Supplementary Memorandum from the Foreign
and Commonwealth Office in response to further questions from
Q 1. What information does the Government
hold on US aid to countries of the former Soviet Union under the
Nunn-Lugar Act? Is the Government pressing the US to reverse its
cuts in funding under the act? If the cuts are not reversed, will
the Government propose that the EU make up the shortfall?
1. The Government does not hold information
on US aid to countries of the former Soviet Union under the Nunn-Lugar
Act other than that which is already in the public domain. Factual
information about Cooperative Threat Reduction (CTR) programmes
(usually known as Nunn-Lugar, although that term more accurately
refers only to Department of Defense programmes) is available
from the websites of the Defense Threat Reduction Agency, State
Department (Russia page) and Department of Energy, at the following
2. Work is still underway in Congress on
the Administration's budget request for Financial Year 2002, which
included a proposed reduction from $872M to $774M for Department
of Energy funding. Department of Defense and State Department
funding for Cooperative Threat Reduction would be comparatively
unchanged. Congress has yet to respond to the request.
3. We are in close touch with the US about
non-proliferation programmes. We attach great importance to the
significant contribution that the US has made to non-proliferation
in the former Soviet Union with nuclear, chemical and biological
weapons projects, and we are keen that this should continue.
4. We do not wish to pre-judge the outcome
of the US funding review. The Government co-operates closely with
our EU partners and with Russia to tackle the environmental, security
and proliferation threats posed by the former Soviet Union's nuclear
legacy. We have allocated a cross-departmental budget of £83.8m
for the years 2001-2004 for this purpose. We have also committed
£12m over three years to chemical weapons destruction and
biological non-proliferation projects in Russia.
5. EU countries already contribute to Russian
non-proliferation projects. The UK Government does not hold information
on bilateral non-proliferation programmes of assistance between
individual EU member states and Russia. The EU itself is contributing
around 6.5 m euros per annum through the Common Foreign and Security
Policy budget to non-proliferation projects in Russia. This is
split between destruction of stocks of chemical weapons and the
secure disposal of nuclear fissile material. We judge that it
would be difficult for the EU to make up any potential shortfall
in US funding, given that the mooted $98m cut in Department of
Energy programmes alone is many times greater than the current
total EU budget for this area. Our response to changes in US non-proliferation
funding, including our approach to EU non-proliferation funding,
will necessarily depend upon the decision to be made by Congress
in this regard.
Q 2. What is the Government's policy on the
Outer Space Convention 1967? Is the Government aware of any proposal
by the US to amend the Convention in order to accommodate missile
defence, or for any other reason?"
6. We are parties to and support the Outer
Space Treaty. The Treaty prohibits the deployment of weapons of
mass destruction in space and military activity on the moon and
other celestial bodies.
7. We are not aware of any proposal by the
US to amend the Treaty in order to accommodate missile defence,
or for any other purpose. None of the proposals we have seen put
forward by the US for a missile defence system would violate the
terms of the Outer Space Treaty. These proposals include the deployment
of space-based sensors, and continued research into two space-based
systems utilising a laser and a "hit-to-kill" interceptor.
Neither system under research would fall into the category of
a weapon of mass destruction nor would it be intended for deployment
on celestial objects. It should be noted that the US has made
no decisions on what missile defence system it will deploy.
Q.3 Further to the supplementary paper already
received on the UK's diplomatic estate in the US: please supply
more detailed information on the location, role and value of the
US properties sold so far in 2001-2002; please supply similar
information on the planned disposals of US properties up to end
of FY 2003-2004; and please set out more fully the criteria which
are applied to such sales in general, and how they have been applied
in the cases of San Francisco and New York residences in particular.
The location, role and value of the US properties
sold so far in 2001-2002 and the planned disposals up to the end
of FY 2003-2004.
8. A list of the properties in the FCO Estate
in the USA which have been or are due to be sold, in the financial
years 2001/2002, 2002/2003 and 2003/2004 is attached at Annex
The list gives the function of each unit of accommodation and
9. Except for houses for Heads of Mission,
individual units of residential accommodation are not reserved
for officers in a specific job. Housing is allocated by the Post,
to a standard which is appropriate to the officer's grade, function
and family circumstances, in accordance with guidelines laid down
in Diplomatic Service Procedure.
10. The table shows totals for the proceeds
of sales to date and for estimated future receipts from sales.
It is not FCO policy to reveal details of price and other terms
agreed in individual sales transactions, as these may be commercially
sensitive, even after a sale has been agreed.
How are properties selected for disposal?
11. Apart from the obvious trigger of staff
reductions or other changes in operational requirements, disposal
may be prompted by various types of under-performance.
The estate is monitored through a set of Key Performance
Indicators (KPIs) which help to identify under-performing properties.
The KPIs are assessed and updated from data obtained from the
routine (triennial but with annual updating) estate revaluations
carried out by independent professional experts. They address
various aspects of the performance of individual properties:
Whether the economic potential of
a property is being fully exploited by the FCO;
Whether a property asset is providing
an adequate return on capital invested, as measured in terms of
How the Annual Resource Cost (ARC)
of a freehold property (i.e. the capital charge and depreciation
costs) compares with the cost of leasing an equivalent alternative;
How the size of residential accommodation
compares with the standard for the grade of the officer housed;
What density of occupation we achieve
in our offices;
How the net useable floor space in
office buildings compares with gross internal area;
Whether buildings are in good condition
Whether properties are fit for purpose
(e.g. compatible with needs of modern IT) and provide adequate
12. The benchmarks that we apply within
the KPIs are:
the Treasury's Test Discount Rate
(6% per annum calculated in constant prices);
the average rent in the local market
for that type of property;
the FCO's local rent ceiling for
a particular grade of Diplomatic Service (DS) officer and ;
the FCO's space standard for a particular
grade of DS officer.
13. Any individual KPI can be compared with
the average (calculated across a region or worldwide) for the
same type of property on our estate, to determine whether the
property in question is above or below average.
14. The KPIs are not however treated as
conclusive in themselves, and the FCO is careful to arrive at
a balanced overall picture of a property before reaching any firm
conclusions. Underperforming KPIs will therefore prompt a fuller
examination of a property's performance, including a check on
the accuracy of the underlying data. If under-performance is then
proven, and is not counter balanced by significant benefits, disposal
(or further development of a property to intensify its use) may
How do the KPI's apply in the cases of the Residences
of the Consuls-General in New York and San Francisco?
15. In both cases the main issue has been
the capital value of the property, and hence its Annual Resource
Cost. In addition, the Residence in San Francisco is some 240
% bigger than the FCO's normal space standard for a Head of Post
of the grade in question. While the representational areas of
the house are operationally very effective and well used , the
bedrooms and private residential areas of the house are much bigger
16. In the case of New York, the
CG's apartment was last valued, informally in March by a local
agent, at US$ 15 million (£ 10.55m). This figure would produce
an annual capital charge of £633.000, in addition to which
the Treasury levies a depreciation charge of £211,000 per
annum (total £844,000). A more suitable property, approved
by the Consul General, can be purchased for US$ 9.3 million (£6.57
million), producing a combined capital and depreciation charge
of only £525,600 per annum, so there can be little doubt
that moving makes good sense for the taxpayer. In San Francisco
the total capital charge (ARC and depreciation) on the present
Residence is £743,000. We have yet to identify a suitable
alternative property for the CG in San Francisco. We shall only
dispose of the present property if we can identify a suitable
alternative which both meets all the operational requirements
of the Post and offers value for money to the taxpayer.
Foreign and Commonwealth Office
5 See Evidence, p 47. Back