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


Examination of Witnesses (Question Numbers 100-109)

FOREIGN AND COMMONWEALTH OFFICE


  Q100  Mr Bacon: The point is, and it was reported as arising from the foreign exchange problems that you have had, essentially you are selling capital assets and using them to fund your current expenditure because your current expenditure went up because of a foreign exchange hit. That is right, is it not?

  Sir Peter Ricketts: We are entitled to do that if that is what we choose to do. We could equally plough it back into the capital programme if we judged that was a higher priority. Yes, it is open to us to switch capital into administration to pay for the running costs.

  Q101  Mr Bacon: One other point that was referred to at the time was the fact—the Foreign Secretary said this—the BBC World Service and the British Council had been making a contribution to help manage these pressures. What did that mean financially in each case?

  Sir Peter Ricketts: It meant that we agreed with the BBC and the British Council, reflecting the fact that they are part of the overall FCO budget, that they would help us with the pressures we are facing for one year only next year.

  Q102  Mr Bacon: Let me put it more bluntly: how much?

  Sir Peter Ricketts: I think the total between the two of them was £9 million.

  Q103  Mr Bacon: The BBC World Service comes under the Foreign Office and is audited by the National Audit Office. That is correct, is it not?

  Sir Peter Ricketts: I believe so, yes. The grant-in-aid that we provide through our budget is, I am sure, audited by the NAO.[6]


  Q104  Mr Bacon: In your experience, the fact that the BBC World Service is audited by the National Audit Office might by some be thought to represent a problem in terms of the editorial independence of the BBC World Service, have you ever found that to be the case in practice?

  Sir Peter Ricketts: No, and I would say it is comparable to the fact that the money comes through our budget, so I am the accounting officer for the grant-in-aid and that has never, so far as I am aware, prejudiced their independence. I think both the auditors and the accounting officer can maintain a distinction between proper and appropriate spend of the money and the editorial line of the BBC.

  Q105  Mr Bacon: It would be possible for the National Audit Office to be the auditor and at the same time to have the highest standards of editorial impartiality and independence?

  Sir Peter Ricketts: I see no inconsistency between those two things.

  Mr Bacon: You can stop there.

  Q106  Chairman: You do not know, Sir Peter, how grateful we are for that answer. That is another campaign that we are waging. Why do we read in paragraph 3.9 that in 2008-09 you were £11 million over budget on your capital project programme?

  Sir Peter Ricketts: Indeed, for the previous year we were almost exactly the same amount under budget, so I think over two years we were pretty well spot-on. I think it reflects the difficulty of trying to build in places like Baghdad, Basra, Harare, Sana'a, Algiers, and then having unexpected events like floods in Madrid or whatever it may be.

  Q107  Mr Bacon: Can you send us a note about the floods and the total costs?

  Sir Peter Ricketts: When we have them, yes.

  Q108  Chairman: Despite this, Sir Peter, we read in paragraph 4.7 that 40% of the estate no longer complies with legal and FCO standards.

  Sir Peter Ricketts: In terms of health and safety work, for example, which is unacceptable and a worry for me all the time because I am personally responsible in the end and partly reflects our budget pressures in recent years. All expenditure, including on health and safety work, has been trimmed back. We have put extra money into the budget specifically for health and safety work this year and next year and we must catch up with that, but it is difficult.

  Q109  Chairman: If there was another government department in front of us where one in three of its projects go over their budget and two-thirds of them were late you would have had a roasting this afternoon, Sir Peter, but we recognise the difficulties you are under in terms of security, terrorism, difficult markets. We do want to see a better managed estate with lower costs, better outcomes, better use of space and so on. Before we part company, will you give a commitment to report back to us in 18 months on the progress that you have made. Is there anything further that you wish to add on any of the questions we have asked you to convince us that you are now fully committed to the full use of this estate?

  Sir Peter Ricketts: I think there are no further comments, Chairman. First of all, may I say I think this NAO Report has been helpful to us in focusing us on areas of shortcomings and weakness. Secondly, I am very confident that with our new estates director, our new strategy and new governance arrangement with Mr Bevan chairing a dedicated estates committee, we will improve our performance. I absolutely accept that we need to improve our performance both in terms of overspending and in terms of project management and the data and in due course driving down this unnecessary space that we have in our embassies around the world. I am confident that if we come back to you in 18 months we will show an improvement, as I believe we did in the financial management area, that extra focus and extra attention will drive and improve performance. That is my commitment to the Committee.

  Chairman: Thank you very much, Sir Peter. That concludes our hearing.





6   Note by witness: The Grant-in-Aid paid for by the Foreign and Commonwealth Office to the BBC World Service is subject to audit by the National Audit Office. The BBC World Service accounts, like the rest of the BBC, are audited by the audit firm KPMG. Back


 
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