Oral evidence

Taken before the Foreign Affairs Committee on Tuesday 24 June 2003

Members present:

Donald Anderson, in the Chair
Mr David Chidgey
Mr Fabian Hamilton
Mr Eric Illsley
Andrew Mackinlay
Mr John Maples
Mr Bill Olner
Richard Ottaway
Mr Greg Pope
Sir John Stanley

__________

Witnesses: SIR MICHAEL JAY KCMG, Permanent Under-Secretary of State, MR PETER COLLECOTT CMG, Director General, Corporate Affairs, MR SIMON GASS CMG, Director, Resources, and MR ALAN CHARLTON CMG, Director, Personnel, Foreign and Commonwealth Office, examined.

Q1  Chairman: Sir Michael, we turn now to the Annual Report from the Foreign Office. This is, I think, the third time that you have appeared before us, with I think mostly a different team. You have come on this occasion with Mr Peter Collecott, who is the Director General, Corporate Affairs, Mr Simon Gass, who is the Director, Resources, and Mr Alan Charlton, who is the Director, Personnel. Let me begin this way. Would you feel any sympathy for those who, having read the Report, would say that perhaps it is too full of commendations of the FCO, that it is a sort of cross between Pangloss and pollyanna, and that there is no attempt to debate or to set out any deficiencies?

Sir Michael Jay: I think, certainly it tried to give a positive account of what was a fairly remarkable year, so to that extent I think that the tone in the presentation is one that I would support. I think there are some aspects of it in which there is recognition that things were not what they might have been, for example, in the discussion on Bali, the terrorist attack in Bali, and the lessons we learned from Bali. I think, in some other bits, on personnel, it talks about how we are not yet up to the kinds of levels we ought to be on diversity targets. So I am not sure I would have a great deal of sympathy with those who thought it was too Panglossian, Mr Chairman. Though certainly I think that there are an awful lot of issues which we ought to debate and an awful lot of ways in which things are changing and things need to improve.

Q2  Chairman: But if there were to be a serious contribution to debate, for example, and your colleagues are mentioned in the Focus problem later, that there is no mention of this in the Report?

Sir Michael Jay: Well, there is no mention of it under that name, it is mentioned under the name of Knowledge Programme, which was an alternative name for Focus; but by all means let us discuss that.

Q3  Chairman: But it is your contention that the Report, in the round, shows an accurate assessment both of the successes and the setbacks?

Sir Michael Jay: I hope so. I do not deny that there have been setbacks during the year, but I think also there have been a lot of successes during the year, both in terms of some of the policy achievements of the Foreign Office, on, for example, EU and NATO enlargement, on some of the work that, let us say, Sir Jeremy Greenstock has done in New York over two pretty formidable resolutions in the UN.

Q4  Chairman: No doubt there have been major achievements, it is just that, for example, the casual reader, looking at what is said about the Common Agricultural Policy, would have the idea that that is proceeding smoothly, along lines approved by this Government?

Sir Michael Jay: I have to say, that view of the Common Agricultural Policy is not one that I share; so I accept your criticism.

Q5  Chairman: And then next time you will say so?

Sir Michael Jay: If that is the impression that it gives then I agree entirely that this is not the right impression. But let us try, if you would like us to, Mr Chairman, to be a little bit more self-critical next year, if the Committee would find that helpful.

Chairman: Yes.

Q6  Mr Olner: You mentioned Bali, Sir Michael; would you like to bring us up to date on further changes you have made on travel advice issued by your Office since then?

Sir Michael Jay: Yes, Mr Olner. I explained this in some detail when I appeared before the Committee a few months ago, but the main difference we have made is to revamp the way in which we present our travel advice. The travel advice to every country has been looked at very carefully again, has been redone in a new format, in order to bring out more clearly to the travelling public, first of all, what the risks are in travelling, and, secondly, what our advice should be to people before they travel. There has been quite a fundamental review of the way in which it is set out.

Q7  Mr Olner: And is that for all countries?

Sir Michael Jay: That is for all countries.

Q8  Mr Olner: Can I ask then, you have the 'Know Before You Go' campaign, which is now in its second year, what improvements have you made since last summer?

Sir Michael Jay: In the 'Know Before You Go' campaign, one of the main developments has been an announcement which we have made today which is to focus on the issue of rape and sexual assault overseas, and this is being launched today, in order to draw attention both to the risks and to what people can do to protect themselves and what help they can receive if they are attacked. So that is one way in which the 'Know Before You Go' campaign has been extended.

Q9  Mr Olner: So if you are just rolling that out now then obviously it has failed in the past?

Sir Michael Jay: No, I would not put it as 'failing in the past'. We are always looking for ways in which we can improve the service we provide for people. Our consular services have risen right up our agenda in the last year or so; services we provide to the British public are becoming more and more important to us as the FCO, and we are looking all the time at ways in which we can provide a better service and to draw people's attention to the hazards they face. So I see this as an extension, a development, of a system which we have had in place, the 'Know Before You Go' campaign, for a few years, not a recognition that some things have failed in the past.

Q10  Mr Olner: I am sure most Members will recognise the fact that the consumer has a point of conflict between advice that is offered by yourselves and advice that is offered by the travel industry, they are not usually the same, are they?

Sir Michael Jay: The travel industry, increasingly, uses our travel advice. Perhaps, Mr Chairman, if that is alright, I could ask Mr Collecott to say a little bit more about that.

Mr Collecott: One of the features of the 'Know Before You Go' campaign of which we are rather proud is the very close relationship we have with the travel industry in generating this campaign.

Mr Olner: Can I perhaps raise a caveat then, Mr Collecott, it is the travel industry and its insurers; my constituents sometimes have difficulty, when they decide not to go on something that has been booked, perhaps on your advice, they have great difficulty in getting the money back that they have paid.

Q11  Chairman: Can you comment on the insurance point?

Mr Collecott: The insurance point is one we are rather conscious of, obviously, and at some points it has created difficulty; but, I think, in most cases, the situation is that both the travel industry and the insurers tend to look at the travel advice which the Foreign Office is issuing and are prepared to pay out for trips which are not taken when the Foreign Office travel advice advises against travel, or advises, for instance, against non-essential travel, that seems to depend from one insurance company to the next. Now, of course, there are bound to be cases where individual insurance companies may take a particular decision, and therefore it may be a problem for an individual traveller, an individual constituent; but, in general, I think they tend to follow the advice that we give, but that is a decision for them, it is not something which we can regulate in any way.

Q12  Sir John Stanley: Sir Michael, as you know, the son of constituents of mine was amongst those British citizens, and indeed other citizens, who were murdered at Bali, five weeks after his marriage, and mercifully his young widow survived but was very seriously burned. Can you tell the Committee whether, following the new travel advice procedures that you have now brought into operation, based on the intelligence that you had at that time, your travel advice would have been different, in relation to Bali, following the new procedures you now have in place?

Sir Michael Jay: I am afraid I cannot say whether it would have been different, given the new procedures that we have in place now.

Q13  Sir John Stanley: Why do you say that; why do you say that?

Sir Michael Jay: I am afraid, simply because I would need to go back and look at exactly what the advice was that we gave at the time, on the basis of the intelligence we had at the time, and to judge whether it would have been different advice or not. And, rather than commit myself to that, I think I would need to go back and look at the details.

Q14  Sir John Stanley: Will you come back to the Committee on that point?

Sir Michael Jay: I can come back to the Committee.

Q15  Sir John Stanley: Because, if the answer is that the travel advice would have been unchanged then perhaps that questions the adequacy of the new procedures; but you may say the intelligence was not sufficiently specific, that "It was impossible for us, even with the new procedures, to give a greater warning to stay away from Bali," I do not know. I am not going to anticipate what you are going to say, but could you look at it and come back to us?

Sir Michael Jay: I think I would need to go back and refresh my memory of exactly what the intelligence was on which we based the advice. And as to whether, under the new procedures, we would have given different advice, I would rather come back to the Committee on that point.

Q16  Mr Illsley: Can I raise two issues around crisis response, Sir Michael. The first issue, in relation to what has become known as a 'flat-pack Embassy', have you had chance to gauge the success of the flat-pack Embassy in Baghdad?

Sir Michael Jay: Yes, we have. There are two things which I should distinguish between. One is the sort of container Embassy, which is the initial Embassy which, in the case of Baghdad, was sent to Baghdad immediately after the end of the conflict, so that our own team was there, I think, before anybody else was there. This was fully-equipped containers, I think four containers, which now enable our team there to live and work in fully-equipped conditions, with proper communications. And I was speaking to our Ambassador in Baghdad yesterday and I asked him how the system was working; he said that, in his judgment, this had been a success. So I think that the concept, which we discussed at this meeting last year, Mr Chairman, of having an instant facility which enables us to put a sort of mini-Embassy instantly in place, has worked. The next stage is what we are calling the 'flat-pack Embassy', which is a much larger and much more complicated process, in which containers, which will allow an Embassy of up to about 30 or 40 people to operate for a period of three or four years, would then be put in place. That flat-pack Embassy is in the process of arriving now in Baghdad, I think the first containers have arrived from Kuwait in the last couple of days, that will be being set up as from now. The Ambassador, to whom I spoke yesterday, said he had been talking to the contractors, they had found exactly the spot where it would go, they will be in the process of installing it, and within a couple of months or so we would have a much more elaborate Embassy, to enable FCO and other government departments to be properly represented in the compound there, from about, I think, the middle of August. So I think that both the instant Embassy and the slightly more complicated Embassy, which is an example of our ability to respond more quickly to crises, so far, have worked well.

Q17  Mr Illsley: I was just coming on to ask you about the timescales. Would that apply to the staff in Kabul as well?

Sir Michael Jay: One of the reasons why we moved to introduce these new arrangements was because of the difficulty we had in setting up in Kabul as quickly as we would have liked. Again, it is another example of trying to learn the lessons from things which do not go as perfectly as we would like them to. It was clear that we took too long to get our people into Kabul and to be properly equipped in Kabul; that we have avoided in the case of Baghdad, and we will now be able to replicate these elsewhere.

Q18  Mr Illsley: How well are the staff coping with that? I can imagine that the initial containerised Embassy staff would be quite happy to put up with some sort of difficulties there, but to face four years in limited accommodation, are the staff happy with that, or is the accommodation much better than it sounds?

Sir Michael Jay: It is not luxurious, to be honest, and nor is it at the moment. Our staff in Kabul, for example, are now living in containers in Kabul, and the staff in Baghdad, or the majority of them, will be living in containers when the flat-pack Embassy is in place. The answer is that they are a pretty enterprising lot; and when we asked for bids to go for a year to Baghdad, a few weeks ago, we had 78 responses overnight, people who are prepared to drop everything and go to Baghdad for a year. And this shows, I believe, a kind of welcome sense of enterprise and adventure; people know it is not going to be nice.

Q19  Mr Illsley: Talking about enterprise and adventure; Rapid Deployment Teams. The Rapid Deployment Team sent to Riyadh, what exactly did it do when it arrived in Riyadh in May?

Sir Michael Jay: Perhaps I could ask Peter Collecott to expand a little bit; but this was the first time that we had used one of our Rapid Deployment Teams. I think I have explained to the Committee before, the purpose of the Rapid Deployment Teams is to allow a team to go overnight, within 24 hours, to be in whichever part of the world British citizens are in difficulty, equipped with a mixture of consular experts, carers, communications people, put together to meet the particular circumstance. And we decided, as soon as we heard of the terrorist attack in Riyadh, that we should send out the Rapid Deployment Team to support the Embassy; the Embassy had its own consular people, who were immediately on the spot, and the Ambassador was there, and they were helping people, but we did not know at that stage whether this was going to be two or three British citizens who were killed, sadly, or more, and we thought it better to over-ensure. Which is another lesson we learned from Bali, because in Bali we did not respond quickly and substantially enough and send the team to Riyadh. And it supported the Embassy for a period of some 72 hours, working round the clock, and the Embassy were extremely grateful for the support they had. Peter, you may want to say a little bit more about the details.

Mr Collecott: I think, Chairman, that Michael Jay has covered the main thing, which is really that they are not doing anything substantially different from what the Embassy consular people are doing; they are there to support. They were doing the usual things which one has to do in a situation like that, which is actually to try to trace all the British citizens that we knew were living on the compound which had been bombed, to try to find out, to support the Metropolitan Police also, who were there, who were trying to establish liaison with the local authorities, and to establish what had happened, and all kinds of care which needed to be given both to the British citizens on the spot but also to ensure that links were established back, through the FCO, to their families in this country and that information was passed through. But, again, it is an expansion of what the Embassy was doing well already.

Q20  Mr Illsley: But you are happy with the way it deployed, the speed at which it deployed and what it was able to provide?

Sir Michael Jay: Yes; but we learn from every experience, and this was the first time it had deployed, and the first thing I said when it came back was, "I want a report from the head of the team; we need to learn the lessons from it." Because there will be lessons to be learned from every deployment of the Rapid Deployment Team, we will learn things.

Q21  Mr Illsley: The last time you were before the Committee, in February, we discussed the idea of a medical component to the RDT; has that been progressed, or is there any further progress with regard to a medical component?

Sir Michael Jay: There will not be automatically a medical component to the Team, but we will make a decision case by case as to whether we think there is a case for one. In the case of Riyadh, there were medical facilities available on the spot, and there was no need for a medical component. In other circumstances, there may be a case for one, in which case we will see whether we can provide one.

Q22  Mr Illsley: Could I ask now about Exercise Blue Monday, and could you tell the Committee whether that was successful, whether there were benefits derived from that particular exercise, and a word perhaps about what benefits you expect to derive from the 'live' exercise in Athens in December?

Sir Michael Jay: I found Exercise Blue Monday helpful. It was the first time we had had a counter-terrorism exercise of this sort, it was a table-top exercise rather than a full exercise, but it enabled groups of people, drawn from widely different parts of the Office, just to discuss amongst themselves how they would respond to a whole series, two, twin crises, as they evolved during the course of the day. And I think it threw up a number of questions, not least about how and when we would deploy the Rapid Deployment Team. So I think that it was useful, we have learned lessons from it, and we will need to expand further on those when we have the full exercise in Greece. Do you want to say anything about Blue Odyssey?

Mr Collecott: Clearly, the Blue Odyssey Exercise has got a dual function, if you like. Firstly, to enable the Greek authorities, in advance of the Olympics, to test some of their reactions to an incident which might go on; but then, secondly, for us to test our co-operation with the Greek authorities and how we would react to an incident like that, were it to be in Greece or were it to be anywhere else.

Q23  Mr Illsley: On the Response Centre, the 24-hour, seven days a week Response Centre, do you know when that will be up and running?

Sir Michael Jay: We hope it will be up and running by the end of August. We had hoped it would have been up and running by now; it was one of the casualties of the Iraq conflict, in that we had to put 5 per cent of our total London-based resources into the Iraq emergency units, and inevitably that meant that certain things could not be done. And one of the things which we could not do was put the 24-hour/seven Situation Centre into places as soon as we would have liked, but we hope it will be up and running by the end of August, and perhaps I could renew the invitation to the Committee, Mr Chairman, when it is up and running, perhaps after the recess, to come and visit it perhaps.

Chairman: Yes; keep in touch with our Clerk on that.

Q24  Mr Illsley: Finally, Chairman, the Foreign and Commonwealth Office helpline; how far are you now towards arrangements for a commercial call provider to deal with responses, and are you happy with the progress towards that?

Mr Collecott: Might I respond to that, Mr Chairman. The consular helpline, which I think you are talking about, does operate, does operate 24 hours a day, and is indeed outsourced, I think, a different place during the day and during the night, if I recall. I think, if I recall, that there was also a discussion we had last time, or perhaps in the intervening period, of another exercise that we have going, which is to provide, as a back-up perhaps, during silent hours of the night, a sort of voice-recognition helpline, which will allow people to hear the travel advice for a particular country, based on voice recognition techniques.

Q25  Mr Illsley: I think the one I was referring to was the one deployed in response to a crisis, information to relatives, this type of thing?

Mr Collecott: No; we do, as a rule. We have a contract now, a sort of call-off contract, with a call centre, and, if we believe that the crisis is going to generate a large number of calls, we do ask them, if you like, to be the first line of defence and to take the bulk of the calls, but, obviously, where the issues are difficult then they have to come to our consular people for that to be done.

Q26  Mr Illsley: Has that been tested yet, in relation to a crisis area, or would it be too soon to say whether you are happy with the way it is working?

Mr Collecott: I think, if I remember rightly, we did not have that in full operation during the Bali crisis, and previously to that, for instance, during 11 September, we had used the facilities of the Metropolitan Police. So I think it would be fair to say that in a full-blooded crisis we have not tested it; there have been times when we thought we might be getting into a crisis and have had them on stand-by, but not anything on the scale of Bali or 11 September.

Q27  Chairman: Sir Michael, it strikes me that, in response to the series of questions on the simulation exercise and counter-terrorism, rapid deployment, flat-pack embassies, and so on, you have a whole series of really innovative responses to the changing global environment. Are you considering also discussing this on a multilateral basis with key allies? At the moment, the response you have mentioned is purely national. Presumably given the counter-terrorism discussions at EU level, is there any attempt to put this on the agenda, as a concerted response by EU countries?

Sir Michael Jay: There have been discussions of this at EU level. I myself took part in it. There are meetings of EU Secretaries-General twice a year, and at the last meeting we had, in December, we were talking precisely about these issues, about travel advice, about rapid response, and as to how we can co-ordinate better. So, yes, there are discussions at EU level, there is an EU group which discusses these; do you sit on it?

Mr Collecott: I do not. At working level, at sort of heads of consular operations, there are indeed quite good discussions which take place, and we have been consulting in particular with our French and German allies over the last months to put forward an initiative into this group which deals with co-operation in helping mutually our citizens abroad, for instance, to try to address issues such as simple things like how we register our citizens, so that that kind of information could be transferable from one to the other.

Q28  Chairman: The only joint initiative at the moment is in respect of the Greek Olympics on a bilateral basis; is there planned, for example, any simulation exercise at an EU level, or with key EU partners, on these themes?

Mr Collecott: Not as yet, I think, is the answer.

Sir Michael Jay: Not that I am aware of, but I think it is something we should consider.

Q29  Chairman: May I give you advance notice that next year I shall ask the question?

Sir Michael Jay: Please; we shall make certain that we have had at least one between now and then, Mr Chairman.

Q30  Sir John Stanley: Sir Michael, with commendable frankness, you referred to the inadequacy of the Foreign Office's response to Bali, and I have to agree with what you said. Could you tell the Committee, that if Bali happened now, heaven forbid, what would the Foreign Office be doing differently than it did at the time?

Sir Michael Jay: You say "heaven forbid," Sir John, but we work on the basis that we may have at any time the next Bali, and I think there is no safe basis on which to operate except that.

Q31  Sir John Stanley: I agree.

Sir Michael Jay: What we would do now would be, first of all, to send the Rapid Deployment Team to be there within 24 hours, equipped to give whatever help they could or whatever help was needed. To go back one step; the first thing that we would do would be that I would learn of this and I would appoint a crisis co-ordinator, at whatever time of the day or night it would be. We would then open our emergency unit in London straightaway, which would be staffed by people who are ready to staff it. We would then make a decision, clearly consulting Ministers throughout, on whether we should send the Rapid Deployment Team, and I think the answer in such a case would be, clearly, that we would send the Rapid Deployment Team straightaway. That is what we would do within the first 24 hours, or so, of responding to a crisis. Clearly, also, if it were outside the capital, our Ambassador and his consulate team would fly there, or get there as quickly as they could and stay there for as long as was necessary. So, by comparison with Bali; quite a lot went right with the response to Bali, but it was not enough, I think that is the point that I would make. There was some really very good response by some of the people in our Honorary Consulate, for example, in Bali, they did a fantastic job, but there was not a sufficiently prompt or large-scale response, and that is what we would try to ensure would happen in the future.

Q32  Sir John Stanley: As you know, Sir Michael, one of the desperate features of the Bali situation was that the very, very small, local hospital got totally overwhelmed with the volume of very, very seriously injured and burned people, and do you think you would be in a better position now to get emergency medical help to such a location than you were at the time?

Sir Michael Jay: I think we would have to make that decision case by case. We had some support from the Australians in the case of Bali. I hope that that would be an aspect that we would look at right from the very beginning, one of the things we would factor into the very first responses, what is the medical situation, do we need to try to fly in doctors, medical aid, do we need to try to get a 'plane to fly people out to the nearest hospital in the region; so from the beginning we would be trying to work out what was the best way of ensuring that people who had been hurt would get the medical treatment they needed. Exactly how you do that would have to depend on case by case; and I think we have to recognise that there would be some occasions, if it were a disaster in a remote part of the world, when we would not be able to provide exactly the medical treatment that everybody needed straightaway.

Q33  Mr Hamilton: Can I just take up a point on that, Chairman. Presumably following on, Sir Michael, from the response that the Foreign Office would have to that kind of crisis, should it, God forbid, happen again in somewhere like Bali, or somewhere remote, would you give consideration to any kind of regional hub, because clearly it is going to take a long time to get anybody from London out to somewhere as far away as Bali?

Sir Michael Jay: Yes; we have given thought to regional hubs and the question of stocking of medicines or equipment. So I think an awful lot of what we do, actually, the nature of the conduct of diplomacy, we are going to have to think a lot more about regional hubs and regional centres rather than doing everything from London, not just in this aspect but in other areas as well. Perhaps if I could give just one example of that. I was in Ethiopia at the weekend and we have a member of the British Embassy there, in Addis Ababa, who is a regional representative of the conflict prevention pools that operate trilaterally in London, DFID, FCO, MoD, and there are now people in three East African countries who have a regional responsibility for helping to work with others to prevent conflict.

Q34  Chairman: DFID operates as well in Africa?

Sir Michael Jay: Yes; and we are moving in that direction.

Q35  Andrew Mackinlay: The Foreign Office Report, quite naturally, is kind of a 'good news' report, but, I put it to you, one thing which you have omitted is actually very, very bad news and acutely embarrassing, and that is the failure of the so-called Focus Programme. And, if I remind you, the Focus Programme was to provide a global registry and intranet, there was an initial contract awarded in January 2002 for £10.5 million, and the initial cost was going to be £23 million over six years, but there was a re-examination of this when it was discovered that the cost had risen to £42 million. The Minister then told the House, in December 2002, that we were cancelling this; we had already spent £9.5 million. Really the question I want to ask is, how on earth did we get into this position where we embarked upon this project, we spent the best part of £10 million, apparently, when the decision to cancel was brought about, the words of the Minister also say, well, it was not that important anyway, I forget his exact words, but I think I am paraphrasing, so we can do without it, presumably life goes on without it? And what you have not told us, and you can tell us now, is, in addition to the £9.5 million which was spent, how much was the cancellation cost?

Sir Michael Jay: I think I am right in saying that the 9.2 includes the cancellation costs, which we negotiated with the contractor.

Q36  Andrew Mackinlay: Are you sure about that?

Mr Collecott: Our total outlay, Mr Mackinlay, was £9.5 million, including the cancellation cost, and we reckoned that the assets that we had already obtained were worth £2.5 million, which means that there is a total deficit, if you like, of £7 million.

Q37  Andrew Mackinlay: Well, it is not peanuts. But how was this decision taken, one, in the first place, to go for this programme, and then, soon after the contract is let, there is an immediate review, leading to the cancellation? It just seems to me to be sloppy?

Sir Michael Jay: The basic concept of the Focus Programme, it is an important programme.

Q38  Andrew Mackinlay: Perhaps you can tell the Committee what it was designed to do, in layman's language, please?

Sir Michael Jay: It was designed to give us a much improved intranet, i.e. an internal communications system, and to provide us with a central global registry, which we do not have, and also to enable us to have much more flexible working arrangements, for example, to enable us to have people travelling with IT on their laptops, in order to be able to operate more flexibly around the world. So it was a very important programme. The estimated costs of the project as a whole, as you said, Mr Mackinlay, went up markedly, from £23 million to £42 million, and when we reassessed it and realised what the new costs were, it was clear we were not going to be able to afford it within our IT budget. At that stage we had to take a very difficult decision as to which of the IT programmes to which we were committed we were going to have to adjust, and we concluded that, although this was important, it was a less high priority than the other IT projects, including Prism, to which we are committed, and that, therefore, regretfully, we should cancel this, while trying to save those bits of it which we could save. And we negotiated with the contractors to continue, for example, to make use of the electronic directory, which was part of it.

Q39  Andrew Mackinlay: What is that?

Sir Michael Jay: It means that, instead of every single member of the Foreign Office having a big red book on their desk with all our staff members in it, all that is on screen, which is a very considerable saving.

Q40  Andrew Mackinlay: It is not a considerable saving, it cost £7 million; instead of a book, you paid £7 million to have something on the screen. I am not being sarcastic, that is the way I look upon it; am I wrong?

Sir Michael Jay: No. You are right that cancelling the project has cost us money, and we would much prefer that that had not happened; but what we have done is save some parts of it, so there are some benefits from the project, even though clearly they are not going to outweigh the costs.

Q41  Andrew Mackinlay: I could go on, but I might do it by Parliamentary Question. But, perhaps you could just explain to us, your colleagues, who must have assessed on your behalf and recommended this and looked at the contract, presumably they were not qualified to do this precisely, were they? Clearly, somebody, somewhere, not through any malevolence but simply was not qualified to make the assessment, to make these decisions, but they did?

Sir Michael Jay: One of the things which happened was that, after September 11, we needed to look at our contingency plans and introduce business continuity systems, so that if our systems fell in one part of London they could be replicated elsewhere. The effect of that was to increase the cost of the Focus Programme.

Q42  Andrew Mackinlay: Ah; but that has fallen off the table, we are not going to have that, are we?

Sir Michael Jay: We are going to have the business continuity, we are having the business continuity plan, but the effect of the business continuity plan, that would have increased the costs, was one of the factors which lay behind the increase in the cost of the Focus Programme.

Q43  Andrew Mackinlay: I think, Sir Michael, that, bearing in mind Parliament's historic and main function of looking at supply and scrutiny of expenditure, there really ought to be a full report about this whole matter to this Committee, if my colleagues agreed, but I hope you would volunteer that, because it does seem to me that really there ought to be disclosure as to what went wrong here, lessons to be learned. I will leave that thought with you, and will see what my colleagues have to say, but you might want to do that anyway. Can I move to the establishment of diplomatic posts. The Foreign Secretary, on a couple of occasions, has written to us about adjustments to our Missions, the United Kingdom Missions, particularly, I think, in the Americas, South America and Central America, and also when there has been a change of view he has explained why that is, because I realise that there is change of view. But where we have not had a communication from is in relation to Kyrgyzstan. Now I raised that, I think in the previous Foreign Affairs Select Committee, Chairman, you will remind me, but I think your Report actually recommended that there should be a United Kingdom Mission in Bishkek, the capital of Kyrgyzstan. We were then told there was going to be one. I certainly have had a Parliamentary Question down for that, but nobody has flagged up with either me or the Committee the fact that actually we have not opened a Mission in Bishkek, which we were promised. The Ambassador to Kazakhstan, who is actually not in the capital of Kazakhstan, is covering Kazakhstan, a country the size of Europe, from, I think, London to Greece, so he is the British Ambassador in Kazakhstan, he is not in the capital of Kazakhstan, and also he is British Ambassador to Kyrgyzstan. Now it seems to me, bearing in mind the importance of this area, priorities are wrong?

Sir Michael Jay: You are right that we have not opened an Embassy in Kyrgyzstan, in Bishkek.

Q44  Andrew Mackinlay: No, and we have not been told?

Sir Michael Jay: I confess that I was not aware that there was an obligation to tell the Committee of this, but, no, we have not opened an Embassy in Kyrgyzstan. We have kept that carefully under review, and, a year or so ago, we did intend to open an Embassy in Kyrgyzstan, but we have had to conclude that the resource constraints and the demands that there are for opening elsewhere do not at the moment permit us to do that. And it is represented from Almaty, which is the former capital, and I think I am right in saying that we are going to have a presence in Astana, which is the new capital of Kazakhstan, shortly. I think I am also right in saying that we are opening a trade office, or BTI are opening a trade office, in the west of Kazakhstan, because much of the important commercial and mineral wealth of Kazakhstan, in which there are some important, British commercial interests, is in the west. So I am confident that we are properly represented in Kazakhstan. I would like us to be able to open a Mission in Kyrgyzstan as well, in Bishkek, but it is not something which we are considering at the moment because of our resource constraints.

Chairman: When the Ambassador moves to Astana, he will be a very long way away from Bishkek.

Q45  Andrew Mackinlay: Mr Chairman, you anticipated me. I want to go back to Sir Michael, because, Sir Michael, you are economical with the truth, we are not going to send our Ambassador to the new capital, are we? The phrase you used, "We're going to have a presence," basically that is an office; am I right or am I wrong? I am right, am I not? You see, Chairman, you missed this point. If you had focused up on this, it is a very interesting point. There is not going to be a British Ambassador in the capital of Kazakhstan, there is going to be an office?

Mr Collecott: I think no final decision has been taken about that. We have already a so-called Bureau de Passage, which is shared amongst the Members of the European Community, which is a sort of joint office there. We are in the process of looking at having our own small office there, which I think we will establish fairly soon.

Q46  Andrew Mackinlay: But not with the Ambassador?

Mr Collecott: The Ambassador clearly will visit at times; but there has been no final decision whether it makes sense eventually to move the whole operation from Almaty to Astana, and that is in common with a number of our allies as well.

Andrew Mackinlay: Can I say to you, Sir Michael, it is perverse that in a country which distances from London to Greece we have an Embassy and we have an Ambassador, but he is not in the capital, and he is not going to be in the capital, also he covers another country where we have no office, in neither of the capitals is the British Council present; bearing in mind the political and economic interests over there, surely it is perverse? Can I say to you also that, in terms of Kyrgyzstan, which is one in the lead table of democracy, or it is probably top of the pile, and yet it is interpreted by their Government as acutely hurtful that the United Kingdom are not there. I have to say to you, gentlemen, as a legislator, I think your priorities fundamentally are wrong. I am amazed, bearing in mind if you look at all the other places around the world where we have Missions.

Mr Illsley: Where was that again?

Q47  Chairman: Bishkek.

Sir Michael Jay: If I can pause for a moment on Kazakhstan, Mr Mackinlay, we are in Almaty at the moment, a new capital has opened in Astana, there is always in these circumstances a question as to what is the right moment to move from the old capital to the new capital, that is something which we would consider, along with our other partners. For example, we did not move immediately from Lagos to Abuja, and now the High Commissioner spends a lot of his time travelling between Lagos and Abuja, it is a hugely important country in which there are two main centres, both of which need the attention of the High Commissioner. The balance between our Ambassador being in Almaty and our Ambassador being in Astana is something which I think he will have to judge, given where he sees his presence as being most needed. I think, in many ways, as important as that is opening an office in the west of Kazakhstan. Certainly, in the conversations I have had with businessmen, what they have said is, "Where we need someone is in the west of Kazakhstan, because that's where the money is."

Q48  Andrew Mackinlay: Kyrgyzstan, what is your answer to that; there is absolutely nothing there, there is no British Council, there is no trade and there is no Embassy, and no full-time diplomat there at all, is there?

Sir Michael Jay: I do not think there is.

Q49  Andrew Mackinlay: A democracy, of five million people?

Sir Michael Jay: We do not have the resources to have a presence everywhere in the world that we would like one, we have to make difficult decisions, we have to prioritise. That is also what lay behind the decisions which the Foreign Secretary communicated to you about the rationalisation of our operation in Central America, about the closure of our post in Bamako, in Mali, and we would prefer not to have to do that. But there are new priorities arising all the time, the latest one clearly is Baghdad and possibly opening in Basra, and each time we open somewhere we have to reprioritise and close or scale down operations somewhere else, because we are operating within finite resources. So there are always difficult decisions to be made.

Q50  Andrew Mackinlay: I hope that, anyway, when we are told about Embassy changes, closures, and so on, it is not selective, because we were not told about this area at all and we have been told about other things, that is a matter of fact. On efficiency savings, I know my colleagues are going to ask about actual properties in a moment, but the way I understood your efficiency savings was that a deal was done with Her Majesty's Treasury that, in terms of the property portfolio, any savings which were made there you could use on IT, in simple terms that is, that is broadly correct, is it not?

Sir Michael Jay: What we were told was that we could make use of the proceeds of the sale of assets.

Q51  Andrew Mackinlay: Whereas, hitherto, it would have gone back to the Treasury?

Sir Michael Jay: It would have gone back to the Treasury; and then we had a certain sum of money for the first three-year period, then the second three-year period, and up until now that has been divided between reinvestment in the estate and also investment in IT. That will continue, although the balance will shift more in the future towards reinvestment in the estate and less in IT.

Q52  Andrew Mackinlay: But I understand that, it is not a rapid thing but in six, seven or eight years, the IT which you are installing now will have to be replaced; how are you going to fund it, because you will have done your property portfolio, will you not?

Sir Michael Jay: Yes. The recycling of assets has contributed towards our IT, but that is not the only source of funds for our IT. Now it is quite clearly in every bid we put to the Treasury, in every spending round, we are going to have to have an important bid to ensure that we do have the quality of IT that we need to operate as efficiently as we want to, that is going to be one of the important aspects of the bid which we will be preparing over the next year for the spending round next year. Mr Chairman, may I ask the Director of Resources if he would like to add anything on this.

Q53  Andrew Mackinlay: Because I am worried about massive cuts, five, six, seven years down the road, to fund the next generation of IT?

Mr Gass: Yes, I would be happy to answer that. Certainly, I think that if we were having to fund a complete, new IT programme from our existing budget, on top of what we are doing already, and if we did not have the comfort of asset sales, and I agree with you that they cannot go on for ever at the same level, then that is not the sort of thing which we could do without very deep cuts in our existing activity. Now clearly that is a point which we will have to make to the Treasury, as we are negotiating for future spending reviews, it is not the difficulty which we face immediately, but I agree that in the medium term it is a problem which we are going to have to grip with Her Majesty's Treasury. I might say, of course, that the problem of replacing IT is by no means unique to the Foreign Office, this is a general Whitehall problem and one which affects the spending patterns of a good many government departments in Whitehall.

Q54  Mr Hamilton: Can I just move us now to a different subject. It is clear from the Annual Report that the Foreign and Commonwealth Office, the British Council, BBC World Service, are expending quite a lot of effort, time and energy on trying to improve the United Kingdom's relations with the Arab and Muslim world, especially the perceptions of the UK in those countries; and I wonder, with all the numerous initiatives that you have and the programmes that you have introduced, do you think you are achieving your aim?

Sir Michael Jay: I hope we will achieve our aim. The British Council has launched, I think, an important initiative, which is Connecting Futures, which is aimed at strengthening links with the Islamic world. We are ourselves clear that that should be a priority of our own public diplomacy, not just for the Arab world but also with the Muslim communities within Britain, and we have an outreach programme to develop our links with the Muslim communities, and indeed other ethnic minority communities, in the United Kingdom, which I think is important; that is bearing fruit. I visited the Islamic Foundation in Leicester a few weeks ago to give a talk there and meet people, and I think that that is an important aspect of our job. There is, of course, a risk that we will be disjointed, we are trying to overcome that risk, through the Public Diplomacy Strategy Board, which we have set up in the last year or so, which I chair, which brings together the British Council, the BBC World Service, BTI, in order to ensure that the public diplomacy that we are pursuing overseas, all of us, is consistent, and also we have the private sector and we have one or two NGOs who are part of that.

Q55  Mr Hamilton: Can I ask you then how you measure specifically the impact of the work that you are doing?

Sir Michael Jay: There are two answers to that question. First of all, we are going to focus on two or three campaigns. The campaign that we have focused on at the moment is the China campaign, 'Think UK', which is Britain in China, and there are two or three other campaigns which are going to be started in the next year or two. What we are doing also is going to launch what has been called a 'tracking study' this autumn, which will be funded jointly by the Foreign Office, the British Council, BTI and Visit Britain, which is what BTA has now become, which is going to look each year at how Britain is perceived around the world. And when that gets going we hope that is going to provide us, year by year by year, with a kind of assessment of how Britain is perceived, and that will give us also a way of tracking whether or not the campaigns which we are funding are having an effect on our image.

Q56  Mr Hamilton: Just for one second, Chairman, can I pursue the issue of relations with the Muslim world, because on page 119 of the Report you highlight the example that you have funded and worked with Lord Patel of Blackburn, and I believe also Lord Ahmed of Rotherham, and other Muslim leaders and representatives of Muslim organisations, under the umbrella of the Hajj Advisory Group, and that you funded an official delegation to Makkah, it was reported in The Independent newspaper on April 28, and it has not been universally well received, I have to say. For example, one anti-racism campaigner said the money would be better spent in Britain, promoting understanding between British Muslims and other racial and religious groups; she went on to say that the money should be spent on helping to accommodate Muslims in a secular society. What comment would you have to make on that?

Sir Michael Jay: The purpose of the support we give to the Hajj every year is to provide consular and other assistance to the very large numbers of British Muslims who travel to Makkah for the Hajj.

Q57  Mr Hamilton: And yet you do not support any other pilgrimages, Jewish, Christian, Hindu pilgrimages, for example?

Sir Michael Jay: I do not think there is anything which is of the same scale as the number of British citizens who go to one place for a religious purpose, regularly, each year. And I have not got the figures in my head but the number of people who need and get assistance from our Hajj Mission is very considerable, and I believe myself that actually it is an extremely useful function that we perform, and Muslim members of the Foreign Office who go, together with prominent members of the Muslim community, provide, I think, a very important service.

Q58  Mr Hamilton: Would you agree with Lord Ahmed that actually it saves the National Health Service, in the long run?

Sir Michael Jay: If you get seriously ill inside Arabia, I do not know. I do think it is worthwhile.

Q59  Mr Chidgey: Sir Michael, to change the subject, if I may. Turning to the Global Opportunities Fund, the Annual Report gives us some more details about that, and, obviously, you remember, it was established in 2002, and in the next three years the FCO has been allocated £120 million to "support existing programmes on human rights and legal reform, democracy and good governance, the environment and international security." I think you are going to get about £87 million over three years, in net terms. How exactly do you intend, if I may say so, with the greatest sympathy, the Global Opportunities Fund actually to make some difference, and why is it felt that it was necessary to create this new Fund, which, frankly, is just a drop in the ocean?

Sir Michael Jay: Our experience, from existing funds that we have, such as the Human Rights Project Fund, is that the expenditure of comparatively small sums of money, well targeted, can make a difference; and what we are trying to do with this Fund, which came out of the SR2002 negotiations, is to focus it on areas where we think it can make a difference. And I think the figures that you quoted are correct, it is £120 million over three years, although some of that, in fact, is going to be used for contributions to international subscriptions and its own administration, so it comes down to 12, 29, 46, I think, over the three years.

Q60  Mr Chidgey: The point that really troubles me, Sir Michael, is that what seems to be happening is that money is being diverted from existing projects, for example, as you mentioned, the Human Rights Project Fund, and, of course, the Westminster Foundation for Democracy. That comes down to the fact that, for example, in the year 2003-2004, while £6 million is being allocated to the promotion of democracy and good governance, which obviously is a fundamental aim, you might argue that £6 million is hardly going to make any difference worldwide, formerly it was actually coming from the WFD. So there is only £2 million new money, £2 million worldwide for the promotion of democracy and good governance, when you have the whole continent of Africa which the Prime Minister tells us, in his support for NEPAD, is our first priority. I would not want to be in your shoes, quite frankly, I would feel somewhat frustrated about that.

Sir Michael Jay: Can I ask Mr Gass, Mr Chairman, just to explain a little bit about the philosophy underlying it; he has been very much involved in it.

Mr Gass: I would like to add a little bit to that, yes, thank you. There is the new money, to which you have rightly referred, Mr Chidgey; in addition, of course, there are the existing FCO programmes, and you referred to the Westminster Foundation, which is funded partially by the Foreign Office, and our Human Rights Project Fund. If you put all of that together, which we have done, into the Global Opportunities Fund, you end up with a sum of £27 million, £43 million and £61 million; so, if you look at the total, it certainly is not large in comparison with a development agency, but then clearly that is not our role in life. What we can do with that money is that we can fund small, high-value, low-cost interventions; and if I could give you just a couple of examples from my own experience, which was most recently in South Africa. The ability to fund, for example, a Treasury official to be seconded to the Minister of Finance, to help him with fiscal policy, it is a tremendously useful tool; our ability to help some of the South African policy in combatting crime, by funding Metropolitan Police training. These are not, in themselves, hugely expensive things to do, but they do give very high-value returns, we believe. Certainly, we are not, in any sense, in competition with our colleagues in DFID in this business, and, for that reason, the large-scale interventions which they would be able to mobilise just are not really the purpose of the Global Opportunities Fund. Of course, the ability to which you can change the world in a major sense with this sort of money has to be limited, but individual interventions can be very important.

Q61  Mr Chidgey: I do not doubt the worthiness of the projects that you are able to undertake, Sir Michael, no question, obviously I have seen some of them in action, but DFID is spending nearly a billion pounds a year, we are talking about £87 million over three years, there is no comparison. My concern, frankly, is that, whilst these individual, small-scale projects no doubt are highly valuable and give you a very good return for the minimum investment that is being made, it hardly seems to me to support the Government's policy of addressing the issues of good governance, human rights, never mind worldwide, just in the one continent which is giving us so much concern at the moment. Surely, it is a question of putting your money where your mouth is, is it not, £2 million for good governance for the world, extra money?

Sir Michael Jay: As Mr Gass said, small sums of money, well targeted, can make a difference.

Q62  Mr Chidgey: But bigger sums of money, well targeted, can make an awful lot bigger difference?

Sir Michael Jay: We have not got the bigger sums of money.

Q63  Mr Chidgey: I am on your side, Sir Michael, I am trying to give you a boost here. I will not delay my colleagues any longer, I will move on. I have made the point, and I think you understand where I am coming from. Can I go on to pick up where Mr Mackinlay left off, on establishment of FCO posts. There is a particular question I would like to ask you regarding how the mechanics work, when you make a decision to close a post; what discussions would you have, under normal circumstances, with the country in question's Government?

Sir Michael Jay: Normally, we would make a decision ourselves, when I say "we" I mean officials and Ministers, on the basis of how best we should allocate our priorities, given the resources we have available, and then as soon as we had reached a decision we would communicate that to the country concerned.

Q64  Mr Chidgey: It appears those procedures were not carried out when the decision was announced to rearrange the UK's diplomatic representation to Nicaragua; is that right, was it altered subsequently at the request of the Nicaraguan Government?

Sir Michael Jay: No, we discussed it with the Nicaraguan Government. I think what changed was from where Nicaragua was going to be represented; originally, there was a suggestion that it should be represented, the original proposal as to where, as it were, the hub should be was changed after discussions with the Government.

Q65  Mr Chidgey: You mentioned earlier, in response to Mr Mackinlay, that you work from a finite pot, we understand that, of course, but inevitably that meant when you opened a post you had to close one, in general terms.

Sir Michael Jay: It is a constant shifting of priorities.

Q66  Mr Chidgey: In fact, the Annual Report points out that in the last five years you opened 32 new posts across the world and closed eight, which seems to me that there is a demand for new offices continuing. My concern is how you are going to cope with that, if you are working from a finite pot; surely, if it is the policy of this Government, which we understand it is, to engage far more directly in the world than we did in the previous decades then you are at the front edge of this, you are literally the front line, and, above all, clearly, you need the resources to be able to follow through that policy?

Sir Michael Jay: Well, we do; and the answer to your question is, we are going to do it with great difficulty, because, as we get increasing demands for opening new posts or strengthening posts in some parts of the world then we are going to have to think of imaginative ways of ensuring that we have the global reach we need.

Q67  Mr Chidgey: You cannot clone people, can you, you need actually to have new people in post to do the job?

Sir Michael Jay: It is a constant judging of priorities. There are going to be some, and I can give no guarantee that we are not going to have to come up and say, in the next two or three years, "This post has now become just so much more that we don't think we should be keeping it open, given the demands to open elsewhere or to strengthen elsewhere." I think that is a reality of life, we are shifting priorities the whole time.

Q68  Mr Chidgey: I do not want to dwell on this point too long, but just one final comment on this point, before I move on to my last point. I cannot conceive of a situation where it is automatic that if our interests grow in one area of the world then we have to reduce our representation in another; that does not smack of sound foreign policy to me?

Sir Michael Jay: It is a necessary consequence of operating within finite budgetary constraints, that if you have demands to spend more on one part of the world and your budget is finite you have got to find something which is classified as a lower priority, which you do not do, it does not mean to say it is not important but it is a lower priority. And that is something which we are having to do all the time.

Q69  Mr Chidgey: A final question, and it is related to this. We were informed a while ago, I think by the FCO, of changes in West Africa, you have referred already to the closure of our post in Bamako, in Mali, and that is a consequence of the upgrading of our post in Conakry to Ambassador level, which I welcome, by the way, I think it is a very important move to make and it shows an engagement with Francophone Africa and western Africa that was not there before. But it comes back to this point, is Mali suddenly a country where we have less concern about developments, in terms of terrorism, in terms of good governance, in terms of human rights; how are we going to represent British interests, not just British citizens, without a presence in that country, which is right at the heart of political developments in the sub-Sahara?

Sir Michael Jay: We would have preferred to keep it open. The judgment was that having an Embassy in Conakry, or raising the status of the Embassy in Conakry was more important, perhaps not a question of one being more important than the other but the rational look at our representation in West Africa as a whole led us to conclude that the right thing to do was to upgrade our Embassy in Conakry to a full Embassy and scale down our Embassy in Bamako. And also, depending clearly on the way in which the situation goes in Liberia, we are hoping to attach a political officer to the US Embassy in Liberia, which is another example of flexible representation. Also, I mentioned to the Committee last year, we are working with the French to enable us to have representation in their Embassy in Niamey, in Niger, and, in return, they have space in our High Commission in Freetown, which is a way, again, of extending our range but in a cost-efficient way.

Q70  Mr Chidgey: Can you tell us when the Ambassador to Conakry is likely to be appointed?

Sir Michael Jay: I cannot tell you, but I can write to you and let you know, certainly.

Mr Chidgey: I would be very grateful.

Q71  Sir John Stanley: Sir Michael, can I just follow the points that have been made by both Mr Mackinlay and Mr Chidgey. I fully understand that you have got to operate within finite budgets where you have got a steady-state situation, but we all know that there is provision in the public expenditure mechanism that where government departments face exceptional requirements that essentially are unforeseen there is the ability to bid to the contingency fund. And, I must say, I was dismayed, in your reply to Mr Mackinlay, when you said that you were having to look to make economies elsewhere in the diplomatic representation simply because we have needed to establish, absolutely rightly, our Embassy in Baghdad, and possibly a base in Basra as well. And I do not understand why the Foreign Office is not doing what I am absolutely certain will have been done by the Ministry of Defence and also by DFID, to make a bid to the contingency fund to meet the quite exceptional needs that you are having to face. On a straightforward level, it seems to me absolutely ridiculous that the Foreign Office is having to pay a price of closing down some of its overseas representation because we have successfully managed to overthrow a tyranny in Iraq?

Sir Michael Jay: I will ask Simon Gass to comment on exactly where we are in our discussions with the Treasury. We did make a successful bid on the contingency fund to finance some of the preparations for conflict, before the conflict in Iraq, and we are considering a further bid and, indeed, I think discussing with the Treasury the possibility of a further bid in order to cope with at least some of the extra expenditure that we will incur as a result of our operations in Iraq. But, irrespective of Iraq, I think we have to recognise that we are entering a kind of period in which we are going to have to be looking constantly at high priorities and low priorities and looking at ways of doing things more efficiently.

Q72  Sir John Stanley: By why are you only considering making a bid to the contingency fund? I would have thought that, the day the war ended, or possibly before the war ended, if one was going to forecast the outcome, you would have been there and you would have your bid on Gordon Brown's desk the day after the war ended?

Mr Gass: Indeed, we did make a claim on the reserve in respect of the last financial year for the expenses which we had then incurred in respect of Iraq. The Treasury met the claim in part but not in full, and therefore we were left with a sum which was unfunded. We will enter a further claim on the reserve this year, undoubtedly, but part of our aim is to make sure that we have a full understanding of what all our costs are going to be this year. What I think it would be wrong to do would be to enter a series of sequential reserve claims with the Treasury, we would rather make sure that we have got a clear fix on our costs before we did that. If I may take one step back, I think that the linkage that because we have to do more in Iraq we close a post, or because we open a post we have to close another post, is more mechanical than actually it is. Of course, there are many areas in which we can make savings in the Foreign Office, and that indeed is what we are trying to do through our Efficiencies Programme, and, for example, the reorganisation of our services organisation, where we hope to save a substantial sum through smarter procurement over the next few years. So it is a question of the Foreign Office operating against a tight budget and really trying to do the best that it can with that.

Q73  Sir John Stanley: Could we have a note from you, Sir Michael, as to what are your estimates of what the capital costs that are going to be involved in creating a proper, long-term Embassy, on a permanent basis, in Baghdad, are going to be, and certainly you are going to want to establish a Consulate, I imagine, in Basra, and the costs of that, what your estimate is? And can you give this Committee a decision as to how much you are going for, in terms of a bid to the Treasury, before we conclude our report, please?

Sir Michael Jay: Certainly.

Q74  Chairman: Sir Michael, creative and innovative representation, you have given some examples, a political officer of the UK in the US Embassy in Monrovia, you have mentioned the linkage, France, Niamey and Accra; you did not mention any possible such initiatives in Central America. When we closed our posts in Tegucigalpa, in Managua and in San Salvador, did we then try to have similar, innovative, creative solutions in dealing with the US there, for example?

Sir Michael Jay: What we have done, I must get this right, we have reorganised our representation in three Central American countries; one of them we have closed and left with the local representation.

Q75  Chairman: That is Managua, I think?

Sir Michael Jay: I will just check; in Tegucigalpa and Managua, where there are DFID people, where there is a DFID office, we are going to appoint the head of the DFID office as a Charg€ d'Affaires in a British Development Office, and then we will be represented from one of the other regional capitals. In the case of San Salvador, we will have an Honorary Consul, who will be our own in-country representative. Now, we have not discussed, I think, in those cases, the possibility of co-location or joint representation with others, so that is something we do on other occasions.

Q76  Chairman: When we have the joint operation with the French in Niamey, and in Freetown, what are the financial implications for the French and ourselves?

Sir Michael Jay: I think I will need to send you a little note on that, if I may, Mr Chairman.

Q77  Chairman: Thank you. A final point on this representation, before I pass to Mr Hamilton. There strikes out from this group in Central America the fact that we are keeping our High Commission in Belize; now is it still the view of the Foreign Office that all posts in the Commonwealth, effectively, should be kept open?

Sir Michael Jay: No. It is not a rule that all should be, Mr Chairman, there are one or two countries, certainly, Commonwealth countries, in the Pacific.

Q78  Chairman: Apart from the Pitcairn Islands and St Helena, and so on?

Sir Michael Jay: They are Overseas Territories.

Andrew Mackinlay: They are Overseas Territories; without representation, out of sight, out of mind. Sorry about that.

Q79  Chairman: Clearly, when you looked at Central America and the representation, the fact of there being one Commonwealth country, namely Belize, presumably was a factor in your keeping open that one?

Sir Michael Jay: Yes, it was a factor, because our interests there remain considerable. But this is not an absolute, because there are one or two Territories in the Pacific, I think I am right in saying, Kiribati is one, where we do not have full-time representation. So we do not have a policy that we should always have a High Commission operating in all Commonwealth countries.

Chairman: Thank you.

Q80  Mr Hamilton: That leads me neatly on to the point I want to discuss about entry clearance, because, obviously, unless we have a High Commission or an Embassy, it is much more difficult for us to organise visas and entry clearance procedures. Now in the Annual Report, and indeed in your supplementary memorandum, you draw attention to the huge increase, I think it is a 9 per cent increase, in applications in 2002 for entry clearance in our posts abroad. To many of us in the House of Commons who represent a large number of British citizens who are of Pakistani, Indian, Caribbean, origin, African, maybe, these entry clearance procedures are critical, because, inevitably, our constituents have family coming from abroad who want to join them for holidays, or weddings, or funerals, or special events. And one of the biggest problems we have, in terms of time in dealing with constituents, certainly in my case, and many, many colleagues, and I think Mr Pope as well, in Hyndburn, is those constituents who are deeply unhappy that their relatives have been refused entry clearance, not, it seems, often, for good reasons, because we accept that there are good reasons for refusal, in some cases, but for spurious reasons. And very often we are asked to provide letters of support, which usually I say is a bit pointless because it does not figure in the calculations when an Entry Clearance Officer is looking at an application. So my question is, how are you going to deal with the increased demand, and how are you going to ensure that there is a greater fairness and transparency in the decisions that are made? And, clearly, we get only the decisions that have gone wrong, I accept, a huge number go through very, very easily, with no difficulty at all, and people come to Great Britain and leave when they are supposed to, and that is fine, we are pleased about that. But how are you going to cope with that increased demand, which has already happened and which is quite likely to increase over the next few years?

Sir Michael Jay: I think it will continue to increase, but I think you are right to say, Mr Hamilton, that the vast majority of cases are settled satisfactorily and are within the time-frame. We dealt with 1.94 million applications in 2002, which is a huge operation, the visa operation, and that was an increase of 9 per cent on 2001, and 91 per cent of our straightforward applications were resolved within 24 hours; so it is a huge and, I think, on the whole, very successful operation, and, I have to say, I am full of admiration for the staff that I meet around the world. I always visit visa sections when I travel anywhere in the world, because it is a hugely important part of our operation and I am very impressed by what they do. But there is a significant number of difficult cases, and a lot of interest, as we know, from Members of Parliament, because of the letters we get, and, indeed, most of our ombudsmen cases are cases which derive from complaints against our visa system. There will always be a small number of cases which, for one reason or another, go wrong, we will do our utmost to minimise those, through proper training programmes and also through making sure that we have got enough visa ECOs in the posts concerned. And that is helped by the sort of self-financing arrangement, so these operations are not a claim on the rest of our budget, it is a self-financing operation, which Mr Gass could explain, if you would like him to. It is complicated further by the security situation; there are some parts of the world, like Pakistan, for example, where it has been very difficult to maintain a full-time visa operation simply because of security concerns and the difficulty of allowing people to come into the High Commission. As a result of that, we have been looking at innovative ways of issuing visas, through courier services, which can reduce the need for people to come to the High Commission and Embassy, and we are opening a new network of ten visa application centres in India, for example, outside the traditional High Commission and Deputy High Commissions, which I think will enable us to provide a better service where people are, rather than expecting them always to come to the capital. So we do have a number of initiatives to try to improve the service, improve its transparency and ensure that we have the right number of people in the different countries; but I do not underestimate the difficulties of this. Again, I was very struck, being in Nairobi and Addis Ababa last week, by the huge difficulty at the moment over Somali applicants; there are very large numbers of visa applicants from Somalia who have no documentation and who, quite rightly, want to join their families here, and it is proving quite difficult to manage. Now we are going to focus resources on that particular issue because there is a difficulty there. So there are a number of initiatives we have at the moment to try to improve the system; but I do not pretend it is going to be easy, because it is a huge operation and it is going to become, I think, more difficult as time goes on.

Q81  Mr Hamilton: I understand, and I pay tribute certainly to your staff, who have improved dramatically over the years, certainly the six years that I have been a Member; and, Islamabad, I know the situation there in Pakistan, having spoken to our new High Commissioner. And I was intrigued to discover you are using a firm called Gerry's/FEDEX to courier around the applications, since the person who deals with my casework in that area is called Gerry, it was quite convenient really. But the other thing I wanted just to ask you about really was the very few cases where there are problems, and I appreciate that many of your staff are highly pressurised and that that is a problem that causes tempers to get raised, especially when you have awkward people trying to apply. I am not going to talk about individual cases, but, for example, in Bangkok recently, one constituent told me that staff there were quite rude to the person who was applying; now it may be that she was rude back, and I am not going to discuss the individual case, but I wonder, in those cases, where you have had a number of complaints in a particular post, whether you address those concerns and pinpoint them to individual members of staff and then help them with retraining?

Sir Michael Jay: Certainly, I hope we would do that. I cannot comment on individual cases, but certainly I would expect that the head of a consular or visa section, or indeed the head of post, to be aware of an increase in complaints, because, certainly, my experience as an Ambassador is that complaints come to you, as Ambassador, and if you notice that suddenly you are getting an increase, you think, "Hang on, there's something not quite right here," and talk to the Consul, talk to the Entry Clearance Manager, and say, "Look, have we got a bit of a problem here, is there somebody who's under a bit of pressure?" If so, take them off, or, if there is a problem, do some more training. So that, I think, I would hope, would be part of the good management of an Embassy and of a visa section.

Q82  Mr Hamilton: Finally, Chairman, can I just ask whether you are confident that you will be able to meet all your PSA targets in the area of visas and entry clearance in the next year?

Sir Michael Jay: I think we will make a really good stab at it. I cannot promise you that we will meet absolutely all of them. But we take the PSA targets extremely seriously, they really are, more than has been the case in the past, a driver for our activities and we will do our utmost to meet them.

Q83  Mr Pope: Just to follow on, briefly, from what Mr Hamilton was saying. First of all, a quick comment, to say, in my experience, it is hugely better now than it was just a few years ago, there has been a very rapid improvement in entry clearance, and, I must say, I would not want to be an Entry Clearance Officer, it looks to me an extraordinarily hard job. I have two quick questions. Can you say just a word about training for Entry Clearance Officers? Constituents come, and it does appear just inexplicable why they have been turned down; quite often you can see easily why somebody has been refused but sometimes it seems just really arbitrary, and I wonder if you could say something about the training? The second point is about Islamabad. I too have come across Gerry's/FEDEX. I am not sure 'innovative' is the word that I would have ascribed to this process. Clearly, there are massive problems in Islamabad, but it is causing a lot of difficulty in a country where there are a great number of people who wish to visit the UK. So I would be grateful if you could say just a few words about that, please?

Sir Michael Jay: I am afraid I have not; I do not know whether one of my colleagues has got details on the training available. If I could ask the Director of Human Resources to say a word about training.

Mr Charlton: Mr Pope, it is standard for Entry Clearance Officers to be trained before they go out to post, so that they receive a standard training package which they are expected to pass before they go out. Obviously, once they are there, they work very much as a team, which probably you have seen, and they do look very much at their own performance and try to improve on the job. In areas where there are particular problems, the head of UK visas will go out routinely, with one or two of his trouble-shooters, where there are big queues, for example, I saw this happening in Lagos earlier this year, and try to sort that out, they are very alive to the customer care side of the operation.

Q84  Mr Pope: That is very helpful. The other problem is about Islamabad?

Sir Michael Jay: On Islamabad, I used the word 'innovative' because it is - - -

Q85  Mr Pope: It is a new Foreign Office word?

Sir Michael Jay: I will take that as a compliment. It was a new way of doing things, and, in fact, although it is not enabling us to provide as good and as fast a service as we would like ideally in Islamabad, given the demand and given the security situation, it has enabled us, I think, to provide a much better service than if we had not had that service and had still had the problems over access to the High Commission because of the security concerns. I should say that I know that the Foreign Secretary is very, very concerned personally about the whole question of visa operation and entry clearance services and follows these innovations and other departures extremely closely.

Mr Pope: I think we have some similar surgeries, yes.

Q86  Richard Ottaway: Chairman, just to add to my two colleagues; having a Croydon seat, where immigration matters probably is the number one issue, things have improved a lot, as far as your side of the operation is concerned, I wish I could say the same for the Home Office, but a satisfied customer from your perspective. Can I take your mind back, Sir Michael, to the dreaded question of resources and deal with property and assets. The Report, where you have an aim or an aspiration, an ambition, to recycle £100 million of your assets in the three years from 2001 to 2004, how are you getting on with that?

Sir Michael Jay: We did pretty well in the first year. Mr Gass can give you the detailed figures. We did not do so well last year, largely because the property market collapsed, particularly in the United States, where we had some properties we were trying to sell, and we are hoping to recoup in the current year, which is the third year of the present triennium, in the hope of reaching the £100 million. But it is not self-evident that we will reach that £100 million this year, at the end of this triennium, and that, again, will put pressure on the budget and lead us to look at economies elsewhere.

Q87  Richard Ottaway: Before Mr Gass answers the details, how will you make up the budget, if there is a shortfall?

Sir Michael Jay: I cannot say that at the moment, it will depend on how much the shortfall is, it might be things that we would have to delay, projects that we would have to delay a bit, in order to make up the shortfall. I hope we will not have to do that, but the international property market is not as strong as we would like just at the moment. But perhaps I could ask Mr Gass to say a bit more.

Mr Gass: In the first three years in which we rolled this out, we had a target of £90 million, we met that; last year we achieved sales of £41 million. So that took us quite a substantial way over the three-year target of £100 million. Last year was disappointing, we sold only a bit more than £13 million last year, partly that was because some deals were delayed, because of property upsets in the post-11 September environment, and we have a plan which would help us to catch up with that; but it is not a certain business, that is absolutely clear.

Q88  Richard Ottaway: If there is a property downturn in other parts of the globe, would it be better to postpone generally until the market turns up, rather than flogging off the assets just for the heck of hitting a target?

Mr Gass: We are certainly not in the business of doing a sort of bargain basement sale on properties, no, but it does depend a lot on whether the property meets our requirements or not. Where we have poor properties, of which we still have some, there is then the dilemma, which is the classic stock market dilemma, do you hold on and hope that the property market will go up, having a property which is not really what you want, or do you sell it and then reinvest by buying a different property, possibly in the same city, at a lower cost. So it is a calculation which obviously we have to make case by case.

Q89  Richard Ottaway: I agree. I do not particularly see the Foreign Office as property speculators.

Mr Gass: Indeed, not.

Q90  Richard Ottaway: Can I take you to the very specific matter of the consular residence in San Francisco, clearly a matter you are well aware of; first of all, are there any plans to sell it?

Sir Michael Jay: Yes, there are. We have now completed the purchase of an alternative consulate and there are plans to sell the existing residence.

Q91  Richard Ottaway: You have actually completed the purchase of the new site, the new residence?

Sir Michael Jay: As I understand it, that has been completed.

Q92  Richard Ottaway: My next line of questioning is moderately academic, but are you well aware that the British-American Chamber of Commerce has described the new house as utterly inadequate for the type of operations that they would like to see conducted over there, and described it similar to the type of house one would find in Acton or Ealing, "a far cry both in size and architecture from the type of house envisaged by your Committee"?

Sir Michael Jay: I am aware of their views, and I do not agree with them. 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. One of the concerns I know that the business community has had is that there is a conference room attached to the Consulate-General, which there will not be in the new one, that is true, but we are making arrangements to ensure that we can have access to a conference room next to the office itself, in order to make up for that. It was a difficult decision, this, and there was a lot of attachment, for reasons I understand entirely, to the residence in San Francisco, but I am clear in my own mind, as are our Ministers, that this is the right way to go.

Q93  Richard Ottaway: The Chamber of Commerce, in anticipation almost of your remarks, Sir Michael, sent us photographs of the new residence.

Sir Michael Jay: I have had them too, on my e-mail.

Q94  Richard Ottaway: In that case, you will be well aware that it is by far the most modest of all the residences in San Francisco now, in fact, it is really down on a par with the Swiss residence, but, Indonesia, everyone has got far superior buildings. Just to say that, if the community there says that they do not think it is up to much, if you have done the deal then I suppose that is it, but it is a matter of regret. How much money was actually made out of the two deals?

Sir Michael Jay: We have not yet sold, so we do not yet know, but we are confident that there will be positive returns, and also that we will be avoiding a heavy capital charge on the existing residence and avoiding heavy maintenance charges over the next few years. And I think the residence is fit for purpose, it is a good house, it can accommodate a sufficient number of people, businessmen and others, for dinners, and also we have very good, high-quality offices in San Francisco, which we have moved into fairly recently, and I think the combination of the two is what we need in San Francisco and gives a very good image of Britain.

Q95  Richard Ottaway: But, Sir Michael, Mr Mackinlay pointed out the losses on the Focus Programme earlier on. I venture to suggest, flogging off the family silver here, the sums you are going to raise do not even pay a small fraction of the sorts of losses you have got on some IT programmes, and yet the money you are meant to be gaining is meant to be going into IT programmes; so all that is happening is that assets are being sold and they are not even covering the losses on these IT programmes?

Sir Michael Jay: We are selling them not just to raise money but we are selling them because what we need is an estate worldwide which really is fit for purpose, which is the right size, the right scale and enables us to carry out the functions we need. The San Francisco residence, we have rough targets for the size of residences in different countries, and the one in San Francisco is 350 per cent over the sort of recommended scale, and the maintenance of something which is so much larger than what is regarded as a sensible norm, the cost of maintenance is just too great.

Q96  Sir John Stanley: Sir Michael, as you know, this Committee has been very robust in cautioning your Department in not flogging off the family silver, as Mr Ottaway rightly says. In most of these cases, these are irreplaceable buildings, and they are buildings that are irreplaceable not simply on cost grounds but very often in terms of the location and the facilities which they provide. I am sure like yourself, I come at this issue with a background of a very, very long period of time, for three years I was responsible for the diplomatic estate, as the PSA Minister, and it was the same story then, and this will be familiar to you, the Treasury, right back then, were trying to flog off our Embassy in Paris, in the Rue St Honor€, and send you out to the Parisian equivalent of Ealing and Acton, which we successfully fought off, and it is the Treasury at the same game, all over again. And I must tell you, Sir Michael, that I was dismayed, as I know was our Chairman, when we were in Prague a few weeks ago, at the meeting of the NATO Parliamentary Assembly, to be told that our excellent Embassy, right in a key position in Prague, is apparently now threatened with being sold. You are shaking your head, I am delighted you are, and I hope you are going to be able to assure us that that is not going to happen. If I could ask you to respond to the general concern that the Foreign Office needs to have locations which reflect properly the importance that our country attaches to its diplomatic and commercial relations with the countries in question? And, whatever you say about San Francisco, these are the people on the ground, these are the people who are engaged in doing business between America and this country, and they are in no doubt that this marks a significant downgrading in the status of British representation in San Francisco. And if you do it elsewhere, in Prague, or elsewhere, the same will be true, it will be seen as a major downgrading, and the people who will rejoice will be our competitors, diplomatically and commercially, round the world?

Sir Michael Jay: I agree completely that we need to have really good-quality, well-placed, centrally-located offices and residences around the world, and that is what our aim is; but, equally, the aim is to have the right kind of residence, the right kind of office, and to have a constant programme of modernisation to ensure we have that. I think the decision that I have described for San Francisco was the right one. In Prague, which I visited recently, the combination of offices and residence is an extraordinarily historic castle; it is not convenient, in terms of its layout, and it is very expensive to maintain, we spent £800,000 over the last two years in maintenance and refurbishment alone, and we have to take this into account. Now there has been no decision at all on Prague.

Q97  Sir John Stanley: Is it under threat?

Sir Michael Jay: We have to look at every property to make certain that they are paying their way and that we are going to be able to maintain them in order to make them efficient and effective; we have to do that.

Q98  Sir John Stanley: But, Sir Michael, you have been to Prague, you know it intimately as well; you understand totally that is an absolutely irreplaceable site.

Sir Michael Jay: I agree.

Q99  Sir John Stanley: And it speaks volumes for the importance that Britain attaches to its historical relationships with the Czech Republic, to a very, very important, new member of the European Union, and a new member of the European Union which will be of significant economic and commercial consequences. There is no way, if that Embassy is sold, that anything remotely equivalent in the centre of Prague is going to be obtained?

Sir Michael Jay: As I say, no decisions at all have been taken about that, and no decisions would be taken without consultation and agreement by Ministers, and I am quite certain that the factors that you have mentioned will be taken into account. It is a magnificent site.

Chairman: Well, the point is made. Sir Michael, we have three colleagues who want to come in on this, there is a block on locally-engaged staff and on retirement, and we have a major discussion afterwards; so can I ask colleagues to be brief on this.

Q100  Andrew Mackinlay: I am sure there is a danger of you bursting into tears with the question I am going to ask now, because it is so unfair, because you have been defending not selling; but one thing which has concerned colleagues, I think, over a number of years, when we have gone to the United Kingdom residence in New York for our Ambassador to the United Nations, is that that actually is woefully inadequate, and I think it is now time that we flagged that up. I am conscious of what was said, and I realise that, basically, at the end of the day, we vote through the money, but, surely, bearing in mind the things you said, it is long overdue that the residence of our Ambassador to the UN, frankly, had better premises, more spacious premises?

Sir Michael Jay: Yes, I think it is minimal, in terms of accommodation. Perhaps I could say, in fact, I am seeing our new Ambassador to the United Nations, I think, tomorrow, so perhaps I could pass on to him your concern.

Chairman: Will you pass that on.

Q101  Andrew Mackinlay: I need some brownie points with him anyway.

Sir Michael Jay: May I pass on your best wishes, Mr Mackinlay, to him?

Andrew Mackinlay: Yes, certainly.

Q102  Mr Chidgey: Just two quick points, Sir Michael. If you took that concept that you are lumbered with, of the asset charge, which basically goes with these incredibly prestigious buildings that we have had over the centuries, and therefore are of very high value now, if you take that any further and apply it to this place, the asset charge on that building there, we would be in an office block at Acton?

Sir Michael Jay: We do not take it to its logical extremes. Where we have a grand house which clearly is hugely prestigious and is serving a really good purpose for Britain, there would be no question of getting rid of it. We are not talking about those.

Mr Chidgey: Can I go then to something more modest, in a different part of the world. Recently I was in Trinidad, and I attended a reception with our High Commissioner there, who has a rather large bungalow, in a very good position, which everyone likes to come to for receptions, which is very good for networking, which is the whole purpose of the place. Now I understand that the grade of that post meant that when a relatively junior member of the Foreign Office went out to assess the property they told the High Commissioner that he was not entitled to the separate living-room that had been provided in that bungalow by somebody putting up a wall. Now this is just pedantry by junior members of the FCO, haranguing our staff there, doing their job, and being told, "Ah, but you can't have that room there, therefore we'd better get you a bungalow down the road."

Chairman: And your answer?

Mr Chidgey: You have not the faintest idea what I am talking about? Go and talk to them, because that is what is happening.

Q103  Chairman: You will undertake to go and talk to our High Commissioner?

Sir Michael Jay: I will. It is a long time since I stayed in the High Commission in Trinidad, but I will.

Q104  Mr Olner: The only thing, Sir Michael, I cannot understand is the property we have in Prague. You have just admitted that you have spent over the last 12 months £800,000.

Sir Michael Jay: In the last two financial years.

Mr Olner: Yes; but that is an awful lot of money, and it buys an awful lot of work, I would suggest, in Prague, to have the building altered or brought up to scratch. Now if it were sold you would never recoup that money, so, for goodness sake, why are we even contemplating it?

Q105  Chairman: Well, you will take into account the strong views expressed in the Committee?

Sir Michael Jay: Yes. I do, indeed, take account of that.

Q106  Chairman: We have two other areas of concern. One is locally-engaged staff; what I propose to do is submit to you various questions on that. The second, in terms of retirement, prompted by the rebirth of Sir Jeremy Greenstock, at the age of 60, as our representative in Baghdad. We are aware that the retiring age for our diplomatic staff is, I believe, certainly very much at the younger end; can you say what consideration, if any, is given, in terms of pension, in terms of promotion prospects, and in terms also of the government policy in that respect, and the active ageing policy of reviewing the current retirement age?

Sir Michael Jay: The present retirement age is 60. There have been occasional exceptions to that. Sir Jeremy Greenstock, in fact, is one. I will ask Alan Charlton to say a word about pension arrangements. But the big change, I think, which will be happening in the next few years, is the European Union Directive which, I think I am right in saying, will make compulsory retirement at any age illegal as from the end of 2006. And this is going to require the whole of the public service, and not just the Foreign Office, to reconsider present retirement ages and about the management of its staff.

Chairman: I am aware that this is a fairly technical matter; also I am aware that there is a division coming up very shortly. I think it would be helpful for the Committee if a note were to be produced, and perhaps we can explore it at the next meeting.

Q107  Sir John Stanley: Can I just ask, Sir Michael, one of the allegations made by the British-American Chamber of Commerce is that they say, as far as we can ascertain, no cost/benefit analysis of the San Francisco transaction has been carried out. Could you give us a note to say whether or not that is the case, and if the cost/benefit analysis was carried out could you provide us with a copy of it so we can see whether the predictions of the cost/benefits are fulfilled in practice?

Sir Michael Jay: Certainly.

Sir John Stanley: Thank you.

Q108  Chairman: Good; that will be helpful. I would like to call this meeting to a close and express my thanks to you and to your team. We look forward to a sheaf of notes, preparing us for next year's meeting on this topic.

Sir Michael Jay: Thank you very much, Mr Chairman. Could I offer you one other note perhaps on the subject which we did not get to, which is the management of local staff. It is something to which I attach personally a huge amount of importance.

Chairman: Yes. Actually, what we intend to do is submit a series of questions which inform the basis of your note. Very many thanks.