Letter to the Committee Specialist from
the Parliamentary Relations Team, Foreign and Commonwealth Office
FURTHER QUESTIONS
ON THE
DEPARTMENTAL ANNUAL
REPORT 2008-09
Thank you for your letter of 12 January requesting
further information on our 2008-09 Departmental Report and our
2009 Autumn Performance Report. For ease of reference I repeat
your questions in italics with our responses below.
FCO BUDGET
1. In their evidence to the Committee in
December, both the Foreign Secretary and Sir Peter Ricketts spoke
about the steps that the Department is taking to try to remain
within its budget for 2009-10, given the fall in sterling (cuts
to programme spending and to spending on hospitality, training,
travel, allowances and salary costs have all been mentioned).
Given that this is a current and changing situation which has
arisen largely in 2009-10 rather than 2008-09, and that the Committee
has received some information anecdotally as well as in formal
evidence, the Committee would appreciate a brief summary overview
from the Department of these steps, as of late 2009/start of 2010.
In particular, is the FCO making cuts only at overseas posts,
or in the UK too; and how uniform across the network are the kinds
of cuts that the Committee has heard about at some Posts, in the
course of its recent programme of visits (e.g. to local staff
working in the US, and to hospitality spending in Europe)?
2. The FCO Board minutes for December 2009
make reference to a budget for 2010-11 that is likely to be 8-9%
lower than in 2009-10. On what basis does the FCO derive this
figure?
As we have said in Parliament and to both the
PAC and FAC the fall in the value of Sterling has had significant
impact on our available funds. We have taken action by reprioritisation
within our budget and we have sought to protect our overseas network
and highest priority frontline work as far as possible. But to
manage our reduced purchasing power FCO has reduced the planned
increases in activity and concentrated on key objectives. The
figure in the Board minutes was indicative of the likely reductions
in planned spending needed to stay within our Parliamentary Control
totals and CSR Settlement in the light of our exchange rate pressures.
The Foreign Secretary has been in discussion with the Chancellor
about how to manage these pressures.
INTERNATIONAL SUBSCRIPTIONS
3. The Committee would like to see, in a
single table if possible, Sterling figures for the UK's subscriptions
to international organisations over recent and forthcoming years
(broken down by organisation) which show, if possible, what share
of the increase is attributable to the fall in Sterling and what
share would be due in any case.
See Table at Annex A which shows the actual
payments made in the relevant currencies for each organisation
and how these have converted to sterling payments.
PSA30: CONFLICT-RELATED
ISSUES
4. The Autumn Performance Report noted that
"continuing pressure on international and UK resources could
affect delivery [of PSA 30], particularly of indicators 2, 3 and
4". What risk to the delivery of these indicators does the
FCO currently see arising from a lack of resources? What is the
FCO doing to try to manage this risk?
As noted in the 2009 Autumn Performance Report
on DSO 6 ("Prevent and Resolve Conflict"), there is
a risk that the global economic crisis will endanger national
and international capacity to act in relation to conflict, even
where political will exists. For the UK, the greatest risks to
delivery of PSA 30 remain another significant rise in our assessed
(obligatory) contributions to international peacekeeping missions
(e.g. the UN and EU) and further unfavourable exchange rate changes,
since HMG is billed by the UN and EU in US Dollars and Euros.
To mitigate against such eventualities, we have implemented—following
the Foreign Secretary's Written Statement in March 2009—changes
to our conflict funding structures for 2009-10 and set out allocations
for both the UN Peacekeeping Budget and the tri-departmental (FCO,
MOD, DFID) Conflict Pool. Further, we negotiated a reduction in
the projected growth of the UN Peacekeeping Budget at the UN's
Fifth Committee in June and expect to be able to meet our assessed
costs and to fund in full our discretionary conflict programme
this year. The FCO has developed systems to record, monitor and
profile expenditure, and quantify risks. A tri-departmental Director-level
Steering Board considers these assessments and the resulting risks
to delivery at regular intervals. Planning for 2010-11 is already
underway. In the absence of agreed budgets for international institutions,
we are using innovative techniques to identify peacekeeping trends
and assess how they can be used to predict costs across years.
At the same time, we continue to focus activity more tightly on
countries where the risk and impact of conflict is greatest, and
therefore allocations are kept under regular review.
5. On 16 December, DfID announced the launch
by the Stabilisation Unit of the 1,000-strong Civilian Stabilisation
Capacity (CSC). DfID said in its Written Ministerial Statement
that the launch of the CSC would enable the Unit to "increase
the number of civilians deployed at any one time up to 200 if
required". As you know, the Committee has taken a close interest
in the cuts which have been made in 2009 to the numbers of UK
secondees in some international post-conflict missions. What difference,
if any, does the FCO expect the launch of the CSC to make to the
numbers of UK secondments to such missions which can be funded
in future? Would it be correct to understand that the launch of
the CSC increases the pool of individuals potentially available
for such overseas secondments, but does not necessarily make available
more funding for such posts?
The launch of the new 1,000-strong Civilian
Stabilisation Group (CSG) will mean that we have a higher number
of well-trained and readily deployable individuals, allowing us
to deploy up to 200 at any one time to post-conflict stabilisation
and peace building missions. The Stabilisation Unit has itself
also been enhanced so that it is fully able to provide the support
needed for these additional secondments. Funding arrangements
remain the same as previously, which is to say that they are funded
from discretionary monies in the Conflict Pool. So, while it is
true to say that the launch of the CSG does not actually make
additional funding available for such posts, the Stabilisation
Unit's enhancement ensures that we are well placed to make effective
and targeted use of available funds and, should a crisis arise,
that we have the capacity to respond swiftly.
6. The 2008-09 Departmental Report and Resource
Accounts show that no spending on conflict prevention is expected
in the FCO budget for 2010-11 (p 16). This would appear to be
the main factor behind the annual drop of over 20% expected in
the Department's Resource DEL for that year. What is the explanation
for the expected disappearance of conflict prevention funding
from the FCO's Resource DEL budget in 2010-11?
No spending for conflict prevention is indicated
in the FCO budget for 2010-11 (p 16 of Volume 2, Departmental
Report 2008-09) because allocations have not, as yet, been confirmed.
The funding for conflict prevention—namely, the Conflict
Pool and Peacekeeping Budget—is transferred to the FCO from
DfID and the HMT Reserve respectively on an annual basis at the
time of Main Estimates (in February/March), Winter Supplementaries
(in September/October) and Spring Supplementaries (in January).
Footnote 4 to Table 3 (p 13 of Volume 2, Departmental Report 2008-09)
explains that the figures under 2009-10 Plans do not include the
total amount of conflict prevention expenditure for the Financial
Year because the full amount has not yet been drawn across the
Winter and Spring Supplementaries. Explicit reference to figures
for 2010-11 Plans will be made in FCO Departmental Report 2009-10.
DSO 1: GLOBAL NETWORK
7. The Autumn Performance Report notes that
"if the current budget pressure of a result of the sharp
fall in Sterling continues [sic], we may not be able to sustain
our current global presence." In his evidence to the Committee
in December, Sir Peter Ricketts said that the FCO would look at
the possibility of closing posts "over the next month or
two" (Q 24). What risk does the FCO currently see of having
to close overseas posts? What effect would any shrinkage of the
current network have on the delivery of PSA 30 or the FCO's DSOs?
As the Foreign Secretary has said recently,
the Government is absolutely committed to a world-class and comprehensive
diplomatic service that is a credit to the UK. The fall in the
exchange rate has affected the purchasing power of the Foreign
and Commonwealth Office's budget. The Foreign Secretary is working
with ministerial colleagues to address next year's budget, and
will report when those discussions are complete. He is committed
to ensuring that as a result of these discussions the FCO will
be able both to fulfil its historic responsibilities and to pursue
its modern priorities and meet its PSA targets.
DSO 2: UKTI
8. The Autumn Performance Report shows progress
against 3 out of 5 indicators (compared to 5/5 in the 2008 APR),
and "strong" progress in only one case. On what basis
does the 2009 APR therefore assess performance against DSO 2 as
"strong"? Does the FCO attribute the weakening of performance
on DSO 2 over the past year largely to the international economic
downturn, or are other factors involved? If so, what is the FCO
doing to address them?
The 2009 Autumn Performance Report (APR) followed
HMT guidance as stated in Public Expenditure System (2009) 6.,
which states that departments are asked to judge whether there
has been improvement in the past year, i.e. in the period since
the 2008 APR. In previous reporting rounds, departments were asked
to judge whether there had been improvement since the beginning
of the CSR period. UKTI delivers DSO 2 for the FCO.
Guidance from HMT for the publication of 2009
Autumn Performance Reports, PES (2009) 6, states that content
should involve:
1. The provision of a summary assessment for
each PSA/DSO. This involves:
(i) an evaluative element to this assessment
for the overall DSO/PSA. "Strong Progress" was defined
as "where more than 50% of indicators had improved".
As UKTI was reporting progress in 3 out of 5
indicators, this fits into "strong progress" as defined
by HMT guidance. It is on this basis that UKTI reported performance
against DSO 2 as "strong".
Performance against DSO 2 has continued to be
strong. UKTI recorded a 22% increase in assisting UK businesses
to internationalise; a 30% increase in revenues from charging;
and a fifth consecutive year of growth for inward investment projects
over the period of reporting (1 October 2008 to 30 September 2009).
There has been continued progress against 3 of the 5 indicators.
In relation to the other 2 indicators:
— Indicator 3: UKTI has continued to exceed
the CSR target by over 100%. The proportion of UKTI clients reporting
additional R&D has fallen slightly through the period of the
downturn.
— Indicator 4: Evidence from the 2009 wave
of the UK Reputation survey confirms that country reputation is
very stable over time, and hence annual change against this indicator
year on year should not be expected. There was no deterioration
or improvement in this indicator.
UKTI has undertaken significant work over the
last year to maximise the value of its resources by moving them
to where they are most productive for UK business and is realigning
its inward investment resources to ensure that funding and posts
are focused on the most productive markets.
Over this period, UKTI has cut the average cost
of assisting businesses in relation to trade development and inward
investment. UKTI continues to become more efficient by delivering
more for less.
More details are available in the UKTI Autumn
Performance Report 2009, available on the UKTI website: www.uktradeinvest.gov.uk/ukti/fileDownload/autumn.pdf?cid=439551
DSO 3: CONSULAR SERVICES
9. The Autumn Performance Report notes that
there is one "red" indicator for quality of service
in the consular network, on customer satisfaction. How does the
FCO explain this, and what is it doing to improve customer satisfaction
with the consular network?
Customer satisfaction surveys have returned
a satisfaction rate of over 94% across the consular network from
October 2008 to September 2009, a consistent green rating on the
Consular Balanced Scorecard. However, our current system of surveys
only captures the views of a limited number of customers, including
only a very small proportion of those we help in a crisis or in
very serious incidents. The red light in the Autumn Performance
Report highlights the need to improve this survey system. An early
priority of the 2010-13 Consular Strategy is to develop a system
to collect customer feedback from a more representative cross-section
of customers, more systematically, and embed that at the heart
of our performance management. This will help us to improve further
the quality of our services, and to develop them on the basis
of this feedback so that they meet customers' needs more effectively.
DSO 5: COUNTER-TERRORISM
10. The Autumn Performance Report says that
spending for this DSO is under pressure from Sterling weakness
and that "the volume of counter-terrorist related litigation
is putting increasing pressure" on resources as well, but
that the FCO is confident that it will be able to use programme
funding "to achieve useful enhancements to UK national security
during the current year." Could the FCO confirm whether programme
funding is being used to pay for counter-terrorist litigation,
or whether those costs are being met from elsewhere?; and whether
the FCO has had to cancel any "enhancements to UK national
security" which were planned for 2009-2010, owing to a lack
of funds?
Our programme funding is not being used to pay
for counter-terrorism litigation. The cost of lawyers is being
met through central funds and court costs have been met through
Counter Terrorism Ddivision's administration budget.
The FCO's overseas counter-terrorism budget
has increased significantly in recent years. In 2008-09 it was
£35 million; in 2009-10 we will be spending £36.9 million;
and we are projected to spend around £38 million in 2010-11.
We are rigorous at ensuring that spending reflects the current
analysis of the threat, and that projects deliver the intended
effect.
DSO 5: WMD PROLIFERATION
11. The Autumn Performance Report says that
progress has been made on two out of three indicators (p 16),
but the accounts of each indicator (pp 18-19) report at least
some progress on all three. The Committee would be grateful for
clarification.
As noted in the Autumn Performance Review (p
16) there has been progress on more than 50% of indicators against
DSO 5 Weapons Proliferation. However, the fact that there have
been setbacks in our two most important indicators—Iran
and DPRK—makes it inappropriate to rate overall progress
as strong.
VFM PROJECTS
12. In the Autumn Performance Report, the
Summary Table of VfM Projects (p 27) shows that for three projects—the
IT Zero Based Review, UKTI Efficiency and Language Training—forecast
savings at the end of 2009-10 are lower than actual savings achieved
by the end of September 2009. What are the reasons for this?
Forecast savings for all projects are periodically
reviewed and are subject to change. Where actual savings to date
have exceeded forecasts at the end of a Quarter, forecasts will
be adjusted for the next Quarter (Q3 results are in the process
of being collated). Where actual savings are falling substantially
below forecasts, these forecasts will also be adjusted as appropriate.
13. The Autumn Performance Report notes that
the changes to the accommodation allowance which were to be implemented
as part of the Europe Zero Based Review (ZBR) are now not to go
ahead, reducing the planned savings to be achieved by the project
to £6.8 million (p 28). Why are the changes to the accommodation
allowance now not to be implemented as part of the Europe ZBR?
Are there plans to bring reform of the accommodation allowance
back onto the agenda, either in Europe or elsewhere? The Times
of 16 December quoted the FCO as saying that it was conducting
an internal review of all allowances paid to staff in overseas
posts.
An Accommodation Allowance was not implemented as
part of the Europe ZBR as the FCO Board took the view that it
was an initiative which should be undertaken across FCO, rather
than just in Europe. As there are other efficiency programmes
being implemented across Europe and the rest of the overseas network,
there are presently no plans to introduce an accommodation allowance.
Regarding The Times article (16 December
09), the FCO has carried out a review of overseas allowances,
and is now in consultation with the Trades Unions. The aim will
be for the outcome of the review to be implemented as soon as
possible once the consultation is complete.
14. The Autumn Performance Reports notes
that "if exchange rates remain at their current level or
fall further, the FCO is likely to have to exceed its efficiency
targets in order to maintain delivery of its DSO and PSA targets"
(p 26). What is the FCO's current assessment of the likelihood
that this will be necessary? If efficiency targets have to be
exceeded, what is the FCO's assessment of the likely scale of
the additional requirement?
The FCO is operating in a challenging environment
with foreign exchange pressures, these are being carefully managed.
At Quarter 2 we had exceeded our target. Currently we are collating
our Quarter 3 data on all the CSR VFM initiatives and early indications
are that we remain on target. We continue to monitor all the projects
closely and to identify possible further efficiencies should there
be any additional requirement.
I hope this provides you with all the information
you require.
3 February 2010
Annex A
INTERNATIONAL SUBSCRIPTION PAYMENTS
| | |
Estimated Spend |
Name of Organisation | 2007-08
| 2008-09 | 2009-10
|
| £ | £
| £ |
| United Nations Regular Budget | 70,061,000
| 74,351,000 | 97,301,000 |
| NATO | 20,962,000 | 21,530,000
| 23,586,000 |
| Council of Europe | 19,260,000
| 23,947,000 | 26,144,000 |
| OECD (2007, 2008 and 2009) | 12,826,000
| 15,169,000 | 15,013,200 |
| Commonwealth Secretariat | 3,435,000
| 5,821,000 | 5,046,000 |
| OSCE | 3,223,000 | 2,319,000
| 2,475,858 |
| Western European Union | 1,903,000
| 2,010,000 | 2,136,000 |
| Other Subscriptions (less than £1m per annum)
| 4,536,000 | 2,375,000 |
1,000,000 |
TOTAL
| 136,206,000 |
147,522,000 | 172,702,058 |
| PAYMENT IN FOREIGN CURRENCY
| | | |
| | |
ESTIMATED |
| 2007-08 | 2008-09
| 2009-10 |
United Nations Regular Budget ($) |
131,175,171 | 131,567,485 | 156,262,897
|
| NATO (€) | 26,627,768 |
26,072,295 | 26,828,656 |
| Council of Europe (€) | 29,303,835
| 29,841,856 | 30,155,384 |
| OECD (€) | 18,505,680 |
18,945,770 | 17,580,000 |
| OSCE (€) | 4,600,959 |
3,042,296 | 2,729,628 |
| Western European Union (€) | 2,483,379
| 2,538,013 | 2,319,651 |
* Commonwealth Secretariat Paid in Sterling
| | | |
PERCENTAGE INCREASE IN BUDGET IN FOREIGN CURRENCY TERMS
| | |
| From 2007-08
| From 2008-09 | |
| For 2008-09 | For 2009-10
| |
United Nations Regular Budget | 0.30
| 18.77 | |
| NATO | -2.09 | 2.90
| |
| Council of Europe | 1.84 |
1.05 | |
| OECD | 2.38 | -7.21
| |
| OSCE | -33.88 | -10.28
| |
| Western European Union | 2.20
| -8.60 | |
PERCENTAGE INCREASE IN STERLING CONTRIBUTION
| From 2007-08 | From 2008-09
| |
| For 2008-09 | For 2009-10
| |
United Nations Regular Budget | 6.12
| 30.87 | |
| NATO | 2.71 | 9.55
| |
| Council of Europe | 24.34 |
9.17 | |
| OECD | 18.27 | -1.03
| |
| OSCE | -28.05 | 6.76
| |
| Western European Union | 5.62
| 6.27 | |
| Notes: | |
| |
| 1. OSCE—The costs dropped in 2008-09 from 2007-08 as we were no longer paying additional costs for the move of OSCE Headquarters.
| | | |
| 2. NATO—The UK % contribution to NATO Civil Budget costs has gone from 15.046% in 2007 to 14.22% in 2008 and 2009 to 13.4% in 2010.
| | | |
| 3. ISBA (International Seabed Authority)—2008 US$507,435 paid (equivalent to £342,421) and 2009 US$496,784 payment in process.
| | | |
| 4. ITLOS (International Tribunal for the Law of the Sea)—2008 €663,995 (£ equivalent not available) and 2009 €676,515 payment in progress.
| | | |
| |
| |
|
