House of Commons Foreign Affairs Committee Foreign and Commonwealth Office Annual Report 2004–05 Second Report of Session 2005–06 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 15 February 2006 HC 522 Published on 8 March 2006 by authority of the House of Commons London: The Stationery Office Limited £0.00 Foreign Affairs Committee The Foreign Affairs Committee is appointed by the House of Commons to examine the administration, expenditure and policy of the Foreign and Commonwealth Office and its associated agencies. Current membership Mike Gapes (Labour, Ilford South), Chairman Mr Fabian Hamilton (Labour, Leeds North East) Rt Hon Mr David Heathcoat-Amory (Conservative, Wells) Mr John Horam (Conservative, Orpington) Mr Eric Illsley (Labour, Barnsley Central) Mr Paul Keetch (Liberal Democrat, Hereford) Andrew Mackinlay (Labour, Thurrock) Mr John Maples (Conservative, Stratford-on-Avon) Sandra Osborne (Labour, Ayr, Carrick and Cumnock) Mr Greg Pope (Labour, Hyndburn) Mr Ken Purchase (Labour, Wolverhampton North East) Rt Hon Sir John Stanley (Conservative, Tonbridge and Malling) Ms Gisela Stuart (Labour, Birmingham Edgbaston) Richard Younger-Ross (Liberal Democrat, Teignbridge) The following member was also a member of the committee during the parliament. Rt Hon Mr Andrew Mackay (Conservative, Bracknell) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/parliamentary_committees/foreign_affairs_committee.cfm. Committee staff The current staff of the Committee are Steve Priestley (Clerk), Sarah Ioannou (Second Clerk), Ann Snow (Committee Specialist), Kit Dawnay, (Committee Specialist), Kevin Candy (Committee Assistant), Catherine Jackson (Secretary) and Chintan Makwana (Senior Office Clerk). Contacts All correspondence should be addressed to the Clerk of the Foreign Affairs Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 6394; the Committee’s email address is [email protected] Foreign and Commonwealth Office Annual Report 2004–05 1 Contents Report Page Conclusions and recommendations 3 1 Introduction 9 Background to the inquiry 9 Form of the annual Departmental Report and related papers 9 Assessing performance 11 A year of two presidencies 12 2 Transparency and openness 13 Relations with Parliament 13 Freedom of Information (FoI) 15 Classified PSA scorecards 16 3 Efficiency and effectiveness 17 The Collinson Grant Report 17 Management 20 Leadership 21 Project management 22 Financial management 22 Performance review 23 Staff 25 The need for professional skills 25 Efficiency measures directly affecting staff 28 Prism 29 Other IT projects 33 ‘Rationalising’ the home estate 33 Reinvesting efficiency savings 34 Conclusion: the FCO’s response to Collinson Grant 34 4 Consular Services 38 Emergency response 40 The Indian Ocean tsunami 40 Hurricanes Katrina and Rita 42 Paying the bills 43 Conclusion 43 5 Diplomatic representation overseas 46 ‘Alternative representation’ 46 The overseas estate 49 6 FCO personnel issues 54 Security of FCO personnel 54 Disciplinary procedures 54 Publication of memoirs 55 2 Foreign and Commonwealth Office Annual Report 2004–05 Senior diplomatic appointments 57 Diversity 58 7 BBC Monitoring 60 Formal minutes 64 List of witnesses 73 List of written evidence 74 Foreign and Commonwealth Office Annual Report 2004–05 3 Conclusions and recommendations Form of the Annual Departmental Report and related papers 1. We conclude that the presentation of the FCO’s performance against its Public Service Agreement targets in the Autumn Performance Report is an improvement over the presentation of similar information in the annual Departmental Report. (Paragraph 5) 2. We conclude that the delay of over two months in signing off and publishing the FCO’s Resource Accounts for 2004–05 was excessive and that it had the unacceptable consequence of depriving Parliament and the public of an important tool for exercising scrutiny. We recommend that the FCO explain in its response to this Report what caused this delay and why it missed even the revised target for signing off its accounts. (Paragraph 6) Assessing performance 3. We conclude that performance targets defined in terms of inputs and outputs may often be more appropriate for the FCO than targets based on outcomes, particularly where a target is based on outcomes which it is beyond the capacity of the FCO to deliver. We recommend that the FCO discuss with the Treasury the potential for redefining some of its targets and performance indicators accordingly. (Paragraph 12) 4. We recommend that in its response to this Report the FCO publish a summary of the results of the NAO’s review of the data systems underlying its PSA targets, together with its commentary on how it proposes to implement any conclusions reached by the review. (Paragraph 13) A year of two presidencies 5. We recommend that in its response to this Report the FCO provide a full breakdown of the costs of the G8 and EU presidencies, how they were met, and whether the diversion of resources to service the presidencies led to any adverse consequences for its other work. (Paragraph 15) Transparency and openness 6. We conclude that the failure of the FCO to share with Parliament the reports prepared for its Board by Collinson Grant Ltd and by Norman Ling is evidence of a disturbing aversion on the part of FCO management to proper scrutiny of its activities. Accountability of the executive to Parliament is a fundamental feature of the United Kingdom’s constitution. We therefore welcome recent undertakings by the FCO to be more open with this Committee in future; we will evaluate this new policy in the light of experience. (Paragraph 23) 4 Foreign and Commonwealth Office Annual Report 2004–05 7. We congratulate the Foreign Office on being one of the better departments at dealing with freedom of information requests in a timely manner, but we are concerned that the FCO is also one of the departments most likely to withhold information from enquirers. We recommend that in its response to this Report the FCO publish a statistical analysis of its handling of FoI requests, showing the grounds on which requests were not met or were only partially met. (Paragraph 26) 8. We accept that where there are good reasons for PSA scorecards to be classified according to the usual criteria, they should not be published, but we recommend that the classification of such scorecards be reviewed regularly, with a view to timely publication where possible. In cases where classification of scorecards remains essential, we recommend that consideration be given to publishing a declassified summary. (Paragraph 29) Efficiency and effectiveness 9. We are disappointed and concerned that the FCO apparently takes the view that, because a study costing hundreds of thousands of pounds and with potentially huge implications for the FCO’s management of its resources was intended for internal consumption only, there was no need to ensure that it was error-free. (Paragraph 35) 10. We recommend that in its response to this Report the FCO list the additional frontline activities which are being funded by efficiency savings and asset sales, giving the amount of funding in respect of each such activity. (Paragraph 36) 11. We recommend that in its response to this Report the FCO provide further details of the restructuring of its Human Resources Directorate, including full information on the reduction in its size and of any consequences for performance of the HR function in the FCO. (Paragraph 40) 12. We welcome the FCO’s commitment to changing aspects of its culture and to giving leadership and management skills their appropriate place in the organisation. We recommend that in its response to this Report the FCO set out how it intends to advance this agenda. (Paragraph 42) 13. We conclude that the FCO failed seriously in its duty to the Committee in not informing the Committee about what the National Audit Office has described as “the largest identified loss by fraud in the Department’s history” and about other frauds. We are extremely concerned that the Tel Aviv fraud continued undetected for at least four years as a result of weaknesses in financial control and involved clear breaches of long standing accounting procedures. We recommend that the FCO in its response to this Report set out the other significant frauds which have taken place in the last five years, and the specific steps it has taken to prevent any recurrence. (Paragraph 48) 14. We welcome the FCO’s new focus on reform of its finance function. We recommend that in its response to this Report, the FCO provide a detailed explanation of the nature of these and related reforms and of the timescale for implementing them. We further recommend that in future the FCO inform this Committee promptly of any incident involving major fraud or financial mismanagement. (Paragraph 50) Foreign and Commonwealth Office Annual Report 2004–05 5 15. We recommend that the FCO keep this Committee informed of the progress of the ‘capability to deliver’ review being carried out by the Prime Minister’s Delivery Unit and, in due course, of its results. (Paragraph 52) Staff 16. We conclude that the FCO needs to catch up with the rest of Whitehall, by recruiting professionally qualified, experienced people to the top roles in finance, human resources and estate management. We recommend that it do so without delay. (Paragraph 57) 17. We recommend that in its response to this Report, the FCO list the senior management jobs which will be cut or downgraded during the SR04 period, and that it state the net increase or reduction in staff numbers that it expects to result from this exercise.