Letter to the Chair of the Committee from
Simon Fraser CMG, Permanent Under-Secretary of State, Foreign
and Commonwealth Office |
FCO FINANCES AND PERFORMANCE
In advance of the formal evidence session on 24 November,
I am submitting a memorandum which addresses the terms of reference
that were published for this hearing. This memorandum will also
act as a forward look in lieu of the FCO's Annual Departmental
Report. I am enclosing a copy of our new Departmental Business
Plan Report.i Some of the input indicators are still
subject to consultation with HMT.
This hearing has traditionally been used to examine
the FCO's Annual Departmental Report, but as the Committee will
be aware, at the change of Government, a decision was taken across
all Departments not to publish full departmental reports. HMT
has also confirmed that Autumn Performance Reports will not be
published this year. We do not expect them to ask for any further
public reporting on our previous Public Service Agreements (PSAs)
or Departmental Strategic Objectives (DSOs). Instead, for 2009-10,
the FCO published "core tables" of key financial, administrative
and policy performance data as an annex to our statutory resource
accounts 2009-10, which were laid before Parliament on 30 June
2010. We were again the first Department to lay our accounts before
The Committee's terms of reference for this session
covered five areas:
1. The FCO's new performance framework: its
three new official priorities, the development of the new "activity
recording process" against these new priorities, and the
department's new Structural Reform Plan;
The Foreign Policy Priorities
In July, the Prime Minister and the Foreign Secretary
agreed new high level foreign policy priorities for the FCO to
replace the eight DSOs. Under these the FCO will pursue an active
and activist foreign policy, working with other countries and
strengthening the rules-based international system in support
of our values to: safeguard Britain's security, build Britain's
prosperity, and provide consular support to British nationals
around the world.
More specifically, the FCO will work to safeguard
Britain's national security by leading work across Government
on countering state threats and proliferation through our global
diplomatic activity and on the security impacts of climate change
and resource competition. With DfID, we shall also lead the Government's
work to build stability overseas, including through our on-going
inter-departmental activity on conflict prevention. We shall take
a key role in work to reduce the risk to the UK and UK interests
overseas from international terrorism. The FCO will contribute
to Britain's efforts in Afghanistan including by working to create
the conditions for a sustainable political process on the ground.
We shall use our unique network of partnerships and alliances
to achieve all of these aims.
The FCO will also lead a process across government
to produce integrated strategies for key countries and regions
to be agreed by the National Security Council. These will ensure
support by all government departments and reflect agreed priorities.
We will work with the MOD and Home Office to promote defence and
security exports both for commercial reasons, and where this will
build the capacity of our partners and allies, increase interoperability
and reduce our own acquisition costs.
The FCO will work on prosperity to contribute
to the Government's top priority of reducing the deficit and returning
Britain to strong sustainable growth by using our network and
resources to promote the British economy, increase exports and
inward investment, open up markets, ensure access to resources
and promote sustainable global growth. In all of this the FCO
will work closely with UKTI. A new joint FCO/UKTI Commercial Task
Force was established in August 2010 to raise the standard and
profile of UK commercial diplomacy and embed the necessary skills
and culture with the FCO to deliver on this agenda. The FCO will
lead a new whole-of-government approach to strengthening bilateral
relations and elevating relations with emerging powers. The new
National Security Council sub-committee on Emerging Powers, chaired
by the Foreign Secretary, will drive this collective approach.
Under the prosperity agenda the FCO will also: work
with UKBA to control migration in order to secure the UK's borders
and promote the UK's prosperity; work with DECC to drive international
action to tackle climate change; and work with other Governmental
Partners to advance Britain's interests and prosperity by proactive
engagement on key internal EU priorities.
In our Consular services over the next five years,
we will merge the FCO and Home Office passport operations by 1
April 2011, so that the Identity and Passport Service will take
over responsibility for issuing passports to British nationals
overseas as well as at home. We will implement the new 2010-13
Consular Strategy so as to improve the quality of service we provide
Departmental Business Plan and Implementation Plan
These Foreign Policy priorities form the basis of
the FCO's Departmental Business Plan, which has been published
on the No. 10 and FCO websites and is also included with this
This document is not intended to be fully comprehensive, but it
does cover key areas of focus for the Coalition Government. It
also reflects the Foreign Secretary's wish that the FCO provide
the lead for all government policy overseas.
The FCO's Implementation Plan, which flows from and
underpins the Departmental Business Plan, is designed to help
us manage and account for the full range of our departmental business.
It enables all FCO staff to see how their work fits within the
Foreign Policy Priorities. It is fully consistent with the Departmental
Business Plan, but goes into more detail, and covers a broader
range of our work, to enable our Directorates and Posts to plan
Both the Departmental Business Plan and the Implementation
Plan cover the four-year period of the Spending Review. This new
system aims to bring greater transparency, accountability and
cohesion to the UK Government's activity overseas. Progress on
the Business Plan will be monitored monthly and published on the
No. 10 and FCO websites. The FCO Board will take stock of activity
under the Implementation Plan every six months.
Business Activity Recording
One of the key tools that allowed us to monitor and
plan our resource costs was Activity Recording. The FCO stopped
full staff activity recording against the old DSOs in Quarter
1 of FY 2010/11, on the appointment of the Coalition Government
and pending agreement of the FCO's new Foreign Policy Priorities.
However, Activity Recording is a necessary and important tool
for capturing data both as part of the Government's public accountability
agenda and for our own internal reporting processes. Therefore
we continued to collect activity data on the costs of the Management
& Support we provided to Partners across Government, so that
we could continue to recover the costs of that support.
We have now developed new Activity Recording headings,
flowing from the three Foreign Policy Priorities and the FCO Business
Plan. Fewer codes should reduce the burden on staff to complete
activity recording returns. We have asked staff to re-start full
activity recording from Quarter 3 of FY 2010/11. This will enable
us to account for the resources that we allocate to each of the
Foreign Policy Priorities.
2. The FCO's Financial Management
The FCO achieved two key measures of effectiveness
in our Resource Accounts for 2009-10. The first was that my predecessor
as Accounting Officer, Sir Peter Ricketts, and his Board of Management,
hit their target for the FCO's final out-turn being within 1%
of our allocation. In numerical terms this was an underspend of
£22 million against a budget of £2,367 million and demonstrated
taut budgetary control given how much of our spending can be affected
by exchange rate movements. As part of the financial management
progress made by the FCO, recognised by your colleagues in the
Public Accounts Committee, the Board of Management now has better
management information. As a result, we are able to take early
steps to identify and mitigate forecast overspends. For example,
in autumn 2009, the FCO Board took decisive action to reduce expenditure
in order to eliminate the forecast risk of an overspend in 2009-10.
Again at the end of June this year, the Board called for decisive
measures to reduce the forecast overspend and implement the £55
million cuts the FCO made as our contribution to the deficit reduction
in this year. We still face financial pressures we must manage
and will again aim to deliver an underspend of less than 1%.
The second measure of effectiveness was that for
the third consecutive year, the FCO was the first major Whitehall
Department to lay our accounts before Parliament, with an unqualified
audit opinion. This is a demanding achievement given the geographical
dispersal of the FCO's network.
At a more detailed level, the FCO continues to achieve
better results through its Finance and Prism Performance Measures
(FPPMs), which are a form of internal benchmarking. These measures
of financial performance focus on: the accuracy of accounts; the
extent of compliance with the cycle of processes from purchasing
through to payment; and the efficiency of invoice processing.
By June 2010, all Posts and UK Departments were achieving an acceptable
score of 85%. To sustain improvement, the bar was raised and the
target acceptable score is now 95%. These measures underpin the
reliability and integrity of financial management information,
so the improving scores enable the FCO to reach a higher standard
Much of this progress has been made under the 5*
Financial Management programme. The 4.5* work phase of the Programme
ended in July 2010, and the Programme team are now measuring the
benefits and assessing the FCO's overall financial management
performance. The NAO, who have taken a close interest in our progress
since early 2009, are doing an independent assessment at our invitation.
On the basis of the assessments, and taking into account any recommendations
made by the NAO, the FCO will design the next phase. This will
focus on further embedding these improvements and continuing the
FCO's leadership in developing and sharing best practice with
other Whitehall departments.
When the NAO reviewed our internal controls, they
found we had a solid framework in place to oversee production
of the Statement on Internal Control (SIC). All their recommendations
have now been implemented and a more robust evidence-gathering
process adopted. We are reviewing the wider risk management framework
to make sure it remains relevant and effective as the FCO evolves.
We will continue to improve our systems and staff
to continue improving the FCO's financial effectiveness. Investment
in staff training has continued with 67 staff in training to gain
professional finance qualifications and 23% of our Finance function
now have professional qualifications. The implementation of new
planning, budgeting and reporting systems has allowed the FCO
to increase our capability. Near real-time information is now
available and the ability to budget in foreign currencies has
been a major step forward.
I should also cover the work of our Internal Audit
Department here. Our "zero tolerance" of fraud and financial
impropriety is rigorously enforced and our default position is
that where there is sufficient evidence the perpetrator(s) are
dismissed and the matter reported to the relevant authorities.
I can confirm there have been no significant
cases of fraud reported to the FAC since the last evidence session
of 9 December 2009. Although the level of identified fraud is
low, we are not complacent and remain vigilant to the risk and
endeavour to ensure that public money is not lost through fraud.
We have good whistle-blowing procedures in place, all staff are
reminded of them on a regular basis, and all reports of financial
impropriety are investigated. We are challenging the way that
we administer ourselves in line with defensible risk management
and central to this are the 5* Finance Programme and the Corporate
Service Programme, backed-up by a robust disciplinary process.
3. Spending Allocations and Effectiveness
within the FCO
The main corporate issue facing the FCO over the
coming months is strategic resource allocation: deciding how to
allocate and use the resources which the FCO secured in the Spending
Review (SR10). The FCO's Resource Allocation Round, now underway,
will allocate our SR10 Settlement across the FCO for each of the
four Financial Years of the SR10 period (2011-12 to 2014-15).
The Foreign Secretary and the FCO Management Board
are agreed that the allocation of resources should be guided by
the new Foreign Policy Priorities, by the Foreign Secretary's
wish to sustain a strong global network; and by our determination
to keep our staff safe, secure, and well equipped, and to ensure
they have the skills we need for the future (ie diplomacy, commercial
and trade policy, and leadership and management skills).
Implementing the FCO's SR10 will be tough. We need
to realise a 10% real cut over the next four years, whilst managing
rising costs and other pressures on our budget. For example like
all government departments, we must also make a 33% cut in "Admin"
spend over the four years of SR10. This will involve restructuring
to achieve efficiencies, primarily in back office activities through
our Corporate services Programme. Our internal allocations may
also be affected by changes in plans of other Departments and
Agencies if they reduce their presence overseas following their
own Settlements eg UKBA, as this will impact on the amount we
need to support them.
We will take the opportunity presented by the Spending
Review to reshape the organisation so that it is stronger and
more efficient in the future. We do not intend simply to replicate
past spending patterns, but to make some clear choices; this will
mean achieving further savings, continue to reduce its headcount
and streamline its structures. The FCO Board intends to reach
agreement on allocations for the FCO as a whole by December, so
that we can allocate resources to our Directorates and Posts,
including our programme allocations, early in 2011, and finalise
business plans well before 1 April (the start of the SR10 period).
4. The impact of the Comprehensive Spending
Review on the FCO's core business, including the department's
overseas network, and especially as regards future arrangements
for the management of the department's exchange-rate risk, and
the allocation and management of overseas spending between the
FCO and the Department for International Development
The Foreign Secretary's letter to the Chairman of
the Foreign Affairs Committee of 27 October explained the Spending
Review Settlement and its broad implications for the FCO, including
the management of exchange rate risk. We are continuing to assess
the impact of the Settlement during the Resource Allocation round
currently underway, but the key elements of the Settlement I would
- For the core FCO it is a 10% real cut over the
four year SR period, with a 33% Admin cut target.
- The creation of a new Foreign Currency Mechanism
to replace the old Overseas Price Movements mechanism will restore
some protection to FCO purchasing power overseas.
- The peacekeeping budget has moved off the FCO
- The FCO family's contribution to UK Overseas
Development Assistance (ODA) spending has increased to £273
million per year.
- The Capital budget for the FCO family will reduce
by around half immediately, with provision for recycling some
asset disposal receipts.
It is worth expanding first on how we will work through
the implications for the FCO. In the coming weeks, we will take
strategic decisions on how to live within our Settlement, including
what we do, and how we do it, and whether our existing network
of Posts adequately meets the new realities. In other higher priority
Posts, such as emerging markets or countries critical to UK security,
it might mean opening new Posts. The Foreign Secretary is clear
that Britain will continue to need a global diplomatic network,
not least to promote our commercial interests to help bring the
UK economy back to long term health. We have no plansand
in the light of SR10 no needfor widespread post closures.
We will report any major decisions to Parliament.
We will meet the Treasury target of cutting administrative
spending by 33% by 2014-15, by continued improved procurement
practices and continuing to streamline back office work, including
through outsourcing, localisation and consolidating functions
regionally overseas or back to the UK. We will also continue to
reduce the number of FCO staff. Our previous Strategic Workforce
Plan planned to reduce numbers of UK staff by 10% before the Spending
Review; a 2% year on year reduction, so the FCO is well placed
to react to the additional financial pressure. Over the next few
months therefore, we will revise the strategic workforce plan
covering the spending review period. The flat cash settlement
equates to around a 2.5% per year real terms budget reduction
and we expect the UK-based workforce to shrink at about this rate,
making use of natural wastage, early retirement and voluntary
redundancy as far as possible, including the recent autumn early
retirement exercise, under which around one hundred staff left.
Official Development Assistance (ODA)
In making these plans, we will take full account
of the FCO's increased target for ODA. The FCO will continue to
contribute to the economic development and welfare of developing
countries through activities that include but are not limited
to stopping conflict, promoting good governance and supporting
economic development, thereby contributing also to the Government's
commitment to provide 0.7% of GNI as ODA by 2013.
We will be planning how to achieve the rise in ODA
Spending over the next few months in consultation with both the
British Council and BBC World Service. All the FCO family's ODA
spend will be in accordance with DAC guidelines. The settlement
will allow us to increase areas of our work which contribute to
international development. We have not yet taken decisions on
which particular activities we will scale-up, but we would expect
to sustain a large proportion of our current ODA work (eg governance
and scholarship programmes which support developing countries)
and add some new ODA-eligible activities. There will also be some
reclassification. In the past we did not score some FCO activities
which could count as ODA. In a tight public expenditure environment,
it's only fair to taxpayers that all eligible expenditure is counted.
So we will ensure, working with the OECD and DFID, that all FCO
work which should legitimately be scored as ODA in areas such
as stopping conflict, promoting good governance, capacity building
and supporting economic development.
We will be assisted in all this by the agreement
of a Foreign Currency Mechanism that will remove from the FCO
the foreign exchange risk we have borne since April 2008. Protection
will now extend not only to Post budgets but also to foreign currency
movements in estates, security, capital and programme expenditure.
The FCO has already stopped forward purchases of foreign currency
pending start of the new arrangement in FY 2011/12.
The Civil Service 2009 staff engagement survey showed
the FCO has very high levels of staff commitment ("engagement"),
ie staff readiness to say good things about the FCO, stay in it,
and strive to deliver better for it. Our positive engagement score
(69%) is 10% over the Civil Service average, 6% above the average
of the highest performing group in the survey, and the best of
all the main government departments. The three strongest drivers
of engagement are leadership and the way we manage change; "my
work"; and "inclusion and fair treatment". FCO
scores here are much higher than the Civil Service average, for
example staff confidence in decisions made by FCO senior managers
is 17% higher; belief that change is managed well is 21% higher.
Staff also have a widely shared sense of pride in working for
the FCO, at 79% in the 2009 staff survey, 24% higher than the
rest of the Civil Service. 63% of our staff say "the FCO
inspires me to do the best in my job", 23% above the Civil
A higher than ever number of staff (88%) took part
in the 2010 survey, which closed on 29 October. We have just received
our initial, high level, survey findings on the FCO as a whole
and we received a positive engagement score of 66% [against 69%
last year]. Although there were minor decreases in satisfaction
across questions since the 2009 survey, the findings are still
generally positive, particularly in view of recent austerity measures.
We will receive the full survey results in early December 2010,
when we will receive the comparative Civil Service averages and
we will know what our key drivers of engagement are. We are not
able to make any conclusions on what our staff have said until
we have received the full results. As we take forward work on
our agenda in the coming CSR period, we will continue to emphasise
the importance of good leadership, including effective, ongoing,
two-way communication with staff on the changes that affect them.
The FCO's global estate
The diplomatic estate is a key tool for achieving
our objectives. It is a unique and highly diverse public asset,
ranging from buildings from which we deliver consular services
in popular holiday destinations to some of our most important
overseas missions such as Washington, Moscow, New York, New Delhi,
Brussels and Beijing.
We will continue to modernise the way we procure
and manage our global estate, driving down costs wherever possible,
and allowing the FCO to concentrate on our front-line functions.
We have taken a number of steps to improve our operations this
- a new asset management framework for estates
- new governance arrangements for estates investment
- greater rigour in delivery of major projects;
- improvements to our property management database;
- better coordination between the FCO and other
departments using the overseas estate.
Looking ahead, we will continue to draw on professional
property expertise as appropriate and carefully prioritise our
capital spending, including addressing the need for new premises
in Jakarta and refurbishment of our existing embassy in Tel Aviv.
Our Spending Round settlement allows us to undertake prudent capital
investment on an appropriate scale given the pressures on public
We will also continue to look critically at whether
the leased and owned property assets we hold are fit for purpose
and represent value for money. As the Committee will know, we
regularly dispose of properties which are surplus to requirements
and will continue to do so. In 2009-10, we achieved some £9.2
million in asset sales. We use the funds generated to invest elsewhere
or to achieve co-location with other government departments and
hence save money. I will continue my predecessors' practice of
informing the Committee of the value of such sales in arrears.
I should add that, while we will need to generate
more of our capital from asset recycling over the next four years,
there is no intention to rush to sell off buildings which are
fit for purpose, which represent value for money and which meet
our operational needs. Ministers fully recognise the impact that
certain historically important overseas buildings can have in
support of the UK's international objectives, especially support
for British business.
As mentioned above the FCO was included in the Chancellor's
announcement that all Government Departments would reduce "administration
spend" by 33% as part of the overall drive to increase efficiency.
The FCO's Corporate Services Programme is a key part of the FCO
achieving this. The aim of the Programme is to save time and money
for the FCO by standardising and streamlining our corporate policies,
processes and tools. We are on track to reduce corporate spend
by £30 million each year from our initial 2008-09 baseline.
The majority of these savings will come from the
localisation of UK-based positions abroad and from restructuring
our local staff overseas. We are also planning to save money by
joining up the corporate services operations of different government
departments abroad and from outsourcing our facilities management.
By the end of this CSR period (2011-15), all Posts where there
is more than one Government Department will share corporate services
where it makes sense. This is the Government Consolidation Overseas
policy as announced by the Chancellor last month. This will result
(assuming agreement with other Whitehall departments on a new
cost sharing mechanism) in more equitable sharing of the costs
of corporate services provision across government departments
Finally, we are putting in place more cost-effective,
efficient and streamlined arrangements for day-to-day maintenance
and getting the basics of health and safety right through increased
Facilities Management Outsourcing. I wrote to the Committee on
4 November to notify you that the FCO signed our second regional
contract to outsource facilities management (FM) in India and
Asia Pacific with ISS to outsource facilities management in 28
posts in 14 countries in Asia-Pacific and India. The contract
with ISS is for seven years, with the option of up to three additional
years. It will deliver between £7-14.9 million savings over
the life of the contract. Furthermore, it will mean significant
benefits in terms of standardisation of services across the region,
professional management of FM activities and a significant reduction
in the FCO's local staff headcount. It will also free up resources,
allowing FCO staff to concentrate on their core business of delivering
the UK's foreign policy priorities.
FCO staff security
If we are to achieve our foreign policy goals, it
is essential that we engage on the ground in difficult and often
dangerous circumstances. Staff security is an essential driver
of resource allocation and a prime concern of ministers.
We take a risk management approach, since no "one
size" solution fits all circumstances. We assess the threat
and vulnerabilities at each post and put in place the most appropriate
measures to protect staff, families and other assets. We expect
to complete all outstanding "high" and "medium"
risk security projects by the end of this year, and our spending
round settlement contains provision to continue this work in the
next few years.
The threat from terrorism is the biggest threat to
the safety of our staff. The number of posts where we assess the
terrorist threat to be critical or severe has increased threefold
since 2006. The nature of the terrorist threat is constantly evolving.
Determined suicide bombers are very difficult to prevent, as saw
in the attack on our Ambassador in Sana'a in April and then the
more recent rocket attack against staff there on 6 October. Fortunately,
there were no serious casualties and our security procedures worked
in both cases. But we cannot be complacent, and we have taken
a range of additional security precautions to protect staff in
Yemen on which I would be happy to brief the committee privately.
The Yemen example illustrates the dilemma we face:
it is often precisely in those places where the foreign policy
challenges are the most pressing that we face the biggest threat
to FCO operations: other examples of high-threat posts include
Kabul, Helmand, Baghdad and Islamabad. While there are no absolute
guaranteesand we are tightly resourced here as elsewherewe
believe we have a calibrated but robust security regime which
provides value for money, and keeps the balance between security
and conducting our diplomatic business efficiently.
Other security threats
I should also add that we assess that the threat
from espionage to be probably as high as it was during the Cold
Warwith the added complication that there are more opportunities
because of the greater use of IT systems. We work closely with
other departments and agencies to counter the espionage threat
and the emerging cyber threat. Again, I would be glad to brief
the committee in more detail privately.
5. The work and performance of the British
Council and the BBC World Service, and the impact of the Comprehensive
Spending Review on these organisations
The Committee has already had a separate evidence
session with both the Council and World Service. We recognise
the valuable work of both organisations: the Foreign Secretary
has set out his vision of a new British Foreign Policy in an increasingly
interconnected world. The work of the British Council and the
World Service provides Britain with an unrivalled platform for
the projection of our culture values; and as such are useful channels
of engagement with audiences who may be reluctant to deal directly
with Her Majesty's Government.
The impact of the SR10 Settlement on the organisations
is that the FCO will continue to provide from our overall Settlement
a grant-in-aid to both the BBCWS and the British Council. The
Foreign Secretary has repeatedly made clear the importance he
attaches to both organisations but also that all parts of the
FCO family must contribute to efforts to cut public spending.
The Council's Grant-in-aid will reduce from £180 million
(excluding capital funding) in FY10/11 to £149 million in
FY14/15. This represents a cut of 17%, which (with inflation)
amounts to a real cut of around 25%. The British Council will
implement this cut through a mixture of efficiency savings and
increased income from English teaching, examinations and contract
delivery activities. The British Council will contribute to the
increased UK ODA spend that is part of the overall settlement.
The Council, unlike the FCO and World Service, is able to raise
a significant part of its own revenue. Its commercial income is
currently £450 million p.a. and after costs this provides
a small surplus.
The FCO will also continue to provide a grant to
the BBC World Service. The amount will reduce from £229 million
(excluding capital funding) in FY10/11 to £212 million in
FY14/15. This represents a cut of 7%, equating (with inflation)
to a 16% real cut. World Service funding will be transferred from
the FCO to the Licence Fee from FY14/15 to enhance and protect
the World Service's vital role. The BBC has made a clear commitment
to providing sufficient investment in the World Service to support
its plans and safeguard its independence and the Foreign Secretary
will continue to play a role in setting the World Service's objectives,
priorities and targets and agreeing any closure of services.
I was pleased to hear that the Committee found their
recent visits to Afghanistan and Pakistan so useful. I hope the
forthcoming visits next year are as useful.
I hope you find these answers helpful. I will shortly
forward a more detailed description of how the FCO will be taking
forward the Structural Reform Priorities/Coalition Priorities
set out in Section B of the FCO Departmental Business Plan and
I look forward to appearing before your Committee soon to discuss
the issues covered in this letter.
12 November 2010
FCO FINANCES AND PERFORMANCE
I have submitted a memorandum addressing the detailed
Terms of Reference for my forthcoming hearing before the committee.
Ahead of this hearing, and also the hearing scheduled for January,
"The Role of the FCO in UK Government",
I would like to set out for the Committee
a broad sense of how the FCO intends to take forward the Coalition
objectives set out in the FCO Departmental Business Plan, published
on 8 November, which I have already sent to you.
1. PROTECT AND
The National Security Strategy sets the context for
Britain's security, outlines the goals we aim to achieve for the
United Kingdom internationally, and identifies the main risks
to our interests on which the Strategic Defence and Security Review
(SDSR) was based. It notes that the United Kingdom is an open,
outward-facing nation whose political, economic and cultural authority
and global interests are disproportionate to our size.
The SDSR confirmed that counter terrorism remains
at the top of the Government's security agenda. Under the broad
strategic direction of the National Security Council, the Home
Secretary is the lead Minister for CONTESTthe UK's strategy
for countering International Terrorism. The FCO co-ordinates and
leads the delivery of CONTEST internationally, both in terms of
the work that needs to be delivered overseas and the way that
work is linked to domestic efforts to tackle the terrorist threat.
We will continue to work closely with partners across government
to achieve that goal. Our efforts are underpinned by the FCO's
Counter Terrorism and Radicalisation Programme fund, which is
the principal funding stream for cross-Whitehall overseas counter
terrorism work. We will also continue to build both strong and
productive bilateral and multilateral counter-terrorism relationships.
The UK plays a central role in international efforts
to prevent the illegal proliferation of weapons of mass destruction.
We will work bilaterally with a wide range of international partners
to improve nuclear and biological security, and to strengthen
export controls and other barriers to illegal transfer of weapons
technology. In particular we will actively engage in international
efforts to prevent Iran from obtaining a nuclear weapon.
We continue to work in multilateral fora to maintain
and strengthen the international rules-based system of organisations,
treaties and regimes, which has helped build global confidence
and security over the last 50 years. This includes working to
achieve success at the Comprehensive Test Ban Treaty Preparatory
Commission in 2010, the Review Conference for the Biological Toxin
Weapons Convention in 2011, the Nuclear Security Summit in 2012
and the Review Conference for the Chemical Weapons Convention
in 2013, as well as active participation in the Arms Trade Treaty
negotiations and follow-up from the 2010 Nuclear Non-Proliferation
Treaty Review Conference.
As mentioned in my memorandum of 12 November, we
recognise the importance of commerce and trade to our national
interests and security. The FCO will increase the impact of our
commercial diplomacy in order to contribute to the Government's
priority of reducing the deficit and returning Britain to strong,
sustainable growth. The FCO will work closely with UK Trade &
Investment (UKTI) and the Department of Business Innovation and
Skills (BIS) to support the economy and British firms, to help
them exploit global opportunities; and to support a strong, sustainable
and open global economy. Commercial objectives are now central
to the UK's bilateral relations and the activities of FCO Ministers.
UKTI, which is a joint FCO and BIS department, has
a network of 1,300 trade and investment staff operating in 96
different markets. Heads of Mission play an important role in
delivering trade and investment objectives. In Posts where there
are no dedicated trade and investment staff, Heads of Mission
offer political support to UK companies in the market and signpost
local companies to UK investment opportunities.
We will work across Government to re-inject momentum
into global efforts to combat climate change. We want to see the
UNFCCC negotiations in Cancun in November/December 2010 and in
South Africa in 2011 build the foundations for a comprehensive
global agreement. In parallel we will work to promote low carbon
growth, especially in the emerging powers, EU and traditional
We will also work to ensure the UK's energy security
(including reliability, affordability and sustainability) by promoting
effective and transparent global energy markets; supporting the
development and implementation of effective EU energy strategies;
and prioritising engagement, including commercial opportunities,
with key consumers and producers.
The UK's prosperity requires the FCO to work with
the UK Border Agency to secure our borders by controlling migration.
The FCO's Migration Directorate will work with UKBA to increase
the numbers of failed asylum seekers and foreign national prisoners
we return to their country of origin, build the capacity of partner
governments to assist returnee re-integration and reduce the drivers
of irregular migration. We will support development and delivery
of a migration policy that meets our economic needs by attracting
the brightest and best economic migrants from the global talent
pool. We will do so, whilst working closely with UKBA on the development
and implementation of an annual limit on non-EU migration to the
UK to reduce net migration.
Conflict overseas represents a significant threat
to UK interests, by impeding economic development, causing instability,
promoting illegal migration or fuelling terrorism. The SDSR confirmed
the Government's commitment to building stability overseas through
preventing conflict and identifying and tackling emerging threats
including from fragile and conflict-affected states.
The National Security Strategy and SDSR sets out
an approach to conflict and instability that integrates diplomacy,
defence and development actions in support of cross-government
strategies. With DFID we shall lead cross-Whitehall work with
MOD and others, to help to prevent conflict and build stability.
As part of the tri-departmental management of HMG's conflict resources,
FCO will manage and report to Parliament on the Peacekeeping Budget
on the basis that these are resources it holds and manages on
behalf of the Government but which do not form part of the FCO
family's core budget and/or DELs.
The FCO and DFID will jointly lead work to develop
a new "Building Stability Overseas" strategy, which
will be published in Spring 2011. This will set out the Government's
overall approach and priorities, including how we will support
our work through the tri-departmental Conflict Pool and the Peacekeeping
Budget. We will ensure that our effort and funding is directed
to those places and activities where the UK's interests are greatest
and where it will be most effectively spent.
The Foreign Secretary has set out his vision of a
distinctive British foreign policy that builds up the UK's global
influence. By 2015, we intend to have strengthened bilateral relationships
with a number of key countries including India, China, Turkey,
Brazil and the Gulf States. We will use the National Security
Council framework to elevate relationships with individual countries
in a systematic fashion, in areas such as health, education and
commerce as well as diplomacy.
We have already sought to elevate our relationship
with India through a new "enhanced partnership." The
Prime Minister led a major visit in July which agreed specific
initiatives to develop economic and trade relations, science and
technology, energy, education, defence, culture and people to
The Prime Minister has recently returned from leading
the biggest ever British delegation to China, which reflects the
importance of China as a global player. China has a vital role
to play in delivering strong sustainable and balanced global growth.
As the world's largest emitter of greenhouse gases, China is critical
to a global deal on climate change and a shift to a low carbon
economy. It plays a key role on a number of security and foreign
policy issues, notably on Iran, the NPT, the DPRK, UNSC and international
institutional reform and international development.
The Prime Minister visited Turkey in July and launched
an updated UK/Turkey strategic partnership under which the Government
aims to double UK/Turkey trade over five years and build stronger
co-operation on foreign policy issues including the Middle East,
Afghanistan and the Western Balkans. All of this is underpinned
by the UK's lead role in the EU as a supporter of Turkey's accession
We will work to intensify our relationship with Brazil
over the next six months across a broad agenda including the commercial
opportunities related to Rio's infrastructure development for
the 2016 Olympics and the 2014 Football World Cup in Brazil.
We are working to elevate our political, economic,
commercial and defence relationships with the Gulf States in the
Middle East. In the region more widely we will engage with the
new government in Iraq, to deepen ties and help build stability.
The British Government will continue to press for progress towards
a two-state solution to the Israeli-Palestinian conflict which
provides a secure and universally recognised Israel living alongside
a sovereign and viable Palestinian state, with Jerusalem the future
capital of both states, and a fair settlement for refugees. The
Foreign Secretary was in the region earlier this month. We will
continue to work with the US and our EU and UN partners to this
end, to secure change on the ground in Gaza and to build the institutions
of a future Palestinian state.
The Commonwealth of the 21st century should stand
for democracy, development, and human rights, acting as a recognised
force for good on the issues of our times. In our engagement with
the Commonwealth we aim to inject new life into its network and
underline the UK's commitment to, as well as the benefits it seeks
to draw from, this unique global organisation. We will encourage
the Commonwealth to focus on the contribution it can make in inter-faith
dialogue, conflict prevention, democracy, development and trade
and the work of international organisations. The FCO will work
more closely with the Commonwealth Secretariat and associations,
member states and other interested parties. We will encourage
the Eminent Persons Group (EPG) and Commonwealth Ministerial Action
Group (CMAG) review to issue strong recommendations from the Commonwealth
Heads of Government Meeting (CHOGM) 2011. The EPG report will
be finalised at its meeting on 20-22 March 2011, and the recommendations
will be considered by Heads at the Commonwealth Heads of Government
meeting in Perth, Australia, in October 2011.
The Foreign Secretary has been clear that we support
expansion of the United Nations Security Council. We support permanent
membership for the G4 (Japan, Germany, Brazil and India) as well
as African representation. Our goal is a UN Security Council that
is more representative of the twenty-first century. Discussions
continue on how this should happen, but fundamental differences
remain. The UK will continue to push for reform.
The Foreign Secretary has commissioned a review of
our overall approach to the Overseas Territories as part of the
Government's development of a more dynamic relationship with them.
The great majority of those living in the Overseas Territories
are British citizens. The Foreign Office will co-ordinate across
Government to ensure the security and good governance of the Territories
and to support their economic wellbeing.
Violent extremism in both Afghanistan and Pakistan
poses a threat to UK interests and to regional stability and has
already claimed the lives of thousands of civilians and security
personnel. Extremism and the instability it causes also hold back
good governance, development and economic progress.
The UK's objective is to prevent Afghanistan once
again becoming a place from which Al Qaeda and other extremists
can attack the UK and our interests. Our policy has four main
- A more stable and secure Afghanistan.
- The conditions for withdrawal of UK combat troops
in 2015, including capable Afghan National Security Forces.
- An Afghan-led political settlement that represents
all Afghan people.
- Regional political and security cooperation that
supports a stable Afghanistan.
From 2015 UK forces will no longer have a combat
role in Afghanistan. But this will not signal the end of our engagement
in Afghanistan. The UK will work with the Afghan Government, regional
partners, international allies and multilateral institutions to
deliver lasting security, stability and prosperity in Afghanistan.
Work on increasing the size and capability of the
Afghan National Army (ANA) is ahead of schedule. The right and
necessary number of forces are now deployed in Afghanistan. There
have been two sets of Afghan-run elections in two years, giving
Afghan people a say in the future of their country.
The Lisbon NATO summit is a key opportunity to set
the pace of security transition and to ensure a sufficient number
of trainers are pledged to help build Afghan security capability.
In Pakistan, the UK's immediate priority is to support
the Government in addressing the flooding, helping to minimise
the humanitarian impact and supporting longer term stability and
growth. We will also continue to deepen the relationship with
Pakistan through a refreshed strategic dialogue and work with
Pakistan to tackle militancy in the border areas and elsewhere.
3. REFORM THE
The National Security Council was established as
the centre of decision-making on international and national security
issues. It oversaw the development of the National Security Strategy
and the SDSR which, taken together, support the position of the
FCO at the centre of delivering the Government's international
priorities. The FCO was deeply involved in the preparation of
both these documents and will continue to be involved in the delivery
of the SDSR. Specifically the FCO will lead on the delivery of
three work strands: building stability overseas (jointly lead
with DFID), state threats and counter-proliferation, and the security
impacts of climate change and resource competition.
The SDSR confirmed the Government's commitment to
maintaining our global diplomatic network to protect UK interests,
address risks before they become threats and meet new challenges
as they emerge. The FCO will lead in the production of integrated
strategies for key countries and regions, ensuring a new whole-of-government
approach, and the FCO will improve the co-ordination of all UK
work in countries overseas under the leadership of the Ambassador
or High Commissioner.
4. PURSUE AN
The Foreign Secretary and Government have emphasised
the importance of the UK playing an active and activist role in
the European Union. The EU Bill we are preparing is aimed at strengthening
the democratic accountability of EU decision-making in this country.
We will be working to make the EU's agenda focus on certain priority
areas over the next few years: conflict prevention, energy security,
climate change, enlargement, furthering our collective international
objectives and, above all, on improving the growth and competitiveness
of European economies.
We are focussing on strengthening the Single Market
as it is the key to delivering the long term, sustainable growth
EU citizens need; better regulation to eliminate unnecessary burdens
and ensure effective enforcement of European rules across the
Union; and opening external markets to ensure greater openness
globally and within Europe. We also want the Commission to put
forward a coherent and overarching vision for an EU low carbon
economy, and ensure that the influence of the European Union is
more effectively deployed to help deliver foreign policy goals.
By 2015 we hope to see the European External Action
Service (EAS) set on a course that complements and supplements
the execution of our national foreign policy. It is in our interest
that the EU uses all the tools at its disposal, including crisis
management missions, development spending, in concert to improve
the EU's collective weight in the world. This is especially important
in areas of key strategic interest to the EU, such as the Western
We are working at home to promote the EAS as a stepping
stone in the career of talented UK officials, in order that the
UK has influence within EU institutions. UK nationals have already
been appointed to a number of senior positions eg Rosalind Marsden
as EUSR for Sudanthe first Briton appointed to be an EUSR.
The European Fast Stream recruitment has been relaunched and the
FCO hosted an event on 18 October to encourage applications to
the European Concours.
5. USE "SOFT
In my memorandum I referred to the increasing proportion
of work by the FCO and its arms-length bodies which will be classed
as Official Development Assistance. We will ensure that the new
"Building Stability Overseas" Strategy covers all the
levers of power at our disposal. We will make effective use of
the BBCWS and British Council to make "soft power" a
tool of UK foreign policy, across the full range of FCO and HMG's
work. As set out in the SDSR, we will also be working with MOD
to ensure that we make most effective use of our global defence
The promotion of human rights and British values
is essential to and indivisible from our foreign policy objectives.
The Foreign Secretary has established an advisory group on human
rights to ensure that FCO policy is informed by the best possible
human rights advice. The Committee will be aware that funding
to the Strategic Programme Fund on Human Rights and Democracy
was reduced by 10% this year, as a contribution to reducing public
expenditure. The FCO consulted Posts and project implementers
about the best way to make this reduction in order to limit the
impact on our human rights and democracy work. This programme
continues to show value for money, making a significant impact
around the world in ending state executions, reducing torture
and protecting the rights of marginalised groups. We will report
our work on human rights through a Command Paper to be laid before
Parliament and also through greater reporting of our human rights
In addition to the above we will of course continue
to support British nationals around the world through modern and
efficient consular service. We have launched a new five-year Consular
strategy which is designed to:
- work to achieve successful merger of the FCO
and Home Office passport operations by 1 April 2011. After more
than 20 years of running separate passport services, the Identity
and Passport Service will take over responsibility for issuing
passports to British nationals overseas as well as at home to
reduce costs and increase security.
- continue to bear down on our costs as part of
the Government's priority to bring the public finances back into
balance. By 1 April 2011, we will have cut 110 jobs as part of
a plan to downsize the consular service by 25% by 1 April 2013.
- deliver the early priorities of the new 2010-13
Consular Strategy in four areas: to improve the quality of service
we provide our citizens by using their feedback more effectively;
to invest in our staff to sustain professionalism and encourage
those on the frontline to take decisions; to strengthen our network
by using different types of consular representation, new technologies,
partnerships and by using resources more flexibly; and to achieve
greater clarity and control over consular finances.
I hope this summary of our work on the Coalition
objectives will be useful background for the committee in preparing
for the hearing.
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