Examination of Witnesses (Questions 100-119)
FOREIGN AND
COMMONWEALTH OFFICE
& DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
10 DECEMBER 2007
Q100 Mr Davidson: We would not accept
this for a moment in a small local authority in the UK. If we
retain the same sort of responsibility for them that we do for
local authorities, why are we prepared to put up with it? If we
do not have any responsibility, why not just say they are independent?
The assumption is that if they are overseas territories and we
have given them citizenship, we do expect a certain standard of
behaviour and we expect it to be policed by yourselves, who clearly
seem to have been asleep on the job.
Sir Peter Ricketts: There is a
difference with the local authorities here in the sense that the
UK is not funding many of these territories, apart from the two
that Dr Shafik refers to. In the territories we are not funding
by the UK taxpayer our position is a bit different but I accept
that overall, because we have this underlying responsibility and
potential contingent liability, we have got to go on improving
their capacity. I said in the case of the Turks and Caicos Islands,
for example, we have the National School of Government working
with them to try and improve the standard of public servants there,
we are trying to get more expertise into the public accounts and
auditing process. So we are working to improve the capacity but
in these very small places it will remain a problem.
Q101 Chairman: You say they are very
small places. Bermuda has a population of 63,000, it has a GDP
of $4.9 billion. Their GDP is the first in the world, $76,000
per head. That is all, by the way, on page 44. If we look at page
29, Sir Peter, you will see that, despite the fact that it is
this fabulously rich place, you are giving £338,000 to them.
Why? If it is so hands-off, if, as you say, they are small places,
they run themselves, it rather begs the question why are you giving
Bermuda £338,000? You are accepting responsibility, are you
not?
Sir Peter Ricketts: My comments
earlier on were really in respect of Turks and Caicos Islands
rather than Bermuda. It is the very small territories like the
Turks and Caicos, Anguilla and Montserrat where there are real
capacity constraints which we need to improve. Bermuda I think
is a different case, Mr Chairman.
Q102 Chairman: Why is Bermuda still
a colony, by the way?
Sir Peter Ricketts: Because this
Parliament has given it an overseas territories constitution.[8]
Q103 Chairman: Why are we giving them
£338,000 when it has the highest GDP per head in the world?
Sir Peter Ricketts: I think it
is the costs of the staff working for the Governor, Mr Chairman.
Q104 Chairman: If it is still a colony,
which it is, will you now look, please, at page 22 at the traffic
lights there. This is following on from Mr Davidson's question.
That is why I am intervening at this point. You will see that
some of these territories which you are responsible for perform
very badly. There is a large number of red lights. If you look
at Bermuda, for instance, money laundering, materially non-compliant,
22%. This is on page 22, figure 8. Insurance, materially non-observed,
44%. If you compare the British Virgin Islands, banking compliance,
36%. If you compare that to the three Crown dependencies, the
Isle of Man, Jersey, et cetera, they are 63%. They are
performing poorly and you, Sir Peter, are responsible for them.
There is a large risk involved here and apparently you are asleep
on the job.
Sir Peter Ricketts: I would contest
that, Mr Chairman.
Q105 Chairman: Why have you got some
of these very bad figures and these traffic lights very clearly
laid out in figure 8? You can compare them directly with the three
Crown dependencies, which generally seem to perform much better.
Sir Peter Ricketts: I raised this
with the Chief Ministers who were in London last week for the
Overseas Territories Conference. I explained to them that this
is not satisfactory as far as we are concerned—
Q106 Chairman: How long have we been
running these places, Sir Peter?
Sir Peter Ricketts: A number of
them pointed out that—
Q107 Chairman: How long have we been
running these places? You raised it last week!
Sir Peter Ricketts: Of course,
it has been the subject of continuing discussion but I had the
opportunity to raise it again last week.
Q108 Chairman: Are they colonies
or are they not? If we are responsible for them, you can see that
this record in terms of compliance in money laundering, banking,
insurance, securities, compared to the three Crown dependencies,
Jersey, Guernsey, Isle of Man, is appalling and you are directly
responsible for these places. We are responsible. There is no
point shuffling and saying, "Oh, they manage themselves."
Why are they still colonies?
Sir Peter Ricketts: We are ultimately
responsible for them, Mr Chairman, but in terms of their own economic
and internal self-government, they are responsible for themselves
and, in a territory like Bermuda, which is, as you say, wealthy,
they are capable of pulling these up.
Q109 Chairman: Why are they not doing
it then?
Sir Peter Ricketts: I am told
they are.
Q110 Chairman: A GDP of $4.9 billion,
a population of 63,000, a GDP per head of $76,000, yet look at
their record. It is appalling! Perhaps some people might say they
are taking you for a ride.
Sir Peter Ricketts: I think that
actually the most effective pressure on them to improve their
standards, apart from our continued encouragement, is market forces.
If they want to go on being successful in the world, they need
to improve.
Q111 Chairman: It is not working
up to now. You think market forces will work. If market forces
work, why has it not worked up to now?
Sir Peter Ricketts: I was looking,
for example, in the banking column, where I see that Bermuda is
actually doing pretty well in this data here. I agree with you
on insurance it is not doing adequately and I think it is something
that the Bermuda government need to take very seriously.
Q112 Mr Bacon: Sir Peter, I would
like to ask you first of all—and in a way it follows on
from what the Chairman was saying about the large number of red
lights for observance and compliance. In paragraph 2.15 on page
30 it refers to the overseas territories programme fund and it
states that of the £11 million spent on overseas territories,
just under £5 million relates to this fund, and aside from
£1 million to meet international commitments in the polar
regions, its aim is to promote sustainable development and build
capacity and so on, and there is therefore roughly about £4
million if you leave aside the polar region, £1 million.
The second bullet points down it says that there were 118 applications
and 65 approved in the most recent year. That works out on average
at £61,000 per successful application, which is tiny. It
is hardly therefore a surprise that it says there is a burden
that Governors' offices are unable to meet in terms of monitoring
and keeping track of these. How long has it been like this, with
lots of small projects, and how soon is it going to get where
the paragraph says you want to get, with fewer larger projects?
Sir Peter Ricketts: Right now
we are trying to improve that. I agree with you. I think there
are too many, too small projects and that they will be more effective
if they can be combined into larger, multi-annual, sustained projects.
We are taking that forward now.
Q113 Mr Bacon: So in future, assuming
the money stays the same, how long will it be before we see 20
or 15 projects rather than 65?
Sir Peter Ricketts: In the new
financial year, with the new spending round starting from April,
we are trying to get all our programme funding into fewer, larger,
more significant streams. So as from the new financial year I
hope you will see that.
Q114 Mr Bacon: Can I ask you about
the Falkland Islands? On page 49 it refers to the economic success
which the islands have enjoyed since enforcing a 200-mile fishing
zone in the mid-1980s. Besides direct economic activity, this
has generated annual licensing income of up to £26 million
for the Falkland Islands government. This is on page 49. That
is by far the biggest slug of income for the Falkland Islands
government. Having visited the Falkland Islands myself a few years
ago, I can see what difference it is making to their ability to
develop infrastructure. I have often wondered—can you explain
why it is that the Foreign Office opposed the attempt by the Falkland
Islands to be able to license fishing in that way originally?
Sir Peter Ricketts: I am afraid
I cannot, no. I can write to you on that. I cannot recall that
period precisely.[9]
Q115 Mr Bacon: This is over the page,
on page 50, where it says that since 2003 Argentina has withheld
permission for charter flights through its airspace. What diplomatic
activity has been taking place with Argentina to try and get that
decision rescinded so that there can be charter flights going
through Argentine air space?
Sir Peter Ricketts: We began the
hearing, Mr Bacon, with a discussion of the new Argentine government
and we certainly have been trying to persuade them that it is
in the interests both of Argentina and the Falkland Islands to
open up the islands to charter flights in that way. We have not
succeeded yet. We have raised that with them this year and we
would intend to raise it with the new President and the new Government
as soon as they are in place.
Q116 Mr Bacon: Perhaps I ought to
know this. Is there yet a treaty governing the fisheries on the
high seas, those outside the exclusion zone? When I visited it
was clear that there was a mutual interest for Argentina and the
Falkland Islands to obtain such a treaty under the provisions
of the UN Law of the Sea. Has progress been made on that?
Sir Peter Ricketts: I believe
there is not yet, subject to correction, a treaty.
Q117 Mr Bacon: Is it possible you
can send the Committee a note, also stating what activities there
have been towards that goal in the last five years or so?
Sir Peter Ricketts: I agree with
you about the importance of it and of course we can.[10]
Q118 Mr Bacon: Thank you. I would like
to ask you about page 26, where it states in paragraph 2.3 that
there is an ambition to build up overseas territories as a career
specialism or career anchor, whatever that is, and to increase
the number of key officials with a background of direct administrative
experience in territories, and while this is especially welcomed
by territory governments, there is still some way to go. Only
four out of 11 Governors had previous experience working in overseas
territories. If you go to appendix 4 on page 60 it sets them out.
You can see in the second line there: "Governor's previous
overseas territories experience" and quite a few of them
just say no, no, no, no, no. If you are interested in improving
the quality of administration in the territories, would not a
good starting point be to ensure that nobody was appointed to
a governorship who did not previously have some overseas territory
administrative experience? Would that not be a very easy thing
to do? The Governors do not stay that long; they are only there
for—how long? Two or three years?
Sir Peter Ricketts: Three or four
years.
Q119 Mr Bacon: It would be extremely
easy to do.
Sir Peter Ricketts: It would mean
we would then have a very limited pool of people to appoint as
Governors.
8 Note by witness: In addition to its constitutional
status, Bermuda is still an Overseas Territory because a majority
of its people has not expressed the wish to become independent. Back
9
Ev 17 Back
10
Note by witness: There is no treaty governing fishing
on the high seas in the South West Atlantic. The UK has suggested
the establishment of a Multi Lateral High Seas Agreement to Argentina
many times within the context of the South Atlantic Fisheries
Commission (SAFC) but the Argentine side has resisted this. The
UK and Argentina last met to discuss the mandate of the SAFC in
Buenos Aires in March 2007. There has been some recent World Wildlife
Fund (WWF) activity aimed at creating a High Seas Marine Protected
Area (MPA). The WWF is discussing its ideas with the FAO, the
European Commission and relevant coastal states. Back
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