Select Committee on Foreign Affairs Minutes of Evidence

Memorandum from the Foreign and Commonwealth Office


  1.  A list of all properties in the overseas estate which were sold or offered for sale in Financial Year 2001-02 is attached at Annex [1]. The list includes the following details:

    the open market valuation of the property prior to sale

    the original asking price

    the agreed selling price (except where no sale was concluded)

    the net receipts from the sale

    the reason for disposal of the property

    the consequences of disposal for the Post.


  2.  FCO policy is that receipts from asset sales (not only property sales) should be recycled within the FCO's investment programme. In principle, up to half of the asset recycling receipts in the current Spending Review period (2001-02 to 2003-04) will be reinvested to support our information and Communications Technology (ICT) strategy. The remainder will be allocated to investment in our estate, to help fund the Estate Modernisation Programme.

  3.  The FCO's investment plans for the current Spending Review period are constructed on the assumption that our asset sales target will be met over the three-year period and that gross asset sales receipts will in practice be split equally between reinvestment in the estate and ICT. Our investment plans for the next Spending Review period (2003-04 to 2005-06) still assume an equal split of sales receipts between re-investment in the estate and ICT. However, with effect from 2004-05, the net sales receipts, ie after taking into account the costs of estate reprovisioning, will be split.

  4.  The investment plans for the current Spending Review period were described in Chapter 12: "Asset and Investment Management", of the Department Report for 2001 (Cm 5110). In particular, the Foreign Affairs Committee may wish to note the contents of Table 31, page 112 of the 2001 Departmental Report, which set out our investment plans in detail. The FCO has made a good start in implementing these plans, with £41 million from property sales reinvested in 2001-02.

  5.  These revenues were retained by the FCO. The current agreement between the FCO and the Treasury allows the FCO (and the British Council and the BBC World Service) to keep up to £100 million of asset sales revenues over the current Spending Review period. The FCO have proposed a similar arrangement for the next Spending Review period. Should asset sales revenues in any triennium exceed the limit agreed with the Treasury, the FCO would argue strongly that it should nevertheless be allowed to retain all such revenues.

  6.  It is not possible to identify expenditure against income from each individual property sale as all receipts are returned to the centre in the first instance. The funds for reinvestment in the estate were combined with the existing estate capital budgets to fund a programme of estate improvement projects, in accordance with the Departmental Investment Strategy. The first call on such funds is the purchase, where required, of replacements which fully meet the operational requirements of the Post concerned. Major new investment in 2001-2002 included offices in Accra (visa offices), Beirut, Boston, Caracas, Dar es Salaam, Lima, Los Angeles, Sofia Tunis and Yerevan and upgrading staff accommodation in New Delhi.

Foreign and Commonwealth Office

May 2002

1   Not printed. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 14 November 2002