Memorandum submitted by the Foreign and
Commonwealth Office
INTRODUCTION
1. This memorandum describes the FCO's resources—money,
people, capital assets—now, and their deployment to support
our objectives; explains the outlines of FCO spending plans for
the next three years, until the end of this Parliament; and thus
brings together some of the material already known to the Foreign
Affairs Committee, Parliament and the public from statements,
speeches and Parliamentary Questions since the outcome of the
Comprehensive Spending Review (CSR) was announced. Further details
will appear in the FCO's Annual Report, to be published in late
March. This Memorandum should be read in conjunction with FCO/FAC
008/99, which compares FCO resources with those of the French
and German Foreign Ministries (see Supplementary Memorandum pages
68-70).
THE FCO'S
SPENDING PLANS
2. The FCO's allocation for 1998-99 was £1.037
billion, as published in the 1998 Departmental Report and voted
in main estimated. This included provision of £97 million
for the British Council and £168 million for the BBC World
Service. The figures have been subsequently adjusted (explanation
in Annex A) and the actual out-turn for 1998-99 will differ from
the original allocation.
3. The FCO's CSR allocation over the three years
1999-2000 to 2001-02 was £1.09 billion/£1.11 billion/£1.13
billion. Of the total £219 million increase (cash terms),
£44 million went to BBC World Service broadcasting and £20
million to the British Council. These figures have been adjusted
subsequently (explanation in Annex A). The real terms percentage
increases are around 2 per cent for FCO and British Council, and
around 4 per cent for the BBC World Service.
4. The figures (including 1997-98 outturn, and
figures for earlier years) are set out in the tables at Annex
A. Annex A deals also with a number of technical issues affecting
the presentation of the estimates and out-turn figures.
FCO MISSION STATEMENT,
OBJECTIVES AND
KEY TARGETS
5. The FCO Mission Statement is at Annex B.
The Department's Aim and Objectives as agreed in the CSR, and
corresponding key targets, are set out in the FCO Public Service
Agreement (PSA), attached at Annex C. As indicated in the PSA,
the FCO is involved in all aspects of Government policy with an
international dimension. Our network of Posts overseas represents
the Government and the UK as a whole. Annex D gives a breakdown
of FCO expenditure against the eight Objectives in 1997-98. The
FCO is implementing Resource Accounting and Budgeting (RAB) according
to the Whitehall timetable.
STAFFING
6. The FCO's key resource is its staff. Many
departments and Posts have been overstretched and have not had
the capacity to handle an increased workload. We are already filling
jobs that have been vacant. In the FCO's internal Resource Allocation
Round (RAR), Ministers approved new jobs in London and overseas
so that the UK can strengthen its diplomatic effort in response
to evolving opportunities and threats.
7. Taken together, this action will mean placing
200 more FCO UK-based staff into jobs handling high priority issues.
Including new locally-engaged staff (LE) overseas gives a total
of 375 more staff. LE staff will be given a greater role in helping
the FCO deliver its policy objectives. The table at Annex E sets
out the planned changes in total authorised slots for UK-based
staff over the next two years.
THE NETWORK
OF POSTS
8. The UK currently maintains diplomatic relations
with 184 countries, through 220 Posts with UK-based staff in 145
countries. Of these, 90 Posts are mini-Missions with four or fewer
UK-based staff of which 20 Posts have one only. We also have 33
Posts with LE staff only. Annex F gives a breakdown of the types
of Post. Running our network of Posts cost £516 million in
1997-98. This figure includes the salaries of 2,336 (April 1998)
UK-based jobs overseas, including 200 jobs filled by members of
other government Departments; about 7,800 locally-engaged staff;
and items such as accommodation, allowances and travel.
9. Posts' key tasks, in representing British
interests and the British Government, include:
(a) to negotiate multilaterally and bilaterally,
for example on EU matters, preventive diplomacy (crisis management,
negotiated settlement of disputes), global issues (drugs, environment,
human rights, arms control), and trade policy;
(b) to identify and influence decision-makers;
(c) to analyse and predict political and
economic events, and make recommendations to London for Ministers,
Whitehall, Parliament, British exporters and the travelling public;
(d) to help sell British goods and services
abroad and attract foreign investors to Britain;
(e) to sell Britain abroad, for example,
in the fields of exports, English language teaching, scientific
know-how, good governance and human rights;
(f) to mobilise international opinion in
the UK interest (the British Council and BBC World Service make
a strong contribution in this area);
(g) to provide efficient services to the
increasing number of Britons abroad;
(h) to facilitate travel to the UK by genuine
visa applicants while screening out would-be illegal immigrants.
10. We are using our increased funding allocation
to strengthen our network of Posts. We are concentrating on areas,
and objectives, to which Ministers attach priority. In particular
we aim to:
(a) strengthen our support for exporters,
and our effort to attract inward investment to the UK by creating
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new jobs around the world, mainly in priority markets;
(b) support a step-change in relations with
other EU member-states, strengthening UK influence in key EU policy
debates and maximising benefits for British business from the
Single Market: 33 new jobs in EU Posts;
(c) increase our ability to influence decision-making
in EU and NATO applicant countries on issues directly relevant
to the UK: 21 new jobs;
(d) reinforce hard-pressed Posts in the new
independent states of the Caspian and Central Asian regions: 25
new jobs;
(e) reduce pressure on visa-issuing Posts
by creating 46 new UK-based entry clearance jobs;
(f) add staff in other priority areas, including
in the UK.
11. We plan, subject to the agreement of host
governments to open eight new Posts in the Far East, West Africa,
the Caribbean and the Pacific. Three existing Posts—Bangalore
(India), Gothenburg (Sweden) and Nagoya (Japan)—which currently
have only locally engaged staff will be strengthened by the addition
of UK-based staff.
12. At the same time, five Posts will be closed—the
Consulate in Cleveland, Ohio, the offices in Chiang Mai, Kuching
(closed November 1998), and the LE Posts in Seville and Pusan.
The ongoing annual saving will be over £600,000, which will
be used to help fund network enhancement elsewhere. Work will
be consolidated in capitals or neighbouring Posts.
SERVICES TO
BUSINESS AND
THE PUBLIC
13. UK exports of goods and services account
for around 27 per cent of GNP. The promotion of trade and investment
is the FCO's single largest activity overseas: we devote 30 per
cent of our resources and over one-third of overseas staff time
to Objective 2 (improving economic opportunities for the UK).
The results of an interdepartmental review of the structure of
export promotion will shortly be announced.
14. Through the Invest in Britain Bureau (run
jointly with DTI), we aim to maintain the UK as the prime location
in Europe for foreign direct investment. We plan to deploy further
staff, dedicated solely to Inward Investment work, in Canada (Toronto),
Sweden (Stockholm) and Japan (Nagoya).
15. In 1997-98, UK citizens made nearly 47 million
visits overseas (9 per cent more than in the previous year and
a record). The five-year period 1992-93 to 1997-98 saw a 38 per
cent increase in the number of overseas visits, and an even higher
increase in demand for consular services. In addition, about 14
million British nationals are resident abroad.
16. The FCO's Consular Division in London handled
18,849 cases of assistance (up 4 per cent). In 1997, 687 FCO Consular
staff overseas carried out statutory (fee-bearing) and non-statutory
(non-fee bearing) functions. The former include issuing passports
and registering births and deaths. The latter include help to
Britons in trouble (the FCO's PSA target for consular work is
that 98 per cent of Posts should meet Citizens' Charter standards
for visits to UK citizens in prison or hospital). In 1997-98 the
FCO recovered the full cost (£5.1 million) of the fee-bearing
services. The £41 million cost of all other consular activity
overseas is met by an element in UK passport fees.
17. Key figures on consular work are at Annex
G. Demand is increasing. So we have to get more value for money
from available resources, using developments in IT to sustain
the level of service. This means increased use of locally-engaged
consular officials; of the Internet; and better links with UK
travel and insurance companies.
18. The FCO runs pre-entry clearance operations
at its 161 visa-issuing posts overseas (Freetown and Khartoum
have been excluded from this figure as, even though they have
not been formally closed, we have suspended such operations at
these missions). Statistics on Entry Clearance services are at
Annex H. In 1998 we handled 1,495,360 UK visa applications worldwide.
Applications increased 9 per cent over 1997. The refusal rate
was 5.6 per cent. The FCO's PSA target for visa work is to take
decisions on 90 per cent of non-residence visa applications within
24 hours. We expect to recover all the costs of the entry clearance
operation in 1998-99, without any increase in fees: projected
income is around £67 million. We and the Home Office have
agreed to create a joint structure for the management of the visa
operation.
19. We plan to introduce net running cost regimes
for consular and entry clearance work in April 2000.
INTERNATIONAL ORGANISATIONS
AND PEACEKEEPING
20. An active UK voice to achieve our objectives
in the UN, NATO, the Commonwealth and other major international
organisations is a high priority for the Government. Subscriptions
(total £92.6 million in 1997-98) are mandatory under international
law. Our policy is to pursue zero real growth in the regular budgets
of international organisations, building coalitions with like-minded
states to insist on a continuing review of priorities and the
scope for efficiency gains. But increased activity in the post-Cold
War period (e.g., the expanding roles of the UN, NATO and OSCE)
puts pressure on costs, and therefore on the FCO's own budget.
21. The UK is a major contributor of personnel
to UN-authorised and UN-led peace support operations. In 1998
Britain was the fifth largest contributor to the UN's peacekeeping
budgets, meeting 6.2 per cent of the $1 billion total. There are
special arrangements for funding the FCO's contribution to peacekeeping—Annex
A.
DISCRETIONARY PROGRAMMES
22. Our spending on discretionary programmes
in 1997-98 totalled £85 million (including £12.5 million
from DFID—see below). The four largest areas are: scholarships;
promotion of human rights; ASSIST (Assistance to Support Stability
with in Service Training), which funds training for overseas military
and police forces within a framework of civilian democratic governmental
control and human rights, peacekeeping training; and anti-drugs
programmes. (The Chevening scheme, which accounts for most of
the scholarship programme spend, includes £12.5 million which
has in the past been transferred annually from DFID to the FCO
as an appropriation-in-aid.) 1998-99 programme spending has stayed
at broadly the same level in real terms.
23. We are now reviewing allocations for future
years. We shall maintain a strong focus on global issues, and
in particular programmes to strengthen human rights, environmental
protection and the fight against drugs and crime. We also aim
to maintain at least current levels of spend on scholarships.
The ASSIST programme is being monitored carefully to ensure that
engagement with overseas military and police serves primarily
our objectives of promoting human rights and good government,
international peace and security and the international fight against
crime, drugs and terrorism. The FCO co-operates increasingly closely
with other Government Departments with an international element
in their programme spending, notably MoD and DfID.
INVESTMENT STRATEGY
AND EFFICIENCY
24. Capital assets provide the global infrastructure
for the FCO's policy capacity, and for delivering services to
business and the public. The total value of FCO assets is £1.188
billion. FCO investment decisions apply value for money criteria
to choices between rental and purchase; between conventional and
PFI/PPP funding; and to spend-to-save proposals such as for new
IT. For RAB (Resource Accounting and Budgeting), we shall run
a rolling (five year) revaluation programme on the overseas estate.
25. Key performance indicators (e.g., return
on capital employed, existing use value as percentage of open
market value) are applied to properties within the estate to help
determine the best economic mix of owned, rented and PFI properties.
Performance indicators are also being developed for IT (e.g.,
whole life costs against whole life benefits, various quality
measures).
26. We gained Treasury agreement in the CSR
to an asset recycling agreement under which the FCO can retain
up to £90 million of gross receipts from asset disposal over
three years (financial years 1999-2000 to 2001-02), re-investing
in FCO capital projects. Work is proceeding on a detailed rationalisation
programme: we have already negotiated two major sales, in Bonn
and Dublin, and are well on the way to achieving our first year's
target of £30 million.
27. In 1998, the FCO concluded a PFI contract
for a new Embassy in Berlin, which will be opened in 2000. The
award-winning design includes public access areas and exhibition
space. A preferred bidder was appointed for the Global Telecommunications
PFI Project to replace the existing FCO messaging systems and
provide modern and reliable communications between the FCO and
posts. The FCO will pursue a PFI/PPP project for post-millennium
IT support, maintenance and replacement.
28. In London a programme of estate rationalisation
is underway. The Old Admiralty Building will be renovated by autumn
2000 as part of a spend to save programme. By the end of 2000
we aim to have given up all rented office accommodation in central
London. We expect to halve the annual running costs of the home
estate by 2001-02, saving approximately £10 million per annum
(this includes gross annual savings of £9 million on rents
and rates compared to the provision made in FY 1997-98). The FCO
internal market for support services will be further developed
by bringing all FCO service providers together into a single Service
Organisation and devolving more budgets to front-line staff taking
policy decisions. Arrangements for charging other government Departments
the full cost of support services will be completed. £12
million savings will be made on procurement. In 1998, the FCO
let a Facilities Management contract for the UK estate. 1998-99
savings were £0.3 million; significant further savings are
expected.
BBC WORLD SERVICE
29. The BBC World Service is the world's leading
international radio broadcaster, reaching about 138 million listeners
each week through broadcasts in English and 43 other languages.
The World Service operates under the BBC's 1996 Royal Charter
and Agreement and is editorially independent of government.
30. The World Service is financed by the FCO
through a grant-in-aid, which stood at £161 million in 1998-99.
The CSR provided additional funding of £44 million for the
three year period 1999-2000 to 2001-2002, an increase in real
terms of 3.9 per cent. This reversed several years of decline.
The CSR settlement included £14 million for the construction
of a replacement transmitter station in Oman. Figures at Annex
J(i).
31. The FCO and the BBC World Service have agreed
to establish a new relationship to reflect international technological,
political and commercial developments. This will guarantee the
World Service's editorial freedom. It will focus on identifiable
outcomes established by the World Service on a regional basis,
reflecting the Government's overall foreign policy objectives.
The new arrangements will meet the requirements of Resource Accounting
and Budgeting, and include measures for performance monitoring.
See Annex J(ii) and J(iii).
32. The World Service is committed to pursuing
energetically alternative sources of revenue, including through
advertising within the constraints of the BBC Charter, and benefits
in kind (e.g., rebroadcasting arrangements with other media organisations).
It already generates revenue of around £7 million through
a variety of such activities.
33. In its Three Year Plan for the period 1999-2000
to 2001-2002 the World Service outlines ambitious plans aimed
at maintaining its leading position as an international broadcaster.
Three key areas for new investment will be on-line, FM broadcasting,
and development of English language programming. Short wave will
remain a core output and the World Service will continue to broadcast
in over 40 languages. The World Service proposes however to close
the German service, following research showing the weekly audience
in English is three times higher than that in German. There will
be an increased emphasis on FM broadcasting in English to Germany.
34. The 1996 BBC re-organisation integrated
the World Service more closely into the BBC, putting more on a
customer/supplier basis the relations between the World Service
and the BBC's central supplier directorates. The latter now produce
all news and most English language programmes, and provide technical
and support services. The World Service continues to produce all
foreign language programmes and some regionally targeted programmes,
and it commissions work from independent production companies.
The World Service is committed under the FCO's Public Service
Agreement to achieve 7 per cent (£25 million) efficiency
savings in the next three years, following this restructuring.
BBC MONITORING
35. BBC Monitoring monitors and reports the
output of foreign broadcasting stations and other media. It became
a business unit funded by four stakeholders (FCO, MoD, World Service
and the Cabinet Office) and by the subscriptions of its users
in 1997-98. Until then it was funded by grant-in-aid. FCO remains
the sponsoring Department. FCO and MoD pay a 40 per cent stake,
World Service 19 per cent and the Cabinet Office 1 per cent. The
FCO's share for 1999-2000 will be £7.2 million and for the
other two years of the CSR settlement £7.4 million and £7.6
million; this equates to level funding in real terms. See Annex
J(iv). Monitoring derives further income from the sale of its
products to Whitehall and the private sector.
BRITISH COUNCIL
36. The British Council, a Non-Departmental
Public Body incorporated by Royal Charter, runs 230 offices in
109 countries. About half the British Council's £415.9 million
funding (1998-99 estimate) comes from government (breakdown of
all sources of funding at Annex K(i)). The Council used to receive
grants-in-aid from both FCO and DfID (outturn for 1997-98, £96.2
million from FCO and £29.8 million from DfID). Transfer of
the DfID grant-in-aid to FCO was agreed during the Comprehensive
Spending Review, and took effect in this financial year, when
the amalgamated grant-in-aid will equal £127.3 million. Following
the CSR, FCO allocated the Council an increase in the FCO element
of the grant-in-aid equivalent to the FCO's own funding increase—i.e.,
around 2 per cent in real terms over the three year period. FCO
and DfID Grants-In-Aid to the British Council are at Annex K(ii).
37. The Council's aim and objectives are attached
at Annex K(iii). The British Council will in future report on
grant-in-aid spending by FCO objectives as well as by geographical
region, so providing a firmer basis for discussion of policy priorities.
Annex K(iv) contains a breakdown of BC funding by activity, and
by geographical region.
38. In 1998-99 the Council carried out a fundamental
review. A revised strategy was adopted, aimed at focusing the
Council's work around a single, clear purpose: "To enhance
the reputation of the UK in the world as a valued partner".
Main elements include: working with the FCO and others to ensure
a more co-ordinated approach to the promotion of the UK abroad;
managing the Council's grant-funded and paid services to meet
shared objectives; using geographical priorities agreed with the
FCO to inform allocation of resources; targeting younger, wider
audiences; focusing on six core sectors (education, English language
teaching, the arts, information, science and technology, and governance
and human rights); and managing all Council services to corporate
quality standards.
39. The FCO's Public Service Agreement commits
the British Council to keeping corporate overheads as a proportion
of the total turnover below 5 per cent over the period until 2001-02.
WILTON PARK
40. The Wilton Park Conference Centre, an Executive
Agency, organises conferences on matters of international concern.
It recovered 84.6 per cent of its costs in 1997-98 and has as
an objective "to meet the costs of its operation as far as
possible through Wilton Park Conference fees and co-sponsorship,
and thereby to reduce the level of FCO sponsorship".
1 Figures above include both UK based and LE staff.
Some of the numbers overlap-e.g., certain new jobs in the Caspian
also score as new commercial jobs. Overall staff totals are at
para 7. Back
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