Examination of Witnesses (Question Numbers
60-79)
FOREIGN AND
COMMONWEALTH OFFICE
Q60 Mr Mitchell: One of the problems
I see from the Report is that other organisations, the British
Council, BIS, other departments, think you are charging them too
much. Why can the charges not be abated?
Sir Peter Ricketts: Perhaps I
will ask Mr Bevan, who is the great expert on that, to respond.
Mr Bevan: We are bound by the
principle agreed with the Treasury, which we do not contest, that
we should be charging the full economic cost to other government
departments when they want to base in our embassies. When you
calculate that full economic cost it will always be much more
expensive than a commercial rate because we are often in a premium
location, we are providing a secure location which in some places
is extremely expensive. We are not just charging them the marginal
cost of providing accommodation, we are charging them the cost
of the invisible support that we also provide to them, so making
arrangements for their accommodation and managing their staff.
Q61 Mr Mitchell: Let me stop you
there and ask the Treasury, why are you insisting on such high
charges? Why not insist on marginal rent?
Mr Gallaher: We are insisting
on the full economic cost to be charged.
Q62 Mr Mitchell: Why?
Mr Gallaher: They are not necessarily
high charges; they are the costs of the service that the Department
is providing.
Q63 Mr Mitchell: If it is a prestige
premises with high security charges, which have got to be borne
in mind, why insist on the full economic cost?
Mr Gallaher: Because we have always
insisted that departments charge the full economic cost for their
services to other government departments.
Q64 Mr Mitchell: In this case you
are assisting organisations which are exporting for Britain, battling
for Britain, in that endeavour.
Mr Gallaher: There is currently
a Shared Services Group looking at these issues working with the
FCO and other main players who operate overseas and we are looking
at the issue, which I mentioned to the Chairman, that there is
an obvious tension between the full economic cost and the cost
to the taxpayer. We are looking at it. At the moment we do have
this rule which is if we start being lenient on one department
in one area others will want the same treatment and it will be
hard to police.
Sir Peter Ricketts: Could I add
one point, Mr Mitchell? Subject to agreement with Treasury, in
some ways it would be quite attractive to cut our costs and get
more people in. The risk to me is that it leaves a hole in my
budget because I have the fixed costs of the embassy that stay.
If we go to reduced costs for other departments I am left with
the rest, so that is not all that attractive from my point of
view. I would much rather get the overall cost of our operations
down overseas if I could and, therefore, the more of us in embassy
premises the better actually.
Q65 Mr Mitchell: Let me approach
it from the other angle now. We see that the EU is now building
up its own framework of embassies and representation, its own
effective foreign service. Why can they not either hire out space
to them or muck in with them in common premises?
Sir Peter Ricketts: I think we
may muck in with them in time to come. As I said, right now what
is happening is offices that used to be Commission offices are
becoming EU offices, so not much is changing in terms of the buildings,
but over time, for example in somewhere like Africa, in small
countries, if there was an EU operation there I would be very
interested in putting one British diplomat or two British diplomats
in to a wider operation. I think that would be very cost-effective.
Maybe, as you say, we can make space for an EU representative.
I think we have done that in places like Baghdad where they do
not have many options and we have brought them in. They have paid
the full economic cost and we have rented them some space in our
embassy in Baghdad. I think over time probably we will move in
that direction.
Q66 Mr Mitchell: Perhaps it is a
bit churlish for MPs who tend to be lavishly entertained in embassies
around the world, and certainly I have been, to start then coming
home and attacking them for waste. When you see many of the embassies,
it does seem that they are there for prestige reasons, we have
got those buildings in areas for prestige reasons, and this is
a kind of relic of the great power status which we once had but
no longer have. Perhaps you could give us a note on how many of
the premises that we are now in we were in in 1950 when we were
a much bigger power.[3]
Sir Peter Ricketts: Yes, we could,
Mr Mitchell. I am a bit in trouble because at your last session
I promised Mr Bacon that we would not sell any of our prestige
residences that do so much for Britain's reputation around the
world.
Q67 Mr Mitchell: Does that apply
everywhere?
Sir Peter Ricketts: No.
Q68 Mr Mitchell: Or just in places
we want to be particular mates with, like the US?
Sir Peter Ricketts: I think we
look at every different capital on the merits. There are some
times when we have got a building which is obviously too big for
us any more, obviously no longer relevant to what we need to do,
and then we can look at selling it. I did promise, and I am sure
all foreign secretaries would agree, that we should retain the
big prestige properties we have often owned for 150 years, let
alone 50 years, which we can use every day to promote Britain.
The number of commercial events that are held in the embassy in
Paris or the embassy in Washington or the embassy in Tokyo are
enormous and they are really good platforms, but that does not
mean to say every building we have ever owned in the world we
should always go on owning, I think that would not be a sensible
estate strategy.
Q69 Mr Mitchell: Why do you not collect
data on space and its use? I see in paragraph 3.2 there is a system
called Pyramid which is a database to record and monitor overseas
properties.
Sir Peter Ricketts: Yes.
Q70 Mr Mitchell: "Of the 188
posts who responded to our survey", say the NAO, "almost
a third did not use Pyramid and most posts we visited only updated
Pyramid twice a year ... A number of Pyramid records were inaccurate
... Property suitability assessments have not been updated since
2006 ... Details of office net internal areas were inaccurate
and incomplete ... ". Why do you not have accurate data for
all your embassies?
Sir Peter Ricketts: We must have.
This is not adequate, it is not acceptable. I think it has been
useful actually, if I may say, for the NAO to do this Report because
it has been a wake-up call for us. We are determined that we will
get these returns on our database up to 100% and we have got an
action plan to achieve that. To be fair, we do have a good sense
of the properties that we own. I think that many of the weaknesses
in the database are properties that we rent, and sometimes we
only rent them for two years, three years, four years, and they
do not get properly on to the database and properly counted. Even
that is not good enough, I agree. I agree with you that we must
get this database properly up-to-date and it must have all the
facts on it about usage of space and so on.
Q71 Mr Mitchell: Why do your chaps
need more space than is provided for public servants in the UK?
The maximum office space there is 12 square metres per person.
Your chaps, being public school chaps, might expect something
better than that, but why are they entitled to bigger premises
and more office space than their counterparts back home?
Sir Peter Ricketts: Fewer and
fewer of them come from public school, Mr Mitchell, I promise
you.
Q72 Mr Mitchell: We have not got
Mr Davidson to ask you the proportion of public school chaps.
Sir Peter Ricketts: Indeed.
Q73 Mr Mitchell: It was my vision.
Sir Peter Ricketts: The highest
morale embassies I have been to are the ones where they are working
in open plan, in modern offices, as if you were in a high specification
office in the UK. It costs an awful lot of money, for the reasons
we have just been discussing, to convert embassies one-by-one
to that standard because we have to bring in UK-cleared contractors
to do all the refurbishment, to make sure that the building remains
secure when they finish and we can only do it one-by-one.
Q74 Mr Mitchell: Are open plan offices
universal on the estate?
Sir Peter Ricketts: No, far from
it. When we have got it, it is really good. We are moving in that
direction whenever we can. There are some of our grander buildings
that are expensive to convert like that and there is only a limited
pool of manpower to do it. We are only moving slowly. The aim
is to be working in functional modern offices, even if it is inside
an old historic building.
Q75 Chairman: As you know, Sir Peter,
in response to Austin Mitchell, our Committee has a settled policy
that we should not ask you to sell our historic residences for
narrow cost grounds. I do want to return to the point Mr Mitchell
was making to you, Treasury. This is about the full cost recovery
that you require. I still do not think we are at the bottom of
this. It does seem absurd to us that some of our Foreign Office
buildings, prestigious buildings, are lying half empty because
of a narrow full cost recovery mechanism, a bureaucratic mechanism
that you are asking of the Foreign Office. Something is better
than nothing, is it not? You should be doing some more joined-up
thinking with the Foreign Office and other government departments
to ensure better use of this office space so that you get more
use of it and Sir Peter is not compromised by it in any way.
Mr Gallaher: We are certainly
working with the Foreign Office and part of this Shared Services
Group to try to bottom out this issue and this problem. We are
certainly not sitting on our hands. We are actively engaged in
this Group at the moment.
Chairman: Thank you very much.
Q76 Mr Carswell: One or two people
have touched on this, Sir Peter. The Lisbon Treaty obviously allows
the EU an overseas diplomatic presence and this means, as you
say, there will be a physical EU global estate. You have said
that you are willing to offer to share some of our estate. You
might say that having pooled our sovereignty the FCO is happy
to try and now pool our embassies. Could you tell me when and
where you are looking to pool our embassies with the EU?
Sir Peter Ricketts: I think in
response to Mr Mitchell I was speculating in the future. I have
no plans at the moment at all to let out any of our space to the
EU. My main point was that if there was an EU mission somewhere
where we were not represented and there was an opportunity to
put one British diplomat into an existing EU operation, that is
something we might consider. The answer to your question is we
have no current plans to do that.
Q77 Mr Carswell: I think you used
the phrase that there may be instances where we would be happy
to "muck in" with them and you talked about small African
countries where there is a limited presence where we would be
happy to have some pan-EU presence. Is that right? Which African
countries did you have in mind?
Sir Peter Ricketts: I would not
exclude it. For example, in Liberia I think our one British diplomat
works out of the German embassy, if I am not wrong. It would not
be unprecedented, but I have got no plan to do that with any EU
delegation. I would rather see how this new EU External Action
Service settles down before making any plans like that.
Q78 Mr Carswell: At the moment you
do not plan to pool any of our embassies?
Sir Peter Ricketts: I have no
plan to do that.
Q79 Mr Carswell: If you were to pool
our embassies, what would be the advantages in doing so? You said
you would be interested in looking at it. What would be the advantages?
Cost obviously, but what else?
Sir Peter Ricketts: If I may say,
"pooling our embassies" is your phrase, not mine, I
do not think I have ever spoken about that. What I can see as
a possible advantage is if there is an EU delegation office working
in a country where we are not represented it could be cheaper
to have one British diplomat working there sharing common support
services with that delegation rather than establishing our own
separate embassy.
3 Ev 16 Back
| 
