Foreign and Commonwealth Office Annual Report 2003– 2004

House of Commons Foreign Affairs Committee

Eighth Report of Session 2003–04

Report, together with formal minutes, oral and written evidence

Ordered by The House of Commons to be printed 14 September 2004

HC 745 Published on 23 September 2004 by authority of the House of Commons London: The Stationery Office Limited £22.00

The Foreign Affairs Committee

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

Current membership Rt Hon Donald Anderson MP (Labour, Swansea East) (Chairman) David Chidgey MP (Liberal Democrat, Eastleigh) Fabian Hamilton MP (Labour, Leeds North East) Eric Illsley MP (Labour, Barnsley Central) Rt Hon Andrew Mackay (Conservative, Bracknell) Andrew Mackinlay MP (Labour, Thurrock) John Maples MP (Conservative, Stratford-on-Avon) Bill Olner MP (Labour, Nuneaton) Greg Pope MP (Labour, Hyndburn) Rt Hon Sir John Stanley MP (Conservative, Tonbridge and Malling) Gisela Stuart MP (Labour, Birmingham Edgbaston)

The following Members were also members of the Committee during the Parliament.

Sir Patrick Cormack MP (Conservative, Staffordshire South) Richard Ottaway (Conservative, Croydon South)

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.

Publications 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 www.parliament.uk/parliamentary_committees/foreign_affairs_committee.cfm. A list of Reports of the Committee in the present Parliament is in the inside front cover of this volume.

Committee staff The current staff of the Committee are Steve Priestley (Clerk), Geoffrey Farrar (Second Clerk), Ann Snow (Committee Specialist), Kit Dawnay (Committee Specialist), Kevin Candy (Committee Assistant), Julia Kalogerides (Secretary), and Chintan Makwana (Senior Office Clerk).

Contacts All correspondence should be addressed to the Clerks of the Foreign Affairs Committee, Committee Office, House of Commons, London SW1A 0AA. The telephone numbers for general enquiries are 020 7219 6106/6105/6394; the Committee’s email address is [email protected].

Contents

Report Page

Conclusions and recommendations 3

Introduction 11

FCO Annual Report 2003–04 12

Financial management 15 Spending Review 2004 15 Efficiency savings 18 The impact of Iraq 20 Costs of EU and G8 Presidencies 21

UK International Priorities 22 Strategy for the FCO 22 Implementation of the strategy 23 Impact on how the FCO operates 23 Impact on network of overseas posts 24

Security 29 The Istanbul Consulate-General 29 Security Review 30 Security of the British Council and BBC World Service 32 Foreign Office Travel Advice 33

Management of the overseas estate 35 The end of the asset recycling programme? 35 Access to information 37 Impact of the asset recycling programme 40 The cases of the Dublin and New York Residences 42 The Prague Embassy and the Cape Town Residence 45

Entry clearance 46 Coping with increasing demand 46 NAO Report 48 Targets 48 Lack of feedback 50 Biometric data 51 Co-operation with other departments 52 Visa applicants in Romania and Bulgaria, and Mr James Cameron 53

Personnel 55 Workforce reductions 55 Diversity targets 55 Locally-engaged staff 57 Specialists versus generalists 59

BBC World Service 60 Work in 2003–04 60 Listening figures and audibility 61 Spending Review 63 Efficiency savings 64 Work in the Middle East 65 Radio 65 New television channel 66 Online services 66 BBC Monitoring 67 Striking the balance 68

British Council 71 Work in 2003–04 71 Public Diplomacy Strategy Board 71 UK International Priorities and By 2010 73 Spending Review 74 Chevening Scholarships 76 British Council in Russia 78 Role in accreditation of EFL schools 78 Flying the flag? 80 Ring-fencing 81

Conclusion 83

Annex A 85 List of abbreviations 85

Annex B 86 Visit itineraries: 86 a) Visit to India and Turkey 86 b) Visit to BBC World Service headquarters Bush House, London 87

Formal minutes 88

Witnesses 90

List of written evidence 91

Conclusions and recommendations

FCO Annual Report 2003–4 1. We conclude that the FCO Departmental Report 1 April 2003–31 March 2004 is a generally well-presented and comprehensive document, reflecting the breadth of the Foreign Office’s work and the challenging global situation in which it operates. We particularly welcome the new ‘lessons learned’ sections and recommend that they be developed and made more specific in future reports in order to present a more realistic picture of the FCO’s activities to the lay reader. (Paragraph 12)

Financial Management 2. We recommend that the FCO, in its response to this Report, state how many bids it has received from its Senior Management Staff for early retirement, whether compulsory early retirements will be made if the figure of 60–80 voluntary early retirements is not achieved, and the operational implications for the Department— including possible losses of embassies and high commissions overseas—of reducing its Senior Management Staff by 60–80 (Paragraph 20)

3. We conclude that HM Treasury’s recognition of the importance of the Foreign Office’s work and the commitment of resources to specific areas, such as security, is welcome. We further conclude, however, that overall the latest spending review settlement will only add to the increasing financial pressure under which the Office now operates and which is putting so much of its valuable work in jeopardy. (Paragraph 21)

4. We conclude that, while it is right and proper for all government departments to strive at all times to make the very best use of taxpayers’ money, the efficiency savings agreed as part of the 2004 Spending Review will place a considerable strain upon the Foreign Office’s operations in the coming years. Given the FCO’s significant fixed costs, people-intensive nature and the increasing demands and expectations being placed upon it, we fear that ‘efficiency savings’ will effectively mean cuts in programme budgets. We recommend that, in its response to this Report, the FCO provide specific, detailed evidence that it will achieve genuine efficiency savings in order to meet HM Treasury’s targets and not simply cut its activities. (Paragraph 28)

5. We conclude that the additional work being carried out by the FCO in support of the Government’s policies in Iraq will remain critical for some time to come. We recommend that the additional costs incurred by the FCO in carrying out this work should be met in full by the Government from the contingency reserve. (Paragraph 31)

6. We conclude that the United Kingdom’s Presidencies of the G8 and the EU in 2005 represent an historic opportunity for this country to help set the world’s political agenda in a number of key areas. It would be unthinkable that such an opportunity should be wasted owing to insufficient funds. We recommend that the Government

ensure that it allocate adequate resources to meet the running costs of the G8 and EU Presidencies. We further recommend that the FCO’s other activities must not be allowed to suffer as a result of these additional responsibilities. (Paragraph 34)

UK International Priorities 7. We conclude that the UK International Priorities White Paper provides a welcome insight into how the Foreign Office operates and what its aims and priorities are for the coming years. (Paragraph 38)

8. We conclude that the FCO is right to seek to make the most efficient use of its valuable personnel resources and to reap the greatest efficiencies from advances in modern information and communications technology. We recommend, however, that the Foreign Office ensure that, as a result of the changes made following the adoption of the new Strategy White Paper, there is no diminution in the level of service provided by the FCO to Parliament and the public. (Paragraph 42)

9. We conclude that the potential closure of significant numbers of overseas posts implicit in the UK International Priorities document is a source of grave concern. We recommend that wherever possible the FCO seek to maintain as effective and as wide-reaching a network of posts as possible, in order to protect and promote British interests around the globe. (Paragraph 50)

Security 10. We conclude that the attack on the Istanbul Consulate General was a barbaric act of terrorism, which we condemn utterly and unreservedly. We again offer our sincerest condolences to all those affected by the terrible tragedy and especially to the families of those who were murdered. We offer our highest praise to those who have worked so hard to cope with the aftermath of the attack and worked in such difficult conditions. We trust that the sacrifice and hard work of those involved will be properly recognised by the Foreign Office. (Paragraph 56)

11. We commend the Foreign Office for conducting an immediate review of security at posts following the Istanbul bombing and we broadly welcome its findings. We conclude, in particular, that the review was right to warn the FCO against turning its posts into “fortresses” and “bunkers”. The FCO’s image and operational capability would not benefit if contact with the public were decreased, although the balance it strikes between operational effectiveness and security must be a very careful one. (Paragraph 62)

12. We welcome wholeheartedly the extra money provided in the Spending Review 2004 for security measures. It would have been wholly unacceptable if extra security measures had had to be funded from the existing FCO budget, to the detriment of other activities. We recommend that, in view of the exceptional exposure of FCO staff overseas to terrorist attack, the FCO should make further requests to HM Treasury for additional funding for security measures as are necessary to safeguard its staff during the current three year period, before the next spending review takes place. (Paragraph 63)

13. We welcome the recognition by HM Treasury of the need to fund security improvements for the BBC World Service and British Council in full. We recommend that the Foreign Office ensure that adequate resources are available for both bodies to maintain the quality of their services while ensuring the maximum safety of their overseas personnel. (Paragraph 67)

14. We welcome the Foreign Office’s thorough review of the travel advice it issues to the public. We recommend that the Foreign Office continue making its web pages as clear and accessible to the general public as possible. (Paragraph 71)

Management of the overseas estate 15. We welcome the Foreign Office’s recognition, in accordance with our previous findings, that the “asset recycling programme” should be dramatically scaled down. We commend it for ‘biting the bullet’ and missing the artificial target set for asset sales by HM Treasury, rather than selling off even more valuable properties for short-term gain. We conclude that it is most regrettable that this decision was not taken earlier. (Paragraph 78)

16. We conclude that the Foreign Office’s unwillingness to submit its “asset recycling programme” to effective parliamentary scrutiny was utterly indefensible and evidence of a lingering defensive attitude to public scrutiny. We welcome the Foreign Office’s ultimate recognition of the importance of this Committee’s oversight. We recommend, however, that the Foreign Office review its procedures for withholding information under the Code of Practice on Access to Government Information, to ensure that they are in accordance with Government-wide best practice. (Paragraph 83)

17. We conclude that the “asset recycling scheme” has had a very serious impact on the Foreign Office’s property portfolio, with valuable buildings that were appreciating in value being sacrificed on the altar of short-term Treasury-inspired targets. We further conclude that these sales have left the Foreign Office more at risk from fluctuations in the international property market and exchange rates, and may have significantly damaged the long-term financial strength of its estate. (Paragraph 86)

18. We conclude that the FCO’s claimed “net gain” of £13 million from its Dublin property transactions should more accurately have been described as a net gain of at least £17 million being reduced by £4 million (minimum) as a result of the Department’s mistaken decision to sell, only to reacquire, the Glencairn Residence and to purchase, only to sell, Marlay Grange. We recommend that, in its response to this Report, the FCO provide precise figures on how much Marlay Grange is eventually sold for and the cost of reacquiring Glencairn (net of acquisition costs). (Paragraph 89)

19. We conclude that the net loss of £380,000 on the sale of the New York Consul General’s Residence and the purchase of a replacement residence, noted by Sir Michael Jay, contrasts starkly with the profit of $8.55 million (approximately £6 million in 2001) originally envisaged by the FCO when it started this transaction. Even in the light of the fluctuations in the sterling–dollar exchange rate noted by the

Office, such a loss seems utterly bizarre. This transaction was undertaken for the purpose of realising a gain of approximately £6 million and has instead resulted in the loss of £380,000 and the replacement of a highly prestigious property by an inferior one. We further conclude that while the tragic events of 11 September 2001 in the USA could not have been foreseen, the exchange of contracts on both properties took place after that date and it seems reprehensible to us that the FCO proceeded as it did in New York (Paragraph 91)

20. We conclude that serious mistakes were made during the sale and purchase of the residences in Dublin and New York and should not have occurred. Such incidents serve to underline the importance of effective scrutiny of the Foreign Office’s property transactions by Parliament. We recommend that the FCO set out, in its response to this Report, how it will ensure that such losses of taxpayers’ money are not repeated in the future. (Paragraph 92)

21. We conclude that the FCO’s judgment to retain the valuable embassy building in Prague is a very welcome one. We recommend that the same decision be made with regard to the highly valuable and useful residence in Cape Town. (Paragraph 95)

Entry clearance 22. We conclude that the steady rise in visa applications at FCO posts across the world presents a continuing and significant challenge. The importance of this work should not be underestimated, not only owing to the increased security concerns arising from global terrorism but also because the visa operation is often the first impression that many people will have of the United Kingdom. We commend the staff who work so hard in this vital field, often in difficult circumstances and with little visible reward for their efforts. (Paragraph 100)

23. We also commend the Foreign Office for its development of new and innovative means of coping with the increase in demand, especially the use of outsourcing in India for the processing of documents. However, we recommend in the strongest possible terms that decision-making on the issuing of visas should always remain with FCO staff. (Paragraph 101)

24. We conclude that the Foreign Office has performed well against its PSA targets in relation to the processing of visa applications, especially in light of the increasing demand with which it is having to cope. We recommend that the FCO ensure, however, that the quality of decision making is not sacrificed in the drive to meet delivery targets. (Paragraph 107)

25. We conclude that the inability to check whether applicants do actually abide by the terms of their visas is a significant problem for the smooth running of the FCO’s visa entry clearance system. We recommend that the FCO develop, as a matter of urgency, means of providing effective feedback to visa-issuing posts on the outcome of decisions. We further recommend that, in the longer term, HM Government, taking advantage of developments in information technology, introduce a system that would allow it to check who had entered and left the United Kingdom and

when, for the purpose, among others, of running a more effective visa entry clearance regime. (Paragraph 111)

26. We conclude that the collection of biometric data by visa-issuing posts overseas will be an important weapon in the fight against international crime and terrorism, and will help create fairer and more effective immigration controls. We further conclude that the Foreign Office appears to be taking a sensible, gradual approach to the roll out of this new procedure. (Paragraph 113)

27. We conclude that it is vital for the smooth running of the visa entry clearance system that the three departments involved—the Home Office, the Foreign and Commonwealth Office and the Department for Constitutional Affairs—work as closely together as possible. We recommend that the FCO continue to encourage greater co-ordination between the three departments at all levels, from united training of personnel to policy co-ordination. (Paragraph 116)

28. We conclude that the problems encountered by the visa-issuing sections of the posts in Romania and Bulgaria were very unfortunate; action should undoubtedly have been taken earlier both by senior FCO and Home Office officials. We regret that it took a crisis of this nature for the wider problem of Home Office–Foreign Office co- operation to be brought to light. We recommend that the Foreign Office act, in collaboration with the Home Office, to ensure that the findings of the Sutton Review are implemented fully and quickly. (Paragraph 120)

29. We recommend that, in its response to this Report, the Foreign Office set out its general policy in relation to ‘whistle-blowers’, and provide the Committee with any written material regarding relevant procedures. (Paragraph 123)

Personnel 30. We recommend that, in its response to this Report, the Foreign Office set out in detail how it intends to achieve the reduction in civil service posts outlined in the Spending Review 2004, and what measures it has in place to support those employees who will be losing their jobs. (Paragraph 126)

31. We conclude that the Foreign Office’s commitment to employing a more diverse workforce is very welcome. We also agree with its assertion that such diversity is essential for the FCO to become more effective and to serve better the British people. We further conclude, though, that the FCO still has a considerable way to go in order to meet its challenging diversity targets, especially in its Senior Management Service. We recommend that the FCO continue to make every effort to ensure that it recruits and promotes the best possible people from the widest range of backgrounds. (Paragraph 130)

32. We conclude that the continuing practice of different Government departments offering different pay rates to locally-engaged staff doing the same jobs is undeniably detrimental to the work of HM Government as a whole. We recommend that the Foreign Office raise this matter direct with the Treasury in order to seek a Government-wide solution to this problem. We further recommend that, in its

response to this Report, the FCO set out how it intends to take this matter forward. (Paragraph 136)

33. We recommend that, in its response to this Report, the Foreign Office set out its policy on the recruitment and employment of specialists to carry out roles requiring more detailed subject knowledge, such as in the fields of finance, property and information technology. (Paragraph 139)

BBC World Service 34. We conclude that the BBC World Service is doing very well to maintain its current audience and audibility figures in the face of stiff competition from other international broadcasters and the difficult domestic situations it encounters around the globe. (Paragraph 146)

35. We conclude that the Spending Review 2004 was a disappointing result for the BBC World Service. At a time when competition from other international broadcasters is increasing and the need for its services has never been greater, it is very unfortunate that the Service should be placed in a position where it may be unable to undertake the improvements and modernisation it requires to retain its leading position. (Paragraph 150)

36. We commend the BBC World Service for the impressive efficiency savings it has already achieved, and for its commitment to ensuring that the extra money it receives as a result of the Spending Review 2004 goes directly on front-line services. We recommend, though, that in future it present a realistic picture to the Foreign Office and HM Treasury on how much it can genuinely achieve by efficiency savings, rather than simply allowing its programme budgets to be cut. (Paragraph 153)

37. We conclude that the BBC World Service’s work in the Middle East and wider Islamic world is more crucial now than ever, in light of the current international situation. We recommend that, in its response to this Report, the Service set out how its plans for improving its radio service in this area have been affected by the Spending Review settlement. (Paragraph 157)

38. We conclude that the failure to launch a BBC World Service television channel in Arabic represents a missed opportunity to further the United Kingdom’s wider diplomatic ambitions and interests in the Middle East and wider Islamic world. It is almost certain that other international broadcasters will take advantage of British inaction, to the detriment of the BBC World Service and the United Kingdom. We recommend that the Foreign Office explore with HM Treasury whether this decision can be reversed. (Paragraph 161)

39. We conclude that the marked growth in the use of the BBC World Service’s online service is a tribute to its quality, vision and relevance. We commend those who are working to strengthen and improve it. We recommend, however, that the highest editorial standards be applied when using contributions from listeners, especially in relation to highly sensitive international topics, to prevent the Service’s abuse by those who would wish to misuse it for their own ends. (Paragraph 164)

40. We conclude that it is utterly perverse that the future of BBC Monitoring should be placed in doubt at the very time when its services are arguably most important to the country’s security and diplomatic needs, and when it is being almost universally praised by its users. We recommend that BBC Monitoring be given financial security by the FCO and its other stakeholders to ensure its future. (Paragraph 167)

41. We conclude that the BBC World Service, its editors and staff, have an unenviable task of producing considered and unprejudiced reports in a variety of very difficult circumstances across the world. In an increasingly polarised world, access to unbiased news is more vital than ever before and we commend the World Service for its wholehearted commitment to impartial and honest reporting. (Paragraph 173)

British Council 42. We conclude that the Public Diplomacy Strategy Board appears to have made a positive start in co-ordinating the activities of the United Kingdom’s key public diplomacy players. We recommend that the Board take the lessons learned from the evaluation of the Think UK campaign in China fully on board when planning future events, and that it recognise the British Council’s valuable experience and skills in this field. (Paragraph 179)

43. We conclude that the By 2010 document sets out ambitious and challenging targets for the British Council, and we broadly commend its vision. (Paragraph 182)

44. We conclude that the settlement for the British Council in the Spending Review 2004 was a disappointing one, which may adversely affect the good work it is doing across the globe. (Paragraph 186)

45. We conclude that the reductions in the size of the British Council’s overseas estate proposed in the latest Spending Review give rise to considerable concern. We recommend that, in its response to this Report, the British Council set out the consequences of these cuts for the level and range of its operations around the world. (Paragraph 188)

46. We conclude that the revitalisation of the Chevening Scholarships proposed by the Foreign Office is a welcome one, which will give it greater flexibility and allow it be more responsive to the United Kingdom’s wider diplomatic needs. We recommend, however, that the review should not be used as an excuse to scale down the scholarships in any way, nor, if possible, to reduce their geographical reach to students from across the world. (Paragraph 194)

47. We conclude that the current attitude of the Russian authorities towards the British Council, seeking to impose a tax charge on its operations, is neither conducive to good bilateral relations nor to encouraging the valuable work the Council is doing in Russia. We recommend that, in its response to this Report, the Foreign Office set out what progress has been made to resolve this situation. (Paragraph 197)

48. We welcome the recent statement by the Secretary of State for Education and Skills on the registration of EFL schools in the United Kingdom. Although the majority of such schools are well-run and managed, the actions of some such institutions have

not only damaged students’ perceptions of this country, but also pose a serious security threat by aiding illegal entry in the United Kingdom. We conclude that the British Council plays a crucial role in superintending the work of EFL schools in the United Kingdom and we praise the work it has done in raising standards. We recommend that the Council work together with the other relevant Government bodies to ensure more effective regulation of such institutions. (Paragraph 203)

49. We conclude that the British Council’s new branding fails to project its purpose and its identity. We recommend that the British Council provide us with detailed information on the full cost of its rebranding and that it reconsider its reluctance to use the Union Flag. (Paragraph 207)

50. We conclude that the ring-fencing of the BBC World Service and British Council’s budgets is vital for the operational effectiveness of both bodies. We welcome the continuation of the current arrangements in the latest Spending Review and strongly recommend their future retention. (Paragraph 211)

Introduction

1. The Foreign Affairs Committee is responsible for scrutinising the, “administration, expenditure and policy” of the Foreign and Commonwealth Office and its associated bodies—most notably the BBC World Service and the British Council.1 We exercise such scrutiny in all the work that we do, examining the whole breadth of the Foreign Office’s work; both in specific countries and regions (such as our recent Reports on Iran and on South Africa)2 and by covering key themes (such as developments in the European Union and the war against terrorism).3 However, each year the Committee uses the publication of the Foreign Office’s annual report as an opportunity to conduct especially detailed scrutiny, on behalf of the taxpayer, of how the Office exercises stewardship of the resources voted to it by Parliament. This Report sets out the findings of our inquiry and our recommendations to the Foreign Office on how it manages theses resources in a wide range of areas—most notably finance, personnel, estate management, security, the network of overseas posts and the entry clearance operation.

2. In the course of our inquiry, the Committee received a number of useful memoranda. We also took oral evidence on two occasions: on 23 June, from Mr Nigel Chapman, then Acting Director,4 and Mr Andrew Hind, Chief Operating Officer, BBC World Service, and from Sir David Green KCMG, Director-General, Dr Robin Baker, Deputy Director- General, and Mrs Margaret Mayne, Director of Finance, British Council; and on 29 June, from Sir Michael Jay KCMG, Permanent Under-Secretary, Mr Dickie Stagg CMG, Director General, Corporate Affairs, Mr Simon Gass CMG CVO, Director, Finance, and Mr David Warren, Director, Human Resources, FCO. All the evidence we received is printed in full at the end of this volume.5 Two visits undertaken by Committee Members were also particularly pertinent to the inquiry. In November 2003, three of us visited the FCO posts in New Delhi and Mumbai (India) and Istanbul (Turkey) with Members of the Constitutional Affairs Committee to examine the visa entry clearance operations there. We also visited Bush House, headquarters of the BBC World Service, on 8 June this year.

3. We wish to stress that our conclusions and recommendations are based not only on the evidence we have specifically collected for this Report, but on our ongoing dialogue, both formal and informal, with Ministers and officials in the Foreign Office, its agencies and external interested parties. We also make it our practice to take advantage of all our overseas visits to listen to the views of diplomatic and local users of the services provided by posts. We are grateful to all those who have assisted us in our work.

1 House of Commons, Standing Orders of the House of Commons: Public Business 2003 (2), HC 3, November 2003, SO No. 152 2 Foreign Affairs Committee, Third Report of Session 2003–04, Iran, HC 80, and Fifth Report of Session 2003–04, South Africa, HC 117 3 Foreign Affairs Committee, Developments in the European Union, HC 631-I (latest publication), and Seventh Report of Session 2003–04, Foreign Policy Aspects of the War against Terrorism, HC 441 (latest Report—for full list of Reports in this inquiry, see footnote 76 below).

4 On 22 July 2004 Mr Chapman was confirmed in his position as Director of BBC World Service. He will report to Mr Richard Sambrook, who was appointed Director of the BBC’s World Service & Global News division on the same day. (“New leaders for BBC’s UK and global news operations”, BBC World Service press release, 22 July 2004.) 5 Ev. 1 ff.

FCO Annual Report 2003–04

4. The Foreign Affairs Committee first started conducting an annual inquiry into the expenditure plans and administration of the Foreign and Commonwealth Office (FCO) in 1981.6 In 1991, Government departments began publishing annual departmental reports setting out details of their work during the preceding year and their expenditure plans for the future. Since that time, the Foreign Affairs Committee, like many other departmental select committees, has examined these reports in detail and reported annually to the House on its findings.

5. The latest FCO Departmental Report was published on 29 April 2004 and it gives a summary of the whole panoply of the work done by the Foreign and Commonwealth Office in this country and across the world during the last year.7 In his foreword to the report, the Foreign Secretary, Rt Hon Jack Straw MP, wrote of the, “immensely challenging” twelve months that British foreign policy and the FCO had faced. He highlighted developments in Iraq, the European Union (EU), Libya and Afghanistan in particular, and stated that:

I believe that the FCO’s record for the last year is one of considerable achievement in supporting security, justice and greater prosperity.8

The report goes on to set out details of the Office’s internal administration and the management of its resources, as well as providing detailed financial information about the department’s activities. It is a very well-presented, attractive and highly readable report, with many pertinent illustrations and examples.

6. In previous years, this Committee, and its predecessors, have commented in detail on the report’s content, presentation and format. The FCO has not always agreed with our recommendations and conclusions, but we believe that our constructive dialogue has contributed significantly to the evolution and improvement of the report. We would wish to highlight three areas of the latest report that have benefited from this Committee’s scrutiny: its title; the cost benefit analysis sections; and the “lessons learned” boxes.

7. Last year, we noted in our Report on the 2003 Departmental Report that:

it is important to clarify ... that the Foreign Office’s Departmental Report 2003 actually comments upon the period from May 2002 to early April 2003. The developments and events it reports on, therefore, primarily took place in the calendar year 2002. There is a danger, we fear, that the title of the Report, referring as it does

6 Foreign Affairs Committee, Fourth Report of Session 1980-81, Supply Estimates 1981-82, HC 343 7 “British diplomacy records substantial achievement in year of challenges “, FCO press release, 29 April 2004; Foreign and Commonwealth Office (FCO), Departmental Report 1 April 2003–31 March 2004, Cm 6213, April 2004 (hereafter referred to as: Departmental Report 2003–04). This report along with all FCO publications is available at its website: www.fco.gov.uk. 8 Departmental Report 2003–04, pp 4–7

to the year of publication rather than the period reported on, could unintentionally confuse readers.9

We went on to recommend that in future the title of the FCO’s reports should refer to the period upon which they commented, rather than to the year in which they were published.10 The Committee was pleased to see, therefore, that the latest report was more helpfully titled: Foreign and Commonwealth Office: Departmental Report 1 April 2003–31 March 2004.

8. In our Report last year, we also welcomed the introduction of a section entitled ‘Cost Benefit’ at the end of nearly every chapter of the 2003 Report. We had long argued that the Foreign Office had failed to highlight the benefits it brought to the taxpayer through the expenditure of relatively modest sums, and we recommended the continuation of this innovation.11 We believe that the inclusion of ten such sections in the 2003–04 Report was a very welcome continuation of this innovation.12 They provide good examples of projects and schemes that have brought, or will bring, considerable benefit or savings. For example, the report estimated that the introduction of a new information technology (IT) programme for modernising the processing of visa applications would achieve savings of up to £29 million for the FCO by 2008.13

9. The most welcome change in this year’s annual report, though, is a response to a comment that we have made on a number of occasions: that such publications fail to acknowledge properly both the successes and failures the Office has encountered that year. In our Report last year we observed:

A criticism that is sometimes raised in relation to publications such as departmental annual reports is that they are too often simply a ‘good news story’ that fail to present a balanced, comprehensive view of a department's achievements and difficulties over the year. This style of presentation is understandable given any organisation’s natural desire to stress its strengths over its weaknesses. However, it is particularly important for a Government department to use the opportunity which an annual report represents to give the most candid assessment possible of its work to those whom it exists to serve. ... we recommend that future Reports strive to reflect more accurately both those areas where the Office has met, or surpassed, its objectives and those where it had hoped to achieve more.14

9 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 4. This Report along with all other Committee publications is available at its website: www.parliament.uk/parliamentary_committees/foreign_affairs_committee.cfm 10 Ibid. 11 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 6 12 Departmental Report 2003–04, pp 34, 60, 73, 91, 105, 121, 132, 141, 160 and 172

13 Departmental Report 2003–04, p 132 14 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, paras 8–9. Also see: Foreign Affairs Committee, Twelfth Report of Session 2001–02, Foreign and Commonwealth Office Annual Report 2002, HC 826, para 17.

Given this recommendation, we were very pleased to see that the 2003–04 report included in most chapters a box entitled ‘lessons learned’, in a similar way to the ‘cost benefit’ analyses described above.15

10. The boxes give examples of initiatives, or general policy areas, that have not gone quite as well as the Office had hoped. Some are very clear and specific. For example, in the Overseas Territories (OT) chapter:

Certain OTs (for example Anguilla, the British Virgin Islands, the Cayman Islands, Montserrat, and the Turks and Caicos Islands) are concerned that the UK Government’s decision to extend to them the provisions of the EU Directive on Taxation of Savings will have an impact on their economies. This is a reminder of the importance of consulting the OTs before the UK signs up to domestic or international legislation that may affect them. This message was repeated by OT ministers at the Consultative Council meeting in December.16

Others are far more general and less helpful to the lay reader. One ‘lesson learned’ in the chapter on UK and global security, for instance, stated that:

Being able to respond rapidly to emerging conflicts by mobilising resources through using Conflict Prevention Pools is extremely beneficial.

Is this a statement of fact? Was this not done before? Is it going to change in the future? Such a ‘lesson learned’ does not seem to be particularly helpful either to the lay reader nor to those within the Office who are supposed to learn from it.

11. On the whole, however, a new era of glasnost appears to be pervading the annual report and is to be welcomed. The Foreign Secretary set the tone in his foreword, where he stated simply that: “We have not achieved everything we set out to achieve”—a realistic reflection on the work of any foreign affairs ministry operating in a changing and uncertain world, but struggling hard to achieve its objectives.17

12. We conclude that the FCO Departmental Report 1 April 2003–31 March 2004 is a generally well-presented and comprehensive document, reflecting the breadth of the Foreign Office’s work and the challenging global situation in which it operates. We particularly welcome the new ‘lessons learned’ sections and recommend that they be developed and made more specific in future reports in order to present a more realistic picture of the FCO’s activities to the lay reader.

15 Departmental Report 2003–04, pp 33, 59, 73,72, 90, 105, 121, 131, 141, 159 and 173 16 Departmental Report 2003–04, p 140 17 Departmental Report 2003–04, p 4

Financial management

Spending Review 2004 13. On 12 July this year, the Chancellor of the Exchequer, Rt Hon Gordon Brown MP, set out the results of the Government’s Spending Review 2004 (SR 2004) in a statement to the House of Commons.18 This Review sets the level of departmental expenditure for the period (or ‘triennium’) 2005–08.19 In his statement, the Chancellor identified three key “priorities” for future Government spending, the first of which was, “to meet the security and defence needs of our country.”20 In this context, he made specific reference to the work of the FCO:

Since 11 September, international diplomacy has also assumed greater importance. Because of that and the security risk faced by our Foreign Office and consular staff working in overseas embassies, the Foreign Secretary's budget will rise from £1.5 billion this year to £1.6 billion—a 1.4 per cent annual average real-terms rise.21

This recognition by the Chancellor of the key importance of the FCO’s work in strengthening Britain’s security is very welcome.

14. For the Foreign and Commonwealth Office, and its agencies, the key implications of the Review are set out in the table below (figure 1).22 We discuss in greater detail, later in our Report, the Chancellor’s specific financial provision for security measures and the FCO’s two agencies (see paras 147–50 and 183–88).

15. On the face of it, this appears to be a relatively satisfactory settlement for the FCO but upon closer inspection it is not as good as it seems. The Office’s total Departmental Expenditure Limit (DEL) is set to rise by an average of 1.4% during each year of the SR04 triennium. This is lower than the majority of other departments, the average rise being 3.4%. Removing the administration budget, which will primarily fund the security improvements, from these figures gives an average annual real terms decrease of –0.7% to FCO programme expenditure. To go even further, removing the BBC World Service, British Council and Conflict Prevention Fund gives an average annual real terms decrease to the remaining programme budget of –2.7% per annum.

18 HC Deb, 12 July 2004, col 1129 ff. 19 For further details, see: HM Treasury, 2004 Spending Review: New Public Spending Plans 2005–2008, Cm 6237, July 2004 (hereafter referred to as: 2004 Spending Review).

20 HC Deb, 12 July 2004, col 1131

21 HC Deb, 12 July 2004, col 1132

22 2004 Spending Review, p 133

Figure 1: outcome of Spending Review 2004 for FCO (£ million)

2004-05 2005–06 2006–07 2007–08

Foreign and Commonwealth Office

Resource Budget 1,503 1,581 1,687 1,723 of which, Administration Budget 632 638 740 772

Capital Budget 71 84 119 117

Total Departmental Expenditure 1,461 1,539 1,630 1,649 Limit

BBC World Service 225 239 246 252

British Council 181 193 199 204

Conflict Prevention 74 74 74 74

Source: HM Treasury23 16. This somewhat disappointing settlement also needs to be set in context. The 2003-04 Departmental Report painted a relatively bleak, and surprisingly candid, picture of the Office’s financial prospects.24 It stated that the last Spending Review (SR 2002) gave the FCO an operational budget which rose more slowly than United Kingdom inflation. On the other hand, staff pay and international subscriptions (the UN, Council of Europe, etc.) were rising faster than inflation, and these comprised around 55% of the Office’s core budget. Public expectations of, and expenditure on, foreign policy activities was increasing, with growing demands on the Office in the war against terrorism, in Afghanistan, in the provision of travel advice, etc. The FCO had also had to cope with greatly increased expenditure as a result of the conflict in Iraq, which resulted in the re-deployment of considerable resources (see paras 29–31 below).

17. In addition, there are other constraining factors not specifically mentioned in the annual report, such as the cost of improving security at posts and the impact of the falling returns from the asset recycling programme (see paras 72–78 below). Greater opportunities for, and lower costs of, foreign travel and an increasing proportion of the civil population with overseas links are also bound to increase pressure on consular resources. With so many fixed costs, the increasing squeeze on existing resources and steadily rising demand for its services, the annual report’s description of managing the Office’s finances as a, “challenging task,” seems a considerable understatement.25

18. As would be expected, the Foreign Office has not sought to criticise this settlement in any way.26 However, one incident during the last financial year illustrates the financial pressure being felt by the Office at this time. In March 2004, reports appeared in the media

23 2004 Spending Review, p 133

24 Departmental Report 2003–04, pp 162–3 25 Ibid., p 162 26 Ev 69 [FCO]

about the British Embassy in Kuwait. It was reported that the British Ambassador, Mr Christopher Wilton, had sent a telegram to the Permanent Under-Secretary informing him that the embassy was “broke”.27 He complained about the, “hopelessly inadequate,” budget he was given, in the face of rising costs and a decaying building. He therefore proposed to close the Embassy on 11 March and re-open on the first day of the new financial year: 3rd April.

19. The Committee raised this matter with the Foreign Secretary, who sent us a copy of Mr Wilton’s full and frank telegram as a restricted annex. The Foreign Secretary told us that:

Mr Wilton’s telegram was a colourful and successful effort to attract attention to a specific end-of-year funding difficulty in the Embassy in Kuwait. Towards the end of the financial year it is not unusual for posts to face overspends or underspends on their budget allocation. But as FCO resources have become more tightly stretched, Ambassadors have been told to do everything they can to avoid overspends. So Mr Wilton was right to draw the problem to the attention of officials in London. As usual with such cases, the FCO was able to make good the shortfall in the budget of the Embassy to remove the likelihood of an overspend.

There was, of course, no chance that we would have allowed the Embassy to close for budgetary reasons.28

The telegram may have been merely a “colourful” way of attracting attention and crying for help, but it does suggest that the increasingly tight fiscal regime in the Office is capable of doing real damage to the work done by posts, and putting staff under increasing and unsustainable pressure. From the extensive conversations we have had with other FCO officials serving around the world, we fear that this is not a one-off incident, but indicative of much wider problems being experienced by the whole Office.

20. We note with concern that the FCO has now confirmed a press report that the Office was seeking bids for early retirement from 60–80 Senior Management Staff (SMS). 29 We recommend that the FCO, in its response to this Report, state how many bids it has received from its Senior Management Staff for early retirement, whether compulsory early retirements will be made if the figure of 60–80 voluntary early retirements is not achieved, and the operational implications for the Department—including possible losses of embassies and high commissions overseas—of reducing its Senior Management Staff by 60–80.

21. We conclude that HM Treasury’s recognition of the importance of the Foreign Office’s work and the commitment of resources to specific areas, such as security, is welcome. We further conclude, however, that overall the latest spending review settlement will only add to the increasing financial pressure under which the Office now operates and which is putting so much of its valuable work in jeopardy.

27 “We’re broke so embassy must close, says Our Man in Kuwait”, Daily Telegraph, 10 March 2004 28 Ev 67 29 “Foreign Office jobs to go to pay for 'summit grandeur'”, The Times, 15 August 2004, p 4; and AR 48

Efficiency savings 22. One of the key planks of 2004 Spending Review was the Chancellor of the Exchequer’s commitment to gaining annual efficiency savings of at least 2.5% per annum across Government. This followed the findings of Sir Peter Gershon, formerly head of the Office of Government Commerce (OGC), who was commissioned by the Chancellor to undertake a review of efficiency in Government.30

23. This injunction applies equally to the FCO as to other departments and it will be expected to realise savings of at least £120 million over the SR 04 triennium.31 This will be achieved primarily in five ways:

x relocation of about 450 posts out of London, and a reduction in the total number of civil service posts by 310;

x “rationalisation of back office function”, principally from Human Resources and Finance Directorates (saving about £30m);

x improved ICT resulting in greater productivity (about £25m);

x more efficient procurement practices (about £11m); and

x efficiency savings achieved by the British Council and BBC World Service (about £30m).32

As can be seen, the Spending Review specifies where £96 million of the savings will be found, leaving the remaining £24 million to be recouped from efficiencies resulting from relocation and staff cuts.

24. The Foreign Office already has a history of achieving significant efficiency gains. As part of its previous Spending Review settlements, it committed itself to achieving efficiency savings of 3% per annum in SR2000 and 2.5% in SR2002. In our Report last year, we expressed our concern that the Department was unable to demonstrate that it was making genuine efficiency savings rather than simply cutting budgets. In its evidence to our inquiry in 2003, the Foreign Office told us that: “Because the efficiency savings are already budgeted in, the savings are, for the most part, sure to be fulfilled—the only question is whether they are met through efficiencies or through cutting activity.”33 Sir Michael Jay later told the Committee in oral evidence that: “Inevitably the continued call by the Treasury to achieve significant efficiencies may mean cuts in FCO core activities.”34 The Committee went on to raise its concern on this matter in its Report.35

30 HM Treasury, Releasing resources to the front line: Independent Review of Public Sector Efficiency—Sir Peter Gershon CBE, July 2004 (www.civil-service.gov.uk/reform/efficiency.asp) 31 2004 Spending Review, p 16 32 Ibid., p 133 33 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 90 34 Ibid., para 91 35 Ibid., para 83

25. We repeated these concerns to the FCO during this year’s inquiry. It told us that:

The FCO continuously seeks to improve the efficiency of its operations, and has achieved a great deal in recent years. Achieving further savings in the period covered by the 2004 Spending Round will not be easy. But, under current plans, the FCO is confident that these will be achieved through improved efficiency, rather than cutting back on front-line activities. ... New savings over the SR04 timescale will arise from genuine efficiencies, rather than from budget cutting.36

Given the scale of the savings to be achieved, the rather disappointing Spending Review settlement and the constraints on the FCO’s budget identified above, this would seem to be a challenging task, and one which we intend to monitor closely.

26. Another important question is for how long such savings will continue to be viable. The head of the BBC World Service, Nigel Chapman, told us in oral evidence that there had to come a time when efficiency savings were no longer viable owing to the nature of ‘diminishing returns’—that is to say further reductions in the costs to deliver services will progressively become more difficult to find without affecting services provided.37 He believed that the World Service would have to look, “very carefully,” at its bid for the next Spending Review in the light of this truism.

27. We believe that such constraints must also apply to the FCO, particularly as 2005/6–7/8 will represent the Office’s third triennium of achieving such savings. The Office is a people- intensive department, with significant fixed costs and increasing demands on its services. Reductions in staff and relocations cannot be used repeatedly to make genuine savings. There must come a time, probably sooner rather than later, when the belt can be tightened no further, and ‘efficiency savings’ will simply become a euphemism for budget cuts.

28. We conclude that, while it is right and proper for all government departments to strive at all times to make the very best use of taxpayers’ money, the efficiency savings agreed as part of the 2004 Spending Review will place a considerable strain upon the Foreign Office’s operations in the coming years. Given the FCO’s significant fixed costs, people-intensive nature and the increasing demands and expectations being placed upon it, we fear that ‘efficiency savings’ will effectively mean cuts in programme budgets. We recommend that, in its response to this Report, the FCO provide specific, detailed evidence that it will achieve genuine efficiency savings in order to meet HM Treasury’s targets and not simply cut its activities.

36 Ev 60. Also see: Departmental Report 2003–04, p 163. 37 Q 24

The impact of Iraq 29. The Annual Report made clear in a number of places that the conflict in Iraq had resulted in considerable additional expenditure for the Foreign Office. This included the costs of supporting the Coalition Provisional Authority (CPA) and the United Kingdom’s Special Representative in Iraq.38 We have commented on the FCO’s important work in Iraq elsewhere.39 The Annual Report noted that at the height of the Iraq crisis, the FCO had redeployed five per cent of its London-based staff.40 In our Report last year, we expressed our concern that the Department appeared to be bearing the burden of the extra expenditure of the Iraq conflict from its own resources. We recommended that HM Treasury should meet in full the Foreign Office’s claim on the contingency fund—the Government’s reserve—to make up for its unpredicted extra expenditure.41 We were pleased to be told this year that the FCO’s claim for the financial year (FY) 2003-04 had been successful.42

30. The FCO’s work in Iraq continues, however, and the costs remain significant. In one of its memoranda to this year’s inquiry, the FCO told us that:

Much of the additional activity was funded by the FY 2003-04 Reserve Claim. We intend to submit a further Reserve claim for FY 20004-05 and 2005-06 to cover the cost of establishing representation in Iraq from July 2004 and the ongoing regional security costs. We have also devoted considerable human resource to Iraq-related activity over the past year and we continue to do so. As a result, we are having to cope with some staff vacancies. This means that some lower priority activities have been foregone. The Departmental Unallocated Provision has also been used to ease the financial pressure on the FCO.43

In another memorandum, the FCO stated that it was unable to give a, “definitive list of all the re-tasking and deferred or discontinued activity,” that resulted from the cost of the FCO’s work in Iraq.44 It noted, however, that: “In concentrating effort on particular countries and regions there is a corresponding reduction given to other countries and regions.”45

31. We conclude that the additional work being carried out by the FCO in support of the Government’s policies in Iraq will remain critical for some time to come. We recommend that the additional costs incurred by the FCO in carrying out this work should be met in full by the Government from the contingency reserve.

38 Departmental Report 2003–04, p 163 39 Foreign Affairs Committee, Seventh Report of Session 2003–04, Foreign Policy Aspects of the War against Terrorism, HC 405, para 155 ff. 40 Departmental Report 2003–04, p 12 41 Foreign Affairs Committee, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 96 42 Ev 105 [FCO] 43 Ev 46, para 23 44 Ev 60, para 10 45 Ibid.

Costs of EU and G8 Presidencies 32. In 2005, the United Kingdom will hold the Presidency of the Group of eight major industrialised democracies (the G8) and will host the organisation’s annual summit in Perthshire, Scotland.46 In addition, in the latter half of 2005 it will also hold the rotating Presidency of the European Council. Both of these responsibilities will place a considerable burden upon the resources of the FCO and the British Government more widely.

33. We raised the question of how the presidencies will be financed in both our inquiry last year and this.47 Most recently, the FCO told us that:

The FCO has set aside the sum of £4.05m from within its current provision to fund Presidency activity during 2004-05. Of this sum, £2.403m is for the EU Presidency with the balance of £1.65m earmarked for the G8. A final decision on the level of Presidency funding required during 2005-06 has yet to be taken.48

This seems to be a very modest allocation for two events of such importance to the United Kingdom’s reputation in the world. The security costs alone of hosting the main G8 Summit and the various European Councils will be very considerable. We were given to understand last year, however, that these costs would be borne by other departments.49

34. We conclude that the United Kingdom’s Presidencies of the G8 and the EU in 2005 represent an historic opportunity for this country to help set the world’s political agenda in a number of key areas. It would be unthinkable that such an opportunity should be wasted owing to insufficient funds. We recommend that the Government ensure that it allocate adequate resources to meet the running costs of the G8 and EU Presidencies. We further recommend that the FCO’s other activities must not be allowed to suffer as a result of these additional responsibilities.

46 For further details, see G8 Summit 2005 website: http://www.perthshireg8.com/?node_id=1.1. 47 Foreign Affairs Committee, Twelfth Report of 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, Ev 55; and Ev 106

48 Ev 106

49 Foreign Affairs Committee, Twelfth Report of 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, Ev 55

UK International Priorities

Strategy for the FCO 35. On 2 December 2003, the Foreign Office published a White Paper entitled UK International Priorities: A Strategy for the FCO.50 This document represents a considerable watershed in many respects for the Foreign Office and, indeed, for the world of international diplomacy. For the first time, the FCO has produced a single document that aims to set out clearly and comprehensively its, “policy, public service and organisational priorities,” for the next ten years.51 It describes, in an informative and highly readable manner, how the FCO works at present, the resources it has to draw upon and the challenges the United Kingdom will face in the coming years, such as environmental change, insecurity of energy supplies and global terrorism. It states that the country’s key relationships will be with the USA—“the world’s single superpower”—and the EU.52 The Commonwealth will also remain a, “valuable informal group for the promotion of common values and interests across the world.”53

36. Sir Peter Marshall KCMG CVO, a former diplomat, submitted a very useful memorandum to us on the Strategy document.54 He noted that it rested on four basic propositions:

i. there is an increasing overlap between external and internal affairs (for example, on issues such as migration and asylum);

ii. globalisation (not only in economic terms, but with respect to phenomena such as terrorism and weapons proliferation) means that foreign affairs will increasingly matter more than ever before in national concerns and priorities;

iii. no government can act alone in international affairs, no matter how powerful it is; it will always have to co-operate and act in alliance with others to achieve its ends; and

iv. international affairs are no longer—if they ever were—the sole preserve of governments, with a wide range of non-governmental “actors” taking a key role in foreign affairs.55

Based on these assumptions and preconditions, the Strategy sets out the United Kingdom’s eight foreign policy priorities for the next five to ten years, which are set out in the box below (figure 2).

50 FCO, UK International Priorities: A Strategy for the FCO, Cm 6052, December 2003 (hereafter referred to as: UK International Priorities) 51 Ibid., p 4 52 Ibid., p 25

53 Ibid. 54 Ev 70 55 Ibid.

Figure 2

Strategic international policy priorities for the United Kingdom: a) a world safer from global terrorism and weapons of mass destruction; b) protection of the United Kingdom from illegal immigration, drug trafficking and other international crime; c) an international system based on the rule of law, which is better able to resolve disputes and prevent conflicts; d) an effective EU in a secure neighbourhood; e) promotion of United Kingdom economic interests in an open and expanding global economy; f) sustainable development, underpinned by democracy, good governance and human rights; g) security of United Kingdom and global energy supplies; and h) security and good governance of the United Kingdom's Overseas Territories.”

Source: FCO56 37. Some of the assumptions in the document are open to debate and it will require regular updating. On the whole, however, the paper is a very welcome departure for the Foreign Office. It provides a clear direction and focus to the Office’s work, allowing it to prioritise limited resources effectively, and sets out clearly to a wider readership what the FCO is doing for the country.

38. We conclude that the UK International Priorities White Paper provides a welcome insight into how the Foreign Office operates and what its aims and priorities are for the coming years.

Implementation of the strategy

Impact on how the FCO operates

39. The last three chapters of the strategy document deal with how the adoption of the new strategy and priorities will affect the way the FCO works. During the course of our inquiry, Sir Michael Jay also sent the Committee a supplementary memorandum setting out how the structure of the Office will change to reflect the strategy.57 We comment below on some of the Strategy’s implications for personnel matters (see paras 127–30).

40. In relation to how the Foreign Office operates, the Strategy document states that:

56 UK International Priorities, p 30 57 Ev 76

As IT permits greater integration between London and Posts, there will be scope to eliminate duplication. We are piloting new ways of increasing the involvement of Posts in work previously done in London. The aim is to break down the mindset that ‘policy is made in London and executed abroad’ and to reduce the resources we devote in London to managing routine bilateral diplomatic relations.58

This would seem to indicate an end to the traditional function of the ‘desk officers’ based at the FCO in London, who monitor events in a specific country or part of the world and co- ordinate much of the policy support needed by ministers, such as answering parliamentary questions.

41. We asked for clarification of this matter, following Sir Michael Jay’s oral evidence session. In reply, we were told that:

We will remain a matrix organisation, using functional, thematic and geographic expertise, at home and overseas, to deliver our priorities. But we must ensure our work in London does not duplicate work in the overseas network but really adds value. In many cases Posts are best placed to provide country specific expertise and we need to make better use of advice from Post in policy formulation. But geographical directorates will continue to have a key role in providing expertise and advice on regional issues and on the most sensitive countries, as well as serving Ministers and Parliament and managing the network overseas.59

The memorandum goes on to note, though, that any such move would be dependent on the successful introduction of the Office’s Information and Communications Technology (ICT) Strategy, which aims to allow the Office to operate as a, “single global online organisation”, linking the entire FCO network of offices and posts together.60

42. We conclude that the FCO is right to seek to make the most efficient use of its valuable personnel resources and to reap the greatest efficiencies from advances in modern information and communications technology. We recommend, however, that the Foreign Office ensure that, as a result of the changes made following the adoption of the new Strategy White Paper, there is no diminution in the level of service provided by the FCO to Parliament and the public.

Impact on network of overseas posts

43. The FCO’s Departmental Report 2003–04 notes that, at present, the United Kingdom has:

x 153 embassies and high commissions in capital cities;

x ten missions to international organisations (such as the UN and the EU); and

x 70 consulates or deputy high commissions.61

58 UK International Priorities, p 56

59 Ev 59

60 For further details of the FCO’s ICT Strategy, see: Departmental Report 2003–04, p 168. 61 Departmental Report 2003–04, p 18

This gives a total of 233 posts. In addition, there are 229 honorary consuls and resident governors in nine of the fourteen Overseas Territories.

44. Throughout the report, great stress is laid upon the importance of the Office’s extensive network of overseas posts. The Foreign Secretary, for example, is quoted as saying:

As I travel around the world, I have seen for myself the value we gain from having professional diplomatic staff on the ground in over 200 posts.62

We agree with this statement, and have monitored changes in the United Kingdom’s representation overseas closely for some time. Our overall impressions of the quality of the FCO’s diplomatic staff has been most positive. Generally, as can be seen from the table below (figure 3), the number of FCO posts has expanded in recent years—often responding to changes brought about by the end of the Cold War. However, there have been a number of significant cases where British representation has been reduced dramatically. In our Report last year, we registered our strong disapproval of the decision to close the British posts in three Central American states—San Salvador, Nicaragua63 and Honduras—and in Mali, West Africa. We concluded that such closures were a, “deeply regrettable, retrograde step in promoting and protecting British interests overseas.”64

45. Given this interest, we were concerned to read in the UK International Priorities White Paper that one of the most significant effects of the adoption of the new priorities by the FCO may be upon the overseas network:

Demands are growing, while resources are finite. We are now running some twenty five more Posts than in 1990. The shape of our network should be driven by our future priorities. ... having a Post on the ground is the most effective form of diplomatic representation in a country. Posts give us people on the spot who know local leaders, speak the language, and can lobby, influence and appear in the media. We will continue to have Posts of this sort in many countries.

But some will be more important than others. We are using new methods for assessing the potential of each Post to contribute to our objectives.65

62 Ibid., p 13 63 The post in Nicaragua does not appear in figure 3 as it closed on 31 March, 2004. 64 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 38 65 UK International Priorities, p 54

Figure 3: Changes made in the FCO’s network of overseas posts 1998–2003

1998 1999 2000 2001 2002 2003

Opened

(UK-based staff)

Chongqing Dili Pyongyang Conakry Baghdad (Iraq) (PR China) (East Timor) (DPRK) (Guinea) Bangalore Tripoli (Libya) Dushanbe Chisinau (India) Monterrey (Tajikistan) (Moldova) Nagoya (Mexico) Kabul (Japan) Denver (USA) (Afghanistan) Gothenburg Pristina Bamako (Mali) (Sweden) (Kosovo) Lahore Asmara (Pakistan) (Eritrea)

(Local staff)

Lome (Togo) Calgary Conakry Tarawa Atyrau (Canada) (Guinea) (Kiribati) (Kazakhstan) Fukuoka Port-au-Prince Sylhet (Japan) (Haiti) (Bangladesh) Ahmedabad (India) Bhopal (India) Goa (India) Hyderabad (India) Pune (India) Bamako (Mali)

Closed

(UK-based staff)

Kuching Cleveland (USA) Lahore Bamako (Malaysia) (Pakistan) (Mali) Chiang Mai San Salvador (Thailand) (El Salvador) Naples (Italy) Tegucigalpa (Honduras)

(Local staff)

Seville (Spain) Kaduna (Nigeria)

Source: FCO66

66 Ev 47. The FCO also noted that: “During 2003 Gothenburg became a localised post—that is operated by locally- employed staff. Although the office in Seville closed in 2000, UKTI maintained a trade team of two locally-employed staff who work from home. There was an erratum in the FCO 2003 Departmental Report which stated that Seville closed in 1998. In addition, the Secretary of State opened the British Embassy Office in Astana in Kazakhstan in February 2004.”

46. The White Paper goes on to say that responding to the changing world scene will require the FCO to be far more flexible and responsive to emerging priorities. At present, this is difficult owing to the large fixed costs involved in maintaining the network of posts. It suggested that one way to achieve this would be to consider, “alternative forms of representation,” taking advantage of new technology.67 Consideration would also have to be given to whether full representation was required in a country that, “has little impact on the achievement of our priorities, and where demand for our services is low.”68

47. The possibilities for such alternative representation identified by the White Paper include:

x greater use in some areas of “hub and spoke” arrangements;

x closer co-operation with DfID on the roles of senior personnel abroad;

x representation by local staff only;

x accreditation to some countries of staff who work primarily from London;

x better mobile IT capabilities, video and telephone conferencing to allow more flexible working abroad while staying plugged in to London;

x wider use of special envoys on particular policy issues; and

x closer co-operation with EU and Commonwealth partners.69

Many of these ideas are not new, and our predecessor Committee discussed some of them in its Report on the FCO’s 2001 Annual Report.70

48. In a memorandum to the Committee on how the Office planned to implement the Strategy, Sir Michael Jay stated that:

This is about organising ourselves so that we are better able to deliver the agreed international priorities of the Government. It is not, as some have suggested, camouflage for closures and cuts. That said I would not want to underestimate the pressures the present resource climate places on the FCO.71

When we took oral evidence from Sir Michael, we asked him whether this was, in effect, a cry for help. He replied:

None of us want to close overseas posts; what we want to do is to ensure that we have the network of posts overseas to maintain the global influence which Ministers want us to have ... What we need to ensure also, however, is that the posts that we do have are properly resourced with people properly trained and paid so that they can do the job they need to do. Whether we are going to be able to maintain the network as it

67 Ibid., p 55 68 Ibid. 69 Ibid., pp 55–56

70 Foreign Affairs Committee, Ninth Report of Session 2000–01, Foreign and Commonwealth Office Annual Report 2001, HC 428, para 37 ff. 71 Ev 76

now is, given the resource constraints, I cannot tell you. ... there are likely to be some changes over the next few years.72

49. While we would always encourage the FCO to be as innovative as possible in getting the best value for money from the resources voted it by Parliament, we are concerned by the implication of Sir Michael’s answers to us. While some form of representation—be it by an honorary consul, a DfID official or whomever—is better than none at all, there can be no doubt whatsoever that the interests of the United Kingdom are best served by having an extensive network of overseas posts, operated full-time by Foreign Office personnel. Where posts have had to close, as in Central America,73 or where the FCO is unable to open one owing to financial constraints, as in Kyrgyzstan for example,74 this country is inevitably likely to suffer a diminution of trade, influence and first-hand information.

50. We conclude that the potential closure of significant numbers of overseas posts implicit in the UK International Priorities document is a source of grave concern. We recommend that wherever possible the FCO seek to maintain as effective and as wide- reaching a network of posts as possible, in order to protect and promote British interests around the globe.

72 Q 169

73 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 35 ff. 74 Ibid., para 39 ff.

Security

51. The global security situation has been a cause of great concern since the watershed terrorist attacks in the USA on 11 September 2001. People in all corners of the world have been affected by subsequent attacks, such as those in Bali (Indonesia) and in Beslan (the Russian Federation). As a Committee, we have been very concerned by this subject and have produced five Reports as part of our long-running inquiry into the Foreign Policy Aspects of the War against Terrorism.75

The Istanbul Consulate-General 52. On 20 September 2003, a car bomb exploded just inside the gates of the British Consulate General in Istanbul. Nine members of staff were killed, including the Consul General, Mr Roger Short, as well as two local policemen and a visitor. This was the first time that a British diplomatic mission abroad had been attacked in this manner and it demonstrated vividly the widespread and indiscriminate nature of global terrorism. The location of the building in a bustling city centre well illustrates the problem of traditional sites in the new era of terrorist threats. Three Members of our Committee had visited the Consulate only a fortnight before the attacks, and had met Mr Short, while looking at the visa entry clearance system there. Our Chairman wrote to Sir Peter Westmacott KCMG LVO, the British Ambassador to Turkey, after the attack and offered our sincerest condolences to those affected by the bombing.

53. In the FCO Annual Report 2003-04, Sir Michael Jay stated that: “the security of our staff has been my greatest single preoccupation since the attack on our Consulate General in Istanbul.”76 Sir Peter Westmacott also wrote a separate section in the Report on the immediate impact of the bomb and the work that has been going on since to help the bereaved families. He praised the speed with which the FCO had responded to the attack, and the help that the Security Strategy Unit, UKvisas and Estates Group had given in getting the Consulate working again within days.77 The Office relied on the emergency planning it had undertaken post-11 September and had successfully deployed an emergency unit and a rapid response team.78 In his report, Sir Peter concluded that:

we must also reflect on the implications of the terrible ‘first’ that Istanbul has suffered for the security of our diplomatic operations the world over. I do not favour retreating into bunkers. But we must, sadly, adjust to the different level of threat we now face across the world.79

75 Foreign Affairs Committee, Seventh Report of Session 2003–04, Foreign Policy Aspects of the War Against Terrorism, HC 441; Second Report of Session 2003–04, Foreign Policy Aspects of the War Against Terrorism, HC 81; Tenth Report of Session 2002–03, Foreign Policy Aspects of the War Against Terrorism, HC 405; Second Report of Session 2002–03, Foreign Policy Aspects of the War Against Terrorism, HC 196; and Seventh Report of Session 2001–02, Foreign Policy Aspects of the War Against Terrorism, HC 384 76 Departmental Report 2003–04, p 9

77 Ibid., p 40 78 Ibid., p 150 79 Ibid.

54. Following the bombing, there was a great need for continued after-care for those affected. Mr David Warren, the FCO’s Director of Human Resources, assured us in his oral evidence that all staff had had access to, “good quality medical treatment immediately after the incident, including counselling and with trauma risk assessment.”80 Welfare officers continue to run a small office in Istanbul and have been on hand in the United Kingdom to help relatives of those who were killed. A follow-up visit in January 2004 found that: “the majority of staff were dealing very well with the after effects of what was obviously a terrible incident.”81 Each bereaved family has received an ex gratia payment of £5,000, “as an advance towards an eventual final settlement.”82

55. The Consulate-General, Pera House, was being restored after a fire when the bombing occurred and the restoration has continued. Sir Michael Jay told us that:

the perimeter wall of the Consulate-General has been rebuilt to a standard which will enable it to withstand a significant bomb blast in the future, and there is a new blast resistant gatehouse and entrance to the Consulate.83

At present, the visa-entrance clearance operation in Istanbul, which Members of the Committee went to see, is issuing 75% of its normal number of visas from its temporary base at the Hilton Hotel.84 It was hoped that the visa system, with help from Ankara, would be fully operational by the end of the year.85

56. We conclude that the attack on the Istanbul Consulate General was a barbaric act of terrorism, which we condemn utterly and unreservedly. We again offer our sincerest condolences to all those affected by the terrible tragedy and especially to the families of those who were murdered. We offer our highest praise to those who have worked so hard to cope with the aftermath of the attack and worked in such difficult conditions. We trust that the sacrifice and hard work of those involved will be properly recognised by the Foreign Office.

Security Review 57. After the attack in Istanbul the Foreign Office moved immediately to improve security at its posts.86 These included measures such as anti-shatter film on windows, strengthened perimeter security, and in Tehran (Iran), where shots had been fired at the embassy, bulletproof and bomb-blast windows.87 The Foreign Secretary also announced an, “independent internal review to look into the balance between security and operational effectiveness in

80 Q 176 81 Ibid. 82 Departmental Report 2003–04, p 150 83 Q 173 84 Q 177 85 Ibid. 86 Departmental Report 2003–04, p 9 87 Q 180

the FCO’s work overseas.”88 This was undertaken by Mr Stuart Jack CVO, of the Diplomatic Service.

58. On 23 June the Foreign Secretary wrote to us and provided a summary of the review’s findings. The principal conclusion was that: “while the FCO’s existing security strategy does not need a fundamental overhaul, there is more that could be done to enhance security worldwide.”89 Further conclusions were that: x total risk avoidance was unrealistic; x risk management was fundamental in striking a balance between security and operational effectiveness; x the FCO needed to devote more resources to security; x the FCO should not withdraw into “fortresses” or “bunkers” which would involve operational drawbacks, although there was also a serious risk of, “threat displacement,” if British targets were seen as softer than American ones; x all posts should undergo a, “vulnerability audit”; x security standards for, “new builds,” should be readily understood and enhanced standards applied to higher risk posts; and x more Overseas Security Managers and some armed guards were needed.

59. Sir Michael Jay in his evidence to us commented on the outcomes of the Security Review. He said that, “we cannot eliminate all risk in office but we can try to manage that risk sensibly”.90 He said that the security of every post should be judged separately against both basic standards and the current threat assessment, which was unique to each individual situation.91 The vulnerability audit recommended in the Jack Review is ongoing. Following the attack in Istanbul, the FCO also re-prioritised its estate budget and expects that in the next few years approximately, “70 percent of [its] investment will be security- driven.”92 The FCO has also told us that: “this has had only a limited effect on our asset recycling programme: but we would clearly only replace an existing building with a new one if the latter were equally or more secure.”93

60. The FCO currently spends approximately £50–£60 million a year on security, and has calculated that to implement fully the security changes on estates, and in some circumstances move location, another £60 million would need to be provided for the next three to four years, leaving the final figure at approximately £120 million per year.94 We learnt that the FCO, in bidding for the 2004 Spending Review, made it clear that the

88 Ev 78 89 Ev 79, para 7 90 Q 178 91 Ibid.

92 Q 180

93 Ev 46, para 24

94 QQ 185–6

increased security issues created by terrorism are outside the normal remit of Foreign Office spending. Sir Michael Jay told us that: “if we do not have the money to make [the overseas network] secure, as it now is, then we will have to think about how we structure our network to ensure that what we do have is secure.”95

61. We were very pleased to note that the FCO’s request for an addition to their baseline of £60 million for each of the three years of the Spending Review specifically for security was met in full by the Chancellor.96

62. We commend the Foreign Office for conducting an immediate review of security at posts following the Istanbul bombing and we broadly welcome its findings. We conclude, in particular, that the review was right to warn the FCO against turning its posts into “fortresses” and “bunkers”. The FCO’s image and operational capability would not benefit if contact with the public were decreased, although the balance it strikes between operational effectiveness and security must be a very careful one.

63. We welcome wholeheartedly the extra money provided in the Spending Review 2004 for security measures. It would have been wholly unacceptable if extra security measures had had to be funded from the existing FCO budget, to the detriment of other activities. We recommend that, in view of the exceptional exposure of FCO staff overseas to terrorist attack, the FCO should make further requests to HM Treasury for additional funding for security measures as are necessary to safeguard its staff during the current three year period, before the next spending review takes place.

Security of the British Council and BBC World Service 64. The deterioration of the global security climate has also affected the work of the British Council and the BBC World Service. The latter has a smaller presence overseas and its premises are generally more secure as they not usually open to the public. When he gave oral evidence to the Committee, however, Mr Nigel Chapman, then Acting Director of the BBC World Service, informed us that the increased threat of global terrorism and especially attacks on Western targets was making it more dangerous for personnel working abroad. This had been especially evident in Iraq, where the number of BBC personnel had had to be “significantly” reduced in the last few months.97 The same was the case in Saudi Arabia, although Mr Chapman told us that the accuracy of reporting was not being affected. He said that what would suffer instead was the ability, “to gather news on the ground, to interview people, to bring a sense of vividness and texture to the coverage.”98 Extra spending on security was included in the World Service’s overall bid for funds in the latest Spending Review.

65. The British Council is more vulnerable in many respects than the World Service as much of its work depends upon having accessible, open premises across the world. In its initial memorandum to us the Council stated that: “difficult security environments are leading us to re-consider the means of delivery in some high-risk countries.” In Pakistan,

95 Q 192

96 Ev 70 and 2004 Spending Review, p 133 97 Q 35 [Chapman] 98 Q 36

British Council offices had already been forced to close to public access owing to the difficult security environment.99 There was no prospect of re-opening these offices at present, but the Council’s Director-General, Sir David Green, told us that examinations and other activities were still being carried out off-site, and 150,000 students had sat examinations last year—a very significant achievement.100 Operations in Riyadh, Saudi Arabia, had also temporarily been closed and the situation there was being closely monitored.101

66. Sir David Green told us, in oral evidence, that security of British Council premises abroad was, “the area which keeps me awake at night”.102 He was worried that as embassies and high commissions become more secure, British Council offices could become displacement targets. Security had been reviewed after 11 September and the Istanbul bombing, but while some premises had had security upgrades, Sir David told us that the British Council required another £10 million over the next two years which would be spent on 29 properties that need enhanced security.103 We were also told that if the British Council were allowed to recycle the savings it made through the Gershon efficiency process then it would not have to make further claims on the Treasury.104 We were very pleased to note that HM Treasury agreed to both these proposals in the Spending Review 2004.105

67. We welcome the recognition by HM Treasury of the need to fund security improvements for the BBC World Service and British Council in full. We recommend that the Foreign Office ensure that adequate resources are available for both bodies to maintain the quality of their services while ensuring the maximum safety of their overseas personnel.

Foreign Office Travel Advice 68. After the terrorist attack in Bali in October 2002, the travel advice issued by the Foreign Office came under heavy scrutiny from Parliament, the media and the travel industry.106 According to the FCO, this service is designed to:

help British travellers avoid trouble by providing information on threats to personal safety arising from political unrest, terrorist activities, lawlessness, violence, natural disasters, epidemics, anti-British demonstrations and aircraft/shipping safety.107

Every week 280,000 pages of the FCO travel advice website are viewed. FCO advice can also be obtained by telephone, fax and on CEEFAX.108 We have taken a keen interest in the

99 Ev 118 and Q 92 [Green] 100 Q 92 101 Q 95 102 Q 92 103 Ibid. 104 Ibid. 105 Ev 121 and 2004 Spending Review, pp 132–3 106 For example, see: Departmental Report 2003–04, p 111; Foreign Affairs Committee, Tenth Report of Session 2002–3, Foreign Policy Aspects of the War against Terrorism, HC 405, pp 57–61; and Cabinet Office, Intelligence and Security Committee: Inquiry into Intelligence, Assessments and Advice prior to the Terrorist Bombings on Bali 12th October 2002, Cm 5724, December 2002. 107 Quoted from FCO Travel Advice website: ‘Frequently asked Questions’. (www.fco.gov.uk).

development and change of FCO travel advice, and commented on the first stage of the review process in our Report on the Foreign Policy Aspects of the War against Terrorism in Session 2002–3.109

69. As a follow-up to the first review, on 10 December 2003, the Foreign Secretary announced a further review which published its results in April 2004.110 The Foreign Secretary made a statement to the House on 1 April 2004 on the results of this review. He declared that travel advice needed to strike a delicate balance: “making public safety its prime concern while minimising the disruption which terrorists want to cause”.111 He went on to say that:

the public will only trust our advice on the terrorist threat if, firstly, they do not think that we advise against travel in the slightest pretext in order to cover our backs; and, secondly, if they have confidence that any specific, credible threat which might affect their travel or behaviour overseas will be conveyed to them.112

In a further written statement to the House, the Foreign Secretary stated that:

in future, in the case of intelligence-based terrorist threats, we shall advise against travel only in situations of extreme and imminent danger – if the terrorist threat is sufficiently specific, large-scale or endemic to affect British nationals severely.113

The Foreign Office will also continue its efforts to make the travel advice web pages clearer and easier to use.114

70. On 28 June 2004 the FCO updated its Guidance to Departments and Posts on Travel Advice to incorporate the results of the review. Among other things, this set out advice on the format of travel advice, its content, language, and three reasons why it might need to be updated—changes on the ground, changes in the terrorist threat and a terrorist, or other significant, incident.115 This document also recommended that travel advice be checked, “at least once a month,” and changed, “as circumstances dictate”.116 At the time of writing this Report, the Foreign Office was updating all 217 of its individual travel advice notices in the light of these revised guidelines.117

71. We welcome the Foreign Office’s thorough review of the travel advice it issues to the public. We recommend that the Foreign Office continue making its web pages as clear and accessible to the general public as possible.

108 Departmental Report 2003–04, p 111 109 Foreign Affairs Committee, Tenth Report of Session 2002–3, Foreign Policy Aspects of the War against Terrorism, HC 405, pp 57–61 110 Departmental Report 2003–04, p 111 111 HC Deb, 1 April 2004, col 1770 112 Ibid. 113 HC Deb, 22 June 2004, col 81 WS 114 HC Deb, 22 June 2004, col 82 WS 115 Ev 80 ff. 116 Ibid. 117 Quoted from FCO Travel Advice website (www.fco.gov.uk).

Management of the overseas estate

The end of the asset recycling programme? 72. For some considerable time, our Committee has exercised especially detailed scrutiny of the Foreign Office’s management of its extensive overseas estate—valued at around £1 billion118—and in particular of its, “asset recycling programme”. Since 1998 the FCO, in agreement with HM Treasury, has been engaged in this scheme, under which future investment is funded by the sale of FCO properties. The process involves the Office identifying and selling properties that have become, “surplus through re-prioritisation, or which are not operationally effective or good value for money.”119 Initially much of the money raised by such sales was used to invest in Information and Communication Technology (ICT), under the slogan “bricks for bytes”, but since 1 April 2004, 80% of proceeds have been re-invested in the estate. 120

73. In the period 1999/00-2001/02, the FCO ‘recycled’ £90 million of assets under this programme. The Office subsequently agreed with HM Treasury in the Spending Reviews 2000 and 2002 (SR2000 and SR2002) that it could ‘recycle’ £100 million of assets in the triennium 2001-04 and a further £100m in the period 2003–06. However, the 2004 Annual Report made clear that the Office had fallen short by £23 million of its target of £100 million of sales in the triennium 2001–04, as shown in the table below (figure 4). The report noted that the last year, “was difficult, with downturns in property markets, reducing the levels of sales of under-performing and cost-inefficient assets”.121

Figure 4: asset sales in triennium 2001/02–03/04

2001/2 2002/3 2003/4 Target for Actual sales triennium £40m £13m £24 £100 m £77m Source: FCO122 74. The 2003–04 Report went on to note that: “It is unlikely that the FCO will be able to maintain the current level of prudent asset sales. This will be a subject for further discussion with the Treasury.”123 In a supplementary memorandum, the Office reported on these further discussions with HM Treasury:

On assets, we agreed to continue our asset recycling programme, but at a reduced rate. This mechanism allows the FCO to reinvest estate sales receipts, primarily for the modernisation of the estate both overseas and in the UK. It is an important

118 Departmental Report 2003–04, p 165 119 Foreign and Commonwealth Office, Foreign and Commonwealth Office Departmental Report 2003, May 2003, Cm 5913, p 141 120 Ev 63 121 Departmental Report 2003–04, p 167 122 FCO Departmental Report 2003, p 141, and FCO Departmental Report 2003–04, pp 167–8 123 Ibid., p 168

element in managing our assets to meet our operational need; it provides flexibility in our network and value for money to the UK taxpayer.124

The Office also noted that:

Even though the current level of asset recycling may not be sustainable it does not mean that the programme will cease. Asset recycling will continue for the foreseeable future. In view of the fact that it is not yet known what the outcome of the talks with the Treasury will be, it is not feasible to suspend sales. Sales are, therefore, continuing on a case by case basis when the estate requirements and economic assessments justify them.125

75. As a Committee, we have long had the greatest doubts about the long-term efficacy of the asset recycling programme. Last year, we reached the following conclusion in our Report on the Departmental Report 2003:

there are very grave concerns about the long-term impact the asset recycling programme is having on the FCO’s overseas estate. There is a real danger that, in its attempts to take full advantage of the scheme agreed with HM Treasury, the Foreign Office is selling properties below their real value in order to meet a short-term target. We recommend that every precaution be taken to ensure that the asset recycling scheme takes full account of the overall, long-term value of properties before they are recycled. If necessary, the Office should be prepared to ‘bite the bullet’ and miss its target for the asset recycling programme in order to preserve the long-term value of its overseas estate and identify alternative sources of funding for future investment.126

76. We have made our view on this matter clear to the Foreign Office on many previous occasions and raised it again at our most recent oral evidence session with Sir Michael Jay. He acknowledged that a number of factors had changed, which had altered the parameters under which asset recycling had initially been undertaken:

When the asset recycling programme started a few years ago there is no doubt that there were quite a lot of buildings we had around the world that were legacy buildings which did not have the allure, if you like, of Paris or Washington, which we did not need and which it made sense to dispose of and then to reuse the assets, or to invest the proceeds in property or, as the judgment was made at the time when we were rebuilding our ICT, in ICT. I think those circumstances have changed quite a lot now. There are not the kinds of properties that there were a few years ago readily available for selling in order to downsize some of our bigger properties, those have been disposed of. ... The asset recycling programme is really shifting into a much lower gear than it has done in the past.127

77. He also noted that the ‘cost of capital’ charge levied on all departments and government bodies by HM Treasury as part of resource accounting had been reduced from 6% to 3.5%

124 Ev 70 125 Ev 46, para 29 126 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 64 127 Q 133

recently. As the Government incurs charges through borrowing to fund departmental activities, this cost is notionally passed on to the departments as a ‘cost of capital’ charge. The charge is calculated by applying a percentage rate (determined by HM Treasury) to the average value of net assets (total assets less total liabilities) held during the year. The reduction in the rate has therefore decreased the notional cost attached to FCO-owned property. Consequently, swinging the balance in favour of retention as opposed to renting a replacement building.

78. We welcome the Foreign Office’s recognition, in accordance with our previous findings, that the “asset recycling programme” should be dramatically scaled down. We commend it for ‘biting the bullet’ and missing the artificial target set for asset sales by HM Treasury, rather than selling off even more valuable properties for short-term gain. We conclude that it is most regrettable that this decision was not taken earlier. We shall continue to monitor closely the low-level sales proposed by the Office.

Access to information 79. One major impediment to the Committee’s effective scrutiny of the Foreign Office’s management of its overseas estate, on behalf of the House of Commons and taxpayers, has been the FCO’s unwillingness to provide detailed figures on sales and purchases. During the course of this inquiry, we engaged in a lengthy correspondence with the Foreign Office in order to obtain the figures we needed to carry out our duty. The exchanges are summarised in the table below:

Figure 5: summary of correspondence between Committee and FCO on sale and purchase of overseas properties

Date Description Contents 26 January Response to Mr Maples asks for details of residential properties written sold and purchased by the FCO since June 1997 and parliamentary the net cash proceeds of each. question (PQ) from Mr John FCO supplies list of properties but refuses to provide Maples MP, details of the proceeds, citing “commercial Member of the confidentiality” and exemptions 12 and 13 of the Committee128 Code of Practice on Access to Government Information.*

5 February Letter from Following Mr Maples’ question, Committee requests Committee to details of net proceeds of each sale made since 1997. FCO129

128 HC Deb, 26 Jan 2004, col 58W 129 Ev 91

23 February Letter from FCO replies and provides some information but no FCO to specific details on individual properties, again citing Committee130 “commercial confidentiality”.

25 February Letter from Committee reiterates its request, and asks for Committee to clarification of how the two sections of the Code of FCO131 Practice cited by the Office are relevant.

16 March Letter from FCO replies and, after “looking carefully” at the data, FCO to provides details of sales and purchases up to March Committee132 2002.

28 April Letter from Committee reiterates request for all the data to be Committee to supplied and again asks how the Code of Practice is FCO133 relevant.

18 May Letter from FCO finally provides all information requested as a FCO to confidential annex to letter. Committee134

* The Code of Practice sets out guidelines for all government departments on how they should respond to requests for information. It includes 15 exemptions, under which departments may refuse to provide certain data for specific reasons.135

80. We were very dissatisfied that it had taken nearly five months to extract information from the Foreign Office that the public clearly had a right to know, and that when finally given it was provided in a form of which we could make little use, i.e a classification, ‘Restricted—Commercial’, which meant we could not share it with anyone outside the Committee. Our concern was increased by the fact that we had had a similar experience when trying to gain detailed information on the sale of the Consul General’s residence in San Francisco last year.136

130 Ev 91 131 Ev 92 132 Ev 92 133 Ev 97 134 Ev 97 135 Department for Constitutional Affairs (DCA) , Open Government: Code of Practice on Access to Government Information, Second Edition 1997 (www.dca.gov.uk/foi/ogcode981.htm) 136 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 70

81. We consequently raised this matter with Sir Michael Jay at his oral evidence session before us. When questioned, he did not disagree that the Office had arguably misused the Code of Practice by citing exemptions twelve and thirteen.137 These stated that:

12. Privacy of an individual

Unwarranted disclosure to a third party of personal information about any person (including a deceased person) or any other disclosure which would constitute or could facilitate an unwarranted invasion of privacy.

13. Third party’s commercial confidences

Information including commercial confidences, trade secrets or intellectual property whose unwarranted disclosure would harm the competitive position of a third party.138

In the former case, we argued, information about the value of purchase or sales would be available from the equivalent of the British land registry or stamp duty records in nearly all countries. In the latter, we argued that this exemption only applies to a situation in which competing organisations are preparing a bid for a Government contract and to disclose how they had estimated their costs could damage their commercial competitiveness against rivals.

82. At the session, Sir Michael promised to “reflect” on his department’s intransigence.139 We were pleased to receive his subsequent memorandum, in which he stated that:

we have decided that, in the interests of openness, we will seek to meet the Committee’s request. We are prepared to report to the Committee information about sales which have taken place three months after the transactions have been completed.140

We welcome this policy of greater openness, which will allow more effective scrutiny. The examples of the New York and Dublin residences, which we discuss in detail below, illustrate the importance of such scrutiny (see paragraphs 87–92).

83. We conclude that the Foreign Office’s unwillingness to submit its “asset recycling programme” to effective parliamentary scrutiny was utterly indefensible and evidence of a lingering defensive attitude to public scrutiny. We welcome the Foreign Office’s ultimate recognition of the importance of this Committee’s oversight. We recommend, however, that the Foreign Office review its procedures for withholding information under the Code of Practice on Access to Government Information, to ensure that they are in accordance with Government-wide best practice.

137 Q 203

138 Op. cit. 139 Q 204 140 Ev 64

Impact of the asset recycling programme 84. The figures finally obtained by the Committee on sales and purchases show the impact the asset recycling programme has had on the estate. The charts below (figures 6(a) and (b)) show how sales and purchases have been spread geographically, with African and European posts bearing the brunt of the losses.

Figure 6(a): sales of FCO properties (2002–04) by location

4 2002-03 2003-04 3 Number of sales

0 Americas (excl. Asia Pacific Wider Europe Canada & USA EU (excl. Middle East & N S Asia Africa Can & USA) Accession 10) Africa Source: FCO

Figure 6(b): purchases of FCO properties (2002–04) by location

15 Actual Target

Percentage 10

0 2000 2001 2002 2003 2004 2005 (no data yet) Source: FCO

The two charts below (figures 7(a) and (b)) compare purchases to sales in the period 2002- 04 by volume and value. Total sales over the period amounted to £33,252,000, while total purchases cost only £9,863,000. As can be seen, sales outnumbered purchases by a considerable extent.

Figure 7(a): sales and purchases of FCO properties (2002-04) by volume

40 35 30 25 2002-03 20 15 2003-04 10 5 Number of sales/purchases 0 Staff Staff Head of Post Head of Post accommodation accommodation Sales Purchases

Source: FCO

Figure 7(b): sales and purchases of FCO properties (2002-04) by value

16000 14000 12000

10000 2002-03 8000 6000 2003-04 Proceeds / £000 4000 2000 0 Staff Staff Head of Post Head of Post accommodation accommodation Sales Purchases

Source: FCO

85. During our inquiry, we also asked about the size of the FCO’s rental bill over the period 1998–2003. While the total bill remained relatively stable at around £64 million per annum, the Foreign Office noted that it had been, “helped by movements in exchange rates and favourable market factors”.141 Subsequently, we were told that during this period the proportion of property owned by the Office, rather than rented, had fallen from 17.5 to 15.2%.

86. We conclude that the “asset recycling scheme” has had a very serious impact on the Foreign Office’s property portfolio, with valuable buildings that were appreciating in value being sacrificed on the altar of short-term Treasury-inspired targets. We further conclude that these sales have left the Foreign Office more at risk from fluctuations in the international property market and exchange rates, and may have significantly damaged the long-term financial strength of its estate.

The cases of the Dublin and New York Residences 87. The sale of two properties attracted our particular attention during this year’s inquiry, as that of the Consul General’s Residence in San Francisco did last year. These were the official residences of HM Ambassador in Dublin and HM Consul General (HMCG) in New York. Both had come to our attention through memoranda supplied by the Foreign Office, but neither had been ‘flagged up’ in any sense.142

88. Following our questioning of Sir Michael Jay at the oral evidence session, the full facts of both cases were disclosed. First, in relation to Dublin, he stated that:

Dublin

In 1997, it was decided to sell Glencairn [the existing Residence] and surrounding land (34 acres) for security and operational reasons. All options regarding the prospective sale of the house and land were considered. In the end it was decided that the most economical and practical option was to sell both the land and the house.

The process of sale went ahead alongside the search for a new property. The Glencairn estate was sold in January 1999 for £24.3 million. As part of the agreement, the Ambassador and Defence Attaché (who has a house in the grounds) could remain in the property until April 2002 (later extended to April 2003) until new properties were found.

In late 1999, after exhaustive searches in Dublin, a replacement property was identified: Marlay Grange. Agreement was reached to purchase Marlay Grange at a cost of £6.2 million. The deal was completed in June 2000. At the time it was estimated that the cost of refurbishment of the property to bring it up to standard, not least for security purposes, would be £2.8 million.

141 Ev 91 142 Ev 92 ff.

As a result of a more comprehensive survey of the property (not possible before purchase due to the intrusive nature of the survey) it was found that the cost of works to upgrade the property would be £3.7 million.

These higher costs at Marlay Grange coupled with a significant improvement in the general security climate (following the Good Friday agreement), and improved physical security around Glencairn (due to improved road network), tipped the balance in favour of repurchasing Glencairn and selling Marlay Grange.

The amount of work already undertaken on Marlay Grange has come to £680,000. In the current market the value of Marlay Grange has dropped to approx. £ 4.3 million. Reacquiring Glencairn will cost us approx. £7 million, leaving an overall net gain to the FCO of £13 million. 143

89. The last sentence of Sir Michael’s written evidence on this matter misses one crucial fact. Overall, the acquisition, refurbishment and disposal of Marlay Grange will cost the FCO around £2.6 million (purchase price of £6.2m, plus £680,000 for refurbishment work, minus £4.3 million re-sale value). The “net gain” referred to by the FCO will be as a result of repurchasing Glencairn without its extensive grounds (34 acres). The fact that the house and grounds were worth £24.3 million in 1999 and the house alone was worth £7 million in 2004, indicates that if the FCO had sold the grounds alone in 1999 it could have gained, at the very least, £17 million. Given the rapidly rising value of land in Dublin, this is a very conservative estimate. We conclude that the FCO’s claimed “net gain” of £13 million from its Dublin property transactions should more accurately have been described as a net gain of at least £17 million being reduced by £4 million (minimum) as a result of the Department’s mistaken decision to sell, only to reacquire, the Glencairn Residence and to purchase, only to sell, Marlay Grange. We recommend that, in its response to this Report, the FCO provide precise figures on how much Marlay Grange is eventually sold for and the cost of reacquiring Glencairn (net of acquisition costs).

90. With regard to the New York residence, Sir Michael told us that:

New York Consul General’s Residence

HMCG’s residence in New York was increasingly found to be too large, inconvenient, and no longer fit for purpose. In June 2001 the CG proposed a move to a new property that he had identified which would be more suitable. A professional valuation at the time showed the existing property to be worth $17.5 [£12.23] million.

Preliminary agreement to purchase the new property at $8.95 [£6.3] million had been reached with the developers on 1 August 2001.

Between 1 August and 11 September there were a series of legal exchanges about the detailed terms of the Purchase agreement and discussions on the design of the new apartment (which had originally been planned as three separate units).

143 Ev 63–64

The situation after 11 September was reviewed by the Department on 10 October and it was decided to proceed to finalise the contract negotiations: the Purchase agreement was signed, and deposit paid on 1 November 2001. The new Residence was occupied by the CG in August 2002 at a cost of £6.48 million.

As a result of the downturn in the US market the aim of receiving $19.5 [£13.6]144 million for the old property was not realisable. The property eventually sold for $12.5 [£6.7] million in February 2004. The severely weakened state of the dollar against the pound at the time meant that our gain in pounds was also severely reduced. The final sterling total received by us was £ 6.32 million, to give a net loss on the overall transaction of £0.38 million [£380,000].145

91. We conclude that the net loss of £380,000 on the sale of the New York Consul General’s Residence and the purchase of a replacement residence, noted by Sir Michael Jay, contrasts starkly with the profit of $8.55 million (approximately £6 million in 2001146) originally envisaged by the FCO when it started this transaction. Even in the light of the fluctuations in the sterling–dollar exchange rate noted by the Office, such a loss seems utterly bizarre. This transaction was undertaken for the purpose of realising a gain of approximately £6 million and has instead resulted in the loss of £380,000 and the replacement of a highly prestigious property by an inferior one. We further conclude that while the tragic events of 11 September 2001 in the USA could not have been foreseen, the exchange of contracts on both properties took place after that date and it seems reprehensible to us that the FCO proceeded as it did in New York. Mr Simon Gass, FCO Director of Finance, acknowledged to us in his oral evidence that:

there is absolutely no doubt we would have wished that things had turned out differently and you may be sure that we have asked ourselves internally some very searching questions about how those two happened.147

92. We conclude that serious mistakes were made during the sale and purchase of the residences in Dublin and New York and should not have occurred. Such incidents serve to underline the importance of effective scrutiny of the Foreign Office’s property transactions by Parliament. We recommend that the FCO set out, in its response to this Report, how it will ensure that such losses of taxpayers’ money are not repeated in the future.

144 N.B. This is different from the $17.5 million given above. The FCO aimed to sell the residence for more that it was technically valued at.

145 Ibid. 146 Exchange rate of £1 = $1.4139 in July 2001. 147 Q 148

The Prague Embassy and the Cape Town Residence 93. In our Report on last year’s FCO Annual Report, we noted the very worrying suggestion that the Office was considering selling the current embassy building in Prague (the Czech Republic), which is housed in the 15th Century Thun Palace.148 We recommended that:

the current historic, irreplaceable, centrally-located Embassy building in Prague be retained as part of the FCO's estate and not sacrificed to the asset recycling programme. Its loss would inevitably be a serious blow to British prestige and interests in this key European country and partner, which by May of next year will be a full member of the European Union.149

We were very pleased to be told, therefore, that the Office had, “reviewed the options in Prague and concluded that they do not support disposal of the Embassy”.150 We greatly welcome this sensible decision.

94. Similarly, in our Report on South Africa, published earlier this year, we registered our concern at the proposal that HM High Commissioner’s Residence in Cape Town be sold. As we noted, this is a, “large and very attractive property that can accommodate a wide variety of functions,” which was clearly a very useful asset to the post.151 We strongly recommended its retention in our final Report. Subsequently, the Office confirmed that:

The Foreign Secretary has asked officials to reassess whether greater value could be obtained from the Residence in Cape Town. This is being done: no decisions have yet been made.152

95. We conclude that the FCO’s judgment to retain the valuable embassy building in Prague is a very welcome one. We recommend that the same decision be made with regard to the highly valuable and useful residence in Cape Town.

148 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, paras 76–77 149 Ibid., para 78

150 Ev 61, para 15 [FCO]

151 Foreign Affairs Committee, Fifth Report of 2003–04, South Africa, HC 117, para 181 152 Ev 61, para 15

Entry clearance

Coping with increasing demand 96. One of the Foreign Office’s core functions—and one which brings it into contact with a very large number of people—is its management of the United Kingdom’s visa entry clearance system. This year’s Annual Report devotes a chapter to the work of UK visa services (UKvisas) and shows that, once again, demand for visas has continued to rise rapidly (see figure 8 below).153

Figure 8: UK visa applications 1998–2007154

3,000,000

2,500,000

2,000,000

Forecast 1,500,000 Outturn

1,000,000

500,000

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: FCO155 97. There were also increasing demands placed on the UKvisas correspondence unit, which dealt with complaints and queries from parliamentarians, the press and the public. For example, it dealt with 54,370 e-mails last year, an increase of 177% on the previous twelve months.156

98. In his oral evidence to us, Sir Michael Jay commented on this steady rise in demand:

The increases ... are very considerable. There was a global rise last year of 14 per cent and of course the rises in certain countries—Pakistan, for example, is one—are very considerable. What we are trying to do is to ensure in each individual case that we

153 Departmental Report 2003–04, pp 124–131

154 Ibid., p 125 155 FCO Departmental Report 2003–04, p 125 156 Ibid., p 128

have the resources which we need. ... It is not going to be easy to achieve that, but we will do our best. Looking further ahead, we have to recognise that there is going to be, I would guess, a strongly increasing trend in the number of visa applications and we are going to have to find some new and imaginative ways of trying to meet these.157

The Annual Report described some of these, “new and imaginative,” methods to cope with this increasing demand. These included allowing customers to apply by post or, in some cases, over the internet. 70% of all visa applications in New York are now e-applications, for instance.158

99. One of the most radical innovations is the outsourcing of certain functions associated with the visa entry clearance process to external contractors. In India, a private company— VFS—now operates 11 offices for the British High Commission, where all the routine processing and checking of applications is carried out.159 This operation was seen by those Members of the Committee who took part in a joint visit to India in November 2003 with Members of the Constitutional Affairs Committee. They saw for themselves what a positive effect the outsourcing had had for both staff and customers. The latter found the new system much more convenient and easy to understand, while staff at the High Commission were able to concentrate their efforts on identifying cases that required especial attention, rather than routine administration. The Members who visited the VFS offices in New Delhi and Mumbai were also very impressed by the professionalism and dedication of the staff involved. The Annual Report noted that such outsourcing was shortly to be extended to Kenya, Nigeria and Malaysia.160

100. We conclude that the steady rise in visa applications at FCO posts across the world presents a continuing and significant challenge. The importance of this work should not be underestimated, not only owing to the increased security concerns arising from global terrorism but also because the visa operation is often the first impression that many people will have of the United Kingdom. We commend the staff who work so hard in this vital field, often in difficult circumstances and with little visible reward for their efforts.

101. We also commend the Foreign Office for its development of new and innovative means of coping with the increase in demand, especially the use of outsourcing in India for the processing of documents. However, we recommend in the strongest possible terms that decision-making on the issuing of visas should always remain with FCO staff. We shall continue to scrutinise this area closely in the future.

157 Q 210

158 Ev 44, para 16

159 Departmental Report 2003–04, p 126 160 Ibid., p 125

NAO Report 102. In June of this year, the National Audit Office (NAO) published a report on Visa Entry to the United Kingdom.161 It dealt with a number of issues related to the FCO’s joint management of UKvisas, with the Home Office, including the use of new technologies and the allegations surrounding the issuing of visas to Romanian and Bulgarian applicants (see paras 117–23 below). Overall the Report concluded that UKvisas was performing well under considerable pressure:

UKvisas faces a real challenge in managing the competing priorities of service delivery and control. This is inherent in UKvisas’ aim, which is to deliver a quality service whilst ensuring that visas are only issued to those people who meet entry clearance requirements. In the large majority of cases, UKvisas is providing a high quality of service to applicants and sponsors. It is also making significant progress in introducing initiatives to improve its efficiency in processing entry clearance applications.162

We welcome this recognition of the hard work done by UKvisas’ staff. On the whole, we agree with most of the report’s findings and comment on some of them specifically in the paragraphs below.

Targets 103. Despite the marked increase in applications, the FCO managed to maintain or improve its performance against its principal Public Service Agreement (PSA) targets in this area, as shown in figure 9.

Figure 9: Performance of UK visas against PSA targets (2002/03–03/04)

PSA 8 Target Performance (description) 2002/03 2003/04

(i) straightforward non-residence visa applications to be 90% 91% 92.14% decided within 24 hours

(ii) posts to make a decision within ten working days on 90% 79% 88.79% non-settlement applications requiring an interview

(iii) posts to meet target times for settlement interviews 90% 98% 98.31%

(iv) the number of visa holders whose leave to enter the UK 0.04% 0.02% 0.047% is cancelled on arrival

Source: FCO163 104. As can be seen, the FCO is generally performing well against its targets, and delivering a good service in the face of rising pressure. We did question the Office further, however,

161 National Audit Office, Report by the Comptroller and Auditor General, Visa Entry to the United Kingdom, HC 367 (2003–04) (hereafter referred to as: Visa Entry to the United Kingdom). 162 Ibid., p 4, para 7 163 FCO Departmental Report 2003, p 124, and FCO Departmental Report 2003–04, p 122

on the range of performances at posts within each target.164 Its answers revealed considerable variation in the performance of different posts. For example, for target (i) above, Mumbai (India) and Dhaka (Bangladesh) dealt with 100% of straightforward applications within 24 hours, while Rangoon (Burma/Myanmar) only processed 35%.165 We questioned Mr Dickie Stagg, FCO Director General of Corporate Affairs, on this matter when he gave oral evidence to the Committee. He stated that:

I think it is a valid point that there is a difference in the management performance of some of these operations compared with others, and one of our jobs is to try to ensure that we maximise the effectiveness and ensure that best practice is widely used, and I think we are making progress.166

We welcome this commitment and look forward to seeing a decrease in the size of these variations.

105. One of the issues highlighted by the NAO’s recent report on visa entry clearance was that the targets for visa entry clearance workers focused on delivery, and particularly speed, over service delivery and quality of decision making. In any event, targets are by definition somewhat arbitrary. The Report found that:

Entry clearance officers face conflicting pressures. UKvisas must ensure that the balance between service delivery and control is commensurate with the risks and reflects the Government’s increased emphasis on developing effective immigration controls. ... Entry clearance staff in the majority of posts we visited considered that meeting processing targets took priority and they did not always have sufficient time to consider more thoroughly applications that raised doubts.167

106. We agree with this observation and discussed this matter with Mr Stagg. He told us that:

At one stage when I was previously overseeing UKvisas three or four years ago, we were thinking in terms of constantly increasing our PSA targets and being more and more ambitious. I think we are now in a position where we think that these are pretty ambitious as they are and that we should stick with them.168

This seems a sensible attitude. While the increasing demand for visas means that speed of processing will always be vital, the public concern about immigration-related matters and national security means that the accuracy of checking is also critical.

107. We conclude that the Foreign Office has performed well against its PSA targets in relation to the processing of visa applications, especially in light of the increasing demand with which it is having to cope. We recommend that the FCO ensure, however, that the quality of decision making is not sacrificed in the drive to meet delivery targets.

164 Ev 43, para 15 165 Also see: Visa Entry to the United Kingdom, p 17

166 Q 210

167 Visa Entry to the United Kingdom, p 7 168 Q 210

Lack of feedback 108. Another issue raised by the NAO report, and linked to the issue of targets, was the lack of feedback available to entry clearance officers (ECOs), who process applications, on the quality of the decisions that they had made. At present, once a visa has been issued, there is practically no way of knowing whether the applicant has abided by the terms of its issue—i.e., in most cases, whether they had returned to their country of origin after a specified time. The report concluded that:

full assessment of whether the objectives of entry clearance are being met would require better information on the actions of visa holders after they enter the United Kingdom. Without reliable information on whether visa conditions are complied with, it is difficult to evaluate the effectiveness of visa controls.169

It went on to note that some overseas posts had, with the Intelligence Service of the Immigration and Nationality Directorate (IND), carried out small-scale tracking exercises to establish whether visa entrants had complied with the terms of their visa. A tracking exercise carried out in Accra (Ghana), for example, found that 37 per cent of a sample of students issued with a visa could not subsequently be traced.170 This raises very serious questions of public concern.

109. This issue was discussed on a number of occasions by interlocutors who met Members of the Committee visiting Turkey and India last year looking at visa entry clearance matters. Many of the ECOs spoken to during that visit said that it would make their job much easier were it possible to track applicants. It would allow them to know which categories of applicants (students, business people, etc.) or nationalities they could afford to be more lenient with and with which ones they needed to be stricter. Resources could be focused more accurately and genuine applicants would have less chance of having their applications refused.

110. We raised this matter with Mr Stagg, who told us that the Home Office had it “in mind” to re-introduce some form of checking procedure, taking advantage of modern technology. In the meantime:

What we are doing is working with some consultants to try to identify what they call metrics, which will help us to establish where there are problems. So we look at various issues to do with students, to do with working holiday makers, various categories of visitors to the UK, and establish whether they are fulfilling the conditions of the visa they were issued with. This is at an early stage; it has not proved all that easy to identify good metrics, but we are taking it quite seriously and I am told by UKvisas that they think it will be possible to have a better assessment of the quality of the issuing in future than we have at present.

169 Visa Entry to the United Kingdom, pp 8–9 170 Ibid.

111. We conclude that the inability to check whether applicants do actually abide by the terms of their visas is a significant problem for the smooth running of the FCO’s visa entry clearance system. We recommend that the FCO develop, as a matter of urgency, means of providing effective feedback to visa-issuing posts on the outcome of decisions. We further recommend that, in the longer term, HM Government, taking advantage of developments in information technology, introduce a system that would allow it to check who had entered and left the United Kingdom and when, for the purpose, among others, of running a more effective visa entry clearance regime.

Biometric data 112. A relatively recent development for the FCO is the collection by posts of biometric data. The Annual Report noted that this was necessary to, “fight fraud and document misuse”.171 The post in Colombo (Sri Lanka) started piloting the collection of such data in July last year. Since then, it has been rolled-out to posts in East Africa: Addis Adaba (Ethiopia), Asmara (Eritrea), Dar-es-Salaam (Tanzania), Dijibouti, Kampala (Uganda), Kigali (Rwanda) and Nairobi (Kenya).172 Mr Stagg told us in his oral evidence that:

We are doing it very much stage by stage and seeing how each bit works. We did it in Sri Lanka first and found that the basics worked; we are now doing it in a range of posts in East Africa, which are different in size, different in their local experience, including Kampala where we outsource. The idea is gradually to build up knowledge of how this works, where the problems lie and ... to try and do this in a properly organised project manner, so that by the time we get to full roll-out hopefully we will have resolved the issues raised rather than being confronted by disaster caused by a big bang. I would not say that we are over confident but at the moment we feel that the process has been handled in quite a well-organised way.173

Once collected, this data may be shared with other Government departments under controlled conditions, governed by the Data Protection Act 1998 and the Nationality, Immigration and Asylum Act 2002.174

113. We conclude that the collection of biometric data by visa-issuing posts overseas will be an important weapon in the fight against international crime and terrorism, and will help create fairer and more effective immigration controls. We further conclude that the Foreign Office appears to be taking a sensible, gradual approach to the roll out of this new procedure.

171 Departmental Report 2003–04, p 127

172 Ev 44, para 19 [FCO]

173 Q 213

174 Ev 61, para 17 [FCO]

Co-operation with other departments 114. At present, responsibility for administration of the various parts of the visa entry system is divided between three departments:

x the Home Office, through the Immigration and Nationality Directorate, is the key policy-making body on entry clearance matters;

x the Foreign and Commonwealth Office manages, with the Home Office, UKvisas who are responsible for regulating and issuing visas for those wishing to enter the UK; and

x the Department for Constitutional Affairs (DCA) is responsible for the administration of the Immigration Appellate Authority (IAA).

When the Committee met with Entry Clearance Managers (ECMs) and ECOs in India and Turkey, it was clear that the involvement of three departments did not assist the administration of the system. There were complaints that changes in the criteria for visa applications were made by the Home Office with little consideration for the resource implications on visa offices at posts. It was also felt that the appeals procedures lacked consistency and that judges in such cases did not fully understand the entry clearance system, which had a serious impact on the morale of ECOs. These findings were echoed in the NAO’s report, which commented in particular on the lack of effective liaison between FCO and Home Office officials.175

115. When we raised this matter with the Foreign Office it assured us that co-operation between the three departments was improving:

Co-ordination between the Home Office [HO] and UKvisas has been greatly strengthened. The UKvisas Joint Ministerial Committee meets quarterly. There are regular bi-laterals between HO senior officials and UKvisas, and Robin Barnett (Head of UKvisas) is a member of the IND Joint Programme Board. The Task Forces established following the No 10 summit earlier this year, have helped to reinforce the channels of communication. In addition, an FCO minister is joining the IND Supervisory Board, of which Des Browne MP [Minister, Home Office] and David Lammy MP [Minister, DCA] are existing members. This will provide a forum for action on issues of concern.176

116. We conclude that it is vital for the smooth running of the visa entry clearance system that the three departments involved—the Home Office, the Foreign and Commonwealth Office and the Department for Constitutional Affairs—work as closely together as possible. We recommend that the FCO continue to encourage greater co- ordination between the three departments at all levels, from united training of personnel to policy co-ordination.

175 Visa Entry to the United Kingdom, p 6 176 Ev 62, para 18

Visa applicants in Romania and Bulgaria, and Mr James Cameron 117. The NAO Report also examined in detail the issue surrounding the issuing of visas to Romanian and Bulgarian nationals. The Report provides a summary of events:

The European Community Association Agreements, the first of which were signed in 1994, provide for nationals of countries who are shortly to negotiate entry to the European Union to be treated on a par with European Economic Area nationals for the purpose of establishing themselves in business. Applicants from Bulgaria and Romania also require a visa to enter the United Kingdom. Entry clearance staff in Bulgaria and Romania refer applications to the Home Office in the United Kingdom, who decide whether applicants qualify under the Agreements. This decision is communicated to the entry clearance officer who then issues the visa. In March 2004 a member of staff at the Embassy in Romania sent Rt Hon David Davis MP [Shadow Home Secretary] material which indicated that applicants were being accepted under the Agreements by Home Office staff despite concerns of entry clearance staff that many did not meet the required criteria.”177

The official in question was Mr James Cameron, then Second Secretary and Consul at the Embassy in Bucharest. Following the publication of Mr Cameron’s concern, there was considerable discussion in Parliament, the media and elsewhere about what had been happening in Bulgaria and Romania, and when individual Ministers had been informed of the situation there. Subsequently Rt Hon Beverley Hughes MP, Minister of State for Citizenship, Immigration and Community at the Home Office, resigned.178

118. Following these events, the NAO commissioned a report into this area, to which we have already referred (see para 102). It found that there had been poor communication between ECOs in Bulgaria/Romania and the Home Office, with different rules being applied by both groups. The Home Office had provided little feedback to ECOs about why decisions were over-turned, nor did they inform them about applicants ‘switching’ visas— for example, from tourist to working visa—once they were in the United Kingdom.179

119. In addition, Mr Ken Sutton, a Home Office official, led an internal investigation into what had ensued at both posts. He reported earlier this year, and the Foreign Office has assured us that it plans to implement his findings fully.180

120. We conclude that the problems encountered by the visa-issuing sections of the posts in Romania and Bulgaria were very unfortunate; action should undoubtedly have been taken earlier both by senior FCO and Home Office officials. We regret that it took a crisis of this nature for the wider problem of Home Office–Foreign Office co- operation to be brought to light. We recommend that the Foreign Office act, in collaboration with the Home Office, to ensure that the findings of the Sutton Review are implemented fully and quickly.

177 Visa Entry to the United Kingdom, para 2.36, p 29

178 HC Deb, 1 April 2004, col 1753 ff.

179 Visa Entry to the United Kingdom, p 29 180 Ev 101

121. Mr Cameron was suspended in March in relation to two allegations of misconduct: one apparently relating to his e-mail to Mr Davies and another to the handling of certain visa applications.181 On 14 June he had a disciplinary meeting at the FCO, which gave him, according to media reports, a “final warning”.182 It was also reported that he would not be promoted for three years nor receive a pay rise this year.

122. It has always been the practice of this Committee to refrain from inquiring into the cases of individual departmental employees, who in any event have their own remedies. Where a case raises wider questions pertaining to the department’s administration, expenditure or policy, however, different considerations apply. We believe that this case raises such wider issues, in particular the treatment of ‘whistle-blowers’ by the Office. We questioned Sir Michael Jay on this matter when he gave oral evidence, but he declined to provide any further information on Mr Cameron’s case until all proceedings against him had been completed.183

123. We recommend that, in its response to this Report, the Foreign Office set out its general policy in relation to ‘whistle-blowers’, and provide the Committee with any written material regarding relevant procedures.

181 Ev 101; “Migrant leak diplomat ‘framed’”, Sunday Times, 13 June 2004, and “UK diplomat in Romania punished for leak”, The Guardian, 15 June 2004 182 Ibid. 183 Q 216 ff., Ev 101 and Ev 102

Personnel

Workforce reductions 124. A key plank of achieving the efficiency savings outlined by the Chancellor in the Spending Review 2004 will be a net reduction in civil service posts across central government of 70,600.184 As part of this total, the Foreign and Commonwealth Office will be expected to cut a total of 310 full-time equivalent posts.185

125. In its memorandum to the Committee on the outcome of the Spending Review, the Foreign Office stated that:

This [reduction] follows a period in which the FCO’s headcount has risen, and accompanies a movement of positions away from our support functions, notably personnel and finance, towards our frontline activities. We are confident that the net result will be a more effective organisation with more people working directly towards the fulfilment of the FCO’s strategic priorities.186

While recognising this, such reductions in the workforce can create very difficult times for the individuals concerned.

126. We recommend that, in its response to this Report, the Foreign Office set out in detail how it intends to achieve the reduction in civil service posts outlined in the Spending Review 2004, and what measures it has in place to support those employees who will be losing their jobs.

Diversity targets 127. The UK International Priorities White Paper, published by the FCO in December last year and discussed above (para 35), stated that, in order to achieve its objectives, the Foreign Office will, “need to draw on a more diverse group of people, with a wider range of backgrounds and experience”.187 It gave specific diversity targets to be achieved within its Senior Management Service (SMS) by 2005: 20% women; 2% minority ethnic; and 3% disabled.

128. During the course of this inquiry we reviewed the Office’s current diversity figures.188 These are set out below, along with the targets for 2005 (figures 10 and 11). As can be seen, the targets are challenging, requiring the Office to more than double the number of minority ethnic staff it has in the SMS, and increase significantly the number of disabled and female employees at those grades.

184 2004 Spending Review, p 17 185 Ibid., p 20

186 Ev 70

187 UK International Priorities, p 59 188 Ev 49, para 39, and HC Deb, 23 April, col 710W

Figure 10: % female staff in the FCO’s senior management service

15 Actual Target

Percentage 10

0 2000 2001 2002 2003 2004 2005 (no data yet)

Source: FCO

Figure 11: % minority ethnic and disabled staff in FCO’s senior management service

3.5

2.5

Minority ethnic 2 Target Disabled 1.5 Percentage Target

0.5

0 2000 2001 2002 2003 2004 2005 (no data yet)

Source: FCO

129. When we questioned the FCO about these targets, it stated candidly that the Office was beginning from a low starting point, and that the targets were challenging.189 It believed that it was unlikely to meet the target for the number of women in the SMS. However, the Office highlighted several positive signs in this field: there were now 20 female Heads of Post; the first two minority ethnic ambassadors took up their posts in 2004;190 and 14% of all staff recruited in 2003 were from a minority ethnic background.191

130. We conclude that the Foreign Office’s commitment to employing a more diverse workforce is very welcome. We also agree with its assertion that such diversity is essential for the FCO to become more effective and to serve better the British people. We further conclude, though, that the FCO still has a considerable way to go in order to meet its challenging diversity targets, especially in its Senior Management Service. We recommend that the FCO continue to make every effort to ensure that it recruits and promotes the best possible people from the widest range of backgrounds.

Locally-engaged staff 131. Of the Foreign Office’s 16,000 staff approximately 10,000 are locally-engaged, as opposed to being recruited directly in the United Kingdom.192 A number of the FCO’s smaller posts around the world are staffed entirely by locally-engaged employees, and these staff perform vital roles within the Office.

132. In our Report last year, we highlighted one issue, related to the employment of locally- engaged staff, which had been drawn to our attention:

Increasingly, overseas posts are not solely staffed by members of the Foreign Office. In a number of missions, several other Government departments are also represented—the Home Office, the DfID, or the Ministry of Defence (MOD), for example—and consequently employ local staff in the same way the FCO does (for example, as interpreters). We have received reports of some difficulties at posts resulting from this co-location, when locally engaged staff performing the same function for different departments, receive different rates of remuneration.193

This was confirmed by the FCO, who reported that some departments, “with greater budgetary flexibility,” had been able to offer better pay and conditions than the FCO in order to recruit and retain the staff they needed. We recommended that the FCO keep us informed of its attempts to prevent other departments from ‘going it alone’ in this manner.194

133. In its reply to our Report, the FCO told us that:

189 Ev 59 190 Mr Anwar Choudhury, High Commissioner to Bangladesh, and Mr Alp Mehmet MVO, Ambassador to Iceland, both appointed in April 2004. 191 Ev 59 192 Departmental Report 2003–04, p 14

193 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 82 194 Ibid., para 83

Where another government department has an autonomous presence in a country, it is at liberty to recruit and appoint its own local staff. In doing so, it is constrained by the same Treasury delegated authority as our posts: namely to match pay and conditions to the ‘generality’ of local practice and otherwise offer the minimum necessary to recruit, retain and motivate. There have been some differences of opinion between the FCO and other departments as to the interpretation of this authority, which we have sought to address through negotiation between officials at a senior level. Notwithstanding much goodwill, it remains evident that other departments, while acknowledging the desirability of a common approach, on occasion regard the employment package offered by our posts as inadequate to recruit the personnel they require, and can afford. They have in consequence offered more attractive terms.195

134. During this year’s inquiry, we returned to this issue. The FCO very helpfully provided us with sample salary comparisons for India and Lesotho, where the DfID has a separate presence.196 These are set out in the table below and, as can be seen, the differences are not inconsequential (figure 12).

Figure 12: comparative pay rates for FCO and DfID locally-engaged staff in Lesotho and India (in local currency)

Grade FCO rate DfID rate (equivalent grade)

Lesotho LEIII Senior Clerical M 3,957—6,914 M 6,835—9,618 (Maloti) LEIV Junior Clerical M 3,651—5,978 M 4,446—6,256

LEVA Driver M 2,922—5,489 M 4,446—6,256

India LEVA Driver R 8,553—15,357 R 15,187—23,955 (Rupees) LEVB Guard R 7,129—13,667 R 11,869—23,036

Source: FCO197 135. The FCO stated that:

The variables arise from the different methodologies employed in determining appropriate rates e.g. use of consultants (DfID) compared with FCO ‘marker’ reviews, and the selection of analogous employers and grade comparators.198

195 FCO, Twelfth Report of the Foreign Affairs Committee, Session 2002–03, Foreign and Commonwealth Office Annual Report 2003: Response of the Secretary of State for Foreign and Commonwealth Affairs, Cm 6107, February 2004, para 21

196 Ev 47, para 35

197 Ibid. 198 Ibid.

This seems to us to put the FCO at a disadvantage when recruiting and retaining staff, and to risk engendering ill feeling between staff doing the same job but working for different departments. It also seems to us to be contrary to the spirit of HM Treasury’s guidelines in this matter and to run the risk of departments operating overseas competing on unequal terms for the same staff.

136. We conclude that the continuing practice of different Government departments offering different pay rates to locally-engaged staff doing the same jobs is undeniably detrimental to the work of HM Government as a whole. We recommend that the Foreign Office raise this matter direct with the Treasury in order to seek a Government-wide solution to this problem. We further recommend that, in its response to this Report, the FCO set out how it intends to take this matter forward.

Specialists versus generalists 137. In the past, an oft-made criticism of the civil service, including the Foreign Office, has been that it was largely comprised of generalists, rather than specialists; what was once described as, “the apotheosis of the dilettante”.199 When we were taking oral evidence from Sir Michael Jay, we discussed with him this issue of specialists versus generalists in relation to wider employment policy. He stated that:

I do not recognise the cult of the dilettante when I travel and see our overseas posts; I see people who are extraordinarily professional, who have extraordinary language skills and who are trained in two or three core competences during their career ... However, I do believe that as the business of managing large complex organisations like ours gets even more difficult we do have to have more professional expertise, more HR expertise, more IT expertise, more estate expertise.200

138. We would agree with the latter sentiments. As the incidents of the Dublin and New York residences, discussed above, and the problems associated with the implementation of the FCO’s IT strategy have shown, organisations like the Foreign Office increasingly need staff with specialist knowledge in such key areas in order to succeed. It is undeniable that there have been great strides forward in the training and professionalism of FCO staff over the past decades. However, it is surely part of the ‘old thinking’ to consider that the gifted generalist can, in an ever more specialised world, glide effortlessly from one area of competence to another.

139. We recommend that, in its response to this Report, the Foreign Office set out its policy on the recruitment and employment of specialists to carry out roles requiring more detailed subject knowledge, such as in the fields of finance, property and information technology.

199 Thomas Balogh, “The Apotheosis of the Dilettante”, Hugh Thomas (ed.), The Establishment (London, 1959), p 83 ff. 200 Q 163

BBC World Service

140. Last year, the Committee commented only briefly on the work of the Foreign and Commonwealth Office’s two principal associated bodies: the BBC World Service and the British Council. In our Report last year we noted that:

The Committee regrets that, owing to the pressure of other work this year, we have been unable to take oral evidence from representatives of either the BBC World Service or the British Council, as we have done previously. We expect to be able to revive this practice next year.201

We were very pleased this year, therefore, to be able to take oral evidence from the heads of both organisations once again, and comment in detail on their work.

Work in 2003–04 141. In addition to the information given about the BBC World Service (BBC WS) in the FCO’s Departmental Report,202 the Service also provided a comprehensive memorandum for our inquiry.203 This highlighted a number of the Service’s achievements over the last year, including:

x maintaining audience and listening figures in the face of stiff competition;

x considerably increased online usage;

x a series of very well-received and successful ‘landmark’ series on issues such as HIV/AIDS, development, etc.;

x broadcasting continuous news and current affairs programmes during the conflict in Iraq; and

x maintaining high standards of efficient management, ensuring the maximum allocation of resources to programme making.

142. The memorandum also stated emphatically that: “Independent research indicates that the BBC World Service is regarded as the most trusted and objective broadcaster among its international radio competitors in almost all markets.”204 This memorandum has subsequently been supplemented by the World Service’s own annual review, published in July this year, which we found most informative.205

201 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 32 202 Departmental Report 2003–04, pp 29–32

203 Ev 106

204 Ibid. 205 BBC World Service, Annual Review 2003/04, July 2004

Listening figures and audibility 143. In its evidence to us, the World Service noted that generally it had managed to maintain audience figures in the face of stiff competition, from both domestic and international broadcasters across the globe. There had been a slight dip in listener figures in the period 2003–04 from 150 to 146 million, although the BBC WS noted that this fall had been more than compensated for by the increase in online usage.206 As the graph below shows (figure 13), audience numbers rose in Africa and the Middle East, and generally fell slightly elsewhere. (The figures for 2003–04 are targets.)

Figure 13: BBC WS audience figures (by region)

61.5 63 59 60 57 55 54

40 2001-2 2002-3 30 2003-4 (target) Audience (millions) 20 14.5 14.5 11.5 13 11.5 10.5 10 10 9.5 8.5

0 Africa and ME Americas Asia Pacific Eurasia Europe

Source: FCO207 144. Relevant to the size of audiences is the issue of audibility—how many people are actually able to hear World Service programmes. Figure 14 below shows that in most regions audibility is increasing (the figures for 2003–04 are targets). In recent years, there has been a marked move away from Short Wave (SW) listening to Frequency Modulation (FM). This has presented challenges to the BBC WS, and other broadcasters, as large numbers of people can be reached on a single SW frequency broadcast from far away. FM, on the other hand, requires numerous frequencies and local transmitters. Such transmitters can be difficult to find, and FM frequencies are often expensive, if not impossible, to buy— some countries will not allow foreign broadcasters to buy them.

206 Ev 106 207 FCO Departmental Report 2004, p 31

Figure 14: BBC WS Audibility figures (by region)

100 93 93 88 88 88 90 90 87 87 86 86 84 83 85 85 85 80 77 74 76 70

60 2001-2 50 2002-3 2003-4

Audibility (%) 40 (target)

0 Africa and ME Americas Asia Pacific Eurasia Europe Global

Source: FCO208 145. Mr Nigel Chapman, then Acting Director of the BBC World Service (now Director), commented on this problem when he gave oral evidence to the Committee:

We have managed to make up most of the gap created by a reduction in short-wave listening by investment in new forms of delivery, FM being the most obvious. However, you really have to gallop at an enormous speed in order to close the gap completely and therefore one of the priorities over the next one, two, three years, will be to accelerate as far as humanly possible the investment in new forms of delivery, including FM, satellite where relevant, cable, the internet, in order to try to close that gap as much as possible.209

Despite the enormous challenges it faces, the BBC WS now broadcasts in 139 capital cities on FM. Those capitals not yet covered are primarily the ‘tough nuts to crack’, in areas such as the Middle East and North Africa.

146. We conclude that the BBC World Service is doing very well to maintain its current audience and audibility figures in the face of stiff competition from other international broadcasters and the difficult domestic situations it encounters around the globe.

208 FCO Departmental Report 2004, p 31 209 Q 58

Spending Review 147. As discussed above (paragraph 13), the details of the Spending Review 2004 were announced earlier this year. These will affect the BBC World Service’s financial planning, as it will all other Government bodies.

148. The last two Spending Reviews (SR 2000 and 2002) had been seen as successes for the Service. It secured an uplift of £48 million in its total grant-in-aid in SR2002, bringing it up to £220 million by 2003–04. In the latest review, the World Service bid for extra funds in two very specific areas:

i. “strengthening our impact across the Islamic world—this includes updating the Arabic Service, increasing audibility and strengthening regional production centres in cities such as Cairo, Islamabad and Jakarta”; and

ii. “moving closer to audiences—this covers areas such as strengthening the online services and ensuring greater interactivity in BBC programmes”.210

To achieve this, Mr Chapman believed that the Service needed an increase in its budget of 1.7% over inflation, i.e. £31 million more by 2007-08 compared to the current £239 million.211

149. In fact, the Service did not receive the amount it had been hoping for from the Review; the Chancellor only gave the Service an increase of 1.5% over inflation. Following the announcement of the Review, the BBC WS told us that:

This means that we will have to review our plans, whilst still aiming to make significant headway in our key initiatives of building impact in the Islamic world (through strengthening the core radio and online services in Arabic) and moving closer to audiences (through expanded FM delivery and interactivity). We will be able to deliver our major objectives, but will need to investigate ways of achieving our lower-priority activities.212

150. We conclude that the Spending Review 2004 was a disappointing result for the BBC World Service. At a time when competition from other international broadcasters is increasing and the need for its services has never been greater, it is very unfortunate that the Service should be placed in a position where it may be unable to undertake the improvements and modernisation it requires to retain its leading position.

210 Ev 106 211 Q 18 212 Ev 115

Efficiency savings 151. Like the FCO, the BBC World Service will be expected to achieve efficiency savings of 2.5% per annum over the next three years, as part of the Spending Review 2004. In its memorandum to us, the BBC WS stated that it was undaunted by the challenge these targets presented:

The World Service has a strong track record of achieving challenging efficiency savings targets. Over the past five years savings of 12.4% have been made. In addition, since 2001/02, the average cost-per-hour of World Service programme production across all language services has been reduced by 10% in real terms, to around £1,500 per hour.

He also told us that the vast majority of the Service’s Grant-in-Aid was already going to ‘front-line operations’, with 90% being spent directly on programmes—the highest level anywhere in the BBC.213 The BBC WS went further, in fact, than most other Government bodies and, as part of its SR2004 settlement, agreed that all rising costs—inflation, pension contributions, wage increases, etc.—would be funded through efficiency savings. Any new money voted by Parliament would be spent directly on ‘front-line activities’.214

152. In his oral evidence to us, Mr Chapman, while stating that he was “confident” the Service could meet the targets, sounded a note of caution about future savings:

we would have to look very hard at the next spending review period. There are certain benefits in relation to efficiency which are around now and in the next two or three years in relation to short-wave, means of distribution, digitisation, perhaps a little bit around the area of mass buying of services as part of the wider BBC ... you then start to run out of means of making efficiencies and you then have to start cutting services, cutting hours of transmission and all of that and that is something which would be a very serious matter if we had to do it.215

As noted above (para 26), we agree with the sentiments underlying this concern: that efficiency savings of 2.5% a year cannot be made ad infinitum.

153. We commend the BBC World Service for the impressive efficiency savings it has already achieved, and for its commitment to ensuring that the extra money it receives as a result of the Spending Review 2004 goes directly on front-line services. We recommend, though, that in future it present a realistic picture to the Foreign Office and HM Treasury on how much it can genuinely achieve by efficiency savings, rather than simply allowing its programme budgets to be cut.

213 Ev 110 214 Ibid. 215 Q 25

Work in the Middle East

Radio

154. In its memorandum to the Committee, the BBC WS stressed the importance of the work it was doing in the Middle East and the wider Muslim world, reflecting the priorities of the FCO.216 It extended its Arabic Service to a 24-hour operation during the Iraq conflict and launched new programmes specifically for this audience. It has also extended its reach to a number of new areas, especially in Iraq and Afghanistan. The Committee was pleased to see the Arabic Service in operation during our recent visit to Bush House.

155. As noted above, one of the two key areas in which the Service sought extra funds as part of the latest Spending Review was its work in the Islamic world. It aimed to revitalise its programming in the Middle East and Gulf, with more live reporting and extended debate and discussion programmes, and move “closer” to its audiences there.217 Vitally for this it wanted to increase the number of regional production centres it has both in that region and in other important Islamic centres, such as Islamabad and Jakarta.

156. Mr Chapman made clear the importance of this renewal of the BBC Arabic Service in his oral evidence to us:

the changing nature of the media landscape in North Africa, Middle East and Gulf, means that unless the BBC Arabic service radio can bring a greater vividness, a greater sense of place, greater sense of energy to its programmes it will start to become less relevant and important for our listeners218

He went on to stress the Service’s importance at this time in the Middle East particularly:

the value of the BBC World Service as a whole, is that it provides people with an independent source of information which they can trust, which raises the level of debate and discussion and brings about common understanding. 219

This was, he argued, vital in an increasingly polarised world. We agree. It is not clear, at this time (September 2004), how the Spending Review settlement will affect the Service’s plans in this field, which clearly need to be closely co-ordinated with other public diplomacy initiatives.

157. We conclude that the BBC World Service’s work in the Middle East and wider Islamic world is more crucial now than ever, in light of the current international situation. We recommend that, in its response to this Report, the Service set out how its plans for improving its radio service in this area have been affected by the Spending Review settlement.

216 Ev 109

217 Ibid. 218 Q 27 219 Q 32

New television channel

158. During our inquiry, we were also informed that the Service would be bidding for funds from HM Treasury to launch a new regionally-based satellite TV service, in Arabic: BBC Arabiya. The suggestion for this initiative came from the Foreign Office, who specifically asked the Service to work out the costings and practicalities of such a new channel. The Service envisaged that the new channel would primarily be a news service, but also show discussion programmes, documentaries, etc.220 It would complement, rather than compete with, the existing privately-financed BBC World Television broadcasts to the region in English.

159. It was made clear to us by the Service that they wished this to be seen as a discrete proposal in terms of the Spending Review 2004, i.e. if the Government wanted the channel, it would have to be funded entirely by new money. Mr Chapman explained the genesis and rationale of the proposal in his oral evidence to us.221 He spoke of the need to respond to al- Jazeera, al-Arabia and other regional satellite channels in Arabic. There was also the US- funded al-Hurra station and a proposed one from the French: “Everybody is waking up to the fact that television is increasingly important in the Arabic-speaking world.”222 At present, BBC World Television broadcasts were having little impact on a region where so little English was understood (in Egypt, he estimated, only about 8% of people speak English).

160. In the end, however, HM Treasury (HMT) chose not to fund the proposed channel. In its supplementary memorandum to us, the Service noted, however, that it remained: “a strategic ambition for us, and we will continue discussions with FCO and HMT on ways of developing the proposals.”223

161. We conclude that the failure to launch a BBC World Service television channel in Arabic represents a missed opportunity to further the United Kingdom’s wider diplomatic ambitions and interests in the Middle East and wider Islamic world. It is almost certain that other international broadcasters will take advantage of British inaction, to the detriment of the BBC World Service and the United Kingdom. We recommend that the Foreign Office explore with HM Treasury whether this decision can be reversed.

Online services 162. The BBC WS now has approximately 5 million users of its online services per week, and over 16 million per month.224 By March 2003, users were viewing around 279 million pages each month. This represents one of the most rapidly expanding areas of the Service’s output, and was a key part of the BBC WS’s bid for extra funds in the recent Spending Review: “moving closer to our audiences to connect and empower them.”225 In addition to

220 Ev 109 221 QQ 53–54 222 Q 53 [Chapman] 223 Ev 115 224 Ev 106 225 Ibid.

the normal news and information services, the BBC WS’s website provides an opportunity for viewers to interact with programmes and share views.

163. During our recent informal visit to Bush House earlier this year, we were given a presentation on the BBC’s online services. One of the innovative features of the website was that increasingly the Service was relying on viewers to act as news-gatherers: sending in photos, stories and personal experiences (for example, of the Bam earthquake in Iran). While we were very impressed by what we saw, we registered our concern about the danger that such interaction could allow the Service to be manipulated by those who wished to promote a particular message. Mr Chapman recognised our concern in his oral evidence:

You need editorial supervision here. One of the reasons why you have to invest money in online, is in order to strengthen that editorial supervision. You do get a lot of potential contributions from people. ... You need people of good journalistic and editorial judgment to differentiate the mischief-makers from the genuine. ... if in doubt, do not publish.226

He insisted that such contributions would always complement BBC journalism, not replace it.

164. We conclude that the marked growth in the use of the BBC World Service’s online service is a tribute to its quality, vision and relevance. We commend those who are working to strengthen and improve it. We recommend, however, that the highest editorial standards be applied when using contributions from listeners, especially in relation to highly sensitive international topics, to prevent the Service’s abuse by those who would wish to misuse it for their own ends.

BBC Monitoring 165. BBC Monitoring, based at Caversham Park near Reading, is part of the BBC World Service, which monitors the world’s media on a daily basis. Altogether, this involves monitoring more than 3,000 radio, TV, internet and news agency sources in up to 100 languages. It then produces a, “comprehensive, round-the-clock digest of what is being said,” for organisations such as Government departments, businesses, universities and Non-Governmental Organisations (NGOs). 227In its annual review, the BBC World Service highlighted the important work done by BBC monitoring—for example, it had ‘broken’ the news of Saddam Hussein’s capture to the international media—and the high level of customer satisfaction with its services.228 The Government’s Intelligence and Security Committee (ISC) also praised the body’s work and stressed the importance of its monitoring of ‘open sources’ for the intelligence services.229

166. Given this approval of the body’s work we were surprised to read in the FCO Departmental Report 2003–04 that:

226 Q 55

227 BBC World Service, Annual Review 2003/04, July 2004, p 23

228 Ibid. 229 Cabinet Office, Intelligence and Security Committee: Annual Report 2003–2004, Cm 6240, June 2004, pp 18–19

We spend about £7 million on this service [BBC Monitoring] every year, and are reviewing its benefits against what we could achieve in other priority areas for the same amount of money.230

This was followed up in June of this year by a letter from Sir Michael Jay, who explained that the Foreign Office currently contributed £7 million p.a. to BBC Monitoring’s funding, which represented 33% of its overall stakeholder funding:

in the light of the current pressures on resources and the Gershon Efficiency Review, the FCO is reviewing its funding for BBC Monitoring. We have agreed with other stakeholders (MOD [Ministry of Defence], Cabinet Office and the BBC World Service) that we will reduce our funding for 2005/06 by £2 million. BBC Monitoring’s overall funding will remain at its current level for 2005/06 as the difference will be made up by other stakeholders and from the BBC Monitoring Reserve.231

He went on to note that the Cabinet Office had commissioned a strategic review of BBC Monitoring which would examine a new funding regime for future years, and would report by the end of 2004. We shall examine the outcome closely. Clearly strategic co-ordination is necessary to prevent individual departments seeking to benefit at the expense of others.

167. We conclude that it is utterly perverse that the future of BBC Monitoring should be placed in doubt at the very time when its services are arguably most important to the country’s security and diplomatic needs, and when it is being almost universally praised by its users. We recommend that BBC Monitoring be given financial security by the FCO and its other stakeholders to ensure its future.

Striking the balance 168. During this inquiry, two allegations of bias in BBC World Service broadcasts were brought to our attention. The first involved the Hausa Service of the BBC WS, which is broadcast in west Africa. There are approximately 24.2 million speakers of Hausa in Africa, predominantly in Nigeria.232 Christian Solidarity Worldwide, alleged in a report that the service was consistently anti-Christian and pro-Muslim in its reporting of events in that country, where there have been very serious inter-religious clashes between followers of the two faiths.233

169. We raised this issue with Mr Chapman when he gave oral evidence to us. He had not had time to examine the allegations in detail at that time, but stated that the normal procedure in such cases was that:

230 Departmental Report 2003–04, p 32 231 Ev 112 232 Hausa is spoken as a first language in large areas of Sokoto, Kaduna, Katsina, Kano, Bauchi, Jigawa, Zamfara, Kebbi, and Gombe states in Nigeria. It is also spoken in Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, Congo, Eritrea, Ghana, Niger, Sudan and Togo—Ethnologue website (www.ethnologue.com/show_language.asp?code=HUA). 233 Christian Solidarity Worldwide, Recent Religious Violence in Central and Northern Nigeria, June 2004 (www.csw.org.uk)

I would ask the complainant for specific examples of their concerns ... then I would talk to the head of the Hausa service about it and indeed I would ask for a translation to be made into English of relevant programmes in that regard.234

He did note, though, the specific pressures faced by the service in question:

the Hausa service has a huge responsibility: it has one of the largest audiences in the World Service; it is operating in extremely difficult terrain and circumstances; the staff there are extremely aware that a word out of place, an ill-judged phrase, a misunderstanding of a story, can lead to very serious consequences.235

170. As promised, Mr Chapman reported back to us in detail after the oral evidence session on the allegations and his memorandum is printed in full at the end of this Report.236 He told us that he had had the relevant broadcasts translated by an independent linguist and inquired into the editorial decisions made. In his memorandum, he responded to the allegations one by one and in each case was able to show that the service had acted properly throughout.

171. The other allegations of bias focused on the reporting of the long-running Israel– Palestine conflict. The World Service had itself broadcast a programme in which it was reported that Israel and British Jews had accused the BBC WS of having a constant bias against Israel, in favour of the Palestinian cause, in its reporting of events from the Middle East.237 Mr Chapman said that:

I would reassure you that at the regular editorial meetings which I chair, this is one of the issues we discuss regularly, pretty well all the time. Have we covered the story accurately, objectively and fairly? One of the ways we test that is by asking whether they have managed to elicit comment from all the relevant parties. If, over time, it is becoming clear that an imbalance is going on, then you have to strive all the harder to make up that imbalance and make sure you get the right range of views. In the case of the Arabic service, I know the Arabic service has many contributions from spokesmen for the Israeli Government. Just because it is broadcasting in Arabic and largely heard in North Africa and the Middle East but not so much in Israel, does not mean that it is not going about its job just as objectively as the English services do.238

Again, though, he promised to investigate further.

172. Subsequently, Mr Chapman wrote to us and explained that the programme in which the allegation had been made was itself responding to a recent report from Glasgow University which had concluded that the BBC was consistently pro-Israeli in its reporting. Mr Chapman noted that:

the BBC often gets complaints from Israeli officials about items about the Middle East and that those are often followed up by co-ordinated e-mail campaigns. While it

234 Q 45 235 Q 50 236 Ev 113 237 Q 51 238 Q 51

is true that the BBC gets complaints from both the pro-Israeli and pro-Palestinian sides about our reporting of the Middle East, it is certainly true that in recent years the majority of the pressure has come from the pro-Israeli side and that the e-mail campaigns come almost exclusively from the pro-Israeli side.

The BBC has no problem at all with receiving views or complaints from anyone on any issue. People should contact us and we should listen, and, of course, explore their concerns fully, and let them know the outcome of their complaints.239

He concluded that:

In the World Service, I, and the team, are committed to impartial and accurate journalism. Recent independent studies by the Royal Institute of International Affairs and other pieces of audience research have provided strong evidence that we are meeting this commitment. But we have to be vigilant every day about this challenge.240

We welcome this commitment.

173. We conclude that the BBC World Service, its editors and staff, have an unenviable task of producing considered and unprejudiced reports in a variety of very difficult circumstances across the world. In an increasingly polarised world, access to unbiased news is more vital than ever before and we commend the World Service for its wholehearted commitment to impartial and honest reporting.

239 Ev 112 240 Ibid.

British Council

Work in 2003–04 174. Like the BBC World Service, the British Council provided us with a comprehensive memorandum for our inquiry, in addition to the section of the FCO’s Departmental Report that deals with its work.241 This highlighted a number of areas of the Council’s work, including:

x the ‘Connecting Futures’ programme, launched in 2002, which seeks to link young people in the UK and other countries;

x the Council’s developing work in Iraq;

x its role in the FCO’s Public Diplomacy Strategy Board and in the formulation of the ‘UK International Priorities’ document;

x the ‘Strategy 2010’ document, which sets out the Council’s priorities for the next five years;

x its contribution to the increase in the number of overseas students now studying in the United Kingdom (270,000 at present); and

x its work in a broad range of human rights, education and health projects, one of which won the UN Prize in the Field of Human Rights.

It stressed that: “the key to increasing global influence for the UK lies in working to maintain, and to build additional, levels of trust with both current and likely future influencers of opinion in other countries.”242 The Council also recently published its own very informative Annual Report, along with a colourful publication celebrating the 70th anniversary of its creation.243

Public Diplomacy Strategy Board 175. In November 2002, the Foreign Office established a Public Diplomacy Strategy Board to provide a, “framework for collective efforts overseas aimed at projecting and promoting the UK.”244 This Board is chaired by Sir Michael Jay, as Permanent Under-Secretary, and includes representatives from the FCO, the BBC World Service (in an observer capacity),245 the British Council, the Department for International Development, UK Trade & Investment (UKTI), VisitBritain, the devolved administrations and the private sector. We commented upon the Board’s establishment in our Report last year.246

241 Ev 117 and Departmental Report 2003–04, pp 32–33 242 Ev 117 243 British Council, Annual Report 2003–04: 70 Years of Cultural Relations, July 2004 244 Foreign Affairs Committee, Twelfth Report of Session 2002–03, Foreign and Commonwealth Office Annual Report 2003, HC 859, para 15 245 Q 1 [Chapman] 246 Ibid.

176. The British Council described itself as a “key player” on the Board.247 When giving oral evidence to us, though, Sir David Green, Director General of the British Council, was keen to stress the role of the individual components of the Board:

We think it is important, in order to help to co-ordinate the work of all the public diplomacy agencies working on behalf of the UK, but it is very important that it is about co-ordinating and making sure that you get complementarity from the different players and not trying to get an homogenous approach to public diplomacy, but recognising the strengths of different players and working to those strengths.248

We agree with this view.

177. The FCO’s 2003–04 Annual Report provided an update on the Board’s work.249 It now has two new funds to draw upon: the Public Diplomacy Challenge Fund (£2.4m in 2003– 04), which offers posts overseas the opportunity to bid for funds for small projects working with local partners; and the Public Diplomacy Campaign Fund. The latter fund provides finance for major initiatives in countries identified as ‘top priorities’.

178. In 2003, the Public Diplomacy Campaign Fund was used for a major campaign in the People’s Republic of China entitled ‘Think UK’ that sought to raise the profile of Britain’s cultural, scientific and commercial links to China. The campaign was initially hindered by the outbreak of the SARS virus in China, but eventually a large number of events were hosted, including a visit by the Prime Minister.250 In its memorandum, the British Council commented positively on the ‘Think UK’ campaign in China. However, it did note that:

Lessons need to be learned from the campaign’s approach, and any future campaigns on the same scale would need to assess the capacity of public diplomacy players to sustain new relationships and manage partner expectations after the additional sums of funding fall away.251

We questioned Sir David Green further on this matter when he gave oral evidence to the Committee. He told us that:

Another lesson was that these campaigns have to be planned a long time in advance. You cannot expect to mount an effective campaign unless you have a lead time of probably 18 months to two years. A third lesson was that you have to be realistic in terms of your expectations. In fact the evaluation has not shown that there has been a significant change in perceptions within China as to the creativity and the innovation which is the UK, which was the purpose of the campaign.252

However, he did note that those who actually attended events as part of the campaign had had their awareness raised.253 We were pleased to be told that an extensive evaluation

247 Q 60 [Green] 248 Ibid. 249 Departmental Report 2003–04, pp 21–24 250 For further details, see: Departmental Report 2003–04, p 34.

251 Ev 118

252 Q 68

253 Ibid.

exercise had been undertaken following this campaign and valuable lessons learned for future ones.254

179. We conclude that the Public Diplomacy Strategy Board appears to have made a positive start in co-ordinating the activities of the United Kingdom’s key public diplomacy players. We recommend that the Board take the lessons learned from the evaluation of the Think UK campaign in China fully on board when planning future events, and that it recognise the British Council’s valuable experience and skills in this field.

UK International Priorities and By 2010 180. As noted above, the Foreign Office published its UK International Priorities: A Strategy for the FCO earlier this year (see para 35 above).255 The British Council assisted in the formulation of these priorities and has responded to the challenges they create for the whole of the FCO. In its memorandum to us, the Council noted that it was concentrating resources in key areas, such as the Middle East, North Africa and regions with large Muslim populations.256

181. The British Council also launched its own strategy document this year—Strategy 2010: our vision for the future.257 This sets out how the Council aims to develop over the period 2005–10. The Council’s memorandum stated that the strategy:

will ensure we reach millions more people worldwide, respond flexibly to emerging global priorities, improve the efficiency of our delivery and ensure we become outcome-focused in our work.258

The box below sets out the Council’s vision for itself in 2010, which, as can be seen, is an ambitious one.

182. We conclude that the By 2010 document sets out ambitious and challenging targets for the British Council, and we broadly commend its vision. We shall monitor the Council’s progress towards these goals with interest.

254 FCO/British Council, Think UK Final Report, February 2004 255 Op. cit.

256 Ev 118

257 British Council, Strategy 2010: Our vision for the future, April 2004 (www.britishcouncil.org/home.htm) 258 Ev 119

Figure 15: British Council’s By 2010 Strategy

By 2010:

x we will be a world authority on cultural relations, English language teaching, and the international dimensions of education and the arts;

x we will understand the needs and aspirations of those we are seeking to reach much better;

x we will be using our expertise and knowledge to help millions of people reach their goals and make a difference;

x we will have built many lasting relationships between people in the UK and other countries and strengthened trust and understanding between our different cultures;

x we will be welcomed as an effective and sensitive partner for societies wanting to bring about a fairer and more prosperous world;

x we will be connecting millions of people with creative ideas from all over the UK and with each other, both face to face and with innovative online and broadcast communications;

x we will be broadening the UK’s world view, particularly how young people in the UK understand and value other cultures and traditions, and;

x everyone who works for the British Council will feel valued and will enjoy opportunities to be creative and realise their potential.

Source: British Council259

Spending Review 183. Like the FCO and the BBC World Service, 2004 was a crucial year for the British Council in determining its financial future, with the latest Spending Review. SR 2002 was generally regarded as a positive outcome for the British Council, with its grant-in-aid increasing from £156.5m in 2002–03, to £184.7m in 2005–06; an increase in cash terms of £35m over the triennium. This figure is supplemented by the Council’s earnings from some of its services, including English language teaching and exam fees. The Council’s memorandum noted that this gives the Council an overall turnover of around £485 million per annum.260

259 British Council, Strategy 2010: Our vision for the future, April 2004 260 Ev 117 and Q 81 [Green]

184. In his oral evidence to us, Sir David Green told us that the British Council was bidding for extra funds in SR 2004 for five key areas: the USA; the Middle East (specifically educational reform); international student recruitment (in the last four years, the Council has helped increase the number of overseas students at higher education institutions and universities by 50,000 and by 25,000 at further education level); sport; and India.261 There was also a separate bid for security matters, which we discussed earlier in this Report (see para 65 above).

185. In the end, the Council, like the BBC World Service, did not receive all for which it had hoped. By 2007–08, its total Grant-in-Aid will have risen to £204m, from the figure of £181m in the current financial year. In its supplementary memorandum, the Council told us that:

As the uplift for 2006/07 and 2007/08 covers little more than risen costs caused by inflation, the scope for undertaking new areas outlined in the Spending Review submission will in practice be limited to re-prioritisation of existing funding (and the move of efficiency savings into activity, once security requirements have been budgeted for). We are looking at scope for more resources to be committed to engaging with reform in the Middle East, India, Sport and supporting a new strategy for UK Education in the global marketplace.262

Securing such funding from efficiency savings will not be an easy task.

186. We conclude that the settlement for the British Council in the Spending Review 2004 was a disappointing one, which may adversely affect the good work it is doing across the globe.

187. We were concerned to note in the Spending Review that part of the British Council’s efficiency savings will be realised by, “reductions in the size of their overseas estate”.263 The Council noted to us in its supplementary memorandum that it would develop a new strategy to reduce, “the Council’s footprint in estates by 15 per cent by 2007/08”.264 We have previously noted our concern about the sale of valuable, appreciating properties, for short-term gain.

188. We conclude that the reductions in the size of the British Council’s overseas estate proposed in the latest Spending Review give rise to considerable concern. We recommend that, in its response to this Report, the British Council set out the consequences of these cuts for the level and range of its operations around the world.

261 QQ 86–7 [Green]

262 Ev 121, para 4

263 2004 Spending Review, p 133, box 14.2 264 Ev 122, para 12

Chevening Scholarships 189. In January this year, the Foreign Secretary wrote to inform the Committee that, following the findings of a commissioned report from a group of external consultants, he proposed to instigate changes in the structure of the Chevening Scholarships scheme.265 The Chevening Scholarships are administered by the British Council on behalf of the FCO. In 2002–03, there were 2,390 Chevening scholars studying in the UK from over 150 different countries. The Review (The FCO Scholarship Review) reported on the three main scholarships schemes funded by the UK Government for overseas students: the Marshall Scholarships, which funds 40 US scholars to study in the United Kingdom each year; the Commonwealth Scholarship and Fellowship Plan (CSFP), which is mainly funded by the DfID but to which the FCO makes a contribution of £2.4m per annum; and the Chevening Scholarships.

190. On Chevening, it found that while the Scholarships were highly regarded, there was little formal evidence of the impact the expenditure on Chevening had for the United Kingdom. There was no significant effort to link expenditure on the scholarships to the FCO’s strategic priorities or show their impact in the short-/medium term. It made a number of recommendations: a) Expenditure on Chevening should be focused much more according to FCO objectives; this should include targeting both specific countries of, “long-term importance,” to the United Kingdom and specific skills/courses. b) The splitting of the Chevening programme into two streams:

i. scholarships—these would be academic awards for the, “most talented and promising young people”, as currently in place;

ii. fellowships—professional awards aimed at, “mid-career and senior professionals,” which should have, “an immediate and ongoing impact on specific policy objectives at Post.” c) There should be greater co-ordination between the three scholarship schemes, with a greater consistency of standards and application procedures. d) The Scholarships should be overseen by a cross-Whitehall committee to ensure that the long-term strategic needs of the United Kingdom are taken into account.266

In his letter to the Committee, the Foreign Secretary indicated that the FCO Board intended to implement most of these recommendations.267

191. When we took evidence from Sir David Green, we questioned him as to which nationalities would be the main ‘winners and losers’ as a result of the re-prioritisation of the scholarships.268 He refused to be drawn, but as the graph below illustrates (figure 16),

265 Ev 116 and Departmental Report 2003–04, pp 25–6

266 River Path Associates, The FCO Scholarships Review: Final Report, November 2003 267 Ev 116 268 Q 99

there are already some clear trends in the allocation of scholarships. The number of South American students is falling, for example, while the number from the PR China has increased by over 60% in the last three years (from 177 in 2000 to 290 in 2003).269

Figure 16: Regional background of Chevening scholars

700

604 600 559 506 500

400 2000/01 342 328 2001/02 308 300 2002/03 262 254 229 231 197 216 214 203 220 200 184187 166 129 161 138 94 101 102 91 87 100 81 78 62 53 51 55 535348 29 0 North South Caribbean EU Wider Middle North Sub Oceania CIS Far East South Asia America America Europe East Africa Saharan Africa

Source: FCO270 192. Sir David did, however, give a broad welcome to the report’s findings. He told us that the proposed combination of the year-long programmes of scholarships, combined with greater flexibility in providing fellowships for tailor-made shorter courses, made, “good sense”.271 It would allow the scheme to cater for those who could not afford to take a year out of their careers. It would also allow the FCO to focus more closely on its priorities:

The fellowship scheme would be more by invitation, so it does enable the Foreign Office to identify a number of people who it thinks would benefit from attending such a course. It gives greater flexibility and by and large we are very much in favour of it.272

193. As a Committee we have seen during our overseas visits the valuable life-long friendships that Chevening can create and the good it reflects on this country. We have often commented on their importance to strengthening bilateral relations.273

269 HC Deb, 18 Mar 2004, col 415W 270 HC Deb, 18 Mar 2004, col 415W 271 Q 96 272 Q 98 273 For example, see: Foreign Affairs Committee, Sixth Report of Session 2001–02, Turkey, HC 606, para 122

194. We conclude that the revitalisation of the Chevening Scholarships proposed by the Foreign Office is a welcome one, which will give it greater flexibility and allow it be more responsive to the United Kingdom’s wider diplomatic needs. We recommend, however, that the review should not be used as an excuse to scale down the scholarships in any way, nor, if possible, to reduce their geographical reach to students from across the world.

British Council in Russia 195. On 21 May officials from the Russian Interior Ministry raided several of the British Council’s offices in the country.274 They alleged that this was in response to the Council’s non-payment of tax, accusing the Council of making, “big money on Russian territory”. There were concerns that these raids indicated a hardening of Russian attitudes towards foreign organisations such as the Council.

196. In its memorandum to the Committee, the Council drew specific attention to its work with the Russian Ministry of Education, helping it to draw up a new secondary school curriculum and it seems perverse that the Russian authorities should be acting in this manner.275 We raised this matter with the Russian authorities when we visited Moscow in June,276 and we put questions both to Sir David Green and Sir Michael Jay.277 The latter told us that:

We are still in negotiations with the Russian authorities. We have not yet resolved the issue; I hope it will be resolved satisfactorily so that the British Council can continue to do what I believe is excellent work throughout their many posts in Russia278

There was some hope that the matter would be taken forward during the Foreign Secretary’s visit to Moscow in the following week.

197. We conclude that the current attitude of the Russian authorities towards the British Council, seeking to impose a tax charge on its operations, is neither conducive to good bilateral relations nor to encouraging the valuable work the Council is doing in Russia. We recommend that, in its response to this Report, the Foreign Office set out what progress has been made to resolve this situation.

Role in accreditation of EFL schools 198. In addition to its wider responsibilities overseas, the Council also has an important role in overseeing the ‘English in Britain Accreditation Scheme’ (EiBAS). This scheme aims to protect international students who are studying or planning to study English as a foreign language (EFL) in the United Kingdom. Language schools may apply to the Council for

274 For example, see: “British Council finds language lessons taxing”, Financial Times, 8 June 2004; and “Tax police crack down on British Council”, The Times, 9 June 2004. 275 Ev 119 276 Foreign Affairs Committee, Seventh Report of Session 2003–04, Foreign Policy Aspects of the War against Terrorism, HC 441, para 2 277 Q 100 [Green] 278 QQ 201-2

such accreditation and are subsequently visited by inspectors who examine their management, resources, teaching and welfare facilities. Such accreditation, while wholly voluntary, is widely seen as important for attracting foreign students by reputable schools.

199. However, concerns have been expressed about the voluntary nature of the scheme. While many schools strive for excellence, there have been a number of cases where foreign students, often with little grasp of English, have found themselves at schools with poor quality teaching, and little opportunity for redress, owing to the lack of regulation. Some schools have also been the subject of police investigations, following claims that they were merely ‘visa shops’: bogus schools that support fraudulent claims for student entry visas from people who, once in the country, subsequently ‘disappear’. This has both wider immigration and security implications. Concerns have existed for decades about such schools but the Government response has been tardy.

200. These issues were raised in a recent report commissioned by the British Council from the Institute of Advanced Legal Studies: Regulation of Private English Language Teaching Institutions.279 It noted that, while such schools are subject to the same consumer protection laws that regulate all companies’ activities:

the profile of most ELT students (young, transient, unaccompanied and not fluent in English) means that it is unlikely that they will be able to take advantage of these consumer protection laws in the event that an ELT institution fails to meet its obligations.280

It also noted that the number of institutions accredited by the Council is thought to be only a small proportion of the total number. This report, and the issue of EFL school registration was discussed at a recent oral evidence session with the Education and Skills Committee, looking at ‘International Education’, and at which the Director General also appeared.281

201. Following the publication of this report, the Secretary of State for Education and Skills, Rt Hon Charles Clarke MP, announced the establishment of a new Register of education providers, with the aim of tackling immigration abuse in the education sector.282 Once established the Home Office proposes to refuse a visa to any student applying to a college not on the register. All schools accredited by the British Council will automatically be included in the register.

202. In his oral evidence to us, Sir David Green welcomed this announcement, and responded to our concerns that the Council’s oversight role sat well within the rest of its remit:

279 British Council, Regulation of Private English Language Teaching Institutions, March 2004 (produced by the Institute of Advanced Legal Studies) 280 Ibid., para 1.5 281 Uncorrected transcript of oral evidence, taken before the Education and Skills Committee, as part of its inquiry into ‘International Education’, from Mr David Green CMG, Director-General, Dr Neil Kemp, Director, Education UK Marketing Division, and Mr Nick Butler, Education Exports Manager, British Council, Q 103 282 “New register of education providers—Clarke”, Department for Education and Skills press release 2004/0120, 18 June 2004 (www.dfes.gov.uk)

We think this is an important step forward and will help reduce both the number of bogus institutions and also bogus students coming to the UK. ... Certainly the English language teaching community very much welcomes our involvement as a neutral broker and partner in that. Given the role we play in English language teaching and the promotion of good practice in English language teaching across the world, I think that it fits well with our remit overall.283

203. We welcome the recent statement by the Secretary of State for Education and Skills on the registration of EFL schools in the United Kingdom. Although the majority of such schools are well-run and managed, the actions of some such institutions have not only damaged students’ perceptions of this country, but also pose a serious security threat by aiding illegal entry in the United Kingdom. We conclude that the British Council plays a crucial role in superintending the work of EFL schools in the United Kingdom and we praise the work it has done in raising standards. We recommend that the Council work together with the other relevant Government bodies to ensure more effective regulation of such institutions.

Flying the flag? 204. When it was founded in the 1930s, the purpose of the British Council was: “to make the life and thought of the British peoples more widely known; and to promote a mutual interchange of knowledge and ideas.”284 In 2004, the purpose is expressed differently, but remains essentially unchanged: “to build mutually beneficial relationships between people in the UK and other countries and to increase appreciation of the UK’s creative ideas and achievements.”285

205. Both on a recent visit to Moscow, and when British Council witnesses appeared before us, we discussed whether its branding properly reflects these aims. In 2002, the Council replaced its longstanding logo, in the form of 49 dots arranged in a stylised version of the Union Flag, with a new logo of just four dots. These dots are supposed to symbolise the four countries of the United Kingdom. According to Sir David Green:

Actually the previous logo was very tired, it did not give a dynamic impression or image of the British Council. … You may have noticed that we also dropped the ‘The’; it is British Council and four dots and actually it has gone down extremely well across the world, both in terms of perceptions of staff and also of the people who use the buildings. They do think it projects a very dynamic and modern image of the UK, in so far as the logo and brand can. I can tell you that we went through many hundreds of different options and this was the best.286

283 Q 101 284 British Council, Annual Report 2003–04: 70 Years of Cultural Relations, July 2004, p 1 285 Ibid. 286 QQ 103–4

We have reproduced below the old and new images (see figure 17).

Figure 17: Old and new logos of the British Council

The BRITISH COUNCIL British

Council

Before After

206. We are concerned that the British Council may be making the same mistake as British Airways, in underplaying its ‘Britishness’. The Union Flag is the most well-known and widely recognised symbol of Britain and, as British Airways belatedly realised, it can be presented as part of a modern and dynamic corporate image, but we did not see it displayed prominently in the offices of the British Council in Moscow. We would be very surprised if the people of Moscow or elsewhere understood the symbolism of the four dots, which in our view completely fail to reflect the Council’s mission, “to increase appreciation of the UK’s creative ideas and achievements”.

207. We conclude that the British Council’s new branding fails to project its purpose and its identity. We recommend that the British Council provide us with detailed information on the full cost of its rebranding and that it reconsider its reluctance to use the Union Flag.

Ring-fencing 208. Since the Spending Review 2000, it has been accepted practice that the budgets for the BBC World Service and the British Council, which form part of the total allocation to the FCO, should be ‘ring-fenced’.287 This arrangement has given the two bodies much greater financial security and independence, and helped them to plan better their future activities.

209. We were disturbed to hear, therefore, of suggestions that this ring-fencing arrangement was at least partly, if not wholly, to be dismantled as part of the Spending Review 2004. We raised this issue with Sir David Green during his oral evidence session with us, and he confirmed the importance of the ring-fencing arrangement.288 In a subsequent memorandum to the Committee, he commented in detail upon a proposal to ‘top-slice’ some of the Council’s funding before allocation, in order to finance a common public diplomacy fund.289

287 Ev 120 288 Q 108 289 Ev 120

210. We were pleased to receive a reassurance from Sir Michael Jay, therefore, that this proposal would not be coming to fruition.290 He subsequently stated in a written submission that:

we know of no extant proposals to remove the British Council ringfence. The FCO's settlement letter from 2004 Spending Round emphasises the need to maximise the value from the UK's spending on public diplomacy, including through joint projects between stakeholders such as the FCO and British Council, but makes clear that the existing ring fence remains in place.291

The Spending Review, when published, confirmed what Sir Michael had told us.

211. We conclude that the ring-fencing of the BBC World Service and British Council’s budgets is vital for the operational effectiveness of both bodies. We welcome the continuation of the current arrangements in the latest Spending Review and strongly recommend their future retention.

290 QQ 195–6 291 Ev 64

Conclusion

212. In our Report, we have tackled a wide range of very important issues. We have examined the impact of the latest Spending Review for the Foreign Office and its personnel. We have reported on the FCO’s new UK International Priorities strategy paper, and the likely consequences for the Office’s work at home and abroad. We have considered the changes that the horrific attack on the Istanbul Consulate-General will bring to the way the FCO and its agencies operate. The visa entry clearance regime and the work of the BBC World Service and British Council have also been scrutinised in some detail.

213. As we said right at the beginning of this Report, we believe strongly that our scrutiny, on behalf of Parliament and the wider electorate, contributes greatly both to the work and the democratic accountability of the Foreign Office. We believe that this is a positive process, helping to open up the often shadowy world of Whitehall and explain its workings to the lay person, and highlighting to the FCO areas of public concern and interest. We are proud to continue the tradition of scrutiny that was initiated by our predecessors, and look forward to the Committee engaging in a continuing dialogue with the Office in the future.

Annex A

List of abbreviations

BBC British Broadcasting Corporation BBC WS BBC World Service CG Consul General / Consulate General CMG Companion of the Order of St Michael and St George CPA Coalition Provisional Authority (Iraq) CVO Commander of the Royal Victorian Order DCA Department for Constitutional Affairs DEL Departmental Expenditure Limit DfID Department for International Development ECM Entry Clearance Manager ECO Entry Clearance Officer EFL English as a Foreign Language ELT English Language Teaching EU European Union FCO Foreign and Commonwealth Office FM Frequency Modulation FY Financial Year G8 Group of eight (major industrialised nations) HMA Her Majesty’s Ambassador HO Home Office IAA Immigration Appellate Authority ICT Information and Communications Technology IND Immigration and Nationality Directorate IT Information Technology KCMG Knight Commander of the Order of St Michael and St George LVO Lieutenant of the Royal Victorian Order MOD Ministry of Defence NAO National Audit Office OGC Office of Government Commerce OT Overseas Territories PSA Public Service Agreement SMS Senior Management Service SR Spending Review SW Short Wave UKTI UK Trade & Investment

Annex B

Visit itineraries: a) Visit to India and Turkey Monday 3 November 2003 (New Delhi)

Meeting with Mr Mark Runacres, Minister and Deputy High Commissioner, New Delhi.

Visit to visa section of High Commission—observing visa interviews and meeting Entry Clearance Officers (ECOs) and Entry Clearance Managers (ECMs). Tuesday 4 November (New Delhi / Mumbai)

Visit to VFS application centre (New Delhi).

Visit to Forgery and Intelligence team, High Commission, and round-table discussion with ECMs.

Meeting with HE Mr Michael Arthur CMG, High Commissioner to India, and Mr Ian Hughes, Deputy High Commissioner.

Wednesday, 5 November (Mumbai)

Meeting with Mr Chris Dix, Director of Visa Services, New Delhi, and Ms Marie-Louise Archer, ECM, Mumbai.

Visit to VFS application centre (Mumbai).

Visit to visa section of Deputy High Commission—observing interviews and meeting ECOs and ECMs.

Thursday, 6 November (Mumbai–Istanbul)

In transit.

Friday 7 November (Istanbul)

Meeting with Mr Roger Short MVO, Consul General, and Mr Myron Reid and Thomas Burke, ECMs.

Visit to visa section of Consulate General—observing interviews and meeting ECOs.

b) Visit to BBC World Service headquarters Bush House, London 8 June 2004

Meeting with Mr Nigel Chapman, Acting Director, Mr Andrew Hind, Chief Operating Officer, and Mr Mike Gardner, Head of Media Relations and Public Affairs, BBC World Service.

Visit to Arabic Service.

Visit to New Media, including presentation on World Service’s internet services.

Formal minutes

Tuesday 14 September 2004

Members present: Donald Anderson, in the Chair Mr David Chidgey Mr Bill Olner Mr Eric Illsley Mr Greg Pope Mr Andrew Mackay Sir John Stanley Andrew Mackinlay Ms Gisela Stuart Mr John Maples

The Committee deliberated.

Draft Report [Foreign and Commonwealth Office Annual Report 2003–04], 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 19 read and agreed to.

Paragraph 20 read, amended and agreed to.

Paragraphs 21 to 43 read and agreed to.

Paragraph 44 read, amended and agreed to.

Paragraphs 45 to 50 read and agreed to.

Paragraph 51 read, amended and agreed to.

Paragraphs 52 to 88 read and agreed to.

Paragraphs 89 to 91 read, amended and agreed to.

Paragraph 92 read and agreed to.

Paragraphs 93 to 124 read and agreed to.

Paragraph 125 read, amended and agreed to.

Paragraphs 126 to 213 read and agreed to.

Annexes agreed to.

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

Ordered, That the Chairman do make the Report to the House.

Ordered, That the provisions of Standing Order No. 134 (Select committees (reports)) be applied to the Report.

Several Papers were ordered to be appended to the Minutes of Evidence.

Ordered, That the appendices to the Minutes of Evidence taken before the Committee be reported to the House.—(The Chairman.)

[Adjourned till Tuesday 12 October at half past Two o’clock.

Witnesses

Tuesday 22 June 2004

Mr Nigel Chapman, Acting Director and Mr Andrew Hind, Chief Operating Officer, BBC World Service and Sir David Green KCMG, Director-General, Dr Robin Baker, Deputy Director-General and Mrs Margaret Mayne, Director of Finance, British Council, examined. Ev 1

Tuesday 29 June 2004

Sir Michael Jay KCMG, Permanent Under-Secretary of State, Mr Dickie Stagg CMG, Director General, Corporate Affairs, Mr Simon Gass CMG CVO, Director Finance and Mr David Warren, Director, Human Resources, Foreign and Commonwealth Office (FCO), examined. Ev 19

List of written evidence

FCO Annual Report

Foreign and Commonwealth Office Supplementary evidence Ev 38 Performance Service Agreements Ev 51 Follow-up to 29 June oral evidence session Ev 58, Ev 62

Financial Management

Foreign and Commonwealth Office FCO Telecommunications Network Ev 66 British Embassy in Kuwait Ev 67 Spring Supplementary Estimates Ev 68 Outcomes of Spending Review 2004 Ev 69

UK International Priorities

Sir Peter Marshall KCMG, CVO Memorandum Ev 70 Foreign and Commonwealth Office FCO Strategy Ev 76 Representation in South East Caribbean Ev 78

Security

Foreign and Commonwealth Office Internal Review: FCO’s Work Overseas Ev 78 Travel Advice: Guidance for Departments and Posts Ev 80

Departmental Properties

Foreign and Commonwealth Office Sale and Purchase of Residential Properties Ev 90, Ev 91, Ev 92, Ev 97 High Commissioner’s Residence in Cape Town Ev 97

Personnel

Foreign and Commonwealth Office Press Articles on Personnel Management in FCO Ev 99 Craig Murray, UK Ambassador to Uzbekistan Ev 101 James Cameron Ev 101, Ev 102 Follow-up: FCO Annual Report 2003 Ev 103

FCO Emergency Planning Guidance Ev 105 Redundancies and EU and G8 Presidencies Ev 106 First Division Association Letter concerning Personnel Management Ev 99

BBC World Service

BBC World Service Memorandum Ev 106 BBC Monitoring Ev 112 Letter to Mr Fabian Hamilton MP concerning a Newshour item Ev 112 BBC Hausa Service Ev 113 Follow-up to 22 June oral evidence session Ev 114 Spending Review 2004 Ev 115

British Council

British Council Memorandum Ev 117 Follow-up to 22 June oral evidence Ev 120 Spending Review 2004 Ev 121 Foreign and Commonwealth Scholarships Ev 116

Foreign Affairs Committee: Evidence Ev 1 Oral evidence

Taken before the Foreign Affairs Committee

on Wednesday 23 June 2004

Members present:

Donald Anderson, in the Chair

Mr David Chidgey Mr Bill Olner Mr Fabian Hamilton Sir John Stanley Mr Andrew Mackay Ms Gisela Stuart Andrew Mackinlay

Witnesses: Mr Nigel Chapman, Acting Director, and Mr Andrew Hind, Chief Operating OYcer, BBC World Service, examined.

Q1 Chairman: Mr Nigel Chapman and Mr Andrew undertaking round the world are to promote a Hind, may I welcome you both; Mr Chapman the particular view about Britain and Britain’s place in Acting Director of the BBC World Service and Mr the world, whether it is in relation to China or India Hind the Chief Operating OYcer. The background or wherever. I think that can be quite a diYcult area to our two meetings today is as follows. Since for the World Service, if it wants to be seen to be government departments first began publishing totally independent and standing above a particular these annual reports in 1991, the Foreign AVairs point of view. Having observer status, being able to Committee has used them as a basis for our scrutiny contribute, being able to give information about the of the Foreign OYce. Last year, because of pressure media, is useful. of business, we only touched very briefly on its two associated bodies: the World Service and the British Council. We promised to revert to our old practice and here we are. Today we will have evidence both Q4 Chairman: Observers have the advantage that from the BBC World Service and from the British they can give a more objective appraisal. Is it Council. Next week we propose to interview the Y working? Permanent Under-Secretary and o cials from the Mr Chapman: Yes, I think it is working. From my Foreign and Commonwealth OYce. As we know, in Y objective observer status there is a “joined-upness” November 2002, the Foreign O ce established a going on now which was not possible before. There Public Diplomacy Strategy Board (PDSB). The idea is some deep thought going on about exactly where was that this board should seek to co-ordinate the limited resources should be spent and in which work of all those relevant bodies in the public countries. From my understanding of the way media diplomacy field. I should like to have your is being used, we can add perspective to that professional view of how useful it has been, what discussion. Recently, for instance, we had a benefit it has brought to the British taxpayer and discussion about whether we should invest in Russia whether you are satisfied with the way it is working. or China and I was able to give some perspectives on Mr Chapman: May I make clear first of all that I am that because of the way in which the media was being there as a member of the Public Diplomacy Strategy used in those particular countries. Board only as an observer; that is the status of the World Service Director. I am there for all the meetings, but I am there as an observer. I have been to the last four or five meetings. I found them useful and informative. I have been able to contribute Q5 Chairman: Do you feel that the special World Service understanding on a whole number of perspective which you bring is being fully utilised? issues, including audiences and the nature of media. Could it be done better? Mr Chapman: It is relatively early days. One of the V things the Public Diplomacy Strategy Board does Q2 Chairman: In e ect you are a full participant. need to think very hard about is how it can make the Mr Chapman: I am a participant in that I am oVering V maximum impact with limited resources. To make information, but I am not o ering World Service the maximum impact, you need to understand how imprimatur for the various campaigns and activities media is used in certain countries. You have to as a whole of the board. understand whether it is worth investing in radio promotion campaigns, in television or a mixture of Q3 Chairman: Are you satisfied with that status? both, in print and understand how people use media. Mr Chapman: Yes, I am satisfied with that status I think that is a perspective we can bring and we because it ensures that the World Service maintains share our audience research, which throws up all its independence in respect of this. The campaigns these diVerent forces and trends, with the group and the Public Diplomacy Strategy Board are I think that is helpful and valuable. Ev 2 Foreign Affairs Committee: Evidence

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind

Q6 Chairman: If there were an independent outside which our listeners want to hear about from us is analysis and you had to give evidence, in which ways that story too. These things are running broadly in could it be improved and in which ways might your sync together. own contribution be maximised? Mr Chapman: How could it be improved? One of the issues always is measuring the outcomes of this sort Q11 Mr Olner: Do you think there is confusion in of activity. Relatively considerable sums are spent the general public’s mind about the BBC World Service and BBC World? They are two completely on these campaigns so one thing I have urged and V stressed in discussions is how we capture the di erent animals with very similar titles. Do you benefits. That means doing proper post-campaign think there is confusion out there? appraisals and investments to make sure we are Mr Chapman: It is not a confusion I have come making maximum use of taxpayers’ money. That is across. something which is very important and something which the World Service is doing all the time in terms Q12 Mr Olner: Hopefully you have not. of understanding the way people are using various Mr Chapman: It is not a confusion which the media and so on. We also bring some expertise about audience research we do throws up. People understanding audiences and how people use understand that they are operating in diVerent information, which is part of understanding whether media, people understand that one is a those campaigns are eVective or not. If you do not commercially-funded service and the other is funded understand that, you will not understand whether by grant-in-aid. We do a huge amount of audience the campaigns are eVective or not. research across the world every year in something like 75% of the key markets in which we are Q7 Chairman: I should like to ask a similar question broadcasting. We get pretty clear indications from about the Foreign OYce’s UK International them about how they perceive BBC World, how they perceive BBC World Service and they can clearly Priorities, the White Paper which was published last V December,1 and again to ask ourselves whether the di erentiate between the two. World Service is a full participant. Were you actually consulted on the priorities before this paper Q13 Mr Olner: Most people who receive BBC World saw the light of day? are fairly well-heeled and in hotels around the world, Mr Chapman: I was not at that time the Acting are they not? The ordinary person in a developing Director of the World Service, so, speaking for country would not see BBC World on television. myself, I was not consulted as such about the Mr Chapman: No, but they will increasingly as priorities. distribution becomes wider. In a country like India, for instance, which has an awful lot of extremely Q8 Chairman: Would you expect to have been? poor people in rural areas, even in those areas you Mr Chapman: No, actually, because in the end that are starting to see BBC World becoming more is an issue about wider government policy. I would widely used through cable distribution. It is not a obviously take account of those priorities once they simple matter of the rich accessing BBC World and have been published and if you think about the the poor accessing the World Service. It is a more priorities we put forward in the spending review complicated mix than that. round this time, they are aware of those priorities and broadly in tune with them and that seems to me Q14 Mr Olner: Could you perhaps rate those to be sensible. audiences you have just spoken about, who would sooner watch Sky or CNN or other world news Q9 Chairman: Following the publication of the media? document there was a re-prioritisation of the Mr Chapman: They will increasingly do so; they will resources following the adoption of the strategy. increasingly see those media as television expands its What implications does that have for the World impact across the world. That is a fact of life. As they Service? are mainly free-to-air services, they are not paying a Mr Chapman: Obviously the focus upon the broader subscription for those services, they are unbundled if Islamic world in particular. you like, then they will be able to see them if they have a satellite dish or a cable point. I think that is one of the issues we in the World Service face over Q10 Chairman: That is something you were doing time, which is how to deal with the increasing power anyway. of television, which is an inevitability. Mr Chapman: Yes, but it has intensified it. That is a good example where we were broadly in tune before, but even more in tune now. The other issues include Q15 Mr Olner: I suppose we are getting near to the the whole growth of international terrorism as a end of the 2004 spending review, in which the BBC major world threat. Again, the World Service, in its World Service will figure like other services which journalistic agenda, focuses very heavily on that the Government will be hoping to deliver over the already, but it reinforces even more that the story next few years. How optimistic are you, given the good settlements you have had in 2002 and 2000, 1 Foreign and Commonwealth OYce, UK International that you will get another good settlement? What Priorities: A Strategy for the FCO, Cm 3818, December 2003 early indications have you been given? Foreign Affairs Committee: Evidence Ev 3

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind

Mr Chapman: I have had no formal indications yet; a lot less than we asked for in 2002. We have been it is too early to have those. I think we have made out cognizant of the climate which has gone before in a persuasive case in our spending review document. making the proposals. It is a well-focused document, it deals with both geographical priorities and the wider issue of how we can be more relevant and closer to audiences. We Q18 Mr Olner: How much are you asking for in have been selective and careful in not spreading our pounds, shillings and pence? net too widely in the proposals we put forward. On Mr Hind: As Mr Chapman said, we are asking for the merits of the case, we should receive a decent 1.7% over RPI on average over those three years, settlement. which is £31 million more by 2007–08 compared with the baseline we have at the moment which is £239 million. So £31 million more on £239 million is Q16 Mr Olner: Two of the specific areas where you the answer. want to move forward are to strengthen your work in the Islamic world and, as important, to move closer to your audiences. Do you think they are two Q19 Mr Olner: What were you getting in 1997? strong areas where the Treasury, probably assisted Mr Hind: In 1997 in cash terms we were getting £162 by the Foreign OYce, will take some sort of lead in million. In real terms, if you convert that to 2003–04 saying yes, you need the extra money to do that? figures, it was about £186 million. That has now Mr Chapman: All I can say to that is that I hope so. grown in cash terms to £225 million this year and Intellectually they are both very strong sets of £239 million next year. So there has been significant proposals and they are in tune with the times we live growth over the last couple of spending reviews in. On strengthening the service to the Islamic world: since 1997. I cannot think of a single geographic area or set of issues which should have a higher priority than that. Q20 Mr Chidgey: Staying with the money for a If you are going to invest more money in the World minute, I want to talk to you about eYciency Service, it seems to me to be a priori right that it savings. In your recent memorandum to us you should be in those areas of activity. The second area made a number of statements including the fact that is about strengthening services outside the Islamic V “The World Service has a strong track record of world because we cannot a ord just to concentrate achieving challenging eYciency savings targets”2. on one area, we need to concentrate on maintaining That is a matter of record. I am, however, a little the impact of some of the other major core services concerned. I should just like to know whether, we have. It would be silly, in my view, to allow the having set yourself a very ambitious target of terrific impact the World Service has, on Africa for meeting all the rising costs in the next triennium instance, to ebb away over time because we could through eYciency savings rather than new money, not invest in better distribution and making you are really confident you can meet this target. programmes which are more relevant to audiences. Mr Chapman: Yes, I am confident we can meet the These audiences are going to get more choice, they target and we put a lot of thought into it before we are going to have access to more media, both radio put that set of figures into the spending review and television and inevitably over time, but slowly, document. There are two broad ways in which we the internet as well. I think we have to strengthen will be able to do that. We spend a significant sum of those services as well if we are going to remain V money, something like £45 million on the whole area e ective and relevant and that is what audiences are of transmission and distribution. One of the areas we saying to us. I am not saying it, they are saying it in want to look at is whether we can take money out of all the research and all the work we do with them and some of our short-wave transmitter investments and that is why I think these proposals are valid and re-invest that in FM and other things. There are worth investment. ways of rationalising short-wave transmitter investment without doing undue damage to the Q17 Mr Olner: Finally, just to get it on the record, number of frequencies on which you actually because I can remember prior to 1997 the World transmit the programmes and that is about reducing Service’s future was very much in doubt in some the number of bases from which you operate; so areas, could you give us a quick line on how much significant savings can be garnered from that. The money you are now seeking to run the BBC World second area is that we are introducing a major new Service, what that figure was you had to run the system of production called Go Digital, which is a service in 1997 and what it is now? digital production system which replaces analogue Mr Chapman: May I deal with the first part of the technology. Again, there are both savings in terms of question on what we are seeking and then I shall ask the time people spend making programmes and the our Chief Operating OYcer, Andrew Hind, to deal means they use to make them; all those things are with more of the history? Our bid on our core wishes helpful in helping us meet the targets we set for investment in the two areas I talked about works ourselves. In that context therefore, what we are out at an RPI ! 1.7% averaged out over the three saying to Government in the spending review is that years. If you take RPI at 2°%, what we are saying is every new pound they give us we will invest over the that we should like to have RPI at two and a half next few years in new services. So there will be plus one point seven averaged out over the three maximum benefit back from that investment. years. To put that in some sort of context, that is slightly more than we received last time in 2002, but 2 See Ev 110 Ev 4 Foreign Affairs Committee: Evidence

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind

Q21 Mr Chidgey: The policy of moving from short- changes of that kind in the spending review period wave to FM is a very interesting one and we have we are talking about now, but after that it would be been down that track with Mark Byford in the past very diYcult. and understand what you are trying to achieve and why you are trying to achieve it. It is actually Q26 Ms Stuart: May I briefly take you back to some listener-led, is it not? of the proposed new services and the priority of the Mr Chapman: Yes. Arabic services? Because it is a priority, that usually means you also have to review things you have done Q22 Mr Chidgey: Listeners are moving to FM rather in the past which may no longer be a priority. Could than short wave. you give me a figure for how much money you are Mr Chapman: Indeed. looking at to establish the new Arabic service? Have you run a similar enterprise before? Within that are you considering cutting back on some of the Q23 Mr Chidgey: There are problems of course services? For example, I understand you are still about whether you can preserve the integrity of your broadcasting to countries like Greece in their native FM station in times of political upheaval, but that is language and the countries of Eastern Europe, who not the issue I want to talk about now. Carrying on are now members of the European Union and where Y with e ciency savings, it is interesting because Sir that may now be less of a priority. Michael Jay in evidence to us has pointed out how Mr Chapman: May I be clear what you mean when Y di cult it is to continue to find administrative you talk about the “new services” we want to Y budget e ciencies year after year after year after establish? At the moment we already have Arabic V year without actually a ecting the achievement of radio and online services. 3 those objectives in his Department. Really what I Ms Stuart: I understand you intend to expand those should like to know, bearing in mind that we and I have heard a figure around £28 million at Y inquired into e ciency savings at the FCO and some stage. raised this issue with Sir Michael, whether you can assure us, unlike him, who could not, that you can make genuine eYciency savings through your Q27 Chairman: If there are sensitive matters in administration as opposed to simply cutting your course of negotiation, we will understand. budgets by 2°%? Mr Chapman: Let me talk about our proposed Mr Chapman: Yes, I can assure you about that. I services for the Arabic speaking world. Obviously cannot assure you that we shall be able to do it for we already have a very successful radio service, but ever, but we are doing it across the proposed that needs new investment, because I believe that the spending review period. changing nature of the media landscape in North Africa, Middle East and Gulf, means that unless the BBC Arabic service radio can bring a greater Q24 Mr Chidgey: That is my next question. How vividness, a greater sense of place, greater sense of long can you carry on doing this? Does there not energy to its programmes it will start to become less come a time when the diminishing returns formula relevant and important for our listeners. To that end comes into operation and you can no longer we have asked for investments around about £5 continue to make a 2°%eYciency saving year on million in 2006–07, moving on to about £8 million year on year? aggregated in 2007–08 for improving radio and Mr Chapman: That is right. online in Arabic. The second facet of our interest in expanding services for the Arabic speaking world is the issue of television. After discussions with the Q25 Mr Chidgey: When does the red flag get waved? Y That is what I want to know. Foreign O ce in the autumn it became clear to us Mr Chapman: Let us put it like this: we would have that the media landscape was changing to look very hard at the next spending review period. fundamentally. I am sure you all know about the There are certain benefits in relation to eYciency impact of al-Jazeera, al-Arabia, a whole series of which are around now and in the next two or three regional satellite channels in Arabic and also the years in relation to short-wave, means of arrival of internationally-funded stations like the al- distribution, digitisation, perhaps a little bit around Hurra station from the United States and the the area of mass buying of services as part of the proposed one from the French. Everybody is waking wider BBC, the so-called Gershon eYciencies. We up to the fact that television is increasingly have already done many of them, but a little more important in the Arabic-speaking world. Having benefit can be accrued from those things. Then after had discussions with them, they asked us to put that the premise of your question is right: you then forward a proposition for a BBC Arabic television start to run out of means of making eYciencies and service as a part of the spending review, but as a you then have to start cutting services, cutting hours discrete part of it, a discrete, separate proposal. We of transmission and all of that and that is something have put that proposal forward and I wait to hear which would be a very serious matter if we had to do the outcome. The figure you are talking about, when it. I do not anticipate us having to make major you were mentioning the £28 million figure, is adjacent to the sort of sum you would need in order 3 Foreign AVairs Committee, Twelfth Report of Session to have a 24-hours a day, seven days a week Arabic 2002–03, Foreign and Commonwealth OYce Annual Report news and information channel on air and doing a 2003, HC 859, Ev 87 good job. Foreign Affairs Committee: Evidence Ev 5

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind

Q28 Ms Stuart: Are you considering cutting back on that from all that research a common answer comes some other services or do the other services remain out, which is: highly respected, valued, seen as priorities and you want that on top of them? independent of government, trusted and a service Mr Chapman: Yes. To answer your question against which people in the Middle East and beyond absolutely, the answer is that I am not thinking of measure other services. It is the corroborating cutting some other services, this is in addition. service. People know that if they hear it on the Arabic service, then it must be true. In terms of all Q29 Ms Stuart: Neither to Greece, nor to countries the evidence which can be brought to the table about who are now members of the European Union. your question, it is positive. Mr Chapman: No, I am not thinking of doing that, partly because those are popular services and Q31 Mr Mackay: Following your answer to my eVective services. Secondly, in the context of the cost colleague Gisela Stuart, this is going to be additional we were talking about there, even if we were to go money which is going to expand the Arabic service. down that route and to close the sort of services you Mr Chapman: Yes. are talking about, it would be a very small contribution indeed to the costs of the sort of Arabic Q32 Mr Mackay: Assuming the Government grant television service I have just been discussing with you these additional funds in the review, how would you. It would not be a huge, major, additional you justify to my taxpayers in Bracknell that that source of investment which could be reprioritised was going to be in their interests, or perhaps, making into that service as it were. This would not pay the it slightly broader but not skipping that very bills. important point, the British interest as well, all this extra taxpayers’ money which is going in, because Q30 Mr Mackay: May I stick with the Arabic service something else would have to give somewhere else? for a second. We have inevitably been taking a great Mr Chapman: Yes, though you could argue in the interest in the Middle East recently as a select context of overall government spending that the committee. One of the great successes of the World investments which are being called for here, in terms Service has always been that it is deemed to be very of improving the Arabic service, are relatively small. independent, even though you are funded by However, having made that point, what do your taxpayers and by government and that seems to me constituents get from it? The value of it, the value of to be your great strength. I should like to know in the BBC World Service as a whole, is that it provides this context, in the Muslim world and the Arab people with an independent source of information world and where it overlaps, whether events in Iraq which they can trust, which raises the level of debate over the last few months have changed that and discussion and brings about common perception of independence in the Muslim world. understanding. In a world which is increasingly Mr Chapman: It is hard to know whether it has polarised, that is an enormously valuable thing. changed the perception over the last few months. People can measure other sources of information What I can say to you, because we have not yet done against it, but it actually raises the whole plateau of a whole lot of new audience research which would debate and discussion around particularly sensitive give a concrete answer to your question, is that matters. I think that it is enormously valuable and broadly speaking, despite Britain’s involvement in audiences ﬁnd it enormously valuable and they the Iraq war, the perception of the Arabic service as continue to use it despite the growth of other media. an independent, trusted, accurate and reliable Look at Iraq. There is plenty of satellite television in service, funded by the British taxpayer, true, remains Iraq which they could be using, but they continue to very strong. When you look at it in relation to other turn to the BBC Arabic service as a source of international services, it scores more highly than reliable, accurate and trustworthy information. It is they do. That is the broad outcome of the research enormously valuable in the whole civil society we are doing. Indeed, in the last week, we have had discussion. some new research from Iraq, which shows that amongst largely speech-based services, like the Q33 Mr Mackay: Again assuming that you obtain French service from RFI and indigenous services the funding to achieve these objectives which you inside Baghdad from Iraqi broadcasting itself, the have just outlined to me, what are the main obstacles World Service remains, by some margin, the most in your way within the region, so if you get money used of all speech-based services and something like in the next few months, what are the hurdles you are one in four people in Baghdad are using the BBC going to have to jump before you achieve an services every week. That gives you some sort of expanded service and these objectives which my context for the way in which it is valued. I would add constituents in Bracknell ﬁnd so welcome? also that we have done extensive research, Mr Chapman: There are two areas. First of all there commissioned on behalf of the governors’ is the area of distribution, which, if you are going to consultative group on Global News and World move closer to audience distribution usually means Service, which again was a mixture of focus groups, via FM and that usually means putting transmitters a mixture of independent assessment. We have used in a particular country. So you need to get the pretty well every method known to man to get a permission of that country to do that. That is handle on your question, which is: are you still something which could hold up progress. The only trusted, are you still valid, how are you trusted in other area which could hold up progress is the issue relation to other people? I am very pleased to say about wanting to expand regional production bases, Ev 6 Foreign Affairs Committee: Evidence

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind which is very, very important. In the last 18 months do not think it would impact on the accuracy of the the World Service has invested in about 20 jobs in core news reporting, because there are frankly the Cairo bureau of the BBC Arabic service. That enough sources to do that properly. Where you has frankly brought a greater strength and a greater would suVer is that sense of being able to gather strength of urgency and immediacy to reporting the material on the ground, to gather news on the Middle East than would be possible from London. ground, to interview people, to bring a sense of If we got the money we are asking for in relation to vividness and texture to the coverage, because you radio and online, one of the things we would want to would be thrown more and more upon having to do do would be to continue to invest in those regional it from London. You can bring analysis from production bases and to expand the number. It is London, but it is quite hard to bring a sense of place again conceivable that governments could say that is and a sense of interaction between people if your a rather good idea, but actually we do not want you reporters cannot go around interviewing people to do that. That would prevent us doing it. In terms freely and gathering information. That is how of the editorial thrust of what we need to do, it is listeners would suVer from a withdrawal of that what we do need to do. kind, but I do not think they would suVer from a lack Mr Hind: The third thing I would add is the of determination by the BBC World Service and the challenge of getting staV who are capable of being BBC as a whole to continue to cover the stories. We trained and can be suYciently competent to expand would find ways of getting the information, of the Arabic service to the level of quality we have verifying it as best we can; obviously we would be known in the past. In an increasingly competitive very, very careful about that, and transmitting it. media environment in the Middle East a major Mr Hind: The other thing to add is that increasingly challenge is getting the right people to do it. star reporters working for the BBC are nationals of the countries from which they are reporting, not Q34 Mr Mackay: So of these governments which necessarily expatriate staV. Therefore, if you take might put obstacles in the way of you expanding into the case of Iraq, while one still has to be extremely FM, some will have straightforward commercial careful about it, there are several Iraqis reporting for reasons, which let us leave aside, some might even be us, even though we have had to pull out expatriate for environmental reasons with your transmitter, staV. but I guess a lot will be for political reasons because they do not want you broadcasting. Would that be a Q37 Sir John Stanley: Yes, but the Iraq pattern fair comment? shows that being an Iraqi and being associated in Mr Chapman: Yes, it would be a fair comment. any way with western interests or the coalition is a Local regulation, which is in the gift of government, dangerous occupation. would prevent it. Mr Hind: Of course, and we have to be very careful about that as well. Q35 Sir John Stanley: With all the targeting which is going on against people who could be broadly Q38 Sir John Stanley: Can you just clarify this? How described as westerners or possibly local people far are you dependent on in-country staV in the three associated with western organisations or those countries to which I have referred to maintain your helping to improve infrastructure in Saudi Arabia broadcasting equipment, transmitters and so on? and Iraq, Afghanistan, do you judge that there is a Mr Chapman: In terms of broadcasting equipment, degree of risk against your own personnel, whether if we just go through the countries in question, in British or locally-employed in those countries? Iraq we have local agreements with people who run Mr Chapman: Yes, there definitely is a degree of risk. individual FM transmitter sites and therefore we are Let us take the case of Iraq, the BBC has had to dependent upon them to maintain the transmitters, reduce significantly the number of people in to make sure there is fuel and oil and so on and keep Baghdad and the surrounding areas in the last few them up to date properly in terms of their working months because of the risk to personnel. Therefore order. Obviously if that were withdrawn from us, we are operating a very tight, small number of there would be a risk that over time those FM people in the Baghdad bureau at the moment. That transmitters would die, they would just not be able is a very concrete example of the sort of choices you to transmit. It is a diVerent sort of story in Oman, for have to make and I have to be extremely careful, as instance, where we have really significant short-wave do my colleagues, around any decision to send and medium-wave transmission facilities not aimed anybody into areas of this kind at the moment. just at the Middle East but right across into South Asia. There I judge the risks to be far less great and Q36 Sir John Stanley: Could you just spell out to us we have a dedicated team of people whose whole job a little more fully what would be the consequences in it is to maintain those transmitters. We are careful terms of frequency of broadcasts, accuracy of about security, but there is never anywhere where broadcasts if you had to make further reductions or there is no risk. possibly complete pullouts of personnel in countries like Saudi, Iraq and Afghanistan? Q39 Sir John Stanley: And Saudi and Afghanistan? Mr Chapman: In the case of Saudi, we have a Mr Chapman: We do not actually have any in- relatively small number of people there at the country transmission facilities inside Saudi. It is one moment. I would have to send you a note on the of those areas where it has not been possible to precise number, but it is a relatively small number. I obtain FM. In Afghanistan we have 14 FM Foreign Affairs Committee: Evidence Ev 7

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind transmitters round the country now. Those are of House, despite the fact that we are embarked on a course vulnerable. They are not all in Kabul; they journey of increasing the number of production are spread right around the country and they are services overseas. vulnerable, you make a fair point, to attacks by Sir John Stanley: I am sure you will reflect on the fact organisations and we have to be careful to guard that if your security costs came to be substantial, them as best we can. given that that is wholly removed and wholly outside Mr Hind: Because of those risks, we maintain short- the normal operation you run, there is no reason wave broadcasting in both of those countries as well why the services you provide should be jeopardised as broadcasting in FM as an insurance policy, which or have to be cut back because of the necessary is a good illustration of the financial challenge we are expenditure you are having to incur to protect your facing at the moment, where we are having to try to installations and your people. compete through FM, while at the same time maintaining that short-wave safety net in many Q42 Andrew Mackinlay: By what method do you countries. ensure the integrity of the objective reporting from the various languages you have? There are some services where you and your senior management Q40 Sir John Stanley: May I just turn to the other team presumably do not understand the languages side of the security coin, which is the financial and it occurs to me that some staV will be both judge implications. You presumably are facing some and jury as to the quality and integrity of their own degree of substantial increase in cost arising simply productions. How do you overcome that diYculty? out of the security environment, particularly in the Mr Chapman: First of all, I believe that the people Middle East and particularly, I would suspect, in the we have recruited and with whom we work over time three countries I have referred to, but maybe more in the BBC World Service understand the values of widely. I assume therefore that you are having to the BBC World Service. One of the reasons why think about additional physical protection measures many of them have come to work for us is because in relation to buildings, additional protection they want to work in that sort of environment. They measures in relation to your staV, additional are very, very conscious of the need to ensure that protection measures in relation to installations. The they behave with due impartiality and objectivity in question I should like to put to you is this. In your the reporting they do. In addition to that editorial bid for funding in the current spending round, given reviews are undertaken on a daily basis, on a weekly that this is a factor wholly outside your own control basis and on a monthly basis, and I, as a senior editor and I believe deserves to be treated as a totally inside the World Service, and at the moment the exceptional measure, are you taking steps to make senior editor inside the World Service, get certain, if you are making a bid for additional funds translations done of particular programmes. We for security protection in the areas to which I have compare and contrast in diVerent languages and also referred, that is treated as a separate bid from your the governors’ World Service and Global News mainstream bid so that the necessary costs you may Consultative Group... have to incur on security are not going to jeopardise the mainstream work you do? Q43 Andrew Mackinlay: What is that? Mr Chapman: We have factored that into our overall Mr Chapman: That is a group of people, chaired by bid. When we are talking about expanding our Dame Pauline Neville-Jones, the BBC International activities in the Arabic speaking world, the wider Governor, supported by experts in broadcasting and Islamic world, the bureaux and so forth, we have journalism. They commission—and did so last year factored those in. I have not put in a separate ring- in particular—special research on the perceptions of fenced supplementary bid around the issue of the BBC Arabic service, and its English services in security of our bureaux, no, I have not done so. particular, in the context of the Iraq war and coverage of the Iraq war. So specific pieces of work are being done in that regard and there is a rigorous Q41 Sir John Stanley: Why not? editorial system in place both to set the right agenda Mr Chapman: Because in the end the view we came and retrospectively to review that agenda across the to was that while there will be costs around that, they range of programmes we make. would not be prohibitively large. Let me take the case of Afghanistan, where I have just been. I have Q44 Andrew Mackinlay: I have no way of knowing seen our premises there and I have seen how we are whether or not this is a justified criticism, but I moving. We do have some security costs in relation understand criticism has been made specifically of to that, but they are not that large in the context of the Hausa service in Nigeria. The geographical area the budgets which are available for the Persian and which it predominantly serves is predominantly Pashtu service. We would be asking for a relatively Islamic, but with a significant Christian minority. small sum of money and I took the view in the end Unhappily I think it is a matter of fact that there is that in this bid, that is part of the cost but a cost conflict between the two communities. It has been which is part of the overall bid. alleged that the Hausa service is overwhelmingly Mr Hind: It may be worth at this point just noting dominated by people of the Islamic faith and I the fact that we have 1,700 staV in the World Service, understand that there have been complaints. I of whom 350 are based overseas. So the vast cannot judge those but one of the complainants is majority of staV are still based in London, in Bush Christian Solidarity Worldwide, which is deemed, Ev 8 Foreign Affairs Committee: Evidence

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind rightly, to be an organisation of some significance.4 attribute your sources of information so that audiences It seems to me that there is a diYculty there for you, are aware, where there is a conflict about the numbers, particularly when it comes to the reporting of what what the source of that conflict is and they can make might be atrocities, where numbers can be their own judgment ultimately as to what they believe. important, and the scale of what are unhappily atrocities. We know even in the United Kingdom Q50 Andrew Mackinlay: That is precisely my point they can sometimes be exaggerated. That is what and indeed if that source is challenged. I understand prompted me to ask my original question, so in a that there is conflict within the plateau state between sense it is the broad issue by way of example, but also the federal presidency and the provincial governor. what would have happened about that. Clearly there I am happy to leave it that you will provide us with is cause for concern. It may be unfounded, may be a note, because presumably similar problems do and unjustified, I am not in any way prejudging that, but will occur in other parts of the world as well. it seems to me that you have to have a mechanism for Mr Chapman: They will. Let me just say that the looking at specific complaints, do you not? Hausa service has a huge responsibility: it has one of Mr Chapman: Absolutely right. the largest audiences in the World Service; it is operating in extremely diYcult terrain and Q45 Andrew Mackinlay: What would have circumstances; the staV there are extremely aware happened in that case? that a word out of place, an ill-judged phrase, a Mr Chapman: What can happen in this particular misunderstanding of a story, can lead to very serious case, because it is an ongoing issue as far as I can see, consequences. That is why I take the issues you are as would happen in any similar case, would be that raising very seriously, as I would about any language I would ask the complainant for specific examples of service frankly and we will undertake a thorough their concerns. Obviously the Hausa service is on air and detailed review. for a significant amount of time, therefore it would Andrew Mackinlay: For the record, I do not be helpful to get a clear idea which broadcasts they prejudge it at all. I am happy with that. are referring to, which days they hear what they Chairman: You are happy with that. believe to be erroneous and incomplete reporting, Andrew Mackinlay: Yes, I am. then I would talk to the head of the Hausa service about it and indeed I would ask for a translation to be made into English of relevant programmes in Q51 Mr Hamilton: Moving on to a similar, unrelated that regard. but perhaps similar, topic, this afternoon there was an item on the World Service. You probably did not Q46 Chairman: Have you done that? have a chance to hear it. It was about the accusations Mr Chapman: The issue was only raised with me by Israel and by British Jews that there is a constant yesterday. bias on the World Service against Israel in favour of the Palestinian cause. How do you react to that? I Q47 Chairman: Have you seen the Christian should say that the broadcast today was quite Solidarity Worldwide memorandum? dismissive. I know that you are scrupulously Mr Chapman: No, I have not. They have not come balanced in everything you try to do, but how do you through to me on the issue. What I am happy to do deal with that constant accusation that you are is to investigate it fully and to reply both to them and biased on a very sensitive and emotional issue like to you about it. The way we would do that would be Israel and the Palestinians? How do you react that along the lines I have discussed.5 there is a BBC bias towards one side? Mr Chapman: One of the issues that relates to is the diversity of view we are broadcasting at any one time Q48 Andrew Mackinlay: That would be fair. I am or over a period of time. Again, I would reassure you not sure what their complaint is and one is seeking that at the regular editorial meetings which I chair, the truth. this is one of the issues we discuss regularly, pretty Mr Chapman: Indeed. well all the time. Have we covered the story accurately, objectively and fairly? One of the ways Q49 Andrew Mackinlay: The final thing on this is we test that is by asking whether they have managed that it is not necessarily just what is said, it is that to elicit comment from all the relevant parties. If, news reporting can often come down to numbers, over time, it is becoming clear that an imbalance is numbers of people killed, who started it and so on. I going on, then you have to strive all the harder to am quite happy to leave it this afternoon on that. I make up that imbalance and make sure you get the just wanted to make it clear. right range of views. In the case of the Arabic service, Mr Chapman: May I just make the point about I know the Arabic service has many contributions numbers? The issue about numbers is that it is from spokesmen for the Israeli Government. Just extremely important to attribute your source of because it is broadcasting in Arabic and largely information. You often get conflicting numbers about heard in North Africa and the Middle East but not disturbances and riots and things of that kind and it is so much in Israel, does not mean that it is not going very important in news reporting that you should about its job just as objectively as the English services do. I take the general point; I take all those 4 Christian Solidarity Worldwide, Recent Religious Violence in Central and Northern Nigeria, June 2004, www.csw.org.uk accusations extremely seriously. If people come to 5 Please refer to the letter from Mr Nigel Chapman, dated 13 me with specifics, and it does help if they come with July 2004, Ev 113 specifics, about particular programmes, particular Foreign Affairs Committee: Evidence Ev 9

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind interviews, particular ways in which they feel they consumption in the evenings and at other times of are not being properly treated, or the story is not the day, so they are complementary services. You do being reported accurately, then I will of course not give up radio and online for television and you investigate. do not go the other way either. If you want to be truly eVective, you do all three, as you see in the Q52 Mr Hamilton: The news story this afternoon United Kingdom, as you see in the United States, as specifically seemed to be targeting the Israeli you see in all developing countries. Eventually you Government and suggesting that it was Israel which get some sort of equilibrium between radio, online had persuaded people to bombard the BBC with and television because all three are entirely valuable complaints. Is that something you have noticed at and important services. all, an orchestration of complaints? Chairman: I think that Mr Mackinlay and Mr Mr Chapman: There is a significant number of Hamilton have raised very important areas, complaints, not so much coming to myself, but more knowing how diYcult it is to be objective in an area coming directly into the BBC News management which is highly fraught. You will write to us from people in Israel or people who support Israel therefore in response to Mr Mackinlay’s concern about the BBC’s coverage. Yes, there is a significant and also perhaps in respect of the Middle East number. There are also significant numbers of showing, in terms of your recruitment policy and complaints coming from other points of view as well your monitoring policy, how you seek to ensure that 6 and in the end it is really not so much an issue about we live up to the ideals of the World Service. the numbers of complaints for me. You can have one complaint, but if it is a highly accurate complaint Q55 Mr Olner: Turning to your online services, and a highly valued one, that is enormously justified. when we toured Bush House a few weeks ago, we The numbers do not necessarily justify the were told that increasingly you were using your complaint one way or the other. audiences as news-gatherers, to send in stories and photographs. It comes down to questions about the Q53 Mr Hamilton: I was just out of the room when BBC brand, the integrity of what the BBC puts out. my colleague Gisela Stuart raised the matter of the In this digital world there is an awful lot of mischief- proposed Arab satellite television station. Forgive makers out there. How are you going to be able to me if she covered this. Would you have any diVerentiate between a mischief-maker and what is reservations about this, if the money were news on which you put your brand and send out as forthcoming as a separate budget item? I know you a proper story? Surely this is a very, very dangerous have had to submit a proposal, have you not? step you are taking? Mr Chapman: Yes. No, I do not particularly have Mr Chapman: I would be with you right up to the any reservations about it. In the context of the last sentence. You need editorial supervision here. changing media landscape in the Middle East it One of the reasons why you have to invest money in would be a very valuable addition for the BBC to do online, is in order to strengthen that editorial that. I am enthusiastic about it because I know what supervision. You do get a lot of potential people think about the BBC brand. I know that in contributions from people. You are right about the Arabic-speaking world they value that brand photographs, about stories, about anecdotes, about enormously. We would be building on the back of a whatever. You need people of good journalistic and very successful radio service, a burgeoning and editorial judgment to diVerentiate the mischief- recently-established successful online service and it makers from the genuine. If you are in any doubt would mean that people could access BBC news and about that, as somebody who used to work in online information in their own language and that would a lot myself, if in doubt, do not publish. You do not have major impact. One of the key facts here is that have to publish any of this material. You can just say in many Arabic-speaking countries the use of you are sorry and you are not going to publish any English is relatively low. In Saudi Arabia 21% of of it, if you are not convinced that it is valid and people speak English, in Egypt it is about 8%. The verifiable. Some cases are obviously easier than reality of life is that with an English television service others. If people are going to send in pictures of the you are going to have some impact, but it is going to Bam earthquake, because they are the only people be on a relatively small number of people who speak actually in Bam at the time, it is not hard to verify English well enough to be able to understand it. If that is a genuine, authentic picture. It is harder when you want to have greater impact, one of the people send in comment. You are right; they could arguments for an Arabic television service is be purporting to be somebody else for all sorts of precisely that: you would have greater impact reasons. We do have to be very, very careful about broadcasting in Arabic. it. We have to be extremely careful about material which could be inflammatory or cause dissent and Q54 Mr Hamilton: Is that what you think television things of that kind. You have to be extremely careful can achieve over and above radio? about these. Mr Chapman: They are complementary. What happens in developing media markets is that radio Q56 Mr Olner: Can you assure us perhaps that you remains very, very important. People tend to are not going to dumb down the online service by consume it on the move and they tend to consume it seeking opinions from it? Mr Hamilton talked a lot in the mornings. Over time, as television emerges, television starts to eat at people’s 6 Ev 112–114 Ev 10 Foreign Affairs Committee: Evidence

23 June 2004 Mr Nigel Chapman and Mr Andrew Hind earlier about loads of orchestrated complaints background information alongside the chance to perhaps coming in. No media is more susceptible to contribute. People can then at least be well informed orchestrated complaints than the e-media. Are you when they are making the points they want to make. going to initiate things which say “Put your hand up That does raise the overall understanding about in the air everybody who wants a free holiday by the complicated issues, which is part of our purpose. seaside. Those in favour vote yes”? Mr Chapman: No, I can promise you that we are not Q58 Sir John Stanley: In your paper to the going to do any of that in the World Service. It is Committee entitled Building Bridges in an Insecure absolutely not in my interest to dumb down any part World, in the paragraph which is headed “Progress of the World Service activities, online, radio or against Three Year Plan 2003–06” you say “The television, if it ever went into that. You have to see estimated weekly radio audience fell slightly to 146 user-generated content as a properly managed and million from 150 million in 2002–03 in an properly edited valuable addition, but it does not increasingly competitive market”.7 You are getting take the place of the core BBC journalism which lies substantially extra money. Why is the radio service at the heart of the success of the BBC news online losing ground to the competition and what are you operation. It can never take the place of that. It is an doing to reverse that? additional, extra facet of the online world, but never Mr Chapman: The radio service is losing ground at the expense of the values of the BBC, of the core marginally against the competition because you journalism, absolutely not. That is the thrust of your have a situation where short-wave listening is in question and I agree with you. decline worldwide; that is a phenomenon which, however powerful the BBC is, it cannot resist Q57 Mr Olner: Yes, but it is a trend in journalism entirely. We have managed to make up most of the now, is it not? I sometimes watch Sunday morning gap created by a reduction in short-wave listening by breakfast shows and it is the audience participation investment in new forms of delivery, FM being the thing, sometimes it is unbeknown quite frankly. most obvious. However, you really have to gallop at Mr Chapman: I have some sympathy with your view an enormous speed in order to close the gap and therefore one of the things which I think is really completely and therefore one of the priorities over important about interactivity in the online world is the next one, two, three years, will be to accelerate as what I call contextualised interactivity. It is far as humanly possible the investment in new forms important that people who take part in debate and of delivery, including FM, satellite where relevant, discussion have access to facts and information. cable, the internet, in order to try to close that gap as People just parading their prejudices about issues much as possible. and stories does not seem to me to add very much to Chairman: It has been an extremely helpful session. the sum of human understanding. One of the things We look forward to bearing this in mind when we we have been investing in, through sites like the one come to produce our report. May we continue our about Islam and the West, for instance, which we excellent relationship with you. Thank you both launched last year, is putting contextualisation and for coming.

Witnesses: Sir David Green KCMG, Director-General, Dr Robin Baker, Deputy Director-General, and Mrs Margaret Mayne, Director of Finance, British Council, examined.

Q59 Chairman: May I welcome the representatives and Commonwealth OYce. We had a member on of the British Council: Sir David Green, Dr Robin the team reviewing the co-ordination of public Baker and Mrs Margaret Mayne. It is my pleasure diplomacy. They came up with proposals, one of initially to congratulate you, Sir David. You have which was the formation of a Public Diplomacy enjoyed an excellent relationship with the Strategy Board, which was one we supported. We Committee. May I say that we consider it a point of think it is important, in order to help to co-ordinate honour, whenever we can, to visit the British the work of all the public diplomacy agencies Council oYces overseas. Obviously your honour is working on behalf of the UK, but it is very something which relates to the work of the Council, important that it is about co-ordinating and making but it is also a very well deserved accolade for you sure that you get complementarity from the diVerent personally. Many congratulations on behalf of the players and not trying to get an homogenous Committee; we are delighted. approach to public diplomacy, but recognising the Sir David Green: Thank you very much. strengths of diVerent players and working to those strengths. The catch phrase which the Public Diplomacy Strategy Board has encapsulated is Q60 Chairman: I should like to begin, as we began with complementarity and clarity. I am very much a full your colleagues from the World Service and ask for member of the board. your perspective in respective of the new Public Diplomacy Strategy Board. What is your capacity on it? Q61 Chairman: You are a full member. You do not Sir David Green: The origins of the Public have the status problem of the World Service of Diplomacy Strategy Board go back to a review having to retain a certain arm’s-length relationship? which was undertaken before the last spending review by someone called Wilton from the Foreign 7 Ev 106 Foreign Affairs Committee: Evidence Ev 11

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne

Sir David Green: No, I am very much a full member. Sir David Green: Lessons have been learned To go back to my earlier comments about the nature particularly about the management of such and the role of the board, it is about strategy and co- campaigns. One of the things we learned—and it ordination; it is not about operational activity or took us a little while to learn—was that actually it determining where funds are spent, it is about the had to be jointly managed and there had to be a overall co-ordination. campaign manager in place as early as possible. We jointly learned with the Foreign OYce... Q62 Chairman: Left hand and right hand. Sir David Green: Yes. Q67 Chairman: Drawn from one of the participants? Sir David Green: No, in fact this campaign manager Q63 Chairman: How useful has it been in your was independently recruited and was working in judgment? China at the time. She was contracted just to do the Sir David Green: I think it has been useful. It is fair job of running the campaign, managed jointly by a to say that the co-ordination of public diplomacy on steering group, which was comprised of Foreign Y the ground is very good indeed overseas and O ce and British Council managers who directed certainly in most countries now there is a public her. diplomacy group which brings together particularly the British Council and the Foreign OYce, the Q68 Chairman: And other lessons? mission, but also other players where relevant such Sir David Green: Another lesson was that these as BBC World Service, such as VisitBritain. There campaigns have to be planned a long time in V was a gap in the co-ordination in London and this advance. You cannot expect to mount an e ective has filled a gap and plays a very important role in campaign unless you have a lead time of probably 18 terms both of sharing information, co-ordinating months to two years. A third lesson was that you activity, discussing whether or not a particular have to be realistic in terms of your expectations. In campaign might be appropriate for a particular fact the evaluation has not shown that there has been country and looking at the evaluation of our work. a significant change in perceptions within China as to the creativity and the innovation which is the UK, which was the purpose of the campaign: to raise Q64 Chairman: What has been the evaluation? people’s awareness about the fact that the UK is a Where are we going from here? Are there very creative and innovative country. Certainly the improvements which you could personally research which has been done, the survey work recommend? which has been done, has not demonstrated that, Sir David Green: One of the areas we have spent a lot although it has demonstrated that those people who of time discussing within the board is the role of took part, who actually attended the events, have country campaigns, of which the most recently had their awareness raised. completed campaign is the Think UK campaign which took place in China. That was very much a Q69 Chairman: We have just heard of this collaboration between the FCO and the British astonishing review of the perceptions of the UK of Council, with some input from UKTI.8 Two other young people of Hispanic origin in the US.9 Is that campaigns are currently running: one on science and a subject for another campaign? technology in North America and promotion of the Sir David Green: I do not know about a campaign in UK’s role in science and technology; the other one is that case. Certainly that is one of the elements within on welcoming the accession states into the European our spending review bid. We believe that if the Union on behalf of the UK, which is called special relationship between the UK and the United Crossroads for Ideas. It is a bit early to evaluate States of America is going to continue then we have them; certainly the evaluation of Think UK was to do much more work on the West Coast and, positive in terms of the impact it made through the particularly with the changing demographics, with media. It got a lot of media attention. the Hispanic populations and with Asian Americans and African Americans. Q65 Chairman: Am I correct that the SARS outbreak rather stumped you on that? Q70 Chairman: What are you doing about it? Sir David Green: It delayed it. We were due to launch Sir David Green: The first thing we did was a survey the Think UK almost precisely as SARS arose. It put and some of the results are rather shocking; not it back and the Prime Minister was due to go to many of the young people who were polled actually launch it and it obviously put his visit back as well. were able to name the four countries of the United However, we rescued it and the final campaign was Kingdom and were not able to recognise many UK V an e ective one. There are issues about personnel. I seem to remember that Catherine Zeta sustainability and there are occasions when a short Jones and Simon Cowell, who runs Pop Idol,were burst of major activity is very helpful. Then there are the two names they could come up with, but they questions about how you sustain it in the longer could not get much further than that. There is a job term. to be done and what we think is going to be the most useful thing to do is to do it. Not as a campaign, but Q66 Chairman: What lessons have been learned to do some work which engages with the other from China? 9 “New research reveals long-term threat to UK/US special 8 UK Trade and Investment relationship”, British Council press release, 18 June 2004 Ev 12 Foreign Affairs Committee: Evidence

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne people, particularly those at high school and at Sir David Green: I am partial, but I think we rank as university through traditional methods of number one. I think that our colleagues in the exchanges, through conferences, through schooling, Goethe Institute and the Alliance Française and in through university links, through encouraging more America would say the same. The reason why they people to come and study in the UK, all the things would say that is because of the very breadth of the which British Council has built up an expertise and activities we engage in. From human rights to a reputation in. We just think that is a focus which language teaching, to promoting excellence in ought not to be neglected. science, to promoting higher education links, to work in the visual arts, we have a very all-embracing definition of culture. Those other organisations, Q71 Mr Olner: Could you tell us whether you think those other representative organisations of the the British Council was fully consulted on the Foreign and Commonwealth OYce’s UK countries you mentioned, have a much narrower definition. I think they envy the fact that the British International Priorities White Paper? V Sir David Green: Yes, we were consulted. Council is able to encompass all of those di erent areas and that gives us a strength that they lack. For instance, in Germany there is a body which is Q72 Mr Olner: Was it a listening role or did you have separate from the Goethe Institute, which has an opportunity to shape it? responsibility for the promotion of international Sir David Green: We were shown an “early-ish” draft recruitment into Germany and also one for and commented on that. In fact one of our promoting links between universities. Those are all comments was that suYcient attention was not being things which the British Council does. given to the role of public diplomacy as a tool of international relations. As a result of that, that element within the strategy was enhanced. Q76 Mr Olner: You say in your memorandum that you are shifting resources into various key areas and obviously one of them is the Middle East. The Q73 Mr Olner: One of the priorities is to promote Middle East is a fairly broad brush. Where exactly in democracy, good governance and human rights. the Middle East are you seeking to promote the Does that not conflict? I felt when we were in Russia British Council? I do not think even with unlimited last week that there was perhaps some tension, that resources that you could promote the British you were stepping into areas which perhaps the Council in all parts of the Middle East. What parts Russians were not particularly pleased about. I just of the Middle East are you concentrating on and is wonder whether that same feeling plays in China there a safety element which perhaps you have not as well. needed to look at in some of the other areas where Sir David Green: Increasingly it has been an area you have operated, but which you may have to look where we have been able to do a lot of work, the at, a safety, security element in your oYces in the whole area of governance and human rights. The Middle East? reason we have been able to do it is because we are Sir David Green: Those are big questions. at arm’s length from government; we are an independent organisation. Although our sponsoring department is the Foreign and Commonwealth Q77 Chairman: You can leave the security side, if OYce, we are independent. you want, as Sir John is coming onto that in a moment. Sir David Green: In terms of our spread across the Q74 Mr Olner: That is not quite what the Russians Middle East it is pretty wide ranging and we are in feel at the moment, is it? Sir David Green: There is a particular diYculty in many of the countries of the Middle East. What we Russia, as I know you picked up. We do not fully are putting forward in the spending review bid is an understand it as yet; the ambassador is working very initiative to work particularly in relation to reform hard to have discussions with the Ministry of of education systems within Middle Eastern Foreign AVairs. That in no way negates the role we countries, which is something where we are can play as an organisation in promoting responding to their stated needs. It comes out of the governance and human rights. We have done a lot of Arab Human Development report which identified work in China on the role of the judiciary, on trial by education systems and the fact that with the very jury and all of that work is much appreciated. I think young populations in many of the countries within we have a particular role as an organisation which is the Middle East one of the key priorities is to not government in bringing people together to improve the education system. In discussions with a discuss those very important issues. number of ministries of education across the Middle East, we have been talking about how we might engage and share expertise from within the UK. Q75 Mr Olner: I see the British Council as a very important tool in furthering the UK’s interests and the UK in a wider world. How do you think the Q78 Mr Olner: Which specific countries are you British Council play in your role compared with a looking to do more with in the Middle East? sister organisation which the Americans or French Sir David Green: Across the whole board from the or Germans or others would run in wanting to Gulf States to Egypt, to the Maghreb. I do not know promote their own countries? Where do we rank? how many countries it is all together. Foreign Affairs Committee: Evidence Ev 13

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne

Q79 Mr Olner: So this is just a broad wander scholarship scheme, which is worth about £44 through the Middle East and not specifically million. We run a number of contracts for the targeted. Department for Education and Skills and we raise Sir David Green: We have country programmes in some money through commercial sponsorship; in each of those 11 countries which have their own the last financial year in the region of £11 million. All British Council centre, often teaching English, and told it comes to £485 million. we also provide information about the UK. We encourage people to come to study in the UK, we Q82 Mr Chidgey: Fine; I am sorry about the have arts programmes, we have a gamut of activities. government bit. I picked that up in Moscow and that We also have a number of development service is one of the problems which is being dealt with later projects on behalf of European Union or other on. I really wanted to get to the dynamics, the eVect funders. We have specific programmes tailor-made this funding has on your operations. The Committee for each of the countries we are working in, in the has seen the British Council in operation in many Middle East. What I was describing was an initiative diVerent parts of the world and we generally are very which is in response to a need, which is a regional welcoming and very supportive of your work. It does need in terms of needing to enhance education vary, depending on the constituency you are in and systems. That is an element which we have put in our the language of the population, the level of spending review bid and, going back to the education of the population, may I say the wealth of Chairman’s earlier question about the Public the population. You get extremes, such as in certain Diplomacy Strategy Board, something the PDSB parts of the world your base will only have enough has identified as a really key priority: our funding for you to tick over and you cannot do any engagement with the Middle East and that the way project work, whereas in other parts of the world, in to engage is through educational reform. Europe, you have thousands of students coming through the doors, paying good fees for English Q80 Mr Olner: I accept all of that, but is it a wish language education which is great of course for the that you as British Council want to improve the bottom line. However, my worry here is that we education of young people in these countries, or is it could easily develop into an elitist system, financially reacting to what these countries themselves want? and intellectually, which rather cuts away from what Sir David Green: It is both and it comes out of a we consider the aims of the British Council to be. reaction to the UN Arab Human Development How do you address that? I put it to you that it is report, but it is also in the UK’s interests as well. One very tempting to go where the money is. of the key areas in which we are working is English Sir David Green: The fact that we are so broad language teaching. In most of the Middle Eastern ranging in terms of the activities we encompass helps countries we have an English-language teaching to address that. The fact that we are doing centre and it is worth saying that at the time of the development projects, those projects are, almost by war with Iraq, we had to close in the nine definition, targeted at the poorest of the poor, surrounding countries and had by definition to certainly not elites. For instance, an access to justice suspend our English language teaching activities. project which we are running for the Department for When we re-opened we gave students the option of International Development in Nigeria, is seeking to either having their money back or joining a new improve the rule of law and people’s access to justice course. I think I am right in saying that something in a number of states in Nigeria. That is not like 98 or 99% of those decided that they wanted to benefiting elites particularly. start a new course of English language teaching. Q83 Mr Chidgey: We do appreciate that, but we also Q81 Mr Chidgey: I want to ask you some questions hear that in some countries you are targeting young about financial management. You will have heard professionals because they are the movers and me go through the list with your colleague from the shakers of the future. That is fine, but there is more BBC World Service, so you have an idea where I am to it than that; there is the actual population at large going to. Just before I get into the detail of that, I which we must not ignore, which I suspect those note in your memorandum to the Committee that sorts of targets lead us to do. you pointed out that your grant from the Sir David Green: We have done quite a lot of work Government has been increased to £184 million for in terms of trying to understand populations and the year 2005–06, but your turnover was around trying to identify who our target audiences should £485 million per annum, so about two-thirds of your be. We have in fact segmented our target audiences income is from elsewhere. I presume that is all from into four parts. At the top of the pyramid are very English language teaching and the like, is it? influential people or already influential people with Sir David Green: No. One part comes from the whom we think it is very important to continue an Government in the form of grant-in-aid, a further engagement. At the next level down we want to go two parts are from income we raise ourselves, some for people who are likely to get into that bracket and from English language teaching and from the therefore will have influence in terms of how things promotion of British examinations, some from are managed within their countries and therefore running development contracts for the Department will be those influences you have described. We then for International Development, others for the go down to another layer which consists of young European Union. We also undertake some contract professionals and people who are interested in work for the Foreign OYce; we run the Chevening further and higher education. Then below that are Ev 14 Foreign Affairs Committee: Evidence

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne people of school age and people who are further Q88 Mr Chidgey: Is any of this dependent upon you down the hierarchy, if I may use that word. In terms securing additional contracts from DfID and so on, of whom we are targeting through some of our doing contract work for diVerent agencies of programmes, it would be that non-elite group. government? Is that part of the projected income? However, unashamedly we have decided that for a Sir David Green: Only in relation to the Prime lot of work, actually the most impact we can have, Minister’s initiative on international recruitment, given our limited resources, both in terms of the where we expect a continuing contribution from the benefit to the UK, but also in terms of providing Department for Education and Skills and also from services to that country, is by going for people who the devolved countries who also benefit from that. are going to aspire to positions of authority, because they will then have an impact within their own Q89 Mr Chidgey: Are these competitive bids with countries. other agencies? Sir David Green: No, not in the sense that we are putting in five elements we think are very attractive Q84 Mr Chidgey: You had a pretty good settlement and which would be useful in terms of benefit to in the 2002 spending review. Are you optimistic that the UK. you are going to get another one for 2004 which compares with 2002? Q90 Mr Chidgey: Quickly, on eYciency savings, and Sir David Green: We have had two good settlements. you will have heard the conversation I had with your colleagues from the World Service. The key issue really is how long you can continue finding eYciency Q85 Mr Chidgey: You are very optimistic right now, savings of at least 2°% over the coming spending so I presume that is going to translate into some review year on year? cash, is it? Sir David Green: We certainly believe we can do that Sir David Green: We had two good settlements in over the next triennium and we have been declared both 2000 and 2002 with an increase of 9% in real compliant through the Gershon process. They terms, which restored us to the levels of pre-1996, accept that the proposal we have put, in terms of which was very helpful. We are realistic about the increasing our eYciency and making those savings, current situation and we know that it is a very much is a viable one and is auditable. They are tough and tighter round this time than it was in 2002. Having we have put two caveats. First of all that we can only said that, we have put in a number of very important produce that level of saving if we receive at least an elements within our bid and it is up to Treasury to inflation-proof increase to our level of grant funding decide whether or not it wishes to fund those. over the period of the three years; second, if we are allowed to spend some of the savings we accrue on security. I know you are coming onto security in a Q86 Mr Chidgey: What areas are you particularly moment, but for us to maintain our premises and the targeting for extra money? safety of our staV at standards which we think are Sir David Green: I have mentioned the US already; acceptable, we will need to invest further in security. we have also had a brief discussion on the Middle We have put to Treasury the idea that part of the East and the role we can play in terms of education savings we manage to make through the Gershon reform within the Middle East. Those are two eYciency process should be re-invested in security. elements within the bid. There is also international recruitment and the Prime Minister’s initiative on Q91 Mr Chidgey: I want to press a little further on international recruitment, where we were charged this. Whilst it is quite clear from the World Service with increasing the numbers coming to the UK to that there are technical improvements and changes study at higher education level. We were asked which will generate eYciency, the British Council by whether we could raise that, along with DfES and definition is far more a people-intensive higher education institutions and universities in the organisation. So it is diYcult to understand how you UK by 50,000 at higher education level and 25,000 can expect year on year to get a 2°% increase in at further education level. We have achieved that eYciency out of the people you employ. There is a over the four years. If we are to sustain that, then we real concern here that you will be led up to a have to keep investing in the campaign and in the situation where to achieve the Treasury’s eYciency promotion of the UK as a study destination. So gains you will simply be cutting your budgets and there is an element of funding in the bid for that. activities. We are looking for reassurance here that you have found a formula. If you have not found a formula, we should like to know. Q87 Mr Chidgey: Presumably if you do not get that, Sir David Green: We have found a formula which none of these is going to happen. There is no plan B does not involve cutting activity. There are several as such, is there? elements to it. First of all, we have a massive project Sir David Green: The other ones were sport and called the finance and business systems which is India, making five. If we do not get the bid, then we integrating currently 20 diVerent IT systems and will have to think again in terms of the extent to bringing them all under one system. This is a project which we reprioritise our existing programmes and which is costing an investment of something like £96 certainly some of those will need to be re-prioritised million over a period of ten years, but the savings and other activities may have to go. which will accrue will contribute to the eYciency Foreign Affairs Committee: Evidence Ev 15

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne target. In addition, we have done a lot of work on would then propose is, since this will be an ongoing procurement and increasing our ability in the area of programme, that if we can be allowed to recycle procurement. We think that there are savings to be some of the Gershon eYciency saving into gained from that area as well. The new strategy we enhancing security, then that will help and we think have just launched, which we call strategy 2010, has we can then do it without making additional claims elements in that which are about eYciency as well. to the government. May I bring in Dr Robin Baker, One is regionalisation and breaking the world into who actually chairs our security committee and who 13 regions rather than having direct relationships may be able to comment further on this? between 110 countries and the centre, which has a Dr Baker: We have spent £3 million since 11 certain excess bureaucracy and also through September on urgent security work. Clearly this is improved commissioning and the development of the biggest single issue facing the British Council, the products and services which we generate. We with so many staV overseas. The dilemma we have think there are ways in which we can economise is that the British Council can bring most value for through rationalising those systems as well. Britain in precisely those environments which are However, I do not pretend it will not be tough and most dangerous. The fact that we are not when I took over the running of the British Council, governmental in those environments is particularly you will remember me coming to this Committee important in terms of the impact we can achieve. and describing what we needed to do in order to get Our strategy has been to look at every installation the British Council onto a sustainable footing. We we have. We have developed something called the had to close in four countries and we had to reduce vulnerability model. In those situations where we our presence in a number of cities within Western know the threat is such, and we have very good Europe, but that was the only responsible thing to do information on threat from the Foreign OYce, that in order to maintain a healthy organisation. I hope our current arrangements are not sustainable, could we will not get to a position where we have to start not withstand the kind of threat level which exists, reducing our network again and we believe that we Y then we will make and have made urgent changes. In can manage the e ciency savings being imposed Saudi Arabia we are facing a particularly acute upon us without having to do that. problem, which has led us to take fairly urgent and immediate action. This is something which we are Q92 Sir John Stanley: I should like to come onto the looking at all the time. The first bid is to reserve a issue of the security problem which you face and the claim for £4 million in the current financial year and issues for you are similar to those which I raised then £6 million in the spending review for the first earlier in this session with the BBC World Service, year of the triennium and this will enable us, as far except that I would judge you have a very much as we can, to protect our staV, our customers and our bigger problem, by virtue of having substantially property. Of course, the diYculty is that for an more people employed overseas, both British organisation like the British Council, which in most personnel and local staV and also of course having a places needs to oVer a public access facility, in some very much larger amount of real estate which you places that is becoming increasingly dangerous and need to protect, both your British Council oYces there are judgments to be made. and also I imagine you are having to turn your Sir David Green: It has also caused us to think about attention to some of the residential accommodation new ways of working and it has meant that we need which your people occupy. Can you tell us what, in to invest further in virtual services, because that is a ballpark terms, is the figure for which you are having way of communicating with people without them to bid for what you described as security investment having to have public access. We have produced a a few moments ago? very imaginative response in Pakistan, where, after Sir David Green: This is the area which keeps me the bombing in Afghanistan, for security reasons we awake at night: the security of our staV and the had to close all our five oYces to public access in people who come into our premises is a real concern Pakistan and we have still managed to administer for us. As other embassies and high commissions— 150,000 British examinations last year. This is done American and British and other countries—become through an imaginative scheme involving Standard more fortified, which is the trend, there is the danger Chartered Bank, where people can go to register to that the British Council becomes a displacement take an exam at any branch in Pakistan and then target. That is a real danger for us. So we have to they are told where to turn up to take the exam. look at this area and we are looking at this area very, There are imaginative responses which we can very carefully. After 11 September, we did a review devise, but the very essence of the British Council is of our security. We did a further review after the about face-to-face work. To deny public access is Istanbul bombing and we have done a significant taking away one of our key tools of being able to upgrade of those premises which were in urgent need engage. of an enhancement of their security. We still need to spend a further £10 million over the next two years. We have a reserve claim in, along with the Foreign Q93 Sir John Stanley: I have some further factual OYce, of £4 million bid and then £6 million in for questions which I just want to put to you. The this financial year, the year 2005–06. That is to tackle answer to my request for the ballpark figure, if I have the 29 properties which we have deemed as ones understood both your answers correctly, is that you which are top priority in terms of further have made a £4 million bid from the contingency enhancement of security. As I said earlier, what we reserve in this financial year and you are estimating Ev 16 Foreign Affairs Committee: Evidence

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne something like £6 million per year subsequently on Q96 Mr Hamilton: Earlier this year a group of additional security investment. Is that correct external consultants produced a very comprehensive broadly? report on the Chevening scholarship programme Dr Baker: It is £6 million next year; it then is £4 which you administer. Did you agree with the million the following year rising to £8 million in the conclusions of the report and did you take any of its fourth year. conclusions to be a criticism of the way you administer the programme? Sir David Green: On the latter point first, certainly Q94 Sir John Stanley: Obviously, Sir David, it is for you to decide how to play your hand with the we did not feel that it was criticism of the way we Treasury, but your comments filled me with a deep administered the programme and the consultants sense of foreboding. I should be extremely went out of their way to compliment the British concerned if you felt that there was not going to be Council’s administration of the programme and said a price attached to your mainstream British Council it was extremely well-managed. We obviously co- activities, if you oVer up to the Treasury a trade-oV operated fully with the review and I believe that the against your eYciency savings, against the security broad thrust of the recommendations is very investment. I can just hear the Treasury mandarin sensible. To have a combination of the year-long saying “That is fine, thank you, Sir David, very programmes of scholars coming to the UK, coupled much. We’ll look to you to provide 100% of your with more flexibility in terms of providing security funding through eYciency savings”. As we fellowships for tailor-made shorter courses, makes know, in the real world that means a greater and good sense and enables the Foreign and greater squeeze on the British Council. I just oVer Commonwealth OYce to ensure that its priorities you that thought from a certain amount of personal are being met. So courses are related to their experience that some of us have. However, it is your priorities and also we are able to target people who hand to play. Could I put it to you that it is very, very are not able to take a year out of their career. important that you ring-fence your security bid and, Talking to young professionals within Iraq recently, I trust, make it very clear to the Treasury that these it was quite clear that they could not, at this point, are events wholly outside the British Council’s spend a year out of Iraq, because there are too many control and there is absolutely no reason nor pressing things for them to do, but to come out for justification for you having in any way to accept a month, or for six weeks, would be a very viable cutbacks on your main activities as a result of these option. I think the broad thrust is right. world events and terrorist activities over which you have no control whatever. Sir David Green: Which is why we have put in a Q97 Mr Hamilton: What do you think the reserve claim and why we are putting in a bid for £6 fellowships will achieve over the existing Chevening million in the first year, when actually the advice is scholarships? that you should not put in anything in the first year Sir David Green: Certainly to come to study in the of the spending review, and we have made the UK for a year... argument that we should use part of the eYciency savings to fund security. We do think it will be tough, but we do think we can do it, with those Q98 Mr Hamilton: The shorter nature of the courses, provisos I have made, without actually jeopardising as you have outlined. the work of the British Council for the reasons I have Sir David Green: Yes, but the year-long one is very explained in terms of eYciency and also changes in good and creates friends for life and we now are able the way we are working and our new strategy. to tap into that friendship and those contacts in the countries in which we have Chevening scholarships, Q95 Sir John Stanley: I trust you are right. I am sure which is most of the countries in which the Foreign Y you also might be entitled to feel that if you make O ce is present. What the fellowship scheme V these eYciency savings, it would be good to plough enables us to do is target a di erent group, people it back into the mainstream business rather than who cannot spare a whole year, but can spare a fences, etcetera. Do you see any near time prospect shorter period. Also, if there are particular subject of being able to re-open your oYces in Pakistan? areas which we think are important, whether to do Secondly, are you currently at risk of having to bring with business or international law or environmental about closure to public access elsewhere in the protection or issues which are of particular interest world? to the Foreign and Commonwealth OYce and relate Sir David Green: We do not see any prospect at the to their priorities, this seems to be a very eYcient moment of re-opening to public access in Pakistan. way of tackling that. Also, this would be less As well as the examinations, we are able to do other competitive. The Chevening scholarship scheme is activities oV site, so we are still able to run a viable very open, transparent and competitive, with ads in programme, which is valuable, within Pakistan. In papers and people applying on a merit basis. The terms of other countries, certainly Saudi Arabia is fellowship scheme would be more by invitation, so it one which we will have to be thinking about and does enable the Foreign OYce to identify a number have had temporarily to close our operations in of people who it thinks would benefit from attending Riyadh for the time being. That will be one which such a course. It gives greater flexibility and by and will be a question mark certainly, but no others. large we are very much in favour of it. Foreign Affairs Committee: Evidence Ev 17

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne

Q99 Mr Hamilton: The report strongly recommends Q102 Andrew Mackinlay: On the last occasion we that priority countries be targeted. I just wondered met, I raised with you the question of the branding which would be the losers and which would be the and logo of the British Council and you said you had winners in terms of priority countries? Who are the just had consultants in to re-brand it. I noted what priority countries? you said and it seemed to me that it was passed by. Sir David Green: The priorities are determined by My colleagues, who were not present on that the Foreign and Commonwealth OYce. We are the occasion, last week in Moscow, raised precisely the managers of the scheme, we administer the scheme, same thing. Have you reflected whether or not you but in terms of decisions about the number of places ought to revisit the branding? I do put it to you that allocated to particular countries, that is a matter for we, as Members of Parliament—although we have the Foreign and Commonwealth OYce. not had a vote on this, I think it is the mood—do feel that the current branding really does not reflect that Q100 Mr Hamilton: I must touch on Russia, because which is justified and thus project Britishness. We we were there last week in Moscow and obviously are not laying down a prescription saying how it the big controversial issue is the raids that the tax should be, but the four dots, which I know represent police have been making on various oYces of the the four countries of the United Kingdom...The British Council all over Russia. I wondered whether British taxpayer is entitled to have the flag flown, as you were any closer to a resolution with the Russian it were, though I am not necessarily talking about authorities on this supposed disagreement over the flag, but it does not have an impact. I wonder taxation of your operations there. whether you have reflected upon that. Remember Sir David Green: The short answer is no. However, you moved from the multi-dots to the four dots. we do have the cultural centres agreement, which has Sir David Green: Yes. been agreed in principle for the last two and a half years and we are pressing for that to be signed, Q103 Andrew Mackinlay: I think it was a bit dotty. because we think this would be a breakthrough. The What say you? Prime Minister spoke to President Putin and Sir David Green: I remember very well. Actually the President Putin has said he would like this sorted previous logo was very tired, it did not give a out. I spoke to the British Ambassador only dynamic impression or image of the British Council. yesterday to discuss with him what else we might do. He is pressing the Russians to see whether we can get Q104 Andrew Mackinlay: This one would not set the the cultural centres agreement signed on 7 July, Thames alight. coinciding with the Foreign Secretary’s visit to Sir David Green: You may have noticed that we also Moscow. The first stage is to get that cultural centres dropped the “The”; it is British Council and four agreement signed. The threat of further raids dots and actually it has gone down extremely well yesterday was a surprise to us, although it did not across the world, both in terms of perceptions of actually come about. The situation is far from staV and also of the people who use the buildings. resolved as yet. They do think it projects a very dynamic and modern image of the UK, in so far as the logo and brand can. I can tell you that we went through many hundreds Q101 Andrew Mackinlay: Along with your other of diVerent options and this was the best. work, the Council has an important role in overseeing the voluntary accreditation of English Y language schools in the UK. Do you feel that Q105 Chairman: E ciency saving on posts overseas. responsibility fits comfortably with the other work To what extent do you co-ordinate administration of the Council? There have been some scams as well, with the FCO, for example in terms of Y as you know. It just seems to me that this is an area accommodation for o cers coming from overseas which you need to be satisfied with and/or you ought and so on? to be pressing the British Government to tighten up Sir David Green: In some places we share on these outfits. accommodation with the Foreign and Y Sir David Green: We very much welcome the Commonwealth O ce and we pay our due for that announcement by the Secretary of State for privilege. Education and Skills and about the register of educational institutions. We think this is an Q106 Chairman: Is there any reason why in most important step forward and will help reduce both the posts there should not be one administrator for all number of bogus institutions and also bogus British accommodation and so on? Would that not students coming to the UK. At the moment we run amount to eYciency savings? the accreditation scheme for English language Sir David Green: That goes to the root of our schools and approximately half existing language position, because in most places it is helpful for us to schools are accredited through our scheme. be distinctly separate from the embassy or the high Certainly the English language teaching community commission, in a separate building. very much welcomes our involvement as a neutral broker and partner in that. Given the role we play in Q107 Chairman: StaV accommodation and so on. English language teaching and the promotion of Dr Baker: In some places we do this. In Iraq, for good practice in English language teaching across example, we will do this, but the nature of our staV the world, I think that it fits well with our remit accommodation is rather diVerent from the overall. embassy’s. The embassies have very clear guidelines Ev 18 Foreign Affairs Committee: Evidence

22 June 2004 Sir David Green KCMG, Dr Robin Baker, and Mrs Margaret Mayne on representational levels and so on in a country Q110 Chairman: Will you convey those to us? with a price tag. That is not the basis on which we Sir David Green: Yes, we will.10 take our accommodation. Most of our British staV overseas are teachers and there is no equivalent in Q111 Andrew Mackinlay: So there are some things embassies. Where it makes sense for us to work which concern you in relation to the spending together we try to do that, but in many cases it is just review. The most important question is left to last. not that easy. What were your last words? Seriously. Sir David Green: We have a current concern about a proposal which is on the table to which we are Q108 Chairman: From time to time it is alleged that V Y reacting, which does not a ect the overall ring- the Foreign O ce tries to eliminate the ring-fence in fencing, but does begin to undermine it. the spending review. Has there been any hint this time round? Q112 Andrew Mackinlay: Is that something you do Sir David Green: Let me answer that question in a not want to share with us in public or would prefer V di erent way, if I may? The ring-fencing is very not to? important to the British Council, as it is to the BBC Sir David Green: I would prefer not to. World Service. Q113 Andrew Mackinlay: Could you write to us Q109 Chairman: Yes, I understand that. That is why about it? I asked the question. Sir David Green: Shall I write to the Chairman Sir David Green: It is something which we hold dear about it? and something which was introduced in the 2000 spending review. We will ﬁght against any attempts Q114 Andrew Mackinlay: That would be excellent. to withdraw that from us. I do not think there is any Sir David Green: Will do. question that the ring-fencing per se will be removed, Chairman: Thank you very much for your help. but we have other concerns in relation to the spending review bid. 10 Ev 120 Foreign Affairs Committee: Evidence Ev 19

Tuesday 29 June 2004

Members present:

Donald Anderson, in the Chair

Mr David Chidgey Mr John Maples Mr Eric Illsley Mr Bill Olner Andrew Mackinlay Sir John Stanley

Witnesses: Sir Michael Jay KCMG, Permanent Under-Secretary of State, Mr Dickie Stagg CMG, Director General, Corporate AVairs, Mr Simon Gass CMG CVO, Director, Finance, and Mr David Warren, Director, Human Resources, Foreign and Commonwealth OYce, examined.

Chairman: Sir Michael, on behalf of the Committee Q116 Andrew Mackinlay: The non-executive can I, again, welcome you and your colleagues. I directors are by ministerial invitation, are they? Do think every one of your colleagues has appeared they rotate? either with you or in other groups before the Sir Michael Jay: There are two non-executive Committee. We have Mr Dickie Stagg, who is the directors: Allan Gormly, the Chairman of BPB, and Director General of Corporate AVairs. We have Mr Lucy Neville-Rolfe, the main board director of Simon Gass, the Director of Finance, and Mr David Tesco. They were appointed, as you say, by Warren, Director of Human Resources. Sir Michael, ministerial invitation for a period of, I think it is, I think all Government departments began two years. publishing an annual report in about 1991 and it has been the practice of this Committee, in common with Q117 Andrew Mackinlay: Just one other thing I most select committees, to use that as a basis for want to clear up. Do you have any responsibility for examining the administration of the relevant security and intelligence? I do mean responsibility. departments. Although some may think of a Obviously you have involvement, as it were. I am committee like ours as being in a confrontational Y just looking at the structures. It is this blurred line as relationship with the Foreign O ce, certainly in an to whether or not our security and intelligence area like this we have always thought of it as being services, MI6 for instance, are Foreign and rather a meeting to discuss the problems which you Commonwealth OYce, or is that an entirely separate face and, where we can, we frequently try to be line to the minister? helpful in terms of the recommendations we make. It Sir Michael Jay: The intelligence services, the Secret will be in that spirit that we approach you and your Intelligence Service and GCHQ, are responsible to colleagues and leave any policy divisions in relation the Foreign Secretary. to government. I would like to call on Mr Mackinlay first in respect of these matters. Q118 Andrew Mackinlay: Not through you? Sir Michael Jay: Not through me although, as you can imagine, there are very close links between the Foreign OYce and the intelligence services because much of what we do has much in common. Q115 Andrew Mackinlay: Page 15 of the report refers to the FCO Board and I notice there are two non-executive directors. What exactly does the Q119 Andrew Mackinlay: In an earlier year I asked Board do and what is their involvement? about sponsorship and I see on page 170 there is Sir Michael Jay: The Board is the board of the senior reference to sponsorship in about 30 companies of management of the Foreign OYce which consists of £5,000 plus sponsorship. I think in previous years the Directors General of the Foreign OYce—the there were some specific examples. What would be Finance Director, Human Resources Director and the highest sponsorship, one, two or three perhaps? the Strategy Director—and two non-executive What examples have you got of what sponsorship directors, as you have mentioned, Mr Mackinlay. I we are getting in the highest areas? chair this Board. Our job is to be responsible for Sir Michael Jay: Could I ask one of my colleagues to implementing the strategy which is set by ministers answer Mr Mackinlay’s question? and, under ministerial guidance, managing the resources which we are given by the Treasury to Q120 Chairman: Of course. Feel free at any time to manage. Also to ensure that in doing so we exercise refer to one of your team. proper quality control over the management of the Mr Gass: I do not think I would be able to answer funds that we are responsible for, the management that oV the top of my head, I am afraid, Mr of our overseas posts, the staV in our overseas posts, Mackinlay. I am sure we can send you a note on the and also we see ourselves as having a responsibility sponsorships.1 I think we have given details of some for communicating to the staV of the Foreign OYce of them on our website. as a whole, particularly at a time of change and financial constraint such as through which we are 1 Please refer to the Annex of Sir Michael Jay’s letter, dated living at the moment. 20 July 2004, Ev 65 Ev 20 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren

Q121 Andrew Mackinlay: Could we have a list, the moment and the reason we do not is not any please, if that is possible. You will remember in reason of principle, it is a question of financial previous years I have asked questions on the cars at constraint. We do have important interests in the airports.2 Kyrgystan; they are represented from our embassy Mr Gass: I do, Mr Mackinlay. in Kazakhstan. Our ambassador in Kazakhstan was in Bishkek last week and had some very useful talks there with the authorities in Kyrgystan. He aims to Q122 Andrew Mackinlay: If I may just move on. The get there every three months and his deputy aims to White Paper3 made clear that the Foreign and get there every three months, which means we hope Commonwealth OYce’s network of overseas posts to have a senior oYcial in Bishkek every six weeks to will change as a result of greater prioritisation and try to pursue our interests there. We are not you envisage, or there was an inference, that perhaps neglecting our interests but at the moment we do not over the next decade there would be a shift in feel we have got the resources that would justify us priorities. We have 153 embassies and high having an embassy there. commissions. If you were looking ahead over the next decade, would you see a reduction in the number of those places in view of the fact that one Q124 Andrew Mackinlay: Okay. Finally, can I go to can exploit new technologies or new priorities? the appendices? I see that the United Kingdom is paying 30% of the cost of the Secretariat of the Sir Michael Jay: I think I am right in saying that we 5 have got about 230 overseas posts altogether— Commonwealth. I calculate Canada, Australia and embassies, high commissions, consulates, deputy New Zealand constitute about the same population high commissions—in some 140 or so countries. We as the United Kingdom and presumably they are have to look at the right spread of our network paying another 30%, are they? Bearing in mind it is pretty constantly to ensure that the network meets not the British Commonwealth, are we paying the priorities that have now been set out in our proportionately or disproportionately? strategy and that we can resource them all properly. Sir Michael Jay: I have not got the figures in front of I would expect to see some changes in that network me. My guess is that we are probably paying over the next five to ten years. I cannot tell you disproportionately still because of our traditional exactly where those changes may come. I would close links with the Commonwealth, even though we expect to see some changes in the size of some of our are not head of it now. embassies and high commissions. I would expect to see some become less important, some countries Q125 Andrew Mackinlay: It is a mutual society, is become less important, some countries and some of it not? our embassies become more important than they Sir Michael Jay: Yes, it is. I do not know whether now are. It is an organic network, if you like, and Simon Gass knows. I am sure there will be a scale of there are bound to be shifts from time to time. I have contributions depending on the GDP. not got the list in front of me, but I think over the last Mr Gass: I do not know exactly the scale of ten years or so we have opened quite a lot of new contributions. I guess it may be the case, I do not posts precisely because of shifting priorities, and I know, that we also pay rather more by virtue of think that will continue. having the headquarters building in London. I do not know that, but that could be a factor. Chairman: Perhaps for the Committee as a whole Q123 Andrew Mackinlay: I think the Committee you could send us that information and to what understands the need to maximise scarce resources extent it is accounted for by Marlborough House.6 and the limits that exist and the fact that over the past 15 years there have been new countries which Q126 Andrew Mackinlay: On page 190 in the did not exist previously. There is still some appendices, the United Kingdom contribution to bewilderment amongst colleagues that you peacekeeping operations 2003–04, there seems to be stubbornly resist having a mission in Kyrgystan. a very high sum of money under Croatia. Croatia is Our predecessor Committee visited the region and now a candidate country of the European Union. recommended that. It is served by our mission in One recognises the fragile nature of the Western Kazakhstan, which is not in the capital of Balkans but it was not clear to me why we have got Kazakhstan. That country is about the size of peacekeeping operations on the scale of 748,000. Western Europe. We know that Kyrgystan has Sir Michael Jay: I would have to look into that, Mr United States, Russia and China, most of the big Mackinlay, and send you a note.7 players, in Bishkek and we still have no representation there.4 Is this a matter for review? Sir Michael Jay: It is one of the countries that is kept Q127 Mr Maples: Permanent Secretary, this Committee has been concerned in the past with the under constant review. I think we would all like to Y have an embassy in Bishkek. We do not have one at policy that the Foreign O ce has pursued for some time of selling residential property and reinvesting in 2 Foreign AVairs Committee, Twelfth Report of Session IT systems and we have expressed our views about 2001–02, Foreign and Commonwealth OYce Annual Report 2002, HC 826, Ev 77 5 FCO, Departmental Report 1 April 2003—31 March 2004, 3 Foreign and Commonwealth OYce, UK International Cm 6213, April 2004, p181 Priorities: A Strategy for the FCO, Cm 6052, December 2003 6 Please refer to the letter from Sir Michael Jay, dated 20 July 4 Please refer to the letter from the FCO, dated 28 May 2004, 2004, Ev 62 Ev 103 7 Ev 62 Foreign Affairs Committee: Evidence Ev 21

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren that. From an answer to a Parliamentary Question8 Q132 Mr Maples: When it is on ICT systems, what put down by me, we were told that the total receipts is the notional cost of capital there? Presumably they for the period 1 May 1997 to January of this year depreciate much further so the cost of capital is from the sale of residential properties was 88 million much higher. and the total amount spent on buying residential Mr Gass: The cost of capital, including depreciation, properties was 28 million. This leaves a diVerence of is higher. We have two sorts of non-capital cost. One somewhere around £60 million. Was all of that spent is the carrying cost of the capital; one is the on developing the Foreign OYce’s IT systems? depreciation of the asset. You are right that ICT Sir Michael Jay: No, it was not, Mr Maples. The assets typically would have been depreciated over position was that in the first period of asset recycling, about seven years, sometimes five to seven years, so the money that we realised from selling property was the depreciation is, indeed, higher. ploughed back into the estate. In the second triennium there was a split—I think it was 50/50— between receipts which were ploughed back into the Q133 Mr Maples: Most people in the private sector estate and receipts which went into our ICT systems. depreciate ICT assets over three years, perhaps five. In the current triennium, 80% of the money which is Maybe it has stopped from what you are saying, but realised from asset sales is ploughed back into the the idea of selling real estate assets in the world’s estate and 20% goes on our ICT systems, so the capitals, which are probably up and down in most balance has shifted very markedly in terms of cases, and using that money to put it into IT systems, ploughing back . . . which may be extremely useful but nevertheless are going to be worthless in somewhere between three to V seven years, seems to me to be an extraordinary use Q128 Mr Maples: If there is a di erence of £60 of capital, that somehow they ought to be in the million between the sales and the purchases, that same pocket. They ought to be thought of obviously has not gone back into the estate, that has diVerently. In that context, you have occupied the gone somewhere else. I am just wondering how Paris residence in a previous incarnation. That much of that has gone into IT systems because that is seems to us to be something that we would never buy where we were previously told the money was being as a country now, but is an absolutely spent. Obviously some of it is, but there is a V extraordinarily valuable asset and some of us have di erence of £60 million. We are talking about the been lucky enough to be entertained there from time answer to a PQ here. to time. You would say that makes the job of being Mr Gass: If I may try to answer that. I think what British Ambassador in Paris or in Washington we are saying is that the further £60 million has been easier, where there is a residence like that, makes you divided between new estate projects which were not as ambassador able to draw into that place people related to the properties that we had sold and ICT who would not come if you had some villa on the programmes. That is how the £60 million is divided. suburbs which no doubt would be fine for your We will have made new investments which account family. How does one possibly trade oV the value of for the net receipts. that house in the Rue du Faubourg against the cost of putting in a new ICT system which links you up Q129 Mr Maples: But in the list that Mr Rammell with Luanda? provided of purchases, it is not replacement. We Sir Michael Jay: Let me say a couple of things about have got Vilnius, Yerevan, Kiev. Admittedly we the property management. The first thing to say is have got one or two that may have been we have a total estate of about £1 billion of some replacements, like the San Francisco residence, but 2,500 properties around the world. The vast some of them are new properties too. I realise it is majority of our sales and purchases are not of high- slightly unfair to ask you about accounting in detail profile residences or embassies but kind of run-of- without notice but I wonder if you could let us have the-mill transactions which, like any other an explanation of where that £60 million diVerence organisation, we have to be engaged in day by day went. by day to make certain that we have got the right Mr Gass: Yes, certainly.9 kind of oYces and the right kind of accommodation for our staV. That is the first point I would like to Q130 Mr Maples: Just pursuing this area, to what make. The second is that we have to make certain extent is this policy driven? Are you the subject of that our buildings are secure, are fit for purpose and resource based accounting? meet our needs. We are constantly looking at them Mr Gass: Yes, we are. to see whether they are right, whether they are too big, whether they are too small. When the asset Q131 Mr Maples: To what extent is the policy driven recycling programme started a few years ago there is by that? Are you charged a notional rent on the no doubt that there were quite a lot of buildings we notional value, for instance, of the Paris residence? had around the world that were legacy buildings Sir Michael Jay: We are, Mr Maples, yes. I think I which did not have the allure, if you like, of Paris or am right in saying that it was 6% and it has now Washington, which we did not need and which it come down to 3.5%, which does shift the balance of made sense to dispose of and then to reuse the assets, advantage away from asset sales towards retention. or to invest the proceeds in property or, as the judgment was made at the time when we were 8 HC Deb, 26 January 2004, columns 57-59W rebuilding our ICT, in ICT. I think those 9 Ev 62 circumstances have changed quite a lot now. There Ev 22 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren are not the kinds of properties that there were a few Sir Michael Jay: It did. years ago readily available for selling in order to downsize some of our bigger properties, those have been disposed of. The discount rate, as you say, has Q137 Mr Maples: You cannot be happy about that? come down from 6 to 3%, which also shifts the Sir Michael Jay: No, I am not happy with the way it balance. The asset recycling programme is really has turned out but you have to make these shifting into a much lower gear than it has done in judgments. the past and in the context of the negotiations with the Treasury in SR2004 we are talking to them about Q138 Mr Maples: It is not just the way it has turned what is a sensible way of proceeding given the out, it is the fact of signing a purchase contract balance of our estate now and our investment before signing a sale contract, is it not? needs.10 Sir Michael Jay: You have to make these judgments as you go along. You have to take the advice of your Q134 Mr Maples: When you respond to how the 60 advisers as to whether this is the right thing to do. million is used, can you tell us what the current There are swings and roundabouts here. I think I am policy is about investing the proceeds of sales from right in saying there were 15 sales recently which property in IT systems as opposed to investing in have well exceeded our expectations in terms of new properties? There are two particular prices. For the houses in Bridgetown we got 50% transactions I would like to ask you about. We do more than we expected and in Dakar 40% more. It is not have all the details, and at some point I would not an exact science. like to ask you about why you will not provide us with the details. One is New York. When we were in Q139 Mr Maples: One would expect to make a profit New York two or three years ago we were told that on some but what I am saying is this seems to me to there were plans to sell the Consulate-General’s V be a mistake, a piece of really bad property residence, which was just o Fifth Avenue, because management that we got ourselves in this position. it was worth a zillion dollars and we could buy We moved the Consulate-General from one of the something just as good a couple of blocks away for fanciest addresses in Manhattan, from a premier a lot less. That seemed perfectly sensible. From the league to a division two address, and we lost money figures that you have supplied to us in confidence on the deal. recently we have seen that there was a small loss on Sir Michael Jay: Indeed, those are the facts but if the transaction and the New York purchase cost you are putting a property on the market and you more than the sale. I wondered what the point of have very good advice that this is worth a lot and a doing it was. very good property comes up at a good price which Sir Michael Jay: The decision to do it was taken V you can snap up, do you forego that one or do you before 11 September 2001 and the e ect of 11 take it? That is the sort of judgment you have to September 2001 was a very sharp reduction in make on the basis of the advice you get from your property prices in New York. That meant that the advisers. amount we got in the end from the sale of the Consulate-General’s residence was much less than we had been led by our advisers to believe we would Q140 Mr Maples: I hope you are not employing get. That was the principal reason but there were them any more because it does not seem that they some other diYculties. were giving you very good advice. I do not think one needs a lot of advice to come to the conclusion that Q135 Mr Maples: Presumably the price of the this is a sort of uncovered option, is it not, it is a property you bought was aVected by 11 September pretty dangerous transaction to enter into? Instead too, it was also in New York. of making several million dollars, we have lost a few Sir Michael Jay: The purchase was completed in hundred thousand. November 2001. My guess is that the commitment Sir Michael Jay: We lost a few hundred thousand on had been made before September, although I cannot the transaction. confirm that. I do not know if my colleagues can. Yes, it was. We were committed to buy the new Q141 Mr Maples: Can I ask you about one other residence before 11 September. We had not sold the specific transaction and that is Dublin. We are told old residence before 11 September. After 11 in one of the tables that you have provided to the September property prices fell and the result was Committee that seven houses in Dublin were sold that we sold the old property for less than we had between 1998 and 2004 and one house was bought expected and, you are absolutely right, Mr Maples, and the gain was £2.5 million. It does not say that for marginally less than we bought the other one. those seven that were sold included the main residence, although we are told somewhere that one Q136 Mr Maples: So the result of that was we signed of the purchases was the main residence. I think a contract to purchase a property without covering what happened in Dublin was that the residence was ourselves by signing a contract to sell the old one, so sold and repurchased, and that is not clear at all a deal that was supposed to net us five or seven from the figures that we have been provided with. I million dollars in fact resulted in a small loss. wonder if you could either tell us or let us have a note on exactly what happened. I think it was sold and 10 Ev 62 then you found you had to buy it back. Foreign Affairs Committee: Evidence Ev 23

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren

Sir Michael Jay: What happened was that we sold money in Dublin, we cannot get to the bottom of the house, Glencairn, and the land, and we bought that, it depends what we sell Marley Grange for, I another property which we believed was going to be suppose. We have these incredibly valuable assets better value for money and more secure. It then which are our residences in foreign countries, which turned out that the property we had bought, Marley we would not buy because they are far too expensive, Grange, was going to be more expensive than we had and we do things like this with them. I just thought to redo and also the security situation in mentioned two but in both cases the transactions Dublin changed and construction of roads around were screwed up, were they not? the old residence, Glencairn, meant that access to Sir Michael Jay: The first one was a victim of the centre of town was easier. We redid the value- circumstances, as I explained. In retrospect, with the for-money calculation a couple of years ago and second one it would have been better if we had came to the conclusion that the right thing to do in stayed in Glencairn. value-for-money terms was to repurchase the Mr Gass: I was just going to add to that that the original house but with much less land. What we FCO property portfolio is about £1 billion, it has got have done is gained substantially on the sale of the about 3,500 properties in it of which over the last five land but at the moment we are in the process of years we have sold about 170. selling the house we had bought and completing the purchase of Glencairn. Q147 Mr Maples: Most of these are staV ... Mr Gass: You are absolutely right. I was going to go Q142 Mr Maples: We could have just stayed with on to say that only six of those residences—Bonn Glencairn and sold the land and achieved exactly the was one—were sold because the post was no longer same result, is that right? needed. It is not that we are selling masses of Sir Michael Jay: We could have done. The judgment residences. You have picked two examples where made at the time was that was not the right thing to there is absolutely no doubt we would have wished do because of the security concerns surrounding that things had turned out diVerently and you may Glencairn. be sure that we have asked ourselves internally some very searching questions about how those two Q143 Mr Maples: The purchase price of the happened. residence is given in one of the answers to us from your Department as £6.325 million and there is no Q148 Chairman: Two of the six. mention of the sale anywhere, and we are finding it Mr Gass: Two of those six, but I am also talking very diYcult from these figures to get to the bottom about the other major properties where we have of this transaction. sold. I do think that those are two exceptional Sir Michael Jay: It was bought for £6.25 million in circumstances. I would not want to leave the 2000. Committee with the sense that that was the result of Mr Gass: If I could just add to that, it has not yet our usual property management, because I do not been sold. think that would be fair.

Q144 Mr Maples: It was sold, Glencairn. Q149 Mr Maples: They amounted to £11 million or Mr Gass: Glencairn was sold. I thought you were £12 million. talking about Marley Grange. Mr Gass: Indeed, it is a lot of money. Sir Michael Jay: We bought Marley Grange for £6.25 million; we have not yet sold Marley Grange. Q150 Mr Maples: Could you let us have a note about exactly what happened in Dublin, what Glencairn Q145 Mr Maples: So we bought a house for £6.3 was sold for and bought back for, so that we know million which turned out to be too expensive to what you made on the land, and what the situation renovate. Did we not make some estimate of the cost with Marley Grange is. Permanent Secretary, I do of renovating it before we paid £6.3 million? That is think that you really ought to reflect, or if the policy a lot of money to pay for a house, even for an is being set by somebody else they ought to reflect, ambassador. on what the consequence of this is. Here are six Mr Gass: We did make estimates of the cost of residences, one of which this Committee had serious renovation but two things were not logged at the questions about, the San Francisco one, on which time. One was that there was substantial asbestos in you did not make a lot of money and this Committee the house. The house was occupied at the time and, felt very strongly that was a mistake, and on two therefore, it was diYcult to get a very intrusive others we have managed to make a really serious survey of the house to identify the fact that it had mess of the transactions. Somebody buying a asbestos. Also, I think I am right in saying that there £100,000 house out there does not make those sorts was subsequent lobbying by the Georgian Society in of mistakes, they find out whether there is asbestos in Dublin for the refurbishment to be carried out in a it, they see whether English Heritage is going to stop particular way which also pushed up the costs. them changing the colour of the windows or something. They do not sign a contract to purchase Q146 Mr Maples: I know none of you are one when they have not sold the other; banks will not individually responsible for this but I just picked two lend you money to do that. I really think the big residence sales in which we seemed to have made Department ought to ask itself how it made these a major screw-up. I do not know whether we lost mistakes and it ought not to enter into any other Ev 24 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren transactions for major residential property sales started and you and your Foreign Secretary only before it feels that it has got a handle on this, that it becoming aware of it some six weeks or so after the is going to manage it better next time. war ended? Sir Michael Jay: We will let you have the note you Sir Michael Jay: The position as far as the Foreign ask for, Mr Maples.11 Secretary and I am concerned is as you have Mr Maples: At some point I would like to come back described it, Sir John. I cannot really answer for Sir to the confidentiality question. Kevin Tebbit. We have regular conversations about these sorts of issues, clearly we did not discuss this particular point. Q151 Sir John Stanley: Sir Michael, I want to turn to another aspect of departmental administration and Q152 Sir John Stanley: Can I just press you further. that is the issue of communications. I want to raise Surely you feel, I hope, a sense of some considerable communications at oYcial level between your discomfort that this crucial piece of information Department and the Ministry of Defence, and also held at oYcial level in the Ministry of Defence was within your own Department between oYcials and not passed on to you over a critical period of some ministers. The first one I want to raise is not bringing nine months. If you do feel some discomfort about up the reasons for going to war in Iraq but because that, perhaps you can tell the Committee what you of the issues it has brought out in terms of are doing with Sir Kevin Tebbit and his oYcials to communications at senior oYcial level, not least ensure for the future very much better between the Permanent Secretary in the Ministry of communication at oYcial level on these sorts of Defence and yourself as the Permanent Secretary in matters? the Foreign OYce. This arose in the context of the Sir Michael Jay: We learn lessons all the time from crucial information as to which of Saddam these kinds of issues and the relations which I have Hussein’s weapons the 45 minute claim related. This with Sir Kevin Tebbit, which the Foreign OYce has was a critical piece of information because with the Ministry of Defence, is now extremely close. depending on the answer was the question as to We have regular meetings between the Chiefs of whether or not there was a threat to British interests StaV and the top management in the Foreign OYce. in an immediate time horizon. If the intelligence My deputy, the Director General for Defence and related to battlefield weapons, then, of course, that Intelligence, regularly attends the Chiefs of StaV represented no immediate threat to British interests. weekly meeting. I cannot imagine a similar issue If it related to the longer-range ballistic missiles arising in the future. which Saddam Hussein supposedly had, then the 45- minute claim related to the British bases in Cyprus, Q153 Sir John Stanley: I am glad you said that. Can the significance of which you will be very much you point to any specific procedural changes you Y aware. When I tabled a question to the Defence have made at o cial level between the Ministry of Secretary, he replied to me on 4 March that his Defence and your own Department to see that this Permanent Secretary became aware that the could not happen again? intelligence on which the 45 minute claim was based Sir Michael Jay: As I say, there are regular informal was in relation to the battlefield weapons only contacts but there are also the structured contacts, V possessed by Saddam Hussein and the Permanent our meetings with Chiefs of Sta , weekly meetings Secretary in the Ministry of Defence became aware attended by my Director General, the Director for of this shortly after the publication of the Defence and Intelligence, at which these kinds of issues are regularly discussed. I also believe that in Government’s dossier on Iraq’s weapons of mass the future they would be aired at the Joint destruction, in other words in approximately Intelligence Committee and we would all be September 2002 or shortly after that date.12 When I informed as a result of that. tabled the same question to your own ministers, it transpired that you yourself as Permanent Secretary Y Q154 Sir John Stanley: Can I just turn to the second of the Foreign O ce only became aware that the 45 issue which arises within the Foreign OYce itself and minute claim related to battlefield weapons in June this is really the issue of communications between 2003 and in the meantime, of course, your own oYcials and ministers on very sensitive and Foreign Secretary had made his own speech at important issues. I want to raise this in the context Chatham House on 21 February 2003, again of the terrible prisoner abuse scandal in Iraq. This referring to the 45-minute claim and, again, in surfaced in the media quite early on in this calendar ignorance as to which weapons of Saddam Hussein year, 2004. Indeed, it is the case that I raised this that claim related. The question I put to you is, are specific issue in formal evidence in this Committee you satisfied or not that there was a nine month gap with Mr Bill Rammell when he came in front of the between the Permanent Secretary in the Ministry of Committee on 24 February.13 We now know that the Defence knowing to which weapons of Saddam key meeting that took place at which the Hussein’s the 45-minute claim related and you International Committee of the Red Cross (ICRC) yourself becoming aware of that, with the formally presented their report on prisoner abuse Permanent Secretary in the Ministry of Defence took place on 26 February in Baghdad. We also now being aware of that six months before the war know that the following day, 27 February, Sir

11 Ev 63–64 13 Foreign AVairs Committee, Fourth Report, Human Rights 12 HC Deb, 4 March 2004, column 1051W Annual Report 2003, HC 389, Q39 Foreign Affairs Committee: Evidence Ev 25

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren

Jeremy Greenstock’s oYce sent a telegram reporting Q159 Sir John Stanley: Or to your attention? on the ICRC’s report and the meeting that had taken Sir Michael Jay: Or to mine. place the previous day. Furthermore, we know that report, which was a telegram, was circulated to Y Q160 Sir John Stanley: Thank you. ministerial private o ces. Despite that, and despite Sir Michael Jay: I have no recollection of seeing it, the massive volcanic nature of this particular issue, let me be clear about that. we also now know, and this is in Mr Rammell’s reply to me of 20 May, that the Foreign Secretary was not made aware of the ICRC report until the weekend of Q161 Chairman: Sir Michael, the Priorities 8/9 May. He then promptly read it on 10 May. Sir document which was published last December, I Michael, I must ask you, how did it come about that want to touch on this before turning to security, does in your own Department there was this huge gap have implications not only for the assets in the between the arrival of Sir Jeremy Greenstock’s overseas missions but also the staV. It seems to oYce’s telegram on 27 February on a massively indicate that increasingly policy making will not be explosive and important issue and it was not until conﬁned simply to London with the implementation the weekend of 8/9 May that anybody briefed the at posts, but with the new IT it will be much simpler Foreign Secretary? to have a total network of policy formulation. Can Sir Michael Jay: As I understand it, the reason why you help on how this will aVect the location of staV it was decided not to mark the copy to ministers’ and the numbers of staV? attention was the emphasis that we were putting on Sir Michael Jay: I think we are clear, Chairman, that the ICRC report was the allegations concerning UK we need to ensure that our resources, both in forces and we knew from our contacts with the London and overseas, are allocated in accordance Ministry of Defence that the allegations concerning with the strategic priorities which ministers have set UK forces were being followed up and investigated. out in our strategy document. We are also clear that we are going to be operating over the next few years Q155 Sir John Stanley: But you know, Sir Michael, under increasing ﬁnancial constraints, so the issues as well as I do that when those allegations in relation which you mention are very central to the to UK forces were made, which were widely departmental change programme. Your premise is publicised in the British press (there was very full right, I believe that with IT we can make more use coverage in the Independent on Sunday, for example, than we have done in the past of the very on 22 February), whether it had been dealt with by considerable expertise we have in overseas posts. the Ministry of Defence or by some other Our ambassador in one of our overseas posts, say department, this was going to have the most our ambassador in Burma, is much better able than monumental impact worldwide on the whole anybody in London to look at the totality of our perspective with which the coalition’s operations relationship with Burma and advise us and advise were being conducted in Iraq. Surely that was a ministers on how they should be conducted if, say, a critically important matter to bring to the attention senior minister is visiting London. I want to use the of your ministers? technology to make more use of that. I think that the V Sir Michael Jay: I think in retrospect it would have e ect of this will be to slim down a little bit some of been better if it had been brought to my attention the geographical directorates in London in order to and brought to the ministers’ attention as well. avoid the duplication that there now is between what is being done by our overseas posts and what is being done by the geographical directorates in London. Q156 Sir John Stanley: What steps are you taking to That will enable them to be focusing on the core make certain that this does not happen again? functions of servicing ministers, focusing on Sir Michael Jay: We have drawn our staV’s attention regional issues, managing the network overseas and, to the need to be very sensitive to all human rights in a sense, empowering our embassies overseas by allegations and to make sure that those are brought giving them a more direct input into the policy to the attention of senior oYcials and ministers. formulation. Q157 Sir John Stanley: Just that? Sir Michael Jay: I hope that will ensure in any Q162 Chairman: With overall numbers that are similar case, and I very much hope there will not be broadly the same? a similar case, the papers would indeed be marked to Sir Michael Jay: We have not had the result of senior oYcials and ministers. That is what we need SR2004 yet but I suspect the combination of the to ensure happens in future. SR2004 outturn and the Gershon eYciency proposals that we put forward will result in some slimming down of our staV over the next two to three Q158 Sir John Stanley: In your own Department, years. The question of avoiding duplication, of how high was the telegram from Sir Jeremy ensuring that our staV are going where they are Greenstock circulated at oYcial level? really needed, is going to be crucial for us. Sir Michael Jay: The telegram was circulated at a senior level, as I think is made clear in answers which the Foreign Secretary gave in the House towards the Q163 Chairman: Are you proposing to go further end of May. It was circulated to ministerial oYces along the road of bringing in specialists? In the old and senior oYcials, it was not drawn to ministers’ days the criticism of the Foreign OYce was the cult attention. of the amateur, what some called the apotheosis of Ev 26 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren the dilettante14, that someone who came in with the Q168 Chairman: What about relations with the press? right intellectual equipment could turn to any job. Is Again, it appears to be the assumption that someone the problem which Mr Maples mentioned for in the course of his career can be the press oYcer or example the mistakes made in terms of the estate, deal with that at the Foreign OYce end but many due in part to the assumption that someone with the departments now bring in, perhaps on contract, right intellectual equipment can take key decisions people who know their way around the press world. on property management? Have you thought of that as worthwhile? Sir Michael Jay: I think there are two answers to Sir Michael Jay: At present the Foreign Secretary’s that, Chairman. The first on specialism is that I do Press Secretary is indeed brought in from the world not recognise the cult of the dilettante when I travel of journalism, and among his staV in our Press OYce and see our overseas posts; I see people who there is a mixture of people who have experience of are extraordinarily professional, who have the press world, who have come from the extraordinary language skills and who are trained in Government Communication Service, and also two or three core competences during their career diplomats. What we need to remember is that which, I believe, makes them exceptionally talented something that rather distinguishes the Foreign and able representatives of their country. I think that OYce from other government departments is that there is specialism even in the traditional Foreign almost all our people are going to have to become OYce make-up. However, I do believe that as the involved directly in press work when they are business of managing large complex organisations overseas, operating with the local radio, television, like ours gets even more diYcult we do have to have media in foreign languages themselves, and for that more professional expertise, more HR expertise, they need training. That is why we need to ensure more IT expertise, more estate expertise. that we have Foreign OYce people coming steadily through our Press OYce getting the training in Q164 Chairman: That is brought in on contract or public diplomacy skills that they are going to need to in-house training? use when they are in post overseas, as I discovered Sir Michael Jay: It will depend. We will need to myself in Paris. recruit people who have that expertise who will become permanently a part of our operation. I Q169 Chairman: One final question, before I turn to suspect that for some large IT projects we will Mr Chidgey. In your most recent memorandum you probably need to have, as we do at the moment, said that the Strategy was not a “camouflage for consultants brought in who have the right kind of closures and cuts” but that you would not want to expertise who work closely with our people. I “underestimate the pressures the present resource suspect we shall have some people brought in on climate places on the FCO.”15 Is this in eVect a cry for short-term assignments. I think there is going to be help or a warning to us of potential closures along a mix of this. On the premise of your question, do we the road? need more professional expertise in these areas, the Sir Michael Jay: I think it is a statement of realism, answer is yes. Mr Chairman. None of us want to close overseas posts; what we want to do is to ensure that we have Q165 Chairman: Does that include the business the network of posts overseas to maintain the global community? There were suggestions four or five influence which Ministers want us to have, and years ago of business people becoming which I think this Committee wants us to have. ambassadors. We have heard rather less of that What we need to ensure also, however, is that the recently. Is that something that you accept there is a posts that we do have are properly resourced with need for, for greater expertise in the commercial people properly trained and paid so that they can do world? the job they need to do. Whether we are going to be Sir Michael Jay: There is a need for expertise. As far able to maintain the network as it now is, given the as our ambassadors are concerned, what we need are resource constraints, I cannot tell you. As I the right people for the jobs. That could be business mentioned earlier on, in answer to a question from people. In the past we have had competitions for Mr Mackinlay, there are likely to be some changes some senior commercial jobs overseas, some over the next few years. business people have come . . . Q170 Andrew Mackinlay: Just on this narrow Q166 Chairman: How many are in post now? point—and I am not talking about the merits of Sir Michael Jay: I do not think any are in post now. individuals—Alistair Goodlad and now Helen Liddell have now been earmarked for the High 16 Q167 Chairman: It has not been very successful Commission in Australia. What is the mechanism? then? Does the Prime Minister send you a memo saying, Sir Michael Jay: No. I think there were two business “This is something I want to do, so do not appoint people who—I think I am right in saying—won on this”? How is that ring fenced or anything like competitions. One left the job fairly shortly after that? It is not a very common thing. We understand starting and one declined to take it up having seen 15 Please refer to the letter from Sir Michael Jay, dated 22 June what the terms and conditions were. 2004, providing an update on FCO strategy, Ev 76 16 “Helen Liddell to be appointed as the next British High 14 T. Balogh, “The apotheosis of the dilettante”, H. Thomas, Commissioner to Australia”, FCO press release, 2 April The Establishment (London, 1959), pp 83-126 2004 Foreign Affairs Committee: Evidence Ev 27

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren that this is clearly a political decision, a political that may be how a junior member of staV may have appointment, but do you wake up one day and get a perceived it. In fact we have performance indicators memo from the Prime Minister saying, “This is by which we judge our property. They are actually mine; I am going to make the appointment on this”? quite sophisticated; they consider rental values, sizes How does it work? I am not talking about the certainly, whether the buildings are in good individuals now, the individual qualities, but what condition, whether they are fit for purpose. We have are the ground rules for that? a range of criteria and I would guess that if Port of Sir Michael Jay: There are very few such Spain were to be sold it would have been judged appointments in the Diplomatic Service and the against those criteria. We can certainly give you a Foreign Secretary has made clear that he foresees note on that specific residence.17 there continuing to be very few such appointments in the Diplomatic Service. Under all governments, Q173 Mr Chidgey: You might like to revisit that and from time to time, Ministers have decided that there look at the notes of the visit and the report made by should be an appointment of this kind, and, indeed, the relatively junior member of staV on their return yes, I am essentially informed that this is what to England because that was not the impression that Ministers would like to do with a particular post, they left with the residents of that property at the and in this particular case I believe that the choice is time, who, quite understandably, in my view, were somebody who is extremely well qualified to be our somewhat incensed by the way they were treated. High Commissioner, as, indeed, is her predecessor. Security: may I start with Istanbul? I was one of the Andrew Mackinlay: Absolutely. One would hope for Members of this Committee who were in Istanbul nothing less. only a fortnight before the bombing took place and obviously very distressed at the loss of life, Q171 Mr Chidgey: Sir Michael, before I go on to particularly of Roger Short, and we have already security, I have a question on the topic of property passed our condolences to the staV about that. We sales. Amongst the list of 250 properties you recognise, as we all do, that this was the first time mentioned that either had been sold or were being that a British Consulate-General or embassy had considered for sale, can you tell me where the suVered such an attack, and as such was a terrible residence for the High Commissioner in Trinidad shock to the Service. Nevertheless, it is important to stands on that particular list? Do you have some know what progress has been made and, Sir figures on that? Michael, in your foreword to the Report you stress Sir Michael Jay: I am afraid I cannot. I have been that the security of your staV is your greatest single briefed on a number of properties, but not on Port preoccupation since the attack in Istanbul, and we of Spain. obviously understand that. Can you provide us with an update on the current situation at the Consulate- Q172 Mr Chidgey: I had the good fortune to visit General in Istanbul? Trinidad as part of a Committee a little while ago Sir Michael Jay: Yes, I can, Mr Chidgey. The works and I had the opportunity to see how eVective the are continuing to restore Pera House. As you know, residence was in attracting leading dignitaries and it was in the process of being restored after a fire leading politicians in the area to the High when the attack happened, and we made the decision Commissioner’s reception. So I was very impressed. that we should continue with the restoration. However, I was not impressed to hear that the Clearly, in the process of restoring it we are also residence was under review for sale because, as a strengthening the security so that it will be less result of a previous incumbent dividing one of the vulnerable to any future attack. For example, the rooms into two with a partition, it now had one more perimeter wall of the Consulate-General has been room than that grade of High Commissioner was rebuilt to a standard which will enable it to entitled to. That was a comment made by a rather withstand a significant bomb blast in the future, and junior member of whatever team it is that does these there is a new blast-resistant gatehouse and entrance evaluations, and it rather incensed the High to the Consulate. In fact Pera House itself, as you have seen it, is well inside the perimeter and has the Commissioner’s wife and himself because it was a V way he was not used to being treated, having served sort of stando which makes it in theory quite many years for the good of his country. To be told secure. What we need to ensure is that the perimeter walls and the defences are strong enough to that an extra partition in his residence disqualified V him from it was something he found rather hard to withstand an attack of the kind that it su ered last take. Do you know anything about this and can you November, and that is what we are doing as an tell us what happened to that residence, or whether essential part of the restoration of the building. we still have that bungalow in Trinidad and it is still doing the job that it was designed to do? It does Q174 Mr Chidgey: I understand that the local police rather reinforce the point about professionalism. I force and security forces had discussed with will leave that with you and move on to security, ourselves whether or not the approach roads and the unless you would like to respond? roads close by the Consulate-General should be Mr Gass: I cannot tell you specifically about Port of closed to general traYc. I understand that was the Spain, but what I would challenge a little is the idea case, but there was a question of whether that gave that a partition in two rooms would have been the the wrong impression. diVerence between keeping and selling a property, Mr Chidgey; that really is not the policy, although 17 Ev 64 Ev 28 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren

Sir Michael Jay: Do you mean before the attack? of staV were dealing very well with the after eVects of what was obviously a terrible incident. If I might Q175 Mr Chidgey: Before the attack. Again, as part oVer a general comment at this point on this area of of the review of the situation of security, have there Foreign OYce activity to provide welfare support been any measures taken in that regard? for staV? It is a matter of great importance to us that Sir Michael Jay: I am afraid I do not know exactly we increase the training of our assessors of the where discussions stand with the local authorities on trauma risk to staV and dependents of incidents of the closure of roads around Pera House. I would this kind, incidents which are traumatic, by which I have to look into that. Certainly there were constant mean primarily terrorist incidents, but not limited to discussions immediately before the attack in terrorist incidents—any incident which is likely to Istanbul with the local authorities, particularly after traumatise staV—and we aim to have 60 such the earlier attacks on the synagogue in Istanbul, assessors trained by next year to be able to deal with which led to stronger security measures being taken, the after eVects of incidents of this kind. more guards being put in place. Indeed, there was a security team in place in Istanbul at the time of the Q177 Mr Chidgey: Thank you very much. May I ask attack, which was putting up CCTV surveillance another question on Istanbul before I go further on systems around the walls. security? The reason that we were there in Istanbul was to look at the entry clearance situation, mainly Q176 Mr Chidgey: It is interesting in this context of the issue was the queuing outside of the Consulate- security that the Committee, I think a little while General. Clearly with the eVect of the terrorist act before, visited Tehran and obviously met with your there this must have been completely stopped. So V 18 sta in the embassy in Iran. Just after somebody where are we now? Have we restored the services? fired some shots at the embassy, if I remember. The Sir Michael Jay: Could I ask Dickie Stagg to answer reason I mention that is because it was quite clear, V that question, Chairman? talking to the sta there, that they were quite Mr Stagg: The position at the moment is that the shocked by this attack, and I wondered, within the entry clearance operation is operating from the context of Istanbul, bearing in mind the severity of Hilton Hotel, from four rooms. They are issuing the attack that then occurred there, what sort of V about 75% of the normal number of visas, which long-term support those members of sta in Istanbul obviously is a drop on the rate before last have been given—those who were injured, those who November. We are planning to move back into Pera were traumatised, because these things seem to House in August or September and that, combined disappear and what we are interested to know is how V with some strengthening of the Ankara operation, the sta were being cared for? we believe will get us back to full operation by the Sir Michael Jay: Let me assure you that they do not end of the year. disappear and we do take our duty of care to our staV extremely seriously, and that is the thing which concerns me more than anything else in the job I Q178 Mr Chidgey: Thank you. Coming back to have at the moment. That duty of care does not stop security, Sir Michael, following the attack in on the immediate aftermath of an attack—it Istanbul, of course, the Foreign Secretary continues afterwards—and there are lessons we have announced an internal review.19 He has contacted us learnt from this about the sorts of ways in which we this month setting out the results of the review, need to protect our staV. Perhaps I could ask the which was undertaken by Stuart Jack. You will be Human Resources Director, David Warren, to say familiar with the findings, I am sure, and I do not something in a little more detail about the measures intend to re-rehearse them here, but I would like to that we have taken with our staV in Istanbul as a know, now that Stuart Jack has presented his final result of the attack there? report on the Foreign OYce’s Security Strategy, Mr Warren: Mr Chidgey, I can reassure the whether you think his findings strike the right Committee that all staV in Istanbul had access to balance between the need to protect staV whilst good quality medical treatment immediately after maintaining access to the post for the general public? the incident, including counselling and with trauma Sir Michael Jay: I think they do, Mr Chidgey; I think risk assessment. Our welfare oYcers have been in that is the fundamental issue for us, how we do get close touch, not only with the staV in Istanbul but that balance right between the need to ensure the also with relatives in the UK of those who were security of our staV and the need to be open enough killed, to oVer all support. The Consulate-General to carry out our business. This is essentially a initially set up a welfare oYce, which was staVed question of managing the risk. We cannot eliminate mainly by volunteers, to give support to staV and all risk in the OYce but we can try to manage that family members, and a small support oYce risk sensibly, and that is what we are trying to do, continues to operate in Istanbul. Trained staV,asthe and those are the principles which underlay Stuart Committee may know, were sent to Istanbul within Jack’s report. I think the basic philosophy that 24 hours to carry out the trauma risk assessments. It comes out of that report is the need to ensure that was not possible to cover everybody immediately there are certain basic standards which we expect to because of local security constraints, but a follow-up observe in our overseas posts; that we judge those visit in January of this year found that the majority standards against the vulnerability of the post and, for example, the extent to which the host 18 For details, see: Foreign AVairs Committee, Third Report of Session 2003–04, Iran, HC 80. 19 HC Deb, 10 December 2003, column 84-86WS Foreign Affairs Committee: Evidence Ev 29

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren government can be expected to ensure the security of make the immediate security measures needed to our posts. So in a sense you are making a judgement enhance their security. Also, we responded to in each individual case. What are the standards specific incidents which arose. You mentioned which are there now? Are those standards acceptable Tehran, Mr Chidgey, and as a result of the attacks given the vulnerability of the post? If they are not we on the embassy in Tehran we have installed need to strengthen the post in order to ensure it is bulletproof and bomb blast windows there. Clearly properly secure. If we cannot do that we need to there was a need to do that and we authorised that consider moving somewhere else where it will be straightaway. We have also re-prioritised our estate more secure. Secondly, of course, if we are building budget—which takes us back to estates—so that the new buildings we need to make certain that we emphasis on our estate management and our new- construct buildings, which also are going to meet the builds and our refurbishments over the next few standards which we are setting ourselves. So it is years is going to be driven largely by security; essentially a risk management approach. probably 70% of our investment will be security driven. Those decisions will be taken on the Q179 Mr Chidgey: That is very interesting, and it is assessment of the risk and the vulnerability and the interesting because one of the things which we are threats to our posts, case by case by case. So, in a able to do as a Committee is to draw comparisons sense, we are in the process of implementing the between the way that our own embassies are approach set out in Stuart Jack’s report. protected and the way that our colleagues, allies, whatever, from the United States treat the same Q181 Mr Chidgey: Have you set yourself a timescale, problem in the same location. Of course it is quite Sir Michael, when you can be satisfied that the basic clear to us that in many cases there is a fortress or security measures that have been identified have even bunker mentality in the approach to security been implemented in all our posts overseas? from our American allies in the same location as an Sir Michael Jay: I do not think I am ever going to be embassy of the United Kingdom, which is clearly satisfied that all our posts are quite safe. not so well protected. I would be interested to know how those decisions are made and what sort of co- Q182 Chairman: Okay, but you surely have a operation there might be in sharing security programme? information as to lead to the Americans seeing a risk Sir Michael Jay: We have a programme and we are at one level and of us seeing it at a somewhat drawing up that programme now. We clearly need to diVerent level. see what comes out of SR2004 and the reserve bid we Sir Michael Jay: We do share information put in that to ensure we do have enough money for constantly with the Americans and, indeed, with security. The Treasury have been sympathetic to this other allies on the security of individual posts, but and I think if that succeeds we continue to we have to make our own decisions on the basis of implement a programme, which I believe will lead to our own philosophy, on the basis of our own adequate security for our posts. But I am never going resource of locations as to how we maintain that to be complacent; every time the phone rings at 10.30 balance ourselves. On resources, perhaps I may add at night I think it is an attack on one of our posts. one point, if I may, which is that we have, as part of our bid to the Treasury SR2004 included, as you Q183 Mr Chidgey: A final question: does the budget would expect, quite a big element for security to that you are bidding for to introduce these security ensure the security of our overseas posts. That is not measures in our posts worldwide appear as a a figure that we have pulled out of the air, it is based separate budget line in your bid for the funding for on an assessment of how secure our posts are around the Foreign and Commonwealth OYce? Is it the world, how vulnerable they are and what we need identifiable? Will we know if it is not met in your bid? to invest in them to ensure that they reach the Sir Michael Jay: It is separate, it is identifiable; it is, standard of security which we believe necessary to as I say, worked out on the basis of what we believe fulfil our duty of care. So it is quite a sophisticated we need to ensure that we can fulfil our duty of care. approach to risk management and we hope very I cannot foretell what is going to come out of the much that the Treasury will accept the arguments. SR2004, but, subject to the views of Simon Gass, I guess it would be readily identifiable. Q180 Mr Chidgey: It seems you are describing Stuart Mr Gass: It would not be readily identifiable in our Jack’s review findings on the vulnerability audit of accounts as a separate line of expenditure, but it is all the posts. Do we know yet when that readily identifiable in our spending review bid to the vulnerability audit is going to be completed? Treasury. Sir Michael Jay: It is ongoing, as they say. Immediately after Istanbul we urgently reviewed the Q184 Mr Chidgey: We will know what you have security of all our overseas posts, in the immediate asked for and we know what you get. aftermath of Istanbul, and we authorised all our Mr Gass: We will certainly know that. posts to make certain immediate remedial measures, Mr Chidgey: So will we! which they thought necessary to increase their security—things like anti-shatter film on windows Q185 Sir John Stanley: I would like to continue on and so on. We also authorised additional more or less where David Chidgey finished. You say, expenditure on areas such as perimeter security. This Sir Michael, in your conclusion on the non-classified was in order to ensure that all our posts were able to part of your paper on security, “As the UK remains Ev 30 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren engaged across an uncertain world we must be Mr Gass: It is a mixture of capital and running costs. prepared for considerable security challenges. On Sir Michael Jay: Two to three million for armoured terrorism we are in for the long haul. To meet these cars, £13 million for guarding and £17 million for the challenges the FCO will need to continue to keep security element of our estates projects. That gives a strong emphasis on security and ensure that the rough breakdown of this year. current eVorts to enhance security can be fully 20 implemented.” What is the ballpark figure, which Q191 Sir John Stanley: Would you expect that presumably you must have estimated, as to the cost breakdown to be carried through over the next four of fully implementing the enhanced security that has years—those sort of rough proportions? been recommended to your Department? Mr Gass: I think in terms of the increase, Sir John, Mr Gass: At present our security budgets are divided V my expectation is that the guarding costs would not up into di erent compartments; it goes partly into rise as much as the capital costs, and the main reason our estate budget, partly into our central security why we need a very large sum on top of our existing budget, partly into our geographical budget. That budget is primarily because there are a number of figure at the moment is somewhere in the region of properties around the world which we feel are never £50 million to £60 million a year. We believe that in going to be capable of being protected to the order to undertake the mixture of estate builds, standard which we think is necessary, and therefore where we feel that we need to move a location, or to we are going to have to move locations and build. heighten the defences of a building which we already Therefore, of the £60 million the dominant part of it have, we might be looking at a figure of about £60 is capital cost for removal of buildings. Where we are million a year for the next three or four years. on guarding is that in most cases we already have what we feel is an adequate guarding level. That may Q186 Sir John Stanley: So we are talking about V change over a period of time; there may be more that quarter of a billion pounds, e ectively—that sort of we can do in particular areas, which we cannot at the order of magnitude? moment. The largest constraint on us is the ability to Mr Gass: I am talking about 50, 60 existing plus an undertaken some pretty meaty new-builds for additional 60, so about £120 million a year. embassies in vulnerable locations. Q187 Sir John Stanley: On the basis of an extra £50 million or £60 million a year over four years we are Q192 Sir John Stanley: Sir Michael, could you tell us talking about an extra quarter of a billion roughly, the approach that your Department is following are we not? towards the Treasury in bidding for this broadly Mr Gass: Yes. quarter of a billion pounds extra which you are going to need on security over the next four years? Q188 Sir John Stanley: That is the capital side, Clearly if you did not get the money or you were presumably. obliged to fund that, which I take it you regard as Mr Gass: No, that includes both capital and being absolutely essential expenditure, by cut-backs running costs. on your mainstream business, this is going to have a pretty devastating cost for the Foreign OYce. So Q189 Sir John Stanley: So in the running costs you how far are you taking the line with the Treasury were including what must be substantially rising which I, and possibly others in the Committee, costs on security guards, close protection teams, might feel would be a reasonable line, that this is a security companies, security services, all of which are totally exceptional item that has been forced on your current expenditure items, presumably? Department by world circumstances, totally outside Mr Gass: Yes. your own control, and that it would be wholly wrong to emasculate the Foreign OYce’s mainstream Q190 Sir John Stanley: Can you give us again some activities to deal with the worldwide security issues sort of ballpark figure as to the uplift you need to created by terrorism, and surely this should be a cover those revenue costs, with basically paying your matter for central government funding out of the security people from local employed security guards Contingency Reserve? to the obviously very, very high cost British close Sir Michael Jay: I think you have put the case very protection teams? well, if I may say so, Sir John. That is very much the Mr Gass: I cannot oV the top of my head give you a line we have been taking with the Treasury, both breakdown of the £60 million as between capital and over the next two years in putting forward a case for running costs, but my recollection is that it is more funds from the Reserve, and also in our bid for capital than running costs, but exactly how much the SR2004 for the three-year period that will begin in running costs are for guarding as opposed to small 05/06. I do detect from the conversations that we works that might not be capital works, I cannot tell have had with Treasury oYcials there is an you instantly. understanding of this position, although I cannot Sir Michael Jay: I have the rough figures for this predict the outcome of SR2004. I agree with you year broken down, which are about 23 and a half entirely that our overseas network has to be secure million for central security budget, which I take it so we have to find the money to make it secure and is capital? if we do not have the money to make it secure, as it now is, then we will have to think about how we 20 Please refer to the letter from the Foreign Secretary, dated structure our network to ensure that what we do 23 June 2004, regarding the FCO internal review, Ev 80 have is secure. I believe that the Treasury understand Foreign Affairs Committee: Evidence Ev 31

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren this argument and I hope very much that we will Q196 Chairman: Are you saying that there is no have an outcome which we will find satisfactory and provision for a top-slicing fund? enable us to fulfil our duty of care. But we are Mr Gass: Mr Chairman, as far as I know there were advancing precisely those arguments. some ideas which were put forward at one stage for an increased fund for public diplomacy involving Q193 Sir John Stanley: So you are making it quite both Foreign OYce and British Council money. To clear that these are exceptional items, unforeseeable the best of my knowledge that is not a proposal items and areas outside your own control and, as has which has been pursued; it was a proposal for been the normal way under successive governments, discussion and is not, as far as I know, part of any this is a matter for the Contingency Reserve? proposal which is being pursued in the context of Sir Michael Jay: Would you like to talk about the this argument. technical points about the Reserve for the next couple of years, Simon? Q197 Chairman: Are you prepared to give us an Mr Gass: Yes. We are seeking access to the reserve, assurance that so far as you were concerned the Sir John, for this year and next year. I cannot principle of ring fencing those two budgets remains remember, I have to confess, whether the precise intact? figure is £60 million in those two years, but it is for Sir Michael Jay: I am not aware of any proposals to a substantial sum. We are also seeking, under the change that in the context of the present spending Spending Review, an addition to our baseline for round, but I do think we have constantly to be security expenditure of approximately £60 million in looking at how we can ensure that there is proper each of the three years of the Spending Review. synergy between us and the British Council, and I think we need to keep it constantly under review. Q194 Sir John Stanley: Clarify that, if you would. What you said in that reply, as I understood it, for Q198 Chairman: We are at a very late stage of the the first two years you are taking the whole of the Spending Review. If there were still such proposals additional £60 million a year, you are seeking that still extant you would know? out of the Contingency Reserve, but are you then Sir Michael Jay: I would expect so. saying that beyond that you are looking to get an overall increase in your baseline and then, assuming Q199 Chairman: You would, would you not? you get it, you are then going to finance the security Sir Michael Jay: Spending rounds have a habit of spending out of an increased baseline if you get it; is producing surprises at the end, Mr Chairman, and that what you are saying? that is my experience. I am a little bit cautious in Mr Gass: Correct, but that baseline increase is a being absolutely certain about this. baseline specifically for security. This is not just a general FCO baseline out of which we are hoping to Q200 Chairman: Mr Gass, you know possibly the get £60 million; this is a specific bid. current state of play. Can you give us an assurance that you know of no such extant proposal? Q195 Chairman: Sir Michael, in respect of the Mr Gass: I can certainly give you an assurance that financial management, I think most of the questions I know of no extant proposal to remove the ring we would like to ask we can submit by means of fence of the British Council. On the fund which you written questions. So I will just take one area, and mentioned, the best understanding, which I have, is that is ring fencing. As I understand it, both the that there was a proposal which was discussed by the British Council and the BBC World Service public diplomacy side of the Foreign OYce at an currently submit their own Spending Review earlier stage, but, so far as I know, that is not being submissions to the Treasury via the FCO. The pursued. If we are wrong in that, Mr Chairman, we principle of ring fencing for both organisations was would need to write to you very quickly to tell you established in the Spending Review 2000. I guess that, but it is not our understanding. they would argue that it does give them a certainty Chairman: Mr Illsley, you wanted to come in on this. in terms of financial planning. Can you tell us a little about the new proposal in this current financial Q201 Mr Illsley: Yes. In the visit that the Committee round, this “top slice” fund? How will that operate made to Russia recently we raised the issue of the tax and how is it consistent with the principle of ring demand being presented to the British Council, and fencing the budgets of the World Service and the the attitude from the Russian authorities was that British Council? because of the money being made by the British Sir Michael Jay: I am not sure I am familiar with top Council in providing services that they were subject slicing fund. What I would say as far as the British to the tax laws of that particular country. Is that a Council is concerned, we are constantly discussing concern for the Foreign OYce if that becomes a with the British Council how we might work more trend worldwide, in that we now begin to receive tax closely with them on public diplomacy in order to demands, which presumably would be part of your ensure that we are realising the synergies amongst budget? Or do we still think that that tax demand has us, and I think we have made quite a lot of progress been sent in error? in that through the Public Diplomacy Strategy Sir Michael Jay: That particular case does cause us Board which ensures there is greater coherence than concern. We are still in negotiations with the I think was the case in the past between us and Visit Russian authorities. We have not yet resolved the UK, BBC World Service and others. issue; I hope it will be resolved satisfactorily so that Ev 32 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren the British Council can continue to do what I believe property within the middle of town was sold for is excellent work throughout their many posts in within a day of it being sold. It cannot be argued that Russia—not just in Moscow and St. Petersburg, but it damages anybody’s privacy. Then we were told elsewhere as well. I hope it will be resolved. If there that this was to protect third party commercial were similar issues elsewhere, yes, that would cause confidences. If my recollection is correct, third party us concern, and something about which we would commercial confidences was put in as an exception clearly need to work very closely with the British so that if you asked competing organisations for Council to try to resolve, and we would certainly bids, then the information they gave you about how help the British Council in negotiations they had they were basing their costs and how they would do with the authorities in countries concerned to try to it would not be disclosed by you, to damage their get it resolved. commercial competitiveness, vis-a`-vis, a competitor who might or might not have submitted a similar bid Q202 Chairman: Is there a hope that this will be to you. I suggest to you that it was a complete red resolved during the Foreign Secretary’s visit to herring to use that. The Department then came up Russia? with a better one, which was number seven, which Sir Michael Jay: I am sure it will be discussed during was the eVective management and operation of the the Foreign Secretary’s visit. As things are at the Public Service, where disclosure could prejudice the moment I think it may take a little longer to resolve competitive position of the Department, and saying it than between now and next week. that it might deter potential purchasers or vendors if Chairman: Sir Michael, I promised Mr Maples I they knew this information was going to become would come back to him on the overseas issue. public, or they knew what had happened in other cases. I suggest to you that, in something like the sale Q203 Mr Maples: We are back on the same subject, of a Consulate-General’s apartment in New York or I am afraid, Permanent Under-Secretary. We are a residence in Dublin, the number of these interested in this issue—I think you have gathered transactions at that level is so small that it could not that from previous reports and from questions that possibly be prejudicial. I will not quote the figure Mr Mackinlay has asked you—and we have had because you have given it to us confidentially, but if great diYculty in getting this information out you are not going to buy another multi-million of your Department. I originally asked a dollar apartment in New York how could it possibly Parliamentary Question about these and was refused aVect the Department’s position of managing its any information on either the budget costs or the assets? Please feel free to answer these points if you sale prices, citing two paragraphs of the want to, but what I am really suggesting to you is: Government’s Code on Access to Information. give up on this, let us have the information. I think Those, I think, are pretty weak and I will come on to your Department is misusing these exemptions in them with you. Subsequently, a third one has been the Government Code of Access to Information. It introduced from the same Code, which has perhaps is a perfectly reasonable thing for a select committee slightly more merit superficially but, I would argue, to ask for, particularly when we find out that there not much. What has actually happened is that from have been a couple of spectacular pieces of providing no information, there was then some mismanagement. I just ask you to drop this and let global information provided; and then at the third us have the information on an open basis. If you attempt information was provided up to about two want to delay it by six weeks or something like that years ago. More recently, you have provided up-to- I do not think any of us will mind about that, but I date information on a confidential basis. I think I would have thought that that would protect you speak for other Members of the Committee when I from any prejudice that might result in trying to deal say we do not like receiving information that we with another similar property. cannot use, unless you are briefing us on a security Sir Michael Jay: You are talking about information matter where it is for our background information— of sales achieved, as it were, Mr Maples? we can understand that. But none of us like having information that we cannot use. One feels that you have discharged your duty but that you have put us Q204 Mr Maples: Yes, transactions that have been in a position where we cannot use it. I would suggest completed. to you that this is a futile battle and you really ought Sir Michael Jay: Can I reflect on that? I do to give up on it, and that it is perfectly reasonable for understand your interest in this subject and I a Committee to ask—and you have a billion pounds understand your desire to have the information, and of assets, you sell a few, you buy a few—what were I congratulate you on your persistence in extracting the prices paid and received for those, and what I it from us.21 have found out about Dublin and New York makes me think that maybe the reason is that you did not want us to have this information. The exemptions Q205 Mr Maples: You could have made it much used initially were privacy of an individual, but this easier. cannot be an invasion of privacy to tell us what you Sir Michael Jay: I know, but let me reflect on this paid for and bought a property for. In most further, if I may, Mr Maples, on this particular countries this information is available from Land point. Registries and Stamp Duty records, or, in this city, the estate agents all know what every expensive 21 Ev 63–64 Foreign Affairs Committee: Evidence Ev 33

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren

Q206 Chairman: But you have struggled each stage then have to come in for an interview. So it is not a of the way. It has been like extracting teeth and, panacea. Our experience in India, in particular, has today, for example, you gave us the figure in respect been very positive, with the High Commission and of the sale of the Dublin property, which thus far you Deputy High Commissions are working much more had withheld. eYciently and the applicants feeling much happier Sir Michael Jay: Okay. with the service they are getting. So it has been very Mr Maples: We will get there in the end, you know; positive. In terms of where we hope to expand it, we you could make it a lot easier for yourselves and us. are hoping to use it in Kampala [Uganda], where we are hoping to use Kampala as a pilot for biometrics. Q207 Mr Illsley: Visa applications. A similar So we are hoping that, even with a biometric question was put to you by the Public Accounts included, which is quite a change as to how we do Committee22: once again a steady increase this year in visas, looking ahead to the future, we will be able to the number of visa applications dealt with by combine that with outsourcing. So we do see overseas posts; do we have suYcient resources to be outsourcing as a fairly major route to managing able to deal with the regular increases that we are increasing demand. I think that online applications seeing? are going to be very important in certain societies, Sir Michael Jay: The increases, as you say, are very although it is very clear that the 70% figure in North considerable. There was a global rise last year of 14% America is not going to be replicated in West Africa. and of course the rises in certain countries— I could give you some figures but the fact is that in Pakistan, for example, is one—are very some areas we are getting down below 10% on-line considerable. What we are trying to do is to ensure applications, even where we are encouraging them. in each individual case that we have the resources And I think that is likely to be the continuing case. which we need. I think for the most part we do, So these are two routes by which we are trying to although I think that if one is looking over the next manage quite a challenging agenda and combining year or so there will be some countries—and I think this with getting the right balance between the Pakistan is one—where, frankly, we are going to service delivery side and eVective control. struggle to keep up with the increased demand. It is not going to be easy to achieve that, but we will do our best. Looking further ahead, we have to Q210 Mr Illsley: Moving on, you seem to be meeting recognise that there is going to be, I would guess, a the PSA targets quite well, despite the increased level strongly increasing trend in the number of visa of demand. Yet some areas, Mumbai, for example, with 100% on target, Rangoon 35%. First of all there applications and we are going to have to find some V new and imaginative ways of trying to meet these, is an obvious di erence between those two posts and for example by outsourcing, which is working quite are you confident that the performance of all posts well in parts of the sub-continent. Further down the can be brought into line with the PSA targets? I road there is the e-Borders initiative, which may suppose the next question is: is the increased demand make it easier to handle a lot of routine applications going to put so much pressure on PSA targets that in a much more straightforward electronic way, they are going to have to be revised substantially, or which again would then enable the resources we relaxed, to allow you to deal with those? have to focus on the diYcult cases, which is what we Sir Michael Jay: I think we will want to try to stick need to try to do. So in the short-term there are some to the PSA targets if we can. We are meeting most of diYcult issues, which we have to resolve in certain the PSA targets—there is one where we are not quite. cases, and in the longer term we have to work with There is always a variation between posts, which the Home OYce to see whether we can establish new depends on the circumstances of each post. I do not techniques to meet what is going to be a fairly steady know why the Rangoon figure is so low. There is one rise in demand. PSA target which is the one for control, which we will need to look at again because that has become rather obsolete now, and we are in discussion with Q208 Mr Illsley: On the outsourcing and the the Home OYce about how we can ensure that there electronic applications, I understand that something is a better PSA target in order to reflect the need to like 70% of the applications in New York now are e- get the balance right between service and delivery, mail applications. which is crucial, but control which is crucial too, and Sir Michael Jay: 70% in New York, yes, that is right. we have to do some work on that. Mr Stagg: At one stage when I was previously Q209 Mr Illsley: So that appears to be quite popular overseeing UKvisas three or four years ago, we were and working well. Are there limitations to that type thinking in terms of constantly increasing our PSA of system and outsourcing? The one that springs to targets and being more and more ambitious. I think mind obviously is security issues which might put we are now in a position where we think that these limitations on that. Are we conscious of that? Are are pretty ambitious as they are and that we should there limitations on how much we can outsource? stick with them. In short, it fits in with the Treasury’s Mr Stagg: Perhaps I can say a few words? Clearly desire to try to keep PSA targets as stable as possible there are limitations to outsourcing, not least that rather than constantly changing, so I think the two ultimately if you want to interview candidates they fit together quite logically. On your wider point 22 Visa entry to the UK: The Entrance Clearance Operation, about disparities in performance, I think it is a valid Public Accounts Committee, 25 June 2004, Session 2003–04, point that there is a diVerence in the management HC 783-i performance of some of these operations compared Ev 34 Foreign Affairs Committee: Evidence

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren with others, and one of our jobs is to try to ensure identify good metrics, but we are taking it quite that we maximise the eVectiveness and ensure that seriously and I am told by UKvisas that they think best practice is widely used, and I think we are it will be possible to have a better assessment of the making progress. quality of the issuing in future than we have at present. Q211 Mr Illsley: I was interested in the Public Accounts Committee, which calculated down a Q213 Mr Illsley: Coming on to the actual issue of figure of 11 minutes under the PSA target, and I biometrics—and I understand it is rolled-out into think it was suggested to you that each entry East Africa and certain pilot areas, and it is to be clearance oYcer had to deal with an application rolled-out completely by 2008, so hopefully that will within 11 minutes. As I recall, the first target that the improve all these issues we are talking about in terms FCO imposes at first interview is four minutes, is it of technology—have we encountered any diYculties not? in biometrics or hostility from applicants? I know on Sir Michael Jay: I am not sure about the four a recent visit to the USA we were confronted with minutes. The target is to be able to handle 40 the idea of fingerprint machines, and it raised a few straightforward visa applications a day, and that eyebrows. translates into 11 minutes. The key word there is Mr Stagg: I think our experience has been rather “straightforward”, and indeed if they are similar. I do not think it has been something where straightforward then they can be handled. What we people have said, “This is marvellous news, thank need to do is to have the sort of system in which you goodness the British have brought this technology to handle the straightforward ones quickly and us,” but in general people have accepted that we are straightforwardly but also have the procedures in trying to do it for sensible reasons, and I think that place to handle the other ones, which are not all bona fide applicants see it as no significant threat. straightforward, and of which there are many, and We are doing it very much stage by stage and seeing which clearly take longer. how each bit works. We did it in Sri Lanka first and found that the basics worked; we are now doing it in Q212 Mr Illsley: You have mentioned the diVerence a range of posts in East Africa, which are diVerent between quality and speed of dealing with in size, diVerent in their local experience, including applications, and the recent National Audit OYce Kampala where we outsource. The idea is gradually report raised this issue as to whether we should to build up knowledge of how this works, where the concentrate on the quality of the visa issuing rather problems lie and, in a sense coming back to the than the speed of it. The NAO also raised this issue23, Chairman’s question about professionalism, to try which has already been raised with you by the Public and do this in a properly organised project manner, Accounts Committee, about lack of feedback. I so that by the time we get to full roll-out hopefully realise the question of checking on leaving was we will have resolved the issues raised rather than abandoned some years ago, but given the being confronted by disaster caused by a big bang. I improvements in information technology, is there would not say that we are over confident but at the now an argument to say that perhaps we should look moment we feel that the process has been handled in more at the quality of the applicant rather than the quite a well-organised way. speed, and combine that with some form of checking when the person leaves, to try to ensure that we are Q214 Mr Illsley: Is there going to be any sharing of getting the decision right initially, and that people that data with any other organisations or other are leaving at the expiry of their visa? Or is that still departments? too complex an issue to implement? Y Mr Stagg: It will be shared with us across to the Mr Stagg: We are conscious of this di cult balance. Home OYce because already we have with the On your question about checking on the quality Y V Home O ce and UKvisas a thing called the Central e ectively—are the issues of visas right, are we Reference System, which is a central, global getting it right or wrong? Obviously, since the 1990s, Y database for visa applications, and this information when the Home O ce stopped checking people will be fed into that too. That also links into ports leaving the country, we lost a key piece of of entry. information. I think in due course the Home OYce have it in mind, when we are in a very electronic age, to re-establish that in an eVective form because it Q215 Mr Illsley: The last question relates to the was not really eVective on paper—no one did Committee’s visit to India and Turkey, which I did anything with the checks. What we are doing is not actually take part in, but I understand there were some tensions there amongst the three working with some consultants to try to identify Y Y what they call metrics, which will help us to establish departments—Home O ce, Foreign O ce and the where there are problems. So we look at various DCA. Has that been an issue? issues to do with students, to do with working Mr Stagg: There are always individual tensions in holiday makers, various categories of visitors to the life, but I do not think so, no. UK, and establish whether they are fulfilling the conditions of the visa they were issued with. This is Q216 Sir John Stanley: May I raise a couple of at an early stage; it has not proved all that easy to procedural questions in relation to the Department’s handling of Mr James Cameron?24 First of all, could 23 NAO, Visa Entry to the United Kingdom, HC 367, Session 2003–04, June 2004. 24 Ev 101–102 Foreign Affairs Committee: Evidence Ev 35

29 June 2004 Sir Michael Jay KCMG, Mr Dickie Stagg CMG, Mr Simon Gass CMG CVO and Mr David Warren you tell the Committee why the Foreign OYce took Sir Michael Jay: I am quite certain that that is indeed the view that Mr Cameron’s whistle-blowing our policy that they should be so advised. What I do activities fell outside the terms of the Public Interest not know is what the position was in this case, but I Disclosure Act? would be surprised if it were otherwise. Sir Michael Jay: I do not think I can, Sir John, Sir John Stanley: So can we have a proper note on because Mr Cameron is at the moment subject to that as to whether Mr Cameron was advised in 26 two disciplinary procedures; these are being carried accordance with your Department’s procedures? out in accordance with normal departmental Q221 Chairman: Clearly you are right, Sir Michael, practices and it would not be right to discuss them in saying that anything said should not cut across the here. legal process which is underway, but certainly I think you can go some substantial way to meeting the questions that Sir John has posed. If there are Q217 Sir John Stanley: I am not asking you to Y discuss the disciplinary procedures, but clearly the di culties you will tell us in the replies which you give. Foreign OYce has taken the view that Mr Sir Michael Jay: I will, Mr Chairman, and clearly it Cameron’s whistle-blowing activities fell outside the is entirely proper for me to talk about the general terms of the relevant legislation, so I think it is Foreign OYce procedures; I do not think it is proper reasonable to ask you what was the basis of the legal for me to talk about individual cases. judgement you took in that case? Chairman: I think your last question, Sir John, Sir Michael Jay: That is one of the issues which will related to general procedures in any event? be addressed in the inquiries and I do not think it would be right for me to say anything further about Q222 Sir John Stanley: Yes, but I did also ask a either of the cases here, Mr Chairman. straightforward factual question, which I think is perfectly appropriate both to ask and to have answered, as to whether or not Mr Cameron was Q218 Sir John Stanley: May I ask you this question: advised of his right to have legal representation was it the case that Mr James Cameron was not before he was interviewed by your oYcials with advised of his right to have legal representation potential disciplinary consequences in Bucharest? before he was interviewed, with potential Sir Michael Jay: I will need to take advice on that disciplinary consequences, in Bucharest? point, Mr Chairman. Sir Michael Jay: Mr Chairman, I am sorry, I do not think it would be right for me to get into questions Q223 Chairman: Of course, but it is a yes or no in front of this Committee. question and I hope that you can respond. Sir Michael Jay: The question is whether it is appropriate for me to answer it, given the present Q219 Chairman: That is a question of fact that Sir stage, and on that I would need to take advice. John has posed: was he or was he not? Sir Michael Jay: I do not know the answer to that Q224 Chairman: Sir Michael, we are grateful to you and grateful to your colleagues. I hope you will think question. that the engagement has indeed been instructive. Sir Michael Jay: Thank you, Mr Chairman. May I Q220 Sir John Stanley: Can you give the Committee make one ﬁnal point? Simon Gass has been the the answer and, as a matter of general policy, would Finance Director for the last nearly three years and you like to tell us what your Department’s policy is has accompanied me three times to this Committee. He is leaving his post shortly, after SR2004 is towards ensuring that those Foreign OYce oYcials, completed, to prepare to be Ambassador in Athens, who may be summoned before disciplinary hearings, and I know he will look forward to welcoming the are advised as to their right for legal Committee in his new and modest abode! representation?25

26 Please refer to the letter from Sir Michael Jay, dated 5 July 25 Ev 101 2004, Ev 102 Ev 36 Foreign Affairs Committee: Evidence Written evidence

FCO ANNUAL REPORT 2003–04

Letter to the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, from the Second Clerk of the Committee, 13 May 2004 Thank you for sending the Committee advance copies of this year’s Departmental Report. These have now been circulated and Members are looking forward to the oral evidence session with the Permanent Under-Secretary on Tuesday 29 June. As in previous years, the Committee has a number of requests for clarification and further information arising from the Report. These are set out below in the order in which they appear in the Report: 1. Could the OYce provide further details of the review of security at its posts? Who is carrying out the reviews; what outside expertise is being utilised (from both outside the OYce and outside Government); when will the initial review of all posts be completed; how have security needs been balanced against other factors, such as accessibility and location; from where will the additional resources required for any upgrading of security alterations come? (p 9) 2. How has the impact of the “Think UK” campaign in China been assessed; what feedback was received? How will future campaigns learn from the experience of this one? (p 23) 3. What “research into international opinion” has the Public Diplomacy Strategy Board drawn upon in the last year? (p 24) 4. To what does the BBC World Service attribute the “dip” in its audience size for 2002–03 in Asia/Pacific, Eurasia and Europe? On what basis does it predict that the figures will rise again in the latter two areas in 2003–04? (table 2, p 31) 5. What are the “agreed milestones for 2003–04” relating to the OYce’s PSA target to contribute to the reduction of opium production and poppy cultivation in Afghanistan? When is it anticipated that cultivation and production will actually begin to fall? (p 61) 6. How is progress towards PSA 4 measured and what data is used? When will the information be available, and how is it possible for FCO management and readers of the report to assess whether the OYce is “on track” to meet this target during the year if all data is retrospective? How is work towards this target divided up and co-ordinated between the three departments involved? (p 62) 7. (a) Given the footnote to the two tables illustrating the work of UKTI on page 70 of the Report (“These figures include projects with and without UK Trade and Investment involvement”), how is it possible to assess accurately the impact of UKTI on inward investment activity? (p 90) (b) What are the reasons for the apparent fall in UKTI’s income noted in Table 5 in the period 2002–03? 8. (a) What is being done to bring performance back on target, in relation to the PSA 5 delivery standard of, “At least 50% of new-to-export firms assisted improving their business performance within two years”? Will remedial action incur any additional expense? (p 74) (b) Could you supply the data currently missing from the table on page 74, relating to the third delivery standard? 9. Why has the allocation of resources to the Drugs and Crime Fund (DCF), as part of the Global Opportunities Fund (GOF), apparently been reduced for years two and three of the current spending review period? (p 82) How will this impact on the planned expansion of the work to combat drug traYcking highlighted on page 60 of the Report? 10. Could you provide the scorecards used to measure progress towards the targets relating to PSA 7, in confidence if necessary? (p 92) 11. How is the OYce seeking to tackle its failure to make progress towards the last element of its PSA 8 target—“greater support for Europe in the UK”? (p 106) 12. What has been the impact of the cancellation of the inter-active voice recognition (IVR) system on the rest of the relevant budget, and the Consular Division’s eYciency savings? Has anything been recovered from the project’s capital investment? What lessons have been learned from the project’s cancellation? (p 112) 13. When will the GenIE-Worldwide system be fully rolled out? What will be the total cost of the new system, once fully delivered, and how is it being funded? (p 118) 14. Have all posts now supplied the data relevant to the PSA 10 targets, listed on page 122 of the Report? If so, do they aVect the overall performance figures printed in the Report? (p 122) Foreign Affairs Committee: Evidence Ev 37

15. The Report sets out the average performance by posts against PSA targets relating to visa services. For the first three targets listed on page 124 of the Report, could you provide details of the three best and worst-performing posts, in order to give the Committee a picture of the range of service delivery performance provided by the OYce? (p 124) 16. Could you provide details of the take-up of online visa applications in the countries where it is now available? What percentage of applications are now made online in each country? Where is it envisaged that the facility will be expanded to next? When is it anticipated that the pilot for online payment will be completed? (p 124) 17. When does the OYce expect to introduce outsourcing in Kenya, Nigeria and Malaysia? Will the arrangements in those countries diVer in any significant way from those seen by Members of the Committee in India? (p 125) 18. Could you provide the Committee with the figures for the number of UK visa applications 1998–2007, given in Chart E on page 125 of the Report? (p 125) 19. What is the planned roll-out for the collection of biometric data by visa-issuing posts? Which posts will be next to be upgraded and when? How will this impact upon the OYce’s outsourcing programme? (p 127) 20. Could you explain why the “delay to Prism should ensure a better end-product for HR as we implement it during 2004–05”? (p 159) 21. A significant proportion of FCO’s administration costs are asset related charges-depreciation, cost of capital charge, impairment arising from revaluation (Note 3, Resource Accounts 2002–03). Are these costs included in the baseline against which the 2.5% eYciency savings are measured, and, if so, what steps is the OYce taking to secure savings in these charges? In addition, what proportion of the total 2.5% eYciency savings does the FCO expect will be non-cash savings? (p 163) 22. How much, if any, of the £36.9 million received by the OYce from the Treasury Reserve will have to be paid back in due course? (p 163) 23. What has been the impact on the FCO’s other activities of the need for the OYce to absorb large additional resource demands related to Iraq in 2003–04 and the current year? Which programmes have been cut as a result? (p 163) 24. What has been the impact of the increased concern about security at overseas posts on the asset recycling programme? (p 165 V.) 25. What are the underlying reasons for the diVerences in the proportion of rented/owned assets across the diVerent regions shown in Chart F? Is the asset recycling programme being implemented diVerently at a regional level? (p 166) 26. Are there plans to move any more staV out of London, further to those referred to in the Report? (p 166) 27. In the light of the diYculties experienced by the OYce in relation to the asset recycling programme, outlined in the Report on page 167, does the OYce still “remain optimistic that our SR2000 target of £100 million is achievable” (Departmental Report 2003, p 141)? What was the shortfall in capital receipts in 2002–03 and 2003–04, and what impact did this have on the OYce’s investment programme in each year? 28. When will the “further discussions” with HM Treasury mentioned in the Report take place, and when will their outcome be known? (p 168) 29. Given the developments outlined in the Report, is it envisaged that any properties will be sold before the outcome of the talks with the Treasury are known, or have all such sales been temporarily placed on hold? (p 168) 30. Where will the extra £4.1 million required to fund the Prism Programme come from? (p 168) 31. How does the OYce, the British Council and the BBC World Service intend to “demonstrate” that they have achieved eYciency gains, rather than simply work within reduced budgets? (p 174) 32. Given the budgetary diYculties being experienced by the OYce at this time, is it envisaged that reductions will be made in any of the UK’s contributions to international organisations? (pp 181 and 187-8)

The Committee also have the following, related, requests: 33. Could the FCO provide the Committee with a list of all properties in the overseas estate sold or oVered for sale in the ﬁnancial year 2003–04, as the OYce did last year (in the same format)? 34. The Committee found the table in last year’s Departmental Report showing the “Changing Establishment of FCO Posts” (Departmental Report 2003, p 13, table 1) most useful. Could you supply an updated version of this table? Ev 38 Foreign Affairs Committee: Evidence

35. Further to the Committee’s Report on last year’s Departmental Report, the Committee would like to gain a better insight into the scale of the problem facing the Department in relation to diVerent Government departments paying LES diVerent rates at the same post (Foreign and Commonwealth OYce Annual Report 2003, HC 859, para 83). Could you, therefore, provide information on: (a) the number of FCO posts where other Government departments have “an autonomous presence”, with an indication of how many departments are represented at posts and which ones; and (b) the rates of remuneration for comparable LES positions (eg drivers, security guards, etc) at a post with more than one other autonomous Government department present—Jamaica, for instance. 36. Could the FCO provide the Committee with a summary table of the SR2002 PSA targets which states, for each, whether current progress is “on course”, “not known”, “slippage” etc as this information is not always easy to identify in the main text of the report. 37. What was the outcome of the FCO’s consideration of “innovative ways of obtaining better value for money from the estate to supplement the existing recycling programme” (Departmental Investment Strategy, p 22)? The Investment Strategy gives examples of the possibility of PPP disposals or the sale of surplus development rights-are any of these projects underway? 38. Following the trial of devolution of estate budgets to geographical directorates (Investment Strategy, p 29) did the OYce find that better decisions were made about the estate? Will this trial be extended further so that more than 50% of all FCO estate expenditure is devolved to directorates (p 165)? Does each directorate have an asset recycling revenue target or are these decisions made centrally? 39. The Committee found the information given in response to Mr Bob Spink’s recent written parliamentary question, concerning the break-down of FCO staV by age, gender and ethnicity, very helpful (HC Deb, 23 April 2004, col 710W). Could you supply the same data for FCO staV on 1 October 2000, 2001 and 2002? Could you also set out briefly the sort of positions filled by staV at each of the grades listed. 40. Further to Mr Malcolm Bruce’s written question to Mr O’Brien (HC Deb, 29 April 2004, col 1209W), could the OYce clarify why details of employment tribunals (or their equivalents) involving locally-engaged members of staV are not kept and monitored centrally? How does the OYce ensure that best practice is being observed across all posts, in relation to the employment conditions of such LES, without such data? Is the equivalent information kept on file for UK-based staV? 41. Could the OYce provide further details of the facts behind the story which appeared in the Daily Telegraph recently concerning the High Commissioner’s Residence in New Delhi? (Daily Telegraph, 6May 2004, p 19) To allow time for the answers to be circulated to Members in time for the evidence session with Sir Michael, I would be most grateful if you could respond to the points raised above by Monday 14 June. If you would like any clarification of the questions, please do not hesitate to contact me. GeoVrey Farrar Second Clerk of the Committee 13 May 2004

Letter to the Second Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, 14 June 2004 Thank you for your letter of 13 May. The following are the answers to the Committee’s questions. 1. Could the OYce provide further details of the review of security at its posts? Who is carrying out the reviews; what outside expertise is being utilised (from both outside the OYce and outside Government); when will the initial review of all posts be completed; how have security needs be balanced against other factors, such as accessibility and location; from where will the additional resources required for any upgrading of security alterations come? (p 9) The review of FCO security is now complete and is being considered by Ministers and senior oYcials. Our intention is to send the full, classiﬁed version to the Committee shortly. The issues raised in this question are addressed in the report. Security measures form an important element of the FCO’s SR2004 bid. 2. How has the impact of the “Think UK” campaign in China been assessed; what feedback was received? How will future campaigns learn from the experience of this one? (p 23)

Assessment of the Impact of the Campaign We are forwarding to the Committee the ﬁnal report on the Think UK campaign. The report evaluates the campaign against core objectives and draws lessons for future public diplomacy campaigns. It does this using performance indicators, analysing the outcomes of impact, partnerships and leverage, and process and management via media monitoring, audience and stakeholder feedback surveys, general public opinion polls and participant feedback from members of the target audience directly exposed to campaign activities. Foreign Affairs Committee: Evidence Ev 39

What Feedback was Received? The Think UK campaign achieved an exceptionally high level of media coverage despite the diYcult media environment at the time, partly caused by SARS. 43% of the coverage conveyed its core messages. Key media statistics include: — 2,251 print articles; — 262 TV and radio reports June–December 2003; — 270 online features; — 18 hours TV broadcasts of short features; — 398 million print media circulation; — 1.6 billion potential TV audience; — £3.2 million equivalent advertising in print media; — £1.6 million equivalent advertising from 11 media visits. Page 34 of our Departmental Report—’Beneﬁts’ section—shows the results of Gallup audience feedback surveys at ten Think UK events: high levels of customer satisfaction amongst the target audience, and events contributing to improved perceptions of the UK. Audience participation ﬁgures show that Think UK events engaged a large proportion of the target audience. Key statistics include: — grand total c 4.5 million, which includes all visitors, competition entrants, Think UK website and gamezone and supporting events; — four million visits to the Interactive Gamezone; — two million visits to the Sina.com Think UK page; — 296,000 exhibition visitors; — 180,000 visits to the Think UK website; — 167,521 Internet projects; — 36,582 participants in wrap-around events; — 12,000 competition entrants. The Campaign commissioned two opinion polls among 18–35 year olds before and just after the campaign. Its results included a 7% increase in people who feel the UK values its cultural ties with China but a similar decrease in overall favourability towards the UK. The polls provide limited evidence for measuring the impact of Think UK activities as it is relatively unlikely that the sample will have directly experienced campaign activities.

How will Future Campaigns Learn from the Experience of this One? The final report on the Think UK campaign has been widely circulated among stakeholder organisations. Lessons drawn from the report, which will inform future practice, include: — Stakeholders must commit and plan early as campaigns have long lead times. — Stakeholders must clarify their expectations and resource commitment early on. — The Campaign Director should be appointed and target audiences, themes and objectives also be defined at the planning stage. — Campaigns should agree with stakeholders a few focused messages to promote. — Budgetary procedures must be established early on to ensure firm resource management. — Sophisticated media evaluation and extensive polling of those exposed to campaign activities is more useful for evaluating campaigns than general public polling. — Future campaign organisers should create and maintain a database of contacts so that relationships can continue to be built after the campaign ends. 3. What “research into international opinion” has the Public Diplomacy Strategy Board drawn upon in the last year? (p 24) In addition to the International Tracking Study in October 2003, which benchmarked perceptions of the UK in 15 countries against key competitors, research (primarily relatively low-cost focus groups of key “cosmopolitan” target audiences, rather than polling) has played a key role in helping to target our public diplomacy activities. The Committee will wish to note that copies of the International Tracking Study are being placed in the Libraries of the House today. This includes public diplomacy campaigns such as: Think UK Campaign (China 2003); UK Science and Technology Campaign (North America, 2004); Crossroads For Ideas Campaign (Central Europe Accession States, 2004); Entente Cordiale (France 2004); plus possible future initiatives in the Middle East and Japan (linked to Expo 2005). Ev 40 Foreign Affairs Committee: Evidence

4. To what does the BBC World Service attribute the “dip” in its audience size for 2002–03 in Asia/Pacific, Eurasia and Europe? On what basis does it predict that the figures will rise again in the latter two areas in 2003–04? (table 2, p 31) The overall picture is that the BBC World Service faces a continuing challenge in maturing markets with increasing competition from domestic radio and from other media, but it continues to perform well relative to its major international competitors. A particular issue is that most of the radio audience falls registered have come as audiences have turned away from Short Wave to FM, which in some markets has been diYcult or impossible for the BBC World Service to access. In Asia/Pacific the BBC World Service’s audience is under growing threat from increased media competition—liberalisation and the consequent spread of local competitors, and the significant increase in satellite/cable TV access. A critical factor has been the decline in Short Wave usage and the corresponding diYculty for the BBC World Service—for political and regulatory reasons—of accessing FM frequencies (though this is gradually changing in markets like Pakistan and Bangladesh). In EurAsia the BBC World Service now finds itself broadcasting to a market which is increasingly sophisticated and where consumers are more likely to turn to domestic broadcasters for news. Foreign broadcast news is a niche market. Again, Short Wave usage is falling rapidly and local FM distribution has been beset by obstacles. In Europe, the BBC World Service is the market leader in a market where there are virtually no direct competitors. But the decline reflects increasing maturity of the media market, together with the loss of one key re-broadcasting network in Romania.

On What Basis Does it Predict That the Figures Will Rise Again in the Latter Two Areas in 2003–04? 2003–04 is the first year of the new SR period. The predicted rise in audiences in EurAsia and Europe are PSA targets which have been agreed a long way in advance and which, under existing target-setting practice, linked to three-year SR periods, cannot be adjusted once agreed. All PSA targets for the three years of SR 2002 (2003–04, 2004–05, 2005–06), including those for the BBC World Service’s global audience, had to be in place by March 2003. The BBC World Service’s global audience targets were agreed in January 2003. They were based on 2001–02 data, which was the most recent data available at that time from which to extrapolate new targets. It was on the basis of that data that the Foreign and Commonwealth OYce agreed with the BBC World Service what were judged then to be realistic but challenging targets for 2003–04 and beyond. We understand that the BBC World Service will publish audience data for 2003–04 soon. 5. What are the “agreed milestones for 2003–04” relating to the OYce’s PSA target to contribute to the reduction of opium production and poppy cultivation in Afghanistan? When is it anticipated that cultivation and production will actually begin to fall? (p 61) General milestones for 2003–04 were agreed by the Department at the start of 2003 as follows: 1. The establishment of baseline data for the five and 10 year targets: — Achieved through the publication of the UN and US annual poppy survey figures. The UK provided financial assistance towards the costs of the UN survey and technical assistance to both surveys. The UN and US surveys use diVerent methodologies to produce estimates of poppy cultivation in Afghanistan (eg, diVering degrees of reliance on imagery versus direct on-the-ground observation). This has meant some divergence in results in the past. The technical assistance from the UK has been designed to facilitate an understanding of these diVerences and to identify how they might become more consistent. 2. Introduction of anti-drugs legislation: — The Afghan Government approved anti-drugs legislation in October 2003. 3. Training of Afghan law enforcement oYcers: — The UK has been instrumental in setting up the Counter Narcotics Police of Afghanistan within the Ministry of Interior and providing its oYcers with specialist training. Some 170 oYcers have now been trained by HMCE including a specialist stop and search unit. Further training and additional stop and search units will become operational this year. The UK has also provided some support and advice to the Afghan Special Narcotics Force which has begun operations to interdict traYcked drugs and remove drugs stockpiles and laboratories. 4. Anti-drugs awareness strategy established; — In 2003 the Afghan Counter Narcotics Directorate, with UK assistance, implemented a public awareness campaign. This included broadcasting Islamic-based counter-narcotics messages on a variety of Kabul and provincial radio stations and drugs story line programmes through the BBC. 5. Customs facilities established at Kabul airport: Foreign Affairs Committee: Evidence Ev 41

— There are basic customs facilities at Kabul airport and DfID have been working on customs capacity building with Germany, who lead on police and border police reform within Afghanistan. Relatively little opium is likely to be smuggled through the airport and therefore FCO and HMCE are working closely with Germany to make further progress on Customs controls at land borders. This was one of the topics discussed at a conference on policing reform held by Germany in May 2004 in Doha. More detail on what the Afghan Government, UK and international community have achieved this year can be found in the Action Plans for the key strands of counter narcotics activity that were agreed at the ATA/UK/UN International Counter Narcotics Conference on Afghanistan held in February 2004 in Kabul. These Action Plans identify priority areas to increase the perception of risk amongst traYckers and farmers and to accelerate provision of alternative livelihoods. It is diYcult to predict with any certainty when cultivation and production of opium will begin to fall. We know that our target remains a challenging one. Experience in other countries such as Thailand and Pakistan, which had much lower production levels and were much more secure countries, shows that cultivation tends to increase before it decreases. 6. How is progress towards PSA 4 measured and what data is used? When will the information be available, and how is it possible for FCO management and readers of the report to assess whether the OYce is “on track” to meet this target during the year if all data is retrospective? How is work towards this target divided up and co-ordinated between the three departments involved? (p 62) The basis for assessing progress towards SR02 PSA 4 is set out in the attached Technical Note. It is not yet possible to give a formal assessment of performance against this PSA target since the beginning of the SR 2002 period (ie from April 2003) because the appropriate statistics on deaths, refugees and internally displaced persons (IDPs) are only available annually on a retrospective basis. The first analysis of these statistics will be available in summer 2004. The Africa and Global Conflict Prevention Pools have however delivered a range of interventions during this period to support the prevention, management and resolution of conflict under regional and thematic strategies. Examples include:

Global Conflict Prevention Pool — Afghanistan: work to support the rebuilding of a national security sector and to reduce narcotics production in order to improve security. — Balkans: support to new electoral and justice systems, police reform and the creation of democratically accountable armed forces, and capacity building for international peace support operations. — UN: training for civilian and military representatives involved in UN and other peace support operations, and support for strengthening the UN system for this work. — Small Arms Light Weapons: help to the development of National Small Arms Action Plans in ﬁve African countries under the UN Programme of Action on preventing and reducing the traYcking and proliferation of small arms and light weapons.

Africa Conflict Prevention Pool — Sierra Leone: logistical and technical support to reform the Sierra Leone armed forces and the policing and justice systems; and reintegration of ex-combatants. Short term UK force deployments to promote and reinforce stability at key flashpoints such as last year’s Presidential and Parliamentary elections. — Great Lakes: support to World Bank led Multi Donor Regional Programme for DDR, covering Rwanda, Burundi and DRC and to the successful deployment of a Mozambican contingent of the AU peacekeeping force. — Sudan: support to the Nuba Mountains Ceasefire monitoring team and Verification Monitoring Teams in support of the MOU on cessation of hostilities in Southern Sudan. — Angola: Support largely focussed on civil society and media work to promote peace and stability. — Nigeria: Key UK support to the Government of Nigeria Strategic Conflict Assessment—the first of its kind carried out by an African government. — Other Countries: Highlighted work in other countries includes: civil society and grass roots peace- building in Kenya, burgeoning Security Sector Reform programmes in Uganda and Ethiopia and ongoing strategic engagement in the Somali peace process. Conflict Prevention is a diYcult area in which to measure outcomes. A peace settlement can take many years to be consolidated. Even when it is clear that a settlement has been achieved, it is hard to attribute the specific contribution made by UK funded programmes and associated diplomatic, development or defence activity. There is concern that the statistical basis for measuring the SR02 Conflict PSA does not capture Ev 42 Foreign Affairs Committee: Evidence

all the beneficial impacts of the three Departments’ work in tackling conflict. Discussions are currently taking place to refine the PSA target under SR04 including the use of more qualitative indicators to measure performance. Further information on the operation of the Global Pool is available from a joint FCO/DFID/MOD booklet (“The Global Conflict Prevention Pool”) available on the FCO website (http://www.fco.gov.uk/ Files/kfile/43896—Conflict%20Broc,0.pdf). 7. (a) Given the footnote to the two tables illustrating the work of UKTI on page 70 of the Report (“These figures include projects with and without UK Trade and Investment involvement”), how is it possible to assess accurately the impact of UKTI on inward investment activity? (p 90) UK Trade and Investment’s Inward Investment Group (IIG), markets the UK abroad as an investment location, working with its partner agencies in Wales, Scotland, Northern Ireland and the RDAs in England. IIG’s key role, with its regional partners, is to pull together the eVorts of both the public and private sectors to ensure that the best case is made for the UK as an investment location and to also ensure that potential investors have access to all the available help and advice they need to make the best commercial decisions. The UK’s inward investment promotional eVort combines both national and regional agencies in one co- ordinated network. IIG therefore helps specific investments but also markets the UK to investors more generally. That is why the report gives a figure of 709 for all investments where these are known. IIG also monitors figures for investments specifically aided by the UK network. The network comprises UKTI, the RDAs and inward investment agencies of the Devolved Administrations. IIG UKTI leads and guides the network and provides some £13 million per annum to the RDA “Single Pot”. The figure for network-assisted projects in 2002–03 is 382. IIG UKTI also monitors the number of jobs provided—34,875 in 2002–03 of which 20,716 are new jobs. (b) What are the reasons for the apparent fall in UKTI’s income noted in Table 5 in the period 2002–03? Part of UKTI’s income is derived from recoveries of grants payable under the Overseas Project Fund [OPF]. These are recovered when a company is notified that its bid has been successful. In 2002–03 the value of successful bids was considerably lower than the previous year. OPF was closed to new applications early in 2003–04 in line with a shift in UKTI’s objectives. In addition, demand under the Export Marketing Research Scheme was lower in 2002–03 than 2001–02, resulting in reduced receipts. The income from chargeable services did not contribute significantly to the fall in receipts from 2001–02 to 2002–03: in 2001–02, income from chargeables amounted to £811,000, in 2002–03, it amounted to £809,000. 8. (a) What is being done to bring performance back on target, in relation to the PSA 5 delivery standard of “At least 50% of new-to-export firms assisted improving their business performance within two years”? Will remedial action incur any additional expense? (p 74) The wording quoted in this question taken from our Departmental Report should actually have read “At least 50% of established exporters” rather than “new-to-export firms”. We regret this error. We are currently exceeding our target of 30% of new-to-export firms assisted improving their business performance within two years. Regarding the established exporter target, it should be noted that assessment is made over a two-year period and that the survey looks at firms which have received our services 6–24 months earlier. Improvements have been made to UK Trade and Investment trade services over the past year focusing support on higher value interventions, it is anticipated that these will bring beneficial results. There will be further improvements in 2004–05. Additionally, we are currently arranging for an analysis of past data to establish a profile of those firms which have failed to report sustainable improvements in competitiveness (productivity/innovation etc) to allow us to address any issues. Remedial Action will not Incur Any Additional Expense (b) Could you supply the data currently missing from the table on page 74, relating to the third delivery standard? Actual performance reported in the 2003 survey for this measure was 61%. Whilst this falls short of the target figure, the result does represent a 3% increase on the 2002 results. UK Trade and Investment is working to engender further improvements to attain this challenging target. 9. Why has the allocation of resources to the Drugs and Crime Fund (DCF), as part of the Global Opportunities Fund (GOF), apparently been reduced for years two and three of the current spending review period? (p 82) How will this impact on the planned expansion of the work to combat drug traYcking highlighted on page 60 of the Report? The £3 million allocation to the Drugs and Crime Fund indicated in the GOF Programme Budget bar chart on page 82 is a contribution from GOF to the Drugs and Crime Fund’s (DCF) £70 million Afghanistan Drug Strategy. Dave Thomas, Head of the GOF Central Management Unit, met with the Second Clerk recently and talked him through the detail of GOF deductions and contributions. Foreign Affairs Committee: Evidence Ev 43

10. Could you provide the scorecards used to measure progress towards the targets relating to PSA 7, in confidence if necessary? (p 92) The scorecards used to measure progress against PSA 7 are attached. Scorecard (a) (increased democracy and the rule of law) is unclassified and has already been published. The others are classified but included here on an “in confidence” basis. 11. How is the OYce seeking to tackle its failure to make progress towards the last element of its PSA 8 target—“greater support for Europe in the UK”? (p 106) The FCO has focused on activities which are high-profile, have a high multiplier eVect, and are economical in resources (ie cheap in themselves or capable of attracting significant sponsorship), given the scale of resources available (in 2003–04, £200,000 for domestic EU Communications work). Over FY 2003–04 the FCO organised or was involved in over 130 such events. Activities include: — business seminars, cultural events, college/university talks, radio phone-ins and public debates; — a series of publications has been produced, focussing on the recent expansion of the EU—including regional booklets that set out the regional benefits of EU enlargement; — a dedicated website is also regularly updated with information; — the Minister for Europe has led a series of UK regional events, involving other Ministers, to ensure people across the country have a chance to get involved in discussing EU issues. All these activities are monitored, and feedback is sought upon them, in the form of questionnaires and public correspondence. 12. What has been the impact of the cancellation of the inter-active voice recognition (IVR) system on the rest of the relevant budget, and the Consular Division’s eYciency savings? Has anything been recovered from the project’s capital investment? What lessons have been learned from the project’s cancellation? (p 112) The impact is a write-oV in 2003–04 of £168,000 as compared to a depreciation figure that would have been in the region of £54,000. We cannot demonstrate financial eYciency savings. However, our decision not to use the IVR system and to go with the MM call centre resulted in us delivering a more eVective service to the public. We have been actively seeking to recycle the hardware (servers) and continue to do so. One lesson learnt was that very close involvement by the business side is needed with the project team to ensure that the specification to which the project is delivering has not changed. 13. When will the GenIE-Worldwide system be fully rolled out? What will be the total cost of the new system, once fully delivered, and how is it being funded? (p 118) The GenIE Worldwide system rollout was completed on 6 December 2003, with the exception of four posts that were awaiting connection to the FTN. The last of three of these was completed in May. The fourth, West Jerusalem, is pending confirmation of its FTN/Firecrest status following a move to new oYces. The capital cost of GenIE Worldwide is £1.7 million, from the FCO Vote. Running costs are recovered through overseas passport fees. 14. Have all posts now supplied the data relevant to the PSA 10 targets, listed on page 122 of the Report? If so, do they aVect the overall performance figures printed in the Report? (p122) We received 232 out of 247 post Returns for 2002-03 data and have not chased the last few. We would not expect their data to alter the performance figures as given in the Departmental Report. The remainder consist of four Honorary Consuls and one Liaison OYcer; the Cameroons, Libya, Uzbekistan, Bulgaria, Hamburg, Geneva, Abuja; and one Overseas Territory-the Falklands Islands. We are now concentrating on the 2003–04 Consular Annual Return data that has started to come in. 15. The Report sets out the average performance by posts against PSA targets relating to visa services. For the first three targets listed on page 124 of the Report, could you provide details of the three best and worst- performing posts, in order to give the Committee a picture of the range of service delivery performance provided by the OYce? (p 124) Target 1: straight forward non-residence visa applications to be decided within 24 hours. Target: 90%, achieved: 92.14% Mumbai, (69,509) Chennai (37,509) and Dhaka (16,007) decided 100% of their straight forward applications within 24 hours. Nine other posts also reported a 100% success rate but dealt with fewer applications. Rangoon only decided 35% of its straightforward applications within 24 hours. Maseru decided 42%. The Visa Section has now closed and applications are submitted via Pretoria. Rio de Janiero decided 47% of applications within 24 hours. The Post had a 65% increase in applications in the last nine months of the year. Target 2: Posts to make a decision within 10 working days on non-settlement applications requiring an interview. Target: 90%, achieved: 88.79% Kolkata, Canberra, Kampala, Chennai, Los Angeles, Baku, Belmopan, La Paz, Nuku, Alofa and Victoria decided 100% of these applications within ten days. Ev 44 Foreign Affairs Committee: Evidence

Kinshasa failed to meet this target throughout 2003 and the queue was between 21 and 90 working days. Freetown also failed to meet this target and averaged a queue of 14 days over the year. Abidjan and Tashkent failed to meet the target for 10 months of the year. Following temporary closure of the Visa Section last year, Kinshasa had to work through a backlog and had a temporary member of staV until a permanent replacement could arrive. Freetown had a 16% increase in applications. Backlogs accumulated until an additional member of staV arrived. Abidjan have now moved into a new building from previously poor accommodation. They and Tashkent had high refusal rates and low-quality applications. Tashkent had a 20% increase in applications. Target 3: Posts to meet target times for settlement interviews. Target: 90%, achieved: 98.31% The majority of Posts have few, if any, settlement applications and have no diYculty in meeting the PSA target timings. Addis Ababa failed to meet this target throughout the year, with queues ranging from 28 to 54 weeks. This queue is mainly made up of Somali applicants, applying to join their families in the UK and they often lack proper identification. Dhaka failed to meet this target for four months of the year with queues between 15 and 29 weeks. This was largely due to an increase in WHM (Working Holiday Makers) and SBS (Sector Based Scheme) applications during this period. Lagos failed to meet this target for three months of the year with queues of between 15 and 16 weeks over this period. 16. Could you provide details of the take-up of online visa applications in the countries where it is now available? What percentage of applications are now made online in each country? Where is it envisaged that the facility will be expanded to next? When is it anticipated that the pilot for online payment will be completed? (p 124) e-Applications is the system whereby applicants in some locations are able to complete and submit their visa application form over the Internet. The key benefit for the applicant is the simplicity of the process: only questions relevant to the application type are asked (eg, only students are asked questions relating to studying in the UK) and the applicant receives guidance and advice as they move through the process. The key benefit for UKvisas is a saving of around three minutes for every application received this way, primarily because data can be captured automatically into the local visa issuing database. The system is currently available in the following locations:

Location Take up rate Ottawa 28% New York 70% Wellington 56% Canberra 26% Paris 15% Pretoria 10%

Other locations operating e-applications for which the take up rate is unavailable at time of writing, include: Chicago, Los Angeles, Hong Kong, Kingston, Helsinki, Dusseldorf and Madrid. Tokyo is just about to begin receiving e-applications and Dublin is scheduled to follow in June. Approximately 22 additional countries are being considered as possible next locations for e-applications, including: South Korea, China, Iceland, Brazil, Chile, Saudi Arabia, UAE, Kuwait, Iceland and other EU countries. The next stage is introducing an e-payment facility. Following a contract awarded to “World-pay”, a pilot for e-payments was recently completed in Ottawa. E-payment is now available in Ottawa, New York, Chicago and Los Angeles It is hoped to introduce e-payments at other locations where applications can be received over the Internet. 17. When does the OYce expect to introduce outsourcing in Kenya, Nigeria and Malaysia? Will the arrangements in those countries diVer in any significant way from those seen by Members of the Committee in India? (p 125) We expect to introduce outsourcing in Malaysia and Kenya this summer. The operation in India provides a model for our rollout of outsourcing but there will be some diVerences according to local requirements. For example, in Nairobi we intend to introduce the capture of biometric data and the outsource partner will assist in collecting this data. In Nigeria, and as a first step to full outsourcing, we intend to introduce a courier assisted visa application system for accepting, checking and submitting applications and returning passports. The experience gained by Post and the companies involved will allow us to develop a fully outsourced service, which we plan to introduce by the end of the financial year. Foreign Affairs Committee: Evidence Ev 45

18. Could you provide the Committee with the ﬁgures for the number of UK visa applications 1998–2007, given in Chart E on page 125 of the Report? (p 125)

Year Forecast Outturn 2007 2,726,537 2006 2,548,165 2005 2,381,463 2004 2,225,666 2003 2,080,062 2,115,000 2002 1,946,651 2001 1,758,829 2000 1,674,110 1999 1,514,764 1998 1,462,599

The graph and figures were calculated in November 2003 and at the time we expected an increase of 7%, which had been the average over recent years. Thus we multiplied the preceding figure by 1.07 to reach the next estimated total. The actual increase in applications for 2003 (April–December) was 11%. 19. What is the planned roll-out for the collection of biometric data by visa-issuing posts? Which posts will be next to be upgraded and when? How will this impact upon the OYce’s outsourcing programme? (p 127) Biometric data is currently collected in Colombo, Addis Ababa, Asmara, Dar-es-Salaam, Djibouti and Kampala. We expect to start fingerprinting visa applicants, subject to legislation having cleared Parliament, in Kigali in late July or early August 2004 and in Nairobi in September 2004. This will complete the implementation of the East Africa Biometrics Project. We currently have no firm plans to commence fingerprinting visa applicants elsewhere but the UK is committed to implementing an EU regulation, providing for mandatory biometrics in visas by 2008. A study is under way at present to produce a strategy to enable UKvisas to implement this regulation in all visa-issuing Posts. Biometric data capture should have no direct eVect on our outsourcing programme. It has been incorporated successfully into the outsourced visa application process in Kampala in March 2004 and will be integrated into the visa application process in Sri Lanka and Kenya, when they are outsourced in the coming months. 20. Could you explain why the “delay to Prism should ensure a better end-product for HR as we implement it during 2004–05”? (p 159) The delay to the Prism HR module has allowed time for the design to be more closely aligned with the FCO’s operational requirements. The bulk of the HR module is due to come on-line in June, and will allow for more automation of some key tasks, principally the FCO’s system of selecting staV for posts, which should produce savings in staV costs and improved service delivery. 21. A significant proportion of FCO’s administration costs are asset related charges–depreciation, cost of capital charge, impairment arising from revaluation (Note 3, Resource Accounts 2002–03). Are these costs included in the baseline against which the 2.5% eYciency savings are measured, and, if so, what steps is the OYce taking to secure savings in these charges? In addition, what proportion of the total 2.5% eYciency savings does the FCO expect will be non-cash savings? (p 163) Non-cash costs are part of the FCOs Resource DEL (Departmental Expenditure Limit) and hence are included in calculating our eYciency target. These charges are a reflection of the quantity and quality of our home and overseas estate. The FCO can and does achieve savings in its non-cash budgets through careful management of the estate. We expect our continuing programme of asset recycling, rigorous scrutiny of capital projects by the DISG and competitive tendering to lead to non-cash savings. Although precise savings targets have not been specified in the FCO EYciency Plan, we will continue to seek to reduce these costs. The precise breakdown of eYciency savings the FCO will have to find has still to be agreed but cash savings will make up more than 50% of the total and non-cash costs the balance, in line with the targets set by the EYciency Review team. 22. How much, if any, of the £36.9 million received by the OYce from the Treasury Reserve will have to be paid back in due course? (p 163) If the FCOs FY 2003–04 budget is underspent, the Treasury may recover some or all of the Reserve Claim by abating the FCO’s End Year Flexibility claim. However, we do not yet know what our FY 2003–04 outturn is. If the budget is fully spent then there will be no recovery of the Reserve Claim. Ev 46 Foreign Affairs Committee: Evidence

23. What has been the impact on the FCOs other activities of the need for the OYce to absorb large additional resource demands related to Iraq in 2003–04 and the current year? Which programmes have been cut as a result? (p 163) Much of the additional activity was funded by the FY 2003–04 Reserve Claim. We intend to submit a further Reserve claim for FY 2004–05 and 2005–06 to cover the cost of establishing representation in Iraq from July 2004 and the ongoing regional security costs. We have also devoted considerable human resource to Iraq-related activity over the past year and we continue to do so. As a result, we are having to cope with some staV vacancies. This means that some lower priority activities have been foregone. The Departmental Unallocated Provision has also been used to ease the financial pressure on the FCO. 24. What has been the impact of the increased concern about security at overseas posts on the asset recycling programme? (p 165 V.) Security has, for some time, been a major factor in decisions on our overseas estate. Since the Istanbul bombing, our Departmental Investment Strategy Group has reprioritised much of our overseas estate expenditure to focus on security concerns. This has had only a limited eVect on our asset recycling programme: but we would clearly only replace an existing building with a new one if the latter were equally or more secure. 25. What are the underlying reasons for the diVerences in the proportion of rented/owned assets across the diVerent regions shown in Chart F? Is the asset recycling programme being implemented diVerently at a regional level? (p 166) The asset recycling programme is being applied equally across the world. The regional diVerences in Chart F largely reflect the historical composition of the estate and varying local circumstances (eg it was easier to lease suitable properties in Europe than in Africa). 26. Are there plans to move any more staV out of London, further to those referred to in the Report? (p 166) The figures for relocation remain as set out in the Lyons Report (456). We have no proposals at this stage to extend that number. 27. In the light of the diYculties experienced by the OYce in relation to the asset recycling programme, outlined in the Report on page 167, does the OYce still “remain optimistic that our SR2000 target of £100 million is achievable” (Departmental Report 2003, p 141)? What was the shortfall in capital receipts in 2002–03 and 2003–04, and what impact did this have on the OYce’s investment programme in each year? We achieved £81 million sales in the SR2000 period (Financial years 2001–04), £19 million less than the £100 million target. The shortfall of capital receipts was £17 million in 2002–03 and £19 million in 2003–04. In 2002–03 the Treasury granted reverse end-year flexibility of £10 million in consideration of the slump in world property markets. This considerably mitigated the impact of the shortfall on the OYce’s investment programme in that year. In 2003–04 the OYce had to reprioritise its investment plans to allow for the eVect of the shortfall on available funding. The FCO clearly recognises that asset recycling is a declining source of receipts. 28. When will the “further discussions” with HM Treasury mentioned in the Report take place, and when will their outcome be known? (p 168) Discussions with the Treasury on sales targets for future years have taken place as part of the SR2004 process. The outcome will be known when the SR2004 Settlement is announced. 29. Given the developments outlined in the Report, is it envisaged that any properties will be sold before the outcome of the talks with the Treasury are known, or have all such sales been temporarily placed on hold? (p 168) Even though the current level of asset recycling may not be sustainable it does not mean that the programme will cease. Asset recycling will continue for the foreseeable future. In view of the fact that it is not yet known what the outcome of the talks with the Treasury will be, it is not feasible to suspend sales. Sales are, therefore, continuing on a case by case basis when the estate requirements and economic assessments justify them. 30. Where will the extra £4.1 million required to fund the Prism Programme come from? (p 168) The original £81 million budget for Prism covered seven years. The revised cost is £4.1 million greater but covers eight years of service which represents good value for money. This has been factored into the FCO’s ICT Administration budget. There is no impact on the capital budget. 31. How does the OYce, the British Council and the BBC World Service intend to “demonstrate” that they have achieved eYciency gains, rather than simply work within reduced budgets? (p 174) In response to the Gershon Review, the FCO recently submitted an EYciency Plan to the Cabinet OYce EYciency Review Team setting out how the FCO will achieve cashable eYciency gains across the whole range of its activities in the SR2004 period. The British Council also submitted an EYciency Plan to the Cabinet OYce EYciency Review Team setting out how they will achieve eYciency gains during the SR2004 period. Proposed eYciency savings for the BBCWS are explained in their section of the FCO bid which is currently being reviewed by the Treasury. Foreign Affairs Committee: Evidence Ev 47

32. Given the budgetary diYculties being experienced by the OYce at this time, is it envisaged that reductions will be made in any of the UK’s contributions to international organisations? (pp 181 and 187–8) The UK has always taken the position, under successive governments, that it pays its assessed contributions to international organisations in full and on time. 33. Could the FCO provide the Committee with a list of all properties in the overseas estate sold or oVered for sale in the ﬁnancial year 2003–04, as the OYce did last year (in the same format)? These ﬁgures were provided to the FAC in a letter from Matthew Hamlyn dated 18 May 2004. 34. The Committee found the table in last year’s Departmental Report showing the “Changing Establishment of FCO Posts” (Departmental Report 2003, p 13, table 1) most useful. Could you supply an updated version of this table? Changing establishment of FCO Posts

1998 1999 2000 2001 2002 2003 Opened (UK based) Chongqing Dili Pyongyang Conakry Baghdad Bangalore Tripoli Dushanbe Chisinau Nagoya Monterrey Kabul Gothenburg* Denver Bamako Pristina Lahore Asmara (Local staV) Lome Calgary Conakry Tarawa Atyrau Fukuoka Port-au-Prince Sylhet (Kazakhstan) Ahmedabad Bhopal Goa Hyderabad Pune Bamako Closed (UK based) Kuching Cleveland Lahore Bamako Chiang San Salvador Mai Tegucigalpa Naples (Local staV) Seville** Kaduna

* During 2003 Gothenburg became a localised post-that is operated by locally employed staV. ** Although the oYce in Seville closed in 2000, UKTI maintained a trade team of two locally-employed staV who work from home. There was an erratum in the FCO 2003 Departmental Report which stated that Seville closed in 1998. In addition, the Secretary of State opened the British Embassy OYce in Astana in Kazakhstan in February 2004. 35. Further to the Committee’s Report on last year’s Departmental Report, the Committee would like to gain a better insight into the scale of the problem facing the Department in relation to diVerent Government departments paying LES diVerent rates at the same post (Foreign and Commonwealth OYce Annual Report 2003, HC 859, para 83). Could you, therefore, provide information on: (a) the number of FCO posts where other Government departments have “an autonomous presence”, with an indication of how many departments are represented at posts and which ones; and There are some 150 Overseas Posts where Other Government Departments (OGDs) maintain a presence. The main OGDs are the Department for International Development, Ministry of Defence, HM Customs and Excise, National Criminal Intelligence Service and Home OYce. We do not collect information from FCO Posts where OGDs operate an independent, autonomous presence in a country. (b) the rates of remuneration for comparable LES positions (eg drivers, security guards, etc) at a post with more than one other autonomous Government department present-Jamaica, for instance. Ev 48 Foreign Affairs Committee: Evidence

The High Commission in Kingston sets the salary rates for all local staV in Jamaica. No other government department has an autonomous presence in that country or elsewhere in the West Indies. Sample salary comparisons are given for India and Lesotho where DFID have a separate presence. The variables arise from the diVerent methodologies employed in determining appropriate rates eg use of consultants (DFID) compared with FCO “marker” reviews, and the selection of analogous employers and grade comparitors.

Grade FCO Rate DFID Rate (equivalent grade) Lesotho LEIII Senior M 3,957-6,914 M 6,835-9,618 2003 (Maloti) Clerical LEIV Junior M 3,651-5,978 M 4,446-6,256 Clerical LEVA Driver M 2,922-5,489 M 4,446-6,256 LEVB Guard Not given India LEVA R 8,553-15,357 R 15,187-23,955 2003 (Rupees) LEVB R 7,129-13,667 R 11,869-23,036

36. Could the FCO provide the Committee with a summary table of the SR2002 PSA targets which states, for each, whether current progress is “on course”, “not known”, “slippage” etc as this information is not always easy to identify in the main text of the report. Please see the attached table, which should be read in conjunction with the full data available in the Departmental Report. 37. What was the outcome of the FCO’s consideration of “innovative ways of obtaining better value for money from the estate to supplement the existing recycling programme” (Departmental Investment Strategy, p 22)? The Investment Strategy gives examples of the possibility of PPP disposals or the sale of surplus development rights-are any of these projects underway? The FCO is considering a number of potential deals that would involve private finance. These have included detailed discussions with developers for proposed construction projects in Bucharest, Sarajevo and Madrid as well as initial studies of private finance options for projects in the UK (Hanslope Park) and Beijing. If any of these initiatives are to proceed they must represent a good deal for the FCO in terms of value for money and aVordability. In order to pass these tests it will be necessary for the asset created to remain oV the FCO’s balance sheet. Recently, the NAO have indicated that the Berlin Embassy (which represents the FCOs only asset procured on a “full” PFI basis) should be moved onto the FCO’s balance sheet. This was done for the Financial Year 2002–03. Under current accounting rules it is proving to be extremely diYcult for us to construct development deals which produce oV-balance sheet assets. We are, however, still pursuing all the possibilities. The sale of surplus development rights at the residence in Buenos Aires is still being pursued, but elsewhere this avenue has not been successful. 38. Following the trial of devolution of estate budgets to geographical directorates (Investment Strategy, p 29) did the OYce find that better decisions were made about the estate? Will this trial be extended further so that more than 50% of all FCO estate expenditure is devolved to directorates (p 165)? Does each directorate have an asset recycling revenue target or are these decisions made centrally? The aim of the trial was to gauge the eVectiveness of devolving to Directorates the responsibility for decisions on which estate assets to acquire, retain or sell to maximise the eVectiveness of Posts. It envisaged a form of asset recycling within Directorates, including the possible sale of an asset in return for higher running cost provision. The trial coincided with a period when funding for estate investment has been particularly limited. Shortage of cash coupled with the increasing need for security-driven investment has forced us to review priorities world-wide. This very much reduced the scope for the pilot Director to retain and recycle estate assets, and the Directorate have therefore found the scheme of limited value to them. We do not, therefore, intend to run this experiment further or extend it to other Directorates for the time being. Nor shall we give Directors formal recycling targets, although the Estate Modernisation Manager will continue to discuss and agree recycling proposals with each Director. 50% of FCO estate expenditure is devolved to Posts, mostly for rents and rates. Prioritisation of major capital investment is carried out globally, in consultation with Directors. The Departmental Investment Strategy Group has delegated responsibility for decisions on investment priorities. The appropriate Geographical Director becomes the customer and “project owner” for all major new constructions. Foreign Affairs Committee: Evidence Ev 49

39. The Committee found the information given in response to Mr Bob Spink’s recent written parliamentary question, concerning the break-down of FCO staV by age, gender and ethnicity, very helpful (HC Deb, 23 April 2004, col. 710W). Could you supply the same data for FCO staV on 1 October 2000, 2001 and 2002? Could you also set out brieﬂy the sort of positions ﬁlled by staV at each of the grades listed.

FCO StaV in Post Breakdown: 1 October 2002

Grade % % % Female Declared Minority Ethnic Declared Disabled Total SMS 10.99 0.65 1.72 464 D7 24.44 1.67 1.11 180 D6 24.10 1.25 0.63 639 C5 19.96 1.31 2.05 536 C4 32.43 2.48 1.57 1,212 B3 49.77 5.63 2.39 1,296 A2 62.19 11.29 3.14 1,116 A1 44.21 21.66 3.26 337 Totals 38.70 5.59 2.09 5,780

Positions ﬁlled at the above grades include: — SMS: Head of Mission/Post (overseas). Board of Management, Head of Department (UK). Equivalent to Senior Civil Service grades in Home Civil Service. — D7/D6: Head of small post, head of section in larger posts, First Secretary (overseas). Head of Section, Deputy Head of Department (UK). Equivalent to Home Civil Service grade 6 (D7) and grade 7 (D6). — C5/C4: First/Second Secretary, head of smaller section (overseas). Desk oYcer (UK). C4 is the grade at which policy entrants start in the FCO. Equivalent to Home Civil Service SEO (C5) and HEO(C4). — B3: Third secretary, support work (overseas). Desk oYcer, support work (UK). B3 is the grade at which operational entrants start in the FCO. Equivalent to Home Civil Service Grade EO. — A2/A1: Administrative support staV, clerical work, range of support duties both overseas and in the UK including communications, secretarial, registry. Equivalent to grade Home Civil Service AO (A2) and AA (A1). Note: the FCO only recruits from the London area at A2 and A1 level.

FCO StaV in Post Breakdown: 1 November 2001

Grade % % % Female Declared Minority Ethnic Declared Disabled Total SMS 9.84 0.00 1.34 447 D7 27.27 2.6 1.30 154 D6 22.93 1.59 1.11 628 C5 16.87 1.22 2.44 492 C4 31.30 2.29 1.87 1,179 B3 49.20 5.18 1.91 1,256 A2 62.44 10.03 3.12 1,057 A1 47.09 22.75 3.17 378 Totals 38.24 5.44 2.11 5,591

FCO StaV in Post Breakdown: 1 October 2000

Grade % % % Female Declared Minority Ethnic Declared Disabled Total SMS 8.24 0.00 1.34 449 D7 31.40 3.31 0.83 121 D6 20.32 1.61 1.77 620 C5 14.86 0.85 1.91 471 C4 29.97 2.52 1.91 1,151 B3 47.73 4.62 1.70 1,234 A2 63.41 9.88 2.82 1,063 A1 47.52 23.29 3.73 322 Totals 37.41 5.23 2.06 5,431 Ev 50 Foreign Affairs Committee: Evidence

Wilton Park

Grade April 2003 April 2002 April 2001 April 2000 A1 14 11 9 7 A2 20 22 18 15 B310886 C4 12 11 12 10 C52100 D67656 D71111 SMS2221 Total Employed 68 62 55 46 Full Time 59.7 55.4 49.2 41.2 Equivalent TotalMale22232017 Total Female 46 39 35 29

Ethnic origin White 67 61 54 44 Anglo Caribbean 1111 Chinese 0 0 0 1

Disabled0000

40. Further to Mr Malcolm Bruce’s written question to Mr O’Brien (HC Deb, 29 April 2004, col 1209W), could the OYce clarify why details of employment tribunals (or their equivalents) involving locally-engaged members of staV are not kept and monitored centrally? How does the OYce ensure that best practice is being observed across all posts, in relation to the employment conditions of such LES, without such data? Is the equivalent information kept on ﬁle for UK-based staV?

There is no obligation on posts to report disputed local staV termination cases to FCO. If however court or tribunal proceedings appear likely the post concerned will report the circumstances to the FCO, particularly where immunity or compensation issues may arise. There are about four such cases running annually.

Posts are expected to manage staV responsibly and fairly within locally approved terms and conditions. Guidance on disciplinary and grievance procedures is provided from London and is incorporated in local terms. Where a complaint is made to FCO by a member of the local staV, the FCO will satisfy itself that the post concerned has followed its own procedures correctly. It will not take a view on the merits of the case.

The FCO maintains records of UK Employment Tribunal cases involving UK Based staV. Local staV (two in 1999–2002 and three in 2003) have brought complaints of unfair dismissal in UK Employment Tribunals. In line with recent case law from the Court of Appeal, the Tribunal has already held that it does not have jurisdiction to hear one of these cases, and it is expected that this decision will be followed in the other two cases.

41. Could the OYce provide further details of the facts behind the story which appeared in the Daily Telegraph recently concerning the High Commissioner’s Residence in New Delhi? (Daily Telegraph, 6 May 2004, p 19)

Since the lease expired in 1989, we have been unable to agree the rent payable to the Government of India who own the property. For many years this issue remained dormant. We have, however, been paying an interim rent. Last year senior FCO oYcials visited New Delhi in an attempt to resolve the problem. However the Indians are demanding a ﬁgure which we consider well above the market value. Our eVorts to resolve this issue continue. Keith Grieve Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 14 June 2004 Foreign Affairs Committee: Evidence Ev 51

Letter to the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, from the Second Clerk of the Committee, 24 June 2004

FOREIGN AND COMMONWEALTH OFFICE ANNUAL REPORT 2003–04 Thank you for your letter of 14 June enclosing the FCO’s responses to the Committee’s written questions on the FCO Annual Report 2003–04. The Committee was disappointed that so much of the material related to the OYce’s PSA targets in the annex attached to your memorandum was sent with a “restricted” covering. As you are aware, the Committee prefers to conduct as much of its scrutiny work as possible in the public domain. It would prefer to be able to discuss the currently restricted material freely with the Permanent Under-Secretary at its forthcoming evidence session, and to publish the evidence with its final report. The Committee has requested me to write, therefore, and ask you to re-examine the material in the restricted annex and to declassify it. If not, could you determine whether the material could be declassified with a few redactions of key figures or text? The Committee hopes you will be able to meet its request but if this is not the case, could you set out the reasons why this material has been classified “restricted” in your response. I look forward to your reply. GeoVrey Farrar Second Clerk of the Committee 24 June 2004

Letter to the Second Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, 20 July 2004

Declassifying PSAS 4 And 7 With Scorecards I am writing to confirm that, further to the Committee’s request, the OYce is content to declassify PSAs 4 (conflict prevention and management) and 7 (globalisation leading to sustainable development) in their entirety. PSA monitors have confirmed that, in the light of developments since the scorecards were drawn up, their content is no longer sensitive enough to merit classification. I should add that there will continue to be circumstances—for example, for security reasons, or to protect the UK’s position in international negotiations—where other performance-related information might have to remain classified until the contents cease to be sensitive. Tom Adams Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 20 July 2004

Further note from the Foreign and Commonwealth OYce FCO PSA 4: Improve eVectiveness of the UK contribution to the conflict prevention and management as demonstrated by a reduction in the number of people whose lives are aVected by violent conflict and a reduction in potential sources of future conflict, where the UK can make a significant impact. JOINT TARGET WITH MOD AND DFID

Assessment indicators: AHEAD—four out of four sub-targets must be either MET or AHEAD ON COURSE—three out of four sub-targets must be judged to be ON COURSE SOME SLIP—two out of four sub-targets judged as ON COURSE MAJOR SLIP—only one out of four sub-targets judged to be ON COURSE

Progress against the PSA Target in 2000–06 will be measured using: (a) Global Pool sub-targets on Afghanistan, Nepal, Macedonia, Georgia, Israel/Occupied Territories, Sri Lanka, contribute 25% to PSA target — A 10% reduction in fatalities from a SIPRI baseline of 7,800 in 2000 to 7,000 by 2006. — A 10% reduction in fatalities from an IISS baseline of 19,000 to 2000 to 17,000 by 2006. Ev 52 Foreign Affairs Committee: Evidence

— A 10% reduction in refugees from a UNHCR baseline of 3,800,000 in 2000 to 3,400,000 by 2006. — A 10% reduction in internally displaced persons from a USCR baseline of 1,500,000 in 2000 to 1,350,000 by 2006. (b) Africa Pool sub-targets on Sierra Leone, DRC, Uganda, Rwanda, Burundi, Sudan, Angola, Nigeria, contribute 25% to PSA target — A 20% reduction in fatalities from a SIPRI baseline of 6,500 in 2000 to 5,200 by 2006. — A 20% reduction in fatalities from an IISS baseline of 48,000 in 2000 to 38,000 in 2006. — A 20% reduction in refugees from a UNHCR baseline of 2,400,000 in 2000 to 1,900,000 by 2006. — A 20% reduction in internally displaced people from a USCR baseline of 10,300,000 in 2000 to 8,200,000 by 2006. (c) Conﬂict Level Assessment Tool sub-targets contribute 50% to PSA target (25% in each Pool)—a new product measuring variations in potential sources of future conﬂict is being created.

Definitions: (a) The Conflict Prevention Pools (i) The Global and Africa Pools were created in April 2001, as policy mechanisms to improve UK conflict prevention policy and impact using a joined-up approach between FGO, MOD and DFID. HMT and Cabinet OYce also play an important coordinating role. The Pools bring together peacekeeping and programme budgets, for the first time. (ii) FCO manage the Global Pool—the Foreign Secretary chairs the Cabinet committee; and DFID manage the Africa Pool—the International Development Secretary chairs the Cabinet committee. (b) PSA Target (i) The PSA target contains two distinct elements requiring measurement: the number of people whose lives are aVected by conflict and a reduction in the potential sources of future conflict. Fatalities, refugees, internally displaced people (IDPs) will measure the first element and the new Conflict Level Assessment Tool on variations in the level of conflict will measure the second element. (ii) Conflict defined by SIPRI is “the use of armed force between the military forces of two or more governments, or one government and at least one organised armed group and the incompatibility concerns control of government and/or territory”. (iii) “Where the UK can make a significant contribution” defines the countries/regions where the UK can make an important input to reducing or preventing conflict. (c) Sub-Target Indicators (i) Fatalities according to SIPRI refer to “total battle related deaths, civilian and military, caused by warring parties which can be directly connected to the conflict”. IISS use a similar definition. (ii) A refugee is defined by the 1951 Convention as “a person who owing to well-founded fear of persecution for reasons of race, religion, nationality, membership of a particular social group or political opinion is outside their country of nationality and is unable or unwilling to return”. (iii) Internally Displaced People (IDPs) defined by UN Guiding Principles are “people who are forced or obliged to flee or leave their homes or places of habitual residence, to avoid the eVects of armed conflict, situations of generalized violence, violations of human rights, natural or human-made disasters, and who have not crossed an internationally recognised state border”.

Issues: (a) Assessing Progress (i) An overall assessment of progress will be based not only on data but also on a narrative assessment, to compensate for the weakness of data sources on fatalities, refugees and IDPs eg a major outbreak of conflict in one country could increase numbers significantly, distorting progress made in other countries. The UK’s diplomatic achievements contributing to reduced conflict will be cited eg mobilising an eVective international response. (ii) Progress will initially be measured separately for each Pool, including the impact of programmes/strategies in each Pool, before a joint overall assessment is made against the PSA target. Foreign Affairs Committee: Evidence Ev 53

(iii) The PSA relates to 2003–06, however baseline data relates to 2000. A time lag of one year exists before data is available in each year. All baseline data relates to 2000. A final assessment will be made in 2007 using 2006 data. (iv) The countries selected for assessing fatalities, refugees and IDPs is a specific group—it does not include every country covered by each Pool. (v) Isolating the UK’s distinct contribution from international and other actors is diYcult, and the target is subject to high risks eg the UK cannot control the policies of other actors, small arms proliferation etc. (b) Data limitations (i) Accurate data on fatalities, refugees and IDPs is not available but is taken from the best available sources. For example SIPRI state the figures represent a minimum indicator but real figures may be much higher. (ii) Both SIPRI and IISS use the starting marker of 1,000 battle-related deaths each year for major conflicts—an arbitrary starting point. To provide a more accurate assessment, additional data from IISS and the States in Armed Conflict Report is included to capture data on fatalities below 100—included in the 2000 baseline. (iii) SIPRI and IISS utilize diVerent sources in collecting data and produce significantly diVerent fatality statistics for the same conflicts, we will therefore use their data to assess overall trends. (iv) Attributing what proportion of refugee/IDP displacement is caused directly by conflict is acknowledged as problematic. Refugee data is based on the number of refugees from each country and not in each country.

Sources (a) Fatalities Stockholm International Peace Research Institute (SIPRI) Yearbook data and International Institute for Strategic Studies (IISS) Military Balance data will be used to measure conflict fatality numbers above 1000. To include fatalities below 1,000, data from the States in Armed Conflict Report, University of Uppsala (who produce SIPRI’s data) and the IISS Small Conflicts Database (to be launched publicly in January 2003) is also included in the baseline/targets. (b) Refugees The United Nations High Commission for Refugees (UNHCR) are mandated to deal with refugees and compile annual data on refugee numbers in “Populations of Concern to UNHCR”. (c) Internally displaced persons (IDPs) United States Committee for Refugees (USCR) data is used for 2000 baseline data because it is the only source available. However all future assessments will use Global IDP project data from the Norwegian Refugee Council—because it is now recognised as the best IDP data source combining data from all the main IDP agencies. (d) Potential sources of future conflict A new Conflict Level Assessment Tool is being developed. This Technical Note will be updated to provide further details. FCO PSA 7: Make globalisation work for sustainable development in the UK and internationally (and particularly in Africa) by promoting democracy and the rule of law, good economic and environmental governance, and security of long-term energy supply, measured by specific underlying targets. This target will be measured using the following scorecards (agreed between FCO and HMT) covering the five elements of the target: (a) increased democracy and the rule of law; (b) more eVective economic governance; (c) more eVective environmental governance; (d) enhanced security of energy supplies; (e) reformed and eYcient international organisations (the UN, OSCE, OECD and Council of Europe), oVering better value for money for the UK. Scorecards (b)—(e) are classified. (a) Increased democracy and the rule of law (i) Number of functioning democracies in the world increases from 95 in 2003 to 105 in 2006. Functioning democracies are defined as “independent countries whose primary legislature and heads of government are elected by a majority vote from two or more opposing choices by secret ballot in a climate which fully permits freedom of expression, assembly and association.” Sources for measuring this include: Freedom House’s Democracy Audit; UNDP Human Development Reports; the State Department’s Country Reports on Human Rights Practices; election monitoring reports from EU. OSCE, Council of Europe, other regional bodies and NGOs. Ev 54 Foreign Affairs Committee: Evidence

(ii) Ratification of any of the six core human rights treaties by 25 additional states by 2006. Ratifications are notified to the UN and recorded immediately on the website of the OYce of the High Commissioner for Human Rights. (iii) The number of countries with fully independent and impartial judiciaries increases from 90 in 2003 to 95 in 2006. A fully independent and impartial judiciary is defined as: “a judiciary which is able to fulfil its function without improper influence or inappropriate interference from the executive, legislature, business interests or other non-state actors; and in accordance with principles of justice (eg due process and equality before the law) as set out in the 1985 UN Basic Principles on the Independence of the Judiciary”. Sources available to measure this include the International Committee of Jurists’ (FCO Human Rights Policy Fund (HRPF)-funded) annual Attacks on Justice Report; Transparency International reports, the State Department’s Country Reports on Human Rights Practices; International Bar Association and Law Society reports and other NGO reports. (iv) More eVective machinery of international justice. Measurements: — International Criminal Court (ICC): 100 ratifications and 20 more States parties complete domestic implementation legislation by end-2003. The ICC came into force on 1 July 2002. By September 2002, 79 countries had ratified. Only 9 had completed domestic implementation. The UK assessed contribution in the First Financial Period (until 31 December 2003) is approximately £2.25 million. — Satisfactory progress towards the completion strategy for the International Criminal Tribunal for Yugoslavia (ICTY), with investigations completed by end-2004. ICTY was set up in 1994 by UNSCR to try those responsible for war crimes committed in former Yugoslavia throughout the 1990s; its temporal jurisdiction remain open. Chief Prosecutor has however drawn up a strategy to complete trials by 2008. The UK assessed contribution in 2002/3 is approximately £5.5 million. — Most trials conducted by the Special Court for Sierra Leone completed by end-2005. The Special Court for Sierra Leone (SLSC) was established in July 2002. Aims: to try 20- 30 of “those most responsible” for Sierra Leone war crimes within 4 years of its establishment; although UNSC mandated, SLSC is a hybrid, funded by voluntary contributions from States. — African Court of Human Rights established and becoming functional by end 2006. At February 2003, six African States have ratified the Protocol leading to the creation of the Court: another nine have to do so before the Court can be established. (b) More eVective economic governance (i) Concrete progress towards the Millennium Development Goals (MDGs). Progress towards the Millennium Development Goals is measured at least annually and published by UNDP. (ii) More countries implementing international standards on investment, corruption, tax and money laundering. Measurements: — Agreement of new UN Convention against Corruption and UK signature by end 2003. two ratifications of the Convention in each year 2004/05/06. Ratifications of the UN Convention will be notified to the UN and recorded on the website. — Two new UK Investment Promotion and Protection Agreements (IPPAs) each year 2004/05/06. Ratification of IPPAs is a public, legal act by the UK and co- signatory government. — Less than five countries on FATF blacklist by end 2004. The FATF blacklist is published at least six monthly. — Three new ratifications of the OECD Bribery Convention by end 2005. Ratifications of the OECD Convention will be notified to the OECD and recorded publicly. (iii) Significant improvements in each year in economic governance for at least two states identified as having failed governance, as measured by the World Bank governance survey. Progress will be measured against the World Bank triennial survey of economic governance indicators including eVective regulation, sound business environment, rule of law, control of Foreign Affairs Committee: Evidence Ev 55

corruption. Immediate progress can be measured by subsidiary surveys carried out in diVerent countries during the PSA period. “Significant” means a statistically significant change as set out in the World Bank methodology. (iv) Formal agreement on transparency of payments from major corporations in extractive industries with at least five countries by 2004, 10 by 2005. (c) More eVective environmental governance (i) EVective implementation of a more coherent approach to environmental governance based on the United Nations Environment Programme (UNEP) Cartagena reforms and World Summit on Sustainable Development (WSSD) Plan of Implementation, including agreement on universal membership of the Global Ministerial Environmental Forum and a 30% increase in UNEP core funding by 2005. Agreement by end of 2004 of a developed role for the Commission on Sustainable Development that allows it to act as an integrating mechanism for overall progress on sustainable development with each individual strand eVectively managed by the appropriate specialist institution. Reports from UNEP and Post on universal membership and funding. (ii) Entry into force of the Kyoto Protocol by August 2003 and an outcome at the Ninth Conference of the Parties (COP 9) in 2003 which involves developing countries in discussions on future targets. Entry in force of Kyoto conditional on ratification by 55 signatories covering 55% of Annex 1 (developed country) emissions. (iii) Successful conclusion of the environmental aspects and the Doha Development Agenda, in particular clarifying the relationship between WTO rules and Multilateral Environmental Agreements. Success will be measured against UK goals for the Doha Development Agenda. (iv) Significant improvement in both the legal basis and eVective implementation of citizens’ access to justice in priority countries by 2005. United Nations Economic Commission for Europe (UNECE) Aarhus Convention on Access to Environmental Information and Participation in Decision Making is the benchmark against which progress will be measured. Priority countries are those in Eastern & Central Europe, the Caucasus and Central Asia (ie non-EU European UNECE member states) and countries where the Access Initiative operates (Chile, India, Mexico, Thailand, Indonesia, Uganda, Nigeria). (d) Enhanced security of energy supplies (i) Increased diversity of oil supplies to EU, including through and above trend increased in oil sector FDI in key oil states by 2005. Key oil states: Russia, Kazakhstan, Sudan, Libya, Nigeria, Equatorial Guinea, Angola. Measured by IEA statistics. (ii) Reduced OECD dependence on oil: programmes in place by 2005 which would achieve a reduction of 10% in 2010 of oil’s share of total primary energy resources (TPER) in OECD and emerging markets. Measured by International Energy Agency (IEA) audit process. (iii) EU gas supply/liberalisation: achievement of full EU gas market liberalisation by 2005, and an increase in contracted gas supply diversity to EU by 2005. Measured by IEA audit process. (iv) Substantial increase in the share of new renewable energy sources and energy eYciency technologies in the energy supply mix non-OECD countries (particularly in Africa) by 2010, through adoption of national renewable energy goals and programmes as follow-up to relevant G8 and WSSD initiatives. Measure increased in renewables using IEA statistics and through mechanisms set up to monitor and report on achievement of WSSD goals—for energy targets likely to be through the Commission on Sustainable Development. (e) Reformed and eYcient international organisations (the UN, OECD, OSCE and Council of Europe), oVering better value for money for the UK. (i) Progressive implementation of improved budgetary practices across the organisations between end-2003 and end-2004. Review by December 2003 of OECD’s budgeting structure, including a more rigorous examination of the distorting eVects and opportunity costs of voluntary contributions, enhancing our ability to target resources at priority activities. Adoption of revised Financial Ev 56 Foreign Affairs Committee: Evidence

Regulations by OSCE Permanent Council and introduction of better co-ordinated, objective- led budget procedures including improved monitoring and accountability by December 2003. results based budgeting in all UN budget documents by March 2004. (ii) Further human resource management reforms implemented across the organisations by end- 2004. A successful conclusion to the International Civil Service Commission’s review of pay and beneﬁts by December 2003, which limits costs while preserving the existing agreed methodology, and ongoing implementation throughout the UN Secretariat of HR reforms as improved mobility arrangements and performance appraisal systems. Adoption of revised StaV Regulations by OSCE Permanent Council and eVective deployment (no time lag) of OSCE Human Resources in the ﬁeld and at the centre of July 2003. (iii) Increased eYciency and productivity gains realised across the organisations by end FY2004- 05. Streamlined working methods across directorates, through the introduction of clusters of work, leading to less duplication of eVort within OECD by December 2003; Adoption of CoE of European Court of Human Rights (ECHR) reform plan by June 2003, leading to a faster through-put of cases before the ECHR. No more than 10% (down from one-third) awaiting judgement beyond three-year set limit by March 2005.

PSA AND PROGRESS IN ACHIEVING TARGETS

SR02 PSA targets Assessment of progress PSA 1: Reduce the threat to the UK from Significant progress in some areas but likely international terrorism and the proliferation of final outcome not yet clear. weapons of mass destruction. Reduce international crime, drugs and people-traYcking aVecting the UK, measured by Whitehall-wide targets. Contribute to the reduction of opium production in Afghanistan, with poppy cultivation by 70% within five years and elimination within 10 years. PSA 2: Reduce tension in South Asia, the Middle Significant progress in some areas but likely East, Balkans and elsewhere through action with our final outcome not yet clear. international partners, paying particular attention to regions at risk from nuclear confrontation. PSA 3: Strengthen European security through an On course. enlarged and modernised NATO, and eVective EU crisis management capacity and enhanced European defence capabilities. JOINT TARGET WITH MOD PSA 4: Improve eVectiveness of the UK contribution Not yet assessed. to conflict prevention and management as demonstrated by a reduction in the number of people whose lives are aVected by violent conflict and a reduction in potential sources of future conflict, where the UK can make a significant impact. JOINT TARGET WITH MOD AND DFID PSA 5: Deliver measurable improvement in the On course with new-to-export firms and business performance of Trade Partners UK’s investment indicators. Slippage in other areas. customers; and maintain the UK as the prime location in the EU for foreign direct investment. JOINT TARGET WITH DTI PSA 6: Secure agreement by 2005 to a significant Some slippage. reduction in trade barriers leading to improved trading opportunities for the UK in developing countries. JOINT TARGET WITH DTI AND DFID PSA 7: Make globalisation work for sustainable Significant progress in some areas but likely development in the UK and internationally (and final outcome not yet clear. particularly in Africa) by promoting democracy and the rule of law, good economic and environmental governance, and security of long-term energy supply, measured by specific underlying targets. Foreign Affairs Committee: Evidence Ev 57

SR02 PSA targets Assessment of progress PSA 8: A modern, reformed, and enlarged EU, as On course. measured by progress towards UK policy priorities including economic liberalisation, CAP reform, justice and home aVairs, an eVective CFSP, and the 2004 IGC; and greater support for Europe in the UK. PSA 9: EVective advice on, support for, and delivery On course. of Government objectives across the full range of the UK’s international interests through a viable and responsive network of diplomatic Posts. Increased influence overseas and improved perceptions of UK and HMG policies, as measured by opinion polls. PSA 10: EVective and eYcient consular and entry On course with seven out of ten indicators. clearance services, as measured by specific underlying Some slippage with others. targets. PSA 11: Improvement in the governance, On course. environment and security of the overseas territories, and more diversified economic development, as measured by implementation of the commitments in the 1999 White Paper. PSA 12: Improve value for money across the full On course. range of FCO, BBC World Service and British Council activities by achieving year on year eYciency gains of 2.5%.

Table 1: A summary of the FCO’s SR2002 PSA targets and current progress in achieving them.

Letter to the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, from the Second Clerk of the Committee, 1 July 2004

FOREIGN AND COMMONWEALTH OFFICE ANNUAL REPORT 2003–04 As you are aware, at the Committee’s oral evidence session with Sir Michael Jay on Tuesday a number of questions which Members wished to ask were not reached owing to the pressure of time. Please ﬁnd below a list of these questions, to which the Members would be grateful for your written response:

UK International Priorities 1. The Priorities document envisages a much greater use of IT to de-centralise functions from London to posts. Does this mark the end of the traditional “desk oYcers” in London? If so, when would the OYce envisage the change taking place? 2. The Priorities document sets out challenging diversity targets for the FCO’s senior management service. In order to achieve these, the OYce will need to more than double the number of minority ethnic senior staV it has, and increase signiﬁcantly the number of disabled and female staV at those grades. Is the FCO conﬁdent it can achieve these targets? How? 3. The White Paper indicates that more posts may be run by DfID oYcials in the future. Is there not a danger that where such appointments are made it will be seen as downgrading the bilateral relationship from a full political-diplomatic one between equal nations, to an unequal one based solely on aid?

Financial Management 4. As a result of the Gershon Review, the FCO will be expected to continue ﬁnding annual eYciency savings of 2.5% per annum in the next triennium. Is the OYce ready to face this continued challenge? 5. As the OYce has already been achieving such eYciencies for the last four years, would it be true to say that most of the “easy hits” have now been made, and that such savings would now begin to cut more deeply into its activities? 6. Last year, Sir Michael was unable to assure the Committee that the department was actually making genuine eYciency savings, rather than simply having its budget cut by 2.5%. The heads of the BBC World Service and British Council were able to give the Committee such an assurance last week. Can the FCO? Ev 58 Foreign Affairs Committee: Evidence

7. When does the OYce believe it will cease to be viable for the FCO to find annual 2.5% eYciency savings? 8. What was the additional cost to the Foreign OYce resulting from the conflict in Iraq in the last financial year? 9. The FCO claimed £36.9 million from the Contingency Reserve. Was the OYce hoping for more? Did this cover all the costs or were these supplemented by a re-allocation of internal budgets? 10. What were the “lower priority activities” that were foregone as a result of the additional expenditure in Iraq?

Management of the Overseas Estate 11. In one of its memoranda to the Committee, the FCO told the Committee that the OYce’s rental bill in the period 1998 to 2003 had remained relatively stable at around £64 million. What was the change in the actual proportion of rented to owned properties in that period? 12. The FCO notes in the same memorandum that the total bill has been helped by “movements in exchange rates and favourable market factors”. Does not the OYce’s increased reliance on rented property make it more exposed to the volatility of such factors in the future? 13. Has the FCO made any assessment of how a weakening pound or unfavourable market factors will aVect its ability to make eYciency savings? 14. Given the modiﬁcations the FCO needs to make to diplomatic buildings to make them ﬁt-for- purpose-security, telecommunications, etc—is it not nearly always better in the long-run to buy a property rather than rent one? 15. Could the FCO provide the Committee with an update on the future of the High Commissioner’s Residence in Cape Town and the Embassy in Prague?

Visa Entry Clearance 16. Why did the percentage of visa holders whose leave to enter the UK was cancelled on arrival actually rise marginally in the last year? 17. Once collected, with whom is the biometric visa data shared and what safeguards are in place to prevent misuse? 18. During the Committee’s recent visit to India and Turkey it was clear that the involvement of three diVerent departments in the visa entry clearance system—the Home OYce, FCO and the DCA—created some diYculties and tensions. Does the OYce believe that the three departments do work well together on this issue? 19. Decisions made by the Home OYce on the criteria for entry into the UK clearly have signiﬁcant resource implications for the FCO. Does the OYce feel that it is always properly consulted about decisions and given suYcient time to plan accordingly? Please could the Committee have your response no later than Friday 16 July. GeoVrey Farrar Second Clerk of the Committee 1 July 2004

Letter to the Second Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, 20 July 2004

FOLLOW UP TO 29 JUNE EVIDENCE SESSION Thank you for your follow up to the 29 June evidence session on the FCO Annual Report 2003–04. Here follow the answers to your nineteen questions.

UK International Priorities

1. The Priorities document envisages a much greater use of IT to de-centralise functions from London to posts. Does this mark the end of the traditional “desk oYcers” in London? If so, when would the OYce envisage the change taking place? The FCO Board has agreed that in order to deliver the priorities set out in the Strategy, we will need to change the structure of the organisation and the way we work. The Organisation Project team has been tasked to implement the changes by April 2006. The restructuring will aVect the way desk oYcers, and Foreign Affairs Committee: Evidence Ev 59

indeed all FCO staV will work in future. We will remain a matrix organisation, using functional, thematic and geographic expertise, at home and overseas, to deliver our priorities. But we must ensure our work in London does not duplicate work in the overseas network but really adds value. In many cases Posts are best placed to provide country speciﬁc expertise and we need to make better use of advice from Post in policy formulation. But geographical directorates will continue to have a key role in providing expertise and advice on regional issues and on the most sensitive countries, as well as serving Ministers and parliament and managing the network overseas. Critical to the success of the new structure will be the ability to operate as a single, global, online organisation. Greater ICT ﬂexibility will also help us to move resources to where they are most needed, as swiftly as possible. The Information and Communications (ICT) Strategy is therefore a key area of activity under the FCO Change Programme.

2. The Priorities document sets out challenging diversity targets for the FCO’s senior management service. In order to achieve these, the OYce will need to more than double the number of minority ethnic senior staV it has, and increase significantly the number of disabled and female staV at those grades. Is the FCO confident it can achieve these targets? How? Our diversity targets for 2005 for the senior management service (SMS) are 20% women, 2% minority ethnic staV, and 3% disabled staV. In setting these targets, which were agreed by the Cabinet OYce, we recognised that we were beginning from a low starting point, and that the global mobility obligation on all DS staV presented particular challenges for improving the diversity of our staV. The FCO is unlikely to meet the targets for minority ethnic staV or for women by 2005. however we do expect to continue to make steady progress. We now have 20 female Heads of Post, and 13% of women in the SMS overall, up from 6% in 1999. Our first two minority ethnic ambassadors took up their posts in 2004. On disability, we believe that the issue hinges more on the reliability of our current statistical information. In our recent Employee Attitude Survey, 3% of respondees from the SMS declared themselves disabled. During the next few months we will be introducing a more robust information management system (Prism), which we hope will give a more accurate picture. We are working hard to improve the diversity of the FCO’s staV at all levels. We met our recruitment diversity targets for 2003 (14% of all new staV were minority ethnic, and 52% women). We monitor our internal promotion and progression mechanisms for adverse impact on any minority group. Clearly it will take some time for these improvements to aVect the SMS, so we are also hoping to increase the diversity of our staV by increased interchange. In April 2003 we gave all staV the right to request flexible working and uptake so far has been good. We have three staV advisory groups on race, disability and gender, chaired by three Board champions. These groups drive forward change initiatives and help to spread best practice. We also have a number of training initiatives underway to help under-represented staV. We introduced Springboard, a development programme for all female staV, in 2003. We have one and four members of staV respectively participating in the Cabinet OYce’s Pathways and Disability Bursary schemes—for staV with the potential to reach the SMS. We have a mentoring programme open to all staV, and are introducing a job-shadowing scheme. We also have a nursery in London which is well-used by staV. We are working to mainstream diversity throughout the FCO, including by using diversity objectives for all staV.

3. The White Paper indicates that more posts may be run by DfID oYcials in the future. Is there not a danger that where such appointments are made it will be seen as downgrading the bilateral relationship from a full political-diplomatic one between equal nations, to an unequal one based solely on aid? In order to pursue our strategic priorities, and to develop our key relationships, we shall continue to require a network of Posts that gives us the ability to influence people and governments around the world. We are using new methods for assessing the potential of each Post to contribute to our objectives. This will enable us to put the right sort and level of resources in the right places to deliver results. One way to achieve greater flexibility will be to consider alternative forms of representation. With new technology, and a growing range of options, a traditional Post may no longer be needed in a country that has little impact on the achievement of our priorities, and where demand for our services is low. In such cases, we are assessing what level of influence we require and how this can most eYciently be achieved. One possibility, as set out in the Strategy, includes closer co-operation with DfID on the roles of senior personnel abroad. We have one current and one recent example of FCO Posts that are headed up by DfID oYcials: Uganda, and Ethiopia. These heads of Post represent the interests of HMG as a whole, not just their parent department. As we work to improve co-ordination between Government departments, this kind of representation may well prove to be the most eYcient and most eVective form of representation in more places. Ev 60 Foreign Affairs Committee: Evidence

However, in making any decisions on levels and forms of representation across the world we will take account of the full costs, the political implications at home and abroad, (including the eVect on the bilateral relationship), and the need to ensure the safety and security of our staV.

Financial Management

4. As a result of the Gershon Review, the FCO will be expected to continue ﬁnding annual eYciency savings of 2.5% per annum in the next triennium. Is the OYce ready to face this continued challenge? As part of its response to the Gershon Review, the FCO has drawn up an EYciency Plan which describes how it intends to make the required 2.5% year on year savings in the period covered by the 2004 Spending Round. It is currently drawing up detailed implementation plans, and is conﬁdent that it will meet the targets set.

5. As the OYce has already been achieving such eYciencies for the last four years, would it be true to say that most of the “easy hits” have now been made, and that such savings would now begin to cut more deeply into its activities? The FCO continuously seeks to improve the eYciency of its operations, and has achieved a great deal in recent years. Achieving further savings in the period covered by the 2004 Spending Round will not be easy. But, under current plans, the FCO is conﬁdent that these will be achieved through improved eYciency, rather than by cutting back on front-line activities.

6. Last year, Sir Michael was unable to assure the Committee that the department was actually making genuine eYciency savings, rather than simply having its budget cut by 2.5%. The heads of the BBC World Service and British Council were able to give the Committee such an assurance last week Can the FCO? New savings over the SR04 timescale will arise from genuine eYciencies, rather than from budget cutting.

7. When does the OYce believe it will cease to be viable for the FCO to ﬁnd annual 2.5% eYciency savings? It is reasonable to expect any organisation to aim for year on year eYciency savings. Experience so far has been that 2.5% is an achievable target. However, if the demands on the FCO continue to increase, it will be diYcult to meet them all even with improvements in eYciency of 2.5% a year.

8. What was the additional cost to the Foreign OYce resulting from the conflict in Iraq in the last financial year? Of a total Reserve Claim of £36.9 million some £30 million related to the Coalition Provisional Authority and hence was not available to FCO. The FCO portion of £6.9 million enabled us to meet all the direct additional bilateral costs of the conflict. Redeployment of staV from other areas also had an opportunity cost that we cannot quantify.

9. The FCO claimed £36.9 million from the Contingency Reserve. Was the OYce hoping for more? Did this cover all the costs or were these supplemented by a re-allocation of internal budgets? The FCO portion of the Reserve Claim fully met our needs.

10. What were the “lower priority activities” that were foregone as a result of the additional expenditure in Iraq? Redeployment of staV led to an increase in the overall number of vacancies but it is not possible to give a deﬁnitive list of all the re-tasking and deferred or discontinued activity that resulted. In concentrating eVort on particular countries and regions there is a corresponding reduction in attention given to other countries and regions. This is reﬂected, for example, in the scaling down of our representation in Central America.

Management of the Overseas Estate

11. In one of its memoranda to the Committee, the FCO told the Committee that the OYce’s rental bill in the period 1998 to 2003 had remained relatively stable at around £64 million. What was the change in the actual proportion of rented to owned properties in that period? In the period 1998–2003 the proportion of owned properties in our overseas estate fell from approximately 17.5% to 15.2%. Foreign Affairs Committee: Evidence Ev 61

12. The FCO notes in the same memorandum that the total bill has been helped by “movements in exchange rates and favourable market factors”. Does not the OYce’s increased reliance on rented property make it more exposed to the volatility, of such factors in the future? For all budgets that are devolved to Posts (including Post hirings) we have an agreement with the Treasury called the Overseas Pricing Mechanism (OPM), which ensures that, for these devolved budgets, we neither gain nor lose through exchange rates or inﬂation diVerences between the UK and overseas. The risk is thus manageable on both a global and local basis. However, the FCO does not escape the eVects of exchange rate movements and market factors in the case of owned properties and centrally managed rentals. We are still required to pay capital charges based on the local value of owned properties. These values are aVected by local property markets, and changes in the exchange rates, but we cannot use OPM in these cases.

13. Has the FCO made any assessment of how a weakening pound or unfavourable market factors will aVect its ability to make eYciency savings? As mentioned in the question above, the market factors throughout our global estate have a tendency to balance out. In combination with the Overseas Pricing Mechanism (also explained above), we do not believe movements in the exchange rate or other market factors will unduly aVect our ability to pursue value for money and eYciencies in the rental market.

14. Given the modifications the FCO needs to make to diplomatic buildings to make them fit-for-purpose— security, telecommunications, etc—is it not nearly always better in the long-run to buy a property rather than rent one? Varying factors in each location dictate whether we own or rent properties: in areas where rents are high it may be preferable to own; in some countries foreign entities are not permitted to own property; in other countries renting may provide greater flexibility than owning, for example if a neighbourhood degenerates a rental can more easily be relinquished and a move made to a better area.

15. Could the FCO provide the Committee with an update on the future of the High Commissioner’s Residence in Cape Town and the Embassy in Prague? The Foreign Secretary has asked oYcials to reassess whether greater value could be obtained from the Residence in Cape Town. This is being done: no decisions have yet been made. We have recently reviewed the options in Prague and concluded that they do not support disposal of the Embassy.

Visa Entry Clearance

16. Why did the percentage of visa holders whose leave to enter the UK was cancelled on arrival actually rise marginally in the last year? A visa may only be cancelled on arrival in certain limited circumstances for example if the there has been a material change in the holder’s circumstances, or if they gave false information or didn’t disclose material facts when applying for the visa. The final figure for 2002–03 was 0.024%, The projected figure for 2003–04 is 0.040%. This represents an increase of 349 visas cancelled out of 1.82 million issued. We are not aware of any particular reason for this small rise. This target lost much of its value when visas began to grant leave to enter in 2000. We are intending to replace it with a more eVective PSA measure that adequately reflects the control strengthening measures that are being introduced to the overseas visa operation. These include improved training, increased use of intelligence and the establishment of Risk Assessment Units in high-risk posts. A range of other measures also are being adopted at local level including periodic checks on visa issuing quality and follow up exercises to monitor trends. In the longer term, the planned e-Borders programme will enable the electronic recording of people into and out of the UK and will thus provide UKvisas with a more eVectively measurement of control standards.

17. Once collected, with whom is the biometric visa data shared and what safeguards are in place to prevent misuse? The data collected is transferred electronically through secure FCO telecommunications links to the UK. It is then stored on IND’s Immigration and Asylum Fingerprint System (IAFS) database, which holds all ﬁngerprints collected under immigration powers. Ev 62 Foreign Affairs Committee: Evidence

The data collected may be disclosed to UK Government departments, their agencies and other public authorities. All data collected is treated in confidence, and is processed and disclosed strictly in accordance with UK legislation, including the Data Protection Act 1998. The orders under which UKvisas’ fingerprinting operations are conducted have been subject to parliamentary scrutiny and approval. The Nationality, Immigration and Asylum Act 2002 provided for the gathering of physical data, including fingerprints, in immigration cases. The legislation stipulates that fingerprint records may be held for 10 years, after which they will be destroyed.

18. During the Committee’s recent visit to India and Turkey it was clear that the involvement of three diVerent departments in the visa entry clearance system—the Home OYce, FCO and the DC —created some diYculties and tensions. Does the OYce believe that the three departments do work well together on this issue? UKvisas works closely with the Home OYce and the Department for Constitutional AVairs (DCA) to deliver the Government “Strategy on asylum and immigration”. Co-ordination between the Home OYce and UKvisas has been greatly strengthened. The UKvisas Joint Ministerial Committee meets quarterly. There are regular bi-laterals between HO senior oYcials and UKvisas, and Robin Barnett (Head of UKvisas) is a member of the IND Joint Programme Board. The Task Forces established following the No 10 summit earlier this year have helped to reinforce the channels of communication. In addition an FCO Minister is joining the IND Supervisory Board, of which Des Browne MP and David Lammy MP are existing members. This will provide a forum for action on issues of concern. The processing of entry clearance appeals is a speciﬁc area of great common interest currently. The three departments are working together to ensure the smooth implementation of the new single tier appeals process, being introduced by the Asylum (Treatment of Claimants) Bill. Since February 2004, led by the DCA, weekly meetings have been held between stakeholders of the three departments to take forward this work.

19. Decisions made by the Home OYce on the criteria for entry into the UK clearly have signiﬁcant resource implications for the FCO. Does the OYce feel that it is always properly consulted about decisions and given suYcient time to plan accordingly? The measures taken to strengthen the co-ordination between the Home OYce, UKvisas and the FCO now ensure that eVective mechanisms are in place to consult FCO and UKvisas at an early stage in respect of any proposed new visa regime. UKvisas membership of the Task Forces ensure that we have both an input to prospective policy changes and an ability to suggest policy changes that may have a positive impact on the entry clearance operation overseas. We work closely with colleagues in other Departments to mitigate the operational impact of changes in policy. The imposition of additional DATV regimes during 2003 was a good example of this. Tom Adams Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 20 July 2004

Letter to the Chairman of the Committee from Sir Michael Jay KCMG, Permanent Under-Secretary, Foreign and Commonwealth OYce, 20 July 2004 At my appearance before the Committee on 29 June, on the Annual Report 2003–04, there were a number of outstanding issues on which I undertook to write with more detailed information. I am pleased to do so here, in the order that the questions were raised at the evidence session:

Q 120—corporate sponsorships I attach a list at Annex A, as requested.

Q 125—is the UK’s contribution towards the Commonwealth Secretariat disproportionate? The UK has always paid 30% of the Commonwealth’s costs, and has done so since the Commonwealth Secretariat was established in 1965. (The FCO pays 30% of the Secretariat’s costs, and DfID pays 30% of the costs of the Commonwealth Fund for Technical Co-operation.) Rates have been reviewed three times since 1965—in 1966, 1969 and 1989. The UK did not try to use any of these negotiations to reduce the scale of its contributions. This has to be seen in its context. At the time, the UK’s view on Secretariat ﬁnances (zero real growth and limited accommodation costs) was not widely held. There was a growing problem of arrears, especially involving the least well oV and some concern that other Commonwealth members might even propose an increase in the UK’s contribution. Foreign Affairs Committee: Evidence Ev 63

The scale adopted in 1989 assigned Commonwealth members to one of seven groups. The rates continue to this day. The UK alone pays the 30% maximum. The rate for Canada and Australia—the second group—is based partly on their UN contribution but maintains earlier relativity to the UK’s 30% contribution—Canada now pays about 19% of the total and Australia about 9.5%. The rates for India and New Zealand—the third group—were based on UN contributions. Richer developing countries such as Malaysia, Singapore and Nigeria were grouped together by reference to the UN scale, although the rates of their UN contributions diVered. The remaining members were placed in the last three groups, based on complex and arbitrary calculations involving population and GNP. This placed countries such as Botswana and Mauritius in group five, Lesotho and Swaziland in group six and the Solomon Islands in group seven. Contributions remain a contentious issue to this day. Countries such as Papua New Guinea complain, with some justification, that they should not be expected to pay as much as Malta. There is also, once again, a growing problem of arrears. However, few members have the stomach for a protracted fight. Everyone would like to pay less, but no-one wants to pay more. Q 126—why are our contributions towards the existing Croatian peace-keeping force to the order of £748,000? The figure quoted for Croatia peacekeeping is the UK assessed subscription cost for the OSCE Mission in Zagreb. The OSCE uses a scale of contribution system for calculating member states subscription costs. The UK pays 10.34% of the costs of the OSCE Missions in the Balkans, the Caucasus and in Central Asia. This part of our subscription is funded from the Peacekeeping strand of the Global Conflict Prevention Pool since, before the GCPP was set up, it had been a call on the Treasury reserve in the same way as the costs of UN peacekeeping missions. (There is a second scale for the Secretariat and Institutions.) The current scales are based on the UN scales of contributions. These use GDP and an ability to pay as baselines. The mission scale mandate expires in December 2004. Negotiations are currently underway on revised scales. The total cost of the Mission for Croatia in 2004 is ƒ10.4 Million. The Mission is expected to down-size and eventually close over the next few years as Croatia prepares for EU Membership. At the moment it is doing important work on such issues as refugee returns. Q 129—how were the proceeds of asset recycling spent? We believe that the question raised by John Maples at the FAC related to a PQ he had asked on asset recycling. That PQ concerned residential property only, and not oYces. The sale of residential property between May 1997 and January 2004 raised £88 million, and purchases of new residential property in the same period cost £28 million. In the same period, the total sale of both residential property and oYces raised £146 million, of which around £28 million was spent on new residential property, and a further £79.4 million was spent on new oYces and refurbishment of the estate. The remaining £38.6 million was spent in support of other investment priorities in ICT.

Q 134—what is the current policy on investing proceeds from sales of property? The current arrangement from April 2004 is for net receipts from sales of properties to be split 80% for Estates purposes and 20% for ICT.

Q 141/150—what happened with Dublin and New York residences, including dates and ﬁgures?

Dublin In 1997, it was decided to sell Glencairn and surrounding land (34 acres) for security and operational reasons. All options regarding the prospective sale of the house and land were considered. In the end it was decided that the most economical and practical option was to sell both the land and the house. The process of sale went ahead alongside the search for a new property. The Glencairn estate was sold in January 1999 for £24.3 million. As part of the agreement, the Ambassador and Defence Attache´ (who has a house in the grounds) could remain in the property until April 2002 (later extended to April 2003) until new properties were found. In late 1999, after exhaustive searches in Dublin, a replacement property was identiﬁed: Marlay Grange. Agreement was reached to purchase Marlay Grange at a cost of £6.2 million. The deal was completed in June 2000. At the time it was estimated that the cost of refurbishment of the property to bring it up to standard, not least for security purposes, would be £2.8 million. As a result of a more comprehensive survey of the property (not possible before purchase due to the intrusive nature of the survey) it was found that the cost of works to upgrade the property would be £3.7 million. These higher costs at Marlay Grange coupled with a signiﬁcant improvement in the general security climate (following the Good Friday agreement), and improved physical security around Glencairn (due to improved road network), tipped the balance in favour of repurchasing Glencairn and selling Marlay Grange. Ev 64 Foreign Affairs Committee: Evidence

The amount of work already undertaken on Marlay Grange has come to £680,000. In the current market the value of Marlay Grange has dropped to approximately £4.3 million. Reacquiring Glencairn will cost us approx. £7 million, leaving an overall net gain to the FCO of £13 million.

New York Consul General’s Residence HMCG’s residence in New York was increasingly found to be too large, inconvenient, and no longer fit for purpose. In June 2001 the CG proposed a move to a new property that he had identified which would be more suitable. A professional valuation at the time showed the existing property to be worth $17.5 [£12.23] million. Preliminary agreement to purchase the new property at $8.95 [£6.3] million had been reached with the developers on 1 August 2001. Between 1 August and 11 September there were a series of legal exchanges about the detailed terms of the Purchase agreement and discussions on the design of the new apartment (which had originally been planned as three separate units). The situation after 11 September was reviewed by the Department on 10 October and it was decided to proceed to finalise the contract negotiations: the Purchase agreement was signed, and deposit paid on 1 November 2001. The new Residence was occupied by the CG in August 2002 at a cost of £6.48 million. As a result of the downturn in the US market the aim of receiving $19.5 [£13.6] million for the old property was not realisable. The property eventually sold for $12.5 [£6.7] million in February 2004. The severely weakened state of the dollar against the pound at the time meant that our gain in pounds was also severely reduced. The final sterling total received by us was £6.32 million, to give a net loss on the overall transaction of £0.16 million. Q 172—Port of Spain residence The residence in Port of Spain has not been disposed of, nor are there current plans to do so.

Q 200—ring-fencing of British Council budget We can conﬁrm that we know of no extant proposals to remove the British Council ringfence. The FCO’s settlement letter from 2004 Spending Round emphasises the need to maximise the value from the UK’s spending on public diplomacy, including through joint projects between stakeholders such as the FCO and British Council, but makes clear that the existing ring fence remains in place.

Q 204—whether to divulge information on commercial transactions on an unclassified basis? We have considered carefully the committee’s interest in the matter of overseas estate sales and the release of information about prices. Whilst we consider that we are within our rights to restrict release of the information the committee seeks by virtue of certain clauses in the Code of Practice on Access to Government Information, we have decided that, in the interests of openness, we will seek to meet the Committee’s request. We are prepared to report to the Committee information about sales which have taken place three months after the transactions have been completed. However, we hope that the Committee will understand that in certain circumstances we will not be able to comply with this, for example when a purchaser has specifically required the inclusion of a confidentiality clause into an agreement. Under those circumstances we would wish to ensure we respected undertakings given. We would however, explain the background of such agreements to the Committee. Q220—what is our general policy towards advising staV who are required to attend disciplinary hearings of their right to representation? We have already written separately, making clear our position on James Cameron’s specific case, but you asked for a note on our general policy. Any member of staV in the FCO who is required to attend a disciplinary hearing is informed of their right to be accompanied in accordance with the FCO Misconduct Procedure. This procedure is consistent with statutory requirements and best practice. The statutory right to be accompanied, which is set out in the Employment Relations Act 1999, allows workers to choose to be accompanied at a disciplinary hearing by one of the following: — a union oYcial employed by the union as defined in s.119 of the Trade Union and Labour Relations (Consolidation) Act 1992; —anoYcial (not employed by the union) who is “reasonably certified in writing” by the union as having experience of, or as having received training in, acting as a worker’s companion at disciplinary or grievance hearings; or — another of the employer’s workers. Foreign Affairs Committee: Evidence Ev 65

A lawyer is not permitted unless he or she falls into one of the above categories. I hope these answers are helpful to Members, but look forward to answering any further questions the Committee may have. Sir Michael Jay KCMG Permanent Under-Secretary of State Foreign and Commonwealth OYce 20 July 2004

Annex A

Corporate Sponsorship 2003–04 Corporate sponsorship helps to reduce the overall burden on the taxpayer of the costs of FCO activities at home and overseas. Guidelines have been produced to assist and encourage departments and Posts to seek sponsorship. They identify best practice on how to raise extra resources for FCO activities and incorporate Cabinet OYce guidance on issues on propriety. In 2003–04 sponsorship agreements individually valued at £5,000 or more were signed in relation to the following:

2005 World Exposition,Japan The UK will operate a pavilion at the 2005 World Exposition in Aichi, Japan for six months. Sponsorship has helped to make this possible.

Innovation UK, Japan Innovation UK is a year long campaign designed to showcase British excellence in science and technology. Sponsorship has helped to facilitate informative and attractive campaign events and to secure key speakers.

One Car,BETokyo Sponsorship in-kind of a Toyota car in the Embassy’s Transport Pool.

Raising Awareness of EU Enlargement A Polish ﬁlm, opened to the public, was shown at the FCO as part of raising awareness in the UK of EU enlargement.

Queen’s Birthday Party,Warsaw Sponsorship helped to reduce the costs to the British Embassy, Warsaw, of this important annual event.

British Festival,Warsaw This event promoted the best of British ideas, innovation, business practice and EU experience, and celebrated British partnership with Poland.

Our Shared Future: UK-Australia

Future Leaders Dialogue 2004 This event will provide two hundred Australian and British young people with the opportunity to explore the relationship between the two countries and some of the challenges facing contemporary Australian and UK society.

Hajj Delegation An UK delegation of doctors and counsellors helped people attending the Hajj. Sponsorship partly oVset the costs of the delegation. Ev 66 Foreign Affairs Committee: Evidence

Corporate Sponsorship

IN 2003–04 SPONSORSHIP AGREEMENTS VALUED AT MORE THAN £5,000 WERE MADE WITH THE FOLLOWING COMPANIES

Total Forecast Sponsorship Project Cost of Project Company Value UK Pavilion, 2005 World Exposition, Aichi, Japan £3,999,900 Inchcape plc £500,000 Toyota (GB) plc £330,000 British Nuclear Fuels plc £250,000 GKN plc £250,000 Shell Int’l Ltd £250,000 Toyota Financial Services (UK) Ltd £170,000 HSBC Securities Japan Ltd £105,712 Toyota Tsusho UK Ltd £15,000 Yazaki Corporation £15,000 Aisin Europe N.V £5,000 Denson Manufacturing UK Ltd £5,000 Denso Marston Ltd £5,000 Denso Sales UK Ltd £5,000 Johnson Controls Automotive £5,000 (UK) Ltd Sumitomo Electric Wiring Systems £5,000 Ltd Toyoda Gosei UK Ltd £5,000 TRB Ltd £5,000 Innovation UK, Japan £350,000 Virgin Atlantic £100,000 BNFL £100,000 HSBC £50,000 Johnson Matthey £50,000 Oxford Instruments £25,000 Celoxica £25,000 AEA Technology £25,000 Transport Fleet, British Embassy, Tokyo £15,000 Toyota Motor Corporation £15,000 Raising awareness of EU £26,102 Stella Screen £26,102 enlargement Queen’s Birthday Party, Warsaw £20,309 HSBC Securities Polska, SA £5,000 Provident Polska Sp.Z.o.o £5,000 GlaxoSmithKline £5,000 British Festival, Warsaw £37,000 BAE Systems (Poland) Sp. Z.o.o £5,000 Our Shared Future: UK-Australia £61,574 Macquarie Bank £10,262 Future Leaders Dialogue, Sydney Landerer & Co £8,210 BA £8,210 Hajj Delegation £65,000 Bombay Halwa Ltd £10,000 GlaxoSmithKline £5,000

FINANCIAL MANAGEMENT

Letter to the Chairman of the Committee from Sir Michael Jay KCMG, Permanent Under-Secretary of State, Foreign and Commonwealth OYce, 7 January 2004 The Foreign AVairs Committee knows of the FCO’s contract with Global Crossing UK for the FCO Telecommunications Network (FTN), and refers to it in its most recent report on the FCO Annual Report (HC 859). I am writing now to draw your attention to the news that on 9 December, Singapore Technologies Telemedia (STT) and Global Crossing (the US parent of Global Crossing UK) announced that they had consummated their purchase agreement. This allowed Global Crossing to emerge from Chapter 11 proceedings the same day. The FCO now has six months to undertake a due diligence process, during which we have the right to terminate the FTN contract if we believe the change of control causes signiﬁcant security concerns. Together with the OYce of Government Commerce, who have the other largest HMG contract with Global Crossing Foreign Affairs Committee: Evidence Ev 67

for the Whitehall telephone System (MTS), we have initiated a due diligence exercise. Hitherto, we have not encountered any issues that may bring into question the stability and security of the new company, but will obviously await the outcome of the due diligence review before taking a final decision. We shall be replying shortly to the points raised in the FAC’s most recent Report. But I should stress that, throughout the period Global Crossing have been in Chapter 11, the FCO has actively managed the risks associated with this situation. Plans were in place to ensure that FCO could retain control of the network in the case of a commercial failure, and that the costs of this should be met by Global Crossing. We had alternative plans at each stage, and we worked hard and successfully to achieve the best outcome. There has been no adverse eVect on the service we have obtained under FTN due to Global Crossing’s financial trouble. Indeed support from Global Crossing has been of significant value in supporting the FCO’s ability to provide facilities in adverse conditions at short notice. This has included, for example, adding Baghdad and Basra to the FTN network. The experience has demonstrated the strength of our partnership with the private sector supplier. They have continued to provide a good quality, cost-eVective service throughout the past two years. With their stability and financial viability now assured, we anticipate the partnership continuing to provide a value for money service to the Government. Sir Michael Jay KCMG 7 January 2004

Letter to the Secretary of State for Foreign and Commonwealth AVairs from the Chairman of the Committee, 16 March 2004

Resourcing of the British Embassy in Kuwait The Committee noted with considerable interest the recent front-page article in The Daily Telegraph, concerning the potential closure of the UK Embassy in Kuwait owing to budgetary constraints (“We’re broke so embassy must close, says Our Man in Kuwait,” The Daily Telegraph, 10 March 2004). As you are aware, the Committee has been concerned for some time about the level of resources available to the Foreign OYce, particularly in light of the eYciency targets agreed with HM Treasury (see paragraphs 92 and 99 of our Report on the FCO Annual Report 2003, for example). I would be grateful, therefore, if you could provide the Committee with details of the current situation with regard to the British Embassy in Kuwait and a background to the diYculties it is facing. We would also wish to see, on a conﬁdential basis if necessary, the internal memo quoted in the article. Please could we receive your response no later than Wednesday 31 March. Rt Hon Donald Anderson MP 16 March 2004

Letter to the Chairman of the Committee from the Secretary of State for Foreign and Commonwealth AVairs, 30 March 2004 Thank you for your letter of 16 March about resourcing the British Embassy in Kuwait. As requested in your letter, I enclose a copy of Kuwait telegram number 30.1 It is classified as restricted. Mr Wilton’s telegram was a colourful and successful eVort to attract attention to a specific end-of-year funding diYculty in the Embassy in Kuwait. Towards the end of the financial year it is not unusual for posts to face overspends or underspends on their budget allocation. But as FCO resources have become more tightly stretched, Ambassadors have teen told to do everything they can to avoid overspends. So Mr Wilton was right to draw the problem to the attention of oYcials in London. As usual with such cases, the FCO was able to make good the shortfall in the budget of the Embassy to remove the likelihood of an overspend. There was, of course, no chance that we would have allowed the Embassy to close for budgetary reasons. I recognise the Committee’s concern about the level of FCO resources. Our budgets are tightly stretched, particularly given that the demands for FCO activity are high. To manage this, the FCO must be as eYcient in the delivery of its services as it can be. Inevitably this means making diYcult choices and finding diVerent ways of running an eVective global foreign policy. But that is consistent with what the Government have made clear that they expect from all parts of the public sector. Rt Hon Jack Straw MP 30 March 2004

1 Not printed Ev 68 Foreign Affairs Committee: Evidence

Letter to the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, from the Second Clerk of the Committee, 16 March 2004

Spring Supplementary Estimate 2003–04 The Committee would like some further information on the Spring Supplementary Estimate for the Foreign and Commonwealth OYce, to which the House agreed on Thursday. Please could you provide: (i) further details of the Biometric Trials being conducted by UK Visas, in conjunction with the Home OYce (RfR1: Subheads A1 and A7); (ii) a breakdown of the £36.9 million, “in respect of Iraq-related security costs,” details of the original allocation for this item in the Main Estimates and reasons for the increase (RfR 1: Subheads A1 and A7); (iii) an explanation of what, “a transfer to Section A of £1,515,000 from RfR 2 Section B in respect of baseline repatriation to departments. (RfR 1: Subhead A2),” means in practice; (iv) details of the “Hamilton Project” (RfR1: Subhead A2); (v) details of the PES transfer from Sections C and D to the Ministry of Defence of £1.8 million and £1.2 million respectively, to “reﬂect funding revisions for CP” (RfR 2: Subhead C3); and (vi) information on the reduction of £565,000 in British Council Grant-in-Aid (shown at RfR1-F, page 218, but of which there appears to be no explanation in the introduction), in particular the reasons for this change and details of to where the resources have been re-allocated. Were it possible to receive an answer to these questions by Monday 19 April, after the House has returned from the Easter Recess, I would be most grateful. Please do not hesitate to contact me if you have any questions about the Committee’s requests. GeoVrey Farrar Second Clerk of the Committee 16 March 2004

Letter to the Second Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Commonwealth, 28 April 2004

Spring Supplementary Estimate 2003–04 Thank you for your letter of 16 March in which you ask for further information on the Spring Supplementary Estimate submitted to Parliament by the FCO. I am now writing to provide the details you requested. For ease of reference, the text of each question set out in your letter is repeated below together with our answer. (i) “further details of the Biometrics Trials being conducted by UK Visas, in conjunction with the Home OYce (RfR1: Subheads Al and A7)”—The funds voted for Biometrics Trials are intended to defray the costs of trial projects for the collection of biometric data from visa applicants, to improve the security of the system. These projects include finger-printing of visa applicants in Sri Lanka (£304,875), and at East African Posts (£306,695) and the commencement of a wider study of the overall impact of biometrics on the FCO/Home OYce visa operation (£250,000). (ii) “a breakdown of the £36.9 million, ‘in respect of Iraq-related security costs’, details of the original allocation for this item in the Main Estimates and reasons for the increase (RfR1: Subheads Al and A 7)”—The £36.9 million in respect of increased Iraq-related security costs breaks down as follows: Armed Protection for UK staV serving in Iraq: £24.9 million. Vehicles (armoured and soft-skinned): £7.6 million. Running costs, including security, of the oYce of the UK Special Representative to Iraq: £1.5 million. Secure accommodation: £2.0 million. Guarding premises of former British Embassy, Baghdad: £0.9 million. The FCO Main Estimate contained no specific allocation for this activity, so it was partly funded from the FCO’s Departmental Unallocated Provision (DUP). The latter alone proved insuYcient to defray the costs of meeting our duty of care to staV as the security situation deteriorated and numbers of personnel in Iraq rose. (iii) “an explanation of what, ‘a transfer to Section A of £J,S15,000 from RfR2 Section B in respect of baseline repatriation to departments. (RIR1: Subhead A2),’ means in practice”—Following the creation of the Global Conflict Prevention Pool (GCPP) in SR2000, it became apparent to oYcials that some of the activities which had been subsumed into the Pool did not meet the developing Foreign Affairs Committee: Evidence Ev 69

Conflict Prevention criteria. In June 2002, Ministers agreed that the activities, which remained legitimate activities for Departments to undertake as a means of delivering other PSA targets, should be repatriated to Departments together with their funding provisions. This particular transfer of £1,515,000 ensured continued funding in 2003–04 for ongoing FCO activity that was no longer appropriate to the GCPP. (iv) “details of the ‘Hamilton Project’ (RfR1: Subhead A2),”—The “Hamilton Project” is a programme of assistance to the Turks & Caicos Islands, the British Virgin Islands, Montserrat and Anguilla. The programme, organised by the Maritime and Coastguard Agency on behalf of the FCO, aims to establish a self-reliant and self-sustaining shipping survey and inspection regime in each of these Overseas Territories. Such a regime will ensure that the Territories’ safety standards for ships, crew and pollution prevention are in line with standards set and enforced by the UK. The Hamilton Project is due for completion in March 2005. (v) “details of the PES transfer from Sections C and D to the Ministry of Defence of £1.8 million and £1.2 million respectively, to ‘reflect funding revisions for CP’ (RfR2: Subhead C3)”—Activity and expenditure under the Conflict Prevention Pools is undertaken jointly by FCO, MOD and DFID. As manager of the Peacekeeping side of the Pools, the FCO organises Departmental funding through the Main and Supplementary Estimates according to agreed programmes of activity. Pool partners agreed that MOD would be responsible for new peacekeeping activity in the Democratic Republic of the Congo (Operation Artemis) and FYR Macedonia (UFYROM), necessitating transfers of £1.8 million and £1.2 million respectively. (vi) “information on the reduction of £565,000 in British Council Grant-in-Aid (shown at RfR1—F, page 218, but of which there appears to be no explanation in the introduction), in particular the reasons for this change and details of to where the resources have been re-allocated.”—The British Council Grant-in-Aid was reduced to reflect the eVect of the Overseas Price Movement mechanism (OPM) on the Council’s overall budget. OPM is an agreement between the FCO and HM Treasury that safeguards the Department’s overseas spending power against exchange rate movements and increases in overseas inflation rates, when the latter exceed UK inflation. By extension, and with Treasury agreement, OPM also applies to the FCO’s contribution towards the British Council’s budget. Where spending power is eroded by exchange rates variation or inflation HM Treasury makes good the shortfall in the Department’s budget. Where sterling exchange rate gains or relative deflation produce windfall gains, as here, the Department returns funds (in this case £565,000) to HM Treasury. Matthew Hamlyn Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 28 April 2004

Letter to the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, 13 July 2004

Spending Review 2004

The Committee noted with interest the Statement in the House yesterday by the Chancellor of the Exchequer, announcing the outcome of the Spending Review 2004. Given the Committee’s current inquiry into the FCO’s Annual Report 2003–04 and the Permanent Under-Secretary’s recent oral evidence session, Members have requested that I write to seek a note from you clarifying the impact of the Review’s outcome for the OYce’s activities. In this note, could you also set out the predicted impact on the FCO of: (a) the Chancellor’s announcements on civil service job losses; and (b) the target of £30 billion of asset sales by 2010 across Government. Please could the Committee have your response no later than Wednesday 21st July. GeoVrey Farrar Second Clerk of the Committee 13 July 2004 Ev 70 Foreign Affairs Committee: Evidence

Letter to the Second Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Comonwealth OYce, 20 July 2004 Outcomes of Spending Review 2004—Outcomes on FCO Activity You wrote asking that we clarify the impact of the Spending Review’s outcome on the FCO’s activities. Overall the settlement allows us to take the steps we feel necessary to increase the security of personnel and of our Posts most at risk from the threat of terrorism. Furthermore it maintains funding for our Global Opportunities Fund and allows the British Council and the BBC World Service to build on the generous settlements they received in the Spending Round 2002. The outcome will also enable us to complete the work underway in the FCO’s current restructuring project that will reshape our headquarters and put greater emphasis on thematic issues (eg counter- terrorism). These thematic centres of expertise will then be able to prioritise and direct funding to the geographical areas where it is most needed. Importantly the settlement will let us strengthen the network to deliver our strategic priorities. You also asked specific questions on what impact the SR2004 settlement will have on FCO staYng and on our asset base. We are committed under our EYciency Plan to reduce our staYng complement by some 310 positions worldwide, from a total of 5,900. This follows a period in which the FCO’s headcount has risen, and accompanies a movement of positions away from our support functions, notably personnel and finance, towards our frontline activities. We are confident that the net result will be a more eVective organisation with more people working directly towards the fulfilment of the FCO’s strategic priorities. On assets, we agreed to continue our asset recycling programme, but at a reduced rate. This mechanism allows the FCO to reinvest estate sales receipts, primarily for the modernisation of the estate both overseas and in the UK. It is an important element in managing our assets to meet our operational need; it provides flexibility in our network and value for money to the UK taxpayer. We will also work closely with Sir Michael Lyons on the implementation of his review, but it is too early to predict how this will aVect our UK holdings of land and property. Tom Adams Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 20 July 2004

UK INTERNATIONAL PRIORITIES

Written evidence submitted by Sir Peter Marshall KCMG CVO UK International Priorities:AStrategy for the FCO Harold Nicolson, the great authority on classical diplomacy, recounts how a visitor to Frederick the Great in 1768 asked, during a discussion of diplomatic method, “and how would Your Majesty define the English system?” Frederick the Great replied sharply “the English have no system”. (Note 1) This was not regarded universally as a fault to be rectified as soon as possible. Rather foreigners noted over the years with bemusement that somehow the English seemed to manage rather well notwithstanding, The bemusement was accompanied by suspicion that behind the facade of fecklessness and insouciance there lay devilish British cunning. It might not always have been a matter of l’Albion perfide. But it was grounds for believing that the British usually landed on their own feet or someone else’s. Does then the presentation to Parliament in December 2003, of UK International Priorities—A Strategy for the FCO (Note 2), “the first time that the FCO has published a document of this sort”, represent a change of national heart, or even some Damascene conversion”? Have the devotees of pragmatism come to recognise that flexibility and forethought are not mutually exclusive? How should we interpret the existence within the FCO hierarchy of a senior oYcial with the slightly intimidating title of “Director for Strategy and Innovation”? Are Britain’s diplomats of today so far forgetting themselves as to address hypothetical questions? Above all, does the publication of the document betoken the approach of l’esprit vulgarisateur to matters which are best left behind fastidious and elitist closed doors? The truth is more prosaic, and more demanding.

The Evolution of British Foreign Policy-making The Strategy can be seen as the culmination of a century-long process of Britain’s emergence from splendid isolation, and of the establishment, under the spur of harsh experience, of a more systematic approach to the conduct of its foreign policy. The process may for practical purposes be said to have begun with Eyre Crowe’s classic Memorandum on the Present State of British Relations with France and Germany, written in 1906 in response to the concern expressed by King Edward VII about “our persistently unfriendly policy towards Germany” (Note 3). Its most recent manifestations have been the series of informative and Foreign Affairs Committee: Evidence Ev 71

imaginatively presented annual Departmental Reports, of which the latest has just appeared (Note 4). The Strategy builds on this series It is a milestone in the conduct of foreign policy, not only in the letter of what it says, but also as an expression of renewed conﬁdence by a country with the sinews, the skills, the experience and the resolve to play a responsible and constructive part in a globalised world. Its clarity and calm conviction testify to a state of aVairs about as far removed as it is can be from Dean Acheson’s famous gibe of 1962 about our having lost an empire and not yet found a role (Note 5).

What the Strategy is and Does The Strategy, as explained by the Foreign Secretary in his covering written statement to Parliament, not only as sets priorities—discussed and agreed between Departments and endorsed by the Prime Minister— for UK international policy over the next ﬁve to 10 years; but also describes how the FCO intends to work, with others and through its network of over 200 diplomatic posts abroad, to help the Government meet the aims which it sets out. Synthesis and exegesis on a grand scale lie behind those seemingly simple sentences. To oVer any substantial comment on such an achievement is an act of temerity rather than of prudence. The simplest approach is to urge everyone concerned to read the Strategy in its entirety—several times. As a supporting commentary, rather than as a substitute, for such a discipline, this memorandum oVers some observations from diVerent analytical standpoints, arranged of necessity in a somewhat arbitrary fashion: (a) the “systemic” basis on which the Strategy drawn up; (b) the limitations which it recognises to “system” in framing foreign policy; (c) its perception of the role of the UK in international aVairs; (d) the methodology which it adopts; (e) the resources required for its successful application; (f) the priorities which it sets out; (g) the European factor; and (h) the Commonwealth/“soft power” dimension. (j) the whole and the sum of its parts.

The Systemic Basis of the Strategy The Strategy can be said to rest on four basic propositions. First, the increasing overlap between external and internal aVairs. In a speech to the Royal Institute of International AVairs on 12 February 2004, the Foreign Secretary explained that when he was Home Secretary his job, as deﬁned by the Mission statement of the Home OYce, was “to build a safe, just and tolerant society”. As Foreign Secretary it was “to work for UK interests in a safe, just and prosperous world”. That similarity, Mr Straw noted, was no accident. As the world becomes more interdependent, the boundary between “foreign” and “domestic” policy is increasingly blurred. Foreign aVairs are no longer very foreign. Secondly, globalisation, not only in its general and evolutionary aspects, but in particular as precipitated by international terrorism and the spread of weapons of mass destruction, means that foreign aVairs matter more than ever before in national concerns and priorities. The psychological impact of “abroad” has been greatly enhanced by the turbulence which has characterised the early years of this century. Thirdly, no government, however seemingly powerful, can hope to deal eVectively on its own with the web of issues which confront it as it seeks to deliver to its citizens the sort of existence which they want, and for which they will vote. To have any hope of succeeding, it cannot but opt for co-operation with other governments in the achievement of common goals: in the language of game theory, its approach will of necessity be positive-sum rather than zero-sum. Fourthly, the Strategy is shot through with the recognition that international aVairs are no longer— if indeed they ever were—the preserve of governments. “International” is not a synonym of “intergovernmental”. There is now a wide range of non-governmental “actors” on the international stage, with whom it is very much in the interest of governments to co-operate. The use of the word “governance” alongside the word “government” attests to the importance of non-governmental factors in the management of public aVairs, external or internal. (Note 6) These four propositions represent virtually the complete antithesis of the old diplomacy which held sway in Europe from the end of the Thirty Years’ War in 1648 until the end of the Second World War in 1945, and the adoption of the United Nations Charter. For three hundred years Europe witnessed, to its ultimate catastrophic cost, the exercise by unaccountable sovereigns of their traditional prerogative in foreign aVairs: it took the form of a zero-sum game, characterised by the balance of power, shifting alliances and brinkmanship. It may be testimony to the skill of those concerned, and at times to their moderation, that their way of doing business did not lead more frequently to destructive war. But it did for them comprehensively in the end. Ev 72 Foreign Affairs Committee: Evidence

Limitations to System in the Conduct of Foreign Policy One of the most striking aspects of the Strategy is the sheer complexity of the issues which it discusses with such quiet calmness and confidence. In his introduction to the first oYcial history of the Foreign OYce published in 1933 (Note 7), the then Foreign Secretary, Sir John Simon, recalled a conversation with Arthur Balfour, a former Prime Minister and Foreign Secretary, and indeed something of a Renaissance man in his learning and attainments, on the future development of large-scale organisations. Balfour advanced the suggestion that the ever-increasing complication in their working, due to new methods of communication and other modern inventions, would in the end put them beyond the range of eVective human control. Frankenstein would, in very truth, be crushed by the monster of his own creation. Balfour gave two illustrations of this though: one was the future of great business combines (“conglomerates” in modern parlance). The other was the Foreign OYce. What Balfour would have made of the responsibilities now falling on the FCO, and set out so clearly in the Strategy, is a matter for conjecture. But he would surely have recognised the extraordinary growth of analytical and managerial power, widely available thanks to developments in information technology. These advances have greatly facilitated the task of keeping pace with “developments on the ground”. But grappling with perceived and predictable complexity is not all there is to it. As the Strategy puts it, “because the world is complex and uncertain our aim is not to predict the future, but to try to identify priorities and to be as well prepared as possible to respond to unexpected events”. It is this latter aspect of international aVairs which has so continuously and so frustratingly baZed diplomatic practitioners. The best laid schemes of mice and men gang aft a-gley. The apocryphal Mr Murphy enunciated a number of laws to codify the inherent perversities of the situation. But that is no reason to abandon the pursuit of orderly policy-making. Prevention remains preferable to cure, let alone to first aid and makeshift remedies. Flexibility and the capacity to react eVectively go hand in hand with the task of dealing with the foreseeable. They are two sides of the same management coin.

Perception of the UK’s International Role “It is a guiding principle of UK foreign policy that to promote our national interests and values we need to be active and engaged around the world. This has never been truer than today”. With this opening passage in his Foreword to the Strategy, the Foreign Secretary expresses in 21st century terms an approach to our role in international aVairs with a continuity stretching back to the times of the Tudors. In his excellent Dictionary of National Biography article on Ernest Bevin, Francis Williams described him as having “in the highest degree that quality which Goethe once thought was to be noted in the English: ‘the courage to be what Nature made them’”. This is an arresting judgment, in the first instance as a tribute to the way in which Bevin and his Cabinet colleagues responded to the new and dire post-World War Two challenges—the Cold War, rebuilding a shattered Europe, the Berlin Blockade and Korea—when physical and economic exhaustion from the Herculean labours of the war itself would have tempted lesser men to seek quieter pastures. But it also bespeaks a realisation that as a people we have been ready for centuries to accept, with all its risks and responsibilities, a degree of involvement abroad which is not usually associated with small oVshore islands. We have assigned ourselves a vulnerable, indeed a precarious, existence of indefinite duration. The wonder is not that there are occasional signs of British reluctance to continue to accept this way of living, but rather that the resistance to it is not more frequent and more vocal. It may seem to require us at times to punch above our weight, a situation acceptable only in the short term. Economic adversity inevitably fuels doubts as to whether the game is worth the candle. In the 30 years or so after the end of World War II, when we fared so obviously and so depressingly worse than our continental neighbours, foreign policy showed signs of confining itself to damage limitation or even to the management of decline. The transformation over the last 25 years in our national fortunes and in our national self-confidence is graphically illustrated by the contrast between the picture painted by Sir Nicholas Henderson in his valedictory despatch of 31 March 1979, from the Embassy in Paris, and the situation today reflected in the Strategy. (Note 8) Sir Nicholas Henderson’s thesis was that over the previous generation Britain’s economic decline had been such as to sap the foundations of our diplomacy. Our performance, measured by a number of criteria, compared most unfavourably with that of France and Germany. Today the boot is firmly on the other foot. As Mr Straw observed in an interview after the Berlin Summit a trois in February. 2004, “we are confident and successful, our economy is doing much better than that of France or Germany”. (Note 9)

Methodology The Introduction to the Strategy explains how it “sets policy, public service and organisational priorities to guide the FCO’s planning for its work over the next 10 years”. It examines the role of the FCO; looks at the world in the next 10 years, analysing relevant trends; considers the UK’s future in the international system and our key relationships; draws on this analysis to set new priorities in both the longer and shorter term; does likewise for the FCO’s “service delivery responsibilities” (Note 10); examines the implications for organisational changes both at home and abroad; and explains how the strategy will be put into practice. Foreign Affairs Committee: Evidence Ev 73

Once again, it is much easier to admire than to challenge this methodology. Its logic is unassailable. It embodies the inextricable mix of substance and process. Above all, it shows how the apparatus is put to deﬁned national practical purpose, rather than leaving the Diplomatic Service open to the charge, which has been levelled at it from time to time in the past, that it was a Rolls Royce without a driver.

Resources The perennial complaint of the bureaucracy is that the elected representatives of the people ask for more and more to be done, but are reluctant to provide the resources for doing it. They will the end, but not the means. Taxpayers, on the other hand, know from experience that in the public domain there may well be little correlation between the amount expended and the results achieved: “you do not solve problems by throwing money at them”. In the struggle to get the resources needed, ministries of foreign aVairs traditionally suVer from two disadvantages, as compared with their “home” opposite numbers and competitors: the lack of a powerful lobby for diplomatic expenditure, and the relatively greater degree of uncertainty surrounding their departmental responsibilities. The Committee on Representational Services Overseas under the eminent chairmanship of Lord Plowden (Note 11), which reported in 1964, after the most thorough outside review of British diplomatic requirements and activities ever undertaken, tackled the resources question head-on. On top of the estimate of requirements, the Committee proposed a 10% manpower margin, since staYng costs represented the highest proportion of expenditure. Not surprisingly this recommendation was not implemented. It is not in the nature of Treasuries to look with favour on such ideas, even under favourable conditions, let alone at times of ﬁnancial stringency such as those which closely followed the publication of the Report. Considering the vital nature of the service to the nation which it details, the Strategy is commendably restrained on the question of the means with which to do the job. Under the heading “Resources” it describes what the FCO now has: namely, a total annual budget of £1.5 billion, out of which it funds the BBC World Service and the British Council, and pays UK contributions to international organisations, as well as its own activities. The Strategy lays emphasis on focussing resources on priorities. It expresses the hope that new resource management systems now being introduced will provide the capability of shifting at least 5% of staV and budgets from lower to higher priorities in any three-year period. It notes however that “additional resources will in some cases be needed”. Others, less discreet and self-eVacing, might have added “in the meantime, to quote Warren Hastings as he surveyed the peculations of others on the Indian sub-continent, we stand amazed at our own moderation.”

Strategic International Policy Priorities for the UK After reviewing the world in the next 10 years and the role of the UK in the international system, in terms both of institutions and relationships, the Strategy sets out international eight policy priorities: a world safer from global terrorism and weapons of mass destruction; protection of the UK from illegal immigration and drug traYcking and other international crime; an international system based on the rule of law, which is better able to resolve disputes; an eVective EU in a secure neighbourhood; promotion of UK economic interests in an open and expanding global economy; sustainable development, underpinned by democracy, good governance and human rights; security of UK and global energy supplies; security and good governance of the UK’s Overseas Territories. It is worth pausing to savour this fascinating group of eight international policy priorities in their individual content, in their mutual relationship, and in their collective coverage. What do they tell us about the world in the early years of the 21st century? What issues do they leave out, or by implication assign to a lower order of priority? How would one prioritise the priorities when the allocation of resources so requires? How much professional aYnity would a diplomat of 50 years ago, let alone of a hundred years ago, feel with this sort of agenda? Would Aldous Huxley or H G Wells have found it more to their liking? Victor Wellesley, one of the most thoughtful British diplomats of early twentieth century vintage, would have applauded the Strategy. He bewailed the British lack of system, insisting that it was inadequate to deal with the problems of the day. He noted that diplomats of the nineteenth century had an easy time of it. They did not, he said, have to “think or delve deeply”. (Note 12) Those simple days were gone for ever by the end of the Great War.

Europe The formulation of European policy cited above—“an eVective EU in a secure neighbourhood”—may seem rather bald to those who have set their heart on being at the heart of Europe. The Government’s views are, of course, set out at length in the White Paper describing the British approach to the Intergovernmental Conference. It was presented to Parliament in September, 2003, that is, some three months before the Strategy (Note 13). There is likewise substantial coverage of EU matters in the latest Departmental Report. Even so, the question arises whether UK policy towards the EU is summarised rather more dispassionately in the Strategy than in European contexts, because of its juxtaposition with our other concerns, especially Ev 74 Foreign Affairs Committee: Evidence

our relations with the United States: “The UK’s most significant partnerships with other countries will be within the EU and with the US”; and “the relationship between Europe and the US will be of paramount importance to the UK’s—and the world’s—future security and prosperity”. The point is far from academic in the present British political context. On the one side there is a strongly held conviction that the future of this country, in the terms of achieving the purposes of the Strategy as a whole, let alone the Government’s specifically European objectives, lies in full engagement with the EU. On the other side there are fears that the nature of the administrative and political involvement which this implies, or could imply, will undermine our capacity both to live the sort of life to which we aspire, and to pursue the world wide role for which the Strategy oVers such convincing justification. The UK presidency of the EU in the second half of 2005 will aVord us an absorbing opportunity to find an accommodation between these diVering viewpoints, at the same time as playing a key role in making EU enlargement work as intended.

The Commonwealth and Britain’s “Soft Power” In its survey of the international system and where the UK fits into it, the Strategy comments that the Commonwealth “will remain a valuable informal group for the promotion of common values and interests across the world”. In terms of British current and future intergovernmental co-operation priorities, it may be diYcult to question this proposition. But it could scarcely be regarded as an evaluation of the what the Commonwealth means to this country, or of the unique achievement of transforming the greatest empire the world has ever seen into a modern, downside-free association of governments and peoples. Nor, of course, was it intended so to be. This emerges directly or by implication from the Strategy as a whole, as well as by the detail provided in the annual Departmental Reports. There are perhaps three main ways in which the Commonwealth is significant in helping to address the general problems which the Strategy surveys: first, the strength of the non-governmental associations and links of all sorts—as the Balfour Declaration of 1926 proclaimed, free institutions are its lifeblood (Note 14); secondly, highly eVective co-operation between the governmental and non-governmental elements, which is fostered by the informality of the way in which the Commonwealth does its business, and by the boon of a common language; and thirdly, the symbiotic evolution of relations between Commonwealth countries on the one hand, and development of their own societies on the other. The Commonwealth is in many respects as relevant to the internal as to the external concerns of its member countries. This is not surprising, since the values which the Commonwealth joins in proclaiming apply not only among countries but also within them, and at every level. The celebrations of the Year of the Golden Jubilee showed the extent to which this applies to the United Kingdom, especially in the wake of Nine-Eleven. They had a notable Commonwealth component, not always evident because it blended in so harmoniously and so inconspicuously with other aspects of the celebrations. (Note 15) Britannia Imperatrix has become Britannia vibrans, stimulated and enriched by ethnic and cultural diversity. Compared with other aspects of this country’s interests as they are scrutinised in the Strategy, this feature of the Commonwealth cannot expect great prominence. But it casts useful light on a broader issue of growing international importance, namely the significance of sources of power other than military hardware. It used to be said that, among international organisations, the Commonwealth was a ruminant not a carnivore. Simple categorisations of this sort are becoming less relevant in the 21st century. The world addressed by the Strategy tends to distinguish more and more between “hard” and “soft” power, between “the might of one’s sword and the attractiveness of one’s ideas”. Not surprisingly, it finds that the distinction between the two, though useful analytically, is blurred and constantly shifting. (Note 16). The situation in the Middle East is eloquent testimony to the way in which possession of overwhelming military strength aVords no guarantee that you can get your own way all the time. Achieving foreign policy goals enjoys no simple relationship with the possession or utilisation of power on any conventional definition. In his speech at Chatham House to which reference has already been made, Mr Straw declared that “there is no longer, if there ever was, a distinction between “hard” and “soft” foreign policy, between pursuing your interests on the one hand and pursuing your convictions on the other”. Each country has a diVerent international power profile, reflecting both the “objective” realities of its historical and geographical situation and the way in which it organises its international involvement in response to them. The Britain portrayed in the Strategy has an impressive panoply of “soft” as well as of “hard” power, hailing from both Mars and Venus. The Commonwealth is a far from negligible part of it.

The Whole and the Sum of the Parts When we look at the trees, it is not because we are forgetting the wood. Rather it is because we are seeking a better understanding of it. The sort of analysis which this memorandum has attempted to apply to the Strategy suggests that there is a qualitative dimension which a first reading might not easily register. The whole is greater even than the sum of its very considerable parts, which inspires great confidence in the Diplomatic Service as an instrument for the promotion of British enlightened self-interest. It is diYcult to overestimate the importance of this point in public relations terms. In fulfilling their duty to cultivate good relations with other countries, to understand their views and interests, and to ensure that these are duly weighed in the national counsels, diplomatic services habitually run the risk of being thought Foreign Affairs Committee: Evidence Ev 75

insuYciently robust in the defence of their respective national interests, and over-solicitous of the interests of others. The zeal diplomats display in fulfilling their proper tasks may seem at times to provide a measure of justification for such a criticism. (Note 17) The Strategy on the other hand is a visible and practical, as well as a wide-ranging and imaginative, commitment to the well-being of this country. It is, to quote the Foreign Secretary again, “an integrated agenda, with justice as its pivot . . . We cannot pursue lasting safety and prosperity if we do not also promote justice”. Rather than promoting “good relations” with other countries for the sake of it, the Strategy declares its aim of “working with others, at home and abroad, to make a positive diVerence to the world— for the benefit of people in the UK and elsewhere”. EVective international co-operation is not the antithesis of the promotion of the national interest. It is its apotheosis. The Strategy is also in some senses a contract with the nation. The successful delivery of a foreign policy of the sort which it propounds is ultimately dependent on the fibre of the British people, on its steadfastness and its cohesion. It depends on whether, in Goethe’s words, they have the courage to be what Nature made them. The evidence is that they do indeed have it. And in the present state of our economy and our society, we have a platform for illustrating it for which Bevin in his straitened day would have given his eye-teeth.

AFinal Reflection It is natural for the annual series of FCO Departmental Reports to concentrate on the executive function of the Diplomatic Service. Taxpayers want to know how their money is being spent. Yet the more the world becomes interdependent, the wider are the repercussions of events and policies, the more crucial in consequence is the advisory function. It may at times take the form of pointing out the disadvantages of a proposed course of action: “a bureaucrat is someone who sees a diYculty for every solution”. The advisory function has to kick in at as early a stage as possible. It is one of the great merits of the Strategy that it combines so eVectively the advisory and the executive functions in its survey of the FCO’s responsibilities, with corresponding beneﬁt to the articulation of policy. It recalls Macaulay’s olympian, and rather surprising, tribute to Machiavelli (Note 18): His skill in the details of business had not been acquired at the expense of his general powers. It had not rendered his mind less comprehensive; but it had served to correct his speculations and to impart to them that vivid and practical character which so widely distinguishes them from the vague theories of most political philosophers. Sir Peter Marshall, KCMG, CVO 3 June 2004

Notes: 1. Sir Harold Nicolson: Diplomacy, 2nd Edition, Oxford University Press, 1950. 2. Cm 6052, December, 2003. For brevity’s sake, it is referred to in this memorandum as “the Strategy”. 3. Sir Byre Crowe, one of Britain’s most scholarly and perceptive public servants, was at the time the Head of the Western Department of the Foreign OYce. He subsequently became Permanent Under-Secretary. 4. Foreign and Commonwealth OYce Departmental Report, 1 April 2003 to 31 March 2004, Cm 6213. 5. This is one of the best known public comments on Britain by a prominent American. It registered all the more at the time because of its essential truth. 6. The best definition of governance is that given in Our Global Neighbourhood, the report issued in 1995 by the Commission on Global Governance under the joint Chairmanship of Mr Ingvar Carlsson, Prime Minister of Sweden, and Sir Shridath Ramphal, formerly Commonwealth Secretary-General: The sum of the many ways in which individuals and institutions, public and private, manage their common aVairs . . . It includes formal institutions empowered to enforce compliance as well as informal arrangements that people have agreed to or perceive to be in their interest. 7. Tilley and Gaselee: The Foreign OYce, Putuam, 1933. 8. Sir Nicholas Henderson’s despatch was obtained by The Economist and printed almost in its entirety in the issue of 2 June 1979, under the headline “Britain’s decline: its causes and consequences”. Sir Nicholas was no defeatist, however. His prophetic closing words were: “For the benefit of ourselves and of Europe let us then show the adaptability that has been the hallmark of our history—and do so now that the warnings of this despatch may before long sound no more ominous than the recorded alarms of a wartime siren. 9. Radio 4 Interview, 19 February 2004. 10. “Services” include consular services, visa services, services to business and the provision of information. 11. Report of the Committee on Representational Services Overseas, Cmnd 2276, February, 1964. 12. Sir Victor Wellesley: Diplomacy in Fetters, Hutchinson, 1944. Wellesley was Deputy Under-Secretary of State at the Foreign OYce between 1925 and 1936. His analysis was penetrating, but his recommendations for reform cannot but seem over-elaborate. 13. A Constitutional Treaty for the EU: The British Approach to the European Intergovernmental Conference, Cm 5934, September 2003. 14. The Balfour formula, adopted at the Imperial Conference in 1926, and incorporated in the Statute of Westminster of 1931, is best known for its magisterial definition of the independent status of Commonwealth members. The full text contains fascinating insights into the Commonwealth and Empire. Ev 76 Foreign Affairs Committee: Evidence

15. The oYcial report on the Golden Jubilee has yet to be published. An account of the Golden Jubilee from a Commonwealth perspective is contained in the writer’s article Annus Mirabilis in The Round Table no 369, March 2003, pp 221–233. 16. The literature is already extensive and will undoubtedly increase further. The original article by Professor Joseph S Nye, jr, in Foreign Policy no 80, Fall 1990, pp 153–171. remains an absorbing introduction to the subject. 17. President Roosevelt is reported to have remarked after Pearl Harbour that the most which could be expected from the State Department was “a strict neutrality”. 18. Macaulay, Essay on Machiavelli, Edinburgh Review, 1827.

Letter to the Chairman of the Committee from Sir Michael Jay KCMG, Permanent Under-Secretary of State, Foreign and Commonwealth OYce, 22 June 2004 I thought the Committee might welcome an update on the practical steps we are taking to implement the FCO Strategy, launched last December, ahead of my evidence session on 29 June. This work has taken a number of forms. First we have been working to develop further our thinking on the strategic policy priorities. We have been devising action strategies for each of the eight priority policy areas. These will set out clearly defined aims for achieving the Government’s goals within each priority. We are also looking at the services we provide, in London and across the network. This process involves working closely with the rest of Whitehall—the Strategic Priorities belong to the government as a whole, not just the FCO. An important part of this work is about clarifying how we can improve coordination of the international work of diVerent departments. I discussed some of the implications with Permanent Secretary colleagues in the International Sub-Committee of the Civil Service Management Board, which I chaired on 17 June. In parallel we are making good progress with the FCO’s Departmental Change Programme. This includes a range of initiatives to underpin the Strategy, based around four broad principles: — focussing resources on priorities; — being flexible and responsive; — increasing our diversity, with a wider mix of people skills and experience; and — meeting customer needs. Our change programme involves coordinated action in several areas of FCO activity, such as finance, human resources or consular. We have established a Departmental Change Board to oversee this programme. At the heart of the programme are organisational changes to adjust our structures at home and overseas to ensure we can help deliver the strategic priorities as eVectively as possible. These are reflected in the attached organisational chart. We are now beginning the process of physical change as departments establish their new management structures. We have established a small team to drive forward these changes, while keeping costs to an absolute minimum. As part of this work we are also reviewing the way we manage our resources. Our aim is to better reflect the division between those resources focused on our core activity (supporting ministers—including their accountability to Parliament, maintaining the overseas network and providing services to British citizens) and those which explicitly support our work on the priority policy issues. While Ministers will, of course, remain responsible and accountable to Parliament for the work of the FCO at home and abroad, the new resource structures will make Directors-General accountable to the FCO Board and to Ministers on how they use the resources available to them to deliver the priorities—In this way we will align resources and policy responsibility. I expect most of these changes to come into eVect by the start of the next financial year. We are also looking at the eVect of the Strategy on the overseas network. I will be discussing with the FCO Board next month the balance of resources in our diplomatic missions overseas. This is about organising ourselves so that we are better able to deliver the agreed international priorities of the Government. It is not, as some have suggested, camouflage for closures and cuts. That said I would not want to underestimate the pressures the present resource climate places on the FCO. We are, like the rest of Whitehall, working hard on the demanding eYciencies targets that flow from the Gershon review and the Budget. Delivering a successful programme of change against this backdrop will be a major challenge. I will, of course, keep the Committee updated on the changes we are making to the FCO, and look forward to discussing these issues in more detail when we meet on 29 June. Sir Michael Jay KCMG Permanent Under-Secretary of State Foreign and Commonwealth OYce 22 June 2004 Foreign Affairs Committee: Evidence Ev 77 Legal Adviser PO SofS Comms Director Chris Mullin MP (Parliamentary Under-Secretary) •Africa •Commonwealth •UKVisas •Public Diplomacy •Commons cover: Consular CE FCO Director Director UKVisas Serivces Consular DG Corporate Human Director Resource Finance Director CE UKTI & Info Director Strategy Trans Bill Rammell MP (Parliamentary Under-Secretary) & •Latin America Caribbean •OTs •East Asia and the Pacific •Russia, Central Asia & South Caucasus •Global Issues •Administration (except Human Resources) •Migration Policy (including Immigration/asylum) •International Crime (including Drugs) •Commons cover: Middle East -atlantic Asia Pacific Director Africa Director DG Economic Global Issues Strategic Priorities 5,6&7 Priorities Strategic Director PUS Policy THE STRATEGIC PRIORITIES (with lead Board member) and expanding global economy interests in an open SP5 (DG Economic) promotion of UK economic SP6 (DG Economic) sustainable development, underpinned by democracy, good governance and human rights SP7 (DG Economic) security of UK and global energy supplies of the UK’s Overseas Territories SP8 (PUS) security and good governance Director Economic •Overall responsibility for the work of the Office •Communications •Parliamentary Relations •Strategy and Innovation •Legal Advisers •Information Management •Research Analysts •Honours/Protocol •Whitehall Liaison Department The Rt MP Straw Hon Jack (SoS for Foreign & Commonwealth Affairs) For implementation by April 2005 Europe Director DG Europe Strategic Priority 4 New FCO Organisation S Asia Director •Middle East •International Security •Defence •Consular •Human Resources •Deputy Leaderthe of House of Lords; and •FCOin Spokesperson the Lords The Rt Hon the Baroness Symons Vernhamof Dean (Minister of State) C Asia, (Russia Eastern Caucasus) Iraq Directors Non-Exec MENA Director DG Political Strategic Priority 3 Director Security Interna’l •European Union •EU Neighbourhood, Balkans, Ukraine, Belarus, Moldova Policy •Economic •Commons cover: International Security Dr Denis McShane MP (Minister of State) Director Defence Liaison Liaison DG Defence & Intelligence Strategic Priorities 1&2 THE STRATEGIC PRIORITIES (with lead Board member) SP1 (DG D&I) a world safer from global terrorism and weapons of mass destruction SP2 (DG D&I) protection of the UK from illegal immigration, drug trafficking and other international crime SP3 (DG Political) an international system based law, which is better able to resolve on the rule of conflicts prevent disputes and neighbourhood SP4 an effective EU in a secure (DG Europe) & OTs Priority 8 Strategic (Minister of State) Mike O’Brien MP •South East Asia •South Asia & Afghanistan •North America •Trade & Trade Policy •Outreach (PaNDU) •Plus: Minister of State at the for trade DTI, with responsibility policy and ECGD •Commons cover: Human Resources Director Americas o PUS on SP8 T Ev 78 Foreign Affairs Committee: Evidence

Letter to the Chairman of the Committee from the Secretary of State for Foreign and Commonwealth AVairs, 1 April 2004 I am writing to inform you of the outcome of a recent internal review of our representation in the South Eastern Caribbean. The remit of the reviewers was to consider whether the configuration of our posts in the region, and the resources available in each, was what we required to deliver our objectives. They visited all the countries in the region where we have representation and spoke to a wide range of stakeholders both in the UK and the Caribbean. The reviewers have now submitted their report and we have considered their recommendations. One of the recommendations that we have decided to accept is that we should not replace our resident British Commissioners in Grenada and St Vincent and the Grenadines when they finish their tours of duty towards the end of 2005. The Resident British Commissioners are the only UK-based staV in both countries and report to our High Commissioner to Grenada and St Vincent and the Grenadines who is resident in Bridgetown, Barbados. Instead of resident representation we will be appointing a non-resident British Commissioner in a way similar to that in which we are represented in Dominica and St Kitts and Nevis. The non-resident British Commissioner will be based in Barbados and will visit both countries regularly. This decision should not aVect adversely the service we provide in the two countries. Our High Commission in both countries will remain open. They will be staVed by locally engaged employees who will handle the day to day work of the oYce including consular protection, public aVairs and commercial work and general enquiries. The main areas of UK cooperation with Grenada, St Vincent and the Grenadines and the wider region will also be unaVected. Enhancing cooperation on regional security remains at the top of our agenda and Bill Rammell’s visit to the region earlier this month identified a number of areas where we can work more closely together. We will be discussing these and other important issues—trade and investment, HIV/AIDS and development—at the UK/Caribbean Forum on 10-12 May. I believe that this limited reorganisation of our representation in the Caribbean will enable us to deliver more eYciently our objectives in the region. Rt Hon Jack Straw MP Secretary of State for Foreign and Commonwealth AVairs 1 April 2004

Extract from the OYcial Report (Hansard) on Overseas Representation

HC Deb,19April 2004, Column 336W Mr Ancram: To ask the Secretary of State for Foreign and Commonwealth AVairs in which countries the Department is represented, including those with regional consulates; how many staV are employed in each location, broken down by (a) UK nationals and (b) locally employed; what the annual cost of maintaining representation in each of the countries was in 2003–04; and what the total expenditure by his Department on overseas representation was in (i) 2001, (ii) 2002 and (iii) 2003. [166211] Mr Straw: I have placed copies of the table showing countries in which the Foreign and Commonwealth OYce (FCO) is represented together with the location of both UK based and locally employed staV in the Library of the House. The annual cost of maintaining representation in each of these countries for 2003–04 has not yet been ascertained. The total expenditure by the FCO on overseas representation for previous years was as follows: 2001–02, £747 million 2002–03, £797 million.

SECURITY

Letter from the Secretary of State for Foreign and Commonwealth AVairs to the Chairman of the Committee, 23 June 2004 In my written statement to the House on 10 December, I announced an independent internal review to look into the balance between security and operational eVectiveness in the FCO’s work overseas. The reviewer, Stuart Jack, worked independently of our existing security structures, and has produced a detailed report containing 48 recommendations. I am now pleased to enclose a copy of his ﬁndings for you and other members of the Committee. The report itself is “Conﬁdential”. This is because it refers directly to the security of HMG staV working overseas. I know that you and your colleagues will understand the sensitivity of this information. Foreign Affairs Committee: Evidence Ev 79

As you and the Committee will see, the review concludes that the FCO’s security strategy does not need a radical overhaul, but that we can do more to protect staV. We need measures and procedures that are robust, based on objective risk management methodologies, and consistently applied. I have accepted all the recommendations, subject to some clarification on the question of standards. Implementation of the procedural recommendations is already going ahead. Those aVecting security standards or with resource implications need more detailed internal consideration first. This is in hand. I am also enclosing an unclassified summary of the report. Michael Jay will be happy to discuss this in more detail, though obviously without straying onto confidential issues, at his hearing with the Committee on 29 June. Rt Hon Jack Straw MP Secretary of State for Foreign and Commonwealth AVairs 23 June 2004

Annex 1

Review of FCO Security Overseas Introduction 1. The review was set up following the attack on the British Consulate General in Istanbul in November 2003. The terms of reference were: “To review the basis for the FCO’s Security Strategy. In particular to re-examine the balance between security and operational eVectiveness”. The review looked at the range of. security threats facing the FCO’s Posts over the next ﬁve to 10 years but focussed mainly on terrorism. The aim is to ensure that the FCO’s security strategy is on a consistently sound long term basis that minimizes the risks, while enabling Posts to function eVectively in line with Government policies.

Methodology 2. The reviewer, Stuart Jack, consulted widely in the FCO and Whitehall, including with the Trade Union Side; visited several overseas Posts; met with a number of companies; and looked at the practice of some other governments, in particular the United States.

Background 3. The FCO’s security measures are designed to protect most importantly its staV and their families, and also information, the integrity of IT systems, buildings, operations, and reputation. The FCO owes a legal duty of care to all its staV, UK-based and locally-engaged. 4. The policy framework and therefore the operating context within which the FCO must seek to secure its security overseas is set out in the FCO Strategy (“UK International Priorities. A Strategy for the FCO”, published on 2 December 2003). British foreign policy is to be “active and engaged around the world”, with eight strategic policy priorities, including eVorts against terrorism. Importance is attached to providing high quality public services, including consular and visa. 5. For the foreseeable future the greatest threat will be from terrorism, particularly but not exclusively from Al Qaeda and like-minded groups, The threat is global and dynamic. The vehicle-borne bomb will- continue to be a weapon of choice for many terrorists. But the FCO must be prepared for other methods of attack, other locations and sources. There is a serious risk of threat displacement to British targets if they appear much softer targets than the Americans in particular. 6. There also remains a serious espionage threat. Particular care is needed over IT security. Crime is the most immediate threat for most staV overseas.

Findings and Recommendations 7. The review’s main conclusion is that, while the FCO’s existing security strategy does not need a fundamental overhaul, there is more that could be done to enhance security worldwide. The security strategy needs to be forward-looking, ﬂexible, professional; with clear criteria and consistent standards, robust decision-making, audit trails, and good communication with staV; and adequately resourced. 8. The safety of staV and families comes ﬁrst. Security should continue to be a factor when deciding what Posts are tasked to do, and how and where. 9. Total risk avoidance-absolute security-is unrealistic. Overseas Posts have an important job to do in protecting and furthering British interests, including in insecure countries. Risk management is fundamental to striking a balance between security and operational eVectiveness and to the prioritisation of security resources. Better methods are needed to assess the vulnerabilities and threats facing each Post. The FCO’s Security Strategy Unit (SSU) have been developing a risk management matrix to inform security decisions along the lines suggested in the review. Ev 80 Foreign Affairs Committee: Evidence

10. The security awareness of FCO staV is generally good. The culture and resources dedicated to security understandably adapted to the lessening of some threats since the end of the Cold War and the easing of the IRA threat. There is strong commitment from FCO senior management to security, and since Istanbul security eVorts have been accelerated. But, in the light of the new and ever-changing threats, the FCO needs to devote more resources to security. 11. Final responsibility for security lies with the centre: the FCO Board and Ministers must remain regularly apprised of security issues. Heads of Post and geographical Directors in the FCO are responsible for individual Posts, working closely with the Security Strategy Unit (SSU). All staV share responsibility for their own and others’ security. 12. All Posts already have Post Security Committees and designated Post Security OYcers. Lines of responsibility at each Post, including Heads of Post, must be clear and well understood. There should be more formal mechanisms for resolving any conﬂicts between professional security advice and operational or other requirements. 13. Security needs to be factored into decisions on the estate in an eVective and consistent way: The review does not recommend a wholesale shift to “fortresses” or “bunkers”, which would involve operational drawbacks, considerable resources and many years. Physical defences need to be considered within a more robust and objective framework, and all Posts should undergo a “vulnerability audit”. In some cases, this might result in a decision to relocate a Post. Standards (for stand-oV, glazing, etc) for new builds and acquisitions of oYces and other accommodation should be readily understood. Enhanced standards should be applied to the highest risk Posts. Decisions should be based on risk management. 14. The human dimension is as important as physical measures. The FCO needs more Overseas Security Managers or locally-engaged equivalents, in some cases possibly more armed guards. There should also be a small increase in the numbers of Overseas Security Advisors and SSU staV and more done to plug into outside expertise. 15. The FCO has already increased its capacity to deliver security training and awareness to its staV. Formal security training should be mandatory. New staV at Post should always be given a local security brieﬁng on arrival in the job. Some staV with security responsibilities, such as Management OYcers, need more comprehensive training before taking up their jobs and more time to carry out their security responsibilities when overseas. 16. The review makes almost 50 recommendations covering the areas mentioned above, many of them procedural or organisational and some related to resources, including buildings, security staV and training.

Conclusion 17. As the UK remains engaged across an uncertain world we must be prepared for considerable security challenges. On terrorism we are in for the long haul. To meet these challenges the FCO will need to continue to put a strong emphasis on security and ensure that the current eVorts to enhance security can be fully implemented.

Letter to the Clerk of the Committee from the Parliamentary Relations and Devolution Department, Foreign and Commonwealth OYce, 6 July 2004

Travel Advice Following the Foreign Secretary’s Written Statement on 22 June, in which he announced his decision to adopt Option (e) of the Travel Advice Review, we have updated our Guidance to Departments and Posts. I enclose a copy for the Committee’s attention. Matthew Hamlyn Parliamentary Relations and Devolution Department Foreign and Commonwealth OYce 6 July 2004

Annex

TRAVEL ADVICE: GUIDANCE FOR DEPARTMENTS AND POSTS AS AT 28 JUNE 2004

Travel Advice—General Guidance 1. Travel Advice is the FCO’s biggest interface with the public. Ministers, MPs, the media, the tourism industry and the travelling public all take a very close interest in it. It is the responsibility of the geographical department, in close liaison with posts overseas, to make sure it remains current, clear, and consistent. There must be no double standards between Travel Advice and advice to British nationals by Posts and Whitehall. Foreign Affairs Committee: Evidence Ev 81

— Current: You must amend your Travel Advice whenever anything signiﬁcant occurs, or is about to occur, in your country. Travel Advice should be checked at least once a month to ensure that it is still current. It must be re-published at least every three months. Where the advice is against travel, or all but essential travel, to the whole country, the Travel Advice should be updated once a month. Geographical desk oYcers and Posts should have it as one of their objectives to ensure that the Travel Advice for their countries is kept up-to-date and under constant review. — Clear: The Travel Advice must be written in clear, unambiguous language, understandable to everyone who reads it. Remember your audience is the general public. The Plain English Campaign recommends that we use shorter sentences and active verbs. And they like sentences beginning with conjunctions. They recommend that we make greater use of the second person; to direct the text at the reader. — Consistent: Deputy Heads of geographical departments should have it as a personal objective to ensure that the Travel Advice given for countries across their department is consistent, clear and current. Travel Advice Section in Consular Crisis Group, and CTPD, can help with advice on wording. — No Double Standards: Posts and Whitehall must ensure that advice given to local British communities, businesses, NGOs etc, and to HMG staV is consistent with the Travel Advice as it appears on the FCO website. Any advice given out by Post, such as Wardens’ Messages, must be cleared with the geographical department ﬁrst (or, out of hours, through the FCO Response Centre).

Travel Advice—Format and Content

Format 2. The standard format is set out at Annex A. The Summary should consist of a series of bullet-points (normally up to five or six) highlighting key travel information. Many website users spend only the minimum time looking at the Travel Advice pages, and callers to the Call Centre often only ask for the Summary to be read out. So it is important that this contains all pertinent information, including any areas of the country where we advise against travel—this should be the first bullet-point. There should be at least one bullet-point on terrorism. The rest should aim to give as good an all-round picture as possible. The final bullet point should be a standard one on the need to have up-to-date travel and medical insurance. The only other mandatory section is “Safety and Security”, of which the first sub-section must cover Terrorism. There may be sensible exceptions to this and where we might need a more general Terrorism/Security Section, eg where the line is blurred between terrorism and civil insurgency.

Content 3. Following the conclusion of the Review of Travel Advice, the Foreign Secretary has said that we should continue to prescribe against travel based on non-terrorist threats (coups, civil unrest, natural disasters) as before. But we should confine such prescriptions in the case of intelligence-based terrorist threats to situations of extreme and imminent danger—ie if the threat is suYciently specific, large-scale or endemic to aVect British nationals severely. We will still issue warnings of imminent attacks (eg we believe terrorists are in the final stages of planning attacks) but will not prescribe action unless the threat is imminent and extreme. 4. The Foreign Secretary would like the “Safety and Security” section of Travel Advice to focus primarily on a factual description of the risks or dangers in the country concerned (be it terrorist threats, civil unrest, crime, health or local travel related), to enable travellers to make informed decisions on whether to travel. Where the Travel Advice recommends against travel, it should include a description of the events or threats that underlie this recommendation. When advising against travel to a border area, as much information as possible should be included eg how far the area to be avoided extends (both along and away from the border), any major landmarks/towns that might pinpoint the area concerned. Annex B contains advice on what should, and should not, go in the sections on terrorism, and how to describe the threat from terrorism.

Travel Advice—What Might Lead to a Change and What Should You Do? 5. There are three main starting points that might lead to a decision being taken to change Travel Advice. — Changes on the ground: When there are signiﬁcant changes in the situation in a country (violence, natural disaster, epidemic), the Post should email suggested amendments to the Travel Advice to the geographical department (as tracked changes on the current TA), copied to Angela Beuden in Travel Advice Section. If the changes are simple factual ones, the geographical department can authorise Ev 82 Foreign Affairs Committee: Evidence

publication and they will be put on the website. If the changes occur out of oYce hours and need to be reflected in the Travel Advice, please send them to the FCO Response Centre (copied to Angela Beuden). — Changes in the terrorist threat: When a new threat assessment is received from JTAC, you should read it (your Department should have arrangements in place for the regular monitoring and distribution of incoming material). CTPD will also alert the geographical desk oYcer and SSU by email when it sees an incoming JTAC report. It is up to the geographical desk oYcer to check that the Travel Advice is satisfactory and covers any new credible threat. You should contact the CTPD Threats OYcer if in any doubt as to what action to take. It may be necessary to have an internal meeting to discuss a new threat report and how it impacts on Travel Advice—again CTPD can advise and also convene a meeting if necessary. Annex C contains further guidance on the process of making Travel Advice changes relating to terrorism. — Following a terrorist or significant incident: Departments must make an immediate factual change to the Travel Advice following any terrorist or other significant incident, if necessary saying that the advice is under review (eg “Following the explosion at ‘x’ on ‘date’, this advice is being reviewed”). This should be done as quickly as possible, ideally within the hour if in working time, three hours outside working time. The initial factual amendment about a terrorist incident should be cleared with CTPD, if time allows. The Deputy Head of the geographical department should clear all other factual changes, copying in DGCA and Ministers as necessary (e-mails will suYce). If, following the initial factual amendment, further changes need to be submitted on, it is essential that this process is done as quickly as possible. You should warn Private OYces and Press OYce that a submission is being prepared. Private OYces will ensure that any Travel Advice submissions are passed onto another Minister, if their Minister cannot look at it.

Travel Advice—Key Considerations 6. The Director General for Corporate AVairs (DGCA) is the senior oYcial responsible for Travel Advice. He should be consulted on all but routine or urgent factual changes. Where an incident has happened and it is imperative to put a factual statement about it into the Summary as quickly as possible, the changes should be made and DGCA copied in on them. 7 The Foreign Secretary should be consulted where: — There are substantive changes because of terrorist threats; — It is proposed to change the level of advice (eg to advise against travel or when the advice against travel will be dropped); — It is proposed not to change the advice despite worrying new intelligence of a terrorist threat; — There is disagreement between London and the Post, or between FCO departments; — Where the proposed change to the Travel Advice would be particularly sensitive for the country concerned; or — When the threat from terrorism is of extreme concern. 8. Where substantive amendments are being made because of non-terrorism related situations (eg coups, civil disturbance, natural disaster, epidemics), clearance should be through DGCA and, as necessary, geographical Ministers, side-copied to the Private Secretary. 9. When the Foreign Secretary is not contactable, substantive changes to Travel Advice should be cleared through DGCA and the relevant geographical Minister. 10. All submissions to Private OYces should go through the DGCA. When DGCA is away, he will appoint another DG to clear Travel Advice changes. If in doubt whether to submit, geographical departments should consult Travel Advice Section or DGCA’s oYce. See Annex D for a model submission. 11. When considering a proposed signiﬁcant change in Travel Advice, the Foreign Secretary will want to know whether other key governments are also changing their advice and whether we shall be signiﬁcantly out of line with them. You can view the current travel advice on other government websites via the travel section of the FCO website. Travel Advice Section has daily telephone contact with opposite numbers in the US State Department and regular contact with Canada, Australia, New Zealand, France and Germany, to discuss Travel Advice. 12. Other government departments will occasionally need to be consulted eg Dept for Transport for aviation/maritime issues, DoH for health matters, Home OYce for football matches. If the threat is serious, or when taking action has sensitive implications, COBR (Cabinet OYce plus concerned Whitehall Departments) may meet to discuss further action, including Travel Advice amendments. Foreign Affairs Committee: Evidence Ev 83

Travel Advice—Implementation 13. Once a change in Travel Advice has been agreed, the geographical department should send the ﬁnal text to Travel Advice Section (by e-mail to Angela Beuden; TAS staV monitor her e-mail in her absence), who will publish it on the FCO website. Out of oYce hours (ie between 1730 and 0900), it should be sent to the FCO Response Centre (Tel no 020 7008 3350, email: fcoresponsecentrewfco.gov.uk) and copied to Angela Beuden. 14. The geographical department should also inform the Post(s) concerned and Press OYce. Where it is decided (by the geographical department/Press OYce/Minister’s OYce) to make a press announcement of the change (in London and/or the Post), Press OYce should liaise with Travel Advice Section (or, out of hours, the Response Centre) so that the timing can be co-ordinated with publication on the FCO website. The geographical department and Press OYce should also consider whether there is a requirement for Q and As to supplement the change in Travel Advice. 15. The geographical department should send a COREU once a signiﬁcant change (eg advising against travel) has been approved. Include the acronyms COTER, COCON and COACD in the subject line of the COREU. Heads of Mission may also wish to inform their host government, and will want to let their EU colleagues know as soon as change has been agreed.

Travel Advice—and Finally 16. Ministers regularly state in Parliament and in correspondence that FCO Travel Advice is under constant review and is checked at least once a month. Departments should keep going back to the Travel Advice for their countries on a regular basis, considering with Posts whether language needs up-dating or weeding. Changes should be made as circumstances dictate and not necessarily saved for the monthly check. Consular Crisis Group June 2004

Annex A

STYLE AND FORMAT OF TRAVEL ADVICE The following headings and sub-headings should be included where possible.

(a)Summary — Should be in the form of 5-6 bullet-points (at most); — If you are advising against travel/all but essential travel (either to the whole country or to speciﬁc areas), always include this as the ﬁrst bullet-point in the Summary; — There should be at least one bullet-point on the threat from terrorism; — The remainder should focus on the main risks to travellers; — If there is no UK Diplomatic presence in a country, say so in the Summary; — You should avoid using phrases such as “the vast majority of visits are trouble-free”: this is (a) a hostage to fortune; and (b) over the top language. If you need to use such language, better to say “most visits are trouble-free”; — Final bullet-point should be a generic one on need for medical and travel insurance: “We strongly recommend that comprehensive travel and medical insurance is obtained before travelling”.

(b)Safety and Security (NB this Section is Mandatory)

(i) Terrorism — Always the ﬁrst sub-section of this section. This must appear in every Travel Advice. — See Annexes B and C from CTPD, for further advice on writing the terrorism paragraph and processing changes. — In addition, you should generally use the following phrases: “You should be aware of the global risk of indiscriminate terrorist attacks, which could be against civilian targets, including places frequented by foreigners. Please read ‘Security and General Tips’ and ‘Risk of Terrorism when Travelling Overseas’ pages.”

(ii) Crime — Give details of crime situation in country with advice to travellers, eg any speciﬁc scams and levels of violent crime. Ev 84 Foreign Affairs Committee: Evidence

(iii) Political situation — Give details of any forthcoming elections and potential demonstrations/strikes.

(iv) Local travel — Repeat the advice against all or all but essential travel to particular areas, with an explanation why we are advising against travel there.

(v) Road/Rail/Air/Sea Safety (included as appropriate) — On Road Safety: include the condition of the roads/local driving patterns/what type of driving licences are required (eg are UK licences suYcient or are International Driving Permits required). — On Rail Safety: eg the need to secure sleeping compartments in trains. — On Air Safety: refer to circular 16–04 issued by AMED, who lead on all air safety matters.

(c)Local Laws and Customs — Give information on drugs penalties, dress codes, attitude to homosexuality (is it illegal?), legality of taking photos near sensitive sites, eg military locations etc.

(d)Entry Requirements — If visas are required and where to obtain them, etc. — Advice on minimum passport validity (especially if less than six months). — Advice for lone parents/other adults (eg grandparents) travelling with children: Where appropriate, you should use the following generic wording, or check with Post whether more or less detailed advice is appropriate: “Single parents or other adults travelling alone with children should be aware that some countries require documentary evidence of parental responsibility before allowing lone parents to enter the country or, in some cases, before permitting the children to leave the country. For further information on exactly what will be required at immigration please contact the London embassy [website link] of the country to which you will be travelling”.

(e)Health — Repeat the instructions in the summary about the need for comprehensive medical/travel insurance, and if necessary give further details on the local medical facilities/the need for medical evacuations etc; — If in Europe, advise on the use of E111 forms; — Don’t give advice on what vaccinations/proﬁlaxis are needed—refer to DoH website or advise the traveller to contact his/her own GP for up to date information; — Include any outbreaks of contagious diseases, eg SARS, Bird Flu; — Include information about endemic diseases (eg cholera/malaria).

(f)Natural Disasters — Hurricanes, earthquakes, ﬂoods, volcanic eruptions, etc. — Any immediate eVects, eg roads closed etc as a result of a hurricane, should go in the Summary and in the “Local Travel” section.

(g)General Give details of anything else not covered in above, eg: — If there is no British Diplomatic Mission, it should be stated here. Also include details of Honorary Consul or nearest Diplomatic Mission for emergency consular cases. — Advice on whether British nationals should register with the Embassy/High Commission on arrival. — If the Embassy doesn’t issue passports locally, what the arrangements are for obtaining a replacement/emergency passport and likely time taken. — Money: availability of ATMs, use of credit cards/travellers cheques/oYcial currency in new EU countries. Foreign Affairs Committee: Evidence Ev 85

— Need to carry ID. — Reconﬁrmation of ﬂights (if necessary).

(h)Contact Details — There is a hyperlink at the bottom of each Travel Advice to the UK Missions Overseas page on the FCO website that gives details of the British Embassy/High Commission and subsidiary posts. It is important that these are kept up-to-date. (Amendments should be sent direct to Online Communications Dept using the “FCO website” address in the GAL).

Annex B

TRAVEL ADVICE AND TERRORISM: GUIDANCE What message do we want to convey? What sorts of language should I use to describe the threat? What should we include in the Terrorism Section? When do we say Threat and when do we say Risk? Should we distinguish between the threat of international and domestic terrorism? When should we use advice to “Be vigilant . . .”. Should we refer to host governments’ own assessments of the threat and their capabilities to counter it? What language should we avoid using? What if it is a serious threat, which might need to be considered out of hours? Whom do I contact if I have any questions?

What Message DoweWant to Convey? 1. We want to give readers information about what we believe to be the level and nature of the threat, whether that threat is aimed at British/western interests, and where to go for further advice. We do not want to be alarmist—if we think the threat is low, we should say so.

What Sorts of Language should I use to Describe the Threat? 2. Examples of suitable language: — We believe terrorists are in the ﬁnal stages of planning attacks in Country A (only use when justiﬁable on current, credible intelligence). — You should be aware of the [high] threat from terrorism (or you can use “continuing” when there have been previous incidents which illustrate the threat). — The threat from terrorism is low. — Country A shares with [neighbouring countries/the rest of the region] a [high] threat from international/domestic terrorism [to visibly western and/or British interests].

In Addition, you should Generally use the Following Phrases — “You should be aware of the global risk of indiscriminate terrorist attacks, which could be against civilian targets, including places frequented by foreigners.” — Please read “Security and General Tips” and “Risk of Terrorism when Travelling Overseas” pages.

What should we include in the Terrorism Section? — How serious the threat is. — Which groups are known to be active (see below for terms to describe Al Qaida type terrorism). — Whether any previous incidents—what type. — Information on any current, speciﬁc threats (if appropriate). — What the host government says about the threat (if appropriate—see below). — Whether the host government is mounting an eVective CT policy (if this clariﬁes the threat picture). — Who the targets are likely to be (is the main risk one of being in the wrong place at the wrong time?). — The threat from indiscriminate attacks globally. — Links to other relevant pages. Ev 86 Foreign Affairs Committee: Evidence

When do we say Threat and when do we say Risk? 4. Some Travel Advice notices currently describe what we assess to be the risk from terrorism in that country, some about threat. We should standardise and always talk about what we assess the “threat” to be. This refers to the intent and capability of terrorist groups. Risk is a wider concept.

Should we Distinguish Between the threat of International and Domestic Terrorism? 5. When appropriate, yes. For example in Turkey local groups eg DHKP-C have carried out primarily low-level attacks against largely host interests, but there have also been major attacks by international terrorists, linked to Al Qaida, against synagogues, the British Consulate and HSBC in Istanbul. 6. The phrase “Islamist terrorism” causes oVence among Muslims. And we should not attribute all terrorism of this nature under the heading “Al Qaida” (apart from being inaccurate, it creates an exaggerated impression of an all-powerful organisation). Where you need to specify the diVerence between local groups and Al Qaida related networks, it is best to refer simply to “international terrorism [aimed at Western interests]”. 7. Where such a distinction isn’t necessary, it is better simply to say “terrorism” and explain the circumstances of the country.

When Should we Use Advice to “Be Vigilant . . .?” 8. The Security and General Tips and Risk of Terrorism links advise people to be alert to unattended baggage, etc. There will be advice for businesses in the latter link when it is updated shortly. 9. In the Travel Advice we should therefore limit ourselves to advising people to be vigilant only where such advice is helpful (ie not in such a long list of places, or such general categories, that readers could feel the advice useless).

Should we refer to Host Governments’Own Assessments of the Threat and Their Capabilities to counter it? 10. Not if it is a PR line saying how safe their country is. But when a government itself issues a warning or description of the threat in its country, it would be artiﬁcial and limiting not to quote it. It may also be relevant to describe to what extent the authorities of the country are mounting an eVective CT policy.

What Language should we avoid using? 11. You should avoid using phrases such as “we see no risk of a terrorist incident” and “we are unaware of a speciﬁc threat” as these are hostages to fortune should any incident subsequently occur.

What do I do if it is a serious threat which might need to be considered by Ministers out of office hours? 12. Ideally, Travel Advice changes should be made within oYce hours. The media will tend to make more of a story of a Travel Advice change out of hours. That is ﬁne if we are looking to create headlines, but otherwise best avoided. However, we cannot always guarantee that advice to Ministers will reach them before Close of Play, especially if the JTAC assessment emerges late in the day. It may be right on occasion to leave the Ministerial decision until the following day when it can be considered properly. There is a balance between urgency (the risk that a bomb goes oV in the interim) and the advantages of giving Ministers proper time and information on which to base their decisions. This should be a decision for Private OYce based on advice from DGCA, through whom the submission will have come. You should be guided by the following principles: — Any serious imminent threat should be considered collectively by the relevant Departments, and if it involves aviation security or otherwise brings in OGDs, in a Cabinet OYce meeting. This should agree advice to put to Ministers. — Press OYce should be brought in from the start, and Private OYce tipped oV with a phone call by the Geographical Desk. Private OYce can advise on the Foreign Secretary’s availability and arrangements for getting him highly classiﬁed assessments. — Every submission should address the question “is this a change that should be announced by the Press OYce, or one that should simply be placed on the website”? The implications of the latter for possible press coverage should be set out. Foreign Affairs Committee: Evidence Ev 87

— Geographical departments should adhere ﬁrmly to the general guidance on submitting Travel Advice changes to Ministers: the only changes related to terrorist threats that need not go to Ministers are purely factual changes and routine tidying up. If there is any doubt about a particular case, the submission should go anyway to DGCA, who is best placed to decide whether to send it on to Ministers. Whom do I contact if I have any questions?

Contacts in CTPD Threats Team: Middle East: 020 7008 4310 Africa: Ext 2590 South East Asia/South Asia: Ext 2240 Europe/Americas/FSU: Ext 3641 Policy: Threats Team Manager: Ext 1959 Ev 88 Foreign Affairs Committee: Evidence

Annex C

THE PROCESS FOR CHANGING TRAVEL ADVICE RELATING TO TERRORISM (Action Lead shown by underlined Department at each stage)

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e n e • R t • i l • T • Foreign Affairs Committee: Evidence Ev 89

Annex D

MODEL SUBMISSION Reference: //2004 From: Geographical Dept Desk OYcer Date: [PS] cc: PS/PUS PS/Minister responsible for the regionDirector-General responsible for the region Director General Defence and Intelligence (if threat related) Director International Security (if threat related) Director, Consular Services Head of CTPD and SSU (if threat related)Head of AMED (if aviation or maritime implication) Press OYce (for press enquiries or releases) PRDD (for Parliamentary implications) Head, Consular Crisis GroupHead, Travel Advice Section, CCG CTPD Threats Team Leader JTAC WASHINGTON (if threat related)