Letter to the Chairman of the Committee
from the Permanent Under Secretary of State, Foreign and Commonwealth
Office
1. I am writing to update you on the latest
FCO management issues. This letter covers the period July to September
2008.
FCO/UKBA SERVICE
LEVEL AGREEMENT
2. Following UKVisas merger with the UKI
Borders Agency on 1 April, the Home Office and FCO are working
well together on Migration issues. To underpin this, we have been
in negotiations with UKBA in recent months over a series of Service
Level Agreements (SLAs). We have now signed agreements on IT,
finance and human resources. I'm confident these agreements provide
a very solid foundation for the FCO's partnership with a key Whitehall
stakeholder.
PASSPORTS
3. I will be shortly writing to the Committee
to explain in more detail some of the background to previous arrangements.
4. I will keep the Committee informed on
the conclusion of our negotiations with the Home Office to start
the integration of our two passport services from 1 April 2009.
As things stand the IPS have recently approved the case for the
merger and the proposal is now being reviewed by the Home Office
Investment Committee. A decision is expected later this month.
SHARED SERVICES
5. I have written separately about the Shared
Services Programme and future arrangements for the management
and co-ordination of change across our corporate services.
FCO SERVICES
6. At the half year point, FCO Services
is performing well against its six formal Ministerial targets
and we are confident that it is on track to deliver the planned
benefits for the FCO.
7. FCO Services continues to implement the
internal changes needed to enable it to operate in a more competitive
environment and has put in place a new, more cohesive, organisation
structure and operational processes so that it can work together
as one organisation to meet its customers' needs more effectively.
8. As a customer, the FCO will assess the
value for money we are receiving from the services provided by
FCO Services, as specified within individual Service Level Agreements
(SLAs) with FCO customers. This programme of assessments will
begin in October 2008 and will form a key part of the SLA renegotiation
process. The new agreements will be phased in from April 2009
to April 2011.
9. We are currently working with FCO Services
to update the Key Performance Indicators for services specified
within individual SLAs to achieve more meaningful measures of
success of those particular service lines.
10. At a strategic level, we are working
closely with FCO Services to develop and promote our strategic
partnership and our new Partnership Board met for the second time
last month to share longer-term plans and to assess progress in
embedding an understanding of the partnership more widely across
FCO Services and the FCO.
PUBLIC SERVICE
AGREEMENTS AND
DEPARTMENTAL STRATEGIC
OBJECTIVES (PSAS/DSOS)
11. We are in the process of conducting
our Business Planning mid-year review. The FCO Board are conducting
face-to-face reviews on 9 October with individual DSO Owners to
hold them to account on progress against their DSO Plans. The
Board will then draw overall conclusions. Progress against our
DSOs and PSA 30 will be made available to the Committee in our
2008 Autumn Performance Report to be published in December.
RISK
12. When updated in September, the Top Risks
Register included six operational risks (physical security, resources,
internal financial controls, IT systems, Visas, and FCO change)
and eight strategic risks (terrorist attack, Iran, Afghanistan,
Iraq, Russia, Pakistan, Zimbabwe, and the Middle East Peace Process).
The Board also discusses individual risks in depth at its monthly
meetings. Most recently, they focused on Zimbabwe (July) to confirm
that appropriate mitigation measures were in place against the
risk of continued deterioration, and also that we had plans in
place to play a major role in reconstruction.
13. We continue to raise awareness of risk
management throughout the organisation. During the last quarter,
we have held two Business Planning and Corporate Performance Management
courses and we have provided risk training on two Management Officers'
courses.
SERVICE LEVEL
AGREEMENT (SLA) WITH
PARTNERS ACROSS
GOVERNMENT
14. The SLA, which governs the recovery
of full economic costings for the management and support services
provided to other Whitehall Departments at our posts overseas,
has now been signed by the majority of major Partners Across Government.
DFID are still examining the cost implications and we have recently
provided them with a final estimate, which we hope will enable
them to sign. The Met Police still have a number of outstanding
issues, which we are working hard to resolve.
ACTIVITY RECORDING
15. The first quarter's activity recording
data has been collected, although technical problems with the
software caused some Posts a problem leading to only a partial
return. The technical problem appears to be related to user volumes,
but until the technical solution is accurately assessed, we have
requested Quarter 2 (July-September 2008) data through a series
of returns via Excel templates. We will be moving to a new time
recording tool for the FCO, in 2009-10. Quarter 2 returns are
due by the end of October.
FIVE STAR
FINANCE PROGRAMME
16. The Programme reached the intermediate
milestone of 3.5 stars in August. This indicates that there is
still significant work to be done to reach the 4 stars level,
which is where accruals-based information is fully integrated
for internal management and external reporting. We expect to have
the results shortly of' the Chartered Institute of Public Finance
and Accountancy (CIPFA) financial management model study. This
will provide a major independent check on our progress in relation
to better financial management.
17. Since the last report, we have started
the induction training of nine B3 accountancy trainees, the first
cohort of our new formal training scheme. We took on the recruits
through a scheme managed by the Department for Work and Pensions.
We are currently in the middle of an external campaign to recruit
nearly 40 skilled finance staff. These measures will increase
our capability and skill levels and provide us with a better mix
of internal staff and contractors. My Board colleagues and I are
seeing better monthly reports, enabling us to be more confident
about reallocating resources and achieving a smaller underspend
in 2008-09. At the same time, we are pushing ahead with a set
of projects to make our PRISM system easier to use and take advantage
of new Oracle tools for planning, budgeting and measuring the
use of staff time. We aim to introduce those new features in 2009-10.
18. We have established that there is a
performance gap between our overseas posts and UK departments
in terms of complying with our Purchase to Pay (P2P) processes.
The UK position has improved significantly in the last year. and
we are concentrating on raising overseas performance. We are implementing
a series of improvements to our internal financial controls. These
are designed to place more reliance on in-built software, reduce
the level of year end audit testing and speed up the implementation
of recommendations in our audit programme.
THIRD GENERATION
FIRECREST (F3G)
19. The rollout of the first stage of our
new IT system, F3G in the UK, with deployment of over 4,300 new
desktop computers, is now almost complete, and has been very successful.
20. The start of deployment to Posts in
Europe begins this autumn. Our first Posts will receive F3G shortly.
The FCO Board remains committed to delivering F3G to the majority
of our Posts by September 2009. All Posts have now received an
indicative date they can work to and prepare for. The final stage
of the UK deployment is scheduled to start at the end of this
year.
HUMAN RESOURCES
21. We updated the Strategic Workforce Plan
in July. A copy of this is attached (Annex A)[21]
and we will also be placing this in the House of Commons library.
I will hold another round of meetings and teleconferences with
staff about this over the autumn.
22. The Strategic Workforce Plan is not
able to go into too much detail about our local staff. It is much
harder to plan for a workforce which is recruited in-country and
according to rapidly changing local needs. We are however committed
to doing more to harness the skills and talents of our local staff.
The Capability Review pointed to this fact—and we are very
aware of the need to take action. We are reviewing our current
local staff strategy. One of the key aims of the review is to
put in place concrete recommendations which will help all of our
staff work as "one team" wherever they are based in
the world. The review team are consulting people around the network
as part of this project and will submit their paper to the FCO
Board in December.
23. The Strategic Workforce Plan points
to the fact that we will continue to be an organisation in which
people manage their own careers. We have just agreed to take further
steps to help with this. From January 2009, FCO managers in the
UK will be able to advertise the majority of senior management
jobs and all delegated-grade jobs as the business need arises,
and they will fill all of these jobs by interview. In doing this,
we aim to improve flexibility and create an environment where
both managers and applicants are able to fully `sell themselves'
to each other. We will also roll this system out overseas by 1
April at the latest.
CULTURAL AUDIT
24. We recently commissioned a "cultural
audit" of the FCO to examine whether the way we behave is
preventing any of our staff from reaching their full potential
or adversely impacting on our diversity goals.
25. I attach a copy of the report (Annex
B),[22]
produced by HR specialists Couraud. It says a lot of very positive
things about the FCO: for example, that we have a great deal of
talent; that we are an extremely well-intentioned employer; that
our leadership, management and communication is good and getting
better; that most of our staff love working for us; and that the
FCO is now a genuine meritocracy and equal opportunity employer.
The report also makes some trenchant criticisms: the FCO culture
is, it says, still too conformist consensual, bureaucratic and
risk-averse, which means we don't always deliver effectively.
26. The FCO Board have discussed the report.
Most of us agreed with much of it and strongly disagreed with
parts of it. We agreed to share it with our staff and encourage
them to discuss it and give us their views; to take up the challenge
to do all we can to empower staff and to keep working to achieve
diversity in the fullest sense, including diversity of thought
and approach, so that everyone in the organisation feels that
their talents are being used to the full.
THE ESTATE
27. Staff moved into our new Embassy building
in Manila in July. The building is close to the central business
district, and designed to our security requirements. It incorporates
a number of features to improve the sustainability of the building,
for example thermal insulation, rainwater harvesting and solar
water heating. In September Meg Munn opened our Vice-Consulate
in Ibiza, following the completion of works to expand the office
space in this busy consular post.
28. I enclose our quarterly report for properties
sold and purchased (Annex C) in the first quarter of the 2008-09
financial year. I provided an explanation of. the sales in Dublin
and Madrid in my previous updates. The property in Amsterdam was
the Residence of the Consul-General and we have reprovisioned
this with a more cost-effective leased property. In Tallinn we
sold land originally acquired for a new Residence, after it was
found to be unsuitable on security grounds—the Residence
was moved to leased premises in March. We bought this land for
£328,223 in July 2002, and sold it in June 2008 for £606,408
thus making a net profit of £278,185. This profit will be
ploughed back into our wider estates programme. In Wellington,
we sold one staff house as part of a local rationalisation programme.
In Dushanbe, we bought leasehold land enclosed within the embassy
security walls, to maintain the integrity of the compound.
29. As of 29 September 2008, the FCO has
achieved net sales receipts of £53.55 million against an
initial 2008-09 target of £55 million. (This target was increased
to £60 million following early successes in Amsterdam, Dublin
and Madrid.) Subsequent residential sales, included in the £53.55
million figure, have been completed in Buenos Aires, Capetown,
Durban, Manila, Stockholm, Tallinn and Wellington.
30. In previous letters I have kept you
informed of the steps we are taking to learn lessons from the
problems we encountered on the Islamabad and Karachi housing project.
I attach for your information an updated action plan based on
the recommendations of the Reading Report into this project. This
action plan was recently reviewed by the Investment Committee
(Annex D).[23]
9 October 2008
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