Examination of Witnesses (Question Numers
60-79)
FOREIGN AND
COMMONWEALTH OFFICE
21 OCTOBER 2009
Q60 Mr Bacon: Did you ever get them
back? Sir Michael Jay told us—I do not think he personally
did—"We dialled the number but nobody answered."
Sir Peter Ricketts: I do not think
we ever got them back, no. Part of it is better financial controls
so that when bills come in people who pay the bills make sure
that they are legitimate and proper expenses, and I think the
fact we have got this PRISM system now and a better culture for
numbers has instilled better discipline. I hope we have put the
systems in place that mean that would not happen again. It was
a very painful episode for us.
Q61 Chairman: So if a mobile phone
bill comes in for one mobile phone for £200,000, Mr Luck
is there to spot it for the first time ever in the history of
the Foreign Office, is he?
Mr Luck: Not personally Chairman
but, yes, there are processes in place absolutely to do that and,
as indicated in my previous answer, the budget managers are now
really switched on to examining all the costs that are coming
through.
Chairman: That is very reassuring. Alan
Williams?
Q62 Mr Williams: We are told there
are delays in delegating budgets to budget holders. What effect
does this have and why is it happening after all this time?
Mr Gardner: It was happening.
The effect of it was that it added to the underspend because people
were getting their budgets later in the year. We quickly picked
up on that. I think colleagues have noted in the last year we
gave out budgets before the beginning of the financial year and
this year we are giving out budgets a month earlier again, and
that means that people can focus on what they are supposed to
be doing and kick off activity much earlier in the year.
Q63 Mr Williams: C&AG, do you
think that improvement is adequate or do they need to do even
more?
Mr Suffield: We have looked at
it and we think that the steps that have been taken are sensible
and appropriate but we continue to look at it going forward.
Q64 Mr Williams: Then again you have
advised us that there is confusion in the Department over roles
and responsibilities. For a long-established department that seems
a rather strange predicament.
Sir Peter Ricketts: I am sorry
if there is still confusion. I think the NAO Report was referring
in particular to the lines of reporting for some of our major
programmes where they tended to be having to report to a number
of different committees. I do want to sort that out because I
think if we have a major programme it needs to be overseen but
it does not need to be overseen by two or three different committees.
That is just of waste of everyone's time. I have in mind some
reorganisation of the committee structure under the board to make
sure that does not happen. I think financial roles and responsibilities
are pretty clear actually.
Q65 Mr Williams: We are told that
across government 14% of staff have financial and management skills
whereas you, strangely enough, only have 8%, just over half of
that. Why are you trailing so dismally behind?
Sir Peter Ricketts: Mr Williams,
we were spurred into action on that before the NAO Report but
even with it and the supplement that the NAO have given the Committee
shows that we are already up to 12% and we are heading for 17%
by end of this year. We are training a lot more of our own staff
in financial matters and also taking on some experts from outside
so we will get to about 17% of our finance staff with qualifications
by the end of this year. I still do not think that is enough,
I think we can do better than that, and I would want to go on
increasing the proportion of qualified people in the finance function.
Q66 Mr Williams: We have been talking
about the foreign exchange fluctuations. What proportion of your
budget is affected by that?
Sir Peter Ricketts: More than
half our budget is spent in foreign currencies.
Q67 Mr Williams: Really?
Sir Peter Ricketts: Uniquely in
Whitehall more than half our budget is vulnerable to foreign exchange
rate movements.
Q68 Mr Williams: Historically you
have employed a large number of consultants and contractors on
finance. Are you still doing so?
Sir Peter Ricketts: We are reducing
them.
Q69 Mr Williams: How effectively
and what are they costing at the moment?
Sir Peter Ricketts: I am aiming
to complete a 50% reduction in contractors by the end of this
year, that is 50% less than two years ago, as a result of training
more of our own staff and bringing in career civil servants with
qualifications, so they will certainly be costing us half what
they were two years ago. I do not have an absolute figure in my
mind but I am determined that we shall drive down the cost of
contractors because we can certainly get better value for money
by having them on our books as civil servants.
Q70 Mr Williams: Finally to C&AG,
on the foreign exchange fluctuations obviously the Department
for Overseas Development must have the same problems to contend
with. Have they been any more effective, to your knowledge, in
meeting the problems than the Foreign Office or vice versa?
Mr Suffield: The Department for
International Development is possibly a little bit behind FCO
in the way that they have sought to manage this risk but I know
that they are in contact with the Department to try and learn
from the approach that FCO have taken.
Q71 Mr Davidson: Can I start by saying
that I think you have a lot of very fine staff who on occasions
have given absolutely excellent briefings to Members as we meander
around the world when we have the opportunity to do so. Sometimes
I must confess they do give the impression that they prefer MPs
to come in the tradesmen's entrance but I suppose they cannot
always overcome their background. I am sometimes tempted to confirm
their prejudices by stealing their spoons but I have always resisted—most
of the time! Can I ask about the tax treatment of your staff abroad.
Do they pay income tax the same as everyone else?
Sir Peter Ricketts: Yes.
Q72 Mr Davidson: So they are all
charged on a UK basis?
Sir Peter Ricketts: Yes, we are
UK civil servants, we go on getting paid in the UK paying UK tax
whether we are at home or abroad.
Q73 Mr Davidson: If they are seconded
what happens then?
Sir Peter Ricketts: The same.
Q74 Mr Davidson: If people were seconded
to Brussels, for example, they would not fall under the rules
of not paying tax the way that somebody employed by Brussels would?
Sir Peter Ricketts: If they are
seconded to the Commission for example then I think they pass
under a different regime. I think then the Commission pay their
salary and I suppose they then pay Belgian tax. I am not absolutely
clear about that. But as long as they are working for the British
government they are paid in the UK and they pay tax in the UK.
Q75 Mr Davidson: Can you give us
a note about what happens if people are seconded in these circumstances
to Brussels? That would be helpful.[3]
Sir Peter Ricketts: Of course.
Q76 Mr Davidson: Arising from paragraph
1.8, where it has mention of the link with UKVisas, you seem to
be responsible for providing staff and providing floor space yet
UKVisas pays for it. Why I want to explore this is I am particularly
unhappy about what seems to be a relatively poor service in some
circumstances from UKVisas taking too long and in many cases coming
out with decisions which I think are far too soft. You sometimes
get the impression that in order to get a decision out the way
people just grant visas. Can you make clear to me whose responsibility
it is to fund these things adequately? Is that through yourselves
or is that through the Home Office budget? To what extent are
the constraints on the physical space and the number of staff
they have caused by constraints in space that you have or is it
any other reason?
Sir Peter Ricketts: The responsibility
for the visa operation is now with the Home Office and with the
UK Border Agency. That was a change a couple of years ago. It
used to be a shared enterprise between us and the Home Office.
It is now a Home Office responsibility and Home Office ministers
set the policy. We provide the space for them to operate abroad
because the embassies have always been the place where we have
had visa work. The budgets are provided by UKBA and they come
from visa income. Partly because the number of visas being issued
has been falling in the economic recession they have had real
pressure on their budgets and they have been doing some pretty
fast restructuring, a lot of hubbing and spoking, ie they have
one big visa factory somewhere and then a lot of embassies round
about send their visa applications into this centre and get the
answers back again. That has been pretty disruptive because a
lot of visa sections have closed down and moved into hub and spoke
working and that has caused delays. It is not a problem of space
in our embassies. It is really an effort by UKBA to drive down
the cost of the operation by going for this hub and spoke model.
Q77 Mr Davidson: In a sense they
are not here to answer themselves but I just wanted to be clear
because in paragraph 1.8 it talks about employing some 3,000 staff
from or recruited via the FCO but you then have no responsibility
for them once they are handed over?
Sir Peter Ricketts: The Home Office
set the policy on the visa issuing but they contract to us, if
you like, to provide a visa service abroad so we provide the staff,
we receive the applications.
Q78 Mr Davidson: So the enormous
queues in some locations that I have seen would be your responsibility
or theirs?
Sir Peter Ricketts: It is our
responsibility to manage them well in the embassies. I do not
know when you have last seen a queue outside an embassy because
more often than not we have outsourced the application process
to commercial providers who have downtown offices who collect
all the data, the passports and money and send them into the embassy,
and therefore queues outside embassies are a thing of the past
in my experience.
Q79 Mr Davidson: I am glad to hear
that because, yes, my experience might be dated. If I were in
any of the locations in South Asia I would not see queues; is
that correct?
Sir Peter Ricketts: Absolutely
not and you would not see members of the public coming to the
embassy because they would go to a downtown office.
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