Sales and purchases
91. For some years, this Committee and its predecessors
have taken a close interest in the FCO's programme of asset sales.
The main earner for the FCO is the sale of prestigious properties
overseas. There have been strong pressures on the FCO to sell
off the cream of its overseas assets and the Treasury has insisted
on annual targets for the amount of revenue to be raised by such
sales. In our Report on the 2004-05 Departmental Report we were
sceptical about how the FCO would meet its target of raising £10
million per annum from property sales.[111]
The FCO responded that it was confident of raising this sum through
"routine sales", mainly of surplus staff accommodation.[112]
92. The high value of some of the FCO's overseas
estate was underlined when, in May 2006, a far-from-routine sale
was announced of just over 3.5 acres of the British Embassy compound
in Bangkok, for £50 million.[113]
The FCO told us that this was its largest ever property sale.
About a fifth of the proceeds of the sale will be reinvested in
the compound, which occupies a nine acre prime site in the business
district of Bangkok. In a positive development, the FCO informed
us of its plans, in confidence, in advance of the sale going through.
93. This Committee has previously been critical of
some of the FCO's estate sales. That criticism was made primarily
on two grounds. First, some of the sales, such as that of the
Consul-General's residence in San Francisco, had in our view been
unwise, and risked diminishing the effectiveness of the United
Kingdom's representation.[114]
Second, there were regrettable errors, notably in the sale of
the residences of the Ambassador to Ireland and of the Consul-General
in New York, which lost money, thus entirely defeating a main
objective of the exercise.[115]
94. In the case of the sale of part of the Bangkok
compound, however, we agree that this was the right thing to do
and we have no evidence which suggests that it was handled other
than well. Indeed, we were told by Dickie Stagg, the FCO's Director-General
of corporate affairs, that the FCO had been able to hedge the
sale so as to save £2 million which would otherwise have
been lost due to fluctuating currency values.[116]
We therefore congratulate the FCO on achieving a good price for
the land sold, while maintaining the overall character of the
compound, which contains several fine buildings and historic monuments.
95. Despite the justified criticisms made in our
past Reports, we have sympathy with the FCO, which has come under
strong Treasury pressure to sell its assets. As Sir Michael Jay
told us, some of the more prestigious properties are of "unquantifiable
but real value."[117]
It cannot be left to accountants to determine their true worth.
We were alarmed, therefore, to be told by Mr Stagg that the Treasury
has been pressing for the FCO to sell off a further £140
million of assets over the next spending period (the period to
2011).[118] It was
not clear at the time whether the proceeds of the Bangkok sale—which
far exceeded the previous target—would count towards this
total.
96. We conclude that any further round of sales
of parts of the FCO estate should be based, not on a revenue raising
target but on the merits of each case. We recommend that, if further
sales such as that recently concluded in Bangkok can be made without
disproportionate impact on the quality of diplomatic, consular
or commercial representation they should be considered solely
on their merits. We further recommend that the proceeds of the
Bangkok sale should count against any target for asset sales which
may be agreed between the Treasury and the FCO as part of the
Comprehensive Spending Review.
97. Since May 2006, the FCO has included information
on estate purchases as well as on sales in its quarterly reports
to us.[119] We welcome
this step.
SECURITY
98. This Committee and its predecessors have taken
a close interest in the safety and security of diplomats and others
working in the United Kingdom's Posts overseas. In the course
of the past year, we have been able to discuss this with officials
on the ground in sensitive locations such as Jerusalem, Baghdad,
Basrah and Riyadh. Some of us have been able to stay overnight
in the hardened accommodation which is home to many staff for
months at a time, and to appreciate both the basic conditions
in which they work and live and the threat they face from incoming
fire. We therefore understand and support the decision on 30 October
to evacuate non-essential staff from the Basrah Palace compound,
following an increase in mortar and rocket attacks.[120]
99. The conclusions and recommendations of the FCO's
March 2004 review of overseas security, carried out in the aftermath
of the Istanbul bombing, have largely been implemented. The FCO
set out what it has done to date in response to our last Report
in this series:
Following the terrorist attack on the Consulate
General at Istanbul in 2003, the Treasury met in full the security
element of the FCO SR 2004 bid. The SR2004 settlement gave an
additional £200 million for FCO security for 04/05, 05/06,
06/07 and 07/08. The funds are allocated to provide enhanced security
measures at all overseas missions and, where our missions are
in the vulnerable locations in the more dangerous parts of the
world, for new Embassy buildings. FCO expenditure on security
works has risen from an average of £2 to £3 million
per year in 2003 to £16.7 million for the 05/06 F/Y. There
are strong security regimes to protect out staff serving in Iraq
and Afghanistan. In these two very high threat countries, all
FCO staff work and live in bomb blast protected buildings located
within fortified compounds. Staff are protected by an armed guard
force when they travel off compounds. Security managers at the
compounds regularly review security procedures. Overseas Security
Advisers based in London travel regularly to Iraq and Afghanistan
to support the work of the security managers.[121]
100. We are satisfied that the FCO itself takes
very seriously its responsibility to protect those who work for
it and that steps have been taken to reduce risk, although in
situations such as Iraq it cannot be eliminated altogether. It
is important that Parliament and the Treasury take their responsibilities
no less seriously. We recommend that the FCO inform this Committee
immediately of any obstacle, including within government, to implementing
necessary security measures, such as a shortage of resources.
102 Cm 6762, p 45 Back
103
Q 40 Back
104
Cm 6791, response to recommendation 29 Back
105
Q 40 Back
106
Ev 126 Back
107
Ev 83 Back
108
Q 45 Back
109
Ev 38 Back
110
Q 46 Back
111
Foreign Affairs Committee, Second Report of Session 2005-06, HC
522, para 128 Back
112
Cm 6791, response to recommendation 32 Back
113
Ev 79-80 Back
114
Foreign Affairs Committee, Twelfth Report of Session 2002-03,
Foreign and Commonwealth Office Annual Report 2003, HC
859, paras 66-75 Back
115
Foreign Affairs Committee, Eighth Report of Session 2002-03, Foreign
and Commonwealth Office Annual Report 2003-04, HC 745, paras
87-92 Back
116
Q 47 Back
117
Q 48 Back
118
Q 47; see also Ev 38 Back
119
Ev 78-82 Back
120
Beckett Statement on Foreign Office staffing in Basra,
FCO news release, 30 October 2006 Back
121
Cm 6791, response to recommendation 34 Back
