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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 522-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE FOREIGN AFFAIRS COMMITTEE
FOREIGN AND COMMONWEALTH OFFICE ANNUAL REPORT 2004-2005
Wednesday 26 October 2005 SIR MICHAEL JAY, KCMG, MR RICHARD STAGG, CMG, MR DAVID WARREN and MR RIC TODD Evidence heard in Public Questions 66 - 170
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Foreign Affairs Committee on Wednesday 26 October 2005 Members present Mike Gapes, in the Chair Mr Fabian Hamilton Mr Eric Illsley Mr Paul Keetch Mr Andrew Mackay Andrew Mackinlay Sandra Osborne Mr Greg Pope Mr Ken Purchase Sir John Stanley Richard Younger-Ross ________________ Witnesses: Sir Michael Jay, KCMG, Permanent Under-Secretary, Mr Richard Stagg, CMG, Director-General (Corporate), Mr David Warren, Director, (Human Resources), and Mr Ric Todd, Director (Finance) Foreign and Commonwealth Office, examined. Q66 Chairman: Good afternoon. As you are aware, we are discussing issues related to the FCO's Annual Report from 1 April 2004 to 31 March 2005. Inevitably, this gives us the opportunity to raise almost anything. I would be grateful, Sir Michael, if you could just introduce your colleagues. Sir Michael Jay: First of all, it is good to be back. On my far left is Ric Todd, finance director. On my immediate left is Dickie Stagg, director general of corporate affairs. On my right is David Warren, the director for human resources. Q67 Chairman: Can you begin by talking about the format of the annual report? We as a Committee over the years have made a number of suggestions about how it might be improved but for the record do you get suggestions from others who read it as to its format? What other suggestions do you get about how it might be presented? What changes have you made as a result of these representations or suggestions? Sir Michael Jay: We see the most important representations that we get as coming from this Committee and we do try to take those into account when we can. We do go through it ourselves and try to improve it each time, in particular to ensure that it is readable, that it follows our evolving priorities, strategic priorities and objectives. I am not aware myself of other comments from outside the Foreign Office or the Committee but if there were any we would certainly take them into account. Q68 Chairman: You must put an enormous amount of effort into producing this document. How widely is it read and do you feel that the effort is worth it? Sir Michael Jay: It is an effort. It is also a discipline because it does get us to focus on what we have done during the course of the year. The way in which it is now structured, partly as a result of this Committee's suggestion, based on lessons learned and cost benefit analysis, the fact of having to do that for the report means, to be honest, that we tend to do it more in the ordinary course of business. It is not just a report to read but the production of it is also helpful in managing the business. Q69 Chairman: Is it available on the internet? Sir Michael Jay: Yes, it is. Q70 Sir John Stanley: You may recall that prior to the last state visit by the Chinese President it transpired that there were, following the questions that were put by Members of this Committee and indeed on the floor of the House, a total of eight meetings none of which was minuted between the Foreign Office and the police dealing with the security arrangements for the visit and the programme. It was certainly a view which was shared in all parts of the House that the October 1999 visit was accompanied by some of the most gross suppressions of the right of peaceful protest in this country that most of us had ever seen in our political lifetimes. When this was the subject of ministerial examination in front of this Committee, the then Foreign Office Minister of State, Mr Peter Hain, said-I quote from his evidence on 19 December 2000-"I think some hard lessons have been learnt. Certainly I would not like to see anything like a repeat of that unhappy series of events and that is true for the government as a whole." Can you assure us that there will be no repeat of those unhappy events during the forthcoming state visit by the Chinese President next month? Sir Michael Jay: It is certainly our intention that there should not be. We are, as you can imagine, working very closely with the police over security for the visit. I know that the police are as well aware as we are of the lessons that we all need to learn from the 1999 visit. It is always a difficult balance to get to allow demonstrators to make their views known within the law, which they must be able to do, and to preserve the security of the visitor but I think we all learnt lessons from last time. I hope very much when this visit is over it will be shown that we have learnt them. Q71 Sir John Stanley: I do not think there was very much difficulty experienced by Members in all parts of the House last time that the balance had been struck profoundly wrongly. Given that assurance, when the present President came to this country as vice-president in 2001 the assurance that this Committee was given by Mr Hain did not appear to have been fulfilled. As was reported in The Independent on 15 October, when the then vice-president Hu visited the United Kingdom in 2001, the Chinese asked that supporters of the Falon Gong and Free Tibet movements, both of which are banned in China, be kept away from him. The Metropolitan Police obliged by blocking the demonstrators. That was a very unhappy experience again in 2001, notwithstanding the assurance that Mr Hain had given to this Committee. Can I ask you to give us a very categorical assurance that there has been no deal done with the security police surrounding the Chinese State President; that those who wish to demonstrate, including on behalf of the Falon Gong and on behalf of Tibet and indeed others who are protesting, with justification, about abuses of human rights, that their protests are going to remain invisible from the Chinese State President whilst he is here. Sir Michael Jay: I am not sufficiently aware of the detailed negotiations either with the police or with demonstrators to give you that absolute assurance but I can promise you that I will look into this after this hearing and inform myself on where the negotiations have got to. Ultimately, this has to be a matter for the police but we will work very closely with them to ensure that we try to get a better balance between the right to demonstrate and the right to security than was the case in 1999 or in 2001. I have not, I am afraid, been reminded of the 2001 events. Q72 Sir John Stanley: Could I ask that you report back to this Committee following your inquiries? I hope that your report back in writing will give us the assurances which I think, in all parts of the Committee, we are seeking. Sir Michael Jay: Ministers and senior officials do regularly raise human rights issues in their contacts with the Chinese authorities and that is an important part of our multifaceted relationship with China.[1] Q73 Chairman: Can I take you onto the wider issues about access and information from your department? Do you apply the provisions of the Freedom of Information Act in practice, in effect, when you make information available to this Committee and to Parliament? Sir Michael Jay: I am not sure I quite understand the question. Q74 Chairman: I will be specific. It is a widely held view in this House, not just amongst Members of this Committee but other select committees, that it is easier to get information from some government departments by invoking Freedom of Information provisions than it is from answers to inquiries by select committees. Sir Michael Jay: We are increasingly conscious in everything we do now of the obligations under the Freedom of Information Act and that would certainly apply to requests for information from this Committee. I would be surprised if there was information which could be obtained under the Freedom of Information Act which we would not, if asked, release to this Committee. We take our responsibilities to release information to this Committee extremely seriously. Q75 Chairman: We will come later to some questions about the Collinson Grant Report but this Committee was made aware of that and the Ling Report to do with the Prism Project after the fact that these committees had been established for some considerable time, so clearly we were not put in the loop at an early stage. We found out about these later on and that is the context in which I ask the question. Sir Michael Jay: The issue there, surely, is whether we should send this Committee automatically anything which we release under the Freedom of Information Act. Anything we release under the Freedom of Information Act is immediately put on our website and indeed there is a special part of the website now which is there just specifically for Freedom of Information Act requests, so once they are available they are available to anybody. There will be classes of documents, particularly relating to our internal management, the day to day management, which would be releasable under the Freedom of Information Act but which we would not release unless asked because they are not of any intrinsic interest. That would explain perhaps why something would be submitted in response to a Freedom of Information Act request which would not have been seen previously by the Committee. Q76 Chairman: Is there not a wider issue here? It would be a bit bizarre, would it not, if select committees of this House had to invoke the Freedom of Information Act to get information when holding government departments to account? Sir Michael Jay: Yes. Q77 Chairman: Surely we ought to have a better position than would be available to any member of the public or any journalist invoking freedom of information? Sir Michael Jay: Over the years there have been large amounts of information which have been made available to this Committee which would not have been made available under the Freedom of Information Act, information that we send you sometimes in confidence so that you can have a proper understanding of the way in which we work. I entirely agree with you. I think it would be bizarre if it was easier to get information from the public. Q78 Andrew Mackinlay: Collinson Grant was received formally in February of this year. At no stage was the Committee made aware of this comprehensive report which was looking at savings and management style of the Foreign and Commonwealth Office. The report castigates the management of the Foreign Office. It also indicates that there was obstruction in its preparation. It says that the failure of some people to respond to inquiries "detracted from the quality analysis, caused severe difficulties and significant delays." The report goes on to use the National Audit Office criteria, seven warning signs, and it says, "The Foreign Office is deficient to some degree at least in many of these requirements. The Foreign Office is slow to act. There is lack of delegation, insufficiency of accountability and responsibility, a failure with regard to middle management decision making." They say that there is significant redundancy of effort in the managerial chain that leaves the Foreign Office-which must mean you and your colleagues-rarely focused on efficient management of the organisation. The entire organisation needs to be challenged and reformed. Leadership lacks the skills needed and the will to upset the status quo. Accountability is poor. The changes required will cause pain, and it goes on. Surely this is really a document which the Foreign Office commissioned-I did not commission it-which really indicates that there needs to be a root and branch reform of the organisation? It also goes on to indicate that savings are not going to be made. Human resources are inflated. They make comparisons with the Ministry of Defence and the armed forces. What say you to all those charges which are not mine but Collinson Grant's? Sir Michael Jay: Let me start by getting a bit of context. You are right in saying that we commissioned the report. We commissioned the report because we are very conscious of the need to change, modernise and reform and have been for the last two to three years. I can go through some of the changes that we have made if that would be helpful. We are also conscious that we have as a result of SR2004 an obligation to further improve our operations and our systems and to fulfil a demanding efficiency agenda. We believed that it would help us if we were to have a hard hitting report from a firm of consultants, pointing up some of the areas in which there was room for development. That is why we commissioned the report. The commissioned report is hard hitting. It concerned much of what we already knew about areas in which we need to improve. For example, delayering in London to reduce the number of senior staff, greater focus on risk management and on delegation of authority. We have learnt and we are implementing a number of those points. It also focused our attention on some new areas of work which we had not focused on sufficiently, like the need for further reform of the finance function, which we are now carrying out with the Treasury and the NAO. We commissioned the report. We do not accept all the analysis. We accept many of the recommendations. A number of them we are implementing; some of them we were already implementing. There is always a risk. It would have been easy for us not to commission a report in which case I would not have to answer this kind of question, but I think it is better if we do feel we need some support in managing ourselves to look for some outside help and then take it into account. Q79 Andrew Mackinlay: I welcome the fact that you are saying you are going to adopt some of their recommendations but it condemns hook, line and sinker the culture in the Foreign Office. It says, "poor leadership; closed culture; poor information for decision makers; low accountability; lack of clarity; poor management, poor worker relations." They are not my words; they are theirs. How are you going to change the culture because it does confirm what a lot of us knew. Sir Michael Jay: It confirms what a lot of you believed, because I do not accept all of that. I accept some of that. We have changed a lot in the last two or three years because of a consciousness that we need to reform and modernise if we are going to be as effective as we need to be in a pretty complicated world. The Foreign Office has a high reputation around the world with its peers, deservedly so in my view, and there are plenty of examples of the way in which we have been extraordinarily professional in what we have done. To take some examples recently, the work on Turkey, saving the UN Millennium Review Summit conclusions document, the work of our mission in New York. As this Committee knows, we have a large number of people doing very high grade work in very difficult and dangerous places such as Baghdad, Basra and Kabul. Let me start by saying that I am proud to lead this organisation. I believe we have reformed a lot in the last three or four years. We have further to go. I think we and our staff do an extraordinarily good job in very difficult circumstances. I want to get that on the record because I think it is important to do so. We have always recognised that there are further changes we need to make. We have changed a lot. We have, by comparison with what we had three or four years ago, our strategic priorities. We are focusing our resources far more around strategic priorities. We are much more flexible than we were, as we know from the rapid deployment teams which we can come to if we talk about consular work later on. We are more adaptable in shifting resources to where they are needed. We have a much greater focus on service delivery. We are much more open, working more closely with other government departments and, in my view, we are increasingly professional, not just in the traditional forms of regional and linguistic expertise but also in the new professional expertise we need to run a highly complex business. There are a lot of changes which have been made. We need to change further. I accept many of the conclusions but not the analysis of that report and I do not accept the root and branch criticism. Q80 Andrew Mackinlay: For fairness and for expedition this afternoon, could you give us a note on those things with which you profoundly disagree-your words, not mine. For instance, all the things that you think are unfair criticism. Could you flag them up and rebut them perhaps in a note? Sir Michael Jay: I will certainly do that[2]. One of them I have already flagged up in response to one of the "57" questions which you asked us a couple of months ago when there was a suggestion that we did not have professional, diplomatic skills, which I profoundly reject because it is simply untrue. There are other areas where we do need to develop further skills and we are developing them. Q81 Andrew Mackinlay: Can I go to two specific charges, though? One suggests there was obstruction by some of your colleagues. It was also put to me, though I am sure it is a tissue of atrocious lies, that you yourself did not complete the questionnaire. That is completely untrue, is it? Sir Michael Jay: If I did not complete the questionnaire, I am remiss. I am not conscious of obstructionism. We discussed the report with Collinson Grant and they came and gave a very good presentation to the board. After they had reported we immediately set up a number of focus groups in the office in order to take forward specifically the individual work streams. We took this extremely seriously. We would not have spent that money on it if we had not. Mr Stagg: On the question of opposition or resistance, it is inevitable that, if you bring in people who are clearly seen as being something of a threat to the status quo, there are people who are unenthusiastic about that process. I think you would find that anywhere in any organisation. It is not good but it is a reality. At the end, we got a good return from staff on the questionnaire. I personally commissioned the report so I am seen as the person, in some ways, to blame in the organisation. I think we have since then been able to do quite a lot in terms of altering some of our structures, reducing some of the layers. We have downsized quite significantly some of the departments in London by 20/25 per cent and we have also introduced a much clearer system of corporate governance at the top which is now seen as in line with Whitehall best practice, which frankly the previous system was not. Q82 Andrew Mackinlay: We were told that Collinson Grant is engaged in three other strands of work. Would you be able to supply the Committee with the reports on these strands and also let us know whether the 2005/06 accounts are expected to be signed off before next summer's recess. Given that you have been unable to move the timetable of your accounts forward this year, how likely is it that the deadline will be met? What systems are being put in place to improve the situation? Sir Michael Jay: On that second point, I have had long discussions with the finance director, with the board and with the audit and risk committee. I am absolutely determined to sign off the accounts before the recess in 2006. This is not going to be straightforward because it is going to require all our posts around the world to manage their accounts or at least to get the information in earlier. This is coming on top of quite a heavy programme of other change, but I am determined to do that. Q83 Andrew Mackinlay: I would like you to respond to the fact that the report castigates the scale, size and nature of the human resources department but also, when I drew attention to this in the summer, I was assured by your office that Collinson Grant would be put on the website. I am open to correction but I do not think it is there now and certainly was never volunteered to this Committee. It was never uttered that such a report was being done. Perhaps taking the last point first, one, why is it not on the website? Can it be on the website? Why were we not acquainted with it and, two, if you can come back to human resources again I would be grateful. Mr Stagg: It is on our intranet internally because we view it essentially as a matter of us trying to improve internally and not something we are ---- Q84 Andrew Mackinlay: I was assured it was going on the internet, on the website, and I cannot see any logic why it should not be, bearing in mind there is considerable, legitimate interest in the stewardship of the Foreign Office. Sir Michael Jay: It should be if it has been released under the Freedom of Information Act. It ought to be and I am slightly surprised that it is not on our website. We will look into that.[3] Q85 Andrew Mackinlay: Human resources? Sir Michael Jay: We would accept some of the comments and analysis in the Collinson Grant Report. Our human resources operation has been too large and we are now in the process of substantially reducing it and moving to a new system of managing our human resources. Mr Warren: Collinson Grant made the perfectly fair point that we were too large as a human resources organisation, with 270 staff for an organisation the size of the Foreign Office's UK based staff complement of around 6,000. We have already put into place a change programme which should shrink the size of the human resources directorate of the Foreign Office by at least 100 positions over the course of the next six to seven months. This programme is in hand and indeed it answers one point, Mr Mackinlay, that you drew attention to, about the delayering of the organisation, by reducing the number of assistant directors of human resources from eight to three. This was in hand when Collinson Grant tabled their report. Q86 Chairman: The reply to us from the FCO when you answered our written questions referred to the fact that there were four strands of work that Collinson Grant were commissioned to undertake. Can we be supplied, please, with copies of the reports on the other three strands? Mr Todd: There are not reports on these. What they did was to put together for us, for example, a database of costs. There is not a written report by them. There is material which we are using in order to take forward Collinson Grant. Q87 Chairman: Perhaps you could send us what material you can.[4] Sir Michael Jay: Can we give you more information about those very strands and what details we can about them? Chairman: We will consider what we get and decide if we need to write to you again. Q88 Mr Mackay: From my experience I think we potentially have the best diplomatic and consular service anywhere in the world and it is something that you should be rightly proud of. You rightly defend it. The problems seem to be in other areas such as our estate management, finance, human resources, and this is very much mentioned in the report we have just discussed. I was alerted to it last time you came to this Committee when, as an aside, you just happened to say about the previous finance director, "I am afraid he will not be with you next time because he is just going back to be our ambassador in Athens" which I am sure was a very good appointment. It caused me to start to look at what other people did. If we take, for instance, Mr Gillham who runs the estate strategy unit, there have been endless problems about and bungling, financial mismanagement which I do not want to go into here because we discussed it with you before. You look at his very distinguished career and look at Caracas, Madrid, first secretary and local councillor in New Delhi, a distinguished diplomat, who should be doing what he knows best; yet for some reason he has been put in charge of estate management of which he, like you and I, will have had very limited experience. Then we turn to your two distinguished colleagues here today. Without wishing to unduly embarrass Mr Todd who is in charge of finance, he has just come back from being our ambassador in Slovakia at a time-correct me if I am wrong-when Slovakia entered the European Union, an absolutely vital time for us in Slovakia. One assumes that he was there because he is a damned good diplomat. Here again, it seems to me that he is wasted at finance. Turning to Mr Warren, a distinguished career: Tokyo, Nairobi and back to Tokyo; yet for some strange reason he seems to have been plonked in charge of human resources. I want to make two points to you which I would appreciate your comments on. In any normal organisation, you would have professional experts dealing with these three areas. In any normal organisation, if you have diplomats as distinguished as these three gentlemen, you would be asking them to do what they are best at, in which they have had considerable training and experience in cultivating their art. I think it is a double blow. One, we are not getting best value as has been proved by the report in these three areas. Secondly, these three distinguished gentlemen are completely wasting their time in areas in which they only have limited expertise, which seems to be hugely unfair on them when I would like to see them either posted up the road at the Foreign Office or out in the field, doing what they are really good at. Sir Michael Jay: Let me try to answer those points. Q89 Mr Purchase: "Try" I think will be the word. Sir Michael Jay: Let me answer those points. Firstly, we very much share in the Foreign Office the Professional Skills for Government agenda which has been adopted in the Home Civil Service by Sir Andrew Turnbull and subsequently Sir Gus O'Donnell. What this means is that people who are going to move to the higher reaches of the Foreign Office need to have a balance of skills. They need to have skills in policy work, service delivery and corporate management, not least because when you become an ambassador, as for example at the moment our ambassador in Mexico City who is down in Cancun helping British citizens get out of their shelters, you need to have people who have the diplomatic skills, the policy skills but also a real focus and understanding of the service delivery agenda and people who can also manage a business because an embassy these days is quite a complicated business with a lot of staff and a lot of finance to manage. We want people at the top of the Foreign Office who have all three of those skills. Secondly, in managing our business-let us take our estates business-we need to have a balance of two things. We need professional skills and a knowledge of our business because with professional skills without the knowledge of our business we will not get it right. If you have knowledge of the business without professional skills, you will not get it right. You need a balance of those two. That is what we have tried to do. I do not think we yet have the balance right and I will go through, if I may, the various areas which you have mentioned. First of all, Ric Todd was indeed the last ambassador in Bratislava. Before that he was in the Treasury where he was managing the spending division. He was chosen by a selection board which included the then government chief accountant, against a Whitehall wide competition involving people with professional skills. That is an impeccable credential. All his four deputies are professionals. The chief accountant and his two deputies are professionally qualified accountants. The finance, planning and performance department is headed by an economist who is a professionally trained accountant. Our procurement strategy unit is headed by a qualified procurement specialist and the head of our internal audit department is an auditor and accountant brought in two years ago and his three deputies are qualified auditors. We will be having an open competition for a professionally qualified finance director shortly to replace Ric Todd. I do not want to give the impression that because the director himself has not all the professional qualifications we would expect the finance function in the organisation has not, because it has. As far as human resources are concerned, there are 42 staff in the human resources directorate who hold or are working towards professional qualifications in training, personnel practice, employment relations in law, management and business studies and pensions administration, for example. The head of our estate strategy unit you mentioned. You are right about his career. He is a qualified economist with six years' private sector experience as well. His deputy is an experienced chartered surveyor and there are five other chartered surveyors and three qualified architects. I do not think it is easy to look at individuals in the organisation and deduce from that that the organisation as a whole does not have the right balance of skills. We are trying to ensure we have the right balance of skills. We will be making changes to some of the positions which you have mentioned-in particular, the finance director and, as I said, open competition for that will start shortly. Mr Stagg: I have just had a review done of our estate function by a very big firm of London surveyors and they made a lot of recommendations for change in the structure but did not suggest changing the sort of person at the head of the organisation. Q90 Mr Mackay: We all know that New York and Dublin were spectacular mistakes which, if they had happened in the private sector, would have led to the resignation of the board but we will leave that on one side. I trust that Mr Todd is going back to what he knows best and I look forward to a senior ambassadorial appointment being made shortly. Returning to your two main points, Sir Michael, do you not see that, first of all, these are not really open? It was only open within Whitehall. It is this impression of a little closed shop. It does you such harm unnecessarily when so much that you do is so good. It is the impression that the Foreign Office looks inward. Nobody is capable of holding a top job there unless they have the ethos of the Foreign Office. Do you not also understand that in other organisations the top people in estate management, when you have an estate the size you have to manage, in human resources, in finance, are absolutely expert in that field? You as-shall we call you the chief executive for the sake of argument-weigh along with your colleagues their advice and make the final decision because you have to see the wider picture. I entirely accept that, but it would be much healthier if there was an open competition for these top jobs and there was not an assumption that your senior diplomatic colleagues would have these jobs, which as I pointed earlier is neither fair on us nor British taxpayers. Sir Michael Jay: I think that was the presumption. I do not think it is the presumption any more. The competition for Ric Todd's finance director succession will be an open competition, outside Whitehall. Q91 Mr Mackay: You did admit that the estate management one was not. Sir Michael Jay: That was not. Q92 Mr Mackay: There has been a change of policy and now senior appointments which are not related to diplomatic and consular work, like these three positions I have been talking about, are open selection and not just selection within Whitehall? Sir Michael Jay: We will have to decide that case by case, because I do think it is important to have the right balance of people who have the professional basis to understand the business. Q93 Mr Mackay: I am trying to get us to where we hopefully all agree and move forward. In any company, the finance director, the human resources director and the estates director would be hugely expert in that field and probably have very little knowledge or understanding of the company or about the field the company was in. Take BP, for instance: they would not be oil men. They would know nothing about oil but the chief executive of BP would say, "This is all very well, Mr Finance Man. You are absolutely right on financial matters" or, "Mr Estate Management Man, you are right on estate management matters, but this will not work because of what happens in the oil industry." That is your job, to weigh the professional advice on the one hand with your own expertise as the Permanent Secretary in the Foreign Office. Surely you should not be afraid of having outside people in and should welcome the best professionals coming in to do a very important job? Sir Michael Jay: Indeed. We have had an outside competition, for example, recently for the director of UK visas. We will be having an outside competition for our Legal Adviser. We are about to have an outside competition for the director of FCO Services and we will have one for the finance director. A couple of years ago there had not been any. We also have one director general on our board who has wide experience elsewhere in Whitehall. I think there is a move away from the kind of closed approach that you have been describing. Mr Mackinlay was right earlier on to talk about the need for a culture change in the organisation. We do need a culture change in the organisation. Introducing major culture changes and other major changes at the same time as managing and maintaining the morale and the ability of a highly complicated organisation is not easy. I do think there has to be a pace in introducing these changes, which makes sense given the challenges that we face, but the general direction in which you want us to go is right. Q94 Mr Mackay: I am pushing at an open door, am I? Sir Michael Jay: You are pushing at an open door, yes, but the speed at which the door opens is something over which we have to have some control. Mr Purchase: Could I congratulate you on your very spirited and forthright defence of the department? We know that people work extremely hard in your department and elsewhere through Whitehall. I am delighted to hear the way in which you have defended the department. I hope the people who work in that department do take real good spirit from what you have been able to say this afternoon. I make no comment at all about management. There are so many books written about it. I cannot think there is anything you do not know about good management or how to structure any department. All is known, as Spike Milligan would have said. The truth is you are damn well short on politics at the office because how on earth you come to organise a report of this nature and how it ever got published in this form beats the living daylights out of me. Now is the time to put into place the monitoring and review procedures that would avoid any repetition whatsoever any further Collinson Grant finding. In a well organised management structure, it is vital those checks and balances are there to avoid this kind of report ever appearing again. It is very harmful to morale and that is why I say I am delighted at the way in which you defend it. Q95 Sandra Osborne: I accept the comments that have been made about cultural change being very difficult to achieve in any organisation. The report does quite clearly state that leadership skills are one of the biggest problems that you have. It says that the entire organisation needs to be challenged and reformed but the leadership lacks the skills needed and the will to upset the status quo. Do you accept that criticism and, if so, what are you going to do about it? Sir Michael Jay: I accept it in part. I think there is a natural desire perhaps to stay with the status quo partly because the output of the office is very good. My point is-and this is a point I make constantly to our own staff and our own leaders, both at home and abroad-it is only going to stay that way if we make the kind of reforms and changes, including culture changes, which we now need to do if we are going to adapt to new circumstances. As for the leadership, what are we doing? We have reformed our corporate management. We now have a board structure which reports clearly to ministers and a quarterly meeting between the board and the Foreign Secretary in order to ensure that we are clear on the strategic priorities that he wants us to implement. We have a series of subcommittees underneath the board which are focusing on human resources, investment decisions, finance decisions and so on, which is a much more coherent structure than there was before. I am working much more closely now with the key ambassadors and high commissioners overseas because they need to be brought into part of the corporate leadership. We now have every three months a meeting between the board and the top most senior 20 ambassadors and high commissioners, plus a representative also of a smaller overseas post, in order that we can get the concept of leadership and change management imbued, not just in the centre of London but more widely. Every year we now also have what we call a leadership conference, a conference of all our top management in London and all our ambassadors and high commissioners overseas, who come once a year again with a view to really focusing on the change and modernisation issue which, as an organisation, we have to embrace. This is a conscious attempt to change the culture and to get people to realise that management and leadership are absolutely key to running a really complicated organisation these days. Q96 Richard Younger-Ross: I believe external appointments are absolutely vital to the health of any organisation. If you look at the social services department in Orkney, they believed there were witches and warlocks running all over the island because of ignorance within the organisation. You obviously have a lot of pressures on the Civil Service at the moment in terms of job cuts, not just in your department but in other departments as well. When you come to appointments, there is a lot of pressure on you to appoint other people who might be being displaced from elsewhere. Can I ask what discussions you have had with the unions to try and overcome some of those problems and what tier of external appointments will you go down to? Is it just the top jobs? How far down the structure? Sir Michael Jay: On the last point, we would go out to external competition when we thought that the subject matter required it and that was the professionalism we needed, irrespective of the level in the organisation. For example, in a lot of our IT work we are working very closely with outside professionals because we cannot possibly do that ourselves. Mr Warren: We have had no formal consultation with the unions on the specific point that Mr Younger-Ross makes, which relates to our being pressed to accept people who are being moved out of other organisations, if I have understood the point correctly. Q97 Richard Younger-Ross: You have other departments with job losses and people being moved. They are downsizing. You are looking to make external appointments in some posts but that, I would have thought, would be resisted by the unions. Mr Warren: The unions have expressed reservations about a spread of external appointments, as you would expect the trade unions to do. But the number of appointments made to senior positions from outside the Foreign Office is currently very few. We have kept the unions informed about our specific proposals to hold more open competitions, which may indeed result in external appointments. We value the close consultation we have with the unions on that point, although it has not taken the form of any formal negotiations. As far as other government departments downsizing and our being required to take staff, this has not been an issue of contention between us and the unions. The unions who represent Foreign Office staff, the three major unions, are of course national unions, because our Diplomatic Service Association is affiliated to the First Division Association, who have interests in the work and fortunes of staff in all government departments. This is not an issue of contention between us and the unions and we maintain close liaison with other government departments and the Cabinet Office as all departments do. The specific point you make is not a contentious issue for us with the unions. Sir Michael Jay: It is partly a question of scale, I suspect. If it goes beyond a certain point then it would begin to have an effect on morale. If it is clear that the reason for going for outside competition is because of the need to have the right professional skills, that is both readily understandable and also increases our own professionalism agenda. We can say to our own people, "Look, you developed those professional skills through outward secondments, through working elsewhere in the private sector, elsewhere in Whitehall and that will both help you and reduce the need perhaps for outside skills to come in." Q98 Mr Pope: I would like to raise the issue of Foreign Office response to emergencies overseas. There has been some criticism of the response of the office to the tsunami disaster. Do you think that is because people have an unrealistic expectation of what they can expect in terms of help from the FCO when an unprecedented disaster like the tsunami hits? Sir Michael Jay: I think it is partly that, yes. There is a very real and difficult issue for us which is going to be addressed now in the consultation which is starting tomorrow, I think, on consular work. There is a really difficult issue of what is the right level of expectation that people should have of the services which the Foreign Office and the government can provide. There has been a rising level of expectation to the extent sometimes that we have not been able to deliver it. That is part of the answer. Part of the answer on the tsunami was that it was an unprecedented disaster. One forgets now just quite how awful it was at the time and how difficult it was to handle with the uncertain knowledge there was, but I think we also have to accept-and we do accept-that in the handling of the tsunami we made some mistakes. We learned some lessons from that as we have done from all the crises we have handled from the time of the first terrorist attack in Bali which we discussed particularly with Sir John Stanley in other appearances before this Committee. We learn lessons from all these disasters and I think we are getting better at the crisis response but we are never going to be perfect. There are always things we have to learn. Q99 Mr Pope: I do not want to be unfair over the tsunami because, as you rightly say, it was unprecedented in scale. I do think though that within the report it does rather pull a punch on page 171. It says that, for example, many people who tried to ring the emergency telephone number in the first few days of the crisis were unable to get through. What we do know as well, which is not in the report, is that the relatives of some of the victims were in some circumstances turned away. Would it be fair to say that some victims or the relatives of some victims were failed by the Office in the immediate aftermath? Sir Michael Jay: I think it would be fair to say that some were, yes, and some did not get the treatment that they had the right to expect, but I would like to put it in context because I do think that the response was extraordinary. From our point of view, we had a rapid deployment team at Sri Lanka the day after the tsunami and we had redeployed our staff down to Phuket and elsewhere in Thailand on the day of the disaster and we had a huge response from volunteers and our own staff as well, who were not trained in this. This is another lesson we have learnt about handling natural disasters like this. If it is a really huge disaster, it is not just your consular staff who are handling it; it is everybody in the embassy who is going to go and help out. That means that we all need to have a degree of training in trauma management and handling people who are in a desperately sad state. There were some very good things that happened and I have been very impressed by the number of letters of appreciation that we have had since the tsunami. I also think there are some families who are right to feel they did not get the treatment that they would expect from us and that is a lesson that we have learnt for the future. Q100 Mr Pope: I would place on record the thanks, I am sure, of the whole Committee for the work that was done by many people in the aftermath of the tsunami. It is appreciated. In terms of the lessons learnt-you have looked at the response and you say you have learnt some lessons-why then was there so much criticism of the response to Hurricane Katrina, because it seems to me that there was widespread criticism of the response of our consular services. There were some reports in the newspapers of British citizens being left without food, water and at the mercy of street gangs in New Orleans whilst our consular services were not deployed quickly enough into that area to provide help and support for British citizens. Sir Michael Jay: Unlike in some aspects of the tsunami, I think the criticism of the response to Katrina was unjustified. What happened was that there were indeed in New Orleans, in the Convention Centre, a very large number of people of all sorts of different nationalities, including British, who were there in very difficult circumstances. They were at the mercy of gangs and looters. Our consular people were deployed in order to get to New Orleans as soon as they could. They were given very clear guidance and instructions from the United States authorities that consular officials were not welcome and should not enter New Orleans. What they should do is to go to the cities around other parts of the south where the American authorities intended to evacuate people. The issue for us as consular officials was we knew there were British people in there. We knew they wanted help, but we are a government organisation and a friendly government was saying, "No, do not go there." What do we do in those circumstances? I do not think we had any choice except not to go there but at the same time all our consular staff who were in Houston, in New Orleans, who had been deployed from Washington, the rapid deployment teams deployed also from here, were going around all the areas outside New Orleans in the other towns affected looking for and indeed finding and helping British citizens who did need help. From those there have been many letters of appreciation. Mr Stagg: We had exactly the same issue about access to crisis centres over the 7 July bombings. We had huge pressure from the American embassy to allow their consular people into the areas affected by the bombs immediately after. Our police were completely determined they should not go there until they had managed the crisis to their own satisfaction. We therefore said no; they could not go in there. There is something of a parallel between the two situations. Q101 Sir John Stanley: I would like to say straight away that I recognise that the tsunami event presented a challenge of unprecedented severity and geographical spread as far as the FCO was concerned. Having said that, I am interested that the National Audit Office is now conducting a formal inquiry. Could you tell us when the FCO was last the subject of a formal NAO inquiry? Mr Stagg: This is a regular event. I think it happens almost every year. It is called a value for money study done by the NAO. The previous one was about the global visa operation which you may remember ended up focusing a bit on the issues in Romania and Bulgaria in the context of the EEA. This study began towards the end of last year. When the tsunami occurred, they asked to do a special study of our response to the tsunami as a good example of the sort of crisis we needed to deal with, an extreme example as you have said. This study was underway beforehand and they are now doing two extra bits to it. One is on the overall response to the tsunami and the other is the views of the victims, those affected, of the service we provided. Q102 Sir John Stanley: Would it be correct to say that the NAO would not have made this specific extension of its existing inquiry into the tsunami response had it not been for very strong representations it received at least from some relatives of victims as to the inadequacy of the FCO's response as they saw it? Sir Michael Jay: I do not know whether that is true. The original NAO value for money study into consular work was done with our agreement. I think when Sir John Bourn came and saw me and suggested it I very much welcomed it. This is exactly the kind of study we do need into our consular operations because they are complicated, difficult, evolving. There are lessons to be learnt and we would welcome the NAO's comments on them. It seems to me that, whatever the response to the tsunami, whether there had or had not been criticism, it would have been an entirely sensible thing for the NAO to say, "Look, we have just had one of the most massive consular emergencies the Foreign Office has ever had to deal with. Let us take that as a case study as to how the broader consular work is going." I am afraid I do not know whether it was their suggestion, our suggestion or whether it came from the families, but in any event I think it was an entirely sensible thing to do. We are genuinely looking forward to the NAO reports both on consular work more generally and on the tsunami because we do think it is important to learn lessons and also to be open about it. I know there are risks, as we discussed earlier in this hearing, in commissioning reports and in a freedom of information age having them widely read; but I think we have to have the confidence in our own systems and procedures to commission things and then to learn the lessons from them, even though they may sometimes be tough. Q103 Mr Keetch: First, Sir Michael, may I say on the tsunami that I had constituents there who reported back to me that there had been a fantastic response, given that this literally came out of the blue on Boxing Day. Certainly I had reports of them being able to find the British tent, because it had the biggest Union Jack outside. Other tents did not have the national flag, and so that was an extremely useful thing to do. On Katrina and your suggestion that British officials were told not to go there, I have to say that has been countermanded-or, rather, it has been suggested it was not the case-by the mayor of New Orleans, who said publicly that was not the case. If that was the case, perhaps you would write to us, because certainly the mayor of New Orleans said that no instruction was given for consular staff, from Britain or any other country, not to go in. Perhaps you could write to us on that specific point. Sir Michael Jay: We will write to you about that point. Q104 Mr Keetch: Can I come to a more specific point, which we touched on briefly when we met with you as a committee yesterday? That is, how consular staff deal with individual tragedies abroad. Do you know how many British citizens are murdered or killed accidentally overseas every year? Sir Michael Jay: I think that I have the information here. I do not have it in my hands. Q105 Mr Keetch: It is an astonishingly large number. In terms of people individually being murdered-as opposed to Iraq or tsunamis or individual incidents like that-it is a large number of people. What amazes me is that there is no standard procedure to deal with the murder of British citizens overseas, when that dreadful thing happens when they are on holiday. You are aware that I raised, with both the minister and with you, the case of a constituent Mr Richard Collins-and his family are aware that I am going to mention this-who was murdered in Thailand on 9 March this year, and yet his body was allowed to decompose to such a degree that no proper coroner's investigation was able to be carried out. What astonishes me about this incident is that there is no set procedure as to what information is given to families; what information is given to the insurance companies of the deceased concerned; in what way our consular staff overseas tries to deal with the family back in the UK, who are obviously going through very difficult times; and to deal with the insurance company to try to ensure that the body is repatriated as soon as possible. We see in our passport that Her Majesty's Government demands that we are looked after. Surely if we, or our next of kin, or our sons, fathers, brothers or sisters are murdered, there ought to be a standard procedure whereby our consulate staff keep us informed? If we cannot do that correctly, then how can we deal with situations like tsunamis or Katrinas? I think that you ought to look as a matter of urgency at how that is dealt with, to ensure that when these appalling things happen-as they happen dozens of times a year, sadly, to British citizens travelling overseas, and are more likely to increase as travel increases-there are standard procedures which are followed, to ensure that these mistakes do not happen in the future. Sir Michael Jay: I thought that this was an important point which you raised, Mr Keetch, of which I had not previously been aware. I asked Mr Stagg to look into it, in case you did raise it today. Could I ask him to say a bit more about it? Mr Stagg: Happily. On the question of deaths, I think we have statistics for those who die overseas, which is about 4,000 British citizens every year. I am not sure if they are categorised exactly by the nature of that death. In terms of standard guidance, I have here the standard guidance we have for our consular officials, Dealing with the death of a British citizen overseas. So there are some quite carefully crafted --- Q106 Chairman: Can you send that to us, please? Mr Stagg: I can even give a copy after this. Q107 Chairman: I think that the Committee should have it formally. Mr Stagg: Yes, I will happily do that. The second thing to say is that, in the case of murders, we would normally communicate with the family in the UK through the police, because they have an investigative interest in the case and they have trained family liaison officers, who are the normal channel through which we work. They are trained to deal with these issues and they have a network all round Britain, which means they can deal with people face to face, which we obviously do not. Q108 Mr Keetch: Are you aware of an organisation called SAMM, Support for Murders and Manslaughters of British citizens overseas? Mr Stagg: I have heard of it. I have never dealt with it. Q109 Mr Keetch: I would suggest that the Foreign Office ought to inform next of kin of British citizens who have been murdered of the existence of that organisation, because certainly in this instance-and I think in other instances-that does not normally happen. If we cannot support citizens back at home in that respect, then I think that we are failing. Mr Stagg: Thank you very much. We are very keen to use these occasions to learn as well as to give you our views. To conclude, in the tsunami we found a number of organisations which we had not heard of before who were specialist in helping those who had been bereaved. So this is a help to us. Q110 Mr Mackay: Sir Michael, as has been mentioned earlier, the tsunami was geographically widespread. When you are doing a post-mortem and learning lessons, you presumably will have a chance to compare best practice in different embassies and high commissions, because it seems to me that some did considerably better than others-and I am not going to name them, because I think that would be invidious at a public meeting like this. In one particular case there seemed to be severe shortcomings, and in one particular case a specific senior diplomat fell a long way below the standards that should be expected. I gather that this is a matter that has been and is being taken up. However, I do hope that we can have an assurance that you will compare, because there seemed to be a vast difference in performance. I am not on a witch-hunt; I am trying to ensure best practice thereafter. Sir Michael Jay: Certainly we would look at the differing nature of the response from different embassies and high commissions, and draw lessons from that. I do not want to get into the particular case either, though there are, as you know, differing views about that. The general point you make, however, is an entirely valid one. Q111 Richard Younger-Ross: Of course, with the tsunami there are bodies that are recovered. That is a closure, in a sense. There were many British citizens in the tsunami whose bodies were never recovered: who are missing. There are others who are kidnapped, presumed murdered or whatever. You will know the case of the Popes, whose son was kidnapped, presumed murdered, in Angola, and there has been a long correspondence with the department. Sir Michael Jay: Yes. I have met the family in Luanda. Q112 Richard Younger-Ross: One of the difficulties they face and others face is presumption-of-death certificates, as I raised with you yesterday, and advice given them at that time was contradictory and wrong. Advice was given on what the presumption of death was in Angola, but of course most families are not interested in what happened in Angola; they are interested in the death and how they register it in the UK. Do you have standard notes of how consular officials should deal with people who are missing and presumption of death, both in terms of abroad and in the UK? If so, could that be placed with this Committee? Also, would you look at revising your draft Support for British Nationals Abroad document, to include a little bit more on that? I think that is an area which is perhaps weak at the moment. Mr Stagg: I do not know exactly what you are looking for in our guidance, but I will find what we have and send it to the Committee, and then if there are other issues ---- Q113 Chairman: We will write to you. Sir Michael Jay: If it would help the Committee, I think that we should try to look through-given the real interest that you have in consular work and the importance for us of getting your suggestions-and make certain that the Committee has all the relevant documents here. Even though this may be quite a bundle, I think it would be helpful for you to have that. Q114 Chairman: We will decide which ones we want to cover. Send us the lot! Before we move off consular services, can I raise the question of your public service agreement targets? I understand that the FCO failed to meet four of the six PSA targets on consular services and that, specifically, you failed to meet the target with regard to issuing passports overseas. You were supposed to have 95 per cent issued within five working days, and you only got 73.3 per cent. Is that acceptable? If it is not acceptable, can you explain why it has happened and what you are going to do about it? Sir Michael Jay: We have worked really hard to meet the targets and it is not acceptable not to meet them, unless there are overriding reasons why we have not. I am afraid I ought to, but I do not have the details of our consular targets at hand. I do not know whether any of my colleagues do. Mr Stagg: To respond to your underlying question, I think that there have been problems over technology to a degree. We introduced, over the last two years, a new system. Q115 Chairman: This is Prism you are talking about? Mr Stagg: No, Chairman. I would happily come on to Prism, but this is GenIE. Q116 Chairman: More technology problems? Mr Stagg: I think not extremely difficult, but implementing these programmes around the world in quite differing environments is quite a challenge. Q117 Chairman: What is the programme called? Mr Stagg: It is GenIE. Chairman: Is it still in the bottle? Q118 Mr Keetch: Lamp! Mr Stagg: We could easily give you an overview of this in writing, because it is more than just the technology issues.[5] Q119 Chairman: Can I move on to some other areas? Diplomatic representation overseas. We have just had a letter from the Foreign Secretary, listing the number of posts which are being planned to be closed or already have been closed; also plans to localise some others and to change facilities in other places. I had a personal experience when I led a Commonwealth Parliamentary Association delegation to Swaziland in September. As you are aware, we have closed our high commission and, while I was there, we were advertising the sale of the residence in the local newspapers. This has gone down extremely badly in Swaziland. I understand that you are also closing Lesotho, and both are being run from Pretoria by our new high commissioner-who is a very good high commissioner-in South Africa. There are similar concerns from the Pacific. We have had letters, representations to do with closures in a number of the Pacific islands-all of them Commonwealth countries, as are Lesotho and Swaziland-and similar concerns have been expressed for other parts of the world. Can you explain why these decisions have been taken? Also, do you agree that for many, very small, Commonwealth countries which have long associations with the UK, this is being interpreted as our withdrawing from interest in their countries, downgrading their significance, and they feel deeply hurt by this? Sir Michael Jay: The overseas network can never be static. We have, over the last seven years or so, opened 29 posts and closed 25, and that is a reflection of shifting priorities. One of the things that we try to do is to ensure that our resources, which are constrained, are allocated in accordance with our priorities and, in particular, with the strategic priorities which were set out in the strategy document which the Foreign Secretary and I published a couple of years ago. That is the starting point for where we want to put our resources. With the resources constrained, if you want to put your resources into areas which have become a high priority, you have to take them from somewhere. This inevitably means some hard choices and hard priorities-about places which are not unimportant but which are not as important as the high-priority ones. We would much rather not have had to close any posts but, had we not closed some, we would not have been able to put our resources where they needed to be, or we would have run our network too thin across the board and been unable to achieve what we need to do in the places that really matter. We judged that our interests in Swaziland and Lesotho could be satisfactorily represented by our high commissioner in Pretoria and equally that, in the Pacific, we could move to more of a hub-and-spoke arrangement, making more use of our high commission in Suva, in Fiji. These were not easy decisions; they were decisions that were made after a quite rigorous examination of where our interests lay; they were as a result of quite lengthy discussions with ministers, and taking into account various other considerations. That is the explanation for it, Mr Chairman. I accept that it is seen by those concerned as being a withdrawal of interest, and to an extent it is. It does not mean a complete withdrawal of interest. We will continue to have relations with the countries and, in the case of Swaziland, there will be an honorary consul there and he will be supported by regular visits from the high commissioner and his staff from Pretoria. Q120 Mr Keetch: Again, this was mentioned yesterday but I want to raise it in the case of Seattle, where we are closing a consulate and we are replacing that with an honorary consul, who I am sure will do a very good job. We are replacing that with a trade post, which I am told will not have fewer people in it than the consul's office did, in a place where there are so many ex-pats that they even have a cricket league, and where important decisions are made for Rolls-Royce and other companies about their investment in the Boeing programmes; and at a time also, I am told, when other aspects of UK-plc, namely the overseas offices of the Scottish Executive and the Welsh Development Agency, are considering moving into that area because they believe there is a very good trade reason to do so. I would like to be assured that, when we make a decision to do this, we consult with other aspects of government like the Scottish Parliament and the Welsh Assembly and that we also look at this over a long period of time. Closing a very small consulate, replacing it with a trade office, then having an honorary consul, then maybe having other departments of government move in there, I am not sure, in the long run, will save a huge amount of money. Certainly in terms of what the mayor and other important people in that city think, they consider it to be a slap in the face to them-because they see HM Government is moving out. I would hope that, when we make these closures-particularly if we are going to localise them, as is described-we see whether we are actually saving any money in the long run, looking at the long-term consequences as opposed to just making that decision. Sir Michael Jay: We do try to do that, Mr Keetch. The decision to close the consulate-general in Seattle was one which was taken as part of the restructuring of the whole network in the United States, in order to ensure that our resources were effectively deployed across the United States, and taking into account the relative importance of different cities and different areas. It was taken in close conjunction with UKTI,[6] because it is essentially a commercial post. The judgment was made that it would meet our interests in Seattle if we were to move to having a locally employed team there, supported by stronger UKTI representation elsewhere on the west coast. The decisions are not arbitrary; they are taken after a really careful consideration of where our interests lie, what our resource constraints are, and how best we can allocate our resources over time. If I may say so, your point about Scotland and Wales is a very good one. I think I need to make sure that we are closely in touch-as I believe we are-with the Scottish Executive and with the Welsh Assembly over their plans. As I think you know, in many parts of the globe the Scottish and the Welsh are indeed co-located with our embassies and high commissions, and we do work very closely together. Q121 Sir John Stanley: Sir Michael, I return to another matter that you and your department will be familiar with. Instead of flying last night from Belgrade to Podgorica, I chose to come back to have the pleasure of this meeting with you. Sir Michael Jay: Thank you, Sir John! Q122 Sir John Stanley: At the meetings I had in Belgrade on Monday and Tuesday, it was absolutely clear that there will be a referendum in Montenegro next February/March. Nobody expects the result of that referendum to be anything other than independence for Montenegro, and the Serbian senior ministers that we met were absolutely clear that, if that was the wish of the Montenegrins, Serbia would not stand in the way of Montenegro's independence. Against that, first of all is it not very regrettable that, at this extremely politically important time, we still have no embassy in Podgorica? If you agree that the events in Montenegro in the next few months will be as I have indicated, surely the Foreign Office should now be taking very early steps to establish an embassy in Podgorica? This would be a country which will be looking for EU applicant status; it has an important position in the Balkans; it is not wholly unrelated to the important issue of a settlement in relation to Kosovo. Surely this is an area which, certainly on political grounds, most conspicuously should be having more attention on the ground from the Foreign Office? Sir Michael Jay: I will look into that question, Sir John. Clearly Montenegro will have an important role to play in our overall Balkans policy. We have to consider whether we can represent it adequately from elsewhere or whether we need to be represented there. If we are represented there, of course, we will have to make a judgment as to where we take the resources from. There are no free posts. We are under pressure to reduce our total number of staff and if we are to open up in places, we have to take them from somewhere else. However, I will look into that. Q123 Sir John Stanley: The root issue is perhaps that the Foreign Office should have been tougher with the Treasury in accepting assumptions for efficiency savings, and indeed assumptions of the benefits of IT, than the department has actually been. It has been seriously salami‑sliced by the Treasury. Perhaps you at senior official level and your ministers need to do some more standing-up-toughly to the Treasury's demands. Sir Michael Jay: We certainly felt at the time that we were standing up toughly, I can tell you, Sir John. Some of the outcome of the last spending round was, from the Foreign Office's point of view, very satisfactory, particularly in the amount of money that the Treasury agreed to give us for the security of our overseas posts, following the attack on our consulate-general in Istanbul. At the time, that was a very high priority for us, because it was essential to be able to reassure our staff that we were providing them with the security to enable them to operate. That was a very high priority for our settlement, and I personally was very glad that that money was given to us. Like all government departments, however, we were subject to the efficiency targets, which we are now aiming to meet-but I will look into that. Q124 Chairman: Before I bring in Andrew Mackinlay, can you tell us what annual savings in financial terms will be made by these closures and localisations of posts which you have just announced, and about which you have sent us a memo. Sir Michael Jay: There are two issues here. One is about the savings in terms of money, and the other is the savings in terms of staff. I might ask either Dickie Stagg or Ric Todd to say a bit more about that. Q125 Chairman: Perhaps when you have the figures you can send us a note; but if you have some round figure now, it would be helpful. Sir Michael Jay: We expect to make about £6 million savings, which would contribute to the efficiency target of £87 million. That is by 2007-08. However, there are other targets which we also have to meet. We have to reduce our local staff pay bill by a certain amount. The only way you can do that is by reducing the number of staff. So it contributes to that as well, and allows you to have staff elsewhere. Q126 Chairman: That is salary savings. That is the recurrent annual expenditure. Sir Michael Jay: Yes, running costs. Q127 Chairman: What about capital? Are you likely to get capital receipts from all this? Sir Michael Jay: We will get some capital receipts from the sale of buildings. I cannot tell you what those will be, because in not every case has the building been sold; and it is a mug's game trying to estimate ---- Q128 Chairman: Who gets that capital? Do you get it or does the Treasury have it? Sir Michael Jay: Yes, we get it. Q129 Chairman: All of it? Sir Michael Jay: Yes. That counts as asset recycling, so we would get the benefit from that. Our policy as from, I think, the beginning of next year-this financial year-is that 100 per cent of the money that we get from asset recycling goes into the estate. So the issue which this Committee has been concerned about in the past-that some of the money which we have received from asset recycling has gone into IT-is no longer the case. Andrew Mackinlay: Two matters I want to ask about. The first one is the Holy See. We were told by yourself that there were going to be new ways, alternative ways, of dealing with this and I understand that the post is being advertised. I have heard what you say about the need for savings, which you have elaborated on today. However, as well as an important post, it is a great honour to be Ambassador to the Holy See. Am I correct that, frankly, nobody could succeed in the advert for this post unless he or she was of some private means and/or located at their expense in Rome? Put another way, is there any chance of working‑class people being appointed? Chairman: Give him a job! Andrew Mackinlay: Or do you have to be part of the magic circle which runs this country? Discuss. It is a serious point though. Mr Keetch: I will do Seattle! Q130 Andrew Mackinlay: Can an ordinary person apply? You have to have money, frankly. That is point A. Sir Michael Jay: I do not think that is the case. The post has been advertised and there were a very large number of applicants-I think 120 applicants altogether. There has been a competition, a candidate has been chosen, and agrément is being sought. An announcement will be made in the near future. This will be, I think I am right in saying, a normal diplomatic service appointment when made. What will be new is the method of appointment. In other words, an outside competition. Q131 Andrew Mackinlay: We look forward to details on that. Point B is not for ritual but seriousness-Kyrgyzstan. Since we last met on the annual report and in previous years, I have asked you about this. Since then, we have had something of a velvet revolution in Kyrgyzstan. There is now the problem of refugees from Uzbekistan in Kyrgyzstan, and the United States are moving from Uzbekistan to Kyrgyzstan. Other key players are represented there. We are not represented even on the cultural side, by the British Council. Is it not now time that you reviewed your decision not to have anybody in Bishkek, bearing in mind that the ambassador who does serve it is based in Almaty, which is not only not the capital of Kazakhstan but is also in a country which is the size of western Europe? Discuss! Sir Michael Jay: Again, I would like to have an embassy, we would like to have an embassy, in Bishkek. It is a question of the proper allocation of resources. By far the most important of the central Asian countries in terms of British interests is Kazakhstan, which is why we plan to maintain an embassy in the new capital, in Astana, but also a substantial presence in what will remain the commercial centre, Almaty, which is about two or three hours' drive from Bishkek; and there will be regular visits from the staff of the post in Almaty to Bishkek. For the moment, I suspect that is how it will stay, but I can assure you that we do keep these constantly under review. The views of this Committee on where we might have posts would clearly be a factor, if we are in the happy position of being able to open more than we feel now we can. Q132 Mr Mackay: Sir Michael, clearly you would like to keep more posts open and clearly it is a matter of balance-priorities, as you have pointed out. We understand your budgetary constraints. We understand that you are having to make efficiency savings right the way across your department. Would it be wrong to say, however, that every bit of saving for a new post has to come out of closing an existing post, or is there not a possibility of making further cuts in other things your department does? For some of us, one of the most important things you do is to be represented in as many countries and as many commercial cities as possible. I do not want to prejudge your answer, but I guess that if I were looking at your budgets I might, in a slightly biased way, come up against other things that I think could be cut out to ensure that our representation was not cut out. Sir Michael Jay: There are two answers to that. The first is that we are always looking at doing things more efficiently, in order to produce savings which can then be put to higher priority activities. One of the benefits of a lot of our IT will be, I hope, that it will release resources and release staff to go to higher priority tasks, including overseas posts. As for cutting programmes, I think I am right in saying that we are not allowed to use capital or programme money for administrative expenses. So even if we were to reduce our programme expenditure, we could not use that on our staff, to open or keep open an overseas post. Q133 Mr Mackay: And that is a Treasury rule that you have signed up to-or you have no choice? Sir Michael Jay: As accounting officer, I get letters from the Treasury explaining what I have to do. Q134 Mr Mackay: That does seem a pity, because I would prefer you and the Foreign Secretary to be given a free hand to allocate your budget as you see fit within your department, which clearly you cannot quite do. Sir Michael Jay: We can to a certain extent. What we can certainly do, and do try to do, is to find more efficient ways of doing things, so that we therefore release resources to open a post or to keep a post open; but there are constraints on our ability to-the technical term is-vire between one budget and another. Q135 Mr Mackay: So there is ring-fencing, in other words? Sir Michael Jay: Yes, in that sense. There is also ring-fencing, of course, in that very substantial proportions of our overall budget are for the British Council and the BBC World Service, which are ring-fenced and therefore are not accessible to us, either for our capital or for our programme or for administration budget. Chairman: Can I just say to my colleagues that there are a number of areas we have to cover. I want to get on to personnel issues but, before we do that, I want to get Fabian Hamilton in on the BBC World Service and to touch briefly on public diplomacy; then we will deal with the personnel matters. I am very conscious of time. Richard Younger-Ross: Very briefly? Chairman: It has to be very brief. One question. Q136 Richard Younger-Ross: It is one question on asset recycling in Dublin. Can you explain whether we are likely to get Glencairn back, when we are likely to sell Marley Grange, how this debacle came about, and how much it has cost us so far? Sir Michael Jay: We are of course in occupation of Glencairn and we are in touch with the owners-constantly in touch with the owners-in the hope that we can complete the purchase of Glencairn, which we have not yet succeeded in doing. Until we can, we think it is better to keep Marley Grange. Whether you want me now to go into all the background again ---- Q137 Andrew Mackinlay: The background is in the public domain. Sir Michael Jay: I have been asked about it by this Committee before, and I think it is in the public domain. If it would help the Committee, however, I would be very happy to write again to update it.[7] Andrew Mackinlay: Presumably you are paying rent. Q138 Chairman: Perhaps you could send us a note updating us on the current position and, if necessary, we will pursue it with you. Sir Michael Jay: Certainly. I am very happy to do that, Mr Chairman. Mr Hamilton: Sir Michael, I want to ask you some questions about the BBC World Service and the changes that are being planned there. I am well aware, of course, of your deep involvement with the World Service. Yesterday, the Foreign Secretary, in a written ministerial statement, endorsed the proposed changes by the World Service and the rationalisation of some of their local language services. They are intending, as you know, to cut some of the language services in places like the Czech Republic, Hungary, Kazakhstan, Poland, Slovakia, Bulgaria, Croatia ---- Chairman: And Thailand. Q139 Mr Hamilton: Yes, and Thailand-which have very small audiences at the moment, and use those savings primarily to establish a BBC Arabic television service. I wondered what your reaction to this would be. Do you endorse what they are trying to do? Do you feel that an Arabic TV service would more accurately report what the British Government is trying to do in its foreign policy, as well as its interest in the Arabic countries? How do you feel that the BBC is best served, and is it in our interest to drop these local language services, which have been so important over the last 60 years? Sir Michael Jay: These are essentially questions for the BBC, but we have encouraged the BBC to look constantly at the profile of their vernacular services, to check that they really were focused on the areas which are important today rather than, say, 40 or 50 years ago. We do endorse their judgment that this is a good time or the right time to discontinue the vernacular services in these countries, bearing in mind that the English language services will continue and that there will still be the availability of BBC World and online BBC World Service services. So they will have English language services; they will have BBC World; and they will have BBC online. What they will not have is the vernacular services. We endorse that judgment, though it is a judgment by the BBC. Q140 Mr Hamilton: Of course I understand that their operating policy is a judgment for them, but my question to you relates to British foreign policy interests, which I know the BBC is not there to conduct fully, but that is why you fund them. We have an interest, do we not, in terms of our foreign policy in some of the countries in which the BBC World Service broadcasts? I wonder whether you feel-where, for 60 years in many of these countries, we have broadcast in those services-that we shall be best served by dropping those local, vernacular language services? Sir Michael Jay: I think that the BBC would argue-and we would not dispute this-that in a sense, 60 years on, the services have served their purpose. The vast majority of these countries are now democracies, liberal market economies, members of the EU or of NATO, with a much greater ability to speak English than was the case in the past. In a sense, this is a good moment to recognise that, if you like, the job is done and now is the time to allocate those resources to today's priorities. We would, in the Foreign Office, argue that one of today's priorities is to have a stronger public diplomacy focus on the Arab world and that an Arab-language TV service would be a very good way of providing that. That is the reason why we would support and do, and the Foreign Secretary did yesterday endorse the changes to the vernacular programme and the suggestion that this should go towards an Arabic TV service. Q141 Mr Hamilton: We know, do we not, that satellite TV services are notoriously difficult to start up, especially in the Arab world? We also know how expensive they are. I wondered whether you thought that £25 million, which I understand is the cost that is being allocated and therefore being funded out of some of these savings, is sufficient to do the job properly. Sir Michael Jay: I do not have the expertise to comment on that, Mr Hamilton. Q142 Sir John Stanley: I have to say that I do most profoundly disagree with you, Sir Michael, at least in respect of one country, and I am most disturbed that you should have given a blanket endorsement to a policy of going for English language services as opposed to vernacular language services. If I may, there is a country I would want to make an exception. I am Chairman of the Britain-Nepal Parliamentary Group, and perhaps I may just put that on the record. Last week I had the benefit of meeting the President of the Institute of Journalists in Nepal, who is in this country on an FCO-sponsored visit-and I am delighted that your department did sponsor his visit. He told me how concerned they were in Nepal at the threat to Nepali language services. In that country, where something like two-thirds of the country is in Maoist control, where the people of that country are utterly dependent for information and for news on the BBC, I think it is absolutely appalling that at this particular moment there should be a threat to Nepali language services in that country. Sir Michael Jay: I am not informed about the Nepali service, Sir John. Perhaps I could look into it.[8] Q143 Chairman: We will no doubt pursue it if necessary. I think that we have dealt with some aspects of the public diplomacy side. May I ask you why we have not yet had Lord Carter's review on public diplomacy? We were promised that it would be completed by the summer. This Committee took evidence from the British Council a couple of weeks ago. We had expected it before then; so had they. It did not happen. We had to ask them questions about it in the absence of actually seeing it. It is not available today. We have not yet had any indication of when it will be published. Can you tell us why not? Sir Michael Jay: My understanding is that Lord Carter is still discussing one or two elements of the report with one or two of the other stakeholders involved. Q144 Chairman: The British Council? Sir Michael Jay: The British Council, yes. Q145 Chairman: Predominantly, I guess. Sir Michael Jay: I am not sure whether he still is discussing with the BBC World Service, but I think that is really a question for him. Q146 Chairman: So you have no idea when it is going to be concluded? Sir Michael Jay: We look forward to it and we hope that it will be published quickly and, when it is, we want to get on with considering it and implementing it-but I would hope very soon. Q147 Chairman: Presumably you have seen drafts in your department. Sir Michael Jay: We have seen drafts, yes. Q148 Chairman: Knowing the way these things work. Sir Michael Jay: Yes. Q149 Chairman: Your officials will have been poring over those drafts closely, to see what the recommendations are. Is there anything in the report, as you have seen it so far, which causes you concern or that you are worried about? Sir Michael Jay: We are broadly content with the recommendations, but I would not want to go beyond that, because we have not seen the final version and we do not know precisely what it will say. We are broadly content with the recommendations which we believe will emerge from the report. Q150 Chairman: Do you believe that there should be a change in the relationship between the FCO and non-departmental public bodies, and that organisations funded by the Foreign and Commonwealth Office should be more closely aligned to the priorities and strategic choices of the Government than has hitherto been the case? Sir Michael Jay: Our ministers believe that they should be able to show, and to show Parliament, that the money which is spent on non-departmental public bodies is spent consistently with, in conformity with, the Government's objectives. That may lead to a consideration of governance arrangements for our non-departmental public bodies. There is also, as far as I am concerned as accounting officer, a requirement that I sign a statement of internal control as part of the FCO accounts, which means that I have to satisfy myself that certain accounting practices are in place in all our non-departmental public bodies. That too is requiring some changes in the accounting arrangements for some of our non-departmental public bodies. Q151 Chairman: In essence, is there not likely to be a conflict, a tension, between the way in which NDPBs have traditionally operated-not just the British Council, because I think other NDPBs, including the Westminster Foundation for Democracy which I used to chair, also had some difficulties because of this-and your desire, maybe driven by the Treasury and public service agreements, to have more control as accounting officer over the expenditure which is coming from your department? Sir Michael Jay: I hope that, if there are any tensions, we can resolve them. I think it is entirely right that I should, as accounting officer, be able to satisfy myself that the funds are being properly spent and accounted for; but I do not see why that should be inconsistent with the NDPBs concerned carrying out their functions, which we support. As you know, the FCO very much values the role of the Westminster Foundation for Democracy in delivering a number of our strategic priorities; but at the same time we do need to assure ourselves that the accounting arrangements are as they should be. I do not see this as being a real difficulty, but we have not quite got there yet. Q152 Chairman: I think that you mentioned governance arrangements. Do you believe that the time has come for the FCO to have more direct roles within the governing bodies, the boards, of organisations which are funded by your department? Specifically, would you want to have a representative of a very high level on a board, for example of the British Council? Would you want to have someone there, if you like, as your eyes and ears and mouthpiece when they are making decisions, because you would regard them as being too independent in the way that they have traditionally approached certain matters? Sir Michael Jay: This is one of the issues which I suspect will be dealt with by the Carter review. Q153 Chairman: I am sure that it will. Sir Michael Jay: I am myself an ex-officio member of the British Council's board, and that has been the case for as long as I can remember. That provides some advantages in terms of arguing within the board for the British Council to reflect the Government's priorities. I do not think that can ever be the complete answer. I think that there needs to be a network of relationships between the British Council and the FCO to ensure that the Government's priorities are carried forward, at least in respect of the money that we give through our grant‑in‑aid, which is of course only part of the British Council's operations. Chairman: I suspect that we may have to come back to this when we have seen Lord Carter's report. Q154 Sir John Stanley: How are you getting on with the censoring of Sir Jeremy Greenstock's memoirs? Sir Michael Jay: He, like all public servants, has an obligation to submit his work, which he has done and we are at the moment discussing that with him. I hope that it will be possible to reach agreement on the basis on which the book can be published, subject to our being satisfied that he is not crossing the line on issues of international relations or public security or ---- Q155 Sir John Stanley: Political embarrassment. Sir Michael Jay: No. I am sorry, there are three-or the question of the need to maintain the confidence of relationships between ministers and senior officials, which is an important part of the obligation that all of us have as public servants. Q156 Sir John Stanley: Sir Michael, could you clarify this for us? Are you the ultimate censor or is the Cabinet Secretary the ultimate censor or is the Prime Minister the ultimate censor? Sir Michael Jay: In this, as in other issues, the ultimate decisions, the ultimate judgments, will be made by ministers. Q157 Andrew Mackinlay: I had a parliamentary reply-for the record it is 21 July, column 2101W-from Jack Straw, and your colleagues would have prepared a reply. I asked him, "...how much public money has been spent in each of the last five years in settlement of grievance procedures brought against senior staff of his department by subordinate staff; how much was paid in each case; and whether the payment was in full and final settlement in each case", and the reply is, "None". I am advised that in fact there had been grievance procedures-quite a few-where a settlement had been made and people had perhaps subsequently signed confidentiality clauses. In other words, that on the basis of their withdrawing their grievances there has been a payment. I take quite seriously the parliamentary reply. Clearly the Foreign Secretary has to get it from you and your colleagues. However, I put it to you that there are and have been grievance procedures, that sums have been paid, and people have signed confidentiality clauses to withdraw their grievance. Am I correct or am I wrong? I do not want to split hairs, as it were, because I may not use the correct terminology, but I am saying to you that that reply is wrong and that payments have and are being made. Is that correct? Sir Michael Jay: I am not aware of any such payments having been made. Q158 Andrew Mackinlay: You are absolutely sure? Sir Michael Jay: I am not aware of any and, had I been aware of any, that answer would not have been given, or we would not have given that advice to the Foreign Secretary. I am not aware of any. Perhaps I could ask the Human Resources Director. Mr Warren: Nor am I in relation to internal grievance procedures against the Foreign Office, which is what the question referred to. However, if the Committee wishes, we will send a note formally confirming the position.[9] Q159 Andrew Mackinlay: I would like that, because I am advised that that parliamentary reply is wrong and I would like that to be clarified, please. Sir Michael Jay: May I just say that clearly we have absolutely no wish whatsoever that a reply should lie on the table which a member of the House believes is wrong. So we would want to try to clarify that too. Chairman: We look forward to receiving a letter from you. Then, if necessary, we will discuss it in the Committee and take it further. Andrew Mackinlay: I think I am happy then, because time is pressing. Q160 Mr Illsley: Following on from that, have any payments been made in respect of external claims against the Foreign Office, perhaps from employment tribunals or through other actions? Mr Warren: I think I would need to confirm the details of employment tribunals which have been concluded in which the Foreign Office has been a party, and advise the Committee. Q161 Chairman: That is helpful. Can you, when you do write to us, also let us know how many serving or former members of the senior diplomatic service are currently the subject of disciplinary investigations or actions? Sir Michael Jay: Certainly. Q162 Chairman: There is one other area on which we have not yet touched, and I am very conscious of the time and am grateful, gentlemen, that you have stayed so long. Can we wrap up by asking about BBC Monitoring? We understand that there has been a change in its sponsoring departments and, as a result of the review, the funding problems that they had have been sorted out, and it is now sponsored by the Cabinet Office rather than the Foreign and Commonwealth Office. Can you tell us why did you value the work of BBC Monitoring less than that of the review team, and why were you prepared, in effect, to hand on the organisation to another government department? Sir Michael Jay: We very much value the work of BBC Monitoring, but we believe that we were paying a higher than fair share of the overall cost of BBC Monitoring, given the even greater interest that some other stakeholders had in it. There was therefore a negotiation which resulted in a shift in the balance of funding among the various stakeholders, as a result of which we thought it was sensible, along with others, that the sponsorship of BBC Monitoring should move to the Cabinet Office. As I understand it, the total funding for BBC Monitoring will continue to increase. So this is an internal housekeeping issue, rather than an issue which will lead to any reduction in the size or output of BBC Monitoring. Q163 Chairman: But will that funding in any way come from your own budget, or will it now be funded by its new sponsoring department? Sir Michael Jay: We will continue to fund it, but at a lower level than in the past. This is one way of achieving our efficiency savings without having to do so in other ways, such as cutting posts. Q164 Chairman: So you would still regard yourself as a stakeholder? Sir Michael Jay: Absolutely. Q165 Chairman: Even though you are not the sponsoring department? Sir Michael Jay: We would see ourselves as being a stakeholder and having an interest in BBC Monitoring, and in its output. Q166 Chairman: How much will you be contributing to it? Mr Todd: I think it is £21/2 million. Q167 Chairman: So the other £2 million, or whatever it is, is coming from where? Sir Michael Jay: It is coming from other stakeholders. I do not have the details with me at the moment. Q168 Chairman: Could you send us a note? Sir Michael Jay: We could send you a note, Mr Chairman, certainly.[10] Q169 Andrew Mackinlay: Going back to my penultimate question, I am also told that there are some people who have retired early, not through sickness, but are retired because-and I do not use this in an emotive way-they are no longer wanted or their face does not fit, but terms are reached under which they are paid much higher sums than their service would justify. It is like a package. Could we be told on how many occasions that has happened in the past, whatever convenient number of years-three years, five years, or whatever? I am not talking about where people go-which I actually have reservations about throughout the public sector-but where there has been a payment which is higher than what they should have got. This is people below retirement age. Mr Warren: We shall send the Committee a note in reply to Mr Mackinlay's question, but I would make the point that all early retirement or early severance agreements that are reached with staff-and we have reached a number recently, as part of the downsizing of the Foreign Office-are reached in terms of the framework that the Cabinet Office imposes on all departments. So there is no question of our being able to offer any different terms. Q170 Andrew Mackinlay: Indeed. So that if my information is incorrect, there should be no people who have had more advantageous terms than those which they are entitled to. Mr Warren: Indeed. Andrew Mackinlay: But it has been put to me that that has happened on some occasions, and no doubt you would write to me and say, "Mackinlay, your information is wrong again". It will not be the first time I have been humiliated but, on the other hand, just remember that sometimes, on some occasions, I am right! Chairman: At that point, can we thank you, Sir Michael, for your and your colleagues' time with us? It has been a long session. We are very grateful, and no doubt we will be communicating with you in future. Thank you, gentlemen, for coming today. [1] Please refer to supplementary memorandum (DR26) [2] Awaiting supplementary note [3] Supplementary note awaited [4] Awaiting supplementary note [5] Awaiting supplementary note. [6] UK Trade and Investment [7] Awaiting supplementary note [8] Awaiting a supplementary note [9] Awaiting supplementary note [10] Awaiting supplementary note |