Consul-General's Residence in
San Francisco
66. In 2001, the Foreign Affairs Committee raised
the issue of the proposed sale of the Consul-General's Residence
in San Francisco with the then Permanent Under-Secretary, Sir
John Kerr.[98] He told
Members that he was not sure that the current house's "home
counties, 1920s atmosphere is exactly right for a Silicon Valley
… Maybe we are not quite right with our Great Missenden image
in a San Francisco home." This was in contradiction to a
letter from the then Chief Executive of British Trade International
(BTI), Sir David Wright.[99]
He described the Residence as "an integral part" of
BTI's operations in the city, offering a useful venue for lunches,
seminars, meetings, etc. (the Consular Office in San Francisco
being too small for such events).
67. Earlier this year the FCO announced that the
current property was to be sold and a smaller house purchased
in another suburb of the city. In its memorandum to the Committee,
the FCO said the current property was "oversize and does
not provide value for money."[100]
68. A number of individuals and groups have lobbied
forcefully for the retention of the Residence as part of the FCO
estate, however, most notably the British American Chamber of
Commerce.[101] In April,
it wrote to the Committee to protest against the purchase of this
"much more inferior residence," which they argued was
more suitable as a "modest family residence" than a
consular residence on a par with other delegations.[102]
It believed that the work of the Consul-General, and the UK's
image more generally, would suffer significantly by the sale and
that it could ascertain little financial benefit to the FCO.
69. The Permanent Under-Secretary disagreed with
the concerns raised by the British American Chamber of Commerce,
and others, when he came before the Committee. He told us that:
The residence in San Francisco, the Consulate-General,
the present one, is a large and rather splendid building; it is
larger than we need, and we would not be able to keep it in the
condition in which it would need to be kept if really it was to
be a good advertisement for Britain. So I am quite clear in my
own mind, having visited it, the right thing to do is to sell
it and to move into what we believe is a very good, fit for purpose
but smaller building.
He also assured the Committee that the new offices
which the consulate had moved into recently, were superior to
the previous ones and would provide many of the facilities lost
by the sale of the current residence.
70. Despite the Permanent Under-Secretary's evidence
on the sale of the Residence, we remained concerned about the
decision to sell the building and asked for further written and
oral evidence from the Department. After two requests, we were
eventually shown the discounted cash-flow analysis used by the
FCO to assess the different options relating to the Residence
(retain existing building, buy a new one or rent accommodation)
and took oral evidence from the key officials involved on 14 October.[103]
We also received a very helpful memorandum from the Comptroller
and Auditor General on the matter.[104]
71. From the evidence we saw, the Committee was able
to conclude that the Office had acted with all propriety throughout
the process of selling the old Residence and buying its replacement,
with due regard for the guidelines set down by HM Treasury on
such matters. We raised a number of concerns about the detail
of the sale and the new building, for example about disabled access,
and, on the whole, were satisfied by the answers we received.[105]
We also note that the sale will free up approximately £2
million for immediate re-investment in the estate and ICT, and
roughly £230,000 in annual costs; this is a significant sum
for the FCO.[106]
72. It remains true, however, that the sale of the
Consul General's Residence in San Francisco represents a significant
loss to the FCO's overseas estate and to its diplomatic representation
in the USA. The new residence is smaller, less versatile, further
from the city centre and a far less impressive building. It can
only be seen as a downgrading of the status of the UK's presence
in one of the most important cities in the USA for British trade
and investment. The short-term savings that will be made do not
make up for the loss of an appreciating asset that has been a
prestigious part of the FCO's estate for 50 years and which, now
sold, can never be regained.
73. We also note with concern that, in spite of assurances
given to the Committee previously, simple finances seem to triumph
over all other considerations in decisions made in the recycling
programme. In its 2002 Report on the Annual Report, the Committee
recommended that "the Government ensure that the contribution
of a building or location to the effectiveness of British diplomacy
is given paramount importance when deciding its future".[107]
In its Reply, the Government assured the Committee that "all
factors" were taken into account when considering which properties
to recycle, including "intangible elements such as the historical
associations of a building or how it is viewed by the local community".[108]
74. However, when the Committee raised this matter
with the FCO earlier this year, Sir Michael stated in his reply
that: "the intangible costs and benefits of making a move
are not easy to quantify ... there is no precise mechanism for
reaching a conclusion when subjective views differ".[109]
These were not included, therefore, in the financial comparison
of the options shown to the Committee, and were apparently ignored
in the decision whether or not to sell the Residence. We fear
that this disregard for such key factors as the location, history
or status is being repeated across the recycling programme.
75. We conclude that the sale of the Consul General's
Residence in San Francisco is another deeply regrettable result
of the Foreign Office's misguided asset recycling programme. FCO
managers should not have been placed in a position where they
had to sell this key diplomatic asset for short-term financial
gain. The damage done to British interests in San Francisco, and
the USA, will undoubtedly be significant and felt long after the
lump sum gained for the Office by its sale has been spent.
British Embassy, Prague
76. During the course of its regular scrutiny activities,
the Committee received reports that the FCO was considering the
sale of its Embassy in Prague. This is currently housed in the
15th Century Thun Palace, in the centre of the city and its work
was highlighted in this year's Annual Report.[110]
77. We questioned Sir Michael about the veracity
of these reports and were very disturbed to hear that the Embassy
was indeed being examined as a possible target for the asset recycling
scheme.[111] However,
the Permanent Under-Secretary assured the Committee that no firm
decision had been made at that time and that the need to have
"good-quality, well-placed, centrally-located offices and
residences around the world" would be given serious consideration.[112]
78. We strongly recommend that the current historic,
irreplaceable, centrally-located Embassy building in Prague be
retained as part of the FCO's estate and not sacrificed to the
asset recycling programme. Its loss would inevitably be a serious
blow to British prestige and interests in this key European country
and partner, which by May of next year will be a full member of
the European Union.
79. It is of grave concern to this Committee that
we only heard about the possible sale of the Prague Embassy by
chance. Given our long-standing concerns about the asset-recycling
programme, particularly as it has now reached the stage of considering
the sale of assets that are "performing well at present,"
we would hope to be fully informed in the future.[113]
We recommend that the Foreign Office identify those properties
which, like the Prague Embassy, are being considered as possible
asset recycling targets and provide a full list, in confidence
if necessary, to the Committee. We would expect this list to be
updated by regular memoranda to the Committee in the future, say
on a six-monthly basis.
86 Departmental Report 2003,
p 138 ff. Back
87
Ibid., p141 Back
88
For example, see: Foreign Affairs Committee, Twelfth Report of
Session 2001-02, Foreign and Commonwealth Office Annual Report
2002, HC 826, paras 53-62. Back
89
Departmental Report 2003, p 141 Back
90
Also see: Departmental Report 2003, p 141. Back
91
Ibid. Back
92
Ev 65, para 24 Back
93
Ev 65, para 25 Back
94
Q 86 ff. Back
95
Q 87 Back
96
Q 88 Back
97
Q 165 [Collecott] Back
98
Foreign Affairs Committee, Ninth Report of Session 2000-01, Foreign
and Commonwealth Office Annual Report 2001, HC 428, QQ 130-132 Back
99
Ibid., appendix 2 Back
100
Ev 65, para 27 (also see Ev 84). Back
101
Ev 125 and Ev 126. Letters have also been received by the Committee
and individual Members from other correspondents (not printed). Back
102
Ev 125 Back
103
Q 107 [Jay]; Ev 84; Ev 95; Ev 19 Back
104
Ev 129 Back
105
Q 144 [Coates] Back
106
Q 117 [Metcalfe] Back
107
Foreign Affairs Committee, Twelfth Report of Session 2001-02,
Foreign and Commonwealth Office Annual Report 2002, HC
826, para 56 Back
108
FCO, Foreign and Commonwealth Office Annual Report 2002: Response
of the Secretary of State for Foreign and Commonwealth Affairs,
Cm 5712, p 6 Back
109
Ev 96 Back
110
See: www.britain.cz/en and Departmental Report 2003, p
98 Back
111
Q 97 Back
112
Q 96 Back
113
Departmental Report 2003, p 141 Back
