Examination of Witnesses (Question Numbers
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 factthe Foreign Secretary
said thisthe 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
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.
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
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
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
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