in the 2005 Annual Report because the main construction contracts had not been let at the time of publication.

Q8. Table 18 of the 2006 Departmental Report notes the contributions of diVerent government departments to various UN programmes. To what extent do the figures in Table 19, on non-UN programmes, include contributions made by government departments other than the FCO?

Answer Table 19 shows UK contributions to non-UN peacekeeping. Peacekeeping expenditure is funded from the peacekeeping element of the Global Conflict Prevention Pools. All expenditure in this table is therefore joint-funded by FCO, DFID and MoD.

Q8. Cont. The Table 19 non-UN programme costs for 2005–06 are £133.5 million (2006 Report, p 101). To what extent does this reflect a real increase in expenditure from the £26.3m illion reported for the previous year in the 2005 Report (Cm 6533, Tables 19 and 20 combined)? How, if at all, do the non-UN programmes listed in Table 19 of the 2006 Report diVer from those covered in the 2005 Report?

Answer The 2005 and 2006 tables on non-UN peacekeeping have been drawn up on diVerent bases. The 2005 table only included International Tribunals and OSCE peacekeeping activity whereas the 2006 table shows all non-UN peacekeeping. The attached table (annex B) restates the 2005 table on the same basis as 2006 using final outturn figures.

Q9a. SR–2002 PSA–2 on reducing tensions subsumes individual assessments for a range of regions, many of which are rolled over into the SR–2004 PSAs. Why were Sri Lanka, Ethiopia/Eritrea, Ivory Coast and Angola—which were assessed as “red”—dropped from the SR–2004 PSAs? 3471161004 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 13

Q9b. SR–2004 PSA–3on Conflict Prevention includes the security situation in ni ne regions/countries, but excludes India/Pakistan and Sri Lanka which were assessed in the similar PSA–2 of SR–2002. Why were these two regions left out of the SR–2004 PSA?

Answer The Committee correctly notes that the FCO’s SR02 PSAtarget on Reducing Te nsion (PSA2) was rolled forward into a number of SR–2004 PSAtargets, but primarily the Conflict Pre vention (PSA3) target. When the SR04 Public Service Agreement targets were drafted, the FCO agreed with HM Treasury that it was not practical to include all individual countries and regions of concern within the SR04 PSAreporting framework. When the SR04 Conflict Prevention (PSA3) target was devised, the three Depa rtments sharing responsibility for delivery (FCO, DFID and MoD) agreed with Treasury nine focus countries/regions as representative of HMG’s conflict related priorities. The criteria for selection was based on: — level of UK government expenditure; — potential for the UK to make a significant contribution; — potential risks of involvement; — UK’s key priorities; and — political context within which the UK was working. India/Pakistan, Sri Lanka, Ethiopia/Eritrea, Ivory Coast and Angola were assessed under the SR02 Reducing Tension (PSA2) target. Angolaand Sri Lanka were considered unde r the SR02 Conflict Prevention (PSA4) target. Although these countries did not meet the criteria for inclusion on the representative lists of focus countries/regions, the FCO continues to work with them. Detailed performance monitoring ceased against some areas of our work to streamline and focus the SR04 PSAtargets more clos ely with our strategic priorities.

Q9c. Overall, the SR–2004 PSA is assessed as “amber” (“on course”), despite “reds” for three areas. What would the FCO’s assessment have been had the situation in India/Pakistan and Sri Lanka still been included in the PSA?

Answer Baseline data, sources of data and indicators of success were not set for India-Pakistan and Sri Lanka as part of the SR04 Conflict Prevention PSAtarget, so any assessment would be h ypothetical. However it is likely that, given the situation in India-Pakistan and Sri Lanka at the time of the assessment (January 2006), the overall assessment would remain “amber—on course”.

Q10. The Committee wishes to receive a finalised assessment of the EYciency Programme performance for 2005–06 (2006 Annual Report, Table 5), once the FCO has been able to complete its assessment by the Autumn, along with any revision to the planned savings for 2006–07 and 2007–08 made at that time. The Committee wants an explanation about the process involved and timescales needed in estimating and then finalising the eYciency assessments. If, once the firmer data are available, some classes of eYciency continue to show a fall in cumulative annual savings (as is currently the case in regard to “reductions in low priority activity”), the Committee would wish to have an explanation.

Answer Details of how eYciency gains are measured for each of the FCO’s eYciency projects is provided in the EYciency Technical Note, published on the FCO’s website (and also attached at annex C1). The timescale required for reliable figures varies from project to project, but should be available in the Autumn once reports have been produced from the audited accounts. In line with the advice in the NAO report “Progress in improving government eYciency” (February 2006), the FCO is verifying the figures for the eYciency gains it has achieved to date. The target and planned outturn figures in table 5 on page 80 of the FCO’s Departmental Report are based on the initial eYciency plan. These are consistent with figures published in the FCO’s EYciency Technical Note and as such have not changed over time. These figures are not the current forecasts of what these streams will deliver. The estimated outturn figures are based on the latest forecasts. These figures are an estimate of what has been actually delivered rather than what was initially planned. The FCO has added savings from additional projects to some of the workstreams, partly to fill the gap caused by the ICT workstream not meeting its target (see answer to question 1). The “Reductions in low priority activity” workstream has two new projects, namely “Alternative Representation” and “DSI

1 Not reprinted—available at http://www.fco.gov.uk 3471161004 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 14 Foreign Affairs Committee: Evidence

Restructuring” which were previously contingency projects, and delivered £6.6 million of eYciency savings in 2005–06. Hence the reductions in low priority activity worksteam as a whole is already in excess of the 2007–08 target of £4.5 million. This £6.6 million will continue to be delivered in future years. EYciency gains are not recorded unless we are confident that they are sustainable ie that they can be maintained beyond the SR04 period. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team

Annex A: FAC Question 5

Table 11

FOREIGN AND COMMONWEALTH OFFICE CAPITAL EMPLOYED (£ MILLION)

2000–01 2001–02 2002–032003–042004–05 2005–06 2006–07 2007–08 Outturn Outturn Outturn Outturn Outturn Provisional Projected Projected Outturn

Assets on balance sheet at end of year

Fixed Assets Intangible 0 2 1 1 0 0 0 Tangible 1,250 1,262 1,246 1,227 1,254 1,483 1,483 1,483 of which: Non-residential land and 495 561 568 478 492 589 589 589 Buildings Residential land and 471 491 471 540 554 696 696 696 Buildings Information Technology 42 31 46 54 40 42 42 42 Plant and machinery 12 13 12 14 14 16 16 16 Vehicles 13 13 13 25 21 18 18 18 Antiques & works of art 20 19 19 20 20 20 Furniture & fittings* 126 103 71 55 43 0 0 0 Assets in the course of 91 51 45 43 71 102 102 102 construction Wilton Park 111

Current Assets Stocks 12 10 10 8 9 7 7 7 Debtors 127 149 144 140 226 243 243 243 Cash at Bank and in hand 17 15 72 39 76 130 130 130 Creditors '1 year "125 "83 "126 "97 "250 "339 "339 "339 Creditors (1 year 0 "33 "32 "32 "31 "31 "31 Provisions "27 "30 "30 "47 "66 "67 "67 "67 Total Capital Employed 1,254 1,325 1,285 1,240 1,217 1,427 1,427 1,427

*With eVect from 1 April 2005 Furniture and Fittings have been reclassified as administration expenditure.

Annex B: FAC Question 8

UK CONTRIBUTIONS TO NON-UN PEACEKEEPING 2004–05

Sub-Saharan Africa

Programme/Activity Final Spend 2004–05

Assessed Contributions Country/Region Sudan AU Mission 2,240,000 Sub-Total 2,240,000 Functional/Thematic Rwanda Trib ICTR 4,408,625 Sub-Total 4,408,625 Total Assessed 6,648,625 3471161006 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Programme/Activity Final Spend 2004–05

Non-Assessed Contributions Country/Region Sudan Nuba Mtn Monitors and VMT 725,639 Sub-Total 725,639 Functional/Thematic Sierra Leone Special Court 2,000,000 Sub-Total 2,000,000 Total Non-Assessed 2,725,639 Sub-Saharan Africa Total 9,374,264

Global (Non Sub-Saharan African)

Programme/Activity Final Spend 2004–05

Assessed Contributions Country/Region Albania OSCE 271,356 Bosnia EUFOR 0 Bosnia EUMM 517,000 Bosnia EUPM 2,485,000 Bosnia-Herzegovina OSCE 818,350 Croatia OSCE 510,034 Georgia ESDP 283,000 Georgia OSCE 1,305,606 Kosovo OSCE 2,794,344 Macedonia EUPOL Proxima 1,426,000 Nagorno-Karabakh OSCE 73,732 Sub-Total 10,484,422 OSCE—Former Programme Activity Armenia OSCE 92,966 Azerbaijan OSCE 108,967 Belarus OSCE 63,913 Estonia Mil Pensions OSCE 9,917 FRY (Inc Montenegro) OSCE 470,385 Kazakhstan OSCE 105,557 Kyrgystan OSCE 134,861 Macedonia OSCE 906,264 Moldova OSCE 104,620 Tajikistan OSCE 277,168 Turkmenistan OSCE 77,411 Ukraine OSCE 74,395 Uzbekistan OSCE 113,397 Sub-Total 2,539,821 Functional/Thematic ICC Criminal Court 5,154,495 Yugoslavia Tribunal ICTY 6,238,756 Sub-Total 11,393,251 Total Assessed 24,417,494

Programme/Activity Final Spend 2004–05

Non-Assessed Contributions Country/Region Albania OSCE 106,565 Bosnia EUPM 4,403,630 Bosnia OSCE 674,151 Balkans (Bos/Kos) PSO 86,500,000 3471161006 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 16 Foreign Affairs Committee: Evidence

Programme/Activity Final Spend 2004–05

Croatia OSCE 246,204 ESDP Fact Finding ESDP 46,000 Georgia OSCE 899,975 IPU CivPol Mission Costs 185,655 IPU (DPAtax payments) CivPol Mission Costs 0 Iraq-Jordan CivPol Mission Costs 10,774,592 Kosovo OSCE 1,028,656 Macedonia EUPOL Proxima 294,579 Middle East Jericho Mon Mission 722,072 Middle East EU Mon Group 0 Nagorno-Karabakh OSCE 71,693 Yugoslavia EUMM (Other) 325,572 Sub-Total 106,279,343

OSCE—Former Programme Activity Armenia OSCE 0 Azerbaijan OSCE 53,004 Belarus OSCE 53,835 FRY (Inc Montenegro) OSCE 378,653 Kyrgystan OSCE 64,637 Macedonia OSCE 714,671 Moldova OSCE 65,543 OSCE Secretariat OSCE 289,341 Tajikistan OSCE 0 Turkmenistan OSCE 53,112 Sub-Total 1,672,796 Functional/Thematic Khmer Rouge Trib KRT 500,000 Sub-Total 500,000 Total Non-Assessed 108,452,139

TOTAL GLOBAL (NON SUB-SAHARAN AFRICAN) 132,869,633

TOTAL NON-UN PEACEKEEPING £142,243,897

HOGARTH REVIEW

Letter to the Secretary of State for Foreign and Commonwealth AVairs from the Chairman of the Committee,dated 8 June 2006 At its meeting on Tuesday, the Committee considered the FCO’s response to its Report on the FCO Annual Report 2004–05. There are a number of points which we will be following up, some of them in correspondence and some with Sir Michael Jay when he appears before us later this month. On one point, the Committee has asked me to write to you. In March, the FCO supplied the Committee with a copy of the report of the Hogarth Review of Ministerial Private OYces. The document is classified Confidential. The Committee does not see why the document should be classified Confidential. As you know, the Review was concerned with the staYng and other resources available to FCO Ministers’ private oYces, and with their eYcient administration. We do not believe that publication could have any of the eVects set out in the protective marking system—for example, that publication would impede seriously the development or operation of major government policies, or that it would shut down or otherwise substantially disrupt significant national operations. In the Committee’s view, the report of the Hogarth Review is a document of legitimate public interest. I therefore request that you publish the document, or that you remove the classification so that the Committee may publish it. I hope you will be able to respond to this letter not later than 27 June. Yours sincerely, Mike Gapes MP Chairman of the Committee 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Letter to the Chairman of the Committee from the Secretary of State for Foreign and Commonwealth AVairs,dated 27 June 2006 Dear Mike, Thank you for your letter of 8 June about publication of the Hogarth Review of Ministerial Private OYces. I have carefully considered the points you make in support of publication, but believe that the balance of public interest falls against publication of this report at the present time. Of course I accept that the report is, as you say, a document of legitimate public interest. That is why we placed a copy of Jack Straw’s letter to Andrew Mackinlay of 7 March giving an account of the review, its origins, conclusions and recommendations in the Library of the House. In recognition of the FAC’s particular interest in the report we have also made the review itself available to the Committee in its entirety. In Jack’s Parliamentary answer of 8 March, he explained that the reason why the report would not be published was because to do so would impair the free and frank provision of advice to Ministers on which the eVective conduct of government depends. This still stands. The eYcient management of a Government Department—like any large organisation whether in public or private sector—is a complex business. Those running it require a certain degree of private space within which to operateeVectively. We have been as open as I believe we properly should in regard to the Hogarth report. As a Minister I depend upon the ability to commission and receive full and candid advice in order to make informed decisions in the interests of the eVective running of my Department. Further disclosure of this recent report would I believe constrain candour and undermine internal eVectiveness. I should explain that the criteria we apply when considering public release or publication derive from the principles of the Freedom of Information Act and not those of the protective marking system which you cite in your letter. Protective marking criteria govern handling arrangements for the transmission and storage of classified documents. FOI criteria are those we use for public disclosure. These criteria are based on the principle that it is the content of a document not its security classification which governs release decisions. Rt Hon. Margaret Beckett MP Secretary of State for Foreign and Commonwealth AVairs

Witnesses: Sir Michael Jay KCMG, Permanent Under-Secretary, Mr Richard Stagg CMG, Director- General, Corporate AVairs, Mr Ric Todd, Director, Finance, Mr David Warren, Director, Human Resources, FCO, gave evidence.

Q1 Chairman: Good afternoon, everybody. Sir Sir Michael Jay: I do not think the position is Michael, can I welcome you and your colleagues to satisfactory because I do not have the impression this Select Committee. I think this will be the last that the Committee think the system is satisfactory, time you will appear before us. I would like to thank and if you do not think it is satisfactory, it is not you for your co-operation with us over several years. satisfactory. What I would like to do is talk through Perhaps you could begin by introducing your a little bit ways in which we might be able to make it colleagues and then we will start on the questioning. more satisfactory. What we would say to begin with Before you do so, can I also say welcome to the is that we very much value the relationship with this Members of Parliament from Iraq and Australia Committee, both at home and abroad. I have been who are watching us today. It is very good to see that very pleased when I have been abroad, particularly we are an internationally-known committee and that when I was ambassador in Paris, to receive the you are so interested in our work, thank you very Committee many times for visits there. We have much. every interest in working closely with you. We also Sir Michael Jay: Thank you very much, Chairman. understand your terms of reference and your May I also, on behalf of the Foreign OYce, say how interests and try to keep up with what your interests glad we are that the Members of the Parliaments of are so that we can respond to those. In the last few Iraq and Australia are here, I think that is an months we have sent you a good deal of information excellent innovation. On my left is Mr Stagg who is covering a wide range of issues, some of which has the Director-General of Corporate AVairs, on his been volunteered by us and some of which has been left is Mr Warren who is a Director of Human in response to requests and we would like to Resources and on my right is Mr Todd who is the continue to do that. For example, I hope to be able Finance Director of the Foreign OYce. to send you a report on our consular work in relation to the World Cup as soon as it is over and we have won! I do think, as I think does the Committee, that this needs to be put on a more systematic basis than Q2 Chairman: Thank you very much. Can I begin it is at the moment. We have undertaken to put with questions about your co-operation with systems in place which will enable you to get Parliament in terms of the degree of openness that information on a more systematic basis and in there is with regard to information that is given to particular you should be able to see key management this House and to our Committee. Do you think that papers which are of interest to you because of your the current position is satisfactory and do we now role in overseeing the management of the OYce. I have a policy of full openness? hoped to be able to write to you on those lines before 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 18 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren this hearing. That has not been possible because my head but it would normally consider two or three there have been a number of things which have been, papers for decision and two or three papers for inevitably and understandably, delayed by information at every meeting. ministerial changes and the need for ministers to get to grips with a lot of new dossiers, but I hope to write Q5 Chairman: How many of those have you sent or to you soon on that. Acouple of other things, if I considered sending our Committee? may, I would like to say. First of all, we have to Sir Michael Jay: Again, I cannot answer that accept that there will be some limitations on what we without checking back but one of the issues in the can send you. In managing the Foreign OYce, like correspondence or the letter, which I hope to be able managing any large and complex organisation, we to write to you shortly, will be on precisely this point, are required to do a certain amount of things in about which papers, whether they were board papers confidence. We have to have regard to our duty of or not, we would be able to send you more care to our staV and to operational eYciency so there proactively than we have in the past. are bound to be constraints on sharing information on, for example, individual staV issues, negotiations Q6 Chairman: I understand, because your website on pay, conditions of service and the consideration lists some documents which have been mentioned as of some structural and management issues which being considered, that you have had discussion on would have an impact on staV. There are some issues issues like policy on whistleblowers, top risks of that kind, and I think this is also a point which is register, key performance reports, finance function important it does seem to me which will become less review, review of performance and IT, freedom of sensitive over time so there may be a question here information issues and capital underspend issues. of sending you things as soon as we feel able to do We have not yet received any of those papers and I so even if they are sensitive at a particular moment. raise it as an issue of the kind of things which we, as a I hope, as I say, that the new systematic approach Committee, are interested in and we would welcome will help but in preparing for this session I was access to information on those areas. thinking back over the last four or five years and Sir Michael Jay: I hope that we would be able to wondering whether part of the problem that we have send you some of those papers and some of them is that the annual departmental review exercise is a would fall into the categories that I described earlier rather formal and cumbersome exercise. I know we on of being sensitive, at least at the time, and would have to continue with that, there are all sorts of not necessarily be appropriate, certainly for reasons why we must continue to let you have the publication. If, for example, they are dealing with departmental review but I do wonder whether, for issues which could aVect the structure of the OYce, example, we could supplement that by letting you could aVect people’s jobs, could aVect people have, say once a quarter, a report for publication on overseas and their livelihoods, those are the sorts of the main management issues that have been at the things we would need to decide on first before it was top of our agenda in the previous three months so right to share them outside those who were that we get away from looking at these things once considering them. I would hope that we could send a year. I would also like to oVer further informal you some other papers of that kind but I would hope briefings to the Committee of the kind that we had also that we could contribute to filling the gap that last October which we found helpful and we would you clearly see by having, as I say, some kind of hope that you found helpful and if there are quarterly report of the big management issues that occasions in which you would like to do that, I know have been before us. we would like to do that too. What I would hope is that arrangements of this kind might enable the Committee to get a more rounded and consistent Q7 Mr Keetch: Sir Michael, your relations with view of some of the management challenges that we Parliament are not just about this Committee face which are very considerable and quite although they are, of course, principally about this complicated and lead thereby to a more constructive Committee. They also about how you have relations relationship. I know that Peter Ricketts has been with other Members of Parliament who serve and thinking on these lines as well and would, I think, represent this Parliament abroad. I am specifically hope to be able to develop a relationship along those talking, for example, about the NATO same lines. I put those forward as ways in which I Parliamentary Assembly which I am a member of, hope we might be able to get the relationship on to Sir John is a member of and the Chairman is a a more constructive basis because I think the answer member of. Certainly when you compare the liaison to your question at the beginning is no. that members of that international committee have with posts overseas or British embassies compared with other NATO countries, I have to say it is rather Q3 Chairman: Can I ask you how many times your low. For example, last week three Members of this board has met this year? Parliament representing the three main parties were Sir Michael Jay: The board meets every month in Washington and San Francisco on a NATO except in August. It meets on the last Friday of Parliamentary Assembly visit; none of us was every month. contacted by the British Embassy in Washington, none of us was advised on what the Government’s, Q4 Chairman: How many reports or papers has it or your oYce’s view was on a whole range of issues considered in that time? that we were discussing. I would suggest to you Sir Michael Jay: I cannot answer that oV the top of strongly that with those Members of Parliament 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 19

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren who are on other committees representing this Q11 Mr Horam: Coming on to the question of the country abroad at international meetings and on management of the Department, you had an other visits, you ought to liaise more closely with employee engagement survey conducted by ORC what there are doing and oVer them advice and International recently. It is commendable that you support because I will say to you, with all candour, carried that out and I noticed that the results were a that compared with other countries certainly in bit patchy. The good result was that a high NATO, as I say, the amount of support that we get proportion of the FCO staV said they had a good from our oYces overseas is minimal compared with understanding of their role and were highly the amount of support that other countries in motivated, which is excellent but, on the other hand, NATO get from their delegations. the number who agree with the statement that the Sir Michael Jay: I will certainly look into that FCO as a whole is well managed was only 28% as particular case. I am very surprised to hear what you opposed to 38% who thought it was not well say. I know certainly when I was in Paris we used to managed. You also had a survey of the FCO board have very close links with the WEU Parliament itself, as I understand it, in which less than half of the Assembly and the British delegation to that on a board members themselves agreed that the board is regular basis and I would have expected that to be good at managing the FCO so there seems to be a the norm elsewhere. I know the embassy in problem at the perception of how the FCO is Washington has a very large number of select managed. Do you think there is a problem of the size committees that visit it and it looks after those, as far that these two surveys indicate and how do you as I am aware from the reports we get back from think it should be addressed? them, very satisfactorily. Let me look into the Sir Michael Jay: I think that the Foreign OYce is particular case. I entirely take the point that you better managed than it has been in a number of make, Mr Keetch. ways. I think, first of all, its purpose is clearer. I think the strategic priorities that we have developed over Q8 Mr Illsley: Returning to this Committee, one of the last couple of years have given it a clearer focus the areas where we have had clashes with the Foreign and I think we have been better than we have been OYce management and with ministers over the past in the past at diverting our resources towards those 10 years is when we have requested intelligence priorities though we are not yet good enough at the documentation. There has been a tendency over the allocation of resources, that is one of the things last few years for successive ministers to make a which comes out in all the various reports that we ruling that intelligence information should only go have. We are better integrated with other to the Intelligence and Security Committee and not government departments in London, I think we to this Committee, despite the fact that we are a work better with government departments than we select committee and the Intelligence and Security have done in the past and I think another survey Committee reports directly to the Prime Minister. I which we have had recently, the Stakeholder Survey, wondered whether the board or the senior shows that. We are more adaptable and responsive management had discussed this issue, whether as our consular response shows and we are better maybe it is in your consciousness as to whether there managed in the sense that we focus more on is a tendency to move away from allowing us to see development and on training than we have done in intelligence or whether you will give any advice to the past. It is a good thing that the oYce at home and your successor for future discussions on this issue our overseas network have received Investors in when he takes oYce? People accreditation in the last year or so which is an Sir Michael Jay: I do not think the board has indication of a better managed organisation than discussed that issue. That is an issue that has been has been the case in past. We have also been focusing very much a minister’s own view and own decision more on collective leadership, which I am happy to and I do not know what Mrs Beckett’s view is on come back to. There have been some marked that issue. improvements and those come out from the surveys that you have quoted, Mr Horam. I do not think we are there yet. This is not just a Foreign OYce Q9 Chairman: Sir Michael, you mentioned your problem. We have had collective discussion among successor in your earlier remarks, Sir Peter Ricketts, permanent secretaries about how we square the what advice would you give to him about how to circle between the number of government deal with this Committee? departments in which people seem to feel they are Sir Michael Jay: To be as helpful as is consistent Y doing a good job but do not feel that the leadership with the proper management of the Foreign O ce. is of the quality that it should be, and I think this raises a problem for a number of us and I do not Q10 Mr Purchase: More importantly, has he asked think we have quite got to the bottom of it. People you for advice? feel that their line management is quite strong but Sir Michael Jay: Yes, he has. I know he is looking the higher up you get, the less confidence people forward and hopes to have a chance to meet seem to have in the overall management. I think this members of the Committee informally before he is partly because we are operating at a time of meets you formally. I spoke to him yesterday before change, people feel uncertain of the changes which I appeared before you today. are going on and they tend inevitably to see the Chairman: I am sure he is watching us live on leadership as responsible for the uncertainty they Parliament Live at this very moment. feel. The management is improving, it has got 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 20 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren further to go and I take a good deal of comfort from Q15 Mr Horam: You recently instituted this new the surveys that you have mentioned but I am also body called the Senior Leadership Forum, is that conscious that they provide me, the board of part of your answer to this problem? management and our successors with lessons to Sir Michael Jay: It is part of my answer to the learn. problem because one thing I have tried to do in the last few years is to get away from the sense that there was a leadership in London which was all of us Q12 Mr Horam: When you talk to your colleagues sitting around this table who make a whole lot of at permanent secretary level, what do you decisions which aVect people overseas who have collectively feel is the nature of this problem? This nothing to do with it and that builds up an clearly is a problem, you are acknowledging that, adversarial relationship between those of us in despite the improvements that have been made there London and those of us abroad. is still a problem and perhaps it is a problem about managing the changes in their Civil Service lives or their Foreign OYce lives. Q16 Mr Horam: Is this leadership forum a decision- Sir Michael Jay: Our staV surveys show a number of making body or is it a dialogue? things. They show that people have a very clear sense Sir Michael Jay: The purpose behind it is to get a of how they fit into the organisation as a whole. I sense of collective leadership of the leadership in think that is a strong point and that is a result of the London and our senior ambassadors overseas so strategic focus we have given. They feel that they that they meet together to form a collective leadership which will then discuss and take decisions have a purpose, that they are contributing, I think Y that is a good thing. 91% said they would go the as necessary on how the o ce should be run. We get extra mile if asked, which shows a degree of away from the sense of them and us and get a clearer commitment to the Foreign OYce which is sense of collective leadership. That has been going admirable. Something else which I personally feel now for about—I think we have had three meetings, very pleased about is 74% feel that they are secure every six months—18 months, we have got another and when you think of the nature of the world in one in a couple of weeks time. I believe that is which they live and the conditions in which they live proving genuinely useful in getting a sense of around the world now, I think to have that collective leadership for the organisation as a whole. proportion of people feeling secure is good. What It is new and it is positive and it is changing things. they do not feel is that they are getting a clear It is making our ambassadors abroad be part of the rationale communicated to them for why things are collective leadership and responsible for changing. communicating the change to their people. Q17 Mr Horam: They have to buy into what you Q13 Mr Horam: What sort of things when you say are doing. “why things are changing”? Sir Michael Jay: It is very diYcult to do that Sir Michael Jay: Let me give you some examples. communication sitting in London, however much First of all, one example is the eYciency programme you telephone, email and have video conferences. we have. Our eYciency programme, which was People on the spot want to hear this from their own agreed as part of our spending round in 2004, managers and their own leaders and that means their requires us to reduce our staV and also reduce our own heads of mission and that is what we are trying support staV. That means reducing the HR to get across to people and through the leadership operation, that means changing the HR operation, conference, which I know Mr Mackinlay and the that means changing the support that people get Chairman came to the reception of afterwards in around the world in managing their careers. March.

Q14 Mr Horam: And people say, “Why is this Q18 Andrew Mackinlay: I think that leadership necessary”? conference, in fairness to you, is a very sensible and Sir Michael Jay: Why is this necessary? Why is there welcome innovation. Listening to you carefully, and not the support mechanism that we have had and got I made a few notes of what you said, it does seem to used to?, that is one thing. Also, the nature of our me that you are in denial, Sir Michael. In the surveys business is changing. Quite a lot of parts of the world which have been referred to by my colleague only V that people have to go to these days are not very nice, 28% of the sta agreed with the statement that the Y you cannot take your wife, you cannot take your Foreign O ce is well managed, another 34% were partner or you cannot take your kids. That causes a neutral or ambivalent but 38% were unfavourable; V degree of family dislocation, people wonder how that is your sta and includes, presumably, some V that is going to aVect their expected pattern of life in senior ambassadorial sta . You said it is improving, the future. There are a number of uncertainties presumably it has come down from something like about life which were not there, let us say, five or six 45% where it was unfavourable. Your own board, in 1 years ago which are there now. We have not done their Executive Summary , said “The board enough to communicate clearly the rationale for change and what these changes, partly generated 1, 2 Note by witness: Mr Mackinlay is quoting from a report produced for the Board about attitudes towards Board internally, partly because the world has changed, performance, which drew on the views of a representative what that means for individuals. That is the sample of over 100 staV from all grades in London and challenge that we have. abroad. 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 21

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren leadership is undermined by perceived weaknesses in important issue to our missions who are managing the organisation and delivering the embarrassed and contractors who are not being strategic priorities as well as a lack of clarity about paid. I will return to that on another occasion. Can the relationship with ministers”. There are two you give us a position statement this afternoon? points here, one relates to your stewardship of this— Where is Prism not working? To what extent is it not and this is your valedictory appearance here—and working in geographical areas and in terms of what the second point, and I would like to take it critical information is not available, such as I have separately, is very interesting as well—a lack of cited? clarity about the relationship with ministers. There Sir Michael Jay: In a moment I will ask Mr Stagg seems to be a problem which you might amplify who has been taking a very close interest in Prism to upon but can we come to the second point in a answer some of the detailed questions. Let me say moment. What about the first point because it does that, as you know from the report which you have seem to me that if you are in private industry or any commented on from Norman Ling, first of all, Prism other public sector organisation, 38% of your staV is extremely important, it is absolutely business today say that things are unfavourable as regards critical that we have a proper management their perception of leadership, I would be information system. It has been more complex than extremely worried. we thought it would be to roll out and we made some Sir Michael Jay: Clearly, there are lessons we need mistakes to start with and that was what Norman to learn from this, but you are picking out one or two Ling’s report showed and I think we have recovered figures from a survey which has a great deal in it, as I from that. We now have Prism rolled out across the said earlier on, which is very positive. Overall, I take whole network so it is operating everywhere except comfort from these reports, whether it is the in one or two posts where it is not feasible, and we Stakeholder Survey, the board report, or a separate are beginning to get the benefits from that. It is also survey we had of the new board structures or the operating in the United Kingdom and we are getting staV survey because I think they do show, if you look benefits from that. We are getting benefits in terms Y at the trends, an improvement. They also show that of greater e ciency in our operation and better it is diYcult and complex to manage an organisation management information. Where we still have at a time of change. As I was saying earlier on, I do problems, and I am conscious of this because they not think we have got that right. I believe that the are raised with me each time I go abroad, is in the Foreign OYce is better managed than it was, I think performance of Prism in a number of posts: it is too it is on an upward trend. It is an extremely diYcult slow, it is too complicated and that we are working to address in order to speed it up because that is job to do and I know there is a lot the board of causing some diYculty for us. Overall, I think Prism management, I and my successor will have to do in started business critical, started badly, is going much the future. better, is over budget but not by a huge amount, is delayed but not by a huge amount and is beginning Q19 Andrew Mackinlay: What about this clarity of to bring us real benefits. Perhaps I could ask Mr relationships with ministers, what is that all about? Stagg to answer some particular questions. Sir Michael Jay: I do not know what that is about. Mr Stagg: Mr Mackinlay, on the question of the slow payment of bills, that is entirely right, during Q20 Andrew Mackinlay: You do not know what it is the process of moving from one system to the new about? I am quoting from the Executive Summary2 system, there were glitches and posts did have produced by the board of which you are a member. diYculties. I think it is fairly typical of these It was a straight quote, it was not me summarising. It transitions that these things happen, we should says “Board leadership is undermined by perceived apologise for them, but it is not unusual. As far as I weaknesses in managing the organisation and am aware these things are working perfectly delivering strategic priorities as well as a lack of satisfactorily at posts. On the question of areas clarity about the relationships with ministers”, I did where it is not working, geographically it now is not put that, you put it. everywhere we want it to be because in some very Sir Michael Jay: I did not myself put that, I did not small posts it does not make sense to provide such a tick that box when I filled in the form, which will not complex system. In terms of the areas of the altogether surprise you, I suspect. That is referring business, I think the only significant area where it is clearly to a sense that there is a perception there not working as it should as yet is in procurement which is, as that says, causing us some diYculties. where, I do not want to get too technical, we have That is clearly something which we need to address. not yet instituted a three-way match system in the UK to ensure that those ordering goods, authorising them and then receipting them are all properly Q21 Andrew Mackinlay: Can I come to Prism which sequenced. That has happened everywhere overseas is the technology relating to management already and we are going to introduce that in the UK information and accounts. I recently asked a from 1 October. That is an area which is not yet parliamentary question, and I was told they were not perfect but the present system is a lot better than it able to answer it because it would cost too much and was before Prism came along when we had a very I think it related to businesses and small contractors simple paper-based system. not being paid by our missions because they could not pay them because Prism was not up and running Q22 Andrew Mackinlay: On page 106 of the report which, as an aside I say, is rather disquieting because there are five consultants, and perhaps you want to that information should be available and it is a very give us a note on this, but I notice Morson Human 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 22 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren

Resources has received £2.1 million. Do you know argue, and I think I would argue, that it would be a what Morson do for us for £2.1 million? waste of public money if you train up very able Mr Stagg: I think I know but I would rather write people, you equip them with expensive language to you.3 skills, you send them to Beijing or Tokyo and then they look in their mid-30s and see that there is above Q23 Andrew Mackinlay: That is fine. Finally, I them a kind of carapace through which they are not notice on the minutes of the board there is talk about going to break because there are senior people who compulsory early retirements for staV and I always are going to stay there, and they leave. That also is bristle at this, because of my background as a trade a waste of public funds, so what one is trying to do union oYcial, and also the abuse in the public sector is to get the balance right here and to have the right of retirements, right across the public sector. I notice mix of skills, age and experience throughout the that it says here, “The board discussed applications OYce. for compulsory early retirements”. That seems to me a contradiction in terms. You do not apply for Q27 Mr Purchase: It is a short question, but right at having it, do you, it is something which is forced the beginning of this set of questions you said, if I upon you. It suggests to me that there is a very recall it correctly now, that one of the important attractive package for some of your staV who can get factors in the improvement of management had been away, start a new career, start a second life. a clearer sense of purpose in the Department. How Whereas, in fact, in the interests of the public sector can I understand that in recent terms or historical as a whole in terms of maintaining expensive terms? What do you mean by that? qualified experienced staV, bearing in mind that Sir Michael Jay: What I mean is that the articulation your retirement age now rises to 65, which I think is of the strategic priorities as part of our strategy, right in every respect, why are we advertising saying, which was launched in 2003 and then revised this “Here, who wants to be compulsorily retired?” It year, has given the staV of the Foreign OYce at home does seem to me a nonsense. and abroad a clearer sense of what the purpose of the Sir Michael Jay: Because we have too many people, Foreign OYce is. There are seven, eight or nine more people than we can aVord to pay given our strategic priorities and people know they are settlement, and we have a requirement under SR working for that. When I was in Delhi recently, for 2004 to reduce our staV by some 300 or so. example, and asked a member of our local staV, “What do you do?” she did not say, “I am an LE 1 Q24 Andrew Mackinlay: Turn the tap oV. in the commercial section” or whatever it was. She Sir Michael Jay: You can stop recruiting, in which said, “I am working to deliver the strategic priority case you very soon have an unbalanced structure. on . . .” whatever it was. That is one of the reasons why I think there was a very strong answer to the Q25 Andrew Mackinlay: As you would say. question in the questionnaire, that a very high Sir Michael Jay: Or you can look at where the proportion of people feel they are contributing to the imbalances are in your existing structures and try to objectives of the organisation, and I do not think we address that. What we concluded was that we had have had that before. too many people at senior levels and the right thing V to do was to o er people terms, which are the Q28 Mr Purchase: I am dismayed. I am literally Y Cabinet O ce terms, to take early retirement in dismayed that we have had a Foreign OYce order to reduce people from the top and also enable operating for a couple of centuries that has not been the extraordinary talent which there is in the clear what its purpose is. You may dress it up in organisation to move up through it. That was the terms of modern management speak of strategic rationale for the compulsory early retirement objectives, it means nothing to me. What does mean scheme. something to me is that people working on behalf of the British Government and the British people Q26 Andrew Mackinlay: Does it not occur to you almost directly, and particularly overseas, did not that the public purse paying for these generous have a clear sense of what the Foreign OYce was for. retirements is badly served in many cases? Of course, I am absolutely dismayed. I was being slightly flip because I do understand we Sir Michael Jay: I think it is more complicated than have got to have talent coming in, we want that for that. I think there was a time probably 20 or 25 years the next 20 or 30 years, but there is an abuse ago when the role of the Foreign OYce was much throughout the public sector, and I suggest it to you, clearer than it had become, say, five or 10 years ago of people being able to go too easily, suiting their when the nature of foreign policy was much clearer purpose, often at senior level so it is often not and when what foreign policy was was much clearer. extended to other people, and it should be reviewed. Now it is less clear because we are living in an age of There should be a tighter grip and that people will globalisation when Britain’s external policy is as have to stay longer and expect to serve to 65, and you much about climate change, environment and adjust accordingly down the pyramid. economy as it is about the traditional security issues Sir Michael Jay: You have a diYcult choice to make with which the Foreign OYce has been concerned. and, as so often with these things, management is a We are also living in an age in which the services we question of diYcult choices. Equally, you could deliver to our people, the consular services and visa services, are high up on our agenda. What we have 3 Ev 38 needed to do is to respond through the strategic 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 23

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren priorities with a set of focused priorities which our interest for a safe, just and prosperous world”. I staV know in this rather complicated, confusing and think the first part of that sentence is a proper diYcult world are the ones which today’s Foreign statement of the Foreign OYce’s purpose, that a OYce is focusing on. That is what we have given to safe, just and prosperous world is a hope and that is them and that is what they appreciate. That shows about it. I think that the strategic priorities you have and comes up in the survey. That is what I am saying, set in the document published in March seem to me Mr Purchase, not that we have had 200 years perfectly sensible. The foreword by the Foreign without knowing what we were doing, but as the Secretary is all about values, whereas I think most of world has changed, so we have to change, and as we us would think the Foreign OYce’s job is mostly have to change, we have to give people a clearer about interests. I realise that, of course, these things sense of how they fit into this rather complex world. overlap and having the right values in place in some places serves our interest, but I do not think it always Q29 Ms Stuart: Can I follow up on this and try the necessarily serves our interest to promote same question but with a slightly diVerent phrase. democracy, for instance, abroad, and we certainly The world is changing, I accept that. Foreign policy decided it is not really a huge interest in Saudi is changing, I accept that, but we still require a Arabia to promote democracy. We have very close definition of what our national interests are. relations with a country which has got one of the Sir Michael Jay: Yes. worst human rights records in the world and we seem reasonably content with that because our Q30 Ms Stuart: If I were to go through this report, interests are better served by having a good and say to you, “Could you please define for me relationship with them than by worsening that what Britain’s national interest in the European relationship to promote our values. The Foreign Union is?” could you give me an answer? Secretary’s foreword in this document, in which you Sir Michael Jay: What I would do would be to look set out the nine strategic priorities—none of which I at the strategic priorities. The report, which was would disagree with at all, they all seem to be launched at the end of 2003 and then revised in perfectly sensible subsets of what is the UK national March, has a very clear section on the main interest—does go on an awful lot about democracy objectives in the European Union along— and see the world in which freedom and justice and opportunity thrive and all of that, and we then go on to get some rather more pragmatic objectives here. I Q31 Ms Stuart: No, not the main objectives, a wonder where is this balance between interests and definition of what Britain regards to be its national values? It seems that the two most recent leaders of interest. I looked for that; I cannot find it anywhere. the Foreign OYce bang on an awful lot about values Sir Michael Jay: I would regard its national interest and I hope the Foreign OYce is getting on with our as being—I am afraid I have not got the strategy interests, but do you see a move in one direction or document in front of me—an eVective, secure and another here? Do you see any conflict between what prosperous Europe. I would need to check what the you say on the front of your Annual Report and exact phrase is, but that is our national interest. The what the Foreign Secretary says in his introduction Foreign OYce’s role, through its embassies, its to the strategic priorities? network overseas and through people here working with others, is to deliver that. Sir Michael Jay: I think the answer to that question is clearly no. Let me take the question of Saudi Arabia, which I think is a very interesting example. Q32 Ms Stuart: But that is not a definition of the We do need to find the right balance between values national interest. To have Europe prosperous is fine, and interests. Clearly, we have very considerable that gives me the interest of the collective, but what interests in Saudi Arabia and we have an excellent is Britain’s national interest? My contention is if I ambassador who is doing an extraordinarily good were to say to your French opposite number, “What job in promoting them. I think it is also in our are the French national interests within the interests that there should be—and we have worked European Union?” he could come up with a pretty with the Saudi authorities on this and are doing so— sharp definition. a programme of reform in Saudi Arabia which Sir Michael Jay: Let me say two things to that, Ms V moves in the direction of the values which are Stuart. I think that building an e ective and globally discussed in the document as well, so the diVerence competitive European Union in a secure between the interests and the values I think will vary neighbourhood is a statement of Britain’s national Y from place to place and you clearly have to try and interest. I very carefully said the Foreign O ce role weigh those up. I do not think you would ever find is to deliver that along with others, but these the Foreign OYce now saying that the interests are strategic priorities were the result of a consultation so important we will cast the values aside. What we with all other government departments, they were were trying to do was to find the balance between agreed in Cabinet, and they are, therefore, they are them and that is not always easy. a statement of Britain’s external foreign policy, but that is the policy which is our job to deliver. Q34 Mr Maples: When this Government came into Q33 Mr Maples: Since this subject has been raised, I oYce there was a lot of stuV about ethical foreign wonder if I could ask you a couple of questions policy as though in some way values had never been about it. Your Annual Report has on the cover of it part of the equation and they did seem to get most “The purpose of the FCO is to work in the UK of the attention for a while. I wonder whether in the 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 24 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren strategic priorities, the bit that was not written by the necessary to do the job and the need to have people Foreign Secretary, we are not coming back to towards the top of the Foreign OYce who have looking after our interests more pragmatically and experience of diVerent areas of its activity. It seems certainly in some of those cases they involve to me that the corporate world is moving away from promoting our values. This Committee took an that generalist approach, particularly in those areas. interest in several British subjects who were Nobody would suggest you took somebody from tortured, or alleged they were tortured, and you marketing and gave them a shot as finance director know all about this because you paid for counsel to for a while so their experience was broader. I would go to the court and help the Saudi Arabian suggest those are three areas, the ones we picked on, Government with its case. where generalists cannot hack it and certainly at the Sir Michael Jay: Let us be very clear about that. higher levels you really do need direct experience. I That case was on a very important principle of law wonder if you can tell us what has happened on the which was entirely independent of the allegation of director of finance and chief information oYcer and torture and I think it is a great pity the two did get what you do expect to happen on the HR and estates confused. management? I do not know when their terms of oYce are coming to an end. Q35 Mr Maples: In that case at the end of the day the Sir Michael Jay: Let me tell you where we are on Foreign OYce did help to get those people released. most of those. On the question of the finance I do not know everything that went on behind the director, we did have an open competition earlier scenes, but it was certainly extreme that the Foreign this year for finance director and it did not result in OYce was far less critical of the Saudi regime than somebody who I felt I could really wholeheartedly we would have liked and I suspect that it would have recommend to my successor as the right person to be been had this been some no-account country with no the finance director, so we have relaunched that oil in north Africa, so are we seeing here an absolute competition. What I very much hope is we will have conflict of the values and interests question? a professionally qualified external finance director in Sir Michael Jay: I think there are conflicts and there place by the end of the year, which is the Treasury’s are tensions. I was very much involved in that deadline for doing that. particular case three years ago and there was a very single-minded objective which was to get the British detainees released and the judgment was how do you Q37 Mr Maples: When they come from elsewhere best achieve that? That sometimes requires you not within the public sector, you say from outside, might to say things that you were doing because if you were they come from some other government to say things you were doing, that might set them department? back. That is a good example of the diYcult issues Sir Michael Jay: This will be an open competition, we do face almost every day. so I hope very much they will come from the private sector and we get the benefit of private sector Q36 Mr Maples: I point out that I detect a slight experience. diVerence in tone between the Foreign Secretary’s introduction and the strategic priorities, but I hope Q38 Mr Maples: Would it be open to somebody with the strategic priorities are the things you are financial management experience in another V following. Could I switch to a di erent subject for government department? one question. Last year we took up with you the V Sir Michael Jay: Yes, it will be an open competition, di erence between what other government which means that applications can come from departments did in requiring professional anywhere. Clearly I cannot commit my successor, qualifications or relevant career experience in some but I would expect the next estates manager also to of the corporate functions that you do. We identified be a professional with professional experience finance, human resources and estates management. I recruited from outside. Since the last time I appeared think the reason we picked estates management was before this Committee, we have appointed a director because the year before we had some trouble over a couple of bad property deals the Foreign OYce had of FCO services which is a services arm in the got itself into and the other area because we were process of an important transformation towards surprised to find that the director of finance the year agency status from the outside world, I think from before was between diplomatic postings. We found the commercial world. I would expect the next chief Y almost every other government department did information o cer, the head of our IT operation, to require relevant experience or qualifications in these be, again, an expert professional recruited by open fields and the Foreign OYce did not seem to. We competition. I know this is a slightly diVerent area, pointed that out in our report and in your reply you but we had an open competition for our legal said, “We are recruiting a professionally qualified adviser. We have an extremely experienced director of finance through open public competition, international lawyer as our legal adviser making a and shall do so for our next chief information oYcer. big impact. As far as the HR director is concerned, We will continue to do this with the directors of that is where I think we have to draw the balance human resource and estates management when their between HR experience which is very deep in the terms of oYce come to an end”. You then drew a OYce. David Warren, our HR Director, is not trade-oV, I think would be a fair way to say it, himself an HR professional, but nearly everybody between the qualifications and experience that are else in the organisation is. I think we have been very 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 25

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren well served in a period of very diYcult change in the Q41 Mr Hamilton: The quote I have got says that HR function by having an HR director who knows, there are “currently no plans for further post and is seen to know, the OYce well. closures”. It does not mention particularly sovereign posts, but I accept what you say. Can I ask you about a specific post though, because I think it is of Q39 Mr Maples: Does the public sector as a whole some relevance. Do you know when we are likely to not develop people in these specialisms? You talked have an ambassador in Podgorica? about recruiting them from outside, from the private Sir Michael Jay: At the moment we have one local sector; does the public sector not recruit and train up staV member, I think, in Podgorica and he is likely financial managers who can move around from one to be replaced by a small mission with one department to the other or HR professionals who permanent UK-based diplomat as ambassador. I do might be interested in the public bodies? not know exactly when that will be, but a decision Sir Michael Jay: Yes, it does. We do recruit people has been taken to do that in view of a judgment of from other government departments. For a finance the importance of our relations with Montenegro as director, for example, we would be looking for it becomes independent. The rationale for that is we somebody with the relevant kind of financial and have invested huge amounts of resources in peace accountancy experience from outside the public and stability in the Balkans and believe that it would sector. That might be somebody who is now working make sense in that context to have a small mission in the public sector but will have had that outside led by an ambassador in Podgorica and also that we experience. would expect there to be a substantial number of Chairman: We have a vote. Hopefully, there will be British visitors as that becomes part of the Adriatic only one and we will only be gone for 15 minutes. tourist zone, so we would expect there to be quite The Committee suspended from important consular activity there too. 3.18 pm to 3.38 pm for a division in the House Q42 Mr Hamilton: So pretty soon? Chairman: Can I switch the focus, Sir Michael, to Sir Michael Jay: Pretty soon. I do not know our representation in other countries and bring in exactly when. Fabian Hamilton to start. Q43 Mr Hamilton: Within the next 12 months? Q40 Mr Hamilton: Sir Michael, when you Sir Michael Jay: Yes, I would certainly expect so. responded, I think to our last report, on your Annual Report 2004–05, you said to us on further Q44 Andrew Mackinlay: Twelve weeks or months? plans for closures of posts or embassies that there Sir Michael Jay: Months. are, and I quote: “currently no plans for further post closures”. I wonder what rebalancing you foresee in Q45 Sir John Stanley: Sir Michael, can you tell us of the global network as the strategic priorities set out any other embassy or high commission in the world in active diplomacy change and develop? How can which is staVed by one UK diplomat? we do that without further closures? Sir Michael Jay: I would have to have notice of that, Sir Michael Jay: You can do that partly by but there certainly are some.4 rebalancing the operations within posts so they focus more on the new priorities, for example having Q46 Sir John Stanley: Could I ask, when our one more people operating on climate change as a new diplomat goes on holiday, who takes charge of the priority than we have had in the past. That would be embassy? one way of doing it. I think I was probably talking Sir Michael Jay: He would be supported by local about sovereign posts there. We do, of course, still members of staV who would take charge of it, that have a number of consulates general, deputy high would be the normal practice. This does happen. It commissions, and there is an option open there to try would be great to be able to have more people there, to reduce some of our subordinate posts and to but we have to limit our representation to the transfer the resources from them to the priorities number of people we have got available. Clearly, elsewhere in the network. That would be another that would be reviewed depending on the nature of possibility. Of course, these are issues we are looking the operation or the nature of the work there. That at now very actively in the context of the would be how we would start. Comprehensive Spending Review on which there is likely to be, as I understand it, an initial report Q47 Mr Hamilton: Clearly, we could probably spend before the recess. Under that Comprehensive the whole afternoon talking about representation, Spending Review we are looking at a zero-based but I want to move on to talk about asset sales review of certain aspects of our operations, because this Committee, as you know, has taken a including our European posts. The issue there is are strong interest over the last few years, and certainly there ways in which we could release resources from our predecessor committee in the last Parliament within our European network by more eYcient examined it very carefully and, indeed, had a special working, for example, perhaps by outsourcing session, I think it was in eVect a sub-committee of the certain operations which are now done within Foreign AVairs Committee, to look into the specific missions or perhaps by transferring resources from sales in San Francisco. You may remember that subordinate posts to other parts of the network. That is something we are considering at the moment. 4 Ev 38 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 26 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren controversy. For example, by selling oV part of the will fetch in terms of bringing that kind of revenue compound in Bangkok, I understand you achieved in, but sometimes you cannot really attach a value to five years’ worth of asset sales by that one sale. I do the prestige that site gives us within that country for not know if that is true or not. Are you going to stop this nation’s representation. I am thinking of, for selling oV some of the family silver? example, Cape Town. Cape Town is not the main Sir Michael Jay: I am going to ask Mr Stagg to residence, is it, Pretoria is the main residence? Cape answer some questions on this, if I may, Mr Town is absolutely valuable because when we were Hamilton. Let me start by saying that I am not sure there we saw that half the government came to I would characterise this as selling oV the family events that the British High Commission organised. silver, though I know this is an issue which has been If you had any other site, you simply would not get of great interest to this Committee. I think any not just the kind of prestige but the attendance from organisation as complex as ours with assets around useful, important people that we need to connect to. the world is going to have to be constantly looking I wondered whether you took any account of the at those that we have and those that we may no prestige value to this country of the site itself rather longer need to ensure that we have the buildings than simply its financial value. around the world, whether they are embassies or Sir Michael Jay: Yes, we do, very much so, Mr residences, which are fit for purpose. There is a Hamilton. There are one or two other examples at constant process of active asset management which the moment of places where we have indeed decided will inevitably involve sales from time to time that the right thing to do is to keep and develop a because that is proper, good, prudent and sensible prestigious residence because it is clear that in the management. The issue, of course, in addition to years ahead in a country that is really important to that is do we have asset sales targets that we are us that is going to be an asset of unquantifiable but expected to meet. I will ask, if I may, Mr Stagg to real value. That is part of the equation, but there will comment on how far the sale of part of the nonetheless be times when we have to make a compound in Bangkok will aVect our existing asset judgment, as in the case of Bangkok, that it is better targets, but I think I should say that there is a to realise part of a compound and then to use that proposal as part of the Comprehensive Spending money for investment, say, in somewhere like Review that we should have a new target—every Podgorica where we may need a new embassy and a government department has a target—of disposing new residence. of £140 million worth of assets over the period of the next spending round.5 The question of asset sales will, I think, inevitably become an active one again. Q49 Mr Keetch: Sir Michael, can I turn to consular Mr Stagg: As Michael says, the Treasury, going services because you mentioned earlier changes in forward, is very focused on asset recycling across the the last five or 10 years on foreign policy and public sector and it is a particular issue for us at the Britain’s interests. There has also been a step change Foreign OYce. They have proposed to us that the in British travel overseas. It is now common for right figure should be £140 million in the case of the people to take gap years, which certainly when I was FCO estate. In terms of our historical asset around we did not do, and people are travelling recycling, the target set in the previous spending more and more and more, and in a dangerous world round will now come to an end because the that is clearly making them more at risk from harm. Treasury, through this process of the Do you think that sometimes British citizens Comprehensive Spending Review, added on a year overseas have an unrealistic expectation of the kind to the last cycle eVectively in which we do not have of support that they may get or, indeed, their a new target. Our view is whatever target turns out families back home might get when they run into to be agreed with the Treasury in due course, and we trouble which perhaps they themselves should have will have to have a target just like other government been more aware of and more prepared to deal with? departments, that should include the money raised Sir Michael Jay: I think sometimes they do, yes. Let by selling oV part of the compound in Bangkok me say first of all that you are absolutely right, the which raised, as you know, in the order of £50 nature of the operation in which we in the Foreign million. From our point of view, it was a very good OYce are engaged now has changed markedly over sale to make at a good time. Estate professionals the last few years. There are now 65 million visits a were saying to us it was a good moment to have sold year by British citizens and a proportion of those are and we managed to hedge the sale so as to add £2 bound to get into trouble and get into diYculties and million to the value we got against a declining will indeed require and deserve, and we are very keen currency at the time. I think that we are going to be to give them, our support. Then, of course, there are able to get all we want on the site in Bangkok for our the terrorist attacks, the hurricanes, the natural eVective embassy operations and the bit we sold oV disasters, which can strike at any moment and cause was one that was, for us, the least valuable part of real diYculties for British citizens overseas. The the compound, so I think it has been a quite a good nature of the operation has changed and we have outcome. responded over the last few years in order to meet that. I do think that there has been a risk of excessive Q48 Mr Hamilton: Can I put this to you, that very expectations. It was against that background that often you can decide the value of a particular asset in the last Foreign Secretary published a guide called monetary terms, in local economic terms and what it Support for British Nationals, which was a guide which was published on 21 March which was the first 5 See Ev 38 time the government had set out comprehensively 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 27

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren what citizens can expect from consular services departments as well on behalf of UK plc because it overseas, but also what they should not expect from may well be that in response to an event like Katrina consular services overseas, otherwise there was a risk or, indeed, the Tsunami you will need to draw assets of unrealistic and unrealisable expectations which and people from other government departments? would then cause people inevitably to be Sir Michael Jay: I think we are getting better at that. disappointed. That was as a result of very wide The rapid deployment teams, depending on the consultation, including with this Committee, and I nature of the emergency, will include people from the think it has been a very valuable document. Metropolitan Police, the Red Cross, medical staV, people from the Department for International Q50 Mr Keetch: I certainly welcome that, and the Development, for example. The rapid deployment Committee welcomed it at the time. There is clearly a team that went to Pakistan after the earthquake there diVerence between what you might expect to occur to was a mixture of Foreign OYce people and DFID you on your travels and an event, for example, like people and others. One of the things that we are Hurricane Katrina or, indeed, the Tsunami or, learning is this has to be a joined-up cross- indeed, a terrorist attack. There was some criticism of government exercise and not just ourselves. FCO oYcials after both Katrina and the Tsunami. When dealing with an incident like that where you have to bring people in from other posts to deal with Q52 Sir John Stanley: Sir Michael, I want to turn to the subject of the adequacy or otherwise of the a mass incident as opposed to an individual incident, Y do you think you are in a better position now to Foreign O ce’s systems of internal financial control. I needto go backto the fraudat the TelAviv Embassy respond to an event like that than you were perhaps Y before those tragic events? which the National Audit O ce correctly described Sir Michael Jay: Yes, I do. First of all, let me say that as “the largest identified loss by fraud in the Department’s history”. It revealed an extraordinary I think the criticism, particularly after Katrina, was V wholly unjustified, and I want to put that on the stateofa airswhereabsolutelyfundamentalinternal record because I think our people did an financial controls were not followed, it showed cash extraordinarily good job in helping people after advances being made on the basis of handwritten Katrina. It was very clear to us immediately after that receipts and your own Financial Compliance Unit, I quote: “found no evidence that invoices were ever hurricane season that we needed to change the way in V which we responded in particular to hurricanes. demanded, seen or authorised by Embassy sta ”. What we have done, therefore, is to extend the The NAO report concluded that: “There were clear concept of rapid deployment teams. We have a rapid breaches of longstanding accounting procedures”. I have in front of me the letter that your colleague, Mr deployment team now in the United States which will Y be able to go immediately to a likely hurricane zone, Todd, sent round to all sub-accounting o cers on 3 whether in the United States, the Caribbean or Novemberlastyear,andclearlyyouhavetriedtotake Mexico, so that we can get people pre-positioned corrective action, although I have to say I was somewhat worried to read Mr Todd’s comments to more quickly earlier and make known that they are Y there in order to respond more eVectively than we the sub-accounting o cers: “You should ensure . . .” were able to last time. We are better placed to do that. and he goes on, “ . . . that the relevant checks are in I know this has come up in this Committee before, place as far as possible”. That seemed to me a very and I know Sir John Stanley had a very considerable strange qualification. Surely the relevant checks interest in it after the first Bali bombing attack in shouldbeinplacefullstopandnotqualifiedby“asfar October 2002. We have worked very hard to ensure as possible”. The key issue I want to put to you is that we are able to respond more eVectively and more anyone reading this from any sort of financial background can only come to one conclusion, and quickly to disasters of whatever kind abroad. We do Y now have rapid deployment teams based here in that is that the Foreign O ce has not got in place a London, in Delhi,6 in Hong Kong and in the United system of internal financial control and internal audit States. We are learning with each emergency—every that begins to measure up to professional auditing one is diVerent, you learn lessons from each one— standards. Do you agree that is the case? about how we should try to ensure we have got the Sir Michael Jay: I do not agree that is the case, Sir right mix of skills in order to help people who get into John. I do agree with everything that you have said Y diYculties. and that the National Audit O ce have said about the fraud at Tel Aviv. That was a very Q51 Mr Keetch: It will be very often the case, will it straightforwardandquiteunacceptablefailureovera not, Sir Michael, that it will not just be the Foreign number of years of some rather simple procedures OYce that will be the British department responding and there is no excuse for that. That is why we have to an event such as that, you might require assistance tried to ensure through a number of measures that from the Ministry of Defence, DFID, the Home that does not and cannot occur again. I would not OYce conceivably in other circumstances. Are you draw the conclusion that that means we do not have confident thatnot onlycan youco-ordinate yourown adequateinternalsystemsinplace.Ithinkitisawake- people to respond well but also that you can co- up call for us about the need to be extremely vigilant ordinate and take the lead to respond for other about the risk of fraud anywhere in the world, particularly bearing in mind that we are operating in 6 Correction by the FCO after the Evidence Session: We are a large number of countries where what we would call workingtosetuparegionalRapidDeploymentTeaminNew fraud is the normal way of doing business. It does Delhi by the end of 2006. require us to have systems in place in each post, 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 28 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren constant visits, some of them announced, some of Q55 Chairman: Sir Michael, I am surprised by your them unannounced, by our internal audit people and answer because to my own knowledge the Foreign our Financial Compliance Unit. It also requires us to and Commonwealth OYce has insisted that non- ensure, and thisis why Mr Todd wrote hisletter and is departmental public bodies, like the Westminster something I attach a huge amount of importance to, Foundation for Democracy and other bodies which that every Head of Mission as sub-accounting oYcer get money from the FCO, are subjected to more realisesthatitishisorherresponsibilitytoensurethat rigorous processes of audit with outside people as these procedures are in place. The buck stops at the well as internal audit. If it is good enough for the sub-accounting oYcer. That is something which I NDPBs which are funded through the FCO, why is it have been reinforcing every time I see a Head of not good enough for the FCO itself? Mission before he or she goes overseas. I refer Sir Michael Jay: That is why I would like to discuss it specially to Tel Aviv and say, “This is what can with the National Audit OYce because the decisions happen. The simplest controls failing can lead to a that we have made in relation to some of our NDPBs very serious fraud and loss of public funds and that is were taken in consultation with the NAO and we not acceptable.” should do that as far as our own internal arrangements are concerned. Q53 Sir John Stanley: Sir Michael, I did not ask you whether in your Department’s and your own Q56 Sir John Stanley: Sir Michael, could I just ask subjective judgment you felt there was an adequate you to consider a further dimension to this. The point financial control system in place. I chose my words I am putting to you is not one which is something that very carefully. I asked you whether you were satisfied I think should most clearly apply to your that you had an internal financial control system and Department, these sorts of arrangements to have an internal audit system that came up to professional professionally acceptable standards for internal standards. Can I ask you further, in the time you have financial control apply, of course, to every single beenthe PermanentUnder-Secretaryhaveyou atany company, whether quoted or not, in this country but, point asked a professional firm of auditors to come just as important, for example, there are the most into your Department to examine your system of rigorous requirements of this sort that apply to every internal audit and internal financial control and to single pension fund and, indeed, every single produce a report to you on that? registered charity in this country, including very small charities. If these sorts of requirements of Sir Michael Jay: I do not think we have done that. I professional auditing, professional financial control, will ask Mr Todd to comment in a moment. What we apply to charities, small charities, up and down the have done is to strengthen very considerably the country then, for goodness’ sake, surely they should AuditandRiskCommittee.WhenItookoverthisjob apply to the Foreign OYce. we had something we called an Audit Committee and Sir Michael Jay: We do have professional— I expanded that pretty early on to be an Audit and Risk Committee. It is chaired by one of our non- executive directors at the moment, Alistair Johnston, Q57 Sir John Stanley: You have not had anybody in Vice-Chairman of KPMG, who is bringing a degree to tell you whether your systems come up to a of rigour to that Audit and Risk Committee which we professional standard. Y havenothadbefore.Weworkextremelycloselyonall Sir Michael Jay: We have the National Audit O ce financial management and fraud issues with the whose job it is to give us advice on that. We are National Audit OYce and if at any time we see constantly in touch with them. We have our own weaknesses in our systems we work to strengthen Audit and Risk Committee. May I ask Ric Todd if them. he wants to add on this point? Mr Todd: We do have a professional internal audit department headed by a professional auditor who Q54 SirJohn Stanley: Iwould like toput it toyou that was hired from the private sector. We have a from the evidence that is in front of us it certainly Financial Compliance Unit which contains people would appear to me to be glaringly necessary for your who are professionally trained in financial Department to commission a leading firm of auditors compliance. We have an Audit and Risk Committee to examine your system of internal financial control which is chaired by a professional accountant, Vice- and internal audit and to present you with their Chairman of KPMG. We have the NAO as our conclusions asto itsadequacy. Thatseems tome tobe external auditor. We are very happy to discuss with an absolute minimum requirement that should be the NAO whether they share your opinion that we upon your Department. need to be reviewed. Sir Michael Jay: I will certainly consider that, Sir John. I would like also to discuss it with the National Q58 Sir John Stanley: All I would say to you is if it Audit OYce to see whether they would regard that as was a satisfactory system of internal audit this sort something which we need to do given the state of our of fraud committed in this sort of way, payment out internal audit arrangements at the moment. of cash on the basis of handwritten receipts, could Sir John Stanley: I look forward to you or your not survive any possible scrutiny by a professionally successor coming back to the Committee on the qualified and professionally performing audit conclusions you have on that.7 system. It could not survive for at the most a calendar year, let alone survive for some 10 years as 7 See Ev 38 happened here. 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 29

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren

Sir Michael Jay: I am not in any way defending what importance of eVective financial controls and we happened in Tel Aviv. have also boosted the staV of the Financial Compliance Unit in the internal audit department Q59 Mr Purchase: It has been a very gentlemanly with additional staV so that they can be more active exchange, if I might say so. I have in front of me four in going out and carrying out spot-checks in places instances and we are talking in excess of one and a around the world to prevent this happening. We half million pounds’ worth of fraud. I speak as a have taken a large number of measures after humble representative of the taxpayers of this discovering this fraud. What I cannot tell you is that country and of my constituency. My first duty is to there will never be a fraud again because we are ensure the safety of the nation. My second one, operating in a world which is prone to this. surely, is to ensure the safety of the way in which its taxes are spent. I find that absolutely, completely Q63 Mr Purchase: I understand that. unacceptable. I am amazed that there is no real sense Sir Michael Jay: After Tel Aviv what we have done of urgency and you are not able to say to us today, is tightened the systems, learnt the lessons from that, or any of your staV, “We have seen to it”. and what Mr Todd and I have said we will now do Discussions with the NAO, I find that incredible, I is consider whether we should have an external really do. You should have seen to it by now. I think auditor in order to check whether in the light of this this Committee has to say today, Chairman, that this our present systems are adequate, and that is an is an unacceptable position. I understand, I worked undertaking that I have given. in the private sector long enough to know there is nothing the working man cannot beat—nothing— Q64 Chairman: Can I ask you one final question on but you limit it and all around the world there will this section. Has any of the £790,000 from Tel Aviv, be opportunities for people to take bits and pieces the £594,000 from the loss of satellite phones in Iraq, out of it here and there, and that is why it needs to the £148,000 taken by a fraud at a British Council in be tighter. In the case of huge amounts of money like Bahrain in 2004, or the money taken by local this you should have attended to it immediately, employees in Ulaanbaatar, Mongolia, £20,000, been never mind discussing it with anybody else. You are recovered? Is there any prospect of any of it being the senior manager, it should have been done. I find recovered? no excuse is acceptable that that has not been Sir Michael Jay: Our aim is always to recover as attended to. If you had told me today, “What a mess much we possibly can of any money which we lose. we had but we have done it”, I would have been First of all, of course, we pursue criminal completely happy, but you have not told us, you prosecutions against those perpetrating fraud, as we have told us who you are talking to, who has done have done in a number of places in the world. We this, who has done that, and in the end, as far as we believe we may get some restitution from Tel Aviv, know, there is another one brewing somewhere else. that will depend on the outcome of the court case, I Sir Michael Jay: I was responding to a specific think I am right in saying, which is still to come. We question from Sir John Stanley about whether we do not think we will get any money back from the should have external auditors. satellite phone fraud in Iraq. We think that we will end up, in fact, in the black after Ulaanbaatar Q60 Mr Purchase: I said he was being too because as a result of the reconstitution of the local gentlemanly, I am not being gentlemanly. staV complement we will be saving money in the Sir Michael Jay: What you have not given me a longer term. That fraud will not, I think, lead to a chance to do is to answer the question which you loss of public funds. We make the restitution and have now posed, which is what we have done since recovery of funds a very high priority after every Tel Aviv, and we have done a lot since Tel Aviv to fraud. absolutely minimise the risk of there being anything— Q65 Chairman: What about the British Council one in Bahrain? Q61 Mr Purchase: Have you fixed it around the Sir Michael Jay: Could I ask Mr Todd to talk world in your oYces? about Bahrain. Sir Michael Jay: What we are doing is looking at the specific problems which arose. Q66 Chairman: It was a lot of money. Mr Todd: The individual who perpetrated the fraud Q62 Mr Purchase: The answer is no, is it not? has been arrested and is facing prosecution in Sir Michael Jay: No, it is not no. What we are doing Bahrain. We have not yet obtained any restitution is working out what went wrong there and then from them. What is interesting about the Bahrain ensuring, for example by moving away from cash fraud is that it is not actually clear to us how the payments wherever we can throughout the world, person who carried out the fraud personally that that does not occur again, that we encourage financially benefited from it. suppliers to accept monthly payments by cheque or by bank transfers. We are improving our training for Q67 Andrew Mackinlay: If you take the telephone all our management staV. We have learnt the lessons issue, nobody in the Foreign OYce can be blamed from this and we have sent those lessons learnt to for the draining of the money by the telephones but every one of our overseas posts. We have written to what is an issue is the competence of your diplomatic all sub-accounting oYcers telling them the colleagues who never reported it. This is against the 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 30 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren backdrop of basic common sense. It is your duty to classified. All of those things we have done. When we say, “Here, the phones have gone missing”. There is negotiated, and ministers agreed, the PSAs under another matter which I have been trailing with you the SR04 it was decided that it did not make sense about competence of senior diplomats and how they to have a PSAfor every area of work, so that was a conduct things. The people who lost these phones, decision which ministers took in SR04. have they at least been admonished, given a slap on the wrist or something like that because they failed Q70 Ms Stuart: I think there is a problem with in their basic duty to flag it up? They were negligent, V matching these performance indicators. they were indi erent, they could not care less Mr Todd: We also have the situation in which 2005- presumably. Do you understand the point I am 06, the report which we have here, was a so-called making? crossover year in that we were reporting both against Sir Michael Jay: Absolutely. the 13 PSAs9 from the 2002 SR and the nine from the 2004 SR at a time when ministers had also decided Q68 Andrew Mackinlay: It is a reasonable point to that they wanted to give us strategic priorities. In a say, “You are big grown-up boys and girls, why did sense, we have brigaded the PSAtargets in SR04— you not report it?” let me get my letters right—with our strategic Sir Michael Jay: Just going back to Bahrain for a priorities, but our suggestion to the Treasury that we moment, I think it is an important point that it was very closely align the PSAs with the strategic a fraud by a member of the British Council and the priorities was refused by them on the grounds that British Council have accepted that they should be there would then be a sort of sudden break in terms repaying us a substantial part of that so there will of PSAs. We think that in SR07, which is the next not be a loss to the FCO from that. On the Iraq one—like buses they keep coming round—will mobile phones, there was a serious control failure in actually give us an opportunity to look again at our Baghdad. That, in a sense, is not altogether PSAs and to make them much more closely related surprising since the conditions in Baghdad at the to the strategic priorities. I think that is a genuine time were pretty appalling. What is more serious as opportunity for us. It is not a crossover year, far as I am concerned is that there were quite clearly unlike 2005–06. serious control failures in London and, indeed, this has been fully investigated by the Financial Q71 Ms Stuart: That assumes that the PSAs Compliance Unit and misconduct proceedings are V themselves are a meaningful tool and I wonder now being considered against certain FCO sta . whether you want to say something more on your Mr Stagg: They are underway, in fact. thinking. Just to illustrate that point, we had an exchange of correspondence in relation to some of Q69 Ms Stuart: Can I move to Public Service the gradings, things were amber one year and then Agreement targets and take you back to your became red and nothing had really changed, and you Departmental Report on page 13. I was slightly very graciously said you were grateful to the puzzled why when you go through the strategic Committee for the opportunity to correct errors. I priority that there are three headings against which am not sure that these were errors on your part. I am there do not seem to be any SR04 PSAtargets. One just wondering whether these tools serve any is Strategic Priority 2, protecting the UK from illegal purpose from your point of view. If I take things like immigration, SP7, security of UK and global energy SP7, security of UK and global energy supplies, that supplies, and SP8, security and good governance of has become immensely important. Are these the UK’s Overseas Territories. Would you like to Treasury tools serving you well? There must be some explain to me why that is the case? thinking on your part. Sir Michael Jay: Yes. I will ask Ric Todd to say Mr Todd: There has been a discussion about PSAs something. You have hit upon an issue which has and their value; how you write them and how you been quite a diYcult one for us, certainly for the time measure against them since they began. I think the I have been in this job, which is the need to get the way in which measurement happens has improved. PSAtargets and the strategic priorities in sync with As you know from the length of the items in the last each other, and that has not been straightforward. report, we have tried very hard to do the best we can At the moment we have PSA targets which were a with these because foreign policy questions are not result of SR 2004 and agreed there, which we are always readily measurable. We are having a charged with fulfilling, but not all of the PSAtargets discussion with the Treasury now, all departments agreed as part of SR 2004 do reflect the new strategic are in the context of the CSR, as to how PSAs can priorities. Do you want to say more, Ric? be made more eVective and how they can be a useful Mr Todd: It would be fair to say that the PSAs as a measure for Parliament and citizens as to what way of measuring what the Foreign OYce does are Departments are doing. tools which are changing. We started oV with the Sir Michael Jay: I think the truth is that some are first set, and we had 138 and something like 140 much more useful than others, to be honest. The indicators, and in SR04 we moved, including partly ones which are readily measurable for our service on the advice of this Committee, to have fewer PSA operations, consular work, visa work, serve a targets, fewer indicators and to have fewer of them genuinely useful purpose and that acts as a discipline

8 Correction by the FCO after the evidence session: The figure 9 Correction by the FCO after the evidence session. The figure should read 12. should read 12. 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 31

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren and focuses resources and eVort and there is a target the long-term, are you giving consideration as to by which you can judge your performance. It is whether it might be necessary in some cases to oVer much harder when you get on to the foreign policy certain locally employed personnel the opportunity issues where there is a risk of artificial targets and of being able to move, if it became necessary, to a artificial measurements. third country? Sir Michael Jay: Thank you very much, first of all, Q72 Ms Stuart: May I suggest, Sir Michael, that as Sir John, for your tribute to the courage and you write this famous letter which you hand over to commitment of our staV, both UK-based and local your successor that— staV in Iraq and, indeed, in other dangerous parts of Sir Michael Jay: It is email now! the world, including Afghanistan. I very much Ms Stuart: that may be one of the areas where welcome that and I know they will welcome that too. probably the constructive relationship between this I would never say that I go to sleep at night satisfied Committee and your successor may want to look at. that we have taken every precaution that we could We do appreciate the Treasury is giving you tools because I know if I did feel that I would wake up in which are not terribly meaningful and that may be a the morning and there would have been an incident. good basis for working together. For our home-based staV we work on the basis of Chairman: Can I go a bit further. When you have left certain principles which I am very clear are essential. your job, rather than in the transition, perhaps you Those are that everybody who goes there should be could write something to the Treasury and just tell a volunteer, everybody should be fully briefed and them that they need to look at foreign policy in a fully aware of the risks, that we should be doing all more sophisticated way than they have done in the we reasonably can to reduce those risks to an past. absolute minimum, and we must be clear that our staV can operate eVectively because we cannot allow Q73 Mr Purchase: Did you want that advice, by our staV to be in Baghdad or Basra or Kirkuk if they the way? cannot operate eVectively. We abide by those Sir Michael Jay: We do have some quite robust and principles and I am in regular touch with our sometimes productive discussions with the Treasury Ambassador in Baghdad and our Consul General in on that kind of issue. In particular, I think it is an Basra to ensure that those principles are being stuck important point in this context and it is going to be to, and I am confident that they are. As far as our an important issue in the Comprehensive Spending local staV are concerned, I have enormous Review on the conduct of foreign policy overall so admiration for their courage and determination. that when, for example, you are thinking about our They take very great risks, quite often just in coming operations in Afghanistan, which are hugely to work. They are aware, of course, of those risks, we important, you do need to look at the diplomatic make absolutely certain that they are. We also eVort and the defence eVort and the development ensure that we enable them to vary their attendance, eVort in some way as more of a coherent whole. That encourage them to come to work by diVerent routes is one of the things that I do feel as I look back on in order to reduce the risk of their being seen, spotted the last four years or so that we need to continue to and identified as someone working for us and, work with other departments on in order to get a therefore, perhaps be put at extra risk. That is more coherent approach and, to be honest, more something which is very much at the top of our eVective use of public funds overall. minds at the moment. We have considered the Chairman: I think we would agree with you on that. question of relocation, perhaps to elsewhere in the country or to another country if that were thought Q74 Sir John Stanley: Sir Michael, can I turn to to be the right thing to do. And I am sure if we judged another strategic priority, and that is the issue of that was the right thing to do, that is what we security of your own personnel, both UK personnel would do. and locally employed personnel around the world, but I want to focus particularly on Iraq. I would like to start by paying tribute, and I am sure the rest of the Committee would share in this, to the tremendous personal strength and personal courage of all our personnel, both UK personnel and locally Q75 Chairman: Thank you for that. Can I just tie up employed personnel, serving in diYcult and this area to do with the Public Service Agreements dangerous places like Iraq and, indeed, in one or two and so on to ask you about one specific area, we will other places around the world. Could you tell us, probably write about some other issues. In the table and I am asking this deliberately only in very general which has been produced you have put in reference terms, whether you are satisfied that your to weapons of mass destruction programmes. I have Department is taking all possible steps to provide for to say I was a bit surprised that seems to be in the the security of our personnel in Iraq, and in amber category rather than the red category given particular our locally engaged personnel who recent developments with regard to Iran, with regard arguably are at greater risk even than the UK to the failure of the Non-Proliferation Treaty personnel? Are you satisfied that you are providing Review Conference last year to make any significant for their security as best you possibly can, not merely progress, what is happening with North Korea and in the short-term but also in the longer term as well? so on. If you were writing it today would you still In your consideration of their security interests in have it in amber? 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren

Mr Todd: Two comments. The first is we would be network of posts in Europe is, I hope, going to result very happy to write to you to follow up this in the release of eYciencies in particular from particular point.10 The second one is to say the rating support service. We also hope that the review of our which we give is the product of a set of assessments posts in Europe could lead to lessons which we can against a number of indicators and statistical learn and transfer to other parts of our overseas measurements and judgments. We put them network. The assessed contributions to together, build it up from the bottom, review it from international organisations is rather a diVerent the top down and come up with a rating, the result category. The point there is we need to look with the was the one which we made at the time which we felt Treasury at the point that there are quite large was justified. These things are never an exact science, chunks of our budget over which we have no control, as we were discussing earlier with Ms Stuart. I would or very limited control, because our contributions to say we had a set of good reasons why we chose the the UN or other international organisations are rating which we gave you, but we would be very based on negotiation amongst a number of other happy to write to you about it again. countries. Those are the three. I should also add that the British Council and BBC World Service will also Q76 Chairman: I am grateful. Perhaps you could be conducting their own zero-based review on also look at the Islamic world, PSA7, in they same aspects of their operations as part of the context in terms of progress of reform. Because we Comprehensive Spending Review, so they are are short of time, we have to move on to the financial included in this exercise. questions. Can you just tell us whether you will be sending us your draft PSAtarget this year so that we Q80 Chairman: Thank you. Can you tell us about can give you our own assessments of whether you your capital programme? I understand there is should be putting things in amber, green or red significant underspend in some areas. What is your before you produce it? latest estimate of your 2005–06 underspend? Sir Michael Jay: What are our obligations? Mr Todd: Our latest estimate of the outturn we have Mr Todd: I do not know the answer to the question not finalised yet. We think that our capital what our obligations are, so we will have to write to expenditure will be something like £39 million you on that one as well.11 underspent. This is something like a 35% underspend. The reasons we have identified so far Q77 Chairman: That is fine. for that underspend, and we will need to do some Sir Michael Jay: We do genuinely value the more work on this, are slippage on our ICT Committee’s comments on these sorts of issues. As programmes, in particular our £350 million future you know, I wrote to you in the hope that we might Firecrest programme, and some delays on estate have your comments on the strategic priorities projects which are in any case inclined to this before we produced our revised version. Views from because they tend to be big lumps of expenditure. the Committee on the strategic priorities are very For example, you will set aside money to buy a plot welcome. The diYculty for us on PSAs is the final of land in Indonesia, and you obviously cannot result on PSAs is often an inter-ministerial spend it on anything else because you do not want to negotiation late at night as part of a broader debate, lose the plot, but if for legal reasons it is delayed you which is it is quite diYcult to— have an underspend. Estates is quite a tricky one to manage. The principal cause of capital underspend Q78 Chairman: It goes back to our problems about is on IT. the Treasury, I guess. Sir Michael Jay: Yes. Q81 Chairman: Your Board has recognised, I understand, that underspends are as much an Q79 Chairman: Can we move on to financial evidence of poor programme management as management and eYciency questions. I understand overspends. with regard to the Comprehensive Spending Review Mr Todd: Yes, that is correct. you are involved in some quite interesting discussions at the moment. Can you tell us which Q82 Chairman: What are you going to do about this areas are going to have a zero-based review? poor programme management? Sir Michael Jay: The three areas on which we are at Sir Michael Jay: What I would hope we were going the moment conducting zero-based reviews are our to be able to do was to build in a kind of pessimism IT spend across the board, our network of posts in bias, if you like, rather than the optimism bias that Europe and our assessed contributions to you have when you expect costs to go up, to be a international organisations. These are diVerent little bit less cautious in allocation of funds categories of issues. On our IT spend we want to recognising that there are likely to be underspends have a really hard look to see whether there are on certain kinds of projects and that you therefore eYciencies which we can make, whether there are need, in a sense, to over-commit in order to ensure shared services we can perhaps introduce, whether you are going to reach your target otherwise we are realising all the benefits we need from them, everything will always be shifting to the right, there and that is going to be very useful. Our review of our will always be underspend, and that is not a good position to be in. This is obviously a risky business 10 See Ev 39 and we need to take the advice in particular from our 11 Ev 39 non-executive directors about how we try to get this 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 33

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren right. I think the Board concluded that it was not Q87 Mr Purchase: Can I just make a general point satisfactory that we were underspending our capital in all of that. Your view that because it is self- budget, though I think I am right in saying there was financing the numbers do not have to be included, I end-year flexibility so the money is not lost forever. do not quite understand why not. I would have Mr Todd: We can carry over the spend. Also, we thought if you have—you used the term “business”, discussed earlier on our Prism management I would not—a profitable income-generating information system, part of the capital underspend business it is just as important to minimise the costs problem is what the experts called “BUMF”, which of gathering that income and, indeed, it enhances the is budgeting, monitoring and forecasting. And if we whole process. Looking for coherence across the get all those things right then you identify the piece, money generated there can be used in other underspends quickly enough to move them to other areas. There is no reason to exclude a money projects, so the FCO needs more BUMF. generating activity from— Sir Michael Jay: We are looking for eYciencies in all our operations. The UK visa operation has become Q83 Andrew Mackinlay: Prism is not working. immensely more productive over the last few years Mr Todd: Prism is working, Mr Mackinlay. because of new processes such as outsourcing. The increase in the number of visas processed is much V Q84 Chairman: Can we look at a couple of other greater than the increase in the number of sta . The areas and then move oV finance. You have got a business is becoming more productive as we go target to reduce your UK-based staV but, as I along. understand it, it does not apply to entry clearance or consular staV. You also do not have a target to Q88 Mr Purchase: You mentioned outsourcing. reduce locally-engaged staV at our posts abroad, You mentioned if you become more productive you which seems odd because they represent a outsource. Does this mean that outside staV are considerable amount of your expenditure. Why do doing the job more cheaply, more eVectively? Are you not have targets in all those areas? What is the you not counting them in the productivity score? justification for this? Mr Stagg: Outsourcing is when we get a commercial Sir Michael Jay: On the first point, you are right, partner, such as FedEx or DHL, to do the front end there is a distinction drawn between the two of the business. businesses we have, consular business and UK visas, which are self-funded. In other words, the staV who Q89 Mr Purchase: I understand that. carry out that business are funded from the fees from Mr Stagg: Sorry. They do not count against our carrying out that business. It would be wrong to headcount, just as if DWP outsourced work in the include those in the reduction figure. The figure of UK the staV working for Capita do not count 321, I think it is, applies to the rest of our UK-based against their headcount, so there is a headcount staV in London and around the world. As far as local issue. The separate one is a question of trying to staV is concerned, we do not have a staV reduction make the business more eYcient. Over the previous ceiling, we have a figure of funds available for local four years roughly demand went up 50% and UK- staV from which each of our Heads of Mission based staYng went up 20% in the visa operation, so abroad has to work out within the allocation he or we were getting more visas per fewer staV. she gets. Q90 Mr Purchase: For less money productivity was Q85 Chairman: So are you paying them less because greater in the private sector than you were managing you put on 400 last year on your locally-engaged to manage within the Department? staV and it went up to 9,600, it went up by 400? Are Mr Stagg: We are using the private sector where they you saying you have got 9,600 people for the same have more skills and specialist knowledge than we amount or less than you would have got for 9,200 the do. They are good at processing, they have special year before? processors who can do it better than we can. Mr Todd: I can explain, Chairman. In the case of UK-based staV we have a ceiling on both numbers Q91 Chairman: Is this not also related to the fact that and pay bill. For LE staV the ceiling is only on pay large numbers of my constituents now have their bill. In both cases that does not apply to staV who are cases dealt with on a paper-based system rather than UK visas and Consular, therefore the increase in the your previous system, so huge numbers of Indian number of LE staV will be the consequence of rising and Pakistani citizens applying for visas to this demand for visa and consular services. The way in country actually do it through a postal system and which Heads of Mission are able to give their LE they might be processed somewhere in the Gulf or staV a pay rise is by having fewer of them. somewhere else rather than in Karachi or Islamabad? Mr Stagg: That is exactly right. We are trying to Q86 Chairman: So if you are issuing more visas in a provide a better service and FedEx or DHL have particular post then there is more income and that is oYces all around India and we have four consulates, then allocated back to that post, is it? so we are giving people a much more convenient Mr Todd: Exactly, to ensure there is suYcient money service. We are trying to focus the work of the people in the visa and consular business to deliver services in the visa sections on the high-risk applicants, those in line with ministers’ objectives and the PSAtargets. are the ones where we are worried, rather than the 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 34 Foreign Affairs Committee: Evidence

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren regular visitors who are businessmen or students Q94 Chairman: Basically problems with the IT who come back and forth regularly that we want to systems mean the savings you thought you were give a simple, quick, eVective service to. I think we going to make in the past might now theoretically be are focusing eVort where we should be worried and made in the future, is that what you are saying? providing a simple, better service to the rest. Can I Mr Todd: It is not that the savings are going to go just make one point, Chairman, just to be clear. We away but if you remember, as Sir Michael explained cannot recycle money from the visa operation into earlier, our Prism programme was delayed by a year other bits of foreign policy, there is a very strict but is going to last for a year longer, so in this case Treasury rule that this money goes back to them if the savings generally are moving to the right. Also, we make too much. there are an awful lot of savings, both cashable and Chairman: There is also an issue of people in this non-cashable, which Prism will deliver for us. country feeling that their relatives might be paying too much for the visa to come to this country if you Q95 Chairman: The Risks Register, what are your are actually making lots of money out of it. There are greatest risks that you face at the moment? complaints that it is already too expensive. Sir Michael Jay: I have not got our latest Risks Mr Purchase: That is a disincentive to the V Y V Register with me. I think there are di erent kinds of Department acting e ciently and e ectively and it is risks. There are clearly the political risks that we face something we ought to take up with the Treasury. and there are the operational risks. Some of the most important operational risks—many of them have been discussed around this table today—are clearly V Q92 Chairman: I think there are di erent views on questions of financial management and fraud, which this. Can I ask you about your Board’s minutes in is at the top of our concerns because of the need to February which referred to looking to make savings safeguard public funds. Another that is quite high up Y “to identify areas where e ciencies might be made, is avian flu and are we properly prepared for an starting with gratis visas, Residence costs, facilities avian flu outbreak transferring into a flu pandemic. management and some elements of language I would always put at the top of the Risks Register training”. How much do you hope to save under the question of security of our posts as well. Those each of those headings in the remainder of this are some that I would say are at the top of our Risks Spending Review period? Register but I have not seen the latest version. Mr Todd: We have a number of targets for eYciency set for us by the Treasury for the SR04 period. We believe we are on track to achieve those. However, it Q96 Chairman: If you could write to us and give us is prudent management to have a number of the full list, we would be grateful. contingency programmes to cover any shortfalls in Sir Michael Jay: We are happy to do that.13 the ones we thought of in the first place. The ones Chairman: Thank you. Can I now switch to public you list were agreed by the Board as potential areas diplomacy. to work up eYciency programmes. We think we can make savings in all of them, but we have not yet 12 Q97 Mr Maples: I think we all feel it is generally a become entirely clear on what the numbers are. good idea and a good policy but, correct me if I am wrong, is it right that we spend the vast majority of money on the BBC World Service and the British Q93 Chairman: Perhaps you can write to us with Council? £239 million on the World Service and some more information when it is available, that £186 million on the British Council, being less than would be helpful. Finally, from what you said, Sir half their income, I think they generate the rest from Y Michael, about the zero spending and the e ciencies their language teaching activities and things like you are going to be making, you gave a great that. Very often when we go abroad we go and take emphasis to information technology. I understand a look at the British Council oYce and it is a huge that you are hoping to get a very large proportion of generalisation but it would be fair to say that we Y the saving and e ciencies for this financial year and have been very impressed with some, which tend to the next financial year from savings from be the smaller ones, and wonder what the hell the information and communications technology. How people are doing in some of the larger ones. We tried realistic is that given that you have made very little to get our heads round this, and I certainly speak for savings in the last financial year? myself when I say I have failed, I do not know how Mr Todd: The savings listed for IT are mainly non- to evaluate whether the money that we spend on the cashable savings, that is to say you get more output British Council is well spent or not. In fact, I think from the existing input. The non-cashable savings in our last report we suggested to the Committee of we were expecting from Prism, the information Public Accounts that they might like to get to the system, and future Firecrest, the mainframe, have NAO to have a look. When we consider that we are moved to the right a little bit and that is one of the spending £24 million on the Arabic TV service, is it reasons why we have been looking for alternative 20 or 24, something in that range— ways of delivering the eYciencies, but we will deliver Mr Hamilton: Alot. the eYciencies. 13 Acopy of the Risks Register was sent to the Committee. See 12 Additional information provided by witness: see Ev 40 Ev 40 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Foreign Affairs Committee: Evidence Ev 35

28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren

Mr Maples: Well, is it a lot? We had to cut back the started two or three years ago a tracking survey to Thai language service and various other things to do try to see how opinion of the UK was changing over it and yet we have got this huge chunk of money time in a range of important foreign countries. That going to the British Council when we can very clearly did not carry on seamlessly because there was see the need for an Arabic TV service that might concern amongst ministers about the value for counterbalance Al-Jazeera and the other one. How money of this exercise but my understanding is that do you evaluate how we are spending this money? Lord Carter would now like to see more eVective How do you within the Foreign OYce evaluate value tracking and metrics of the work that is done by both for money in this public diplomacy area, the BBC the Council and the World Service and, indeed, the World Service, the Arabic TV service, the British FCO. So I think that will come back into focus Council, the £2.3 million Public Diplomacy initially through using commercially available Challenge Fund? How do you evaluate that and how tracking information but probably, I suspect, are you confident that the £186 million we are moving towards using more dedicated specific spending on the British Council is getting really tracking information in which we will set the good value for money because I think there are big questions and establish the parameters of the question marks about this in the minds of quite a lot inquiry. of us? Sir Michael Jay: We have fairly well developed systems and relationships with both the BBC World Q99 Mr Maples: Perhaps we could return to this at Service and the British Council. With the BBC some point or maybe you could let us have something. Presumably these exercises measure the World Service, for example, there are regular V contacts at director level and there is also an annual bang for our buck that we are getting from di erent meeting, which took place last week, between the ways of spending money on public diplomacy. One BBC and our Public Diplomacy Minister, Lord that I know is not within your budget, at least I do Triesman, at which we were examining exactly these not think it is, is the education of foreign students at questions, what is the right balance between the British universities. I think there is a very well Arabic service, a possible Farsi service, the BBC established body of evidence that that sends those World Service radio. We do it mainly through the people away with an extremely good impression of, reports they have to make in accounting for the and relationship to, the United Kingdom for the rest money they get and of course it is looked at in each of their lives, so if they go back and work at a high Public Spending Round. level in their government or in one of their country’s businesses there will be a predilection for doing things with the UK and, therefore, that money Q98 Mr Maples: When you are talking about the would seem to be well spent. Again, how exactly one BBC World Service the Foreign oYce directly would evaluate that is quite diYcult. I would like to commissions what it wants from the BBC World feel that the money we are spending on the British Service, as I understand it. Can we talk about the Council, about which I have some doubts I cannot British Council more because it seems to me there we quantify, that we really are evaluating that against are giving a block grant. I wonder how you measure things like educating foreign students here or the eVectiveness of the spending of that money. You spending more on the Arabic TV service. could open an awful lot of embassies, hire an awful Mr Stagg: I think it would be very good to do that. lot more staV, put a lot more money in the Public There are some very important and interesting Diplomacy Challenge Fund without making a big questions about a large amount of FCO hole in their budget. I just wonder how we have come expenditure, both internal to the FCO and money to the conclusion that is £189 million well spent and spent by our NDPB partners. I think it would be how we can be sure of that. very good if we could write to you about how this Mr Stagg: They are very fair questions. The way we money is spent and how we evaluate its have done it historically has been through two eVectiveness.14 exercises. One has been through the British Council Sir Michael Jay: I think this would be extremely itself doing survey work on those who go to their timely as well, if I may say so, for the Committee to libraries, their functions, who attend the events they be interested in this issue because the Public organise overseas or come on visits to the UK and Diplomacy Board, which was set up as a result of trying to assess their perceptions as a group against Lord Carter’s review, does have these issues very a sort of cohort of typical people from that country. much on its own agenda. I think there have been a How eVective that is as a tool is a very fair question couple of meetings of the Public Diplomacy Board to ask in that if you are brought to the UK on a visit and this is going to be an issue for it to consider in you probably should have a fairly positive view of its meetings ahead. It would be very good to have an the place. It may not necessarily be so much to do input from the Committee on these points. The only with the particular way in which your visit was other point I ought to make is that the budgets of the organised or by whom. But there has been an eVort British Council and the BBC World Service have made to try to develop an opinion polling survey- been, in the last I do not know how many Spending based analysis of how far British Council Reviews, ring-fenced, so the prospect of money expenditure leaves people with a warmer, more leaking from one to the other, as it were is not positive view of the United Kingdom than typical something which is open to us. fellow citizens. Separately, and in terms of the overall impact of all our public diplomacy work, we 14 See Ev 40–41 3471162001 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren

Mr Maples: This Committee might be prepared to and other stakeholders, as would be the case for support you on that. every other NDPB of, for example, the DCMS. That is the direction in which I think we are going. Q100 Ms Stuart: Can I just return to the British Council. I think I need to declare an interest here Q102 Mr Purchase: I would like to bring together a that I am a board member of both the Westminster couple of strands that we have been considering for Foundation for Democracy and the British some time now. One of the Public Service Agreement Association for Central and Eastern Europe. On the targets was to promote a moderate version of Islam British Council, when Lord Carter came here I asked in Islamic countries. I want to ask you about the him what was the point of the British Council and he relationship with the BBC World Service. How do admitted this was a question that exercised him you work on an issue like that with the World greatly and I do not think he came to a very definitive Service in what you are trying to achieve? The World answer. When we go abroad one of the things that Service are contemplating bringing in an Arabic always strikes me is why is the British taxpayer service, just a few hours a week, but how do you paying for English lessons? Why is the British bring that together into a coherent train of thought Council paying for English lessons? and then a promotion? Mr Stagg: No, it is not. Mr Stagg: I used to be responsible for it in my past. The way it worked when I was responsible was that I had regular meetings with Mark Byford, who was Q101 Ms Stuart: Quite often when we go and meet then the head of the BBC World Service and, to British Council staV in terms of their good avoid the impression which may have come from perception we are being told, “It is because we are some of the earlier exchanges, we did not control teaching English”. I think there is a confusion what they do and how they do it in any detail, all we between its function and its purpose, which we are are involved with is the balance of coverage they are still struggling with, but there is also institutional delivering between the various regions of the world confusion. Part of Lord Carter’s recommendations, and in particular the vernacular services and how and also this Committee’s recommendations, was they are working. In terms of the focus of their work, that we should bring to an end the dual role of the if we felt, as we have felt over the last couple of years, Permanent Secretary being on the Boards. I am that there was scope to use television more in the trying to get a sense of your thinking. Have you Arab world in order to try and correct some reached a point where you think we should separate misapprehensions that are very deeply embedded as that position? Also, if I were to put the question to a result of media coverage there, the BBC were a very you “What is the point of the British Council?”, natural vehicle for doing this given they have got a what would you say to me? well-regarded Arabic service already and journalists Sir Michael Jay: I would say that the British working in the language. So we began a process of Council, I believe, does an extraordinarily good job talking with them, which involved Mark Byford in most of the world in presenting aspects of Britain coming to talk to our Board, which he did once a and British society in ways which embassies quite year and now I think his successor does as well, to often cannot. It does that in diVerent parts of the talk about their plans, and in that discussion we world in diVerent ways. I have seen recently what talked about our political priorities and how their they have been doing, for example, in Pristina, what work interlaces with our strategic priorities and they have been doing in Tirana, and that is a very, political goals. very good and useful projection of Britain and Britain’s educational system, culture and science in ways which it is harder for us to do. I think that is Q103 Mr Purchase: Was my colleague, John a good function, that is a legitimate function for the Maples, wrong when he said that you buy the service British taxpayer to fund. On the question of the from the BBC World Service? Is there not a composition of the British Council Board of contractor-client relationship here? Do you not tell Trustees, the view of our ministers at the moment, them what you want and say, “This is the result we the evolving view, along with this Committee, is that want”? the Permanent Under-Secretary should not be a Mr Stagg: No, that is not how the relationship member of the Board of Trustees, and that is a view works. which I share myself. I have very much enjoyed the last four and a half years being a member of the Q104 Mr Purchase: You amaze me. Board. My own view, which I expressed at the last Mr Stagg: Whether that would be desirable or not is meeting of the Board, is that it does cause a degree another question. Clearly, we want to ensure first of of confusion in the Board to have a representative of all that they are seen as a genuinely independent the sponsoring department, as it were, present, and editorial organisation otherwise if they became like it is better to have the relationship between the FCO the Albanian State Television Service they would and the British Council through a separate series of not be much use to us. Secondly, the area that we relationships at ministerial and senior oYcial level, have been involved with up until now has been in including the question of ensuring that we are trying to decide where they can give us most value getting value for money from the money we are for our money. The discussion about Arabic TV putting into it, and for the Board of Trustees to be really revolved around whether we as FCO, and looking at the overall management of the British ultimately the British taxpayer, would get more from Council, at its relationship with the Foreign OYce a television service Arabic broadcast by satellite 3471162001 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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28 June 2006 Sir Michael Jay KCMG, Mr Richard Stagg CMG, Mr Ric Todd and Mr David Warren around the Arab world than a range of existing changes in oversight and governance that Lord vernacular radio services, particularly those going to Carter’s review put forward also talked about Central Europe where people were increasingly able changing the Board and having this Public to get free media of their own locally and/or access Diplomacy Board with Lord Triesman chairing it. other media in other languages. We are involved in At the same time, and our Committee commented that range of areas, not in terms of a more direct on this when we produced our report on public relationship as maybe you thought. diplomacy a few weeks ago, the old structure, which was this advisory body, was still in existence Q105 Mr Purchase: You may think I would fit very alongside it. You were running a parallel structure of well into an Albanian style set-up but I am a bit more the two organisations, the one from the past and the diplomatic than that. I am still struggling to find out new one. I just wonder what the purpose of having what you do with the BBC. I understand that you that is. Lord Carter also said he was going to come need a high grade, well respected outlet but the back, or at least he should come back to the issue and purpose of having a high grade, well respected outlet review the progress within the next 18 months to two is to get a message across, is it not? You do not leave years, as far as I can see. From what I have gathered, that to the BBC, do you? it seems to me that there were lots of behind the Mr Stagg: It is a message about the nature of Britain scenes negotiations going on, that the original draft as much as a message about particular political that Lord Carter came out with last October was issues. It is a message that “This is the sort of society diYcult for the British Council in particular to that we are which produces this sort of balanced, accept and as a result there was, in a sense, a fudge. even-handed media coverage of diYcult and What I would like to know is what the Foreign controversial issues”. The belief is that this is part of OYce’s ideal solution to this problem is given it is the British brand. Obviously we could become more quite clear the report from Lord Carter did not come direct but my personal view is we are right to treat it up with a definitive outcome and a definitive way in this way, to be honest. We would not be gaining forward. for the UK taxpayer over time if we damaged the Sir Michael Jay: I think I would see the main priority brand. now as to make the Public Diplomacy Board work Sir Michael Jay: I think that audience levels are as eVectively in the interests of a more coherent high as they are, and the BBC World Service is as approach to public diplomacy overall. I know that is respected as it is around the world, because it is seen what Lord Triesman wants to do. I think the first as being editorially independent from the British two meetings of that Board have gone well. It is early Government and I think that is a prize that is terribly days yet and it is diYcult to judge how that is going important to keep. to go at the moment, but I think the prospects are quite good. I am not, I am afraid, in the picture Q106 Chairman: I think that most Members of the about the advisory body. Committee would probably agree with that approach, not all though. Can I take you back Q107 Chairman: It is keeping the previous people on slightly to the British Council. John Maples referred in a kind of advisory consultative capacity. to some posts which are very good. I had the benefit Sir Michael Jay: Oh, I see, I am so sorry. You are of visiting Shanghai and the British Council quite right, that is happening. I am not quite certain operation in Shanghai, which I think is absolutely at the moment how that is going.15 excellent. They were doing some very good engagement with a publication in English and Q108 Chairman: Perhaps you can clarify that for us, Chinese which was encouraging young people to get no doubt we will come back to this issue. We all involved in higher education in this country and the agree that public diplomacy is very important even education system. I think that is a good example. if there are some diVerences about what we define it The other one is a publication they have just as. Can I thank you, Sir Michael, and your launched The Media Guide for Muslims in Britain, colleagues for coming along together. We will which the Foreign OYce might consider getting probably see some of you in the future but others are some copies of and taking to all of our posts in the moving on. To you personally, can I wish you all the Arabic world because it explains a lot about Britain best for the future. Thank you for coming today. to other countries about the nature of this country. Sir Michael Jay: Thank you. It is not designed for that purpose but I would just flag it up. I would like to ask you, in that context, the 15 See Ev 40–41 3471161009 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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SUPPLEMENATRY EVIDENCE

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 18 July 2006 Dear Chairman, During my time as Permanent Under Secretary I have valued the relationship that the FCO enjoys with your Committee. I am sure this relationship will develop further in the future, and with Peter Ricketts’ support I would therefore like to restate the oVer I made during the Evidence Session on 28 June that we should let you have a quarterly report, for publication, on the main management issues that have been at the top of our agenda in the previous three months. I hope that this will give the Committee a fair and up to date view of the range of the challenges we face. I would also like to restate my oVer of informal briefings on management or policy issues of interest to you. May I take this opportunity to put on record my regret that we did not mention the Valletta CHOGM in the Highlights of the Year Section of our Departmental Report? The Valletta CHOGM was an important and successful meeting, and its omission was an administrative oversight. At the Evidence Session on 28 June, I agreed to let you have further information on a number of areas. At question 22 Mr Mackinlay asked for details of Morson Human Resources. Morson International source and provide technically skilled building industry staV (Technical Works Supervisors) to support the Management Sections of our overseas posts in maintaining the overseas estate. There are approximately 40 such staV around the world. Their primary role is to identify and oversee essential maintenance, and ensure that it is carried out to an appropriate standard. Sir John Stanley asked at question 45 for a list of our missions which are staVed by one UK Based diplomat. Sir John has subsequently put down a Parliamentary Question which Mr Hoon answered on 6 July. For the Committee’s record, the question and answer were: Sir John Stanley: To ask the Secretary of State for Foreign and CommonwealthAVairs what the locations are of British embassies and high commissions staVed by only one UK-based diplomat. [82084] Mr Hoon: Two British high commissions are staVed by a single UK-based diplomat. They are in St John’s (Antigua and Barbuda) and Castries (St Lucia). Our embassy to the Holy See is also staVed by one UK-based oYcer. In addition, the following subordinate posts are staVed by one UK-based diplomat: British Embassy OYce, Abidjan The Administrator’s OYce, Ascension Island British Consulate-General, Auckland British Embassy OYce, Banja Luka British Consulate-General, Bordeaux Embassy OYce, Conakry British Consulate-General, Lille British Consulate-General, Lyon British Consulate, Monrovia British Consulate, Nagoya Pitcairn Islands Administration, Pitcairn The Administrator’s OYce, Tristan de Cunha. At question 47, Mr Hamilton raised the question of asset recycling. I would like to take this opportunity to clarify to the Committee that the asset recycling target proposed to the FCO by HM Treasury of £140 million is for the period from 2004–05 to 2010–11. Sir John Stanley raised internal financial controls at question 54. As Principal Accounting OYcer I am satisfied that the FCO’s Internal Audit Department meets Treasury requirements for me to maintain a professional in-house, or outsourced, internal audit service. The Internal Audit section is headed by a chartered accountant (ex-Price Waterhouse) and all his staV are professionally qualified, or studying for a professional qualification. The FCO’s Audit & Risk Committee agreed in 2004 that Internal Audit staYng levels should be increased to allow the frequency of audit visits to Posts such as Tel Aviv to be changed from six years to four years, and to enable smaller Posts to be audited for the first time. The Audit & Risk Committee also agreed last 3471161009 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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year that a partnership contract with a “Big Four” private audit firm should be put in place, to make additional qualified staV and specialist skills available to enhance and support the in-house service. The tendering process for this contract has now been completed and bids are currently being evaluated. In addition, the FCO Board has asked the National Audit OYce—as external auditors of the FCO—to review our systems of internal financial control; we hope that the NAO will be able to undertake this work in the autumn. At Question 75 you asked about PSA 1, the FCO’s Weapons of Mass Destruction target. When the progress assessment was drafted in March 2006, we judged Amber to be the appropriate category since our work to counter proliferation across the board was gradually making progress in line with our expectations, despite some important setbacks. There were disappointments last year over the outcomes of the Non-Proliferation Treaty (NPT) Review Conference and the World Summit. But there were also some significant advances in other Treaty regimes such as the Chemical Weapons Convention, the Biological Weapons Convention and the Suppression of Unlawful Acts at Sea. We used UK Presidencies of the G8 and EU to consolidate work achieved so far in those fora and to push for a more strategic focus in the future. An assessment now would similarly need to balance progress against setbacks. Iran has not yet indicated when or how it will reply to the latest international proposal, but the cohesion among the E3 !3 group as well as the strong statement by the UN Security Council demonstrate that the international community is determined to pursue non-compliance. The missile test launches by DPRK were a setback although they were followed by rapid international condemnations. In April, the UN Committee to oversee UNSCR 1540 on preventing the proliferation of WMD material was unanimously extended for a further two years. Also in April, States Party to the BWC agreed an agenda for the Review Conference this November, confounding predictions that it would fail. Overall, we remain seriously concerned about the risks of proliferation, especially with respect to Iran and DPRK, but there has been progress in other areas in line with our expectations. At question 76 you also asked about PSA 7, the FCO’s target on “Engaging with the Islamic World”. When the assessment was drafted in March 2006, we judged progress had been made in engaging with Muslim countries as well as with mainstream scholars. We also took into account the significant progress made in 2005 on encouraging countries in the region to make commitments towards economic, political and social reform. In particular, we had used the UK presidencies of the EU and the G8 to inject considerable political momentum towards reform. One of the main outcomes of the EU-Mediterranean Summit co- chaired by the UK in November 2005 (and the Bahrain G8 Forum for the Future in December) was a clear five-year action plan with concrete commitments on political, economic and social reform in North Africa and the Middle East. However, we were concerned at the time that actual change on the ground remained limited: autocratic governments; basic rights denied to many; economic under-performance; and appalling records in most indices of globalisation. While governments in the region were gradually accepting the need to engage in reform, many would like reform to be limited in extent; and most believe reform will take years if not decades. An assessment now would also need to recognise the disparities between the acceptance by the governments in the region of the need to reform; and the failures in the actual implementation of the reform commitments. We are working closely with EU and G8 partners to ensure that these processes maintain the pressure towards eVective implementation of the reform commitments agreed in 2005. We are also using the UK Global Opportunities Fund to promote reform initiatives: supporting electoral reform in Lebanon, helping to improve the management of Libyan and Moroccan prisons, training journalists for elections in Egypt and Yemen, supporting the OECD investment initiative across the region, etc. However, this is still to be judged against the lack of meaningful progress on the ground on the main reform commitments: most governments remain cautious about tackling corruption and governance issues; none has so far been prepared to limit the executive regarding the legislature or judiciary. Media freedom remains restricted in most countries and NGOs tightly controlled. In addition, recent electoral results in Palestine and Egypt have been used by regimes to play up the dangers of political reform. While it is reasonable to expect further gradual progress, major breakthroughs on reform are unlikely. Also at question 76 you asked about our PSA targets and our obligations on releasing information to the Committee. We continue to welcome both the committee’s review of our PSAassessments a nd its interest in and views on our future Public Service Agreement. As noted before we will provide the committee with full details of the 2008–11 PSAas soon as it has been agreed. Public Service performance as sessments collated for inclusion in the Departmental Report (DR) and Autumn Performance Report (APR) follow HMT Public Expenditure System (PES) guidance. PES guidance notes that the DR containing PSAassessments “should not be published until express Treasury approval has been given” (PES(2005)21 page 12) highlighting that the Departmental Report is co-presented to Parliament with the Chief Secretary to the Treasury. PES

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guidance states that the APR should be “published as [a] command paper or . . . in a manner in which [it is] formally presented to Parliament” (PES(2005)16 page 43). We do not therefore consider it appropriate to release PSAassessments to the committee as evidence before formal public ation in the DR or APR. At question 92, you asked about eYciencies. The projects mentioned in February’s Board minutes were identified to fill a potential gap in the FCO eYciency plan caused by other projects being unable to meet their target in full in the necessary timescales. This is due to a mixture of late delivery and double counting. These new projects will contribute to the FCO’s overall eYciency target of £86.7 million in 2007–08. They do not have targets in their own right, as the eYciencies they will deliver will be compensating for shortfalls in other projects, as mentioned above. Preliminary Estimates of what these projects will deliver in 2007–08 are as follows: Gratis Visas £1.75 million Residence Costs £1.0 million Facilities management £2.0 million Language Training Not yet available These are purely estimates at this stage as project planning is ongoing. As such these forecasts are not firm commitments. The savings from these projects will be a mixture of cashable and non-cashable eYciencies. At question 96 you requested a copy of the Risks Register. I am writing separately with a copy of the Register. At question 98 onwards I promised further information on how public diplomacy funds are spent and how we evaluate their eVectiveness, and on the new Public Diplomacy Partners Group. The FCO spends public diplomacy funds on a wide range of activity in order to to contribute to the achievement of the Government’s International Priorities. Some of the impact of public diplomacy activity involves the achievement of precise objectives in the short term. But much is aimed at achieving medium to long-term objectives, often in less direct ways. Much of the FCO’s spending on public diplomacy is to cover the cost of FCO staV. This might be an Ambassador addressing a public meeting, or a Press OYcer overseas developing contacts with the local media to encourage them to report in ways helpful to our objectives. We also spend significant sums on scholarship and fellowship programmes and on our worldwide Internet presence. But a large part of our public diplomacy eVort, in financial terms, is delivered through the BBC World Service and the British Council. The activity of these organisations must contribute to the achievement of the government’s International Priorities. But micro-management by the FCO of the World Service and the Council would not help anybody. The greatest strength, for example, of the BBC World Service is its editorial independence: the BBC’s reputation for accuracy and independence is the reason why people listen to it. It is diYcult to measure the eVectiveness of public diplomacy because it is often indirect and long-term in nature. But we recognise we need to do better on this. In future, the new Public Diplomacy Board will be the principal mechanism for setting priorities, designing strategy, and measuring the impact of FCO-funded public diplomacy work. Following Lord Carter’s review of public diplomacy, the FCO is about to appoint a specialist consultancy firm to design and develop common performance metrics which we can apply to public diplomacy activity to measure its eVectiveness. The BBC World Service and British Council already carry out measurement of their own performance. The BBC World Service continuously measures its global audience and trust ratings; and the British Council tracks how many people globally receive its services, the number of students it teaches and the impact that it has on people’s understanding of the Council and the UK as a whole. We have well-developed mechanisms for oversight of the work of the BBC World Service and the British Council. For the World Service we hold an Annual Ministerial Meeting that is chaired by an FCO Minister. Four Quarterly Meetings with the Director of the World Service support this. In addition there are at least two Regional Reviews each year and regular finance meetings. In the case of the British Council, the FCO is strengthening the existing mechanisms. In line with the recommendations of your Committee, the FCO Permanent Under Secretary will no longer sit on the British Council Board. In its place will be enhanced co-ordination and oversight at Senior OYcial Level (at least Quarterly) and directly with FCO Ministers (again at least Quarterly). In addition, the Permanent Under Secretary will form part of the formal oversight process, not least in the role of Accounting OYcer. Separately, the National Audit OYce is planning to undertake a value for money audit of the British Council in 2007. In line with Lord Carter’s recommendation, the old Public Diplomacy Strategy Board has been replaced by two bodies: a new, smaller Public Diplomacy Board, with responsibility for agreeing public diplomacy strategy and for performance management; and a public diplomacy advisory panel with wider membership. The Public Diplomacy Board has begun to set global priorities for public diplomacy work. The advisory panel has been established under the name “Public Diplomacy Partners Group” under the chairmanship of

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VisitBritain. The Group brings together the wider grouping of public diplomacy partner organisations, many of which were previously represented on the old Public Diplomacy Strategy Board. These include VisitBritain, FCO, British Council, BBC World Service, UKTI, DfID, DCMS, MoD, Scottish Executive, Welsh Assembly & Northern Ireland Civil Service. Yours sincerely, Sir Michael Jay KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 19 July 2006 Dear Chairman, At the FAC hearing on 28 June Paul Keetch MP raised a question about the help the FCO gives to the delegation to the NATO Parliamentary Delegation. We were not asked for any briefing for the June NATO Parliamentary Assembly visit to Washington and San Francisco mentioned by Mr Keetch, and did not therefore provide any. Had we received a request we would have been happy to provide oral or written briefing, or asked our Embassy to provide one. The FCO is always ready to help MPs travelling abroad as part of a NATO Parliamentary Assembly delegation and have done so twice this year (for a January trip to Washington and San Diego—subsequently cancelled, and a February trip to Brussels). We also provide briefings for the twice yearly Assemblies. I have asked our Parliamentary Relations and Devolution Team to consider with the Overseas OYce how to ensure that all delegations receive the briefings they need and have a right to expect. I am sorry it did not happen on this occasion, and thank Mr Keetch for bringing the lack of briefing to our attention. Yours sincerely, Sir Michael Jay KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce 3471161011 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

Ev 42 Foreign Affairs Committee: Evidence

BBC WORLD SERVICE

Wednesday 12 July 2006

Members present:

Mike Gapes, in the Chair

Mr Fabian Hamilton Sandra Osborne Mr John Horam Mr Greg Pope Mr Eric Illsley Mr Ken Purchase Mr Paul Keetch Sir John Stanley Andrew Mackinlay Ms Gisela Stuart

Written evidence submitted by the BBC World Service,received on 28 June 20 06 It was a year of great achievement and change for BBC World Service. It saw both the biggest strategic shift in priorities in its history, and a record-breaking audience figure. This took place against a backdrop of ever-increasing technological change, and the emergence of powerful and divisive global forces, which makes the World Service’s commitment to impartial, independent journalism all the more important. The quality of BBC World Service’s journalism and its innovative programmes shone through throughout this turbulent period. BBC World Service’s position as the best-known and most-respected voice in international broadcasting, bringing benefit to the UK, was acknowledged in Lord Carter’s Review of Public Diplomacy, published at the end of 2005. The BBC welcomed the Report’s positive vision of the World Service’s value and the safeguarding of its editorial independence, which is paramount to its eVectiveness. It also welcomed the agreement that “observer status” was the correct role for the Director World Service in relation to the new Public Diplomacy Board. All parties are currently identifying ways of working together, as the Board begins its work. The Review confirmed that ring-fenced funding provided financial certainty, which is an essential factor in the long-term eVectiveness of the World Service—the BBC welcomed this, together with moves towards greater accountability for public money. Early in 2006 the Lords Select Committee on BBC Charter Review produced a 2nd Report that included evidence from BBC World Service. This Report looked into the outcome of the Carter Review and many of the changes that have taken place at BBC World Service over the year. Again, BBC World Service welcomed the findings of the Report, which emphasised the importance of its editorial independence and endorsed its multi-media approach to serving global audiences, including the aim of making the proposed BBC Arabic Television channel a 24-hour service as soon as possible, rather than the presently funded 12#7 service.

2010 Changes BBC World Service’s vision to 2010 was announced in October 2005. This strategy included the plans to launch an Arabic TV service in 2007, increased investment in interactive services, FM transmission facilities, overseas news bureaux and marketing. Language service reprioritisation: Although part of the above plan is to be funded by funds generated by the outcome of the 2002 and 2004 spending reviews, a major reprioritisation of the current budget was needed to implement the full 2010 strategy. It was decided that 10 language services (Bulgarian, Croatian, Czech, Greek, Hungarian, Kazakh, Polish, Slovak, Slovene and Thai) should be closed, releasing over £10 million a year for re-investment. The last of these services closed on 28 February 2006. The criteria used to decide whether to maintain services was based on recent political and media changes in Europe, which have lessened the need for these European languages, and the relatively low market impact of the Kazakh and Thai services. This was the appropriate response to the challenges faced by BBC World Service, but it was also diYcult and painful, especially for the staV directly aVected. BBC World Service remains grateful to these staV for their contribution to creating and maintaining the BBC’s international reputation and decades of distinguished broadcasting. Their contribution was marked by an event for the staV who had worked for these services over a period of many years, a special commemorative programme that went out on the English network and there are plans for a Prom concert dedicated to the work of the European services, which will also be broadcast on BBC World Service. 3471161011 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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The vast majority of staV based overseas have found alternative employment. In London, it has proved more diYcult to find new jobs in and outside the BBC for staV aVected. Many of them have left the BBC voluntarily and are in receipt of redundancy payments laid out in the agreement reached at ACAS with the unions in Spring 2005. BBC Arabic TV: The introduction of an Arabic TV channel is a crucial and necessary step for the BBC, in order for it to remain successful in a market where television is becoming the preferred medium for news and information. The channel will broadcast 12 hours daily throughout the Middle East, although the ambition is to extend this to 24 hours. Drawing upon the BBC’s unmatched newsgathering resources, and working alongside BBC Arabic radio and bbcarabic.com, the channel’s launch will turn the BBC Arabic Service into a genuinely multi-media operation, indeed the only major international broadcaster capable of providing news to Arabic-speaking audiences whatever their medium of choice. Research in the Middle East showed a very strong demand for the service. It will be produced from the newly redeveloped Broadcasting House—the BBC’s central London headquarters where it will be joined by the rest of BBC World Service when it moves from its current home at Bush House in 2012. It will cover international and major regional issues, as well as carrying multi-media discussion programmes and debates in conjunction with the BBC’s well-established and trusted Arabic radio and online services. ANews Editor for the service has been recruited —Salah Negm, who was formerly a BBC programme editor, and was most recently General Manager with the Middle East Broadcasting Corporation (MBC) in Dubai. The recruitment process for other staV continues. Other proposed television services: Separate discussions with the FCO are currently taking place about the possibility of a BBC Farsi TV service. Both parties agree that, prima facie, there is a strong broadcasting case for this. However, funding is a key issue as BBC World Service has stated that it cannot reprioritise further for this purpose.

Audiences

BBC World Service’s global weekly radio audience figure reached a record 163 million listeners, an increase of 10 million on the previous high recorded in 2001. There were particularly large rises in key African markets such as Nigeria, up 3.6 million to over 23 million, Tanzania, up 2.7 million to almost 13 million, and Kenya, up 1.5 million to six million. Audiences also grew significantly in Indonesia, India and Sri Lanka, although they fell back in Bangladesh, Egypt and Pakistan. The audience figure includes the first national survey in Burma, which gave BBC World Service a weekly reach of 23.1% with 7.1 million listeners. Increased survey coverage of Nepal, also added 2.6 million listeners. Nepal and Burma are both countries starved of independent media. Globally, the shortwave total is at its highest level for three years and still accounts for two out of three BBC World Service listeners. Audiences held up well in markets such as rural Africa and India, where there is little or no opportunity to listen to FM-quality sound. However, FM is indispensable in urban areas, where the investment BBC World Service has made over the past five years is delivering growing audiences amongst opinion formers. Surveys showed that BBC World Service programmes continue to command the highest scores for reputation, trust and objectivity in most markets when compared with international competitors. BBC World Service scores higher for trust than other leading international broadcasters in almost all key markets. It is a similar story for objectivity and relevance.

New Media

New Media also put in a record performance. In March 2006 the number of unique users of the BBC’s international facing news online sites totalled over 32 million, and page impressions reached almost 500 million. Both figures were up more than 50% in 12 months, far outstripping targets. Equally important was the way BBC World Service’s interactive programmes and online sites have become a forum for debate between people of many diVerent languages and cultures. Investment in interactive technology has made it possible to process higher volumes of traYc during periods of intense international controversy, such as the row over publication of the cartoons depicting the Prophet Muhammad. However, online access cannot be taken for granted. China still blocks many news websites, including the BBC’s, and the Iranian authorities began blocking bbcpersian.com for the first time in January 2006, depriving many Iranians of a trusted source of independent information at a time of growing international tension. This came after traYc from Iran to bbcpersian.com during the week of the election in that country had nearly doubled. However, it remains the dominant news site in Persian. Many people still manage to access the site, and the weekly web forums continue to attract a large number of responses both from inside Iran and elsewhere in the world. They oVer a unique window through which we can see what ordinary Iranians think about events inside and outside their country. Representations are being made to lift the ban. 3471161011 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Distribution BBC World Service programmes are now available in high quality audibility on FM in 150 capital cities, up from 145 a year ago. Additionally, new regional FMs were set up in key areas of the world including the Middle East, where Sulaymaniyah in northern Iraq and Gaza benefited from the improved audibility that FM brings. Anew medium wave service was also started in Lebanon. BBC World Service constantly re-evaluates its distribution methods in terms of its impact (how many listeners it has the potential to reach) and value-for-money. Whilst shortwave is still important in most parts of Africa and Asia, and rural areas in general, in EurAsia, Europe and Latin America, shortwave audiences are small. In an FM world, audiences are demanding the higher quality FM services. BBC World Service has redirected resources to reflect this, increasing FM distribution in urban areas where FM is indispensable, and reducing shortwave transmissions. This global strategy is succeeding, as the latest audience figure demonstrates.

Editorial overview 2005–06 was a very strong year editorially. Throughout the year, the rapid pace of events seldom slowed across the whole of the Middle East. Forming a complex chain of developments, key stories included Israel’s withdrawal from Gaza, Prime Minister Ariel Sharon’s illness and the elections in Israel, the Palestinian territories and Egypt and their aftermath. In Iran, the domestic and international implications of the election of a new government—and the increasing tensions over Iran’s nuclear programme—were the dominant themes on radio and online. The BBC’s Persian Service oVered audiences strong coverage that included rare interviews with the leading contenders, Rafsanjani and Karubi. The then British Foreign Secretary Jack Straw, Egyptian Director General of the International Atomic Energy Agency, Mohammad Al Baradei, and Iran’s top nuclear negotiator, Ali Larijani, were among the big names interviewed on the nuclear debate. It was also a year of natural disasters on an exceptional scale, from Hurricane Katrina and its aftermath— which devastated towns and cities, including New Orleans, on the southern US coast—to the South Asian earthquake that left nearly 75,000 dead in the Kashmir region, and the mudslides that killed hundreds in Guatemala and other parts of Central America. BBC World Service provided comprehensive coverage from its own correspondents on the ground and, more than ever, by linking with people aVected. In the aftermath of the South Asian earthquake, reporters from the BBC’s Hindi and Urdu services helped to bring the full impact of the disaster to the world’s attention. The bbcurdu.com site received more than 4,000 emails, including numerous eyewitness accounts and videos shot by survivors. Mobile phone users drew a vivid picture of conditions in the devastated region. This was one of the first examples of user-generated content providing information that BBC reporting crews were unable to access. BBC World Service’s coverage of Hurricane Katrina in August dealt not just with the devastation and its aftermath, but with the wider issue of what the handling of the crisis would do to the psyche of the United States and its reputation abroad. Online sites featured reaction, discussion, analysis and images from the devastated areas, again including many first-hand contributions from listeners and web users. Hundreds of messages were received from people concerned about the whereabouts of family or friends living in or visiting the region. In the past eight months, the BBC has returned to the region to report on the progress being made in rebuilding communities. Programmes included a special edition of the interactive programme World Have Your Say, presented from New Orleans. The uprising in Andijan was the most important event in Central Asia. When demonstrators were shot dead in the Uzbek city last year, BBC World Service, uniquely among international media, was able to report from the scene and provide full coverage of the aftermath. BBC World Service programmes received a number of awards during the year, notably a Sony Gold award in the News Feature category for a special series, Return to Sarajevo, presented by Allan Little, and a Best Radio Documentary award for Assignment: Message from Mavembo (which highlighted the plight of failed asylum seekers returning to DRC) at the One World Media Awards.

Reporting Restrictions BBC journalists faced severe operational diYculties in a number of countries. Reporting from Iraq and Afghanistan remained challenging and dangerous. In Iran, BBC correspondent Frances Harrison had to operate under diYcult restrictions to cover major stories. Central Asia is increasingly volatile. The Uzbek newsgathering operation in Tashkent had to be closed after the uprising in Andijan—its reporter was expelled from the country, and seven of the local staV were forced to seek asylum. In Tajikistan, BBC World Service had diYculties in renewing its licence for FM broadcasts. In the aftermath of the South Asian earthquake, Pakistan’s regulators took BBC Urdu oV its FM partner stations, although part of the service is now being rebroadcast. In Nigeria, BBC World Service’s largest partner is still being prevented from broadcasting BBC news programmes; happily, the audiences there have rediscovered the value of their shortwave radios. In Egypt, in June this year, the BBC made a formal complaint to the Egyptian Minister of the Interior following assaults by members of the Egyptian security 3471161011 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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services on two journalists that work for the BBC. There were also problems in Gambia, when a correspondent for the BBC’s English language African service, was detained by the Gambian security forces—he was later released. In Nepal, private FM radio stations were ordered not to broadcast political news after the royal coup in February 2005. This aVected all the private radio stations which were broadcasting BBC Nepali programmes on their frequencies (though some of these defied the Government and carried on regardless). BBC Nepali programmes on the state-run Radio Nepal were also interrupted. However, as a result there was a marked increase in the shortwave audience for the Nepali Service at that time. BBC Nepali was back on air with at least one local rebroadcaster by December 2005, and in May 2006 Nepal’s new multi-party government oYcially eased some of the edicts that had stifled press freedom after February 2005. BBC Nepali transmission has returned to normal for the moment—however, problems may re-surface as the political situation in the country is fluid. BBC World Service has had to think more creatively about covering events in many of these countries. In Iraq, where the security situation has made it very diYcult for correspondents on the ground to move around, the English network took an in-depth look at the reality of life in special Iraq Days during the year. People from all walks of life, all over the country, described their experiences. They ranged from an insurance broker whose business was thriving, to a hairdresser who often had to manage without any water. It highlighted how Iraqis live today, how they felt about the changes in Iraq, and how they performed their normal duties and tasks.

Changes to English Schedule The year saw a new look for the English schedule, with a stronger focus on news and information. However, BBC World Service remains committed to a mixed English schedule that contains a wide range of news, documentaries and analysis. British and international culture continues to play a strong part in the mix of programmes. There is strong coverage of business, arts and culture, science and technology, health, literature, entertainment, religion, music, social issues and sport. The schedule also oVers a new daily programme dealing with diVerent aspects of the arts, and at weekends, the schedule oVers an hour-long arts magazine and a world music programme. Major British and international cultural, sport and musical events covered during the year included the African Cup of Nations, the Commonwealth Games, World Cup football, the Live 8 concerts, BBC Proms and the Reith lectures. In July, in the same week as Live 8, programmes were broadcast from Africa Live Day at the British Museum, the Glastonbury Festival of Contemporary Arts and the Wimbledon tennis championships.

New Interactive Services New interactive programmes and online sites have become a first choice when people want to take part in a “global conversation” about issues and events in the news. In 2005, the idea of a “global conversation” between peoples of diVerent cultures, languages and backgrounds achieved new eVectiveness with the launch of a new generation of interactive programming. BBC World Service’s new programme World Have Your Say was designed to be a daily interactive experience, and has resulted in bringing out a range of topics, voices and emotions that are not normally heard on the air. It also joined up the various conversations that take place in all BBC World Service languages. For example, if the topic was Iran, the World Service would tap into what people are saying on the BBC Persian website and share that with the global audience in English and other languages. Constant dialogue with audiences is giving news teams an early warning of issues that may turn into major news stories. Investment in technology has made it possible to process a sudden increase in online traYc much faster, and users can nominate the top comments of the day as the ones that most closely reflect what they think and feel. People who comment are also invited to give their details so news teams can contact them. Africa Have Your Say has also become a very important programme where Africans across the continent come together to debate issues that really matter to them. Interactive programming was extended in the language services as well. The Arabic Service has, reputedly, been described as a “Parliament for Arabs”, where people can contribute diVerent views and perspectives without fear of being marginalised or judged. BBC Arabic also launched a new programme for young audiences, BBC Extra, broadening the agenda to social issues such as health and women’s rights.

Landmark Programming Editorially, the Who Runs Your World? season on global power was the most ambitious themed season ever undertaken by the BBC’s Global News Division. This involved every language service on radio and online and also featured on BBC World television. High profile interviews took place with a wide range of people, from UN Secretary-General Kofi Annan to the Executive Producer of The Simpsons. Language 3471161011 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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services covered issues that mattered most to their audiences, such as the endemic problem of corruption in Russia and towns run by organised criminals in Albania. The aim was to challenge, inform and tackle a major theme on behalf of users of the BBC’s international news services. The Fuelling the Future season tackled the major issue of energy supplies. BBC World Service news, business and science programmes were devoted to energy issues for a week as concerns grew more widespread that an energy gap could lead to a crisis for humanity. Radio and online reports brought listeners and online users a global perspective, from Russia’s controversial role in reducing the level of Ukraine’s gas supplies to Venezuela’s oil bonanza. Programmes looked at the production of oil and its fluctuating price and investigated how countries of the G8 and the large developing economies of China, India and Brazil would be able to fuel their future growth if cheap energy sources ran out. They examined the link between energy and policy, asking if concerns about energy security influence the United States’ stance. The season weighed up arguments for and against diVerent energy sources, assessed their eVect on the environment and considered viable alternatives to relying on oil, coal and nuclear power. Together with the special coverage of countries in the news, such as Iraq and Afghanistan, “big picture” seasons like these help people to make sense of an increasingly complex world.

Marketing Projects One of BBC World Service’s key priorities for the year was to increase its marketing eVort in order to secure and retain its impact in key markets. The BBC Arabic roadshow Your Future, Who Decides It? was part of this drive to increase marketing activity and increase audiences in the Middle East. It travelled to five cities—Cairo, Amman, Khartoum, Ramallah and Damascus. Live broadcast debates held in universities were promoted through interactive booths at colleges, shopping malls, gyms and internet cafe´s. Young men and women were invited to express their views on issues such as traditional marriage and unemployment, and to identify and put questions to opinion formers and leaders. In the Syrian capital Damascus, it was the first time this type of open debate had been broadcast live. The overall response was overwhelming—the roadshow reached more than 260,000 people on the ground in five countries. Hundreds packed the venues during the radio debates and the roadshow webpage was the most visited page on the Arabic website over a period of two months, generating over 300,000 page impressions. Roadshows in other key markets also gave listeners new opportunities to discuss issues central to their lives. In Uganda, presenter Paul Bakibinga, himself a Ugandan, was the “face” of the roadshow that launched the interactive programme Africa Have Your Say and a new weekend edition of the current aVairs show Network Africa. Ugandans came out in their thousands to meet the BBC teams as they toured the country. The BBC Urdu roadshow travelled to the Northern territories of Pakistan, making programmes with listeners in Gilgit, Hunza and Skardu shortly before the region was struck by the South Asian earthquake. BBC Hindi’s Aapki baat: Aap ke beech (Your views directly from you) toured the heartland of Bangalore, Kalinganagar, MuzaVarpur and Pune and the states of Punjab and Uttar Pradesh in the run-up to India’s budget announcement in February 2006. Listeners were able to quiz a panel of experts and voice their views on what the economic transformation of India meant to them.

Finance

The Government’s Spending Review 2004 confirmed the proposed increase in GIAfor 2005–06 from the Spending Review 2002. The table below shows the available spend.

Reconciliation to 2005–06 Grant in Aid

Operating Capital Total £m £m £m Grant in Aid (exc BBC Mon sub) 202.8 31.0 233.8 Subscription to BBC Monitoring 5.3 5.3 Total Grant in Aid 208.1 31.0 239.1 HM Treasury approved virements 4.3 "4.3 0.0 Funding available for expenditure 212.4 26.7 239.1 3471161011 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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The operating expenditure for the year also reflected savings of £7.1 million which arose from new digital working practices and savings in distribution and transmission costs. Additional monies were invested to enhance the World Service’s output to the Middle East and the wider Islamic world, expand online support of language services and extend distribution through FM rebroadcasters around the world. There was also operating expenditure on restructuring costs at BBC World Service which included the 10 language service closures that took place during the year. During the course of the year, a value for money review of financial support at BBC World Service was carried out. As a result of redesigning processes, savings of one third of finance staV costs were identified and implemented in time for the start of the new financial year. Further value for money reviews of administrative support, business development and technical support were started in the financial year. The results of two of these have reported in the last couple of months. In admin support, a saving of 20 full-time posts has been identified, although it is hoped that this can be achieved through “natural wastage” and voluntary redundancies. In business development there will be changes to work practices. The outcome of the review of technical support services will be known in the next couple of months. Capital expenditure included improvements to overseas oYces. Anew bureau was opened in Jakarta and the BBC’s newsgathering oYces in Delhi and Islamabad were refurbished.

BBC World Service Trust

The BBC World Service Trust worked with an increasing range of donors, NGOs and local partners in over 50 developing and transitional countries, using media to improve people’s lives both through strengthening the media infrastructure, and creating programming which contributed to good governance, public health and education. There was continued high impact for health initiatives, such as the HIV/Aids projects in Angola, Cambodia, India and Nigeria. The year was also notable for growing recognition in the development field of the role independent media can play in establishing good governance. Alandmark was the launch of the first independent regional broadcaster for southern Iraq. Serving four million people, the Basra-based Al-Mirbad broadcasts a range of programmes, from news and current aVairs to children’s programming, entertainment and sport. In its biggest project to date, the Trust trained the editorial, administrative and technical staV; assisted in the development and piloting of diVerent programme strands and supervised the importation and construction of the studio and transmission equipment. Many of the 150 strong staV had never worked in broadcasting before. Al-Mirbad is an Iraqi station, built by Iraqis, with local Iraqi staV providing wholly Iraqi content to their community. The Trust’s Media Dialogue Programme (MENA) helped journalists to develop their professionalism in other parts of the Middle East and North Africa. Seminars were held in Beirut, Cairo, Damascus and Rabat, and young journalists attended a training programme in London. The scheme was later extended to Yemen and a number of Gulf States, and additional training was provided for chief executives and managers in an eVort to change entrenched attitudes in media organisations. The Trust also worked closely with the Commission for Africa. Aiming to identify ways of strengthening African media, it coordinated contributions from the African and international media development community to the commission’s report, Our Common Interest, published in April 2005. In this report, building the capacity of the media was identified as an essential contributor to creating a climate for accountability and good governance in Africa, and an African Media Facility was called for. In response, the African Media Development Initiative (AMDI) was set up in January 2006 to undertake the largest-ever survey of media provision in 17 African countries. The Bangladesh Sanglap (Dialogue on Bangladesh) was a major Trust initiative on governance supported by DFID. It included the biggest season of programmes ever mounted by the BBC in Bangladesh and generated audiences of over 5 million. The initiative included debates on a wide range of social issues, lively phone-ins and student workshops, the themes of which were determined by a unique piece of audience research conducted by the Trust.

BBC Monitoring

Along period of uncertainty over the future funding of BBC Monitoring came to an end during a year when editorial and production teams provided a crucial insight into turbulent regions of the world, such as the Middle East, Iran, Afghanistan and parts of the former Soviet Union. Following a decision by the Foreign OYce to reduce funding, a review was commissioned by the Cabinet OYce, which has since taken over from the FCO as BBC Monitoring’s lead stakeholder. 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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The review, led by Sir Quentin Thomas, concluded that the partnership between the Government and BBC Monitoring represented “excellent value for money” and that it should be a “UK objective” to give BBC Monitoring stability and confidence allowing it to focus on maintaining an operation that matches its customers’ needs. The outcome has been a five-year agreement with an overall increase in funding amounting to an average of £23.8 million per year until 2010–11. Aring-fenced grant replaces the p revious subscription model. As well as taking over as the sponsoring Department, the Cabinet OYce chairs a new Governance Panel, whilst BBC World Service retains a close relationship as a major stakeholder. However, in spite of the funding outcome achieved by the Cabinet OYce review, it remained necessary to reduce costs by £2 million per annum by March 2007. Following publication of the review’s findings in August 2005, BBC Monitoring began a transformation of its services for 2010 and beyond. Detailed structural changes, new posts and teams were announced in March 2006. The changes included the closure of 69 posts, although many had been left unfilled to minimise redundancies. The value of systematic media monitoring was demonstrated clearly during a year when the Middle East was once again a top priority. Local bureaux played an important part in giving access to a wide range of media outlets. Coverage of Iraq focused on reporting and comment on the continued violence and the fate of foreign hostages against the backdrop of electoral developments. Following the victory of the militant Islamic movement Hamas in the parliamentary elections in the Palestinian territories in January 2006, close attention was paid to subsequent political and diplomatic manoeuvres and the reactions of key Middle East governments. Iran was another area of great interest to stakeholders. Major stories included Iran’s nuclear programme, President Mahmoud Ahmadinejad’s controversial remarks on Israel and the Holocaust and the behind-the- scenes power battles that followed the presidential election in June 2005. The growing importance of Iranian blogs was reflected in regular roundups of developments in new media. Work began to boost coverage of provincial press and television sources, including some serving Arabic-speaking populations. In Afghanistan, local management of enhanced operations inside the country was established. Media assessments were provided for key customers, such as the Ministry of Defence, at a time when British forces were being deployed to Helmand province. The ability of locally based monitoring teams to track media sources across countries of the former Soviet Union was constantly in demand, with events such as the Chechen-led raid on the Russian city of Nalchik, the Azeri elections and protests, and disputes over gas supplies to Ukraine and Georgia. Tashkent remained one of the most diYcult locations to work from and the team’s work there was highly praised for its coverage of the events and their aftermath in the Uzbek city of Andijan. Under an internal re-organisation of responsibilities, the current Director BBC Monitoring, Chris Westcott, becomes the Accounting OYcer for BBC Monitoring. He will now report to Richard Sambrook, Director BBC Global News. The World Service remains a major stakeholder and user of services provided by BBC Monitoring. 28 June 2006

Witnesses: Mr Nigel Chapman, Director, and Ms Alison Woodhams, Chief Operating OYcer and Director of Finance, BBC World Service, gave evidence.

Q109 Chairman: Can I welcome Nigel Chapman and already doing. I think we have managed to ride a Alison Woodhams from the BBC World Service. tiger of change and also strong performance in the Thank you for coming along again. I would like to same year, which is a rare thing to do. place on record our thanks for when we visited yesterday and saw your operation at work. We have got an hour, and I am sorry for the slight delay Q110 Chairman: There was a lot of opposition to the getting you in, and we think there may be a vote, but scrapping of some of the language services and V we are not sure, in about an hour’s time. Can I begin certainly some of your sta must have been very by asking you about the significant changes that you upset. How have they dealt with that? How have have introduced in the BBC World Service since last they reacted to that now? year? How have you dealt with that? How has the Mr Chapman: I think change of this kind, Chairman, Service coped with that? How successful have these is very diYcult. I would like to place on record my changes been? thanks and the thanks of the BBC as whole and the Mr Chapman: I think the Service has coped thanks of audiences across Eastern Europe and extremely well with them. It is quite a remarkable Thailand and Kazakhstan for the services that were story that in a year when you make the biggest put out until very recently. They were high-quality changes in the 70 years of history of the World services. Change like this is not easy and we have had Service, that that should coincide with an audience to be painstakingly careful about making sure that of 163 million people per week, which is a record- the staV are treated properly, that we are as generous breaking audience, and also a lot of innovative as possible in terms of redundancy payments, and in additions to the web and other services that we are trying to find them other jobs, and so on. I think we 3471162002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams have done that very well. The teams have worked Mr Chapman: Yes, but into Arabic television, and very hard to do that. It has not of course lessened the that is going to be funded by grant-in-aid. That is pain for some of those individuals. Change is very quite clear; it is on the same model as the language diYcult and changes in an organisation with a 70- services are in radio and the new media activities are year history where those services have been on the as well. air, in some cases, for the greater part of those 70 years is diYcult. Putting aside the human impact— Q116 Mr Horam: Would you not like to go into and I am not minimising it by saying that—I think commercially funded television? we have won the argument that on balance in a fixed Mr Chapman: Not for language services, I would set of resources, you have to make diYcult choices not, broadly speaking, because I do not think they and it is a better use of grant-in-aid to improve and are going to work. In the case of Arabic television, really burnish the services for the Middle East the BBC went down that whole road in 1994 to 1996 through Arabic television, improving new media, in a commercial partnership. improving marketing, improving distribution across the world. That is, on balance, a better use of those Q117 Mr Horam: But that was a partnership not just resources than to carry on investing in the places taking adverts, was it not? where we were investing in before. Mr Chapman: It was both a partnership for distribution and taking adverts. That got you into all sorts of diYculties about editorial policy, the stories Q111 Mr Horam: You are part of the BBC’s Global you were going to run, how compatible they were News Division and there are three parts to that. with the people who were funding you. I think one of There is the World Service, which is you, and then the good things about the current proposed Arabic there is BBC World television and BBC Monitoring. funding is that it is grant-in-aid so you do not get Mr Chapman: Yes, that is right. into those issues. Chairman: Can I keep the Arabic questions to a little bit later. Q112 Mr Horam: That is an historic separation. Does it still make sense in an evolving media context? Q118 Mr Horam: Looking to the future, do you see Mr Chapman: They are not separate in the sense of this division being maintained? managerial organisation in that they are working Mr Chapman: I do not see any sign at the moment that BBC World television in English is suddenly more closely together than ever before. In editorial going to become grant-in-aid funded. As far as one terms, in making sure that we present to the world can tell, I think that it is going to remain a through three diVerent media a coherent picture of commercial channel. That is the position the BBC is the big themes and issues, I would say that the BBC taking. It has got a business plan to break even by is getting its act together in a way that makes it more the end of the decade and it is making significant powerful rather than less powerful. Having said progress towards that and that is the plan we have. that, you also have to accept that the funding There is no plan to suddenly reverse all that and start V streams are di erent. The funding stream for BBC asking for public funds to fund BBC World. World television is a commercial funding stream. It is advertising and sponsorship and not from grant- Q119 Sir John Stanley: Like all media organisations, in-aid and that has been the historic position on BBC you are understandably transfixed to a degree by the World ever since it was launched in the early 1990s. number of people who are listening to your services and you are, in part, being driven by the numbers. I Q113 Mr Horam: Can you see this is changing? see that you are trying to get the BBC global reach Given, as you say, you are trying to present a up for international news services from 190 million common editorial line, which is admirable, and the to over 250 million by 2010. The question I put to management is now closer and closer, as you say, you is is there not a danger in chasing audience does it make any sense to have these rather artificial numbers that the World Service is losing sight of barriers between what is commercial and allows what has always been and remains a critical part of advertising and what does not? its remit, which is to provide access for those people who are living in totalitarian or semi-totalitarian Mr Chapman: First of all, I need to say that it is not regimes where suppression of the media is the order part of my responsibility to run BBC World. of the day, where they have no national access to any form of independent news information. Is there not Q114 Mr Horam: I appreciate that. a danger that that very, very important requirement Mr Chapman: We need to be careful about the is being lost sight of? mantle I am wearing in this discussion. In some ways Mr Chapman: I can see hypothetically, Sir John, why that is a question for government, not a question that might be a danger but it is not a danger while I for me. am Director of the World Service because I take particularly strongly my responsibility to broadcast to areas of the world which are most starved of free Q115 Mr Horam: But looking at it from your point access to information. I was particularly pleased to of view does it really make sense? You are going into see, for instance, that last year, the first time we have television, I understand? been able to get data on our performance in Burma, 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams over 25% of the population are listening every Mr Chapman: Now you draw it to my attention, week—six million people. I was really thrilled about Chairman, it would always be nice to see more that because if ever I can think of a place where the references to the World Service than two. In terms of World Service needs to be broadcasting to, it is the broad strategic outlines and priorities which I somewhere like Burma. I measure success partly by have in front of me, it seems to me the World Service the number of people who consume the services but has got a pretty big role to play in many of them, not also what they think of them. Reputation is as all of them because it is not appropriate but in many important as reach and in reputational terms if you of them. I think we have a role to play in enabling, look at all the data that we measure—and this is for instance, the world to be made safer from done by independent companies, not by the BBC— terrorism, improving governance and sustainable we are the leading international broadcaster in most development. I think a strong media source of of the markets that we measure, for things like information for people in many societies helps that objectivity, trustworthiness, relevance to the to happen, so I do think we have a central role to audience. Those qualitative values, if you like, are as play. important in assessing your success as the sheer number of people who use you. If we start to see a Q124 Chairman: Does this strategy paper have any deterioration in those performance indicators, even major implications for you in the way you work? if it meant we got lots more people using us, that Mr Chapman: I do not think it would lead to some would not be a satisfactory story. That would be the sort of fundamental realignment of our priorities, danger you are talking about. I must do everything no. We are having regular conversations with the I can to prevent that happening. FCO about broad strategic priorities. I have said this before, I always define it as where in the world we Q120 Mr Keetch. Can I ask Mr Chapman about should broadcast and how, ie by what media is the change because one of the reasons why the BBC most appropriate, but what we broadcast, the World Service is hugely respected is that it has a content, is entirely the business of the BBC and the certain constancy. Can I ask a question that might World Service. I think all parties accept the writing seem very trivial but is important to many of your and the spirit of that writing in the agreement that we listeners and that is about the theme you have. There have that it is not appropriate for any government or has been huge controversy on domestic Radio Four any organisation, not least the FCO, to interfere in about the cancellation of their UK theme. Are there that. I think it is quite legitimate to have any changes planned to Lilliburlero? conversations about strategic priorities. We had Mr Chapman: No, in a word. conversations about strategic priorities when we decided to make the changes we made, which we announced last October, so I think there is a proper Q121 Mr Keetch: And you can assure us that dialogue going on about that. It seems quite Lilliburlero will stay part of your theme whilst you appropriate to me. are Director? Mr Chapman: Absolutely because it is part of the Q125 Mr Purchase: I want to explore a little further brand. It is not the only theme we have. We have all on the question of “what”. During the Second sorts of diVerent musical stings and themes that go World War the BBC played a very significant, in and out of programmes, but Lilliburlero is played indeed crucial part in winning the War. It may be regularly on the English network and it is a bit of a thought in some regards now, although it is very clarion call for listeners. Their ears prick up and they diVerent in nature, that we are involved in a serious know this is the World Service that they are listening worldwide conflict. Does that in any way influence to. I am not sure what advantage there would be for what the BBC would take as its brief in broadcasting me to scrap Lilliburlero. to diVerent parts of the world? Mr Keetch: I am very grateful to you for saying that, Mr Chapman: Can I just say you use the analogy of thank you. the Second World War, but I think when you look back at the history of the World Service one of the Q122 Chairman: At which point we will move on to things that really stands out loud and clear is the FCO strategy. I do not know if the FCO has a World Service through the Second World War strategy for this but we will not go there. Was the broadcast good news or bad news of our allied World Service consulted when the FCO produced its advances. It was truthful and accurate about what new strategy paper on Active Diplomacy for a was going on. Not everybody would have liked that Changing World which was published in March but that is one of its great strengths. In my view, in this year? a world of polarisation, conflict and great distrust, it Mr Chapman: I can remember seeing drafts of it and is even more important than ever to present a I can remember having the opportunity to comment balanced picture around the great events that are on it in terms of the broad strategic objectives. going on in the world. So the notion, for instance, that it is right and proper for us to present only one side in a time of conflict seems to me to be Q123 Chairman: When you saw the final version fundamentally mistaken. It is even more important were you surprised there were only two references to when there is conflict, distrust and polarisation to be the BBC World Service in the whole document, one independent, accurate and fair-minded and to on page 42 and one on page 47? present a diversity of view. That is absolutely at the 3471162002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams heart of what we believe editorially. In places of changes. What part has the Foreign and conflict—and I can think particularly of what is Commonwealth OYce played in the formation of going on in Sri Lanka where there is a great deal of your current five-year strategy and how you are conflict—I get many emails from people going forward? complaining about our coverage one way or the Mr Chapman: As I said earlier Chairman, in the other but I know for a fact that we hear from people 2010 strategy we had extensive conversations with who support the Tamil Tigers and we hear from the Foreign OYce about that. In terms of the closing people who support and represent the Government of services and the opening of new services, we did a in Sri Lanka. That is absolutely appropriate and that thorough review against a certain number of criteria is the rule on which we operate and we should which were, broadly, geo-political importance, the operate on that across the piece in terms of reflecting extent of free and independent information and diversity of views, being evenly balanced, and audience impact for every single one of the language especially so in times of conflict. Our history says services. We shared that with the Foreign OYce and that has been one of our greatest strengths over the we came to a coincidence of view which is that we years. wanted to close certain services and keep the vast majority open. That seemed to me a sensible way of Q126 Mr Purchase: I have no recollection at all of working together. That work predated the Public the BBC in the Second World War in any way Diplomacy Board and that is work that is going on reporting anything that could be thought of as at our regular quarterly meetings and annual joyous for the enemy and indeed the BBC was seen ministerial meetings as part of the web and weft of as a major part of our war eVort, not just to cheer how we work together. ourselves up, but in fact as a weapon. I put to you that there are certain circumstances in the world Q129 Chairman: So it is too early to judge whether where we may as well be at war in a diVerent way. the Public Diplomacy Board is going to have a Would you see the BBC then as being part of the significant impact? allied eVort to win such a conflict or not? Mr Chapman: It is too early but what you would Mr Chapman: The best way it can be part of an allied hope would come out of it, standing back now not eVort to win a conflict would be by keeping true to as a World Service Director but somebody who is the values that run through the heart of it. The concerned about spending all that public money, moment it starts moving down a value chain which you would be looking for alignment, definitely in is partial and selective, untruthful, biased and terms of geographical priorities, it strikes me. It partisan, it completely loses its way. Nobody would would be pretty strange if one organisation is saying trust it. Nobody would want to listen to it. What it is really important that we spend more money and impact could it have in the world? That is my case. have greater impact in the Middle East and the Islamic world and then another organisation is Q127 Chairman: Order, order. The witness is here to spending loads of money in other places and is not answer questions; Members are not. Can I take you realigning its eVort and energy to broadly fit within to another area which has developed in the last year those strategic priorities. Otherwise you end up with which is the Public Diplomacy Review that was three or four diVerent strategic priorities that do not carried out by the Government. As you know, we mesh together. That does not mean that each produced a report on that a few months ago. Do you organisation does not have its own job to do but you think this new Public Diplomacy Board that has do need, I think, to be aware of the overall picture been established will lead to any changes in way the and make the thing fit, absolutely. World Service operates in terms of co-ordination of public diplomacy activity or not? Q130 Ms Stuart: I am getting greatly concerned Mr Chapman: I think it will lead to some changes in about whether there is a conflict here between what the sense that I think everybody sitting round the the Foreign OYce does (and in the last evidence table together—the British Council, Foreign OYce, session we took evidence from the Foreign OYce on ourselves—is going to lead to better co-ordination its Annual Report) and where you are. Clearly the and better understanding of the role that each party strength of the World Service is that it regards itself has. I do not think it is going to lead to a huge as independent and impartial and factually based fundamental shift and I do not think it should lead but at the same time these are public funds from the to a fundamental shift in resources and priorities, British taxpayer. For you to be able to position but I do think it is legitimate to sit round together yourself, you need to have clear idea of where the and if we are spending all this public money on Foreign OYce regards British national interests. Do public diplomacy, are we absolutely clear that we are you have a sense for how the Foreign OYce defines spending it in the right places in the right way. That “British national interests”? seems a perfectly legitimate thing to do and you are Mr Chapman: I have a strong sense of their overall only going to have those conversations if you are strategic priorities and I also have a strong sense in sitting round the table together. geographical terms, and this is all relative of course, of parts of the world which are more important than Q128 Chairman: You say there is no fundamental others. I suppose that is my best answer to your shift in resources and priorities but clearly there is question. Therefore, in terms of my work and the not much point in having a review of public World Service’s work, on a strategic level we can diplomacy unless there are going to be some have sensible conversations about whether we 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams should be broadcasting more here or less there or in Mr Chapman: That is correct. diVerent ways or whatever. At the end of the day we do broadcasting, we do news and information, and other people do other things, and all I can do is make Q133 Mr Illsley: You pointed out in your own sure looking objectively, if I can put it like this, first memorandum that audiences fell back in of all, that I am comfortable about the broadcasting Bangladesh, Egypt and Pakistan. Is there any case. Stand back and ask is there a broadcasting case particular reason for that? V V for a presence in a particular country. It happens Mr Chapman: There are di erent reasons in di erent that if you look objectively at the world it would be places. The audience in Bangladesh has always been pretty odd to start arguing that we would like to volatile. It went down quite a lot after the Iraq War, spend less money in the Middle East and Islamic it then came back up again and it then went down world at the moment. I do not see how intellectually again. What we are finding there is that, partly or rationally you could come to that conclusion. It through the impact of television, people are listening seems to me what we have been trying to do over the every month but they are not listening every week, last year and a half/two years is in tune with the and that is a weekly figure that you quoted there so broad geographical emphases the Foreign OYce they are not being counted, they are falling oV the want. That seems to be quite rational and logical and edge, and we have got to get them to listen more I do not have a problem with it. often. The second issue about Bangladesh is distribution. We need to be on FM distribution in Bangladesh. Nothing would give me greater Q131 Ms Stuart: The reason I am troubled is Y pleasure than to be able to enable the people of because you have got the Foreign O ce objectives, Bangladesh to be able to listen to the World Service where I personally am not entirely clear they have in good, strong, clear sound, as in so many capital suYciently defined British national interests, and cities and other parts of the world they now can. We two of the key vehicles of public diplomacy are the have been in conversation with the government World Service and the British Council. The British there. We have put forward a plan to try and enable Council have got equal worries about the definition FM distribution to take place and at the moment we of its purpose. For you the question as you sit in are working on it. It is slow progress and I would just trying to define your purpose, is there are some areas like to see it happen. In Egypt, the fall was a where you can measure your successes much more marginal amount. I think you have got to look at easily; as you say, how many people listen to you. performance in the Middle East increasingly in a tri- You go to Burma and a quarter of the population media way—television, radio and new media listens so you can say we have an impact. You must together—and that is what will be possible obviously have a sense of how easy it is for you to define your purpose in relation to those other parts of the jigsaw. in a year’s time when the Arabic TV service is Do you find it easy or are there things which both the launched. In Pakistan the reason why we lost some Foreign OYce and British Council could do which audience was because we lost a critical FM would make it easier for you to define where you fit partnership because the regulator decided the in, or are you comfortable with the current partner was not abiding by the local regulatory paradigm? framework. We are in conversations with the Mr Chapman: I am broadly comfortable with it and regulator about that and I hope we will be in a I will give you an example. One of their objectives is position where we can reinstitute that relationship in to promote sustainable development and poverty the not-too-distant future and therefore the numbers reduction, underpinned by human rights, democracy, will hopefully go back up again. good governance, and protection of the environment. That is objective number six. I would argue that at the Q134 Mr Illsley: So, by and large, it is mainly heart of good governance is strong, independent technical reasons as opposed to— media and access to reliable sources of information. Mr Chapman: Yes. I cannot really conceive of a society that is going to develop better without that as one of the cornerstones of its developmental programme. If in those societies Q135 Mr Illsley: Are there any other areas where people are listening to the World Service, they have audience numbers are falling back? got a standard against which to judge their own Mr Chapman: No, in all other parts of the world they media, they have got reliable sources of information, are going up. They are going up in Africa, they are they can make better sense of the world than they going up in large parts of Asia, sometimes because could before, then we are indirectly—and it is not of better distribution and sometimes because I think something I say to my journalists every day go out people are turning to the BBC at times of regional and create good governance in the world—aiding and and local conflict. I think there is a wider point which helping that to happen. Therefore, that is how our job is that a lot of our listeners and would-be listeners as a broadcaster of trusted and reliable information are turning to the BBC because they want to try and fits into an objective like that. It fits quite make sense of some very complex forces going on in comfortably, in my view. the world, some quite disturbing forces often, and they look to the BBC as a source of that Q132 Mr Illsley: Mr Chapman, the World Service understanding. The overall geo-political climate in last year reached a record weekly radio audience of which we are living is helping us to grow 163 million. audiences, too. 3471162002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Q136 Mr Illsley: Just moving on to content and in it was a very small number of people in a very small particular in relation to the African audiences, I am number of groups who were asked their views. It is aware that you have experienced rises in audiences not like going out and doing a major MORI opinion in key African markets. However, the research from poll where you get thousands of comments. the Governors’ Consultative Group found that some respondents were talking about the World Q139 Mr Horam: It is qualitative research. Service having a Western attitude referring to Africa Mr Chapman: It is qualitative research and it is very as “a problem” and that this was particularly found small numbers. amongst younger first-time listeners. How would you respond to that? Would you accept that view? Q140 Mr Horam: Nevertheless, qualitative research Mr Chapman: I think there is always a risk in is valuable. covering Africa that the programmes can be Mr Chapman: It is but you have got to be careful dominated by conflict, war, poverty and human with qualitative research about extrapolating out misery. Anybody who goes to Africa—and I have from the research a big pattern or a theme. You have the pleasure of going quite regularly—knows that it got to put it into the mix. Again, there is a risk, and is a much more varied and diverse story than that therefore one of the things you have got to get to and there are lots of very positive elements in Africa. help mitigate that risk is the strong news-gathering In terms of our journalism agenda, it is very, very strength of the BBC World Service in Africa. If we important to reflect those—the economic changes, try and report Africa from London that is not going business changes, the impact of debt relief. There are to work. We have invested significantly in both more lots of issues I can think about at the moment that news gathering strength on the ground and better would be positive stories and it is important that our overseas bureaux and oYces to work from, which journalists do not become obsessed about the latest means the reporters and correspondents are civil war or the latest development in some long- alongside the stories and alongside the audience. I running conflict. Having said that, they have still got think that helps to break down this sense that you to cover those things, too. So there is a risk, yes. I do are broadcasting from 3,000 miles away in London not think it is a particularly big risk but you have got from a Western viewpoint. to keep on watching out all the time. If audiences sense that you are not being fair to the country which you are reporting about then they are less likely to Q141 Mr Horam: Nonetheless, there was clearly a want to listen to you and they will think you are less Western viewpoint detected from your respondents, trust-worthy, so you need to be careful. But I do not however small in number they were. Is this not a think it is a deeply ingrained issue. danger that you may have an unconscious liberal, Western European attitude which comes across in judgemental terms? Q137 Mr Illsley: Is there anything that your Mr Chapman: There is a danger of it but I do not international competitors are doing that you think think it is a profound, deep danger. If it was a you ought to be doing or anything they are doing widespread threat of our programming we would that you feel might be better than the World Service, not be seeing the sort of performance we are seeing or do you think the World Service stands amongst because more and more people would be dissatisfied its competitors pretty well? and disaVected from us because of the attitude they Mr Chapman: I think it stands amongst its would be seeing in us. That is not what is happening. competitors pretty well. You are talking about That is also not what is happening when we asked Africa there in particular. In terms of FM them whether we were a trustworthy, fair-minded, distribution, we have been second to none in impartial news-gathering organisation. If we had all acquiring transmitters or partners to enable us to be of the traits that some of those people were saying, heard properly, loudly and clearly, and that is one of we would not be scoring the sort of scores we are the reasons why the figures in Africa keep on going scoring when we are asking them about those issues. up and up and up every year. In terms of the Our scores would be going down. Well, they are not specialist journalism that we do in Africa, I think we going down, they are going up. can hold our heads very, very high indeed. Q142 Mr Pope: Just turning to the Arabic TV Q138 Mr Horam: Can I come in on this point. I was service, when is that due to launch and is it on track interested in what you said about the problems of and on time? Africa and you did answer the point by saying you Mr Chapman: It is early days yet. It is due to launch thought the Consultative Group was really saying in the autumn of 2007 which is when it was always you were perhaps overstressing the problems of due to launch. It is on track and on time. We have Africa. I also got a sense from what they said that the made some pretty important strategic decisions respondents in Africa were really saying you had a about the location for the television service. It will be rather Western attitude, ie, it was not just a question part of the new Broadcasting House complex. We of you portraying Africa as a problem but also a have just signed through the BBC an agreement with certain liberal, European attitude came across in the the developers to start the fit-out of the floors in broadcasts. question. We have recruited some of the senior BBC Mr Chapman: I think we need to be a little bit careful people who need to work on it from outside and about that because that consultative work, without inside the organisation. So, yes, at this early stage it in any way wanting to say it did not have any value, is on-track but, to be fair, it is only a few months into 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams the process. I suppose the real question will be in a Interestingly enough, even in a country like Iraq year’s time when you ask me that question is it on where you would intuitively think audiences of the track and on time. World Service at this time would be in serious diYculty because not many people would want to Q143 Mr Pope: You just told my colleague, Mr listen because it comes from London and it is British Horam, that you cannot broadcast to Africa from funded; actually that is not the case. I have just been London as there is a danger of it being seen as a myself and spent four or five days in the Middle East Western tainted service if you do that. Is there not a and one of the things that really hit me going round danger that it will be seen as a Western tainted the Gulf States—and I have also visited Cairo and service if we broadcast to the Arab world from Jordan and other places in recent years in Broadcasting House? preparation for Arabic television—is how Mr Chapman: I did not say we cannot broadcast sophisticated the audience is about seeing, on the from London. I said it is very important that we had one hand, British government policy as one thing, a strong news-gathering presence on the ground. We Iraq as one thing, and the BBC as an independent do broadcast from London to Africa all the time. broadcaster, despite the fact it is funded directly by Network Africa comes, for example, from Bush taxation, in this case the World Service. They see an House every day of the week. It is quite possible to independent broadcaster bringing them reliable combine a strong sense of presence on the ground, news and information which is not there to convert understanding the stories and issues, and broadcast them to a particular government policy. They from many thousands of miles away. They are not understand that and that is one of the reasons why incompatible. the World Service gets such high scores for independence and trust-worthiness. This clever, Q144 Mr Pope: What do you think the key lessons sophisticated perception about the role of the World are that you have learnt from the diYculties that the Service has been around for 30 or 40 years. It is a BBC had in the mid-1990s with its Arabic TV very, very strong brand in this world and I think service? people will turn to the news service. As I say, Mr Chapman: It was a very diVerent time and it was everybody I met in my recent trip last week cannot a very diVerent framework for the funding of that wait for the BBC’s Arabic TV to start, including Arabic television oVer. That Arabic television oVer some of its biggest competitors because they see the was a subscription service with a commercial partner value of having it in the market as part of the mix. where the commercial partner was paying large amounts of the costs, both in terms of distribution V and production. This is a very di erent model. One Q146 Mr Hamilton: Can I follow on from what my of the things we have learned is that is not a very V colleague Mr Pope has been saying. You do not good model. We need a di erent model and the think then that you are too late into the market, since model we have got now, which is a grant-in-aid Al Jazeera has been going for 10 years now and funded model where some of these inherent conflicts many of your former journalists from the previous just are not possible, is a better model. We are going attempt to set up an Arabic TV station went to work to be paying our own way in terms of distribution for Al Jazeera? You do not think it is too late? You and our own way in terms of production. We are not relying upon third party funding to do that and have got competition from Al Jazeera and Al therefore I think we are more secure in terms of Arabiya as well as other TV stations, of course. distribution and our overall set-up, if you like, than Mr Chapman: No, I do not think it is too late. It is we would have been otherwise. not just me who does not think it is too late; when we have asked audiences who would use this service they are very clear that it is not too late. I cannot put Q145 Mr Pope: Afinal point because I know Mr a number on precisely how many would use it, that Hamilton wants to come in on this. Is grant-in-aid would be impossible at this stage, but all the funding not a double-edged sword? There is a danger feedback we have got in terms of the audience that the World Service will be seen in some ways as a state broadcaster in a region where the UK’s research we have done, and over the last couple of presence has been, to say the least, controversial years I have met a fair number of people both at the over the last few years. Is that not a problem as well, top of government and all around the Arab world, that if you were perhaps to take a more commercial and they all are welcoming to the prospect of the route it would at least enable you to be at arm’s BBC doing Arabic television. They wish, frankly, we length from the government? I am not for a moment had carried on doing it for the last 10 or 15 years. impugning the integrity of the World Service, I am They were rather sorry we stopped, although they just saying in terms of perception that might be a knew the reasons why, and are rather glad we are diYculty? coming back. It will be part of a mix. I do not think Mr Chapman: It might be a diYculty but all the people just watch the BBC and do not watch Al evidence argues the other way. First of all, you have Jazeera and vice versa. People in the Arab world are got an Arabic radio service which has been very sophisticated and they move around, and they broadcasting now for 50 or 60 years which again cross-compare, and they look at the running orders when you ask audiences about the perception of it, of programmes, they look at what is leading the BBC they perceive it as independent of government, and what is leading here. It is a very sophisticated despite the fact it is funded by the British taxpayer. market and there is room for all of us. 3471162002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Q147 Mr Hamilton: It is good news of course that Mr Chapman: That is right, yes. there is room for a revived, new BBC television service which is totally funded from grant-in-aid. That is really good news. However, you are going to Q150 Mr Keetch: Are there the staV to enable you to spend £19 million a year running this station which produce the kind of high-quality service you would will only run for 12 hours a day. I know that is not like to see in that part of the world? what you originally wanted but do you not think Mr Chapman: There definitely are the staV around. there is a problem in just running for 12 hours a day The growth of television-trained, Arabic-speaking when Al Jazeera and, I think, Al Arabiya run for 24 journalists has increased hugely in the last 10 years. hours a day I understand from your own costs it The staV are available not just from the Al Jazeeras would only cost a further £6 million to run it for 24 and Al Arabiyas of this world but obviously in hours? Is that something you are going to aim to do? national television stations, in local television Mr Chapman: I would obviously like to run it for 24 stations, sometimes working with the media where hours. When we put in the original submission it was we can train them to do television skills so, yes, I a 24-hour service. I think we have gone far enough think the opportunity to come to London to work in terms of reprioritisation inside the World with the BBC with all of its editorial standards and Service’s limited resources. £6 million on one level high brand values will be very attractive to many does not sound very much but it is the budget for people. One of the things that we can guarantee is eight or nine language services in the World Service. that the agenda will be a free and unfettered one in There is neither a case nor an appetite for further terms of covering the stories in the Middle East. For closures of language services to fund that gap. I do some staV who currently work for some not think it is appropriate because you cannot make international television services in Arabic (not the out the intellectual case for it. You cannot make out BBC’s) there is a sense that there are no-go areas in a valid case that it is an appropriate thing to do in terms of the journalism, in the sense that if you are broadcasting terms. I would like to see that gap funded by a particular country or a particular closed and I have said to the Foreign OYce and I organisation it is a bit hard to do searching have said to Government, “Please will you close that journalism about that area of the world if you are gap,” and we have got to carry on those discussions. getting funding from there. When you talk to people V We are obviously coming towards a CSR now and privately about these issues, sta who work in those there may be an opportunity in that context to raise stations, one of the attractions of the BBC would be that issue again. It would be much better if it was on to work in an editorial climate where that is one of 24 hours a day. the fears you do not have to think about.

Q148 Mr Hamilton: It is ironic of course that the Q151 Mr Keetch: I am glad you said that, Mr Foreign OYce lost £6 million on one property deal Chapman, because when the Committee was in in the last financial year, but that is neither here nor UAE we met some journalists who felt they were there. Do you think that your eVectiveness as an being self-censored in that respect, which leads me Arab TV station is going to be significantly on to my second question about content. It must be hampered by that 12-hour gap? If a news story said that Al Jazeera broadcasts some graphic images comes up while you are oV air are you going to be that would not be broadcast on the mainstream able to broadcast specially? How are you going to be BBC. Will you be constrained from doing that? The able to cope with that when you are reporting? broadcasting of the beheading of somebody, for Mr Chapman: It would depend upon the scale of the example, which might be seen on a television station story. On the morning of a major story, if it was in the Middle East would not be seen here. Would flagged up in advance, I think we would have to rush you broadcast that? things together and start early on that particular Mr Chapman: No, we would not broadcast that morning. The trouble with news is that it is not because in the end what matters here is that the predictable, it is unexpected, and you do not have editorial values and standards of the BBC’s Arabic that kind of nice easy run-in period, and therefore I TV service are those of the BBC. There is not a would very much like to see this gap closed, yes, I separate set of standards—not that I am saying there think it would add strength to the oVer. All I can say should be—for any part of the BBC’s output; it is all to you is that I keep on arguing the case. the same standards. If we judge editorially that it is inappropriate, it is insensitive, it is wrong, it does not add anything to the telling of the story to broadcast Q149 Mr Keetch: Two quick questions, if I may, beheadings, we do not do that and the Arabic service Chairman, one on staV and then one on content. On is not going to be running a separate editorial agenda staV, following on really from what Mr Hamilton around those images and issues from the rest of the said, are there people in the industry in that part of BBC; absolutely not. the world with that knowledge to permit you to do this? I know some of your previous staV have been poached by Al Jazeera and others and a recent editor Q152 Mr Keetch: So the judging of the content on and general manager with the Middle East that kind of issue would be done on a BBC basis not Broadcasting Corporation in Dubai has joined your on a Middle Eastern basis? good selves. Mr Chapman: Yes, absolutely right. 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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Q153 Mr Purchase: Just picking up you were saying freedom of information. One of the reasons why we there is no intellectual case for doing this rather than have made a very strong case and a right case for that, this Committee decided very strongly that we changing the mix of languages and the closure of the wanted to extend the reach and service of the BBC Eastern European language services was because we to the Arabic-speaking peoples. We were very could argue that in terms of impact declining, in powerful in our demand for that. I understand that terms of access to free and independent £6 million is not easy to come by, but in the end this information—far more than was around at the time is about making a qualitative judgment as well as a of the Cold War—it is a completely diVerent media quantitative one. Given the critical nature of this climate. If you go to the Czech Republic or Poland arena of the Arabic service, tell me what now, it is a completely diVerent society and on the methodology you employ to refute any intellectual first one—relative geo-political importance—you case for putting more into the Arabic service than for could make out a strong case that it would be better something else? to invest more money in the Islamic world at this Mr Chapman: I think there is an intellectual case for particular time, with all the conflicts and issues that a 24-hour service; there is no doubt about that. The flow from it, than to carry on investing a large sum of issue is about making relative judgments, of course money (over £10 million in Eastern Europe). In that it is. When we did the review of all of our what were sense, that is the intellectual apparatus and that is then 42 language services, we looked at various the framework that we have to use. That seems to be criteria, including, as I said earlier, the broad geo- the most sophisticated around. I do not think there political importance, the issue around the extent to is a more sophisticated one. It is one that does throw which people had free and independent access to up some pretty clear priorities. independent media, and the third issue was were we making an impact. All the remaining language services are doing a pretty good job against those Q156 Sir John Stanley: We have to try and deal with three criteria, so it is pretty hard to argue that we the world as it is evolving and as it is now and since should just close all these other things down, move you made what I think was a very good strategic all the money oV into the Arab world and Middle decision to establish the Arabic television service, East, even though there is a strong case for doing the world has moved on further. I would suggest that more broadcasts to the Arabic world and the Middle the overall British interest, and indeed the free world East. In the end everyone has to accept that the interest, in you achieving 24-hour coverage with World Service in its plans up to 2010 has your Arabic television service is now even more reprioritised something like 18% of its budget over a compelling than when you first took the decision to three-year period, far, far higher than RPI, in order establish the service on a 12-hour a day basis. for all the things to happen that I have talked about, Indeed, the Prime Minister’s speech last week in and I think that is the right level of prioritisation and terms of how important it is to try and mobilise the the right level of eYciency savings. If we were to do modern Muslim world, I would suggest, adds to the more I think people would be coming to me and case for this being so compelling. The question I saying, “Why are you stopping broadcasting to would like to put to you is have you made any Rwanda? Why are you stopping broadcasting to approaches to your parent department, the Foreign Russia? Why are you stopping broadcasting to other OYce, for going for some form of supplementary parts of the world where there is a need for the World additional grant from either the FCO or indeed a Service?” You have not got the right sort of supplementary contribution from the Treasury to in attitudes. what is by the standard of public expenditure an incredibly small amount of money with potentially a Q154 Mr Purchase: That is why I am asking you huge benefit for Britain? Have you put that about your methodology because I accept we can all possibility? I say that against a background of the make judgments about these things but this is a Secretary of State for Health last week, she suddenly qualitative as well as a quantitative problem— came to the House and announced she had found Mr Chapman: Yes, it is. £750 million for community hospitals, which those of us with community hospitals in our constituency Q155 Mr Purchase: I was asking you—and I found very welcome. If the Health Secretary can understand it is diYcult—is there a broad suddenly find £750 million, would it not be beyond methodology employed by the World Service to the wit of yourselves and the Foreign OYce to find determine whether to do this rather than that? £6 million out of the Treasury for what by any Mr Chapman: There is indeed and I think I international perspective is an incredibly cost- articulated the three broad criteria we use in making eVective addition to your performance? those judgments. You were talking about British Mr Chapman: I must agree with you! The point is I foreign policy objectives and you have to be broadly think it would be an incredibly cost-eVective cognisant of those. We are not operating in a totally addition to our performance. It would be a very isolated framework. That is just not a realistic mind- good thing to do. We made out the case. We made set. You also have to take into account the out the case first of all for funding the Arabic broadcasting issues and the media issues, which is television service during the spending round of 2004. the specialism that we bring to the table, and We subsequently went through the reprioritisation understanding those markets and understanding the exercise which resulted in the outcome last October. position of those societies in terms of access to I think the BBC has gone a very long way to helping 3471162002 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams this to happen. I would very much like to see the Iran, and the Foreign OYce are presently Foreign OYce and Treasury help us close the gap considering it. I think it is fair to say that they are and make it possible to be on air 24/7. won over by the value of it and the case for it. I think they think it is a good idea but they then have to have those conversations you talked about with the Q157 Sir John Stanley: Could you answer my Treasury and they will need to have those specific question. Have you made a specific request conversations in the summer and autumn to try and Y to the Foreign O ce to seek the additional funding see whether we can get the sort of funding we are of £6 million? talking about for a Farsi TV service. Coming back Mr Chapman: We have over the last two years made to Sir John’s point, it would be the source of some a number of requests in this area and they are very sort of supplementary bid outside the CSR process. aware of our request. I think you have to look at Farsi television outside the CSR process because it is a significant sum of money and it is a special need and a special case. I Q158 Sir John Stanley: And they have been turned very much hope that the FCO will persuade the down? They must have been, presumably? Treasury that it is a good idea. Mr Chapman: At the moment there has been no money forthcoming but we are heading towards a spending review process now which will start in the Q161 Chairman: We will do our best to help. Can I early part of 2007 and I am expecting it to be a major just take you to our visit yesterday where we saw the part and plank of our bid. very interesting on-line website services that you Chairman: I think we have seven minutes before a have in Farsi, Arabic, Russian and other languages. vote so I want to cover three more areas quickly. Clearly your new media operation is very important. You are investing a lot of money in that area. How do you see that going in your investment plans? Q159 Mr Pope: I have a very quick last question on What proportion of your annual spending is going this topic which is to say I can understand why you to be spent on these new media? said in response to my question earlier that you Mr Chapman: I will ask Alison to talk about the wanted it to be all grant-in-aid funded and have it proportion of spending in new media. I think that we operating to the BBC ethos and attracting the have done very well so far in this area. I am not journalists, but if the option is a 12-hour service that complacent about it but I think we were one of is 100% funded by grant-in-aid or a 24-hour service earliest international broadcasters to really see the which is only slightly funded by additional revenue, value of new media activity in languages additional perhaps generated by advertisement, would that not to English. I think we have been selective about our be a better option? Would it not be better to get up investment. I do not think it is appropriate to invest and running a 12-hour service and have a review of millions of pounds in every language because the this and say, “We can expand to a 24-hour service at user base in that society is not there to access it, it no extra expense to the taxpayer. We can generate would be wasted money, but in seven or eight this ourselves”? Would you at least consider that? languages we are a 24/7 news operation, with audio, Mr Chapman: We did consider the whole issue of with good images, with good updated analysis and commercial funding when we put forward the bid in text and background interpretation of the main the first place and the truth is that the range and international stories. The next development will be source of commercial advertising revenue that is in to provide those top stories in video because as theory available to the BBC for an Arabic TV service societies mature and broadband access becomes is limited, and even taking money to do a hybrid to more widespread, people like to be able to look at get some of it funded by commercial and some of it the latest news on their PC as well as to read about funded by public money, raises all sorts of issues and it or listen to it. That is part of our priorities. In terms given the source of a lot of the advertising revenue of the spending position? and the societies which it would come from, I think Ms Woodhams: Last year we spent about £14 million it would cause us editorial diYculties. directly on new media activities, which is about 7% of our total grant-in-aid spend, but that will go up by another £1 million this year and probably another £1 Q160 Chairman: Can I ask you about where we are million the following year. with the funding of a Farsi language television service? Jack Straw when he was Foreign Secretary Q162 Chairman: What about the move towards gave evidence to us and said that he was very getting broadband for all your on-line services? sympathetic to the idea but the problem was the When is that going to happen? Treasury. I am paraphrasing but that is basically Mr Chapman: It depends on how you define what he said. Have you got anywhere with broadband. If you define broadband as services developments on that front? compatible for a broadband user, I think we will be Mr Chapman: I think we are at an earlier stage than in a position to oVer strong, high-quality video we are on the Arabic television front. Where we have work, news reports in video to accompany our text got to with that is we have been in discussions with and stills, next year. That is part of the investment the FCO about it. We put forward a detailed Alison is talking about. The thing with new media is argument as to why we believe it would be a good that everyone gets very excited about new media, thing to do, for the people of Iran, for audiences in and as a former Director of BBC On-Line myself, I 3471162002 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Mr Nigel Chapman and Ms Alison Woodhams get very excited about it too, but the investment has Mr Chapman: I was criticised in that way by the to be a proportionate. There are many societies to Financial Times when we launched what was the which the World Service broadcast now which are a second Chinese website. Let me be absolutely clear million miles away from broadband. In fact, they are about this. The BBC World Service funds and a million miles away from narrowband access to the produces two websites in Chinese and Mandarin web on any large scale, so we cannot get into a aimed at the Chinese market. One is BBC position where we impoverish people who rely Chinese.com, which is a news site which, to use your upon radio— phrase, is hard-hitting and no-holds-barred in terms of the range of subjects covered. That is, as you say from your own experience, comprehensively Q163 Chairman: You have got clockwork radios on blocked from access inside China. Because there is a the one hand and broadband on the other. demand for it, we also launched a much smaller site, Mr Chapman: I have to deal with this complicated which is mainly about English language teaching continuum which is diVerent in every society. We and British culture, how you can come and study have to get that right. here and general information about Britain, which is not blocked by the Chinese authorities. In addition, Chairman: Afinal question from Greg Pope. we also have partnerships with radio stations in China that broadcast our English language teaching V Q164 Mr Pope: You have launched a website aimed programmes. You can cut o your nose to spite your face here, if you are not careful. You could take the at the mainland Chinese market which is quite an view: as I was blocked with my news, I am not going interesting departure because the BBC’s main to make any eVort at all to reach out to people in website is, by and large, blocked in China. We China whatsoever and I am not going to do anything discovered this when we were there a month or so else. We took the view that it was worth putting a ago. I notice there is not a link from your website to limited investment into an English language the main BBC website. Is this because you are not teaching site, which complements our Radio work carrying any hard-hitting stories that may upset the that is specifically targeted to China. That seems to Chinese Government? Is there a danger that you will me quite reasonable. People can accuse us of get portrayed in the same way as, for example, whatever they like but, when you look at it factually, Google have been portrayed as trimming in order to it does not stand up to analysis. access what is potentially a huge market? I Chairman: Mr Chapman and Ms Woodhams, thank understand that but I think there is a danger that you you for coming. may lay yourself open to that criticism and even The Committee suspended from harsher criticism from my colleagues. 3.37 pm to 4.00 pm for a division in the House.

BRITISH COUNCIL

Letter to the Chairman of the Committee from Martin Davidson,Deputy Direc tor General, British Council,dated 16 June 2006 Dear Chairman, When we spoke on Wednesday I undertook to bring you up to date with the British Council’s plans to reorganise our work in the UK regions. This forms part of our wider UK Operations Change programme which will see a net movement of posts out of London. This reorganisation aims to increase eYciency and service delivery in order to reach millions more people. After careful consideration of our UK operations, our Senior Management Team has approved closure of some regional oYces in the UK. We are currently in consultation with our Trade Union Side and the Public and Commercial Services Union about how we implement this decision. Our oYces in Bristol, Cambridge, Nottingham, Birmingham, Newcastle and Leeds will be closing, with an additional loss of eight related posts in our London oYce and four in our Manchester oYce. We are also withdrawing outreach staV from Reading, Bangor, Aberdeen and Canterbury. These changes will aVect 35 posts. Twelve of these are based in Manchester and London and we expect to be able to redeploy these staV to new posts with little diYculty. As some of the 35 posts are vacant, 21 staV based in the regional oYces will be aVected by closures. We will support these staV in finding jobs elsewhere in the British Council. Where this is not possible, we will help them find alternative local employment through the Cabinet OYce Civil Service Initiative. The main work of our regional oYces has been to support Government-funded scholars and deliver UK British Council programmes in the region. The landscape has radically changed over the years and the number of Government-funded scholars managed by the British Council has fallen from 20,000 to around 3,300 today. In addition, new communications technology and changing expectations enable us to deliver student services and programme management more eVectively and eYciently by creating all-UK delivery 3471161012 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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teams in our metropolitan centres. This mean that the regional oYce network is no longer required for these functions. At the same time we need to increase our ability to establish strong regional partnerships. We will do so by establishing senior regional partnership manager posts able to draw on the British Council’s UK-wide expertise. Where possible we have held face-to-face meetings with staV aVected and have notified the others by telephone. If you wish to discuss this further, or receive additional information please do not hesitate to contact me. Yours sincerely, Martin Davidson Deputy Director General

Written evidence submitted by British Council,received on 4 July 2006

Introduction The British Council plays a central role in building long-term relationships for the United Kingdom. These relationships increase appreciation of the UK’s creative ideas and achievements and strengthen mutual understanding between the 110 countries in which we operate. We do so in order to win long-term influence for the UK, to build trust with other societies, and to underpin the country’s reputation among relevant target audiences. We believe that the best approach to public diplomacy is to work in areas which build mutual benefit for the UK and other countries. We respond to the identified needs of our audiences by matching them to the priorities of our UK stakeholders, institutions and wider society. We use the specialised resources and expertise of the UK in areas such as creativity, science and innovation, English language, education, information and knowledge, and governance and society. Our work contributes to a range of overseas priorities set out by the Government, and principally the strategic international priorities 1, 3, 4, 5, and 6 laid out in the FCO’s document, Active Diplomacy for a Changing World (Cmnd 6762, March 2006). In addition to working closely with the FCO and BBC World Service, we work in partnership with, and on behalf of, the DfES, DFID, DCMS, the devolved administrations and a range of public and private sector bodies in wider society.

Highlights of 2005–06

Creating and sustaining long term relationships Against the backdrop of continued tension and conflict in the Middle East, the London bombings of July 2005 and issues with global resonance such as the publication of the Danish cartoons, building trust and mutual understanding with the Arab and Muslim world continued to be a top priority. We concluded our five-year programme Connecting Futures which brought together young people from 44 countries, directly involving 30,000 participants and a further 350,000 participants through intermediaries. Millions more were reached through various forms of media. Approximately 70% of all participants in the programme worldwide have been Muslim. Together with over 500 partners we have built mutual understanding, learning and respect between young people by linking individuals in diVerent countries and encouraging them to work on joint projects and share their experiences, ideas and skills to make a diVerence both in their own communities and internationally. We are now developing our Inter-cultural Dialogue project, which will draw on the achievements and lessons learned from Connecting Futures (particularly in working with influential individuals respected by younger populations) and move to a diVerent focus of facilitating leadership training for young leaders between the UK, the rest of Europe and countries with significant Muslim populations. Acore element of the narrative for the London 2012 Olympic bid was about con necting young people through sport. Dreams & Teams, a programme designed to develop the leadership and volunteering skills of young people which we manage in partnership with the Youth Sport Trust, was, and still is, an important part of that narrative. It is active in over 30 countries, where it has been endorsed at the highest level. Other IOC members understood what the UK is doing for young people and sport because Dreams & Teams was on the ground in their countries. The UK bid team, including the Minister for Sport, used Dreams & Teams as a way in to talk to key decision makers. The Minister for Sport believes that the involvement of IOC members in Dreams & Teams may have made a crucial contribution to the vote in Singapore on 6 July. 3471161013 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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In south-east Asia we created opportunities for young adults to build relationships through our Global Young Leaders Programme. Through training and debate, the programme helps 15- to 25-year olds acquire the skills and confidence to get involved in their communities. Activities are organised in each of the participating countries (Indonesia, Malaysia, the Philippines, Vietnam and the UK) and culminate in a 10-day international camp, which in 2005 took place in Indonesia.

Reform and Capacity Building We continue to assist Iraq in its international re-engagement and in building ties with the UK. We have now provided training and networking events for more than 200 university senior managers, ministry staV, academics and media and health professionals, and run six management development programmes in partnership with Birmingham and Nottingham universities in support of Iraq’s higher education reform programme. Amongst other work, we engaged with Iraqis in raising political awareness, representation and participation in the political process in the run-up to the October 2005 referendum and December 2005 election through our management of DfID’s political participation fund. We have launched an innovative regional school leadership programme using the latest video- conferencing technology bringing together experts and school heads from several Middle Eastern countries with their UK counterparts. We are also addressing issues of vocational training needs in partnership with a number of education ministries in the region, and developing a cross-Whitehall education strategy. In Afghanistan we continue to work closely with ministries in providing teacher training for English, and in supporting the Higher Education and NGO sectors. Our work in 2005–06 supported Afghan governance and reform, and promoted the arts through sponsorship of UK-related theatre productions and the screening of British documentaries. Since committing greater resources to Africa following the 2002 spending review, we have worked closely with the Commission for Africa and with reform-minded governments and institutions in the region to strengthen civil society and assist in the development of transparency and accountability. Our InterAction leadership programme provided transformational leadership skills to more than 1,400 civil society leaders and engaged 40,000 wider change agents in areas such as English language capacity building.

Promoting the UK’s creative ideas and achievements We chose climate change as the major theme for our work in science and innovation to underline the leadership shown by the UK on this issue; the Government’s commitment to use both the G8 and EU Presidencies to renew eVorts to confront climate change provided a catalyst for us to play an important role in taking forward the debate and to contribute to UK policy objectives. To this end, our ZeroCarbonCity programme included exhibitions, city debates, public talks, youth conferences, online discussions and school events. To date the programme has taken place in 60 cities with visitor numbers often exceeding 10,000 at each venue. By the end of the project in 2007, ZeroCarbonCity will have taken place in 200 cities in 70 countries and will reach 8 million people worldwide. ZeroCarbonCity has also had a significant presence in the UK with the NorthSouthEastWest exhibition shown at the Glastonbury Festival, in Trafalgar Square, the Royal Society, the Science Museum and, most importantly, at the G8 Summit itself. An independent evaluation of the programme concluded that ZeroCarbonCity allowed the British Council to make, “an intelligent and imaginative contribution to the Government’s objectives . . . The programme is widely viewed as having made a significant contribution to the UK Government’s priorities”. The British Council-supported production of Love’s Labours Lost was the first performance of a Shakespeare play in Afghanistan for over 17 years. For post-Taliban Afghanistan, the production resonated strongly with target audiences. It was one of the first productions in which men and women shared a stage and as Mosa Radmanish, Head of Afghan Radio and Television said: “This was a very important event for several reasons. The most important was that men and women worked together on stage. This showed that women have the right and the freedom to act, to be actresses”. We continued to attach high importance to developing cultural contacts with Iran during the year. We followed up our ground-breaking Turning Points exhibition of 2004 at the Museum of Contemporary Art in Tehran by working in partnership with British and Iranian institutions in a new initiative in cultural heritage and by working with the UK’s Field Studies Council and Iran’s Department of the Environment in developing environmental education centres in the Anzali wetlands.

Promoting UK Education In the UK we worked closely throughout the year in partnership with the DfES and the UK education sector to follow up the success of the first Prime Minister’s Initiative on international education. In developing the successor strategy, we have worked to address issues such as increased international competition, the quality of the experience of students while in the UK, and improved alumni tracking systems. While the new initiative, launched by the Prime Minister and our Chair, Lord Kinnock, sets 3471161013 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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ambitious targets for 100,000 additional students by 2010–11, it also recognises the need for a greater emphasis on educational partnerships and exchange as many countries develop their own capacity both for post-graduate teaching and research. In China and India, we continued to re-focus our work to reflect the growing demand amongst UK stakeholders for building stronger ties as these two countries’ economies and influence grow. In India, we worked closely with the High Commission in New Delhi to deliver the year-long public diplomacy initiative, with education road shows reaching 100,000 people across six states, and with an innovative range of activities on climate change. We raised £3.5 million in private sector funding for the UK-India Education and Research Initiative, launched by the Prime Minister during his visit to New Delhi last September. We reported on our work in helping establish the UK as the second most popular study destination in China (1% behind the US in terms of market share), in our submission to the committee’s inquiry on East Asia (May 2006), and on building exchange and co-operation links between UK and Chinese schools. We also reported on our work in showcasing the UK’s creative industries and providing opportunities for the building of partnerships, and on our work in assisting reform of legal, social and economic institutions. We have worked closely with the British Embassy in Beijing to develop a three-year public diplomacy strategy which has been presented to the Public Diplomacy Board, demonstrating how we intend to take forward the Connections through Culture programme and take advantage of the opportunities oVered by the Beijing Olympics and Shanghai 2010 Expo.

Supporting policy change In partnership with the OSI we continued our work in improving the understanding among influencers in key European countries of Turkey’s long-term ambitions for closer ties with the European Union. This built on the role we played in the creation of the Independent Commission on Turkey (ICT). Made up of a group of distinguished European policymakers, including former heads of state and governments, the Commission examined the challenges and opportunities presented by Turkish membership of the European Union. After the report was published the ICT asked that we continue to work together. They recognised that the British Council oVered a politically independent forum for debate and a presence both in Turkey and every EU Member State; this meant that we were ideally placed to facilitate international exchanges between experts and politicians. We arranged the ICT follow-up visit to Turkey for talks with the Prime Minister, Deputy Prime Minister and leading academics and commentators, and we will be organising the visit which continues this dialogue in September.

Provision of information about the UK As part of our work to improve understanding internationally of the role and contribution of Muslims within British society, we worked with the Association of Muslim Social Scientists to produce British Muslims: A Media Guide. The document sets out dispassionate and accurate information about British Muslims to provide a broader context for the international media against which the reporting of day-by- day events can be judged. It is published in the belief that a detailed and many-sided understanding of communities within British society gives us a fuller, more subtle and more accurate picture of Britain, its faiths and cultures. After two well-attended launches in London and Glasgow, the demand for the book was such that the first print-run of 10,000 copies was distributed within the first two weeks. We will reprint more copies shortly and are talking to partners about translating it into Arabic, Urdu, Bangla and Bahasa Indonesia, thus enabling us to reach a wider number of influencers in countries of critical importance overseas.

Direct teaching of English and Examinations Young aspirants, and people with potential seeking to participate in the global economy, are looking to acquire (a) professional skills, (b) the means to communicate internationally and (c) globally recognised certification of these competencies. Our English teaching and exams work directly meets the second and third of these needs, thus providing the basis for UK education opportunities which meet the first. In 2005–06 we taught English to over 325,000 learners (3% more than in the previous year) in 53 countries. This work earned us income of £81 million. We also delivered 1.3 million UK examinations to over 925,000 candidates worldwide (an increase of 7% on 2004–05) achieving £25 million in export earnings for UK examination boards. Internal surveys demonstrate that we are having a direct impact on how our English teaching assists in improving perceptions of the UK as a source of high quality learning opportunities. In Malaysia, for example, 63% of our students expressed the aspiration or intention to study in the UK. English teaching and exams are thus a key driver for drawing in the kind of people that the UK wants for a long-term public diplomacy relationships. We begin the process of building lasting relationships with the UK for million of young people, by providing UK expertise and qualifications to help them meet their 3471161013 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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aspirations for personal development. We view this as the start of a lifelong journey for people of future importance to the UK, and from which we can select the high-achievers with whom we can develop closer ties.

Public Diplomacy Accountability and Co-ordination We reported to the committee in two recent submissions on accountability mechanisms (October 2005) and on the initial steps to follow up Lord Carter’s report (February 2006). We discussed how we might develop the eVective accountability of the British Council to Parliament and our sponsoring department in the March 2006 British Council/FCO Forum. We have since submitted proposals to the FCO on how the dialogue between our two bodies might work more eVectively. We believe that the answer is not an increase in the number of mechanisms, but sharpening the focus, providing more detailed Terms of Reference, and giving better definition to the mechanisms which exist (these were outlined in an annex to our submission to the FAC on accountability). We fully agree with the committee and with Lord Carter that transparent and eVective mechanisms for accountability to Parliament are essential. We believe these are perfectly compatible with operational independence, and we welcome the recent statements of the committee and of the FCO (in its response to the FAC’s report on public diplomacy) on the importance of arm’s length delivery of our public diplomacy work overseas. We recruit through open advertisement Board trustees in line with good practice amongst public bodies. We are working closely with the FCO and the BBC World Service to develop the structure and work of the Public Diplomacy Board and the Public Diplomacy Partners group, representing wider Whitehall interests in the public diplomacy area. We have seconded a senior oYcial to the FCO to head the public diplomacy strategy and performance measurement unit, and are co-funded the consultancy on performance measurement with our sponsoring department. While strategic direction is essentially an issue for the FCO, we are closely involved in discussions on determining priority countries, themes and developing strategic country plans under the aegis of the new Board.

Taxation and Status In 2005 we established a pro-active policy of regularising tax and status issues across the global network. The process and timetable was endorsed by the British Council Board in 2006 and is in line with the recommendations of the Carter Review. Countries have been divided into three categories according to agreed criteria: “critical”, “priority” and “desirable”. Our aim is to resolve all “critical” and “priority” cases will be resolved by December 2007 and “desirable” countries by December 2009. The Board acknowledges, however, that in some cases our ability to regularise will be dependent on the co-operation of the host government and the existence of appropriate legal and fiscal frameworks.

Measuring Success We place great importance on systematic monitoring and evaluation of all our activity. During 2005–06, we simplified and realigned our scorecard to reflect Strategy 2010 objectives. We maintained performance in our impact measures against 2004–05 except for one area—long-term relationships. We feel that targets in this area were perhaps too ambitious in a year of change. We are currently investigating why this happened and have introduced a new monitoring process to highlight potential problems in-year. We were successful in reaching millions more people both directly and through our web and broadcast products. The positive impact results achieved through our large scale global and regional products—Connecting Futures, Dreams and Teams, InterAction and ZeroCarbonCity—demonstrate how we can achieve greater impact through large-scale regional and global programmes.

Value for Money,Improved Efficiency and UK Operations Change Following extensive consultations, the British Council Board approved a major programme of change in our UK operations in March 2006. The objectives are to strengthen our professional expertise; improve, standardise and realise eYciency savings in our project and contract management; and enhance our capability to support innovation and customer service in the UK and overseas. We have developed specific, radical proposals for more eVective, leaner structures which will deliver these objectives, which we will implement during 2006–07. We have maintained a network of small oYces around the UK for some time. These oYces were geared to administering scholarships, the numbers of which have declined over recent years and a decision has therefore been taken to close them. There is a need for a more strategic engagement with the English regions. We have significant experience of working with partners in the devolved nations and the proposed new structure will put a greater emphasis on managing relations with important stakeholders across the country, including in the nine English Regional Development Authorities. We propose to put in place senior regional relationship managers who are active and visible in the regions but who are also able to inject the UK 3471162003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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regional dimension directly into our thinking in both the UK and overseas. We expect this process to be completed by April 2007, in keeping with the timetable for other changes under the UK operations programme. Following the 2004 spending review, we undertook to seek savings of 2.5% per annum for the 2005–06 to 2007–08 triennium including savings for 2005–06 of £5 million. We have exceeded this target by £0.1 million. When savings of £2.1 million on full cost recovery activity are included, the total savings we achieved in 2005–06 were £7.2 million. Major savings have come from a new Finance and Business System (FABS), introduced in the UK in January 2005. This has allowed us to reduce the number of UK finance posts from 129 to 92 and make additional savings on redundant licences and support costs of local systems. We also made significant savings through improved procurement involving the renegotiating of existing central contracts, introducing central contracts to reduce certain running costs and joining with other government oYces on provision of such items as mobile telephones. By 2007–08 we are required to have made cumulative savings on our Grant-funded programme of £13 million. We intend to make these savings through the continued rollout overseas of FABS, following the successful implementations in India in October 2005 and in China in April 2006, where savings will come on stream in 2006–07. Further savings will be made from the introduction of a new regional structure in our overseas network and the UK Operations change programme, which is designed to deliver a 15% reduction in the cost of grant-funded posts. We are now in the second year of implementing major strategic change under our ambitious change programme, Strategy 2010. We have already completed the transition to 13 overseas regions and further changes highlighted above will take place in our UK operations in 2006–07. These changes will make our delivery of public diplomacy more eYcient and enable us to respond more rapidly to the changing needs and priorities of our stakeholders. 4 July 2006

Witnesses: Sir David Green KCMG, Director-General, Mr Martin Davidson, Deputy Director-General, and Ms Margaret Mayne, Director of Finance and Resources, British Council, gave evidence.

Q165 Chairman: May I thank the British Council for ZeroCarbonCity, which is going to 200 cities across coming to join us. As you know, we regularly have 70 countries and will be seen and engaged with, by you before us, as we did only a few months ago. I will 2007, some eight million people. Those are two ask a catch-all question to begin. What do you examples of where we can really add value for the believe is the purpose of the British Council today? UK. One of the diYculties of public diplomacy is What value does it bring to British taxpayers? how you measure its success. We have been doing a Sir David Green: Our purpose is to win friends for lot of work in terms of how to do that and the the UK and to win friends who are going to be Annual Report that we have produced this year for friends for the long term. Traditional diplomacy is the first time really tries to be as transparent as we no longer suYcient in the world in which we live and can in terms of the success or indeed where we have public diplomacy is therefore a very important tool not done as well as we might have done. Perhaps in order to build a constituency of support for the finally, just in terms of an indication of the value that UK, and I believe vital to our long-term prosperity we bring to the UK, it is quite telling that other and security. What the British Council does is to countries and other analogues look to the British build friendships and long-term relationships with Council as something of a model. So only last month people who are going to be in positions of authority the French have launched a new organisation, and influence in the future, so we target the successor Cultures France, which they say is modelled on the generation, the younger people. Therefore, we have British Council. Similarly, the Canadians, to engage with them in areas that are going to be of Americans, Germans, Irish and most recently the interest to them. That could be the arts, education— Indians look to the British Council as the model for primarily education—science, English language and cultural relations and public diplomacy. sport. I could give you a couple of concrete examples in terms of value for the UK. If you take Q166 Chairman: As you know, we have recently international recruitment, we are the lead published a report on public diplomacy, including a organisation in terms of recruiting overseas students section on the British Council and its work. One of to the UK. There are some one million students if the recommendations that this Committee made was you take into account all the English language that there should be an independent review of your students, FE, HE and students in school here. That work. What is your response to that? Do you have brings a benefit to the UK of £10 billion per annum, any reservations about that proposal? but, more important than that, that is one million Sir David Green: We do have some reservations. We people who could become friends for the UK. agreed with the line that the Foreign OYce took in Another example is the work we are doing on replying to the report when they gave their climate change, which is a key Government priority. submission. We feel that the Carter Review, which We have been running a project called took place over a period of 18 months and concluded 3471162003 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne at the end of December last year, was a thorough Q169 Chairman: Can you give me a rough area of review, and came up with a series of proposals, what we are talking about because 20 actors and a which are now being enacted and that to have a big production, bringing people backwards and further review on top of that would not be forwards must have had a considerable cost. particularly helpful. I think we should wait and see Sir David Green: My expectation would be that it how the new arrangements bed down and then, would be probably in the region of a quarter of a perhaps in two or three years’ time, we should decide million pounds but I do not know precisely what it whether or not it is appropriate to do a further was. review. The British Council has probably been the most reviewed organisation over its history, and Q170 Chairman: When will you know? even in my time there have been two major reviews. Sir David Green: I can find out very soon. There was the Wilton Review five years ago and then the Carter Review two years ago. Q171 Chairman: When you take on these major projects, how does it work? Do you set a ceiling? Do Q167 Chairman: Can I move to one specific issue you have a call for a particular person to work from which your Annual Report refers to as your long- or do you basically approve the proposal and then it standing association with Shakespeare. You co- just develops? produced a production of Midsummer Night’s Sir David Green: No. We are changing the way we Dream in India. Could you tell how much that cost operate now to a commissioning process, but the and how you felt that contributed to the goals of the way it works is that a project plan is put up and is British Council? then approved and there is a budget. Sir David Green: This is a project using Midsummer Night’s Dream as the play that was being performed. Q172 Chairman: You cannot tell me what the budget It was directed by Tim Supple from the RSC. What for this proposal is? we wanted to do and what our regional director in Sir David Green: I do not know. I can easily find out. India wanted to do was to have a director from the Ms Mayne: I would agree that it is in the order of a UK work with Indian actors to do a new, fresh quarter of a million pounds. production of Midsummer Night’s Dream that would then be performed in India and also, it was Q173 Ms Stuart: Sir David, I think this is your fifth hoped, in Sri Lanka, because we were covering both appearance in front of the committee. You are due of those countries. It was sponsored by Hutch, the to retire in March 2007. I hope you will not regard mobile telephone company in India, although in the these sessions as a cruel and unusual punishment. end they came up with less sponsorship than they Can I tempt you to write a letter to your successor had initially promised. It involved 20 or 22 actors which covers three points: one thing you wish you from India, who were auditioned through a series of had not done; one thing you wish you had done; and workshops by the director across India until he had the third a thing you wish your successor could do reduced it the 20 that he wanted to work with. He looking forward? Do you want to answer that then was invited to bring it to the UK as part of the question later in the proceedings? It is quite Complete Works of Shakespeare season at Stratford. important. I saw it and it is a very extraordinary production in Sir David Green: Can I mull over that and come back seven Indian languages but probably half of it is in to it? English. It was critically very well reviewed. Why do Ms Stuart: One thing you would not have done, one I say that is important from a public diplomacy thing you wish you had done, and one, looking point of view? It was demonstrating the mutuality; forward, things which you say in the current state it was using a UK director to work in diVerent ways you could not have done but it is something your within the Indian context, new ways of direction and successor needs to do. also someone with a very deep understanding of Shakespeare. It was also for him very important Q174 Chairman: Can I move on to looking at the V because it was using di erent types of performance overall role of the British Council in relation to the V and a range of di erent sorts of backgrounds of the Foreign and Commonwealth OYce? The FCO people who were taking part. It caused a huge published its strategy paper in March this year called amount of interest in India, a huge amount of media Active Diplomacy. How was the British Council interest. I do not know what the numbers who read involved or consulted in the process of performing about it or actually saw it were, but from that point that FCO strategy? of view it was a very successful public diplomacy Sir David Green: We were given a draft, bearing in event. mind that this is an update of their original strategy that they produced in 2003, and invited to make Q168 Chairman: How much did it cost? comments on it, which I did. Sir David Green: What we are now doing is working with the director and his production to do an Q175 Chairman: Which issues did you highlight as international tour across the world. I am afraid I important? cannot give you the costs. I will have to come back Sir David Green: The strategic priorities where we to you on that.16 I do not know what they were. can make the biggest diVerence are in terms of making the world safer from global terrorism; 16 Ev 72 preventing and resolving conflicts with a very strong 3471162003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne international system; supporting the UK economy; Sir David Green: I think well. and achieving climate change, which is the recent one that has been added. We commented in terms of Q179 Mr Horam: What state are they at? how we could work in support of those. Sir David Green: We have presented a suggestion for how we can improve the accountability mechanisms. Q176 Chairman: In view of that, were you surprised that the British Council is only mentioned twice in Q180 Mr Horam: How forward is that suggestion? the whole document, once on page 42 and once on Sir David Green: The suggestion is that it is several page 47? layers. At the top, it is an annual meeting with the Sir David Green: Yes, a bit surprised, and I did chair, Neil Kinnock, who by the way is very sorry register that. I have, from time to time, made that he cannot be here with us today but he has a representations that I thought we were under- longstanding engagement in CardiV giving out represented in the parliamentary report in terms of degrees. He would have a meeting with the Secretary the proportion of the expenditure that goes on the of State annually. I would have and do have a British Council, and indeed the BBC World Service, quarterly meeting with Lord Triesman, the Foreign that the amount of coverage that those two public OYce Minister responsible for public diplomacy. diplomacy organisations get within the We would, at an annual meeting, present our plans departmental report, and also in the priorities, is not to Lord Triesman and that would be at the point at commensurate with the role that we could play. which the Corporate Plan was being agreed. We have a body called the FCO Forum, which contains Q177 Chairman: Given that FCO has developed this senior oYcials, and Martin Davidson, is my new strategy, does it have any major implications for representative on that. the operational work of the British Council? Sir David Green: It really comes back to the question Q181 Mr Horam: Is that the same as the Leaders you asked me at the outset. All our work is in the Forum? UK’s interests and has to come within the Sir David Green: No. This is an FCO body at senior framework of the international strategic priorities, level but quite a small forum between the Foreign so within the priorities that are being set by the OYce and the British Council to talk about Y Foreign O ce, which are of course the UK’s operational issues and priorities and to interpret the Y priorities, not the Foreign O ce’s; they are the UK international priorities and what that means. Government’s priorities. All of our work—and we have a purpose statement, three outcomes, and then five outputs to help to measure our ability to achieve Q182 Mr Horam: Does that meet as and when those outcomes—comes within that framework of necessary? the international priorities. If you take making the Sir David Green: It meets quarterly. We are very world safer from global terrorism, then the keen to make sure that our country directors in the Connecting Futures work that we have been engaged 110 countries in which we function work closely with in is directly contributing to making the world a their heads of mission and, at the point at which they safer place. That is something we have been doing are developing annual plans, they would discuss for five years involving 44 countries and 30,000 those with the heads of mission and they would get individuals, 70% of whom are Muslim. That was agreement to what was in those plans. very much about building better understanding between people in substantial Muslim populations Q183 Mr Horam: You have a dialogue with the and the UK. Then on preventing and resolving heads of mission in these 110 countries and agree conflicts through a strong international system, an all this? example of how we can contribute to that is by the Sir David Green: That is the theory. I cannot, hand Peacekeeping English work that we do which we on my heart, say it happens but, by and large, that is manage on behalf of the Ministry of Defence, the what we expect to happen. At the point at which we Foreign OYce and we contribute ourselves as well to develop the Corporate Plan, which is now a two-year a programme called Peacekeeping English. Through document, we would discuss that with the Foreign that at the moment some 50,000 police, border OYce and we would get agreement to that before it guards and military personnel are involved in goes forward. That would be through the FCO learning English, for obvious reasons, to minimise Forum. I also meet with the Permanent Under- conflict. I think that is a demonstration of how we Secretary on a very regular basis. I meet him before can help to prevent conflicts. I could go on. Similarly every board, but I also meet him more frequently with the fifth objective of supporting the UK than that. That is very important to keep that economy: there is PMI, Creative Industries and a mechanism strong. We have a Heads of Mission number of others areas in which we are engaged. I Survey which gives feedback on the performance of have given you one example of climate change. The the British Council against our stated outcomes and point I would like to make is that all of our work is how we believe they contribute. within that framework of trying to contribute to meeting those international priorities. Q184 Mr Horam: That is very interesting. In the nature of your work, that is very diYcult to evaluate, Q178 Mr Horam: How are the mechanisms for FCO is it not—this is cultural work, this is selling Britain, oversight evolving? and all these kinds of things. Some of them are very 3471162003 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne intangible. How can you possibly have a reliable Q186 Ms Stuart: Looking through the list of targets mechanism for evaluating whether the money spent and how you measure yourself, I am struck by the by you is being well spent? ones where you have met your target and the ones Sir David Green: It is diYcult. I hope you have all over which you have no influence. Let me explain had a copy of this document.17 If you have it with this. “The UK is increasingly recognised as a you, may I turn you to page 66? We have done a lot country of choice for partnering positive social of work working with academics on how to evaluate change.” That assumes that when it comes to public diplomacy and in particular the building of positive social change, UK plc is miles ahead of relationships. This is pioneering work because none everyone else in the world. If that is so, and the same of our analogues have done it. Some refining still words “we satisfy individuals’ aspirations for self- needs to go on within the methodology. I think it is development” or “this country is ahead of creative helpful in terms of showing us where we are doing ideas and achievement”, if that is the case, then well and where we need to put more focus. If you actually that is not an achievement by the British take those results there, we are doing well in terms of Council; that is a state within the United Kingdom. positive partner results, and that relates to the The question is: if that is so, to what extent does the output that we have, which is that the UK is British Council manage to convey that to the rest of increasingly recognised as a country of choice for the world? partnering positive social change. If a ministry of Sir David Green: The achievement of the British education wants to do some curriculum Council is to make sure that people recognise that development reform, then we hope that they will the UK is strong in those areas of creative ideas or choose the UK, and that will be a measure of that. in terms of education, or indeed in reform. Clearly, Similarly, self-development results are about if we were starting from a weak base and what we individuals wanting to use the UK to help satisfy have to oVer from the UK is not of a suYciently high their own aspirations. Where, as you will have standard, then we would be in diYculty. We are noticed, we have done, on the face of it, less well is lucky in that we have a huge pool of creativity, as on long-term relations. I do not want it to sound like you know, and a very strong education system, et a rather weak excuse, but there is a serious cetera, but our job is to make sure that people know methodology problem with that measure. If I can about it. What this is measuring is the extent to turn you to page 68, the more accurate measure is the which people are actively using the UK in order to one which is the “index at T1/T2/T3 view of the UK study whether to come to the UK or to use distance valuing relations with their country”, which gives a learning courses, which are provided by the UK, or result of 73. That was based on a reasonable sample to learn English or whatever. We can measure the of 42,000 people across the world. I am afraid the extent to which they are doing that. Similarly, if a earlier ones, the two above that, were based on a ministry of education wants to reform its curriculum much smaller sample of only 320, and I do not think or improve its governance of schools, we can that was particular valid. I apologise for that. I hope measure whether they look to the UK or to the US that is why you see a not very positive result there. I or to France or Germany. Our role is very much as think it is mainly to do with the methodology. the facilitator and, in a sense, the marketer of the UK’s abilities and skills, and that is measurable.

Q185 Mr Horam: That “creative ideas” seems to Q187 Ms Stuart: What I am concerned about is that have fallen down in the latest figures. you do not set yourself targets of known factors. If Sir David Green: “Creative ideas” has improved or I go back, I arrived in this country between 1972 and stayed the same as last year, but did not meet the 1974 when essentially this country was a basket case. target, no, that is true. The other point that I would The rest of the world, quite rightly, would not have make is that we have had a massive year of change looked to the UK for positive social change and a within the reorganisation, and I suspect that we whole lot of other things, and your performance might have been a bit overambitious in terms of indicators would have been miserable because no setting the targets. What is helpful about this is that one looked at this country. I am not putting this it does point us to areas where we have got to put question as a critic but as a friend to you. more eVort and more focus and helps raise the Sir David Green: They might be miserable now, debate in terms of staV within the organisation though, because we had failed in marketing what is actually to try to understand what it is we need to do good about the UK. If we had not been able to to improve our performance in these areas. The persuade the ministries of education that our system other one which is not good enough is in customer of higher education funding is well worth looking at, service, which you will have probably noticed. That then we could have failed, regardless of the strength again is something that we need really to work on. of it. We can drill down by country and you see where Mr Davidson: What is important is the specific countries have fallen down and some have exceeded question that we ask, which is: has your involvement the target, but some have dropped much lower than with the British Council changed your perception? they should have done. So: has your involvement with the British Council made you increasingly recognise the UK as a 17 Sir David Green was referring to the British Council’s country which will help meet aspirations? We do Annual Report for 2005–06. specifically ask: has your involvement with us as an 3471162003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne organisation changed your perception? I think they Sir David Green: It was not spontaneous. It was very are an acceptable measure of the value that the carefully thought through, but it was the decision British Council brings into this equation. that we came to because we did not feel that we were having suYcient impact to justify the resources that we were putting in. Given that we have opened in the Q188 Chairman: Can I take you back to public last three years in Afghanistan, Iraq and Libya and diplomacy? We have had the Carter Review and we we are now seeking to open in Algeria, we cannot have commented on that. I have alluded to it earlier. just carry on opening up in countries; we have to What benefits do you think the new Public balance oV and make decisions about where we can Diplomacy Board is going to bring to your work and make most impact. to the broader co-ordination of public diplomacy? Sir David Green: I think the initiative that started Q190 Chairman: Do you make that decision yourself with the Public Diplomacy Strategy Board after the or are you advised to do it by the FCO? Wilton Review helped to co-ordinate the work of the Sir David Green: We made the decision ourselves but major public diplomacy organisations, which is the we then had to get the approval of ministers to close Y Foreign O ce, ourselves and the BBC World in Peru, but it was not an instruction from the Service, but also a number of other players who are Foreign OYce, far from it. important but at a secondary level. What Lord Carter said was that we need to strengthen that Q191 Chairman: I did not say it was an instruction. further and he felt that the Public Diplomacy Board Sir David Green: There was no pressure from the had become too dissipated and he wanted to have a Foreign OYce. much smaller group, which has on it the heads of the Mr Davidson: It is a discussion which we have as part BBC World Service, the British Council, a very of our regular discussions with the Foreign OYce Y senior person from the Foreign O ce, chaired by a about where geographical priorities lie. I have to say minister and then with two external people to bring that in my experience we have never had an easy run a fresh look. The initial signs are good in terms of the with the Foreign OYce whenever we seek to close. In way in which we are co-ordinating our work, the case of Peru, we had the discussion on the basis recognising the fact that each of us has diVerent of what we sought to do. There was quite a lot of things to bring to the table, and that we are not questioning on whether or not that was appropriate trying to homogenise public diplomacy but we are but, in the end, the Department did agree with us recognising that the British Council has something that it was appropriate. diVerent that it can oVer to the BBC World Service. I think there is also recognition that it is a more Q192 Chairman: Are there any other countries complex area of activity than perhaps was first where you have withdrawn or are withdrawing thought. I welcome that because public diplomacy is operations at the moment? very nuanced and it is a complex activity. What Sir David Green: No. progress we have made so far is to start talking about Mr Davidson: There is none under consideration at how we interpret the international priorities in terms the moment. of geographical priorities and see which organisations can best contribute in those countries. Q193 Sandra Osborne: My question is in relation to We have also started to think about what the key your level of independence as an organisation. I theme should be in order to do a pilot project, which know there were fears expressed during the would then be assessed in terms of how eVective it is. consultation on the Carter Report that in some way There are three themes that we are looking at: the new set-up might compromise your climate change; promoting the UK economy; and independence as a British Council, with the new set- creating liberal democracy. DiVerent players will up of the Public Diplomacy Board and the Minister have diVerent things to bring to each of those three chairing it and all that. What would be your themes. assessment of that, albeit it is early days? Sir David Green: That relates to Ms Stuart’s question. I can give you one-third of an answer to Q189 Chairman: Can I take you back to what you your question which is: what would I urge my said about countries in which the British Council successor to do or what would I suggest my should operate? I have just received an email from a successor does? I think I would urge my successor to parliamentary colleague who is concerned at the retain the arm’s length relationship with government closure of your operation in Peru. He points out that and the ring-fencing, because I think that is DfID has also closed its oYce in Peru and the absolutely critical to the strength of the British Serious Organised Crime Agency has also Council and its ability to add value to the UK. When transferred drugs liaison oYcers from Peru to we were having discussions with Lord Carter about Colombia, despite the fact that after the USA, the the report, that was the thing that we were most keen UK sends the largest number of visitors to Peru of to protect, our operational independence. Whilst we any country. Have you been told by the Foreign and accept that we must and should and it is absolutely Commonwealth OYce to close your operation in right that we do work within the international Peru, or did you make this decision purely priorities set by the Government, we believe that it is spontaneously in coincidence with what all these in the Government’s and the UK’s interest for us to other things which have been happening? remain at arm’s length from the Foreign and 3471162003 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne

Commonwealth OYce. That is certainly understood happier if we thought that there was some by Lord Triesman and the senior oYcials within the impediment to a mainstream proper embassy there. Foreign OYce. There is, though, an issue, which will Surely this is where you are most valuable? have to be worked through in time and it will be Sir David Green: We would certainly be able to make something which my successor will have to take on, a very strong impact there and we are able to do that and that is the relationship between the Public in countries like Uzbekistan and Kazakhstan. I Diplomacy Board and the British Council Board would like to come back to you with a proper because there may come a time when the Public response on this, if I may. One of the things that we Diplomacy Board makes decisions which are in have sought to do over the last few years is to conflict with the views of the British Council Board. rationalise the network so that where we have a When I discussed that with Lord Carter, I asked him presence, it is a presence that can actually operate the question which board did he think had really eVectively and make impact. One of the things sovereignty, and he said “the British Council that I inherited when I arrived as Director-General Board”. I think that is an important principle. You was an operation that was spread far too thinly have hit a really crucial spot in terms of making this across the world, with too many country operations work because getting that relationship right between and too many centres within those countries. The the Public Diplomacy Board and the British Council first thing I did was to rationalise that. I take your Board is going to be of critical importance. points. I would like to come back to you with a proper response. There will be other countries which will be ones that we should be considering for Q194 Sandra Osborne: It sounds as if the opening. Angola is another one that we ought to be independence of the board might be under threat. considering opening at some point. I would need to Sir David Green: No, I do not feel that, and the fact look at that more carefully.18 that it was written into the Carter Review is a very Mr Davidson: One of the ways that we have to look clear recognition of the need to respect the at country operations in the future is through the operational independence of the British Council and lens of our regional network. Part of the reason for the editorial independence of the BBC World setting up the regions was to move away from having Service, which runs like a leitmotiv throughout the to have a full operation in every single country and report. That was very good protection. The fact that to look at the ways in which we can operate into ring-fencing has now been in operation since the countries from neighbours. In the case of Angola, we Spending Review in 2000 and Lord Carter said are looking at how we can operate out of South should remain is also an important factor as well. Africa. In the case of Kyrgyzstan, I think we would be looking to see whether or not it is appropriate to expand from Uzbekistan there. In the case of Q195 Mr Mackinlay: On the places, we have dealt Belarus, is it possible, for example, to do more work with the places you have vacated, as it were, but I out of our Russia operation? I think from the days think in previous years I have raised the question of when every time we wanted to expand our operation, Kyrgyzstan. I was interested that you said you had Y it was through a quite expensive fixed cost base on had discussions about the Foreign O ce’s priorities which we then start working; we are looking for a implicit in that but you are not governed by that. I more flexible approach in the future. am like a long-playing gramophone record with Sir Michael Jay on Kyrgyzstan and I make no apology for that. I simply have never been able to get to the Q197 Mr Mackinlay: I am very grateful for that. bottom of why the United Kingdom, either our Obviously in your brief it says ‘Mackinlay will raise mainstream diplomacy or yourselves, are not in Belarus’. You see, I did not. There is probably a Kyrgyzstan. It is a relatively small country but in the lesson not to do that. At the other end of the scale, league table of the “stans”, it is one which at this this summer I hope to visit the British Council in moment of time is not bad, and I choose my words. I Australia. I have never been there and I am looking am incredulous why not, bearing in mind its political forward to it. I did want to ask about states like importance in terms of big players—the United Australia and New Zealand, the places where States of America and Russia are both there English is predominantly the language; the culture is combating a lot of other things. Why are we not Anglo-Saxon to an extent. Australia is practically all there? grant-aided. There is not much income from Sir David Green: Mr Mackinlay, you have also Australia. I suppose I am floundering a little bit. raised Belarus in the past. With places like Australia, is this a high priority for our cultural diplomacy? Surely things like Shakespeare, film, music and drama are going to be Q196 Mr Mackinlay: Yes, and I have deliberately going out there and there is a marketplace. Indeed, held back on that. In fairness and being serious, it is arguably it is the job for those parts of arts and a good point, but you answered that. You said there culture to market themselves. were diYculties and things move on. The Sir David Green: We have got to do a further exercise Kyrgyzstan matter is really is amazing on the in terms of the Change programme and what we are diplomacy side. I do not want to labour the point. doing about reprioritising the expenditure across the We have had plenty of evidence. This committee has world. Clearly that part of the world will be subject expressed concern and dismay about this. There have never been volunteers. It would also make one 18 Ev 72 3471162003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne to that same review. In terms of our operation in split into at least three diVerent organisations to Australia, it is very much around education and perform those same tasks. You can get tremendous promoting the UK’s education as a destination for cross-fertilisation. For instance I heard a statistic the students to come to and also around creative other day that in Malaysia 63% of those people industries. We do a lot of work in connecting up arts coming in to study and learn English through our organisations and promoters in Australia with those fee-paying language school say they want to go on in the UK. There is a similar programme in New and study at university in the UK. You get a lot of Zealand. There are other strong connections in cross-fertilisation and benefit by having the whole terms of sharing best practice in education systems. canvas. I think the answer I would give is: no, it I know that the DfES and the Ministries of would be detrimental to the UK’s interests. Education in Australia and New Zealand are very positive about the connections that we have built there, and indeed in other governmental areas of Q200 Mr Hamilton: Your Corporate Plan for policy work. I think that is a very fair question and 2006–08 predicts a small number of teaching centres it will be something that we look at when we review which cannot be brought to break-even and that you the whole of the canvas of the world in terms of are going to close those. Have you identified any of where we should be putting our priorities, which to those centres? some extent will be influenced by the Public Sir David Green: Yes, we have. In recent months, we Diplomacy Board. have looked at the whole of the teaching operation. I should just add, though, before I forget, that as well as doing the direct teaching for fee-paying students, Q198 Mr Hamilton: Looking at your finances, Sir we do a lot of work with ministries of education in David, I noticed that from the year 2004 to 2005 and helping them to reform and strengthen their own 2005 to 2006 your fees and income from services and English language provision and work within their other sources increased by £19 million and your total ministries of education to do teacher training, to resources by £44.1 million, assuming my arithmetic work on textbook development and on curriculum is correct. Last year, Lord Kinnock told us that reform. That is of course paid for by the grant. We about 60% of the British Council’s income is self- looked at all our centres. We looked at those ones generated. I have not been able to work that out in which were very eVective in terms not only of my head just now. Given your success in generating making an impact but also bringing in revenue to the income and the fact that that income appears to be British Council. We have called those our business increasing more quickly than your grant in aid, do critical group. I think there is in the region of 40 of you think there will come a time when the British those. The ones that do extraordinary well are Spain Council will ever be self-financing? and Hong Kong and centres like that. Then there is Sir David Green: No. another group which is what we have called, and I do not like the phrase particularly, mission critical. Q199 Mr Hamilton: Why not? They are not ones that are going to bring in a Sir David Green: First, can I nail one thing and that significant revenue to the British Council but they is that all of the work we do in terms of teaching are important. If you take Saudi Arabia, for English through our language schools and the instance, a commercial operator of English language examinations that we promote on behalf of services could not operate in Saudi Arabia, but it is examination boards is not in any way subsidised by a very important way of getting to young Saudi the grant-in-aid. It is a completely separate Arabians. Whilst that manages to break even or, in operation and there is no subsidy of those operations recent years, has actually made a loss, we can by the grant. I would put it the other way, that the manage that because this second group of mission value that the UK gets and the UK Government gets critical can help each other. If one of them manages is that for every pound that the British Council to make a small surplus, that can compensate for a receives in grant-in-aid, we turned that into £2.74p loss in a country like Saudi Arabia. Then there are last year. That was because we were able to bring in other ones, and there is a handful of those, where students to study English, we were able to promote actually they are making a significant loss and the examinations, we won contracts through the public diplomacy benefit of those is not that European Commission and DfID, and we did work significant, and therefore we would close those. If for the DfES, et cetera. I think if the grant were you wanted me to write to you with a list of the ones removed or reduced, it would also remove that that we are considering closing, then I would be ability to leverage those funds, which are so happy to do that.19 beneficial. I said in my opening remarks that we were the envy of a number of other countries. One of the strengths of the British Council is the fact that we Q201 Mr Hamilton: We would be interested in that. cover a very wide canvas and the fact that we do Finally, can I ask on the financial issue: our English language teaching, promotion of British predecessor committee in 2004 visited Moscow and examinations and promotion of the UK as an you will recall the problems we had there with the tax education destination for higher educational and authorities and the raids and the rather unpleasant further education students; we do arts and culture situation that your colleagues in Moscow had to put and we work in governance and human rights. We up with. Have we resolved those now? I know earlier do the whole gamut. The other countries have a very fragmented service, and so Germany would have it 19 Ev 72 3471162003 Page Type [E] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne this year there were all sorts of allegations of Audit OYce should perhaps be involved in espionage and ghastly things going on, part of a accounting for public money. Do you have an wider game, I think. Have you resolved that? attitude to that? Sir David Green: I think so but you can never be Sir David Green: We would be very happy to have entirely sure. The criminal case that was brought the NAO do a value-for-money audit, as proposed against our director in St Petersburg has now been by the FCO. I know that they are considering that dropped and we have had that in writing, so that is and will be writing to you shortly. We would very good news. We have paid all the back tax that certainly welcome it. I should say that we have just we were asked to pay, which comes to about £1.4 had our accounts audited by the NAO. That is the million. We have registered all of our centres across result you have in front of you. They spent some Russia. The discussions about the Cultural Centres three weeks in the British Council looking over all Agreement, which is the next stage, was tied up with our accounts. On occasions, they go overseas, and the status issue because we were for many years, if indeed they can go anywhere they want, to make you remember, seeking to establish a Cultural sure that we are spending the money properly and in Centres Agreement that would then legitimise our the way that we say we are. position in Russia. That is now on the table and we Ms Mayne: The big question is: how do you know are in discussions with the Russians on that. We whether £186 million is being spent properly. I think have given our comments and we are waiting for this annual report makes some attempt to show you them to come back. There was a moment, a couple not just that it is being spent in a way that is correct of months ago, when there was a threat to re-open in line with procedures, which is what you would the tax issue in Moscow, but that does not seem to expect the NAO to tell you in their audit report, but have materialised. also what value it is creating for Britain. It is important to say that it is about spending money correctly but also indeed spending it wisely. Q202 Mr Hamilton: By the way, are you happy that that £1.4 million is owed, or is that just a figure they demanded and you paid up? Do your accountants Q206 Chairman: We heard a few weeks ago that you agree under their tax laws? are closing some of your outreach centres in the UK. Sir David Green: Martin was more centrally Where are we on that? Linked to that, what is the involved with this. staV reaction to these proposals and what are the Mr Davidson: We did look at that figure and draw implications in terms of cost? Why are you doing it on advice from international accountants to ensure and what will it mean? that it did meet the best understanding of what the Sir David Green: The reason we are doing it is that tax position is in Russia, which, as I am sure you we are doing a major change of the whole of the UK know, is extremely complex, to really get inside. Yes, operations. If Sir John Stanley were here, he would we felt it was a figure which we could understand. be asking me about staV numbers. As part of what Sir David Green: We have had to close our teaching we call Strategy 2010, we feel the need to reorganise operation in St Petersburg and we had to move out the UK operations in terms of making sure that we of our building there, but we are, I am pleased to say, are as eYcient as we can be and also that we have the opening a new building. I will be there on Saturday right skills and competencies and the right people in when it is being opened by the Prime Minister. terms of the sector areas where we need expertise. Ms Mayne: For the avoidance of doubt, it is We are aiming to reduce by around 100 staV important to record that that £1.4 million did not members on the grant side in the UK, from about come from the grant-in-aid; it came from the fee- 650 to 550. The Change programme will mean an paying part of the activity. increase in terms of the expertise levels in certain areas, particularly those where we want to concentrate and where we have said that we want to Q203 Mr Hamilton: It still came out of your general build our world authority reputation in cultural activities? relations, international arts, international Ms Mayne: Yes, it did. education, and English, those four areas where we still feel we need to build further our own cadre of Q204 Chairman: On the question of the problem in expertise. Why are we going to close the UK regional Bahrain when money was fraudulently taken, will network? This was built up to support students and the British Council be paying that money to the particularly when we had the technical co-operation Foreign OYce? training programme for DfID where we were Sir David Green: The answer to that is yes, although supporting something in the region of 20,000 the Foreign OYce has accepted responsibility for students who came to the UK and needed to be some of it. They have accepted responsibility for looked after in their places of study. That figure, in £38,604 and we have accepted responsibility for terms of the scholarships that we manage, has £110,060. reduced to about 3,000. That UK regional network is over-staVed in order to provide support for that level of scholarships. What has happened is that they Q205 Chairman: On the issue of the general control have started to do other things which have been very of your money, how do we know that the £186 useful things. We believe that what we really need to million that you get from the FCO is properly spent? do in the UK regions is to build relationships with We made a recommendation that the National key partners within those regions, whether it is the 3471162003 Page Type [O] 02-11-06 23:52:54 Pag Table: COENEW PPSysB Unit: PAG1

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12 July 2006 Sir David Green KCMG, Mr Martin Davidson and Ms Margaret Mayne regional development authorities or universities or subject. In terms of what I would have done, whatever at a more senior level. We are going to be thinking back and having the time again, I would putting in place what we are calling relationship have been braver in terms of moving faster in terms managers, who would have that responsibility. They of the Change programme. The British Council is do not necessarily have to be based in all the regions such an important organisation and I feel very around England. Going back to what the passionate about what it can achieve as an functioning of the current members of staV is, a lot organisation on behalf of the UK that some of the more of that work can now be done electronically in changes that we have made I would like to have terms of providing email support to students and made earlier on in order that we could maximise the V that can be done from Manchester or from London impacts and be even more e ective than we are or from one of our centres in Edinburgh, Belfast or currently. CardiV. Q209 Chairman: I switch now to your role in accreditation of English as a foreign language Q207 Chairman: In your Annual Report you have schools. There has been concern expressed in the some information about staV attitudes in a staV past, including by this committee at one time as well, survey but it is only limited information. Could you about the lack of regulation in that area. As a make more detailed information about staV constituency MP I know this because I have had responses available to us? places closed down recently in my constituency. Sir David Green: Yes. Could I say first say that we Some people from India have spent thousands of pounds on fake colleges which they did not know. have had a very good response rate to our staV They have been ripped oV by people who then survey? MORI conducted that for us and they were reproduce a website in a slightly diVerent name very surprised that for the third time running we which looks glossy and they make thousands of actually increased levels of people responding: 73% V pounds more out of people in India. Do you think of all sta responded to the survey, which is very the time has come for mandatory regulation as such high. On the positive side, there is a feeling that there for private schools? Could the British Council be a is a very strong sense of team work where they work: body or the body involved in doing that? 68% felt that. They felt that their managers had Sir David Green: We believe that the time has come listened to them: we had a score of 79% on that. The and we very much welcome the DfES move to go for respondents feel that managers respond to their compulsory accreditation. I am thankful that none concerns: 74%. Where we were less strong was in of the visa scams have been perpetrated, to the best terms of people feeling absolutely clear what it was of my knowledge, in any of the schools that the that we were seeking to do as an organisation in British Council has accredited. To explain the terms of the Change programme and Strategy 2010. context, it is estimated that there are 1,400 English There was a drop in the confidence of the UK senior language schools around the UK. We are the key management team to 40% from 43%, which is a accreditation body, which we do on behalf of worry to me but I think is mitigated by the fact that English UK and 398 of those 1,400—only 398—are there has been so much change and that obviously accredited through us. There are one or two other creates a certain amount of uncertainty. smaller schemes around and between 100 and 150 other schools are accredited through those schemes. We would certainly be very much in favour and we Q208 Chairman: To save time, could you send us think it would be in the interests of the English more detailed information?20 language sector and also in the interests of the UK’s Sir David Green: Yes. The public sector norm is 33% reputation overseas if there was a compulsory as against the 40. Can I respond to the question that accreditation system. I was asked by Ms Stuart at the beginning, which I Chairman: Thank you. We have covered quite a wide said I would come back to? I will be very brief. I am range of questions today. I am grateful and I afraid I cannot answer your question as to what I appreciate your patience while there was a vote. No would not have done but I will write to you on that doubt we will see you again at some point. I am not sure, Sir David, whether you will come before us but I am sure we will see you in some other capacity. We 20 Ev 73–75 wish you all the very best. 3471161014 Page Type [SE] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Letter to the Chairman of the Committee from the Director General, British Council,dated 4 August 2006

Dear Chairman, I am writing to provide the additional information requested by the ForeignAVairs Committee during the recent evidence session on the British Council. Firstly, the committee requested clarification on the costs of the production in India of A Midsummer Night’s Dream. You may recall I estimated in oral evidence that these were in the range of £250,000. The total British Council funding over three financial years (2004–05 to 2006–07) was £259,255. The project attracted £208,000 in partnership funding bringing the total to £467,000.1 This covered the cost of creating this large-scale production from scratch and a four-city tour of India, seen by capacity audiences of 8,500. The project formed one of the centrepieces of the India public diplomacy initiative, jointly undertaken by the FCO and the British Council, seeking to build forward-looking partnerships in areas demonstrating innovation and creativity, aimed at inspiring India’s rising generation of decision-makers to choose the UK. Critics have likened the production in importance to Peter Brook’s landmark staging for the RSC of 1970. The project has been a collaborative venture drawing together British and Indian artists, performers, musicians, technicians and designers to create a new interpretation of Shakespeare’s play drawing on the cultural creativity of both India and the UK. Its aim was to demonstrate the UK’s commitment to working in a mutual manner with India’s artistic scene and to achieving high-profile impact for the public diplomacy initiative. Developed in the seven principal languages in use in India, it has enabled us to help reposition the UK’s cultural relationship with India to one based on genuine collaboration and equality, with 176 positive articles including in most major Indian daily and weekly publications. The inclusion of the play in the RSC’s Complete Works season in Stratford provided added profile in the India media. Additional impact will now flow from two further years of UK and international touring, including seasons in London and Stratford, an extensive return tour to India and visits to East Asia, North America and Europe. These tours will be substantially funded by partners, with the British Council making only modest interventions where necessary. Secondly, further to my comments in reply to Q200, I oVered to inform the Committee of the teaching centres that we are considering closing in 2006–07. These are Kosice, Varna, Chittagong, Istanbul and Tel Aviv. Thirdly, on Kyrgyzstan, whilst we have no permanent public presence in the country, we carry out a cost-eVective outreach programme from our Kazakhstan directorate in Almaty. Each year we demonstrate at least two aspects of the UK’s creativity in the arts. We brough British films to both the 2005 and 2006 European Film week in Bishkek. In autumn 2005 we presented the “Magic Pencil” exhibition of work by illustrators of UK children’s literature, and during 2004 we presented the Barbican Piano trio, the Spree Jazz band and the film “Anita and Me”. In 2005 we also ran a seminar on “Children as Readers” for local children’s librarians and teachers of English to introduce aspects of UK best practice in reader development. This seminar complemented the “Magic Pencil” exhibition, with a British librarian and a children’s book illustrator taking part. This autumn we are planning a short residency for a UK artist to conduct workshops with local artists and show his works as part of a wider UK–Central Asia contemporary arts exchange project. We are also active in Krygyzstan through our implementation of the Peace-keeping English Project (PEP) funded by the Ministry of Defence and the FCO. This supports the professional development of Military English teachers, the development of curricula, the building up of a testing system to internationally recognised standards, and the setting up of self-access centres, to enable Kyrgyz military personnel to participate more eVectively in a multi-national environment. The self-access centres provide services to more than 200 learners of English in Bishkek and Osh. We ran an international summer school in Bishkek this summer for language teachers from countries in the PEP region, including participants from Kyrgyzstan. We also implement two EU funded projects in Kyrgyzstan. The larger of these, “Strengthening the Implementation of the Comprehensive Development Framework in the Kyrgyz Republic”, follows an earlier two-year phase, is an 18-month project, with a budget of 750,000 euros. This works to build capacity in the Strategic Development and Expertise Department of the Presidential Administration to monitor and evaluate progress in implementation of the country development strategy. The second project strengthens the capacity of the National Statistical OYces to provide accurate, reliable and timely data using international standards and methods. This latter project is regional and is also being implemented in Kazakhstan, Uzbekistan, Tajikistan and Turkmenistan.

1 Total non-British Council funding includes £144,000 from the Public Diplomacy initiative fund and 64,000 from Hutchison Essar Telecoms. 3471161014 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Our further plans for Kyrgyzstan in 2006 include outreach visits to promote UK educational opportunities to young professionals, university students and teachers of English, and development of our support for learners and teachers of English through partnership work with a library. Finally, I oVered to provide information on the British Council’s staV survey. Apaper on this is attached. With kind regards, Sir David Green KCMG Director-General

Staff Survey 2006 In response to the Committee’s request for further information on the British Council staV survey please see below a short summary, action being taken and the complete results.

Summary The staV survey was run for the fourth consecutive year by the market research company Ipsos MORI on behalf of the British Council. StaV were invited between 3 January and 3 February 2006 to complete a 44 question survey online in English or a paper version translated into a variety of languages. As in previous surveys, the questions covered staV opinion on management, understanding of strategy, the employment oVer, values, as well as diversity. There was an opportunity to add verbatim comments. The survey is open to all staV in the organisation. In 2004, 61% of staV responded, in 2005 73% and this year again 73%. MORI norm figures are 59% for the private sector and 49% for the public sector. The survey shows a strong improvement in staV perceptions of greater teamworking with colleagues outside their immediate section. There are also improvements in line managers listening and responding to staV concerns. StaV report they know what is expected of them and that they are treated without discrimination. They also feel pay is fair compared to similar jobs in external organisations. Please see below four areas for action: leadership and middle managers, organisational vision, examining leadership and teacher initiatives.

Action The following actions are in train as a result of the survey:

1. Leadership and middle managers The deterioration in the scores among middle managers was noted as a concern. There is a clear gap between perceptions of senior management/country directors and middle managers. This could aVect the organisation’s ability to take change programmes forward. There is a encouraging lesson to learn from the way Country Directors report very positively and do not feel disenfranchised which was a risk identified in the regionalisation programme. This is attributable to the eVort Regional Directors have made in working with Country Directors. Anne Wozencraft, Director Human Resources has already presented the results to the Global Leadership Team and emphasised the need to ensure better communications between Country Directors/UK Heads of Department and their teams with the areas of focus as professionalism, leadership and clarity of vision and goals.

2. Organisational vision The results suggest a need to adapt the approach to help staV understand the organisation’s overall business strategy. Specifically, there is a need for consistency in the language used when discussing the reason for change and in communication coming from the diVerent change programmes. All messages should refer to the 2010 corporate objectives as the context and reason for change. To assist in the goal of ensuring the engagement of staV, an external consultant will give advice to the senior management team (SMT) on staV engagement and models of communication during major change. 3471161014 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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3. Examining leadership Previous resolutions to address the issue of confidence in SMT have not worked. There is a need to re- visit assumptions around leadership held by both SMT and middle managers. Aproject will run over the period May to June 2006 to develop a common unders tanding of British Council leadership in order to recommend actions for SMT to take to improve staV survey measures of their performance.

4. Teacher initiatives Teachers continue to be significantly less positive than other categories of staV. There are two initiatives that are underway. The first is the establishment of the English Job Family Development Project post. The duties will include work on a teachers’ qualifications framework and performance management and professional development for teachers. An experienced middle manager from the English and Exams network took up post on 1 June. The second project post is part of the Global Human Resources Change Programme and focuses on developing a rationalised and clear employment package for teachers and middle managers in British Council teaching centres. An external HR consultant is carrying out the project initiation stage, consulting British Council managers and staV as appropriate.

Results

Question 06 05 04 1 I know what is expected of me in my job 91 91 90 2 I am given the support that I need to do my job well 73 74 70 3 I regularly receive feedback about my performance 62 61 58 4 I regularly receive feedback about how I can improve my performance 48 48 43 5 My line manager listens to me 79 78 77 6 My line manager responds to my concerns 74 73 71 7 I know what the British Council’s three corporate outcomes are 67 63 83 8 I am able to see fully how my job contributes to one or more of the British Council’s 88 89 82 corporate outcomes 9 I have suYcient opportunity to develop the skills I need in my current job 64 65 59 10 I have suYcient opportunity, in my current job, to develop myself for the future 55 55 52 11 I am encouraged regularly to look for ways of improving services to customers and 67 67 64 clients 12 My line manager encourages me to give him/her feedback on his/her performance 46 44 40 13 At work I am supported when trying out new ideas even if risks are involved 57 55 52 14 There is a strong sense of teamwork where I work 68 65 63 15 I regularly work with people outside my immediate section 68 59 57 16 I feel able to voice my feelings, views and concerns at work without fear of disapproval 59 60 55 17 Team working and knowledge-sharing with colleagues in the regions and the UK helps 62 63 61 me to be more eVective 18 I can be open about any mistakes I make at work rather than conceal them 76 7978 19 Where I work, all of the various activity teams are working towards common 605849 objectives 20 I have confidence in the British Council’s UK Senior Management Team at UK 40 43 44 headquarters 21 The British Council’s UK Senior Management Team at UK headquarters 42 43 44 demonstrates the British Council’s values 22 I have confidence in the leadership of my country/regional directorate orUK 596059 department 23 Management in my country/region/UK department does what it says it is going to do 56 56 48 24 Management in my country/region/UK department is open and honest 54 54 45 25 I have a clear picture of the British Council’s plans for the future 52 60 51 26 Where I work, our programmes and services are based on principles of mutual respect, 74 73 0 learning and benefit between the UK and other countries 27 I feel confident that FABS (Financial and Business Systems) will bring long-term 34 41 0 benefits to the way we work across the British Council 28 I have a clear picture of the main aspects of strategy 2010 57 59 51 3471161014 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Question 06 05 04 29 I understand the reasoning behind the main aspects of strategy 2010 51 54 46 30 I understand what strategy 2010 will mean for me in my job 40 41 32 31 My line manager welcomes a diversity of viewpoints and opinions among staV 69 68 65 32 Management in my country directorate/regional directorate or UK department deals 33 32 30 eVectively with poor performance 33 I am satisfied that the British Council’s recruitment policy and procedures are fair and 54 53 47 transparent 34 I am satisfied that, where I work, management applies the British Council’s recruitment 59 58 54 policy and procedures strictly as specified 35 The British Council values all staV equally irrespective of their contractual status 50 48 43 36 I feel I have the correct balance between my work and home lives 53 54 50 37 Where I work people are treated without discrimination 71 71 68 38 My overall benefits package is good 56 54 0 39 My pay is fair compared to others in similar jobs in other organisations 39390 40 If asked by a friend, I would recommend the British Council as a place to work 69 70 63 41 I am proud to work for the British Council 77 78 73 42 I am aware of improvements where I work as a result of the last staV survey 34 37 31 43 I am aware of improvements in the Council as a whole as a result of the last staV 29 31 27 survey 44 I think the British Council is a better place to work than 12 months ago 31 3332

Email to the Committee from Mr David Blackie,Director,International Edu cation Connect Ltd., received on 31 May 2006

FCO Departmental Report 2006—AC omment on Public Diplomacy The FAC have already called for an independent review of the British Council, and we welcome that development and look forward to the response of the FCO. This FCO report notes that the FCO provided grant-in-aid to the British Council of £186 million in 2005–06, “about 40% of the Council’s income”, so we deduce that 60% of the Council’s income comes from other sources. In evidence to the FAC last year, and in response to a question from Mr MacKay about whether the grant-in-aid from the FCO could be cut, Lord Kinnock remarked that “We [British Council] leverage the resource that is utterly dependable from grant-in-aid resources so that we are an organisation that can generate that additional value and those additional resources.” In other words, the British Council explicitly uses the platform of substantial public funding as a means of access to other revenue—via development contracts, as an agency for examinations, as a teaching organisation, publisher, exhibition organiser and so on. Over a period of 14 years my company built a position as the clear market leader in electronic publishing of information about English language teaching in the United Kingdom. This leadership was, in eVect, formally recognised by the British Council when in 1998—at that time nine years since the project had begun—the organisation signed a five year co-operative (with no money changing hands) agreement with us. With well over a year of the agreement still to run, the British Council used their publicly funded position and their staV (those specifically liaising with us) and other resources to set up in direct competition with my company, to duplicate our product and business model, and to persuade our client base to switch allegiance from our service to theirs. Setting aside the issue of ethics (fundamental as ethics should be to the issue of British Council conduct) and also the cavalier attitude of the British Council to a co-operative agreement entered into in good faith, the point is that what the British Council did could not have been done without “the resource that is utterly dependable” ie the material financial support of the taxpayer through the FCO. In this particular case the British Council also loaded the imbalance by invoking the “Prime Minister’s Initiative” and the presumed advantages of the Education UK “brand” as licensed to them by the DFES. The FCO was, we submit, thereby sponsoring unfair and anti-competitive activity and causing irreparable damage to a legitimate tax- paying British enterprise. As a taxpayer who has had his enterprise and his livelihood severely compromised, I submit that such sponsorship is totally unacceptable. That, as it transpires, there is no mechanism, function or personage for holding the organisation, whose response has been one of pure denial, to account in respect 3471161015 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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of any aspect of this merely adds insult to injury. Since none of this story would have happened without FCO sponsorship, the FCO must be seen to accept full responsibility for everything the British Council does, or else drop its sponsorship and allow whatever remains of the British Council to manage on its own. David Blackie Director International Education Connect Ltd.

Letter to the Chairman of the Committee from the Secretary of State for Foreign and Commonwealth AVairs,dated 18 July 2006

Dear Mike, Following the recent evidence session of 13 June, I am writing as promised to provide a response to Question 257 about the British Council.2 The British Council is keenly aware of its duty of care towards its staV and visitors in the Palestinian Territories, as elsewhere, and gives high priority to ensuring their safety. In mid-February of this year it delivered two courses on security for its staV in the Middle East: three staV from the Palestinian Territories participated and followed the guidance they had been given, during the attacks on their oYces in March. Feedback from individuals showed that training helped them in this crisis situation. Since the attacks, the British Council has decided to move to new premises in Gaza and Ramallah. The aim is to re-open the Council’s physical presence as a matter of priority. A security specialist has visited both cities and identified premises which would be suitable both from a security and from an operational point of view, and the Council is currently in the process of agreeing terms with landlords. The Council keeps in daily contact with the Consulate General on security and travel movements. Over the last few months, staV have worked from temporary premises in Gaza but, with the current diYculties, are now working from home. Core services, including running examinations, educational enquiries and events, are being maintained by staV working from a temporary location in Ramallah and from the East Jerusalem oYce. The Council is currently reviewing its strategy for the longer term in order to maintain services while minimising risk to staV and visitors. This will include a greater emphasis on indirect and virtual services. Sir David Green, the Director General of the British Council, has stated: “Our centres in both Gaza and Ramallah provide an important service for students and young people who otherwise have little access to educational opportunities. We are determined to ensure that we can find ways of continuing our valuable work in the Palestinian Territories. While security at the oYces had been reinforced in recent years, having open access to the public has been an important principle for our operations in the Palestinian Territories.” Yours, Rt Hon Margaret Beckett MP Secretary of State for Foreign and Commonwealth AVairs

Letter to the Chairman of the Committee from the Comptroller and Auditor General, National Audit OYce,dated 20 July 2006

British Council

Dear Chairman, In its recent report on Public Diplomacy, your Committee recommended that the National Audit OYce consider a further value for money report on the British Council. My purpose in writing to you now is to confirm that I do plan to undertake a study along the lines you suggest and to outline the way forward. My staV have held initial discussions with the Foreign and Commonwealth OYce, the British Council and your Clerk to identify how best we can deliver a study to address the issues your Committee raised. As we undertake detailed planning and scoping work for the study, we would, of course, like to be able to draw informally on the expertise of your Committee, and I have asked the Director responsible, Tim Banfield, to get in touch with your Clerk after the summer recess, to work out how best to take this forward.

2 Foreign AVairs Committee, Sixth Report of Session 2005–06, Developments in the European Union, HC 768, Ev 74. 3471161017 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Regarding timing, I understand that the Foreign and Commonwealth OYce are commissioning an external review of performance measurement across the field of Public Diplomacy, following which the British Council expects to amend the ways in which it assesses its own performance. I intend to let these changes work through over the next few months, before starting my examination in the first half of next year. Finally, I should add that our longstanding audit of the Council’s financial statements will of course continue, including assessment of the Council’s systems of internal control, both in the UK and overseas. Sir John Bourn KCB Comptroller and Auditor General

Email to the Chairman of the Committee from Kate Board,British Council, received on 21 July 2006

Dear Mr Gapes, I am writing to you, in your role as Chair of the Foreign AVairs Committee, to brief you on the British Council operation in Beirut and the welfare of our staV in these diYcult circumstances. The British Council’s oYce in Beirut has been closed since Friday 14 July. All staV are safe and well. The majority of locally engaged staV have left the centre of Beirut and relocated to the mountainous areas. UK staV are all accounted for and are in the process of being evacuated. Acouple of m embers of staV not in Lebanon when the bombing started have been accounted for and are now in Cyprus. Acting Country Director Andrew Mackenzie is working from within the Embassy along with nine British Council contracted teachers who volunteered to help the Embassy deal with the high volume of enquiries and requests for assistance. (Country Director Amanda Burrell is currently working from the Council’s oYce in Cyprus as she was prevented from returning to Beirut after annual leave on Friday). This arrangement is indicative of the mutually supportive relationship between the Embassy and the British Council in Lebanon, following the FCO’s decision to send a close protection team to provide safe conduct to a British Council teacher stranded in the South of Lebanon after the outbreak of air strikes. The British Council’s oYce building in Beirut has been closed and secured, with the hard drive and key documents moved to the Embassy for safekeeping. Emergency procedures are being co-ordinated by a team in British Council headquarters in London. Plans are in place and agreed with the Embassy for an evacuation of the 30 individuals for whom the British Council is responsible in Lebanon and our staV in Cyprus are on standby to assist them on their arrival. From Cyprus they will then be brought to the UK. The British Council’s oYce in Nazareth closed on 18 July until further notice. The two locally-engaged members of staV are both safe and well. If you would like any further information I can be contacted directly on the details below. Yours sincerely, Kate Board Geographical Director Europe, Americas, Middle East and North Africa

FCO BOARD OBJECTIVES AND PERFORMANCE SURVEY

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 16 June 2006

Dear Chairman, Last financial year, the FCO Board for the first time set itself clear and published objectives. These are divided into five areas: corporate leadership, strategy, delivery, resource management, and learning and development/diversity, and are underpinned by 15 objectives and 52 measurable indicators of success. At the end of the financial year, we measured our performance against these objectives through a Board Assessment analysing our delivery of these objectives, through assessments made by business leads, self- analysis and a Board performance survey sent to a random selection of staV across the FCO. 3471161019 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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I attach the main findings from both the objectives review and the performance survey. You will see that the overall picture shows a steady improvement in all areas, particularly when compared with last year, and that this improvement is recognised by the Board and by staV. However, there are still clear areas for development, notably continuing diYculties with resource management, which we shall want to make a focus for this financial year.

As part of the Board’s commitment to openness with staV, these objectives and the progress we have made against them are all published on FCONet (our intranet). I was particularly heartened by the clear message from the staV sampling that they see value in the Board holding itself accountable to staV in this manner.

I am sending these documents to the Committee as continuing proof of our commitment to share information with you in which I know you to be interested. I understand that the Committee prefers to publish as much of the information we send it as possible, but, as you will see, this is an internal assessment which we have deliberately made suYciently frank to be operationally useful, and which is not intended for wider publication. I should be grateful if the Committee would take this into account when considering how to handle it. Yours sincerely, Sir Michael Jay KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce

FCO ESTATE

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 11 April 2006

Quarterly Return of Estate Sales

My letter of 19 January 2006 enclosed a list of properties that the FCO had sold in the second quarter of the Financial Year 2005–06. In accordance with Sir Michael Jay’s commitment in July 2004 to send the Committee regular reports, I am enclosing a further report which lists the properties sold in the third quarter of the Financial Year 2005–06.

As with previous tables, the figure shown is the gross sales proceeds. Transaction costs will vary, but can be expected to average 6–8%. One of the properties involved, that sold in Antananarivo, Madagascar, was the Residence of a Head of Mission. The properties in Auckland and Brisbane were the Residences of the Consuls General. These three posts were part of the change in network announced in the House by the Foreign Secretary on 15 December 2004. Chris Stanton Parliamentary Relations and Devolution Team

FCO PROPERTY SALES FOR THE PERIOD 1 JULY TO 30 SEPTEMBER 2005

Gross Sales Receipts Post Type of Property £ 11 November 2005 Antananarivo Residence 265,000 11 November 2005 Auckland CG Residence 659,000 23 December 2005 Brisbane CG Residence 376,000 23 November 2005 Brussels Residential 477,000 16 December 2005 Dublin Residential 905,000 Gross Sale Proceeds 2,682,000 3471161021 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Letter to the Head of the Parliamentary Relations and Devolution Team,FCO ,from the Clerk of the Committee,dated 21 April 2006

Dear Chris, Thank you for your letter of 11 April, enclosing the quarterly return of estate sales. As you know, the Committee finds these returns helpful. I have been asked to request some further information, arising from the latest return. First, which grade of oYcial occupied the residential properties in Brussels and in Dublin before they were sold? Second, were any purchases made—or are any planned—to replace any of the properties disposed of? I am sure that the Committee would also find it useful to receive quarterly information on estate/property purchases. Would you give some thought to this and let me know if you will in future be able to include information on purchases, together with the information on disposals? Yours, Steve Priestley Clerk of the Committee

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 3 May 2006

Estate Sales

Dear Steve, Thank you for your letter of 21 April, requesting further information arising from our latest quarterly report of estate sales. As the Committee has requested, the next quarterly report will include equivalent details on purchases in the period. AnoYcer of Counsellor rank previously occupied the property we sold in Brussels. AFirst Secretary previously occupied the property we sold in Dublin. Both sales arose from changes in Posts’ requirements. We have not purchased a replacement property in either case, and there are at present no plans to do so— but it is only with the bigger transactions, such as a new Embassy, that sales tend to be matched directly with purchases. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 15 May 2006

Estate Sales In his letter of 3 April to the Chairman of the Foreign AVairs Committee about the Bangkok compound redevelopment, the then Foreign Secretary, Jack Straw, undertook that we would be in touch with you when the sale had been completed. I am pleased to be able to inform you that the sale was completed this morning, and attach a copy of a press release that was issued by the British Embassy Bangkok at 1700 today (Bangkok time). The purchasers have asked us not to publicise the sale price. I can, however, confirm for the Committee that the purchase price was 3,401,000,000 Thai baht, the equivalent of £49.88 million at the exchange rate achieved. Chris Stanton Parliamentary Relations and Devolution Team 3471161023 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Press Statement

BANGKOK: SALE OF PART OF BRITISH EMBASSY COMPOUND, 15 MAY 2006 The British Government today completed the sale of part of the British Embassy compound in Bangkok. Tiang Chirathivat Real Estate Company Limited, part of Central Group, a Thai retail conglomerate which owns a neighbouring flagship retail property, purchased the 3.55 acres of land.This is the largest ever property sale by the Foreign OYce. The historic Residence, the Embassy and the “green character” of the compound will however be preserved. About £11 million of the proceeds will fund redevelopment of the remainder of the compound, including new staV accommodation, recreational facilities, remodelling of the Embassy oYces and security works. The balance will pay for vital investment elsewhere on the FCO’s worldwide estate.

Notes for Editors 1. The 12.75-acre compound was larger than needed. The site was purchased outright by the British Government in 1922. Originally located on the outskirts of the city, it is now part of the Central Business District. The land sold was the most polluted and the noisiest part of the compound; next to a six lane arterial road (Ploenchit) and the skytrain elevated railway. 2. The War Memorial and statue of Queen Victoria will be moved to appropriate sites near the Residence.

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 13 July 2006

Quarterly Estate Return January to March 2006 Dear Steve, In my letter of 3 May I undertook, in addition to Michael Jay’s commitment in July 2004 to send the Committee regular reports on estate sales, to report purchases as well. I enclose our latest report, which lists the properties sold in the fourth quarter of 2005–06 (Annex A) and all properties purchased in 2005–06 (Annex B). As with previous tables, the figure shown for estate sales is the gross sales proceeds. Transaction costs will vary, but can be expected to average 6–8%—though in the case of the recent and exceptional sale in Bangkok, which will be included in our next quarterly report, the percentage was significantly lower. Three of the properties sold in the final quarter of 2005–06—in Asuncion, Port Vila, and Nuku’alofa—were the Residences of a Head of Mission. The property in Perth was the Residence of a Consul General. These four posts were part of the changes in our network announced in the House by the Foreign Secretary on 15 December 2004. The Committee will note sale proceeds of over £8 million arising from 245 Warwick Road. The FCO held this freehold site for development by the Russian Embassy, as part of a wider reciprocal agreement for mutual provision of sites. The Russians decided they wanted to sell the site for commercial development, using the proceeds to fund new Embassy facilities on their main site at 1–7 Kensington Palace Gardens. We agreed, in return for a payment of £8.125 million, our fair share of the diVerence between the commercial development value of the site and the (lower) value for diplomatic use. The transaction was completed on 1 February 2006. We understand that the Russians have since sold the site to a development company. Since writing to the Committee in October 2005, the gross sale proceeds from the sale of the property in Helsinki in June 2005 have increased from £185,000 to £208,000; the balance of the transaction was received after we first reported the sale. In the final quarter of 2005–06, three of the sales straddle the financial years 2005–06 and 2006–07. The figures given reflect the gross sales proceeds received in the reporting period. We will record the balances as they are received in our quarterly reports for 2006–07. While writing, I must clarify and correct a point in the Government’s response to the second report of the Committee on the FCO’s Annual Report 2004–05 in respect of receipts from estate sales. I must apologise for the fact that the figure provided—£9,859,000—was that for forecast net estimated receipts rather than for the gross sales proceeds overseas as intended. Gross sales proceeds from estate sales overseas totalled £9,673,000. For the Committee’s convenience, I enclose a revised full list of estate sales in the Financial Year 2005–06 (Annex C). Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team 3471161024 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Annex A

FCO PROPERTY SALES FOR THE PERIOD 1 JANUARY TO 31 MARCH 2006

Gross Sales Receipts Post Type of Property £ 4 January 2006 Perth Residential £490,000 10 January 2006 Stockholm Residential £474,000 13 January 2006 Port Vila Residential £175,000 13 January 2006 Port Vila Residence £255,000 20 January 2006 Helsinki Residential £234,000 24 January 2006 Asuncion Residence £97,000a 25 January 2006 Dublin Residential £1,079,000 31 January 2006 London 245 Warwick Road £8,125,000 21 February 2006 Santiago Residential £731,000 22 February 2006 Nuku’alofa Compound £29,000 (Incl Residence and OYce) 15 March 2006 Lima OYce £29,000b 29 March 2006 Perth Residence £676,000 29 March 2006 Tel Aviv Residential £885,000c 30 March 2006 Istanbul Compound £286,000 Gross Sale Proceeds: £13,565,000 a Figure represents 50% deposit received—the balance is due during FY 2006–07 b Figure represents 50% deposit received—the balance is due during FY 2006–07 c Figure represents 60% deposit received—the balance is due during FY 2006–07

Annex B

FCO PROPERTY PURCHASES FOR THE PERIOD 1 APRIL 2005 TO 31 MARCH 2006

Gross Sales Receipts Post Type of Property £ 5 May 2005 Harare Land £478,000 22 March 2006 Manila Land £7,202,000 Gross Purchase totals £7,680,000

Annex C

FCO PROPERTY SALES FOR THE PERIOD 1 APRIL 2005 TO 31 MARCH 2006

Gross Sales Receipts Post Type of Property £ 30 May 2005 Brisbane Residential 160,000 8 June 2005 Helsinki Residential 208,000 20 June 2005 Bratislava Residential 383,000 29 September 2005 Lisbon Residential 800,000 11 November 2005 Antananarivo Residence 265,000 11 November 2005 Auckland CG Residence 659,000 23 December 2005 Brisbane CG Residence 376,000 23 November 2005 Brussels Residential 477,000 16 December 2005 Dublin Residential 905,000 4 January 2006 Perth Residential 490,000 10 January 2006 Stockholm Residential 474,000 13 January 2006 Port Vila Residential 175,000 13 January 2006 Port Vila Residence 255,000 20 January 2006 Helsinki Residential 234,000 24 January 2006 Asuncion Residence 97,000a 25 January 2006 Dublin Residential 1,079,000 31 January 2006 London 245 Warwick Road 8,125,000 21 February 2006 Santiago Residential 731,000 22 February 2006 Nuku”alofa Compound 29,000 (incl Residence and OYce) 15 March 2006 Lima OYce 29,000b 3471161024 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Gross Sales Receipts Post Type of Property £ 29 March 2006 Perth Residence 676,000 29 March 2006 Tel Aviv Residential 885,000c 30 March 2006 Istanbul Compound 286,000 (49 year long lease of surplus land on compound perimeter and underpass rights) Gross Sale Proceeds: £17,798,000

Overseas sales % £9,673,000 UK (London) sales % £8,125,000 a Figure represents 50% deposit received—the balance is due in FY 2006–07 b Figure represents 50% deposit received—the balance is due in FY 2006–07 c Figure represents 60% deposit received—the balance is due in FY 2006–07

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team,FCO,24 October 2006

Dear Steve,

Chris Stanton’s letter of 13 July 2006 enclosed a list of properties sold by the FCO in the last quarter of the Financial Year 2005–06, and purchases in that year. I enclose a further report listing the properties sold in the first quarter of the Financial Year 2006–07; there were no purchases.

As with previous tables, the figures shown are the gross sales proceeds. Transaction costs will vary, but can be expected to average 6–8%—though they were significantly lower in the case of the Bangkok sale.

None of the properties sold in the quarter was the Residence of a Head of Mission. The properties in Montreal and Rio de Janeiro were, however, Consul Generals’ Residences. The Kampala sale reflects the fact that we recently moved into a new High Commission building. The Asuncion sale follows from the changes to the FCO overseas network announced in the House by the Foreign Secretary in 2004. Richard Cooke Parliamentary Relation and Devolution Team

FCO PROPERTY SALES FOR THE PERIOD 1 APRIL TO 30 JUNE 2006

Gross Sales Post Type of Property Receipts £ 10 April 2006 Montreal Residence 693,000 11 April 2006 Wellington Residential 124,000 27 April 2006 Wellington Residential 105,000 15 May 2006 Bangkok Compound 49,927,000 19 May 2006 Kampala OYce 2,106,000 12 June 2006 Ottawa Residential 129,000 14 June 2006 Asuncion OYce 106,000a 21 June 2006 Stanley Residential 90,000 26 June 2006 Rio de Janeiro Residence 264,000 30 June 2006 Stockholm Residential 386,000 Gross Sale Proceeds: 53,930,000 a Figure represents 55% deposit received—the balance is due later in the financial year. 3471161025 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Letter to the Chairman of the Committee from the Minister for Trade,Invest ment and Foreign AVairs, 10 October 2006

Dear Mike, I am writing to inform you that, further to the Foreign Secretary’s announcement to Parliament in 2004 that our Embassy in East Timor would close by the end of 2006, it has now been decided that the Post will close on 13 October. Our Embassy in Dili is one of a number of Posts to be closed following a review in 2004 of the UK’s international priorities, and the role of the FCO in achieving them. We had intended to close the Embassy on 14 July. However, due to recent unrest, the Foreign Secretary decided to postpone closure by three months to provide time for the UN Security Council to decide on the mandate for the new UN Mission to East Timor. The new mandate was agreed on 25 August and the country is now stable. As agreed at the time of the original decision, the responsibility for East Timor will shift to the British Embassy in Jakarta from this date. An Honorary Consul will also be appointed. The Government of East Timor has been informed. Rt Hon Ian McCartney MP Minister for Trade, Investment and Foreign AVairs

FCO STAFF SURVEY

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team,FCO,dated 4 April 2006 Dear Steve,

Result of the Staff Survey I am writing to let you know the results of the FCO’s staV survey will be published by the Cabinet OYce on the Civil Service website later today: (http://www.civilservice.gov.uk/managment/statistics/index.asp). I have pleasure in enclosing 17 copies of the results for your information. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team

FCO STAKEHOLDER SURVEY

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 26 June 2006

Dear Chairman, I am writing to thank you for taking the time to participate in the FCO’s current survey of our key stakeholders. We have yet to receive the final report. But I am enclosing a draft copy3, since I wanted to share the findings with you and the Committee at an early stage, not least since I may want to refer to the survey results when I give evidence to the Committee on 28 June. We will, of course, provide both your Committee and the House Library with copies of the final report as soon as it is available. We expect this to be within the next few weeks. Until then I should be grateful if you would respect its status as a draft.

3 Not printed. The final version has been placed in the Library of the House. 3471161026 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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I am glad to see the positive feedback on our performance. But there is also a clear message that we could do better still. My early judgement is that we will want to accept all the action points set out in the report, and that doing so will put us in an even stronger position to play our role eVectively. We have recently appointed a Stakeholder Manager who will help us to take forward work in this area and ensure that we follow up the points that have emerged. Yours sincerely, Sir Michael Jay KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce

FINANCIAL MANAGEMENT

Letter to the Head of the Parliamentary Relations and Devolution Team,FCO , from the Clerk of the Committee,dated 22 March 2004

Dear Chris,

The Committee has considered the FCO’s Spring Supplementary Estimate, which was laid on 14 February. It requests further information, as detailed below: The FCO has drawn down a significant amount of its Departmental Unallocated Provision and DEL reserve, which has resulted in a 3.5% (£29.439 million) increase in the administration budget limit. The FCO has a target to make year on year eYciency savings of 2.5% over the 2004 Spending Review period. The Committee requests a detailed explanation of the need for such large increases in the FCO’s administration budget. The Committee also wants to know whether the OYce will be able to achieve its eYciency savings targets and whether it has robust measures in place to control its administration costs. The FCO’s Estimates Memorandum seemed to indicate that the OYce was still waiting for Treasury approval for further increases in its administration budget. This relates to £20 million of impairment costs and £12 million of core DUP not initially identified as administration costs. The Committee wishes to know whether Treasury approval has been sought, and if not, what the implications are if the SSE does not include the increase in administration budget. There are expenditure increases for Visas and Consular services which are oVset by income increases of £39.1 million and £14.4 million respectively. In the Main Estimate, the FCO predicted income from these sources as £143.876 million, but the Spring Supplementary figures represent a further 37% increase. This has happened in previous supplementary estimates, where the OYce has made large upwards adjustments to forecasts. The Committee wishes to receive an explanation of the large increase in both costs and income from the original plans set out at the start of the year and would like to receive more information on the diYculties of making accurate forecasts. Estimates Memoranda were introduced from the Winter Supplementary Estimates 2004–05 with the intention of providing Select Committees with a more comprehensive explanation for the key changes in resource. The Committee considers that the Memorandum supporting the FCO’s Spring Supplementary Estimate 2005–06 was generally consistent with Treasury guidance and was an improvement on the Memorandum supporting the Winter Supplementary Estimate. However, there are three sections where the Memorandum was rather weak in its explanations. The Committee draws the OYce’s attention to the following areas: — Impact on the OYce’s Public Service Agreements (PSA). The FCO’s Spring Supplementary Estimate includes a number of significant resource movements yet makes no links to the PSAtargets. The Committee wishes to know whether the FCO can explain the benefits arising from the additional resources and the impact on specific PSAtargets. — DEL End Year Flexibility. According to Treasury guidance, the Estimates Memorandum should explain how the EYF has accumulated and whether it has been specifically earmarked for future use. The Committee would like the FCO to provide this information. — Departmental Expenditure Limits and Administration Budget Limit. The FCO’s Estimates Memorandum did not provide prior year comparatives for the last three years, only the planned figures up until 2007–08. The Committee would like the FCO to provide these figures, as they help relate changes in the Estimate to previous years’ expenditure. 3471161027 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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— Detailed explanation of changes. Treasury guidance requires departments to provide a more detailed analysis than that provided in the Estimate itself. The Memorandum should also explain changes to the net cash requirement where relevant. I would welcome a response to this letter by 24 April. Steve Priestley Clerk of the Committee

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 24 April 2006

2005–06 Spring Supplementary Estimates

Dear Steve,

Your letter of 22 March requested further information on the matters detailed below. Chris Stanton Parliamentary Relations and Devolution Team

Increase in Administration Budget Limit

Table 1 (below) shows a breakdown of the £29.439 million increase in the administration budget limit at the Spring Supplementary.

Table 1

Breakdown of increase in admin budget limit £ million

Impairments DUP rolled forward from 2004–05 as EYF 20.0 Unused 2004–05 cash DUP rolled forward as EYF 5.0 Non-cash 2004–05 underspend rolled forward as EYF 3.1 Overseas Price Movement (OPM) Adjustment 1.4 Total admin uplift in Spring Supplementary 29.4

With the exception of the OPM adjustment all of the increases above were funded by end year flexibility (EYF) and so came from administration budgets already available to the FCO. The ring-fenced non-cash impairments Departmental Unallocated Provision (DUP) was set up as part of the Spending Review 2002 settlement to enable the FCO to manage its fixed asset impairments. Any unspent funds can be rolled forward as EYF to build up a buVer for managing future non-cash risks. In 2004–05 we did not need to draw on this DUP as impairments totalled under £3 million. As mentioned in the Memorandum, we needed to draw down this DUP in 2005–06 because we are forecasting significant impairments due to expected write-downs on completed buildings in Iraq. In addition the FCO has a non-ring-fenced DUP, which it originally created out of its SR2002 settlement as recommended by Treasury. Its purpose is to maximise flexibility within the SR settlement to respond to new priorities and pressures. The FCO did not draw down this DUP in 2004–05 because we were already forecasting additional pressures in 2005–06, so we planned to carry it forward as EYF. Pressures included meeting the costs of the Afghan Drugs Inter-Departmental Unit, Iraq programmes, International Organisations subscriptions and Comcen redundancies. The FCO’s SR2004 settlement included a commitment by the FCO to achieve 2.5% per annum eYciency savings. We are still on target to achieve these and can redeploy the savings elsewhere within the FCO. The FCO currently estimates that it will exceed its 2005–06 savings plan of £38.7 million. Administration costs are controlled by ensuring budgets allocated are within the administration limits specified by Treasury and not allowing virement into administration from other budgets. The FCO has sought Treasury approval for the remaining £20 million impairments DUP and £12 million of core DUP to be classified as administration. The details are still under discussion with Treasury but they have indicated that for 2005–06 this will be dealt with as an exceptional end year virement. 3471161027 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

Ev 86 Foreign Affairs Committee: Evidence

Visa and Consular Services

Visa and consular income is both demand led and volatile. We therefore take a conservative view of income, and matching expenditure, in drawing up the Main Estimate to ensure that we do not end up with an income shortfall leading to an overspend. Forecasts of activity are regularly reviewed in the light of actual demand and a final adjustment is made in the Spring Supplementary to reflect our final expectation of increased cost and income. The details of consular and visa funding are quite complex and given that this is an area of interest, oYcials from our Financial Planning and Performance Department would be happy to meet with you to provide more detail and discuss. Benefits arising from additional resources Resource movements in the Spring Supplementary are largely routine and planned, (eg Conflict Prevention draw down, joint funding of the Afghan Delivery Plan, transfers between government departments, International Organisations cost-sharing agreement) and so do not change our ability to deliver from original plans. The unplanned, additional money received in the Spring Supplementary are the Reserve claims to meet Tsunami Costs incurred in 2005–06 and 2004–05. This has enabled us to meet our PSAOb jective 9—High quality consular services to British nationals abroad.

End Year Flexibility

As mentioned above, the Resource EYF available in 2005-06 has accumulated from Departmental Unallocated Provision which was not drawn down in 2004–05. In addition, there was £3 million of non- cash underspend in 2004–05. The remaining £16.6 million of EYF is planned to be used in 2006–07 to help meet forecast pressures including: International subscriptions increases, Flu Contingency Planning, restructuring of the Senior Management Structure and the Professional Skills in Government programme. Capital pressures include Lancaster House dilapidations and the cost of altering the ICT infrastructure design as a result of changes in Government Security Standards and implementation of the solution.

DEL and Admin Budget Limits

As requested, we have extended the DEL and administration budget tables to show three historical years.

Table 3DEL Comparison £ million 2002–032003–042004–05 2005–06 2006–07 2007–08 Actual Actual Actual Budget Plan Plan

Resource DEL1 1,540.900 1,585.188 1,753.649 2,005.937 1,691.645 1,728.645 Capital DEL 96.171 49.821 73.677 136.697 111.203 109.203 Less: Depreciation2 "126.597 "103.538 "70.043 "138.716 "168.624 "184.624 Total 1,510.494 1,531.471 1,757.2733 2,003.918 1,634.224 1,653.224

1 Resource DEL figures for 2006–07 and 2007–08 are understated because they do not include conflict prevention expenditure, which will be transferred at the time of the 2006–07 and 2007–08 Main and Supplementary Estimates. In addition 2005–06 included expenditure on a number of one oV items (Tsunami expenditure, EYciency Challenge Fund & G8 & EU presidencies). 2 Depreciation, which forms part of Resource DEL, is excluded from the total DEL, since Capital DEL includes the purchase cost of capital assets. To add on the depreciation of those assets would double count their cost. 3 The 2004–05 figures have been updated to show actual figures—the memorandum mistakenly showed forecast for 2004–05.

Table 4 Administration Budget Comparison £ million 2002–032003–042004–05 2005–06 2006–07 2007–08 Actual Actual Actual Budget Plan Plan

Administration budget 763.007 745.715 752.907 825.677 862.068 883.068

1 2006–07 and 2007–08 figures have been increased by £35 million and £50 million since the memorandum because Treasury have approved the reclassification of the impairments DUP as administration. The reclassification of the core DUP as administration has not yet been finalised so will be reflected in a Supplementary Estimate. Forecast administration outturn for 2005–06 is £858 million, which includes £43 million of provision for impairments (compared to £3 million expenditure on impairments in 2004–05). 3471161027 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Changes to Net Cash Requirement

There was an overall increase of £226.434 million. This can be broken down as follows:

£m

Resource DEL Increase RfR1 113.622 Resource DEL Increase RfR2 110.785 Capital DEL increase 13.719 Net Accruals adjustments "11.692 226.434

The net accruals adjustments are made up of the following:

Non-cash to cash switch Decrease in capital charge 2.000 Decrease in depreciation 18.000 DUP Drawdown Impairments DUP 2005–06 "20.000 EYF Impairments DUP 2004–05 "20.000 Non-cash underspend 2004–05 "3.092 Use of provisions made in previous years 11.400 Net accruals adjustments "11.692

The non-cash to cash switch is in line with recent Treasury guidance. The switch is partly to enable a change in accounting policy to reclassify expenditure on furniture from capital to resource and partly to reflect the increase in rental properties and reduction in owned properties. The £11.4 million use of provisions is for cash paid out in respect of provisions made in 2003–04 and 2004–05 for early departure costs and for other staV provisions.

Letter to the Clerk of the Committee from the Chief Executive of UK Trade and Investment, dated 20 April 2006

UKTI Estimate Memorandum

Dear Mr Priestley, HM Treasury guidance in PES(2004)14 specified that departments are required to provide an “Estimates Memorandum” to their Select Committee explaining the allocation sought in the Main Estimates and how they link to the department’s published targets. I enclose UK Trade & Investment’s Estimate Memorandum for the forthcoming Main Supply Estimates. Should the Committee require any additional information, we will be happy to expand the Memorandum appropriately. Main Estimates are presented and published approximately three weeks after the Budget (see Government Accounting, chapter 11). However, we await formal notification of the likely publication date. I am also sending a copy of this letter and enclosure to the Clerk of the Trade and Industry Committee. Yours sincerely, Andrew Cahn Chief Executive/Accounting OYcer UK Trade & Investment 3471161028 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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UK Trade & Investment

MAIN SUPPLY 2006–07—ESTIMATES MEMORANDUM

1. Summary of the 2006–07 Main Supply Estimate This Memorandum covers the Main Supply Estimate for UK Trade & Investment, which is a joint operation of the Foreign and Commonwealth OYce and the Department of Trade and Industry. Expenditure under this Estimate covers programme expenditure for trade development and inward investment, including grants to the Regional Development Agencies (RDAs). The administration costs relating to this programme expenditure are reflected in the Main Estimates of UK Trade & Investment’s parent departments, the Foreign and Commonwealth OYce and the Department of Trade and Industry. The programme expenditure is in line with the 2004 Spending Review settlement for 2006–07 and supports our Public Service Agreement (PSA) target of: By 2008, deliver a measurable improvement in the business performance of UK Trade & Investment’s international trade customers; with an emphasis on new to export firms; and maintain the UK as the prime location in the EU for foreign direct investments.

Resource and Capital DEL: £ million Resource DEL 95.328 Capital DEL 0.248

2. End Year Flexibility (EYF) Entitlement The department maintains a plan of proposed utilisation of EYF over the Spending Review period. At the start of 2006–07, UK Trade & Investment will have an accumulated End Year Flexibility (EYF) entitlement of £8.490 million resources and £1.291 million capital, subject to any further underspends emerging during 2005–06.

3. Spending Review The 2004 Spending Review settlement announced figures 2005–06 to 2007–08. The figures shown below take account of the transfer of £0.281 million to the Foreign and Commonwealth OYce in 2005–06 in respect of the World Expo in Aichi, Japan; and a baseline transfer of £0.2 million to the Department of Transport for the travel costs of the Duke of York, the UK Special Representative for International Trade and Investment.

£ million 2005–06 2006–07 2007–08 Resource DEL 100.0 95.3 89.3 Capital DEL 0.2 0.2 0.2

There are no new services in this Estimate compared with last year. UK Trade & Investment Central Finance Team Strategy & Corporate Group April 2006

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 2 May 2006

Main Estimates 2006–07 Dear Steve, In accordance with the recent guidance issued by Treasury, I attach an Estimates memorandum. The memorandum should be read alongside the 2006–07 Main Estimate, also being published by HM Treasury today. 3471161029 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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In accordance with Treasury guidance Michael Jay, as Accounting OYcer, has authorised Ric Todd, as Finance Director, to sign Estimates memoranda on his behalf. The memoranda will continue to be cleared by Michael Jay in near final draft. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team

Foreign & Commonwealth OYce Main Estimate 2006–07 Memorandum for the Foreign AVairs Committee

Reconciliation of 2006–07 Main Estimates to SR2004 Outcome 1. The 2004 Spending Review settlement showed the FCO Resource Budget for 2006–07 as £1,687.0 million and the capital budget as £119.003 million. Since July 2004 there have been a number of changes to the FCO’s Departmental Expenditure Limits (DELs) and to the Treasury’s budgeting framework which bring the current Resource DEL figure for 2006–07 to £1,818.141 million and the Capital DEL to £150.003 million. The tables below show the main changes and reconcile the DELs with the Main Estimates figures.

Table 1 RESOURCE 2006–07 2007–08 Resource DEL Baseline from SR 2004 (£m) 1,687.000 1,723.000 Changes to Resource DEL Conflict Prevention Pool Main Estimate Changes (net) 174.463 — Transfer from DFID in respect of Small Grants Scheme 7.985 7.985 BBC World Service Capital Grant moved to Capital DEL "31.000 "31.000 British Council Capital Grant moved to Capital DEL "7.800 "7.800 Transfer of BBC World Service Broadcasting Service share of BBC Monitoring "6.100 "6.100 Subscription to the Cabinet OYce Transfer of FCO share of BBC Monitoring Subscription to the Cabinet OYce "3.100 "3.100 Net eVect of reclassifying British Council as Public Corporation "2.340 "2.340 Net changes £1 million or less "0.967 0.033 Resource DEL at 1 April 2006 1,818.141 1,680.678 DiVerence Between Resource DEL and Main Estimate Remove Common Foreign & Security Policy (non-voted expenditure in DEL) "6.713 Add Reimbursement of Taxes (voted expenditure outside of DEL) 18.000 Remove Departmental Unallocated Provision (not voted) (Table 5) "64.000 Add BBCWS Capital Grant from Capital DEL (Resource in Estimates) 31.000 Add back British Council Capital Grant from Capital DEL 7.800 (Resource in Estimates) 2006–07 Main Estimate Resource Total 1,804.228

Table 2 CAPITAL 2006–07 2007–08 Capital DEL Baseline from SR 2004 (£m) 119.003 117.003 Changes to Capital DEL EVect of reclassifying British Council as Public Corporation after SR2004 "7.800 "7.800 BBC World Service Capital Grant moved to Capital DEL 31.000 31.000 (Budgeting framework change) British Council Capital Grant moved to Capital DEL 7.800 7.800 (Budgeting framework change) Capital DEL at 1 April 2006 150.003 148.003 DiVerence Between Capital DEL and Main Estimate Departmental Unallocated Provision for Capital (not voted) "1.000 "1.000 Remove BBCWS Capital Grant from Capital DEL (Resource in Estimates) "31.000 Remove British Council Capital Grant from Capital DEL (Resource in "7.800 Estimates) 2006–07 Main Estimate Capital Net Total 110.203 3471161030 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Conflict Prevention Pool Main Estimates Changes 2. Activity and expenditure under the Conflict Prevention Pools are undertaken jointly by the FCO, MoD and DfID. The FCO manages the Peacekeeping and Global programme expenditure elements of the pool and has £74 million for the Global Conflict Prevention Pool in its Resource DEL baseline which is added to by other pool partners through transfers between Departments in Main and Supplementary Estimates. The eVect of the transfers between pool partners to the 2006–07 FCO Main Estimates is a net increase of £174.463 million. This is made up of an increase of £200 million for peacekeeping, transfers totalling £28.680 million to MoD, DfID and SIAfor Global programme expend iture and a transfer of £3.143 million from DfID for Africa programme expenditure. 3. The Chief Secretary to the Treasury has not yet agreed the total amount that Parliamentary approval should be sought for peacekeeping expenditure in 2006–07. Since there is uncertainty over these costs due to changes in demand for peace support operations, the Treasury has agreed that an initial amount of £200 million should be applied for in the Main Estimate. The Treasury expects that further provision will be sought in the Supplementary Estimates, by which time more accurate information will be available. Last year (2005–06) approval was given for a total amount of £373 million to be sought.

Transfer from DfID in Respect of Small Grants Scheme 4. The Department for International Development (DfID) transferred £7.985 million to the FCO in the 2005–06 Winter Supplementary, in respect of the transfer of responsibility for the Small Grants Scheme. This is a baseline change that carries through to 2006–07 and 2007–08. From 2006–07 onwards these funds form part of the FCO’s bilateral programme budget.

Change in Budgeting Framework for Capital Grants 5. The Pre-Budget Report 2005 announced a change to the budgeting framework from 2006–07 in respect of capital grants. All spending on capital grants is now counted in the capital budget (Capital DEL) to align better with the national accounts measures used for the fiscal framework. However, for Estimates purposes this expenditure will continue to be recorded as Resource across Whitehall. Hence, the reconciliation of the current 2006–07 DEL to that announced in SR2004 shows expenditure on capital grants moving from Resource DEL to Capital DEL, whereas the reconciliation of the Resource & Capital DEL to the 2006–07 Main Estimate shows it moving back from Capital to Resource.

Transfer of Responsibility for BBCWS Monitoring Service to the Cabinet Office 6. The Cabinet OYce took over from the FCO as lead stakeholder for the BBC World Service Monitoring Service on 1 April 2006. As a result of a 2005 review of BBC Monitoring, all stakeholders agreed to make a PES transfer that moves funds permanently from their own baseline budgets into a central fund to be administered by the Cabinet OYce on behalf of BBC Monitoring. 7. The FCO transferred £3.100 million from its baseline budget. The BBCWS Broadcasting Service is also a BBC Monitoring stakeholder and £6.100 million of their ringfenced grant in aid provision was transferred to the Cabinet OYce. 8. The FCO and the BBCWS Broadcasting Service will no longer make any subscription payments to the BBCWS Monitoring Service.

Net Effect of Reclassifying British Council as a Public Corporation 9. This change was also explained in the 2005-06 Memorandum. This is a baseline change which carries forward to 2006–07 and 2007–08. The reclassification of the British Council from a Non-Departmental Public Body (NDPB) to a Public Corporation has been reflected in the FCO’s Resource & Capital Departmental Expenditure Limits since the 2004 Spending Review. As an NDPB the resource and capital expenditure of the British Council was included in the FCO’s Resource and Capital DELs and the Resource DEL included an element for British Council non-cash costs such as depreciation. As a Public Corporation only the grant-in-aid paid to the British Council needs to be recorded in the FCO’s Resource DEL. The total of grant-in-aid payable to the British Council is unaVected by this change in classification.

Departmental Expenditure Limit (DEL) & Administration Budgets 10. The tables below show a comparison of the 2006–07 DEL (Table 3) and Administration (Table 4) budgets with the 2002–03, 2003–04 and 2004–05 outturn, the forecast for 2005–06 and plans for 2007–08. 11. The breakdown between Resource and Capital diVers from the table in the 2005–06 Spring Supplementary memorandum because the figures have been restated to reflect the changes to capital grants in Treasury’s budgeting framework (explained in paragraph 5 above). 3471161030 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Table 3

DEL COMPARISON

2002–032003–042004–05 2005–06 2006–07 2007–08 Actual Actual Actual Forecast Budget Plan Resource DEL1 1,535.100 1,548.388 1,714.849 1,967.072 1,818.141 1,680.678 Capital DEL 101.971 86.621 112.467 152.497 150.003 148.003 Less Depreciation2 126.597 103.538 70.043 138.716 151.624 166.624 Total 1,510.474 1,531.471 1,757.273 1,980.853 1,816.520 1,662.057

1 Resource DEL figures for 2006–07 and 2007–08 are understated because they do not include all of the conflict prevention expenditure, which will be transferred at the time of the 2006–07 and 2007–08 Main and Supplementary Estimates. In addition 2005–06 included expenditure on a number of one oV items (Tsunami expenditure, EYciency Challenge Fund & G8 & EU presidencies). 2 Depreciation, which forms part of Resource DEL, is excluded from the total DEL, since Capital DEL includes the purchase cost of capital assets. To add on the depreciation of those assets would double count their cost.

Table 4

ADMINISTRATION BUDGET COMPARISON £ MILLION

2002–032003–042004–05 2005–06 2006–07 2007–08 Actual Actual Actual Forecast Budget Plan Administration budget 763.007 745.715 752.907 857.677 862.101 883.101

1 As mentioned in recent correspondence, the reclassification of the core DUP as administration has not yet been finalised with Treasury so will be reflected in a Supplementary Estimate. Forecast administration outturn for 2005–06 is £858 million, which includes £43 million of provision for impairments (compared to £3 million expenditure on impairments in 2004–05).

Departmental Unallocated Provision (DUP) 2006–07 12. At the time of the Main Estimate, the FCO has £64 million of unallocated resource provision and £1 million unallocated capital provision which is broken down as follows:

Table 5

2006–07 DEPARTMENTAL UNALLOCATED PROVISION

Resource Capital RfR1 Ringfenced Impairments DUP (non-cash) £35.0m — RfR1 DUP to met unforeseen requirements arising in-year £19.0m £1.0m RfR2 Global Conflict Prevention Pool £10.0m — Total £64.0m £1.0m

End Year Flexibility (EYF) 13. The Public Expenditure Outturn White Paper published in July 2005 showed a total figure of £111.991 million for carry forward of 2004–05 DEL underspending into 2005–06 under the DEL EYF scheme. Table 5 below shows how this figure was made up from a mixture of adjustment for 2003–04 final outturn, forecast 2004–05 underspend and unused Departmental Unallocated Provision. 14. £44.904 million of this EYF was drawn down in the 2005–06 Spring Supplementary, and we anticipate making a reduction of £36.924 million to adjust for final 2004–05 outturn when the 2005–06 EYF is calculated. This leaves the FCO with £30.613 million accumulated EYF for RfR1. This is made up of £3 million admin and £3 million programme rolling forward from unused DUP in 2004–05 and £24.163 million capital from 2004–05 underspend. 15. For 2005–06 we are currently forecasting full spend against the Resource budget and an underspend of £23 million against the capital budget. The FCO did not draw down its RfR1 DUP of £1 million capital in 2005–06 and anticipates rolling this forward under the end year flexibility scheme as well as the £23 million underspend. These figures are not reflected in the table below. EYF availability from 2005–06 will be confirmed in the Public Expenditure Outturn White Paper to be published in July. 3471161030 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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16. The remaining EYF is planned to be used in 2006–07 to help meet forecast pressures including: International subscriptions increases, Flu Contingency Planning, restructuring of the Senior Management Structure and the Professional Skills in Government programme. Capital pressures include Lancaster House dilapidations and the cost of altering the ICT infrastructure design as a result of changes in Government Security Standards and implementation of the solution.

Table 5

ACCUMULATION OF EYF £ MILLION

RfR1 RfR2 Administration Programme Capital Programme Total Adjustment for 2003–04 final outturn (6.306) — 5.297 (1.009) Forecast voted underspend 2004–05 30.000 — 25.000 26.000 81.000 Ringfenced Impairments DUP 2004–05 20.000 — — 20.000 not used FCO Core DUP 2004–05 not used 8.000 3.000 1.000 12.000 Total FCO EYF Entitlement in Public 51.694 3.000 31.297 26.000 111.991 Expenditure Provisional Outturn July 2005 (table 6—Cm 6639) EYF drawn Down in Winter — — — — Supplementary EYF Drawn down in Spring 28.092 — 10.000 6.812 44.904 Supplementary of which: Voted underspend 3.092 — 10.000 6.812 19.904 Ringfenced Impairments DUP 2004–05 20.000 — — 20.000 not used FCO Core DUP 2004–05 not used 5.000 — 5.000 Adjustment for final 2004–05 outturn 20.602 — 2.866 (19.188) (36.924) Balance of Accumulated End Year 3.000 3.000 24.163 — 30.163 Flexibility

Public Service Agreements 17. Full details of the FCO’s Public Service Agreements for 2006–07 can be found in the 2006 Departmental Report (Cm 6823). D R Todd Finance Director 2 May 2006

Letter to the Clerk of the Committee from the Head of the Parliamentary Relations and Devolution Team, FCO,dated 5 June 2006

Fraud in Ulaanbaatar

Dear Steve, On 24 May the British Embassy in Ulaanbaatar, Mongolia, dismissed 11 of the 12 locally engaged (LE) staV employed there. An investigation carried out by the FCO’s Financial Compliance Unit (FCU) concluded that the local staV had colluded, without the knowledge or participation of any of the three UK based diplomatic staV, to under-declare their Social Insurance (SI) contributions. They did this by using Embassy stamps without authority on a letter sent to the Mongolian authorities purporting to be from the Embassy. Although the Mongolian SI oYce was no doubt the intended victim of this deception, the Embassy as the employer is liable to make good the £12,500 shortfall in employee contributions: the employer has a legal responsibility to remit employee contributions to the authorities, whether or not they have been deducted from the staV’s pay. This has resulted in a total loss to the FCO of approx £20,500 (£12,500 underpayment and £8,000 penalties). The FCO is investigating legal action to recover these losses from the former staV of the Embassy. 3471161031 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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The deception came to light when the Embassy reviewed its procedures for payment of SI contributions. This followed on from a review of Income Tax deductions. This earlier review arose from routine request, in December 2004, from the FCO to all diplomatic posts requesting them to ensure that they were following local regulations in regard to the deduction of LE staV Income Tax. Discussions between the Embassy and the Mongolian authorities took place, and by May/June 2005 it was apparent that the method by which LE staV Income Tax and SI contributions were paid was not in accordance with local regulations. This was rectified in September 2005. The Embassy has no liability under local law for past income tax due but not paid by the staV, should the tax oYce conclude that was the case prior to September. Aliability does however arise in respect of employees’ SI contributions due. The Embassy after September began a review of SI payments, during the course of which the above deception was discovered. In the course of discussions with the SI oYce, the SI oYce asked the Embassy to provide salary details dating back to January 2003 to enable them to review contributions. As a result of this request, Embassy diplomatic staV discovered that monthly reports had been sent, purporting to be from the Embassy, to the SI oYce showing falsified staV salaries and SI contributions. FCU have established through interviews with all LE staV that in January 2003 the LE staV held a meeting (without the participation or knowledge of UK based staV) to discuss SI contributions. At this meeting the LE staV agreed to make it appear to the SI oYce that the 19% employers’ contribution was in fact a 29% contribution comprising the 19% employers’ SI contribution and the 10% employees’ contribution. Correspondence was fraudulently sent to the local SI oYce by an unknown member of the LE staV to give eVect to this deception. Mongolian employment law allows the Embassy to dismiss staV for such an oVence, both in respect of willful misconduct and for committing a criminal act. In line with the FCO’s zero tolerance policy, the Embassy therefore proceeded to do so in respect of the 11 staV who had participated in the deception. Local law also requires that the Embassy should report any criminal action to the competent local authorities. This has been done. The FCO has the intention to pursue civil actions to recover the losses from the former staV, and the practicability of doing so is currently being investigated. I am copying this letter to Nick Wright at the Public Accounts Committee, and to Martin Daynes at the NAO. Chris Stanton Parliamentary Relations and Devolution Team

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 7 August 2006

Review of FCO’s Discretionary Programme Budgets

Dear Chairman, When I met members of the Committee informally last month, I reaYrmed Michael Jay’s undertaking to put systems in place which will enable you to receive information on a more systematic basis and to see key management papers which are of interest to the Committee. In that context, I enclose a copy of the review of the FCO’s discretionary programme budgets, which has been discussed by the FCO Board. As you will see, the review found plenty of evidence that our Global Opportunities Fund (GOF) programmes are helping to support the delivery of our strategic priorities. But the review also identified aspects which need further work. In particular, we need to tighten up our procedures for monitoring the outcomes achieved by our bilateral and Chevening programmes. This is not to say they are not delivering useful outcomes, rather that our system for reporting and measuring those outcomes needs improving. Work is in hand to make the necessary improvements. The FCO’s Public Diplomacy Group, following Lord Carter’s review of public diplomacy, were already working up new evaluation mechanisms for FCO-funded public diplomacy activity and had instituted a review of the Chevening programme which will, inter alia, address the suggestion of a retrospective review of the eVectiveness of the programme. The FCO Board’s Finance Committee will review at their next meeting in September an implementation plan for the review’s recommendations and I will send you a copy thereafter. I will also send you a progress report in six months time. In the meantime, some of the review’s recommendations have already been implemented following Board discussions. Yours sincerely, Sir Peter Ricketts KCMG 3471161032 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Letter to the Chairman of the Committee from Permanent Under Secretary,Fo reign and Commonwealth OYce,29 August 2006

FOREIGN AND COMMONWEALTH OFFICE: FRAUD IN THE BRITISH EMBASSY IN SANTO DOMINGO 1. I am sorry to have to inform the Committee of a significant fraud which we have identified at the Embassy in the Dominican Republic. At this stage of the investigation, the loss looks to be around £200,000. I enclose an initial report for your information. We believe the fraud was perpetrated by the locally employed Accountant. 2. The internal investigation into all aspects of this most unsatisfactory case is still in progress. We are pursuing with the relevant authorities both criminal charges and civil action to recover as much public money as possible. I will provide a fuller report once our work has been concluded. 3. While this loss will not require a separate note on the FCO account, I judge that its scale and nature make it suYciently significant to draw to your attention at this stage. Sir Peter Ricketts KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce

FRAUD IN SANTO DOMINGO

Summary 1. Afraud has taken place at the Embassy in Santo Domingo. The loss is believ ed to be about £200,000 and took place over the period July 2004 to May 2006. The internal investigation to determine the exact loss continues but the loss is not expected to increase significantly. We believe that the fraud was perpetrated by the Locally Engaged Accountant. No other staV are believed to have been involved. The fraudster has been dismissed and the matter is being taken forward with the criminal authorities. No arrest has been made as original documentation is needed and this is still awaited from the banks. 2. We believe the fraud was carried out in two ways. Firstly duplicate cheques were cashed by the Accountant who simply kept the cash; and failing to pay all the Visa fees into the bank. Accounting records were amended to hide the fact that this fraudulent activity had taken place and bank statements forged to match the accounting records. We further believe the fraud was allowed to take place because the prescribed control regime was not followed rather than weaknesses in the control regime.

Detail 3. In July 2006 the Banco De Las Americas alerted the Embassy in Santo Domingo to the fact that they were US$17,000 overdrawn and asked Post to rectify this position. This was surprising to staV at Post as they banked with Banco Popular and not Banco De Las Americas. 4. Initial investigation identified that the account at Banco De Las Americas in the name of the British Embassy had been set up by the Accountant, without authorisation, as a means of cashing cheques. The fraud involving this bank was that required payments would be correctly made to suppliers but the Accountant would then get staV at Post to authorise additional, unrequired, payments to that supplier. The cheques arising from these additional transactions would be cashed through the unoYcial bank account, by the Accountant, who would keep the cash. These additional payments were not entered on the account and bank statements were forged, by the Accountant, to hide the transactions missing from the account ie artificially overstating the amount of money in the bank. 5. In addition the Accountant only paid in part of the Visa Fees into the bank and then amended the bank receipt to show all the money had been paid in. For example if Visa fees for the day were Pesos 51,000, Pesos 1,000 were paid into the bank and a “5” added before the 1,000 on the bank receipt. The full Pesos 51,000 was then entered on the account and the bank statement forged to reflect the accounting records. Again this overstated the amount of money in the bank. 6. To date we have found that the Accountant stole about £200,000 since the fraud started in mid 2004. This earliest fraudulent transaction so far identified is July 2004. This loss is currently an approximate figure as it is believed that the Accountant was also involved in other smaller frauds on the account but the accounts have not yet been fully examined. However, comparison of fundings and local receipts against local spend indicates that the amount stolen will not increase significantly over that already identified. 7. The matter has been reported to the District Attorney (DA) in Santo Domingo. They have not yet arrested the Accountant. We have three months ie to 10 October to fully document the case to the police. We will ensure that this is done. 3471161032 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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8. At this time we believe the fraud was allowed to take place because of non application of prescribed procedures rather than gaps in the control framework. Specifically bank statements were not obtained independently by the surprise checking oYcer (had this been done the fraud would have been deterred or stopped in the first month it took place); and apparently high cash balances were not investigated. Had this been done it would have been discovered that the amounts stated on the bank statements were incorrect. Other required checks that would have helped stop or detect the fraud that were also inadequately carried out included control over duplicate payments, not investigating why bank statements were not original, lack of control over Letters of Instruction and the Accountant was the only person to prepare the end of month Accountant. 9. The internal investigation will be completed as soon as possible but will inevitably take some time because of the volume of transactions to analyse. Financial Compliance Unit

FREEDOM OF INFORMATION

Letter to the Chairman of the Committee from the Permanent Under Secretary of State, Foreign and Commonwealth OYce,dated 26 June 2006 In our response last month to the Committee’s report on the FCO’s Departmental Report 2004–05 (Cm 6791), we provided a general overview of the FCO’s performance during the first year of the Freedom of Information Act. I now attach a report which provides more detail on how the FCO rose to the challenge. We will provide the Committee with similar reports on an annual basis and will publish updated versions periodically on our FOI website. DCA’s FOI Annual Report, published last month, provides a comparative statistical analysis of the operation of FOI across central government. Yours sincerely, Sir Michael Jay KCMG Permanent Under Secretary of State Foreign and Commonwealth OYce

Freedom of Information: The FCO’s First Year The Freedom of Information Act (FOIA) went live on 1 January 2005. The Department of Constitutional AVairs’ report (available at http://www.dca.gov.uk/foi/imprep/annrep05.pdf) on the first year of operation of FOI in central government was published in late May 2006 and provides a detailed, comparative statistical analysis of the FCO’s performance. The following is a summary of what the FCO has achieved.

Volume 19,700 FOI requests were received across Whitehall in 2005. Of these, the FCO received 1,315, generating 80 requests for internal review (IR) of our decisions, and 17 complaints from the Information Commissioner’s OYce (ICO). The table below shows the breakdown for the FCO of each by quarter, together with the 1st quarter 2006 figures for comparison. 3471161034 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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ICO Complaints (Workload Multiplier = 3 x new request) Internal Reviews (Workload Multiplier = 2 x new request) Unresolved from prev. Quarter New Requests

700

600

500

400 Cases 300

200

100

0 1st 2nd 3rd 4th 1st Quarter 2005/6

Achallenging first quarter (44% of the total requests in 2005) was followed by a marked drop in new requests in the second half of the year. Numbers have risen sharply again in 2006. The trend has been broadly reflected across government.

Alongside FOI we are also dealing with a significant rise in requests under: — The Data Protection Act (DPA): 2005—67 including a major case about two former Guantanamo Bay detainees; 2004—6. — The Environmental Impact Regulations (EIR): 2005—10; 2004—0.

Performance

Performance in meeting permitted deadlines ended the year on 93% following a progressive improvement. The following table compares the FCO quarterly performance with the Whitehall average.

Performance %

95

90

85

FCO

% Whitehall

80

75

70 1234 Quarter 3471161034 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Types of Applicant

Largest groups in descending order are: — the public (c 50%) — the media (c 30%) — academics — solicitors — MPs — professional FOI requestors (several internet-based companies provide fee-paying services to lodge and follow up FOI requests). Many Whitehall Departments have received repeated requests, and vexatious requests, during the first year of FOI and these are being responded to robustly in line with ICO guidance. The FCO has had three such requestors, one of which accounted for 5% of all requests.

Types of Request

Iraq and the EU were the most popular topics in the first quarter, but have since declined. FCO management issues currently account for around 25% of requests and have a high release rate. Requests for older material (1975–80s) also run at about 25%. Otherwise there is no discernible trend. Compared to other Government Departments the FCO receives few frivolous requests and none simple enough to be answered substantively within a few days, except where we hold no information or the request exceeds the cost limit. No directorate stands out as particularly hard-hit.

Responses

2% 12%

8%

Full/Partial Disclosure Full Refusal incl. >£600 Not Held Clarification 56% Unresolved

22%

The following chart shows how the FCO responded to requests. The FCO response rate for full or partial disclosure stands at 56% of total requests [70% of resolvable requests]. The equivalent Whitehall figure is 60% [75% of resolvable requests]. The FCO’s lower disclosure rate reflects the more sensitive nature of much of the information we hold.

Proactive Disclosure

In May 2005 the FCO became the first Department to launch a dedicated website for FOI disclosures, regarded across Whitehall as a model of best practice. 211 items have been published on the website, representing more than 500 pages of information which range from the shooting of Bob Marley in 1976 to information relating to Iraq’s use of chemical weapons. 3471161034 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Use of Exemptions The following table gives details of the exemptions used by the FCO in 2005. Unsurprisingly s27 (international relations) was the most-used exemption.

S(27)—International relations. 195 S(35)—Formulation of government policy, etc. 156 S(40)—Personal information. 78 S(23)—Information supplied by, or relating to, security bodies. 73 S(36)—Prejudice to eVective conduct of public aVairs. 71 S(42)—Legal professional privilege. 42 S(24)—National security. 37 S(31)—Law enforcement. 16 S(43)—Commercial interests. 16 S(41)—Information provided in confidence. 14 S(22)—Information intended for future publication. 10 S(38)—Health and safety. 8 S(26)—Defence. 3 S(28)—Relations within the United Kingdom. 3 S(32)—Court records, etc. 1 S(37)—Communications with Her Majesty, etc and honours. 1 S(44)—Prohibitions on disclosure. 1

Information Management Group June 2006

REVIEW OF CONSULAR SERVICES

Letter to the Chairman of the Committee from the Parliamentary Under Secretary of State, Foreign and Commonwealth OYce,dated 28 June 2006 Dear Chairman, On 24 November 2005, the National Audit OYce published its report on Consular Services. The key recommendations included better targeting and influencing vulnerable groups of travellers, improving the consistency and professionalism of our frontline services, and equipping consular services to meet emerging change in information technology and biometrics. We accepted the NAO’s recommendations in full and have set out a detailed programme of work to implement them all by February 2007. In December last year, we sent the Committee a matrix reproducing the NAO’s recommendations and setting out our plans for work to implement them. I now attach an updated version of that table, with changes underlined, to highlight work we have done since December last year. At the same time as the NAO’s main report was published, we issued a joint FCO/NAO report focused on the lessons learned following the Indian Ocean tsunami. We sent the Committee progress reports on implementing these recommendations in December 2005 and in May 2006, the latter as part of the FCO’s response to the Committee’s report on the FCO Departmental Report 2004–05. I hope that the Committee finds this update useful. I plan to send you further progress reports on both the main NAO themes and the tsunami-related work after the summer recess. We also plan to update the Committee on consular work arising from the FIFAWorld Cup 2006 after the to urnament. I am also sending the table attached here to the Chairman of the Public Accounts Committee, given its work on Consular Services following the NAO’s report. Yours sincerely, David Triesman The Lord Triesman of Tottenham

NAO summary recommendation NAO detailed recommendation FCO Response

INFLUENCING AND CHANGING BEHAVIOURS OF TRAVELLERS 1. There is scope to better (a) Undertake structured analyses The new version of our consular casework understand the root causes of previous assistance cases, software, COMPASS—which is now being of assistance cases,and to building on other on-going rolled out—allows us better to identify the target hard hitting messages research, to better identify key groups of travellers most likely to get into at traveller groups which do risk traveller groups which are diYculty, and the types of cases concerned. 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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NAO summary recommendation NAO detailed recommendation FCO Response not prepare adequately,or less likely to access and digest Analysing and using this information to target those which have historically the full text of existing, extensive our communications activity is a high priority required more consular travel advice; for the consular communications team. We assistance. have also conducted bench-marking research to establish, for example, which groups are least likely to read Travel Advice or obtain travel insurance, and are targeting our communications work accordingly. Using information from COMPASS we have identified posts who report high levels of potentially avoidable consular incidents, such as rape, sexual assault, robbery and passport loss, and we are using this information to target our messages by resort. We have set up a challenge fund for our posts and are inviting bids for activity to promote in-resort campaigns with particular messages. We will be giving out FCO safety messages on postcards to holidaymakers in Spanish resorts this July, through our partner, Holiday FM. (b)Increase the use of trend We are building a capacity for this within our analysis, international passenger small consular policy team. We have also surveys and future modelling increased our engagement with outside techniques to forecast the likely stakeholders, for example through the Travel future demand for assistance; Advice Review Group and Consular Strategy Board, enabling us better to draw on and be aware of their own analysis of future trends. We need to improve the quality and consistency of our management information (MI) to undertake accurate structured analyses and forecast likely demand. We are reviewing the MI needs of the consular network as well as the range of sources of information, including external sources, and plan to design new systems for collating accurate, comprehensive and timely management information. Scoping review to be complete by September. (c)Ensure that all country travel We have begun to collate the necessary advice pages include in their information (where it exists), and will summaries advice on the most implement this recommendation soon for common causes of assistance those countries where information is already cases in that country; and available. We have implemented this for our priority countries and will update the remaining travel advice pages as part of the regular three-month review cycle of travel advice. We will complete this by September. (d)Increase the range of media We have put the NAO’s recommendations at sources used to disseminate the heart of our communication strategy, and messages, targeting identified they form the basis of the briefs given to the risk sectors—for example using PR and partnership marketing agencies who features on television travel work for us on the Know Before You Go programmes, student magazines (KBYG) campaign. We have increased what and tabloid newspaper travel we spend on partnership marketing as a sections—and make wider use of proportion of KBYG campaign budget to illustrative personal case maximise opportunities to work with big histories to convey consequences brands in promoting our messages. Key of being under-prepared. current partners include: Lonely Planet (350,000 copies of Travel Safe guide given out through outlets such as adventure travel shops and gap year groups); First Choice (poster promotions in stores); Western Union (FCO information on their new cash-cards and related publicity); Sainsbury’s (features in e- newsletters, in-store promotions); and Last- Minute.Com (pop-up windows on their site directing people to our travel advice). We have appointed new “student ambassadors” in 15 of the UK’s biggest universities, to promote our safe travel messages to this vulnerable group of travellers using student media and networks. Our Rough Guide to Safer Travel and Lonely Planet Travel Safe Guide are also targeted at this audience. Articles placed in their university publications 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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NAO summary recommendation NAO detailed recommendation FCO Response

by student Ambassadors have reached 467,000 students over the past year. We have conducted a sixth-form schools tour, together with Lonely Planet writers, and had spoken to 1,400 students by the end of May 2006. We have combined these tours with local media opportunities where possible and will restart activity in September. Our new TV filler “It all adds up”, which targets people travelling without insurance, won a Gold award at the UK IVCAawards in February, and a silver at the International Film and Video Festival awards in Los Angeles in May against competitors from 26 countries. In the quarter ending March 2006, our TV fillers received 20,000 transmissions across terrestrial and digital stations, an increase of 463% on the same period last year. To buy this airtime would have cost us £422,425. We plan two new fillers aimed at the grey and ethnic minority markets later this year. Through a PR company, we have generated extensive press, radio and TV coverage through research-based stories on key travel themes such as winter holidays or Hen and Stag parties abroad. Clearly we need to handle case studies sensitively and respect confidentiality. But we are using our customer satisfaction survey for the first time to ask people if they would be prepared for the details of their cases to be used as appropriate in case studies, and hope that the results of this will provide material. We have asked posts for more individual case studies and our revamped GoGapYear website asks travellers to send in their stories, which are passed to us via Lonely Planet.We placed a full-page advert in the Sun’s first-ever travel supplement (January 2006) as well as adverts in magazines on buying property abroad (secured free through partnerships).

2. In developing a consular (a) The consular guide should make The then Foreign Secretary launched Support customer guide for clear: for British nationals Abroad: a Guide with an assistance work,the FCO — The boundaries of consular oral statement to Parliament on 21 March should consider the key of consular activity and the 2006. The Guide meets all of the NAO’s criteria it should use to services FCO will never recommendations. establish levels of assistance oVer; which are appropriate for — The minimum service FCO Implemented the country and individual will try to provide in all circumstance. countries; — The minimum level of Implemented support which the public can expect to receive in all cases, whether for terrorist atrocities, or other murders overseas or other circumstances. This may result in the need for flexible resourcing to provide short term assistance to Posts during more exacting cases; — The principles, such as the The Guide sets out (p 29) the principles that vulnerability of individuals, Ministers will consider when deciding if a which will be considered particular event or set of events is a major when assessing whether to catastrophe, which merits provision of an provide an enhanced level enhanced level of support. It also takes a of assistance for particular criteria-based approach for example in cases. describing when we will make exceptions to our policy on support for dual nationals (p9 ). We are doing further work on criteria such as individual vulnerability—see under 2(b) below. 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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(b)The guide should be We have set work in hand to consider what underpinned by: criteria staV should use in deciding on the — Acentral set of criteria on resources to devote to individual cases. One risks and appropriate example is the vulnerability of individuals assistance levels, to assist (2(a) fourth para above). StaV are likely to posts in setting—and need to devote more time to delivering service justifying if challenged—an to, say, a vulnerable and frail individual far appropriate level of from home, than to a long-term resident assistance; abroad with family support, knowledge of the local language and procedures, etc We are considering whether we can codify such criteria in our internal guidance to staV.We have issued instructions to posts to stop providing “lifestyle” assistance to British nationals resident abroad, such as help with queries about residency, employment, local jobs or schools. We will be monitoring this through better management information (see above). Posts in Spain, our biggest overseas network, have set up a best practice working group which meets regularly to drive through improvements in the consistency of services. A programme of regional strategy conferences with similar objectives is being rolled out around the world. — Increased emphasis on We are co-located with EU partners in sharing the burden of Almaty, Ashgabat, Dar es Salaam, consular services by Pyongyang, Quito, Reykjavik, Minsk and working closely with other Chisinau. We are alert to further nations, services, including opportunities to expand this list. We have pooling of staV resources made work on the “EU consular space” a and accommodation, and priority of our EU Presidency. However, this driving forward ideas such is still at an early stage: most British as European Union Nationals in diYculty abroad still expect to consular space. see a representative from the British mission rather than having to rely on an EU oYce or the local authorities.

MOVING TOWARDS MORE CONSISTENT FRONTLINE SERVICE TO INDIVIDUALS 3. Both increasing the (a) Post reviews should be extended breadth and depth of to cover the following areas in coverage of the Post review more depth: system,and collecting fuller — The appropriateness and This has been implemented. management information, consistency of the level of would assist the FCO in assistance provided; ensuring that posts provide a — The accuracy of This has been implemented. consistent level of service, performance and appropriate for the country management information circumstance. and performance against targets; — Customer care, including This has been implemented. enquiry handling, complaints, and facilities; — The use made of the This has been implemented. Compass assistance software tool; — Opportunities to work with This has been implemented. other embassies to routinely provide joint information or consular assistance in remote locations, as well as co-operation in crisis situations; and — The quality of decisions In October 2005, a Nationality & Passports being taken on the handling Best Practice Unit (BPU) was set up, with a of applications of passports. remit to undertake a rolling programme of visits to the main passport issuing posts, and to other posts as the need arose. The BPU reviews all aspects of passport work, eg management of the operation, staYng levels, quality of decisions. The BPU works closely with the Reviewers, and has so far visited Amsterdam, Beirut and Damascus. We are currently getting feedback from these posts and will be able to report to the Committee in 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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July on improvements made. We have since visited Canberra (plus Sydney and Perth), Geneva, Rome, Madrid and Lagos, and have visits planned for Pretoria and Hong Kong. (b)Following reviews, the team Where possible, and following discussion with should maximise impact by Post management, recommendations will be encouraging Posts to agree reasonably precise on timings. However, for action plans linked to specific any which are dependent on staV moves (in and measurable achievements, and out), or budget availability, timings are and by developing more formal less certain. Reviews will be followed up, six mechanisms to disseminate to 12 months after the report has been issued, lessons learned. to check on progress with implementing recommendations, and to determine what benefits have been realised. We have expanded the Consular Review Team and have two ad hoc Reviewers whom we can call on if necessary. The new capacity means we can review more posts in greater detail. We carry out desktop reviews in London of posts that need urgent advice where we cannot visit within the desired timeframe. We are now helping posts to devise action plans which build on review reports. As part of the review process, Posts are also being encouraged to share best practice with colleagues at other Posts. We will monitor this to see if we need to do more. One mechanism for best practice sharing is via articles in the Real World (consular network) newsletter. Others are being considered. We have written an Internal Communications Strategy, a principal part of which is the post of “internal communications oYcer”, who will ensure that messages are up to date and spread consistently across the Consular network. (c)Post reviews and subsequent In financial year 2005–06 we have for the first management action could be time set a PSAtarget of 75% for customer better informed by: satisfaction with our service, which we are — More rigorous collection measuring through a survey conducted at and analysis of customer overseas posts and in the UK (for clients who satisfaction measures, have returned here).The results in FY 2005–06 including more were an overall level of satisfaction for all comprehensive analysis of types of services oVered of 98.2% “satisfied” complaints and other and above. Of that 98.2%, 92.9% rated our correspondence. service as “good” and above, while 79.3% — Better methods of reviewing thought it was very good. We conducted the and comparing workload, survey through 46 posts and had a response including the reassessment rate of 28%, which is very high against an of the potential for using a industry standard of 10–15%. We have learnt basic method of time lessons from this survey and have agreed recording, particularly for changes for FY 2006–07 to improve the assistance cases, using the collation of data and statistical robustness. capabilities of Compass. Posts which devote more than two staV years to consular work are also required to conduct regular customer satisfaction surveys of their own, and we are looking to strengthen central collection and analysis of the information which these provide. We have set work in hand to review and strengthen our procedures for dealing with complaints. We produced a new internal Complaints Manual in May, to guide desk oYcers in processing complaints to meet our public commitments in the Consular Guide (p 33) and ensure standard practice. We maintain a database recording the details of complaints, such as how quickly they were responded to, as well as the source or geographical region of the complaint to identify where further action is required. We issued the first detailed guidance on using COMPASS (the Consular database with e- mail facility) in December. We have piloted 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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an advanced version of COMPASS (COMPASS Next Generation) in 19 posts and London. We are making changes following lessons learned and will roll-out COMPASS NG to all relevant posts by early 2007 . . . Consistent use of COMPASS needs to be embedded across all posts . . . COMPASS NG has an improved reporting function, which will generate more useful data. We are currently piloting the time-recording facility in COMPASS NG across our Spanish consular network and, once we have reviewed this, we will consider whether to extend time recording to other posts.

4. The FCO should continue (a) Continue to refine a risk-based This exercise is now complete. We have to work on ensuring that assessment to: provided quality feedback on all plans. All crisis management and — Prioritise feedback to Posts Posts now have updated emergency plans. emergency planning at Posts on the quality of their crisis Posts are asked to update plans on an annual is robust,and should management plans basis, and test them quarterly. We will complete its action plan according to key factors continue to monitor this and ensure deadlines arising from lessons learned such as the number of are met. from the Indian Ocean British visitors and tsunami. expatriates, the likelihood of civil unrest, natural disasters and terrorist activity. — Agree with Posts the frequency with which they should test crisis plans. (b)Experience shows that Anew dedicated o Ycer will oversee this understandably, the need to process and help ensure an increase in quality respond to successive crises has ratings, working, where appropriate, with detracted from progress in external assessors. reviewing emergency plans. The FCO should review the level of its staYng commitment to these areas to ensure that crisis planning is given suYcient attention, and maintains the momentum towards completion by the date the FCO has set itself of October 2005. (c)United Kingdom based and This exercise is ongoing. overseas senior management should regularly review achievement against agreed dates for submitting and testing emergency plans, and respond to any failures to comply. (d)The FCO should ensure that the All posts are required to prepare contingency crisis planning and training is plans for emergencies. We are looking at the included in the objectives of possibility of including crisis planning and senior oYcials at Post, against training in the objectives of senior managers. which their performance is This involves, for example, consultation with assessed. Trades Unions. All Heads and Deputy Head of Mission designate are now required to attend consular crisis management training before departing for their posts. (e)The FCO should establish a We have identified, and agreed with system for ongoing review and Ministers, 20 priority posts on which to focus enhancement of emergency additional crisis training, equipment and planning and testing, including exercising of emergency plans. Best practice establishing baselines from guidelines have been disseminated via the which to monitor improvements FCO’s intranet. in quality. (f)Expanding and extending the Expansion is ongoing. The number of trained role of Rapid Deployment FCO volunteers has increased to Teams to promote faster approximately 80, on standby to deploy from responses. Giving regional rapid London The Hong Kong RDT has been deployment teams such as that operational since September 2005, and the US being developed in Hong Kong regional RDT was established on 1 June 2006, for South East Asia the ahead of the hurricane season. Each regional responsibility for providing a RDT has some 30 volunteers. We will set up 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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regional source of crisis two more regional teams to create a global management expertise to assist network—including one in New Delhi by the Posts in testing their plans. end of 2006. For the time being, responsibility for testing plans will remain at the centre, but regional expertise will be useful for relevant Posts. Regional RDT members have limited time to devote to extra RDT activities for which they volunteer.

5. The FCO should seek to (a) Establish formal liaison points, Tessa Jowell is the Cabinet Minister with maximise the benefits from guidance and practical responsibility for the co-ordination of the improving existing,and arrangements with other United Government’s support to British nationals forging new,working Kingdom government returning from major incidents overseas. We partnerships with others to departments to provide a co- are finalising a formal agreement with the provide a more eVective end- ordinated government service to DCMS on exactly how a transfer of to-end service to British United Kingdom citizens responsibility will take place: this will be nationals,in crisis and non- seeking initial assistance from ready by the end of July 2006. It will include a crisis situations. consular staV. This should DCMS colleague being embedded in the FCO include ensuring that Crisis Unit. responsibility for British citizens returning to the United Kingdom passes smoothly to relevant Home departments. (b)Implement more flexible Only around 50% of loans are repaid; the arrangements for allowing Posts others have to be written oV from public to use some discretion in issuing funds. We believe this rate would increaseif loans to individuals as Posts were given more discretion (they can Undertakings to Repay once all currently issue UTRs up to £100 excluding other sources of funding have costs without reference to London). We are been explored, to reduce costs considering how we might implement this and to avoid unnecessary recommendation but we need to take account deterioration in the individual’s of the fact that allowing Posts more discretion circumstances. would lead to inconsistent practice, which could, in turn, lead consular customers to complain about perceived unfairness. To ensure consistency in advancing loans, the policy and decision making on the issuance of most UTRs should remain in London. We will complete a review of our UTR policy by November. We have asked 12 posts to monitor the number of UTRs granted and refused over the four month period until September and the impact of these decisions on demands for further assistance. (c)Develop arrangements with Delivering high quality support for British United Kingdom based non- nationals abroad, in normal times and in governmental partners who can crisis, was made an international strategic provide additional services and priority for the Government in the 2006 support to those seeking routine White Paper “Active Diplomacy for a consular assistance and in times Changing World: The UK’s International of major crisis. Priorities”. One of the specific aims which underpins this is to “build stronger partnerships across and outside Government to ensure more extensive support for British nationals and their families abroad and on their return to the UK after suVering major trauma overseas”. We are drafting a Consular Partnership Strategy for engaging key UK stakeholders in support of, and to aid delivery of, the Consular Strategic Priority, which includes reviewing our current partnerships. This will be agreed by October. We oVer routine consular assistance through working with NGOs. The best example is Prisoners Abroad, with whom we have a three-year rolling funding Agreement (based on Home OYce best practice guidelines— “Compact”) and who deliver routine welfare support to British prisoners overseas. Other partners include Fair Trials Abroad, SAMM Abroad [support for victims of murder and manslaughter], REDRESS [victims of torture], REPRIEVE [death penalty cases], REUNITE [international child abduction], Veterans Association, Travelcare [support for 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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people at Heathrow and Gatwick], Missing Persons Helpline. We also work with a range of NGOs to deliver help in crisis situations. eg British Red Cross Society, Samaritans, Salvation Army, Victim Support, CRUSE International [bereavement], Disaster Action, WRVS. Many of them play formal roles in our crisis handling arrangements. We are looking for scope for more partnerships with such organisations. An example could be to contract out the transmission of some funds from families to their overseas prisoner relatives (in most countries). Another could be regular contact with relatives post-event (death, injury, detention), or prison visiting in some countries. (d)For significant emergency See 5(a) above. Negotiations with the DCMS situations, a clear trigger point are close to completion, including on exactly should be established to ensure a when the trigger point should occur. Contact co-ordinated cross- is also made at the initial stage of an incident governmental response, with Cabinet OYce Civil Contingency including clear understanding of Secretariat, to set in hand cross Whitehall co- respective managerial and ordination arrangements. budgetary responsibilities by all stakeholders. (e)Ensure that Post crises plans Posts’ crisis plans take account of all existing include consideration of the resources, including Locally Engaged staV. scope for and benefits of co- We recognise the latter are essential in making operation with others such as the regional RDT concept work. We have local staV and volunteers in also started to engage with the Diplomatic emergency situations. Service Families Association, and provide crisis training for our Posts’ Community Liaison OYcers, to ensure that spouses and partners are better equipped to help out in a crisis. We currently train spouses and partners when there is a high likelihood that they will be used, such as ad hoc training for a planned major event. We recently trained some 80 spouses, partners and Embassy staV who volunteered for the call-handling centre for the World Cup in Berlin. To extend the scope of this training to reach more family members, we are asking posts to encourage family members to participate when they are having any specific crisis training at post and to involve family members when they test crisis emergency plans. Posts are encouraged to discover and draw on whatever expertise exists amongst the local community (eg the resident British community), while ensuring that any such volunteer response in a crisis would not conflict with the main one. The British Red Cross Society would, if necessary, send out managers with the appropriate skills to ensure maximum eVectiveness of volunteer groups.

6. The FCO has made good (a) Consider scope for extending the The majority of 100% consular jobs are at progress in enhancing the range of career opportunities in Bands B3 and C4, which are relatively junior professionalism of its consular work to encourage high grades. Thereafter, the jobs tend to have a consular staV but still needs quality staV to embed consular smaller percentage of consular work. Within to use training and skills into their portfolios, and the FCO’s current structure, there is innovative approaches to to engage in consular work at opportunity to return to consular work, in a further improve the quality diVerent points throughout their supervisory capacity, as staV progress through of its service. careers; the grades. All fast stream entrants are now required to undertake a service delivery job within their first two years of joining the oYce, or as soon as possible if they are studying a hard language. Consular Directorate, UKVisas and Human Resources Directorate have established a “workforce planning” group, which is examining ways in which to increase the number of staV gaining service delivery 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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experience early in their careers. Senior oYcials need to lead the way and we are encouraging the strongest possible fields for senior level consular jobs. All Heads and Deputy Head of Mission designate are now required to attend consular crisis management training before departing for their posts.

(b)Developing a better mix of We are encouraging those with consular experience of consular staV, experience to apply for key consular jobs as including widening they become vacant. The Professional Skills in opportunities for less Government agenda is leading to changes in experienced London-based the way that HR Directorate will expect casework oYcers to do consular oYcers to gain experience across the diVerent work overseas in addition to work groups in the FCO. When these take familiarisation visits; eVect, oYcers from all entry streams will be required to have experience of service delivery work (including consular) to be able to progress through the grades. This should increase the pool of talent available for consular work, and help to ensure more oYcers have experience of it as they advance in their careers. The majority of casework oYcers in London do not have overseas experience and many are new entrants to the FCO. We encourage caseworkers to pay familiarisation visits overseas. However, the constraint on resources—financial and personnel—does not allow us, at present, to release caseworkers for an additional period to gain valuable experience working in a consulate overseas.

(c)Pilot a scheme to evaluate the We will consider by the November2006 costs and benefits of introducing whether the Canadian system of handling a United Kingdom based system consular work out of hours would bring for “out of normal hours” benefits to the FCO and our consular clients. assistance, similar to that used We need to take account of the far greater by the Canadian foreign number of British people travelling and living ministry; abroad, and consequently of the greater challenge which maintaining such a system would pose. We would still need to maintain the same system of out of hours cover at our Posts overseas, so that cost savings might be less significant.

(d)Make attendance at core We have made training mandatory for all consular training courses these groups. We have set up a new database mandatory for all locally to ensure that all staV overseas who have not engaged consular staV (including had the required training quickly receive it, Honorary Consuls), and duty and to monitor ongoing training for all staV. oYcers; We will also be able to monitor this through the new COMPASS software now being rolled out. We are producing a distance- learning video for duty oYcer training to allow posts quickly to train any oYcers that need this.

(e)Increase the number of regional Implemented. Our internal reviewers are training events and make conducting a review of our consular training specific provision in these to team to see if its resources need to be share lessons between Posts. increased to cope with the growing demand for training in the UK and overseas. Regional training events for locally engaged staV increased from six to eight. Specific regional training courses introduced for Honorary Consuls. Training courses have been structured to facilitate sharing of experience and best practice between individuals and posts. We have held two regional consular strategy conferences for posts in the EU and in the Middle East and North Africa, to exchange best practice and identify key regional trends. We will hold four regional strategy conferences in the next 12 months, in Nairobi 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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(for sub-Saharan Africa posts), New Delhi (for South Asian posts), the Caribbean and Hong Kong (for South East Asian posts). 7. Passport applicants (a) Agree with the United Kingdom We have agreed this with the Identity and and overseas should be given Passport Service that overseas Passport Service (IPS). greater choice to obtain their citizens should be able to obtain passports from the United their passports directly from the Kingdom or from the FCO, United Kingdom Passport subject to meeting basic Service if they desire, with security requirements. immediate eVect; where they have travelled back to the United Kingdom, can attend any necessary interviews there and can provide a verifiable address. The United Kingdom Passport Service believes that this can be made to work, particularly for renewals, given adequate arrangements to ensure applicants’ eligibility and identity. (b)Align Consular and United We are working hard towards closer Kingdom Passport Service alignment with IPS standards. Wherever security checking and quality possible we will also standardise procedures; assurance processes for the issue where local circumstances overseas may of passports. render exact duplication of procedures impractical, we are coordinating closely with IPS to ensure that we meet the same standards, even if the means may diVer. This has been agreed with IPS. We have established a Joint Working Group to establish good practices. Recent IPS attachments to our missions have also resulted in increased awareness by IPS of the rigorous nature of the checks (eg on foreign documentation) which we carry out. Those concerned have commented that they will be more careful when checking foreign documents presented to them in the UK. (c)Regularly review the impact of We have created a dedicated Fraud Liaison the new arrangements on speed OYcer role to work closely with other and security of passport issuing, Government departments in a more co- and particularly on the level of ordinated approach to tackling fraud. We will demand for passports to be closely monitor how the new latitude for issued overseas. The impact of applicants overseas to obtain a passport in the such cases will provide valuable UK aVects the numbers of issues Posts make. input into a more fundamental This will be recorded in Posts’ annual returns. decisions regarding the future of issuing passports overseas (see recommendation 8).

EQUIPPING CONSULAR SERVICES TO MEET EMERGING CHANGE 8. Given the radical changes (a) In response to our findings the The latest phase of CapGemini’s work has required for the passport FCO has already commenced explored these issues—and a number of operation,the FCO should the process of the fundamental others—in some detail. Findings and possible change its current business review through a report from options for the way forward will be presented model for issuing passports consultants CapGemini. We to the FCO Board on 20 June and to overseas. consider that the future Ministers shortly thereafter. direction of the Passport operation should include: — Production of passports should be based in far fewer locations than at present. Specifically, a passport network based on production capability mainly in the United Kingdom, but with the option to maintain several regional “hubs” where there are major concentrations of British passport holders (such as Spain and North America). 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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— Aclear definition and service standard for those residual functions that need to be retained in the country of residence of the applicant. This should focus of maintaining the capability at Posts to issue non-biometric emergency travel documents or temporary passports to assist emergency travel, and to undertake local checks on passport entitlement, such as interviews, biometric enrolment and the inspection of local records. Since a relatively small number of emergency passports will be issued, unit costs will increase but fees should be set to recover full cost. — To build up capability in passport productions hubs to take on tasks such as the authorisation of passport decisions made by Posts, and to advise Posts on their decisions on nationality. Once the nature of the next stage of biometric passports is clear the FCO should reconsider whether further work should be consolidated to “hubs”, to obtain lower costs and more consistent standards.

9. The FCO should ensure (a) Re-invigorating Compass, the Piloting of COMPASS NG (Next Generation) that existing consular consular assistance software began in October, with rollout to Posts information technology programme, with more detailed expected to begin in Summer 2006. See systems are fully utilised and training and a staged rollout of response to 3(c) above. There will be more new systems are developed its functions; including its face-to-face training at Posts, and trainers will to enable it to allocate its planned improved functionality. also take part in regional conferences. New resources where they are modules to come onstream later in the year most needed. include Crisis Management and On-line registrations, We are conducting a six-month pilot of unclassified laptops with access to COMPASS for use by small posts and Honorary Consuls with high numbers of consular cases. (b)Monitoring whether posts are We actively encourage Posts to use using the Compass system, COMPASS and we monitor its use. The including enforcing compliance Directorate’s senior staV raise COMPASS use through linking any staYng bids on overseas visits. We are currently to case workloads shown on the considering the benefits of enforcing systems; compliance by linking future staYng bids to COMPASS statistics. (c)Regular and proactive This function is now covered by the Head of investigations of common Consular Directorate’s ICT Operations Team, infrastructure problems and created in February 2005. Co-ordination with frustrations with the system IT Helpdesk, FCO Services and IPS has reported by Posts to the centre; tightened considerably, ensuring that we and obtain regular reports of problems with consular IT systems and are able to investigate and resolve them. The current focus is on resolving problems Posts experience with OmniBase—a joint IKPS/ FCO database of all UK passports issued. (d)Better generation of See response to recommendation 1(b) We are management and performance reviewing how we can improve our MI information from the key systems. Anew tool has been developed to information technology systems. produce management information from GenIE (our current digital passport issuing 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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system). BRIT, the new biometric passport system, to be introduced at Posts from February 2006, has been developed to produce extensive management and performance information, including for example data on performance against PSA targets. BRIT will be rolled out to all passport-issuing posts by July 2006. 47,000 passports have been issued since the start of the roll out in March. 10. The FCO should,in (a) Regular reviews to assess the When assessing passport fee increases, conjunction with HM adequacy of funding levels assumptions are made based on available Treasury,regularly review should consider: statistical information, of the likely demand the basis of funding for — Changing patterns of travel for consular services. This information will consular assistance work and and the observed level of include: should reconsider the range demand; Numbers of journeys; of consular activities covered — Projected trends in the issue Travel trends (for example the growth in by its internal and external of passports; and travel to more exotic locations, the increase in targets. — The case for linking the adventure holidays, the increase in consular premium to the independent travellers); number and type of The numbers of passports predicted to be overseas visits as well as the issued; number of passports issued. The increase/decrease in popularity of some locations (and staYng implications for those Posts); The likely benefits of improved travel advice and Know-Before-You-Go campaigns. We will continue to seek to improve the forecasting of demand for services. The introduction of ID cards will pose important challenges, as they will allow British Nationals to travel within the EU without a passport. The introduction of the ID card is expected to mean a reduction in the number of passports issued by IPS. Due to the cap on the price of an ID card, there are no plans for it to include a Consular Premium, which could result in a shortfall in Consular Premium income. We are working closely with IPS, the Home OYce and the Treasury regarding their predictions of the potential impact of the ID card on passports issued and funding. (b)Ahierarchy of targets should be We have established seven new business established under the existing targets. These will be monitored throughout Public Service Agreement and 2006–07 and, if suitable, will be put forward underlying targets, to develop to the Treasury as new PSAtargets for the more detailed working level Comprehensive Spending Review 2007 period targets in areas where none 2008–11. The targets cover: devising strategies currently exist. For example, for death penalty cases; sending “bereavement targets for travel information packs” to families of those who die overseas; and crisis management could revising travel advice; responding to crises; include: updating posts’ emergency plans, and the — The level of public return on investment of our Know Before awareness of, or a number You Go marketing campaigns. of visits to, traveller information; — The number of Posts who have current, reviewed and tested emergency plans; — The speed of deployment in response to crises, and level of continuing support during crises.

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Letter to the Chairman of the Committee from Lord Triesman of Tottenham,Pa rliamentary Under- Secretary of State,Foreign and Commonwealth O Yce,11 October 2006

Dear Mike, In the Committee’s report on the FCO’s 2004–05 Departmental report, you recommended that we set out the goals, work programme and achievements to date of the Passports Best Practice Unit (BPU). In doing so in our White Paper response, we referred to an impending review of the impact of the eVectiveness of the Unit. This would be informed by feedback from the first three posts reviewed by the Unit (Amsterdam, Beirut and Damascus), six months after their reviews. The review of BPU has now been completed and I thought you might be interested to receive a copy. I believe this specialised review team, which operates in co-ordination with our wider Consular Review Team, is making a positive impact in improving the working practices of our posts to enable them to meet their PSAtargets. Posts are given recommendations on how to improve their proce dures and are given six months to implement the recommendations. Feedback from the posts themselves has been overwhelmingly positive, and the review team has also provided a valuable insight into the challenges faced by post, which helps to develop and inform passport issuance policy and procedures. I have also enclosed a copy of the 2006 Consular Strategy Update: In Partnership, which sets out what we have achieved over the past year and the challenges we face in the year ahead. I hope you will find this helpful. David Triesman The Lord Triesman of Tottenham

REVIEW OF THE PASSPORTS AND NATIONALITY BEST PRACTICE UNIT Following the six-month reports from the initial three posts reviewed by the Best Practice Unit (BPU)— Amsterdam, Beirut and Damascus—we undertook to assess the impact of the Unit so far. The aims of the BPU are to ensure that: (a) passport oYces overseas run in accordance with Passport Guidance; (b) passports are issued within PSAtargets; and (c) passports are issued to those with a genuine claim to British Nationality and with appropriate checks taken to ensure authentication of identity. Recommendations made during Best Practice reviews can largely be split into two areas: (i) Recommendations which concern working practices or mandatory checks for which policy has already been laid down in FCO Guidance on Passports. These recommendations are considered “non-negotiable”. There may be auditory implications if these recommendations are not followed and Posts are strongly encouraged to follow them. The six-month review post-BPU visit looks closely at these areas. (ii) Recommendations which encourage a change to processes within the passport section. This in turn may lead to the more eYcient production of a passport, the better designation of tasks according to grade and job description and the encouragement to better meet PSAtarge ts. These recommendations rely on “buy-in” from the Post, as their focus is on promoting best practice rather than addressing any failures to comply with standards. However, if Posts choose not to follow recommendations and subsequently have diYculty meeting PSAtargets or demonstrate continued ineYciency, the Head of Passport and Documentary Services Group will strongly encourage the senior management at Post to step in and ensure that the recommendations are given a fair trial. In the course of the first three reviews, the BPU found that there were gaps in some of these areas and have made recommendations for Posts to tighten procedures. Below is a brief report of the findings, recommendations and action taken following the first three Best Practice reviews. These demonstrate that the BPU has fulfilled its objectives in these cases.

Value To Posts The value of having an independent expert to review working practices and procedures, to make recommendations for improvement is obvious. It also helps to build relationships between London and posts and between groups of posts with similar regional issues—the Head of BPU helps to establish and encourage ongoing sharing of best practice between posts. The feedback from posts reviewed over the past six months has been overwhelmingly positive. 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Value To Consular Directorate The work of the BPU has also given staV in London a valuable insight into the work being conducted at the overseas passport issuing posts. From the reviews we are able to see how things are working on the ground and this in turn is helping to formulate future passport issuance policy and processes. The BPU is also of value to Consular Directorate’s Resources Group. Resources Group identifies posts which are not meeting PSAtargets and asks the BPU to conduct reviews to see h ow working practices can be improved to bring the post up to the required standard. Although the full impact will not be known until statistics are collated in April 2007, we feel confident that the reviews will have had a positive impact on posts’ ability to meet the PSAtargets. Overall, we feel confident that the BPU has fully met is objectives during review visits to seven passport issuing posts over the past eight months and that the BPU is an asset to the Consular operation. There might even be a case for expanding its resources over the coming months to enable it to keep up with demand.

Detail of Findings from Review of First Three Posts

Amsterdam: November 2005

During the course of the BPU visit to Amsterdam the Head of BPU found no major issues in the “non- negotiable” areas and those recommendations made involve only minor changes to procedures. The majority of the recommendations concern processes. There were, and remain, parts of the process which are being completed by staV at the incorrect grade. However, the Head of BPU has pointed out that there is an on-going staYng issue in Amsterdam which the Consular Review Team are aware of and negotiations towards its resolution continue. This is putting pressure on the rest of the team in Amsterdam and the Head of BPU accepts that, until the staYng issue has been sorted, some of the recommendations on processes cannot be implemented. The Head of BPU was pleased to see that the recommendations made on Passport Application Form (PAF) administration have been implemented and that information on application forms has been made clearer. Also, as the Passport section is now open only in the mornings only one cashier is appointed per day (Amsterdam used to have two diVerent people taking cash in the mornings and afternoons which made accounting for errors diYcult). Although the Head of BPU would prefer Amsterdam to nominate one member of staV as a permanent cashier, she can see that this compromise will work. Nationality determinations are being made by correctly graded staV although, through staYng problems the Consul- General is still validating passports and he is over-graded for this task. In the “non-negotiable” area, surprise checks are now being undertaken each month and the security of bulk and working stock is well managed.

Beirut: November 2005

During the course of the BPU visit to Beirut the Head of BPU found no major issues and the majority of the “non-negotiable” recommendations involved some minor changes to procedures. General working practices in Beirut were sound and Post had spent some time improving their processes in light of a passport fraud which was discovered in 2004. However, in a few areas processes had been unnecessarily over-graded in an attempt to prevent future fraud. For example, the Consular Assistant did not make nationality determinations and this was taken on by the Vice Consul. The Consular Assistant is the correct grade to make these determinations and has had the appropriate training. As long as the Vice Consul is performing the correct checks while validating the passport application and the mandatory monthly sample check of applications is carried out by the Consul, the Consular Assistant should be allowed to take on this aspect of passport work. In addition, supporting documentation for basic and straightforward passport renewals was being kept with the passport application. This is generally unnecessary as a previous nationality determination has been made and all the relevant supporting documentation was received when the initial nationality determination was made for the first passport. The Consular Assistant is making nationality determinations but the more complex cases are still being dealt with by the Vice Consul. Moreover Post have decided to continue keeping supporting documentation for all applications. Of the “non-negotiable” recommendations, the majority have been implemented. The customer is now required to sign for the receipt of their new passport, Lost and Stolen reports are recorded on “Compass”, Passport Destruction Certificates are filed in logical order with the passport application forms, and the Custodian of the bulk stock of blank passports has been given a letter from the Ambassador outlining his/ her duties and responsibilities. 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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Damascus: November 2005 There were a substantial number of recommendations made by the BPU in both areas. Damascus runs a small passport operation and although the Head of BPU recommended several changes to working practices, there were no serious problems in this area. The recommendations for changes to processes included better administration of the passport application forms (in terms of how data is recorded), ensuring annual orders of passports and quarterly returns for Emergency passports are submitted in time and that refusals were administered in the proper fashion by a correctly graded member of staV. In the six months since the BPU review, all recommendations in these areas have been implemented. However, the “non-negotiable” areas were of more concern and the Head of BPU made a large number of such recommendations. Of these, Post have confirmed that they have implemented the majority including: tightening up on the security, storage and access to blank working stock passports, entering lost and stolen passport details on Compass, asking customers to sign for the receipt of their new passports and the Custodian of the bulk stock of blank passports has now been issued with a letter from the Ambassador outlining her responsibilities and duties. (In addition, the Head of the BPU has added that comment was made at the time of the BPU visit about eVectiveness of the bulk stock custodian. It was the most organised bulk stock operation she has seen and credit must be given to the bulk stock custodian for the way she carries out her duties in this regard.) The Head of BPU is still concerned that the mandatory monthly check of issued passport applications may not be being carried out eVectively by the Consul. The current Consul leaves post in August and BPU have arranged to have a meeting with the new Consul to highlight these issues and to ensure that mandatory checks are being undertaken. Consular Directorate FCO

Letter to the Chairman of the Committee from Lord Triesman of Tottenham,Pa rliamentary Under- Secretary of State,Foreign and Commonwealth O Yce,13 October 2006

Dear Mike, As I mentioned in my letter to you of 28 June 2006 about the National Audit OYce report on Consular Services, please find attached a note on our consular work for the FIFAWorld Cup in Germany. Our work for the tournament targeted and influenced travelling football supporters, has helped to improve the consistency and professionalism of our frontline services in Germany and in London, and will inform our preparations for future major sporting events. I would be very happy to respond to any questions that the Committee may have on the report. I hope that the Committee finds this update useful. David Triesman The Lord Triesman of Tottenham

FIFA World Cup 2006 Consular Services for British Nationals in Germany

Report to the Foreign AVairs Committee

FOREIGN AND COMMONWEALTH OFFICE OCTOBER 2006

Introduction 1. This report is an account of our work to deliver our consular objectives for the FIFAWorld Cup 2006 in Germany: — to prepare for a safe and trouble-free World Cup for travelling British fans; and — to ensure that those who do get into diYculty during the tournament, and their families, get the most eVective consular support possible. 2. It concludes by drawing out the lessons we learned from the operation, and how we intend to use those lessons in preparing for future tournaments, most immediately for the European Championships in Austria and Switzerland in two years’ time. 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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3. UK Government planning for the FIFAWorld Cup involved a number of player s, notably the Home OYce, the Association of Chief Police OYcers, UK Football Policing Unit, UK police (including British Transport Police), the Crown Prosecution Service and the Department for Culture, Media and Sport. This report focuses only on the consular operation to provide assistance to travelling supporters in diYculty in Germany, and on activities such as public diplomacy where they contributed to the success of that consular operation. However, the FCO, through the British Embassy in Berlin, played a much wider role alongside this consular responsibility, including in helping to co-ordinate the eVorts of other Departments and in maximising opportunities from the tournament to enhance the British-German relationship.

Planning the Operation 4. For every major international football tournament since the European Championships in 2000, we have appointed a dedicated Football Attache´ to the relevant FCO post or posts to lead preparations. Our Football Attache´ for the World Cup 2006 took up his post in Berlin in July 2005. Supported throughout by a Sports Liaison OYcer based in Consular Directorate in the FCO in London, the Football Attache´ began work on the budgetary, staYng and other practical planning required across our network in Germany in preparation for the World Cup. He also began a programme of regular attendance at England fans’ events, and contact-building with the FAand supporters’ groups, which pr oved important channels of communication in the run-up to and during the tournament. 5. Once the draw for the World Cup was made in December 2005, we knew where England’s three first- round matches would be played, as well as the venues for either of their two possible routes to the final. The Deputy Head of Mission in Berlin, with the support of the Football Attache´, took on overall direction of the planning and operations for the tournament. Within that, our Consulate-General (C-G) in Dusseldorf led on preparations for England’s games in their consular district: Frankfurt and Cologne in the first round, then Gelsenkirchen in the quarter-finals. The C-G in Munich led on the games in Nuremberg (first round) and Stuttgart (second round), and would have done for the semi-final in Munich had England got there. The Berlin Embassy led on preparations for the other quarter-final and the final in the Olympic stadium. 6. From immediately after the draw, the Ambassador in Berlin and other senior oYcers from the network in Germany undertook an intensive programme of visits to the England venue cities to gain the co-operation of, for example, local mayors, police chiefs and FIFAorganising committe e representatives. Aparticular focus of this activity was to stress how England fans had changed over the past years, with arrests and disorder in the most recent tournaments at record lows. These visits proved important in getting across to local German authorities that they should judge England’s travelling fans by their behaviour, not their reputation—something which contributed to the highly-successful policing of England fans in the tournament itself. 7. We had decided during our early planning that our consular operation in Germany during the World Cup would be led by a mobile team of consular staV setting up temporary consulates in the England venue cities on the days before, of and after their matches. This team would work in conjunction with a 24/7 call centre at the Embassy in Berlin, which would provide a single, Germany-wide emergency number, field all initial consular enquiries during the World Cup, and act as the co-ordination centre for the response to any major incident aVecting British nationals during the tournament. 8. Mobile team members were drawn from our existing network in Germany. Twelve temporary duty staV were sent out from London to fill their normal positions in the Embassy in Berlin and Consulates- General in Germany for the duration of the tournament. This arrangement ensured that those staYng the mobile team had the experience and local knowledge necessary to fulfil their roles. It is worth noting that even if we had had permanent staV in place in more cities—for example, if our consulate in Frankfurt had not closed before the tournament—we would nonetheless have needed to rely on mobile teams. The scale of the operation was such that no single post in Germany, not even Berlin, had a permanent complement of consular staV capable of dealing with the demands posed by an England fixture. 9. As planning progressed, we worked closely with the Football Association (FA), EnglandFans (the FA’s oYcial supporters club), and the Football Supporters Federation (FSF, which represents unoYcial England fans), to plan our detailed deployments for the tournament itself. We were able to get representatives of the FSF to accompany the Berlin Embassy staV on several of their planning visits to the venue cities: this helped to ensure that the practicalities of our operation—where we set up oYces, where we placed staV etc—would reflect the needs of the fans. 10. The fans told us that, while many of those travelling to Euro 2004 in Portugal had combined their trips with family holidays, those going out to see games in Germany would be much more likely to shuttle between Germany and the UK, or between Germany and attractive neighbouring cities such as Amsterdam and Prague, and would travel by a wide variety of routes. This had two important consequences for our planning: (i) Emergency Passports (EPs), valid only for a single journey to the UK, would be inappropriate for most of those who required replacement travel documents during the tournament: fans would want replacement documents which allowed repeat trips. We decided that we would therefore oVer Temporary Passports (valid for multiple journeys and for a one-year period) through the mobile consular teams and the Embassy in Berlin during the course of the tournament. This was the first 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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time that we had oVered this service on a mobile basis. Fees for Temporary Passports are set higher than those for EPs to reflect their greater cost. Full 10-year replacement passports were also available through the C-G in Dusseldorf, the centre of our passport-issuing operation in Germany, in the usual way. (ii) The tournament would have an important impact on neighbouring posts to Germany, particularly those in countries with road-transport links from the UK (France, Belgium, the Netherlands), with cheap flight destinations close to Germany (eg Poland), or with cities attractive to fans (eg eastern Europe, particularly Prague, and Amsterdam). We therefore included our Posts in the neighbouring countries to Germany in our plans for the tournament. We tasked them to make sure their own contingency arrangements were tested and that they had adequate staV in place. We also used them to distribute our information material or messages to fans. The UK Football Policing Unit (which reports to the Home OYce) also placed liaison oYcers in a number of neighbouring posts for the duration of the tournament.

“Avoiding Penalties”Campaign 11. We decided early that a targeted pre-tournament communications campaign would be essential, both to help fans stay safe in Germany and to manage their expectations of, and demand for, our support. 12. Our target group—travelling football fans—is resistant to standard government information (our research shows that people are less likely to check travel advice, get insurance etc when travelling on this kind of trip). We had to find ways of communicating travel safety messages that were attractive to fans, and therefore likely to be read and retained. 13. Building on a successful experience from Euro 2004 in Portugal, we designed a credit card-sized foldout information card as the central tool of our communications campaign. The card (copies are enclosed with this report) included information which fans would want—on the venue cities, useful phrases in German, notes on local laws and customs and handy directions to stadia etc—as well as information on travel safety, and on what British consular staV could and couldn’t do when things went wrong. The card gave prominent place to the single, Germany-wide emergency number that we had put in place for the course of the tournament. 14. We signed up a range of partners to ensure that the card got to as many travelling fans as possible. The FAsent it out with tickets, and helped us to distribute cards at the Engl and team’s warm up games in Reading and Manchester earlier in the summer. We distributed 133,000 information cards at airports including Heathrow, Gatwick, Leeds Bradford, Birmingham, Luton, Stansted, Liverpool and Manchester. This included 23,000 at Heathrow alone, where the cards were given to fans on British Airways, Lufthansa and British Midland flights to Germany and neighbouring countries using marketing staV at check-in queues on key travel days to matches. We used airport information screens to display the Germany emergency number to travellers and encourage them to programme it into their mobile ’phones. We distributed over 4,000 cards through ports across the UK, working through the police. Some 50,000 cards were also distributed to fans in Germany, mostly at arrival airports. Our World Cup information card won the Gold award for best consumer promotion at the Chartered Institute of Marketing: Travel Industry Group’s Awards this September; and the campaign has been shortlisted for the Whitehall and Westminster World Civil Service Awards 2006. 15. There were a number of other elements to the “Avoiding Penalties” campaign: — Atext message alert service in partnership with the Football Supporters ’ Federation and T- Mobile, to which fans could sign up to receive football and travel safety news on their mobile phones while in Germany. Whether or not they had signed up to the service, every T Mobile user arriving in Germany received a text message with the Berlin Embassy’s 24-hour help line number—helping us get that number out to a huge number of fans. — FCO and Berlin Embassy staV attended a number of England fans forum events in the month leading up to the World Cup, to promote our travel safety messages, set out what we could do to help those in trouble, and distribute the information cards. —WeoVered a mobile travel advice service with Pixaya to which fans could sign up. — We developed a “Skinker” (downloadable desktop news alert service) in partnership with Talk Sport Radio, who promoted it to their listeners and through their website. Some 8,000 users downloaded this service and received updates from Talk Sport on the England team and other football news interspersed with key safety tips for travelling to Germany. — We co-sponsored the FSF’s England Fans’ Guide to Germany 2006 and launched it jointly with the FSF, the Home OYce and the footballer Tony Adams at the FCO in London. This, and a separate media event for the campaign involving the footballer David Platt at White Hart Lane, gained significant media coverage for our travel safety messages including the front page of the Sun. 16. Feedback from fans and others suggests that our communications campaign was a success. The widely-advertised 24 hour emergency number in Berlin received the great majority of calls from fans in diYculty during the tournament, showing a high awareness of this number. Most fans in Germany had got 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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the message about, for example, the illegality of Nazi salutes. The low levels of avoidable consular cases and of disorder overall throughout the tournament are, in our assessment, due at least in part to the success of our pre-tournament communications and our engagement with local authorities and police. 17. Our media handling and public diplomacy work before and during the tournament was also aimed in part at reinforcing the success of the consular operation—whether by breaking down stereotypes of England fans in Germany, publicising our consular eVort, or helping to manage expectations of what help the Embassy in Berlin could or couldn’t provide if things went wrong.

Training 18. The World Cup operation involved staV from across the British Embassy in Berlin and Consulates in Germany, supported by others in London and elsewhere. Many of these staV are not regular consular oYcers and required training to enable them to carry out their duties through the World Cup. In preparation for the tournament, we therefore: — trained 80 call handling staV to man the 24-hour emergency number at the Embassy in Berlin. These were drawn from mainstream Berlin Embassy staV and their spouses/partners and families. Training consisted of sessions on the basics of consular work and what we can and cannot do to help people, plus role-plays with actors to help staV prepare for dealing with diYcult, traumatised or abusive customers; —oVered in-house media training for consular staV deployed on the ground during the tournament, to help them deal with press attention; — delivered specialist refresher training to those issuing mobile temporary passports during the tournament; and — provided the necessary refresher training for the temporary duty staV sent to Germany during the tournament to fulfil a range of roles in support of the Berlin Embassy and Consulates.

Testing our Contingency Plans 19. On 3 May 2006, following the majority of our training, we conducted a major crisis exercise in Germany to test the World Cup-specific emergency plan, which we had drawn up to shape our response to any major incident aVecting British nationals during the tournament. This simulated two bombs exploding in bars full of England supporters in the city of Cologne. We used around 40 actors to play injured and traumatised British nationals and to simulate a media pack around the scene of the “incident”. The call handling centre in Berlin was transformed into a crisis management centre for the duration of the exercise, with large numbers of staV volunteers from the FCO in London and others calling to play the roles of family members worried about loved ones involved in the attacks. 20. The exercise fully tested our crisis management and contingency procedures for the World Cup. The mobile team in Cologne, directed from the Crisis Management Centre in Berlin, was able to deploy rapidly to the scene of the incident and oVer support to those British nationals aVected. Call handlers at the Embassy in Berlin were able to deal with a large volume of calls from the “public” (ie our volunteers). We also learnt a number of lessons from the exercise, which enabled us to refine our preparedness before the World Cup actually kicked oV. For example, we improved our call handling arrangements to allow the call centre to operate more reliably and flexibly. And we strengthened deployment plans for the mobile team on the ground in the light of the (realistic) scenario that some would, as in the exercise, be stuck in the Stadium or other venues and unable to go to the scene. 21. The Embassy in Berlin conducted a further “desk-top” contingency exercise with the Consulates- General in Munich and Dusseldorf on 9 June, the day before England’s opening match against Paraguay.

Service Delivery During the Tournament 22. The mobile consular team covered five England matches: the three first-round games in Frankfurt, Nuremberg, and Cologne; the second-round match in Stuttgart; and the quarter-final in Gelsenkirchen. 23. The team started its work in earnest in Frankfurt on 8 June, two days before the first England game. Operating from oYces provided by our newly-appointed Honorary Consul, they remained open until the morning of 12 June. This operating pattern was maintained in other venues, oVering a full service in each venue city the day before, the day of and the day after each England match. 24. The core of the 16–18 person team, which included the Football Attache´ and a member of the FCO technical branch usually based in Berlin, travelled across Germany, usually having less that 24 hours at home between five-day deployments. In Nuremberg and in Stuttgart (the second-round game) as in Frankfurt, our Honorary Consuls provided oYce space for the temporary Consulates. In Cologne and in Gelsenkirchen (England’s last game) the team used hotel conference rooms. 25. In addition to issuing temporary passports the team provided a full range of normal consular assistance including: 3471161036 Page Type [E] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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— issuing emergency passports; —oVering advice on transferring money; — contacting relatives and friends and ask them to help with money or tickets; — providing lists of lawyers, interpreters and doctors; — notifying next of kin of accidents or death and advising on procedures; — visiting those arrested or imprisoned or hospitalised; — passing messages to friends or relatives; and — speaking to local authorities in certain circumstances. 26. Statistics on the mobile team’s work during the tournament are attached at Annex I. 27. The 24/7 call-centre in Berlin was maintained until England were knocked out of the tournament, then scaled back to operate on an early morning to late evening basis, and reinforced again around the time of the final in Berlin. It proved an enormously valuable resource both in handling calls from fans in diYculty (many of which could be resolved without intervention from staV on the ground eg queries about how to transfer money) and in co-ordinating the distribution of work to the mobile teams. Statistics on the call- centre’s activity during the tournament are attached at Annex II. 28. The Germany operation was backed up in London by a dedicated World Cup/Germany Unit in the FCO’s Consular Directorate, which was in place from 7 June until 7 July. StaV there worked on a shift basis to provide an extended daily service, working in conjunction with the FCO Response Centre for out of hours service, seven days a week. The Unit worked with the Call Centre in Berlin and, like Berlin, had a specific, single number for members of the public to call: it also took on much of the work of liasing with the UK friends and relatives of consular clients in Germany. 29. For much of the tournament, we operated comfortably within the resources available to the mobile teams and other parts of the operation. However, at times (particularly around the time of the Stuttgart match when a relatively high number of British nationals were detained) they were fully stretched. This suggests that we got our risk assessment for the staYng levels of the mobile team about right. However, this will always be diYcult to predict (see lessons learned below) as demand for assistance can vary considerably throughout such a tournament and an element of contingency is necessary to deal with any major incident. 30. In addition to the mobile team, the Embassy in Berlin had a separate, reserve group of staV on stand- by throughout the tournament to deploy to the scene of any major incident in Germany. Although this group was not used, it was an essential contingency measure and could have dealt with, for example, a coach crash or other major incident in another part of Germany if this had occurred during the World Cup.

Costs 31. We allocated £500,000 from the resources of Consular Directorate for the World Cup. This covered mainly extra staV, pre-tournament publicity campaigns, transport and accommodation for the mobile teams. As final invoices are paid, our latest forecast is that this budget will be 6–8% underspent. 32. In addition to the direct financial costs of the tournament there were substantial opportunity costs for the Embassy in Berlin in re-prioritising other work in order to focus on the World Cup. This is an important factor for any post to take account of in planning for an operation on this scale. However, we estimate that these costs were more than outweighed by the positive gains for the bilateral relationship and the image of the UK in Germany which flowed from the success of the tournament and not least from the generally excellent performance of England’s travelling fans. And for Berlin Embassy staV, working on the World Cup oVered valuable opportunities: they have gained new knowledge and experience, with many more now having been exposed to consular work and the customer care and other skills it requires; a better level of preparedness for emergencies; and a strengthened sense of team spirit having gone through a testing period together. Work is in hand to make sure that these gains are recognised and maintained.

Lessons Learned 33. We conducted a full review of lessons learned from the World Cup at a meeting in Berlin immediately after the tournament, and have held a separate review in London of Consular Directorate’s part in the preparations and the operation itself. 34. The main lessons which we have learned from the tournament are as follows: — The mobile team approach, using staV with the right local knowledge drawn from across the German network and temporary Consulates in the venue cities, was the right one for a tournament on this scale. It allowed us to deliver a fast-moving and flexible service where it was needed. None of our permanent posts in Germany could have coped from their usual day-to-day resources. This lesson is even more important when looking at countries where the FCO’s network is smaller eg Austria/Switzerland for Euro 2008. 3471161036 Page Type [O] 03-11-06 00:01:45 Pag Table: COENEW PPSysB Unit: PAG2

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—ItisdiYcult to make good predictions about what the demand for consular assistance will be. The first three games were relatively light compared to what we expected; but the detentions in Stuttgart on the weekend of 24–25 June stretched our mobile teams and call centres to full capacity. We were right to staV the mobile teams on a risk-assessed basis; there will always need to be an element of spare capacity during “normal” working of the teams, on a contingency basis, so that they can deal with peaks in demand. — Such a potentially demanding event requires central direction (in this case by the Embassy in Berlin) in order to join up the eVorts of a range of posts and partners. This could be reinforced for future tournaments by formalising an arrangement with a single senior point of accountability (“Senior Responsible Owner”), probably the Ambassador. — The single initial point of contact for British citizens seeking advice or assistance (dedicated telephone number) worked well and helped us to reduce the demands on the mobile teams on the ground. — Pre-tournament publicity aimed at preventing trouble, reducing risk and managing expectations pays oV. There is real evidence that our “Avoiding Penalties” campaign and our engagement with fans helped to reduce the demand for our assistance during the tournament, and helped those fans who did get into diYculty to contact us easily and eVectively. This kind of communications strategy, using a range of means for getting messages across and a number of partnerships with fans groups, the FA, airports etc will serve as a model for future tournaments. — Early planning is essential. Though we were able to put in place all the measures flowing from our contingency exercise on 3 May, timing was tight. We should conduct training and crisis contingency exercises earlier in future tournaments than we did for this World Cup, to allow more time for the lessons learned from them to be implemented. — Proactive public diplomacy and media handling before, during and after the tournament (including close co-operation across Whitehall and with other stakeholders eg Home OYce, the Police, fans and the FA, local authorities in the host country) is an inextricable part of successful consular service delivery at large-scale sporting occasions like the World Cup. This cannot be emphasised too strongly. — The Football Attache´ was fully stretched and at times found it diYcult to combine engagement with fans and organisers with co-ordination of the consular logistics (deployment plans etc) across a the network of our posts in Germany. For future tournaments we should consider reinforcing this function, for example with an additional member of staV.

Passing on the Lessons 35. We were able to involve consular staV from our posts in Austria and Switzerland in one of the mobile team deployments during the tournament, to expose them to some of the challenges that they will face as they begin to prepare for Euro 2008. We are putting together for them a library of key documents (job descriptions, budgets, logistics plans, communications plans, contacts, etc) which they will find useful as they begin that planning. The Embassy in Berlin has already shared lessons learned with our Posts in Vienna and Berne. 36. Our full-time Sports Liaison OYcer in Consular Directorate in London will maintain the knowledge gained and lessons learned from this tournament and provide continuity between tournaments and matches. With the qualifiers for Euro 2008 due to begin soon, this oYcer will be the focus of continual refinement of our plans and collection of lessons learned to ensure that we build further on the successes of previous tournaments.

Conclusion 37. The World Cup consular operation was an enormous success. We were able to deliver a flexible, mobile service which put our resources where they was most needed and oVered travelling fans the right level of support. We minimised the number of those having to turn to us for help, through a highly targeted and eVective communications campaign. We had well-tested plans in place to deal with major incidents such as a terrorist attack occurring during the tournament. Above all, our staV performed exceptionally well under often high levels of pressure and of media and other scrutiny. We have learnt lessons from this tournament which will inform our planning for future such events. 38. The World Cup operation can also be seen against the FCO’s objectives of increasing the professionalism of our own staV. It provided staV in Germany, in neighbouring posts and in London with the opportunity to improve our project management and contingency handling expertise; and to develop the leadership qualities which are part of those skills. 39. We would welcome any comments or questions which the Committee has on this report. 3471161036 Page Type [E] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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Annex I

Post Mobile team

Venue Berlin Dusseldorf Hamburg Munich Overall Cologne Frankfurt Gelsenkirchen Nurnberg StuttgartOverall Case Type Prison visits 2 2 1 87 88 Prison-related assistance 2 2 9 9 Prisoners contacted 5 10 15 0 00 Emergency Passports issued 15 6 14 35 8 7 3 9 27 Full biometric passports issued 44 44 0 Letters issued to help BNs return to UK 0 0 2 2 2 2 9 1 14 Recovered passports handed in 18 18 1 3 1 4 3 12 Temporary Passports issued 18 18 7 3 7 6 23 Passport- related assitance 1 1 8 6 2 1 17 00 Lost property handed in 35 5 40 1 2 3 Lost property inquiry 0 1 3 1 1 6 Missed coach assistance 0 1 12 13 00 Missing person report 0 1 2 3 1 7 Stranded Minor 0 1 1 Medical Assistance 0 1 1 2 Uninsured hospitalisations 8 3 11 0 00 Other assistance 114 26 140 3 6 2 1 12 Total 202 89 9 28 328 33 27 34 21 119 234

Annex II

A BREAKDOWN OF CALLS RECEIVED IN THE BERLIN CALL CENTRE DURING THE FIFAWORLD CUP 2006

Lost/Stolen Passport 187 Lost/Stolen ticket 20 Lost/Stolen Money/Credit Cards 40 Directions to stadium 4 General information 62 Medical information 4 Report of Illness/Injury 8 Report of Assault 6 Report of Arrest 85 Report of Death 2 Report of Missing Person 37 Other 320 Total calls recorded 775 3471161037 Page Type [O] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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PUBLIC DIPLOMACY BOARD

Letter to the Chairman of the Committee from the Parliamentary Under Secretary of State, Foreign and Commonwealth OYce,dated 20 April 2006

Dear Chairman, I am writing, on behalf of the Foreign Secretary, as the Chair of the new Public Diplomacy Board. Thank you for your recent report on Public Diplomacy. I read it with interest—it is a welcome contribution to this developing area of policy. You raise a number of key issues, to which we will be responding fully, in the normal way. But, I wanted to write to you now on one particular issue raised in your report. I was pleased that you agreed with Lord Carter’s recommendation that a new, more focussed public diplomacy Board should be set up to drive public diplomacy strategy and measure performance. Like you, I believe that such a Board can operate eVectively without compromising the editorial independence of the BBC World Service or the operational independence of the British Council. This is reflected in the Board’s Terms of Reference. We have now set this recommendation in hand. And, I thought this would be a good time to update the Committee on what we are doing. I chaired the first meeting of the new Board on 30 March. Alongside the permanent members (representatives from the FCO, British Council and, sitting as an observer, the BBC World Service), we welcomed two independent members—Chris Powell as Vice Chair and Simon Anholt as the performance measurement expert. Both were recruited through open competition and bring a wealth of wider experience, a fresh perspective and rigour to the Board’s work. I am confident that the Board will make a real diVerence to the impact of our public diplomacy. It will set a list of priority countries and objectives within those countries. In each country, it will ask the partners to agree a comprehensive, medium-term public diplomacy strategy. It will ensure that partners allocate resources accordingly, and will evaluate and monitor the impact of their activities over time. By way of a test case, we had a useful discussion on the future Public Diplomacy strategy for China at the first meeting. The next step for the Board is a meeting in May at which we will continue our discussions on China and discuss our emerging plan for Pakistan. Following that, the Board will have an away day to discuss in broadest terms how it should operate and where it should focus its eVorts. In parallel, we will shortly issue a tender for consultants to work up a more stringent approach to monitoring and assessing the eVectiveness of our, and our partners’, public diplomacy work. This is a fast developing and exciting area of work. I will keep you updated as we move forward. Yours sincerely, David Triesman The Lord Triesman of Tottenham

RISK MANAGEMENT

Letter to the Head of the Parliamentary Relations and Devolution Team,FCO , from the Clerk of the Committee,dated 25 July 2006 Dear Chris, The Committee is grateful to have been supplied with a copy of the FCO’s Top Risks Register.4 I have been asked to write with some follow-up questions. — Can the Committee receive a copy of Stuart Jack’s review of security at Posts, referred to in the Register and the subject of a WMS on 29 June 2004? — Why does the Middle East not feature in the register? — Why does Iraq not feature in the register? Areply by 4 September would be appreciated. Yours, Steve Priestley Clerk of the Committee

4 Not printed. 3471161038 Page Type [E] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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Letter to the Clerk of the Committee from the Head of Parliamentary Relations and Devolution,FCO, dated 4 September 2006

FCO Top Risks Register

Dear Steve, 1. Thank you for your letter of 25 July. 2. I enclose a copy classified Confidential of the Jack Review. 3. On the Top Risks Register (TRR), you asked why Iraq and the Middle East were not among the five “Strategic Risks” identified in the July version. 4. Both are extremely high policy priorities for the FCO. The Middle East has become even more acute since the document was produced. The FCO already devotes significant resources to each, and is actively engaged in managing the risks associated with them. 5. Both issues have figured in previous, longer, versions of the TRR. But the Board has recently asked that the TRR be cut down to a few Risks focusing on those which, if they occurred, would have corporate implications for the FCO (eg requiring decisions on shifting resources to deal with them). The aim was to use the TRR to encourage proactive thinking in the FCO about the range of possible risks, both on the policy and corporate sides, to the organisation achieving its objectives. 6. Reducing the “strategic” (or policy) risks to five obviously involved judgments about what to include. Many policy risks could have been included, certainly both Iraq and Middle East. But since they were already the subject of intense policy focus, and considerable FCO resources they were left out of the Top Risk Register in order to make room for other types of risks, such as an energy or major humanitarian crisis. 7. The Board will keep the TRR under regular review, and will look specifically at the coverage of Strategic Risks, at their next quarterly review in the autumn. Yours sincerely, Chris Stanton Parliamentary Relations and Devolution Team Foreign and Commonwealth OYce

OTHER EVIDENCE

Written evidence submitted by Christian Solidarity Worldwide (CSW), received on 23 June 2006 Introduction 1. Christian Solidarity Worldwide (CSW) is a human rights organisation which specialises in religious freedom, works on behalf of those persecuted for their Christian beliefs, and promotes religious liberty for all. 1.1 Regular fact-finding visits enable CSW to obtain fresh, accurate information, to stand in solidarity with those who are suVering and to tailor practical responses to identified needs. CSW has developed strong relationships with key contacts around the world, who provide regular updates on situations of persecution. Supporters also express solidarity with those who suVer through prayer, equipped with regular bulletins from CSW. 1.2 CSW’s team of advocates produce regular expert briefings on current situations of persecution. These briefings are used to inform and lobby UK and European Parliamentarians, the Foreign and Commonwealth OYce and other European Foreign Ministries, the European Commission, the Council of the European Union, the US Administration and the United Nations among others. In this way CSW ensures that the voice of the persecuted reaches key decision makers in the international community.

Regions of Focus

2. Asia Pacific

2.1 Burma 2.1.1 We welcome the Foreign and Commonwealth OYce’s (FCO) involvement in UN Security Council discussions on Burma, and hope that the United Kingdom will remain engaged in eVorts to bring Burma to the agenda of the UN Security Council and seek a binding resolution. While the United Kingdom’s support is welcome, we hope the United Kingdom will take a more active lead ineVorts to bring a UN 3471161039 Page Type [O] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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Security Council resolution on Burma urgently. We note that after the publication in September 2005 of the report Threat to the Peace by international law firm DLAPiper Rudnick Gray Cary, commissioned by former Czech President Vaclav Havel and Nobel Laureate Bishop Desmond Tutu, the United States announced its support for UN Security Council action the next day, while the United Kingdom expressed no position for more than two months, and only formally announced its support in November 2005.

2.1.2 We welcome the FCO’s eVorts to raise human rights concerns, and hope that the United Kingdom will increase and intensify its eVorts to raise the plight of political prisoners, and particularly the situation of the Internally Displaced People and the gross violations of human rights suVered by ethnic national groups, including the Karen, Karenni, Shan, Mon, Chin, Kachin, Arakan and Rohingya. We urge the United Kingdom to work with allies to investigate crimes against humanity and attempted genocide.

2.1.3 We urge the United Kingdom to provide financial support for pro-democracy and human rights organisations, particularly exiled Burmese groups involved in monitoring, documenting and disseminating information concerning human rights violations.

2.2 China

2.2.1 In response to the Foreign and Commonwealth’s reporting of China in its annual report, CSW would like to address three questions to the FCO. 2.2.1.1 What has the FCO done to address the very serious concerns regarding Chinese repatriation of North Koreans to face harsh detention, torture and even death in some cases, as well as forced abortion in cases where the returnee is pregnant? 2.2.1.2 Has the FCO led or taken moves within the international community to address China’s deliberate breach of its obligations under the 1951 Convention relating to the Status of Refugees, to which it is a party, most specifically in its refusal to allow access for any North Koreans to asylum procedures and to permit the UNHCR access to North Koreans in Chinese territory? Has the FCO in fact raised this issue within the UNHCR? 2.2.1.3 Has the FCO impressed upon the Chinese that repercussions will result from this ongoing deliberate breach of international law?

2.3 Laos

2.3.1 In light of the FCO’s SP3 and SP6, CSW requests that the government of Laos is engaged particularly on the issue of developing the rule of law, with particular reference to religious freedom. In particular, the government should be strongly encouraged: 2.3.1.1 To clearly articulate that members of any religious group are free to practise their faith according to their conscience, without the constraint of belonging to a specified religious group; 2.3.1.2 To establish means for the enforcement of provisions for religious freedom at the level of local authorities; 2.3.1.3 To continue to train local authorities with respect to the provisions for religious freedom, in order to ensure its full and proper implementation, to guarantee the constitutional protections for religious groups, to fulfil Laos’ obligations under international law and to bring Laos into conformity with international standards on religious freedom.

2.3.2 No specific mentions of Laos were made either in the FCO Departmental Report 2006 or in the Annual Human Rights Report 2005. However, serious infringements on religious freedom persist on Laos, to some extent facilitated by a poorly developed legislative framework. The macro context of the weakness in the rule of law in Laos renders religious freedom vulnerable to the whims of oYcials in the Party. There has been evidence of an increased awareness in Laos of the need for religious freedom, concomitant with the increased involvement of the country in ASEAN and other international fora, and the Lao Front for National Construction has undertaken to educate local authorities about religious freedom. However, there also remains among some oYcials a deeply-ingrained antagonism to religious aYliation, and the public discrediting of the Christian religion by oYcials has continued to be reported.

2.3.3 Ongoing international scrutiny appears to be essential in preventing religious freedom violations. Proper, equal and enforceable protection under the law, as well as a broad eVort to educate oYcials and society are particularly key to addressing this issue. 3471161039 Page Type [E] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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2.4 North Korea 2.4.1 We wish to commend the FCO for its very important role and success in the General Assembly resolution on North Korea, which is an important step forward. We commend the FCO for its significant role in addressing the serious concerns in North Korea within the international community. 2.4.2 In view of the FCO annual report CSW would like to address two questions to the FCO: 2.4.2.1 What will the FCO do in the face of the intransigence of the Democratic People’s Republic of Korea (DPRK) in refusing to respond to the concerns articulated in the UN resolutions of the General Assembly and the Commission on Human Rights, and its refusal to acknowledge or co- operate with the mandate of the Special Rapporteur on the situation of human rights in the DPRK? 2.4.2.2 Does the FCO have plans to explore further avenues within the international system to press North Korea to take seriously the international concern regarding its egregious human rights record and to take practical and eVective steps to improve respect for human rights for the citizens of the DPRK?

2.5 Vietnam 2.5.1 As Vietnam looks to augment its position in the international community, CSW urges that the Vietnamese government be held accountable for its religious freedom obligations under international law, and encouraged to ensure clear improvements in the situation of religious freedom across the country, especially in those provinces in which the worst violations occur. Under the FCO’s commitment to the promotion of democracy, human rights and good governance under SP6, CSW recommends that the government of Vietnam is strongly encouraged: 2.5.1.1 To clarify the ambiguities and loopholes concerning the process ofoYcial registration, and to ensure that competent authorities are obliged to facilitate the process; 2.5.1.2 To ensure that, from a national to a village level, Party and security oYcials are educated and held accountable to the new provisions on religious activity, as stipulated in Article 7(2) of the Ordinance Regarding Religious Beliefs and Religious Organisations; 2.5.1.3 To ensure the equal implementation of the provisions on religious activity; 2.5.1.4 To fully investigate any allegations against local authorities, especially those pertaining to beatings, attempts at forcing renunciations of faith or any other measures to obstruct religious leaders from registering their congregations; 2.5.1.5 To fully investigate any allegations of religious conditions being attached by local authorities to the receipt of funding or other benefits, as such cases arise; 2.5.1.6 To proactively uphold the right to peaceful assembly for religious organisations, as guaranteed in Article 21 of the ICCPR. 2.5.2 With special reference to the Protestant Christian community in Vietnam, the situation of religious freedom must be considered in the context of the recent measures introduced to regulate religious activities. The Ordinance Regarding Religious Beliefs and Religious Organisations, coupled with Decree 22 of March 2005, have established some form of legal framework for religious activities in the country. However, not only does the fact of central administrative control over religious activities give cause for concern itself, the eYcacy of this framework is severely limited by a number of factors. These include the existence of a number of ambiguities, tensions and overlapping provisions which occur within and between the two documents and the considerable unevenness of its implementation across the country. The reports by Protestant leaders in some areas of the country, of having been informed by authorities that the new measures simply do not apply to them, are especially damning in this regard. They also undermine the confidence of church leaders in the seriousness with which the Government of Vietnam takes the issue of religious freedom. 2.5.3 In light of the arbitrary actions and policies of provincial- to village-level authorities, the Christian community of Vietnam has called upon the government to ensure adherence to the rule of law and respect for the rights of all Vietnamese citizens in the area of religious freedom, in accordance with Vietnam’s obligations under international law. The intention to encourage the implementation of the State’s policies on religion and to submit to international standards has been articulated in Articles 7(2) and 38 of the Ordinance, respectively. There is need both to ensure that State policies are in accordance with international standards, and to ensure their eVective and uniform implementation at a local level.

3. Latin America 3.0.1 CSW was concerned to note an almost complete lack of attention in the FCO report to the entire region of Latin America. While the report covers FCO work on issues like the resolution of conflicts and the reinforcing or building of democracy, it fails to mention any FCO eVorts in one of the longest running conflicts in the world, in Colombia, or one of the world’s longest standing dictatorships, in Cuba. 3471161039 Page Type [O] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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3.0.2 Neither the firm establishment of democracy nor respect for human rights is guaranteed in Latin America. Rather than ignoring an entire continent in its annual report of activities, CSW would encourage the FCO to pay some attention to the region of Latin America, not least the countries where the most egregious abuses continue to occur on a daily basis, Cuba and Colombia.

3.1 Colombia 3.1.1 Conflict and fragile (or in some cases nonexistent) democracies continue to be an unfortunate hallmark in Latin America. While the FCO report briefly mentions the fact that the Colombian cocaine industry has an impact on UK citizens, it does not detail any attempts made by the FCO to address either the drug trade, or related issues, like the conflict, corruption, endemic poverty, or internal displacement. As far as the promotion of democracy, the report does not mention any eVorts to reinforce the fragile Colombian civil society, or engaging with members of that society who are often the targets of violence, including trade union leaders, journalists, human rights defenders, and Church leaders, both Protestant and Roman Catholic.

3.2 Cuba 3.2.1 CSW was also disturbed to find that no mention is made of any FCO eVorts towards the establishment of democracy and respect for human rights in Cuba. What has been the FCO position on the regular reviews of the European Union Common Position on Cuba? Asummary of how FCO representations in Cuba engage with Cuban civil society, including human rights defenders and pro- democracy activists as well as with the family members of political prisoners would be welcome.

4. South Asia

4.1 India 4.1.1 CSW welcomed the commitment issued in the Political Declaration on the EU-India Strategic Partnership, promulgated under the UK Presidency, to “work together to uphold human rights in a spirit of equality and mutual respect”. While it is concerning that no specific references were made in the documents associated with the EU-India Strategic Partnership to the fundamental problem of caste discrimination and the subjugation of Dalits, this issue was commendably given specific recognition in the FCO Human Rights Annual Report 2005. 4.1.2 CSW would like to make specific recommendations for the consideration of the Committee: 4.1.2.1 Continued recognition must be given to the widespread problem of caste discrimination in India; 4.1.2.2 Aclearer articulation is needed of the fact that Dalits are the chi ef victims of human rights abuses and religious intolerance in India; 4.1.2.3 Astronger commitment is needed to the promotion of the rule of law a t a grassroots level to promote harmony and stability between diVerent social groups in India, in connection with SP3; 4.1.2.4 Aclear mandate is needed to make representations challenging leg islation which promotes the subjugation of Dalits in India and obstructs freedom of religion; 4.1.2.5 In connection with SP5 and SP6, the promotion of means for sustainable development targeted specifically at Dalit communities, including the Ambedkar Principles, should be considered. 4.1.3 There continues to exist a dichotomy between India’s secularism and economic progress on the one hand, and ongoing caste discrimination on the other. While the FCO Departmental Report 2006 focused on the “explosive economic rise of India”, it passed no comment on the pervasiveness of caste subjugation. This constitutes a block to the full societal participation of Dalits and tribals, and its symptoms have constituted some of India’s worst human rights problems. Caste discrimination also limits India’s economic potential, owing to the patterns of socio-economic exclusion aVecting a large proportion of its population. In order to promote human rights and sustainable development under the FCO’s SP6, and with a view to facilitating Indian economic development in the interest of British investors under SP5, there is a continued need to support initiatives for Dalit emancipation. 4.1.4 Among the issues to be addressed, a key element of the subjugation of Scheduled Castes, Scheduled Tribes and Other Backward Castes is the obstruction of their religious freedom both through legislative means and extremist violence against those who adopt a new religion. The assertion of the EU-India Strategic Partnership Joint Action Plan that India is a paradigm of “how various religions can flourish in a plural, democratic and open society” failed to take account of India’s major religious freedom problems; the extent and nature of violence against the religious minorities, particularly those of Dalit background or involved in evangelistic or developmental work among Dalits, ought to give cause for particular concern. Widespread attacks against the Christian minority have continued into 2006: although many attacks are not satisfactorily reported, CSW had by the end of March 2006 documented at least 21 incidents of violence against Christians in the preceding three months. 3471161039 Page Type [E] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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4.1.5 In some states, particularly those ruled by a BJP government, there is a consistent problem of ineVective investigation and prosecution of attacks on religious minorities. This often generates impunity for attackers, which represents a failure in the rule of law and undermines the confidence of the minority communities in the justice system. In most cases of violence against Christians, attackers have been released on police bail, even after committing violent attacks. This indicates that the oVences are treated with inadequate seriousness, and risks failing to provide an adequate deterrent to attackers. Furthermore, the extent of police neglect, bias and violence gives cause for major concern. For example, on 25 January in Chapri village, Madhya Pradesh, a group of seven police led a violent attack on two tribal leaders. No disciplinary action is known to have been taken against the police responsible for the attack. On 16 January in Matiapada village, Orissa, two Christians arriving at the police station to register an arson attack on their homes, were instead questioned under the Orissa anti-conversion law; police also refused to include the name of the village leader in the First Information Report, despite the persistent claim of the Christians that he led the attack against them. The rationale behind the FCO’s SP3, on promoting the rule of law to resolve disputes, should provide a mandate for representations to be made in the micro context on religiously motivated violence which is unsatisfactorily dealt with by the domestic justice system. 4.1.6 There also continues to exist a number of legislative obstacles to full religious freedom, not least the denial to Christians and Muslims of Dalit background of a stake in India’s public sector “reservation” policy and the anti-conversion laws in Orissa, Madhya Pradesh, Chhattisgarh, Arunachal Pradesh and Gujarat, and recently passed by the state legislature in Rajasthan. 4.1.7 Among the other necessary aspects of a policy to address social exclusion in India are the targeting of aid at Dalit and tribal communities and long-term economic empowerment. Recognition was given to the former in the FCO Human Rights Annual Report 2005, which noted allegations of the deprivation of Dalits during the relief eVort following the 2004 tsunami. Clear systems of accountability are neededto ensure that aid reaches the most needy communities. The latter may be supported through sympathetic representations in favour of reservation policy, and the promotion of other means for long-term development among Dalits.

4.2 Pakistan 4.2.1 We note that no reference is made in the Annual Report to the abuses of the Blasphemy Laws, the Hudood Ordinances and the persecution of religious minorities. We hope that the Foreign & Commonwealth OYce will make it a priority in its relations with Pakistan to seek the repeal of unjust laws and address serious human rights issues concerning religious minorities and women.

4.3 Sri Lanka 4.3.1 We note that the escalation in attacks on Christians in Sri Lanka, and the proposed anti-conversion legislation is not referred to in the Annual Report, despite the fact that the Foreign & Commonwealth OYce Freedom of Religion Panel commissioned a Special Representative, Baroness Cox, and a Special Adviser, Benedict Rogers, to investigate anti-conversion legislation and produce a report for the FCO. We hope the United Kingdom will make it a priority in 2006 to urge Sri Lanka not to pass legislation which violates international human rights agreements and to bring an end to anti-Christian violence.

5. Sub-Saharan Africa

5.1 Eritrea/Ethiopia 5.1.1 CSW commends the FCO for its role in promoting plans for the reduction of tension along the Ethiopia/Eritrea border, and its eVorts to ensure the resolution of this border in line with the international ruling. 5.1.2 CSW also notes that the British Embassy in Addis Ababa is currently working to forge a strong international consensus on the internal political crisis in Ethiopia following negative developments in that country. It is, however, surprising that similar action does not appear to have been taken in relation to Eritrea, a country that has become increasingly repressive, where several thousand people are currently detained without trial, some since 2001, where torture occurs routinely, and where evidence is emerging of extra-judicial killings of detainees.

5.2 Nigeria 5.2.1 CSW applauds the fact that a new partnership with Africa was put at the heart of the Gleneagles G8 agreement which emphasizes the importance of good governance in sustaining development, and that an EU–Africa Strategy has been agreed by the European Council. CSW concurs with the assertion that one of the hindrances to sustainable development and prosperity in Africa is violent conflict. CSW therefore commends the FCO’s eVorts to promote reconciliation and broker peace in the Niger Delta and in Kano and Plateau States. 3471161039 Page Type [O] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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5.2.2 CSW would like to highlight the fact that, since 2000, a system of religious repression that is either tacitly or openly approved or facilitated by state governments has been entrenched in most of northern and central Nigeria. The process of enforcing this system is frequently characterised by the use of recurrent violence that has now begun to elicit commensurate retaliatory action elsewhere. This has ominous implications for the future of a nation that is more or less equally divided between two major faiths. Given the complicity of many state governments in repressive actions, CSW calls on the FCO to urge eVective intervention by the federal administration in order to ensure that such practises are brought to an end as a matter of national interest.

5.3 Sudan 5.3.1 CSW congratulates the government on its role at the UN World Summit in ensuring the establishment of the “Responsibility to Protect” as an international norm. 5.3.2 CSW also commends the fact that the FCO has warned perpetrators of human rights abuses in Darfur that they would face investigation by the ICC, and concurs with the unfortunate conclusions regarding PSAtargets for Sudan. 5.3.3 It is lamentable that three years after the conflict erupted, and despite much verbal denunciation, the international community has yet to take eVective action to end the culture of impunity in Darfur. The inability to take action can be attributed in part to a continuing belief despite evidence to the contrary that Janjawid militia, who along with regular government forces have been identified by the UN as the main perpetrators of human abuses, are largely outside of the control of the Sudanese government. Consequently there appears to have been reluctance at international level to take punitive action against the government for its failure to rein in the Janjawid and end the targeting of civilians. This lack of consequences has assisted the emergence of the general culture of impunity that currently prevails in Darfur. 5.3.4 Thanks to the FCO’s eVorts the international community has now embraced the “Responsibility to Protect”. CSW now calls on the FCO to again assume a leading role in ensuring that this norm is put into practice with immediate eVect in Darfur, particularly with regard to encouraging the enlargement of the size and mandate and adequate resourcing of the AU force, and its eventual replacement by a UN force operating under a mandate defined by Chapter Seven of the UN Charter. 5.3.5 CSW congratulates the FCO on its key role in the signature of a Comprehensive Peace Agreement (CPA). However, we remain concerned at the obstruction by the north of the time table for implementation of key provisions of the agreement, at its refusal to accept the ruling on Abyei County, and at the continuing presence of militia groups in southern Sudan, including the LRA. In addition, the use of torture and arbitrary detention continues in northern Sudan in defiance of the provisions of the new Sudanese Bill of Rights and the country’s undertakings as a signatory of the UN Convention Against Torture. 5.3.6 To ensure the success of the CPA, the FCO must continue to play an active role in encouraging sustained international engagement in the implementation of the agreement and the timely provision of resources to support it. If this does not occur, the CPAwill never become a m odel for peace building that can be exported to other troubled areas of Sudan, as was initially envisaged.

5.4 Uganda (Northern) 5.4.1 CSW commends the FCO’s support for eVorts to end the brutal insurgency in the Acholi region of northern Uganda and to bring key perpetrators to trial before the ICC. 5.4.2 However, there is concern at a local level that the ICC warrants were issued at a time when peace talks between the Lord’s Resistance Army (LRA) and the Ugandan government appeared to be slowly making headway. The issuing of the warrants ended this peace process, but the violence and suVering continue and the LRAleadership remains at large. 5.4.3 The lack of eVective measures to execute the ICC warrants has weakened the standing of the organisation in the eyes of the local population, which longs for normality and feel that the aborted peace talks had oVered the best way forward. Many of Joseph Kony’s top generals are indoctrinated abductees. While most of the Acholi population agrees that Kony should be brought to justice, there is a sense in the community that the abductees need rehabilitation, not punishment. 5.4.4 There are other concerns. Ninety five per cent of the Acholi tribe have been forced out of their homes and are obliged to live in refugee camps. This has eVectively disrupted, perhaps irreparably, the way of life of an entire people group. In addition, it is not unknown for 1,000 people to die each week in these camps. Worse still, while the Acholi suVer primarily as a result of the activities of the LRA, they are often victimized by elements of the Ugandan Army who are n the area ostensibly to protect them. 5.4.5 It is vital that more is done to ease the plight of the Acholi people of northern Uganda, and to accommodate their views. CSW also calls on the FCO to urge the Ugandan government to declare northern Uganda a disaster area in order to facilitate international assistance to the area. 3471161039 Page Type [E] 03-11-06 00:01:46 Pag Table: COENEW PPSysB Unit: PAG2

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Conclusions 6. While CSW commends the FCO on many of its achievements as reported in the Annual Report 2005–06, we would take this opportunity to draw the Committee’s attention to the recommendations made in the above response, particularly related to human rights and religious freedom. Alexa Papadouris Advocacy Director 23June 2006

UK STRATEGY: CHANGES IN THE US NETWORK

A letter to the Chairman of the Committee from the Minister for Trade,Inves tment and Foreign AVairs, 12 September 2006 Dear Mike, I wanted to alert you at the earliest opportunity to changes in prospect in our commercial network in the USA. These will be the first changes in the overseas network arising from the implementation of UKTI’s new five-year strategy Prosperity in a Changing World, which was published on 20 July. As you are aware, UKTI is committed to respond to the growing opportunities in the emerging markets, such as China and India, by increasing the support it oVers to UK companies looking to do business in those markets. To meet that objective, UKTI will shift resources from more developed markets, mainly in Europe and North America, where UK businesses already have a well-developed presence. The key changes I have just approved are that UKTI will: — withdraw its two-person team from Denver (the Consul will remain) and transfer rsponsibility for delivering UKTI objectives in Colorado to UKTI’s Chicago team; — withdraw its three person-team from Seattle and close its oYce there transferring the resource to enlarged UKTI teams in San Francisco and Los Angeles; — enlarge the team in Miami (in addition to the teams in San Francisco and Los Angeles) where demand for UKTI services is increasing; and — reduce the size of the teams in Atlanta, Chicago and New York. The changes involve a net loss of jobs in the US network and amount to a 13% cut in the overall level of our commercial resource in the US. I believe they will leave our commercial resource better focused on the US states oVering real export and inward investment opportunities for UK companies and enable UKTI to continue to provide them with a first-class service. StaV in the US network will be informed about the changes over the coming week. I should be grateful, therefore, if you regard the changes I have outlined as embargoed until 22 September. I will provide you with details of other planned changes in the UKTI networks later in the year. Rt Hon Ian McCartney MP Minister for Trade, Investment and Foreign AVairs

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