Letter to the Second Clerk of the Committee
from the Head of the Parliamentary Relations Team, Foreign and
Commonwealth Office
Thank you for letter of 7 December 2007 regarding
issues arising from the Winter 2007-08 Supplementary Estimates
round. This reply addresses the issues raised in your letter and
follows its format with replies to the questions asked immediately
following the restated questions.
1. What departmental restructuring will the
EYF be spent on? How many staff cuts, if any, will this departmental
restructuring involve?
A. Our current estimate is that 67 delegated
grades and around 28 members of the senior civil service will
have left in 2007-08 as a result of the restructuring programme.
2. What proportion of the £22 million
EYF will be spent on staff redundancy costs?
A. We have taken up £22 million as
programme EYF to spend entirely on voluntary early retirement
or voluntary early severance costs.
3. What are the exit costs associated with
the FCO's efficiency programme? Will these exit costs reduce FCO's
reported efficiency gains?
A. Costs of SR04 efficiencies are not available
since they are measured excluding restructuring costs and other
associated one-off costs. However the bulk of the £6 million
local-engaged staff restructuring costs, referred to below, will
be a result of efficiency measures.
CSR07 efficiencies, in contrast, will be recorded
and reported net of restructuring and implementation costs. We
will therefore be reporting costs separately once the programme
is established and running.
4. Can you provide a detailed breakdown that
shows the components of the FCO estate which the £35 million
of capital EYF will be spent on?
A. The drawdown of Capital EYF in the Winter
Supplementary is not linked to individual programmes and/or projects.
Rather we have assessed the expected overall level of capital
expenditure across all FCO capital budget holders, and anticipate
that the total demand for funds will necessitate use of our capital
EYF. We will make a similar drawdown of nearly all of the remaining
capital EYF in the Spring Supplementary. Given that this drawdown
is not tied to individual projects, it is not possible to provide
the detailed breakdown requested.
5. How much EYF is the FCO intending to take
up in the Spring Supplementary Estimates?
A. We intend to take-up another £10.4
million resource programme EYF to be spent on Global Conflict
Prevention and £7.35 million resource programme EYF to be
transferred to capital to pay for the operations in Afghanistan.
We also intend to take up £31.3 million Capital EYF.
6. Please can you provide a detailed breakdown
of what the £17 million will be spent on, specifying what
amounts will be spent on FCO Services, FCO's efficiency programme
etc?
A. The FCO Services element of the take
up of the DUP was £2 million. In excess of £6 million
has also been spent on Locally Engaged staff restructuring. We
do now, however, expect to spend less in total in 2007-08 on the
efficiency programme than was anticipated at the time of the Winter
Supplementary Estimate.
7. What are the start-up costs associated
with the FCO's efficiency programme?
A. The major element of the start-up costs
of the FCO's efficiency programme is the £5.9 million cost
of the shared services programme.
8. Why is there a shortfall in administrative
income from that estimated in the 2004 Spending Review?
A. Consular and Visa income that had been
included in our Administration budget was reclassified into our
programme budget by Treasury in the 2004 Spending Review. It has
since become clear that the amount of income expected to remain
within our net Administration budget was overestimated by around
£30 million PA. We are correcting this for Main Estimates
2008-09.
9. The Department has placed a reserve claim
of £3.4 million from the Emergency Disaster Relief Fund.
The Estimates Memorandum states that this is for costs arising
from the Lebanon evacuation. Given that the conflict between Israel
and Hizbollah occurred in July 2006, within the last financial
year, what will these funds be spent on?
A. The £3.4 million claim on the EDRF
relates to the conflict in Lebanon in 2006 and the evacuation
of British Nationals from Beirut via Nicosia and their repatriation
to the UK. This was a combined FCO/MOD and Police operation. The
largest expense was reimbursing the MOD for their costs, including
sea charter costs for the sea evacuation from Lebanon to Malta
and air charter costs from Nicosia. Ministers exceptionally agreed
not to reclaim the latter from evacuees. The FCO did not reclaim
the costs in 2006-07. A finally agreed settlement of costs was
reached with the MOD in March 2007. The FCO sought reimbursement
of these costs and the funds will be used to cover FCO general
expenses in 2007-08.
10. The Estimates Memorandum states that the
FCO is "increasing other current (not administration) expenditure
and receipts by £60 million to cover increased consular and
visa business". However no explanation is given as to why
there is either increased receipts or expenditure. In its written
response to the Committee's questions on the Departmental Report
dated 29 June 2007, the Department stated that "income for
2007-08 [set out in the Departmental Report] assumes no growth
in demand for visa services and is based solely on increased fees"
(Q34). Why is £60 million needed to cover increased consular
and visa business and will fees have to rise as a result?
A. The increase is upon the amount of receipts
for 2007-08 initially estimated in the run up to Spending Review
2004 and therefore is over three years out of date. Expenditure
and receipts have been adjusted upward to reflect current levels
of income and this does not imply a need to increase fees.
11. The Department is transferring £8.3
million to Security and Intelligence agencies "to expand
their capacity and capabilities". How will the £8.3
million be spent?
A. The £8.3 million will be spent on
sensitive conflict prevention, counter-narcotics and good governance
programmes.
12. Why has £7 million been transferred
to the Home Office from the FCO for the Border and Immigration
Office?
A. The transfer is to cover in-country costs
incurred through the consideration of both Work Permit and Highly
Skilled Migrant Programme visa applications and compliance costs
associated with in-country activity to ensure that visa holders
are adhering to their conditions.
13. Please can you clarify where the transfer
is shown in the Home Office Winter Supplementary Estimate?
A. The Home Office will take up the transfer
along with a 2nd tranche transfer of £5.363 million in the
Spring Supplementary Estimate.
14. To what extent will the FCO have to reduce
funding for existing activities as a result of it having to transfer
£7 million to the Home Office and £8.3 million to Security
and Intelligence Office?
A. No activities will be reduced as a result
of these transfers. Transfers between government departments such
as these are a routine occurrence and are therefore incorporated
in the normal budgeting process.
15. Why has £14,000 been transferred
from the Cabinet Office to the FCO in respect of the Privy Council
Office?
A. This was decided at ministerial level
and is to cope with the growth in the volume of legislation for
the Office of the Parliamentary Council. This is a cost-sharing
arrangement between the Cabinet Office and the users from other
government departments.
To ensure that the additional costs are met,
departments are required to meet the increase in the costs. The
arrangement is the Cabinet Office makes a baseline transfer once
a year to OGD's equal to its expenditure on OPC via the supplementary
Estimate and recover the additional portion based on a formula
reflecting the use it makes of the drafting services.
16. Please can you clarify where the transfer
is showing up in the Cabinet Office Winter Supplementary Estimate?
A. This transfer is shown in the introduction
to the Cabinet Office Estimate as "Transfer to 14 Government
Departments to fund the Parliamentary Council Office".
17. Why is DFID not showing the £3 million
transfer in respect of conflict prevention activity in Afghanistan
in a Winter Supplementary Estimate?
A. DfID did not take a Winter Supplementary
Estimate.
Richard Cooke
Head, Parliamentary Relations Team
31 January 2008
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