Supplementary memorandum submitted by
the Foreign and Commonwealth Office
Letter to the Chairman of the Committee
from the Permanent Under Secretary of State, Foreign and Commonwealth
Office, 15 July 2003
1. Thank you for your letter of 25 June,
enclosing questions which we did not have time to discuss at my
evidence session on the FCO Departmental Report at the Committee
on 24 June.
As requested, this letter also covers the supplementary
material I promised during the evidence session.
2. I mentioned at the evidence session a
number of FCO achievements over the past year. In particular:
— We have made a huge effort on Iraq.
We redeployed 5% of our London staff into Emergency Units, and
we were one of the first countries to send diplomats back to Baghdad.
The United Kingdom's Special Representative, John Sawers, is playing
a key role alongside Iraq's civil administrator, Paul Bremer;
— We continue to play a major role
in the fight against terrorism: Sir Jeremy Greenstock's chairmanship
of the UN Counter-Terrorism Committee; and helping Greece to defeat
N17—the group responsible for the murder of Brigadier Saunders;
— We are working for peace in the Middle
East: the conference hosted in January helped pave the way for
Abu Mazen's appointment as Prime Minister and the publication
of the Road Map.
3. Aside from the foreign policy field,
we are delivering high quality commercial, consular and visa services:
— BTI are increasingly successful in
their support for UK companies abroad and bringing foreign investment
into the UK;
— UK visas is responding well to a
growing demand, handing almost two million visa applications last
year, up 9% on the previous year;
— We help over 53,000 British nationals
each year, and cover over 1,000 new consular cases each week.
4. Our responses to the questions in your
letter are as follows:
Question 1: The Annual Report shows that
the Department now employs nearly 10,000 locally-engaged staff.
This is an increase of some 1,000 over the past two years. Why
have the numbers increased and how do you ensure that these staff
are appropriately rewarded and managed while they are employed
at the Posts?
The increase in local staff numbers over the
last two years is primarily a reflection of tighter reporting
requirements. Since 2000-01, Posts have for the first time been
required to include staff employed on behalf of other government
departments in statistics. There have also been increases in FCO-funded
staff, most significantly in the area of security where, since
9/11, large numbers of guards hitherto employed on contract or
casual terms (and not featuring in statistics) have been taken
on as Posts' direct employees. There has also been an increase
in local staff numbers working in Entry Clearance, Consular and
Commercial work, reflecting a trend towards localisation of jobs
hitherto done by UK-based officers and additional visa regimes.
Fee-bearing work of Consular and Entry Clearance Sections are
intended to be self-funding.
All locally-recruited staff appointed to an
established job at one of our Posts are paid at the rate appropriate
to their grade. World-wide, there are five LE grades (LEI-LEV)
with subdivisions at LEV (drivers, cleaners, guards, messengers)
and, at a few posts, at LEIII (secretarial, clerical). Grade nomenclature
may vary, for example, in the US, but the structure remains the
same.
In accordance with Treasury guidelines, pay
scales are matched to the local going rate to recruit, retain
and motivate staff, measured against one or more similar marker
organisations, employing staff undertaking comparable work. Conditions
of service are set by reference to local law and again by comparison
with the generality of local practice. It is the responsibility
of UK-based Management Officers, acting under the supervision
of Heads of Post, to undertake the necessary local research and
seek approval from the FCO for salary enhancements, and to set
conditions of service. Posts enjoy local discretion as to where
to pitch salaries within the approved maxima.
However, Heads of Post will shortly be given
greater autonomy in setting the pay and conditions package of
their local staff within budgetary limits set by London at the
beginning of the Financial Year. The criteria to be adopted will
be affordability and sustainability, with resources tailored closely
to the motivation of staff and achievement of objectives.
The Management of Staff overseas is governed
by a Charter of Principles and written Guidance issued by the
FCO to all Posts. All local staff, irrespective of grade and function,
are part of a management structure governed by the achievement
of agreed objectives, and subject to a personal appraisal system.
Line managers may be local or UK-based staff depending on the
size and structure of the Post concerned.
In recognition of the increasingly important
role being played by Local Staff, the FCO will be investing more
resources in developmental training.
Question 2: How are pay and conditions set
for locally-engaged staff employed at your posts by other Government
Departments (MOD, DfID etc)? Is there a danger that two members
of staff doing exactly the same job at a post, such as a driver
or guard, could be paid differently because they are employed
by different offices? Does this create difficulties?
The convention has been that where an FCO Post
is the largest employer other Government Departments match the
pay and conditions of their locally-recruited staff to those authorised
by the FCO. In the few places where another Department is the
largest (lead) employer, then the FCO's employees will enjoy the
other Department's agreed pay and conditions.
In recent years we have found that other Departments,
with greater budgetary flexibility, have found the pay and conditions
at a few Posts a constraint on their ability to recruit and retain
the local personnel they need. There have in consequences been
some instances of a Department going it alone
The FCO is in discussion with the Departments
concerned about maintaining uniformity of approach to pay and
conditions for co-located locally-engaged staff.
Question 3: Aside from the rights of some
staff to receive terminal benefits when they leave, do any of
your locally-engaged staff belong to funded pension schemes for
which the Department would have to make up any financial shortfall
where the value of scheme assets did not cover its estimated liabilities?
What is the total current value of assets and liabilities for
any such schemes?
Yes. Defined Benefit Pension Schemes are in
place in a few countries. Up to date actuarial valuations for
the four largest schemes are set out below. The data has been
received from Independent Actuaries for the year indicated, adjusted
to reflect exchange rates at the year-end:
| Date of Valuation
| Fair value of assets | Present value of Future liabilities
|
| Canada | 2002 | £ 3,555,000
| £ 3,503,000 |
South Africa | 2003 |
£ 3,285,000 | £ 1,401,000
|
USA | 2002 | £25,301,000
| £36,274,000 |
Irish Republic* | 2001
| £ 1,477,000 | £ 1,677,000
|
* Exchange rate adjusted only from last year
The FCO is reviewing the implications of new accounting standards
for the future treatment and management of defined benefit pension
schemes.
Question 4: What recourse does a locally engaged member
of staff have if he or she feels that they have been unfairly
dismissed? Can they have their case heard at a UK employment tribunal?
The FCO as a matter of policy requires Posts to offer conditions
of service which conform to local labour law, and to have clearly
defined disciplinary procedures. If a locally engaged member of
staff has a grievance s/he should in the first instance pursue
it through the Post's management chain. There is no formal channel
of appeal to London since Posts employ staff on the basis of local
law, but staff are free to raise cases with management in London.
Any member of staff who has a grievance concerning the grounds
for his or her dismissal has recourse to the courts of the country
in which they are employed. It is our policy that our Posts should
not seek to shelter behind diplomatic privilege if confronted
by a claim for unfair dismissal.
It has been determined by Employment Tribunals in the UK
that they do not have jurisdiction to hear cases involving locally
employed staff at our Posts where it has been made clear in the
"contract of employment" that local employment law obtains
(but see the second paragraph of our response to Question 5 below).
Question 5: During the last year, on how many occasions
have locally-engaged staff sought recourse to an employment tribunal
following their dismissal?
Within the last year our Posts in Brasilia, Riga, Rome and
Dusseldorf have reported that dismissed members of staff have
started legal proceedings against them. Not all these cases will
be through a "Tribunal" mechanism.
Six cases have been brought to an Employment Tribunal in
the UK (the Posts concerned: Rome, Hong Kong, Kingston, Berne,
Colombo and Dubai). All have been "frozen" pending the
outcome of an Appeal hearing in one case. The Appeal body has
just decided that UK Employment Tribunals have no jurisdiction
where unfair dismissal or discrimination has been claimed. However,
the Appeals hearing concluded that where there is a breach of
contract (common law) then a Tribunal may in some circumstances
take jurisdiction, or alternatively a case may be brought in the
country concerned.
The case of Mr Raul Fernandes (Dubai), referred to in the
final paragraph of your letter, is amongst those "frozen"
pending the outcome of the Appeal referred to above. I shall write
to you separately about his case.
Question 6: How will EU Council Directive 2000/78/EC affect
the FCO? What planning is being done now to plan for its impact?
The Committee is right to highlight the significance of EU
Council Directive 2000/78/EC of 27 November 2000 (establishing
a general framework for equal treatment in employment and occupation).
There is already provision for staff in the FCO Delegated Grades
(those below the Senior Management Structure) to be able by mutual
agreement to work beyond 60 (the most junior band up to 65 and
other bands up to 63). As I told the Committee on 24 June (Q 106),
the present retirement age is 60 for staff in the FCO's Senior
Management Structure. The raising or abolition of the retirement
age will have considerable structural implications, particularly
for the Senior Management Structure.
As an initial response to the Directive, we carried out an
internal scoping review to identify its implications for the FCO
and possible approaches both in the management of late career
(flexible) options and in assisting staff in making end-career
decisions. It was not possible, however, to take this work further
before Government thinking on retirement and pension ages for
public servants had developed. The situation is now clearer as
a result of the publication of the DTI Age Consultation Document
(Equality and Diversity: Age Matters) on 2 July 2003, and the
Department for Work and Pensions (DWP) response to the Green Paper
on Occupational Pensions (Simplicity, Security and Choice: Working
and Saving for Retirement—Action on Occupational Pensions),
published on 11 June 2003.
Some of the issues which we shall need to address include:
— how to ensure fair competition at Appointment
Boards;
— medical requirements for Diplomatic Staff posted
overseas;
— the importance for the FCO of continuing to bring
on talented people within the FCO and bring in talented people
from outside;
— alternative employment opportunities for older
staff who might wish to "trade down"—that is,
find less demanding work at a lower grade;
— helping staff find employment outside the FCO.
These are complex and inter-related issues needing careful
evaluation. The FCO Board intends to look at the way forward later
this year.
Question 7: In the memoranda submitted to the committee
before yesterday's session, you confirmed that the 3% efficiency
savings agreed with the Treasury for 2002-03 were "deducted
automatically from each Directorate's budget allocation at the
beginning of the financial year". You also told us that,
as the savings were thus achieved automatically, "the only
question is whether they are met through efficiencies or through
cutting activity". How were they achieved?
Question 8: How do you monitor the way savings are made
across directorates and ensure that short-term savings are not
being made at the expense of longer-term projects?
Responsibility for FCO expenditure and related efficiency
targets is devolved to Directorates, These Directorates draw up
and monitor efficiency plans having agreed them with Finance Directorate.
Finance Directorate, through Quality and Efficiency Department,
also review Directorate Efficiency Plans with Resource Management
Officers every six months. The expenditure decisions are made
by each Directorate on the basis of what each Department and Post
has bid for in the Resource Allocation Round (RAR). It is therefore
the responsibility of the Directorate and Departments/Posts to
decide where the funds should be expended, and where savings are
to be made within their area of responsibility. They are in the
best position to judge on the disbursement of the funds allocated.
Decisions on long term projects that impact on the work of the
FCO are made at Board level, endorsed by Ministers where necessary.
Directorates have achieved the efficiency savings demanded
of them from a wide range of measures covering many types of expenditure.
Some of the efficiency measures taken during the 2002-03 have
been:
— Absorbed increased workload within existing resources
in both Consular Directorate and UKvisas.
— Obtained better deals on leasing properties through
stronger negotiation.
— Rationalisation of training courses and negotiated
cost reductions from training organisations.
— Procurement savings on contracts.
Directorates have not cut core activities but have reviewed
their activities in the light of their efficiency plans. They
have identified activities which can be dropped without significantly
jeopardising the desired outcomes.
Unlike some other government departments the FCO is primarily
a people operation. The level of administration spend is related
directly to the achievement of outcomes. With relatively small
programme and capital budgets, a large proportion of the efficiency
savings fall to the Administration budget. It is extremely difficult
to continue to find Administration budget efficiencies year after
year without affecting the achievement of FCO policy objectives.
Inevitably the continued call by the Treasury to achieve significant
efficiencies may mean cuts in FCO core activities.
SUPPLEMENTARY INFORMATION
5. Bali Travel Advice
In their report into the terrorist bombings on Bali, the
Intelligence and Security Committee (ISC) acknowledged that the
FCO Travel Advice was "proportional to the then current Security
Service assessment". In subsequent reports, both the ISC
and FAC commented that FCO should continually review Travel Advice
and ensure that "each new Advice is checked for clarity,
consistency and accuracy before publication". It is in response
to these and other comments that the FCO introduced the new measures
to which I referred during my evidence session on 24 June.
The Safety and Security section of Travel Advice now focuses
primarily on a factual description of the risks or dangers in
the country concerned. Where there is a recommendation against
travel, it includes a description of recent incidents or threats
that underlie this recommendation. The language is as clear and
universally comprehensible as possible, following advice from
the Plain English Campaign and others. Together with the improvements
in the assessment of intelligence through the creation of the
Joint Terrorism Analysis Centre (JTAC), we believe the result
has been a more direct and focused product. The travel industry
has welcomed these changes.
It is difficult to answer the hypothetical question of how
this would have affected the advice we issued on Indonesia before
the Bali bombing. That attack itself changed our perception of
the threat, as well as causing us to look again at our internal
processes. It is reasonable to assume that the format and wording
of the FCO Travel Advice would have been more user-friendly. But
as the Foreign Secretary said to Parliament at the time, we had
no intelligence which would have led us to warn people against
going to Bali.
6. Conakry Ambassador
We have nominated a person and are now seeking agreement
from the Government of Guinea. Once this is given, we shall announce
the appointment through our Press Office in the usual way. We
expect the new Resident Ambassador to be in place by late August.
7. Baghdad, Basra and Reserve Fund
The "flat-packed" Embassy in Baghdad, which is
still being assembled, should last for at least five years, and
could probably be used for longer if necessary. But we have a
good freehold site and would expect in due course to build permanent
Mission premises because the old Embassy buildings, which date
back to the 19th century, are beyond economic restoration. It
is too soon to take decisions on the eventual size of an Embassy
in Baghdad. Once some staff accommodation is included, we could
be looking at investing over £10 million.
Similarly, I cannot yet say that we will definitely maintain
a Consulate in Basra in the longer term. If we do, we would probably
aim to establish a presence in a leased villa or suite of offices,
and also lease our UK-based staff accommodation. The cost of fitting
out leased offices for a Basra Consulate is impossible to forecast
without knowing how large the offices would be, or what kind of
building might be leased but, with associated security work, they
might be in the region of £1 million.
We are still in the process of compiling a bid to the Treasury
Reserve of Iraq-related costs which we cannot meet from our Departmental
Expenditure Limits settlement. I expect this bid to be the region
of £20-23 million.
8. Joint Operations with France in Niamey and Freetown
We expect to open a new office in Niamey based in the French
Embassy later this year. It will be staffed by a member of the
Abidjan Embassy (who will spend the first week of each month in
Niamey, with a local staff member providing cover for the remainder
of the month). We estimate a start-up cost of around £10,000,
and annual running costs, excluding rent, but including travel,
local staffing and utilities of around £22,000. The office
rent is not yet finalised.
France opened an office in our High Commission in Freetown
in January this year. They pay an annual rent for this office
of £2,400 which includes electricity. They pay all other
running costs separately and supplied their own furniture and
office equipment.
9. San Francisco Residence
We carried out our usual discounted cash flow analysis comparing
the costs of retaining the current Residence, purchasing a new
Residence, and leasing a new Residence. We prefer not to release
these figures at this stage; to do so might compromise our chances
of achieving the best price on the sale of the present Residence.
We are appointing brokers to market the present Residence in September.
The four houses short-listed for the new Residence were assessed
against a set of criteria covering issues such as distance from
the office, quality of location, image, security, the size and
suitability of the public rooms and related facilities, and the
cost of acquiring and adapting the properties.
The Committee may also wish to know that we expanded the
existing Consulate-General offices in 2000 to accommodate an increase
in staff numbers and to improve the working environment. We are
negotiating with the landlords to acquire additional space that
would enable us to improve the facilities for conferences and
receptions within the Consulate-General offices.
10. Port of Spain Residence
We are unaware of any recent discussion between a member
of the Foreign Office in London, and the High Commissioner at
Port of Spain, in which the disposal of the present Residence
has been discussed. We have no plans at present for replacing
the Port of Spain Residence and have only recently built new quarters
for the High Commissioner's domestic staff. I shall discuss this
issue with the High Commissioner.
11. Management of Local Staff
At the end of the Committee meeting, I offered to provide
a note on the management of Local Staff, which is essential in
delivering the government's agenda and services overseas. In answering
your subsequent written questions, particularly No 1 (above),
I have explained something of what we are doing in this field.
We attract and retain many highly-talented and highly-committed
local staff. It is essential that these people are well managed.
That is why we have the "Charter of Principles", mentioned
in the answer to Question 1. It commits Heads of Posts and managers
down the chain of command to good management practice. Local staff
should have a clear understanding of what is expected of them,
and what they can expect from their managers.
In our drive to raise management standards further we have
been conducting a pilot project in a number of Posts to test whether
we can aspire to achieving "Investor in People" accreditation
worldwide. A number of Posts (British Consulate General New York,
Prague, The Hague, Stockholm, Ashgabat, Muscat and Belmopan) have
met the standard this summer. We have found the Investor in People
principles highly beneficial in London. We want to ensure our
local staff are managed at no less a standard than applies to
our UK-based staff.
The Committee has remarked upon the growth of local staff
numbers over the last two years. There is a long-established trend
towards greater reliance on, and confidence, in locally- recruited
expertise; but it is also a reflection of the economic realities
facing the FCO. We need to get the very best out of local staff
in the future; and to this end they both need and deserve the
very best management. That is why I shall be keeping developments
in this area under close scrutiny.
Heads of Post will in future have responsibility for deciding,
within budgets set by Directorates, the best package of pay kind
conditions which they can set to help meet FCO objectives. This
innovation will require effective performance management of individuals,
founded on objective setting at all levels and annual appraisal
and a keen eye for affordability and sustainability.
12. Diplomatic Representation in Central America
Finally, I should like to update the Committee on the arrangements
for restructuring our representation in Central America—San
Salvador, Tegucigalpa and Managua.
San Salvador will officially close to the public in mid-July.
Two UK-based officers will remain in Post until the end of August
to supervise the closure. Tegucigalpa will cease frontline activity
in November 2003; and Managua in February 2004.
The British Ambassador in Guatemala will be accredited to
El Salvador and Honduras. Nicaragua will be covered by our Ambassador
in Costa Rica. In addition, in both Honduras and Nicaragua, the
senior DfID representative will be appointed as Charge D'Affaires,
supported by an Honorary Consul. In El Salvador, an Honorary Consul
will be appointed as our in-country representative.
Sir Michael Jay KCMG,
The Permanent Under Secretary of State,
Foreign and Commonwealth Office
July 2003
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