Memorandum from the Foreign and Commonwealth
Office
SALES OF
PROPERTIES IN
FINANCIAL YEAR
2001-02
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.
USE OF
PROCEEDS FROM
PROPERTY SALES
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
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