Adapting the Foreign and Commonwealth Office's global estate to the modern world - Public Accounts Committee Contents

Examination of Witnesses (Question Numbers 40-59)


  Q40  Mr Curry: That was the first part; what was the answer to the second part of the question?

  Mr Bevan: The other part is on investment, so if you take Washington, Washington will have, in terms of the ability for the ambassador and his staff to take local moderate decisions about what they do with their estate, which are a matter for them, but if we are talking about a big investment or big decisions to sell the residences, for example, or a big investment programme, those are things that need to be decided centrally by Alan and the team in London.

  Q41  Mr Curry: To what extent are security issues a factor? I was quite struck that in Washington all the electricians and plumbers come out from the UK, they are not local people, and I assume that is for security reasons, and that is a huge added cost, presumably?

  Sir Peter Ricketts: It is. Those who are working on our embassy buildings have to be UK staff for reasons the Committee will understand, which adds enormously to the cost. We need to keep a space at the very heart of our embassies completely UK only and that is an expensive proposition.

  Q42  Mr Curry: To come back to Mr Bevan, you have an inventory of what you want to sell?

  Mr Bevan: Yes.

  Q43  Mr Curry: To what extent is that a public inventory? Presumably not too public because otherwise you then do not get very good prices?

  Mr Bevan: That is exactly right. We have a target for the coming financial year.

  Q44  Mr Curry: Who sets it?

  Mr Bevan: It is set by the estate committee that I chair and it is set in part in light of a calculation about how much capital we want to bring in that financial year in order to reinvest elsewhere in the estate.

  Q45  Mr Curry: It is determined by an internal capital need. The Treasury is not saying you have got to flog so much?

  Mr Bevan: We also have targets that we agree with the Treasury in terms of annual asset recycling so there is a joint decision-making process that goes on there. Then we have a separate list of properties which we believe we can sell in the course of the coming year to realise that capital. We do not make that list public in advance for the very reason that you have identified, Mr Curry, that that could have an effect on the market value.

  Q46  Mr Curry: Now we are going to get a European Union diplomatic service, presumably there will be real estate implications for that. Have you thought where the interface might be in terms of buildings in some of the overseas countries where perhaps they are not sufficiently prime targets, as it were, for everybody to have an embassy?

  Sir Peter Ricketts: Yes. What is going to happen in the first place is that all the buildings that are currently for the Commission delegations around the world, we will put a new brass plaque on the door and they will become European Union missions, so there will not be much of a property implication. Over time I think there will be more EU delegations opening up around the world and if we have surplus property that we want to sell that could become interesting, yes, but what you identify is exactly the issue at the heart of the NAO Report: how much should we do this by central direction and laying down central guidelines and how much should we do it by giving initiative to our ambassadors to get on with it. Getting that balance right—and I accept that we have not necessarily had it right up to now—is at the heart of it.

  Q47  Mr Curry: What process do you go through at least to determine the paradigm?

  Sir Peter Ricketts: That is what we are really doing with this estates strategy that we are now putting together on the back of the NAO Report. It will provide the paradigm and provide the principles and then Mr Croney's Directorate will enable the ambassadors to get on with it. For the major projects we will have to have a proper project sponsor, a professional surveyor and architect, but for the smaller projects we would hope to be able to get the embassies on to them.

  Q48  Mr Curry: Do you really need support staff in central London in King Charles Street and Old Admiralty Building?

  Sir Peter Ricketts: We have fewer and fewer of them. We are moving more and more of them out to our new hub around Milton Keynes where we have a site at Hanslope Park; it has been an old site, and now we have a good estate in Milton Keynes.

  Q49  Mr Curry: I must not denigrate Milton Keynes so close to an election.

  Sir Peter Ricketts: At Milton Keynes because Hanslope Park up the road has been the FCO's for 60 years now.

  Q50  Mr Curry: When the Pope said there is no such thing as purgatory he clearly had never tried to drive through Milton Keynes!

  Sir Peter Ricketts: Quite! I do not think I could comment on that, Mr Curry.

  Q51  Mr Curry: Secondly, if there is anything that keeps you awake at night might it be the building in Shanghai? This is a fantastic building with all sorts of knobs and whistles and goodness knows what. It is a very, very pricey item. Mr Bevan, you had a sympathetic smile at that point as if you might have the odd twinge in the middle of the night on this. What could go wrong?

  Mr Bevan: I think it would be fair to say that a year ago when we were thinking about the Shanghai Expo, there was concern that we might not have the right building at the right price to represent Britain in the right way. We have put a lot of effort over the last year into ensuring that we have the right people and the right money to deliver it. I do not lie awake and worry about the Shanghai Expo building. I think when it opens in two months it will be a very good advertisement for Britain.

  Sir Peter Ricketts: It is going to be a great building actually, if I may say. It is about the most popular of the pavilions in China. It is on all their posters alongside the Chinese pavilion because it is the most creative.

  Q52  Mr Curry: And the sprinkler system is under control?

  Sir Peter Ricketts: I hope so.

  Mr Curry: Well I am delighted to know that the spirit of the old Papal State still exists in Italy and so will the Chairman no doubt.

  Q53  Chairman: On that point, have you seen figure 11 where it says on page 29 that the National Audit Office assessment of your response in China is "Poor". Sir Peter, what impact has that lack of investment had on our position in China?

  Sir Peter Ricketts: The problem with China is that we cannot move out of our existing embassy offices, in effect, because it would be enormously expensive to try to re-create what we have there in the boom market that is China, and we have been desperately trying to get our hands on another building nearby where we can spread because our embassy in Beijing grows all the time. We have been in discussion for some time with the Americans who have just vacated a property more or less across the road from us and we are trying to buy that off the Americans to give us more space. Our problem really is that we are straining at the seams of our existing property and in the circumstances of Beijing I do not think it is realistic to move to a completely new one, so that is more a question of supply of adequate buildings that we can use for an expanding embassy.

  Q54  Chairman: This of course is an absolutely essential marketplace for us and we read here that, "We found current office spaces were of poor quality with few facilities." It is the question I have already asked of you, Sir Peter: has it had an impact on our representational ability with a hugely important and more and more important marketplace?

  Sir Peter Ricketts: No, I do not think so, Chairman. I think we have been able to fund Shanghai and continue to do the programme of modernisation that we need. In Beijing we are waiting until we can get our hands on this new site across the road at which point we will move out half the staff and then properly refurbish the building we have.

  Q55  Mr Mitchell: Why can you not bring in more government departments and perhaps trade associations and groups interested in exporting? Why can you not make the embassies British centres for all-purpose business and representation and education and all the other things that could be brought in? You seem to have a lot of surplus space; why not use it?

  Sir Peter Ricketts: Indeed. The UKTI offices are in our embassies so the official British trade and investment effort is in our embassies. People who want space that they can bring members of the public into easily tend not to be very keen to come into embassies because embassies always have security and guards and you need passes and metal detectors and so on, and so they are not very convenient places for public access. Residences are better.

  Q56  Mr Mitchell: Those can be made partial. You could subdivide parts of it which are less security conscious.

  Sir Peter Ricketts: Some of them you can. Indeed there are places in the world that I have been to where the Visit Britain office, the British Council and the BBC are all in the same premises, but there are many where security does make that difficult. I would love to get more people into our unused space to use it, and every time we can, we do, but security is a constant obstacle.

  Q57  Mr Mitchell: Would you bring businesses and trade associations in?

  Sir Peter Ricketts: I do not think they want to be there. They want to be in modern downtown offices where it is easy to get your clients in and out. They tend not to want to be in embassies.

  Q58  Mr Mitchell: They also want to use the expertise of the embassies and the business representatives there.

  Sir Peter Ricketts: They want it available. What they love to do, and we are doing it more and more is use the residences for business promotions. Our ambassadors now have business in their houses all the time.

  Q59  Mr Mitchell: You do that?

  Sir Peter Ricketts: Absolutely, and indeed we charge for it, which is a useful source of revenue sometimes for hard-up embassies.

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