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

Supplementary memorandum from Permanent Under Secretary of State, Foreign and Commonwealth Office


  I am writing to follow up my appearance before the Public Accounts Committee on 1 March with points on which I undertook to send you further information.

Accounting treatment of asset sales (Questions 83-86)

  Mr Curry asked about the accounting principle used for asset sales, and whether we convert foreign exchange receipts from sales into Sterling and repatriate proceeds, or whether they are re-invested and used locally. The answer depends on three factors: the size of the sales proceeds; which local currency is involved, and the local banking regulations in that country. Two examples demonstrate this:

    — Madrid—the largest of the sales last year where most of the Euros realised were sent back to the UK. Some were retained locally, to offset the need to spot purchase further Euros to fund the post;

    — Singapore—a proposed sale here will result in Singapore dollars being received but there are local restrictions on conversion of large sums to Sterling. So this might result in a "staggered" conversion into Sterling.

  This treatment is separate from the way in which the accounting for sales proceeds works. That is all to do with the rate at which the initial receipt in local currency is converted to Sterling (which will be the prevailing corporate rate at the date of receipt). The later handling of the foreign currency, and its potential conversion into Sterling will result in currency fluctuations handled through the gain/loss on foreign exchange accounts (and not fixed assets).

CSR target for asset sales (Questions 97-98)

  Mr Bacon asked about the three year CSR target for asset sales. The Treasury target for asset sales for the current CSR period is £54 million. Net receipts for years one and two were £15.5 million and £59.5 million respectively. Receipts this financial year, to the end of Q3, are £5.6 million. We are confident of reaching an internal target of £8 million for this financial year. We therefore expect to have generated £83 million in capital over the three years of the current CSR period.

Buildings in Italy (Questions 26-27)

  Mr Bacon also asked about our representation to UN bodies in Italy, and whether the situation there was similar to Brussels, where the UK delegation shares space in the NATO building alongside other delegations. It is not quite the same. As I said on 1 March, we do not have a separate building in Italy for our mission to the UN bodies (FAO, WFP and IFAD) there. The UN operates out of its own building, with no delegation space in it. We have, however, made economies in that the DFID representation to the UN agencies based in Rome moved into the Embassy building on 1 March, having previously rented office space in the centre of Rome. As well as providing better value for money this makes better use of the Embassy as a platform for "one team" working.

Buildings occupied since 1950 (Question 66)

  Mr Mitchell asked which properties we are in now which we also occupied in 1950. The table below shows those properties we have owned since 1950 and their acquisition date.

Type of propertyYear of acquisition

Addis Ababa
Compound (incl offices, residence and staff accommodation) 1904
AlexandriaCompound (incl office & residence) 1909
AnkaraOffice, residence and compound 1926 & 1946 (compound)
AthensResidence and office 1936 & 1950
BaghdadOffice and compound 1921 & 1931
BahrainOffice, residence and compound 1900
BangkokCompound (incl office & residence) 1922
BelgradeOffice and staff flat 1925
BerneOffice and staff flats 1918
BucharestCompound, offices and church 1908-1912
Buenos AiresOffice, club, residence & staff flat 1938-1945
CairoCompound (incl office & staff flat) 1916
CanberraStaff accommodation 1945
Cape TownResidence1937
DakarCompound (incl office & residence) 1904
DamascusUndeveloped site 1947
DubaiCompound (incl office, residence, staff accommodation and amenities) 1950
HelsinkiResidence, house & garage 1925
Ho Chi Minh CityOffice 1928
KarachiCompound (incl office, residence and staff accommodation) 1950
KuwaitCompound (incl office & residence) 1931
La PazResidence1950
LuandaCompound (incl office, residence and staff accommodation) 1921
Mexico CityOffice1910
MontevideoResidence and garden 1923 & 1946
MoscowResidence and staff accommodation 1929 & 1942
New YorkResidence1945
OsloCompound (incl residence & staff accommodation) 1906
OttawaResidence and staff accommodation 1930
Panama CityResidence 1921
PragueOffice and residence 1926
PretoriaCompound (including office) 1938
RangoonCompound (incl office, residence and staff accommodation) 1948
SofiaResidence & garage 1910 & 1913
TehranCompound (incl offices, residence, garage, staff amenities and accommodation) 1932-1934
Tel AvivOffice and residence 1949
TokyoStaff amenity1934
ViennaOffice and residence 1938
WashingtonResidence 1920s

Damascus (Questions 15-20)

  Mr Bacon also asked about the cost overruns on our new Embassy project in Damascus. The FCO Estates Committee is considering the best way forward with the project and I will write to you again shortly once we have taken a decision and the additional costs involved are known more precisely.

Madrid (Questions 21-24)

  Mr Bacon asked me to send you a note on the flood in our Embassy in Madrid and what the FCO's financial liability might be. We have not yet received any claims from the landlord or other tenants in the building (Torre Espacio). We have appointed a loss adjuster and procured independent professional engineering advice from the British property and construction consultants Ridge (who visited the Embassy in February). Ridge are about to let us have their findings. We will inform the committee of any liability once all claims have been assessed and settlement reached. We will be defending our position robustly to minimise the FCO's exposure through our local loss adjuster.

Estates Strategy

  Finally, we are finalising our new estates strategy document, and I will send you a copy shortly.

  I am sending a copy of this letter to the Chairman of the Foreign Affairs committee.

15 March 2010

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