Further letter from Simon Fraser CMG,
Permanent Under-Secretary of State, Foreign and Commonwealth Office
I am writing to update you on the latest FCO management
issues. This letter covers the period August to December 2010.
FCO PRIORITIES
The FCO Departmental Business Plan was published
on the No10 and FCO websites on 08 November. The plan sets out
the FCO's departmental priorities, structural reform plan, expenditure
and our commitment to transparency. I sent a copy of this to the
Committee ahead of the hearing on Financial Performance in November.
We have started to publish transparency data, including monthly
implementation updates on our Structural Reform Plan. We have
also produced a fuller Implementation Plan which will be the key
internal document underpinning our business planning work.
Heads of Mission are currently drafting Country Business
Plans which will run from the beginning of next financial year
and will cover the four-year SR10 period and for which they will
be held responsible. The Country Business Plans set out the work
of each Sovereign Post to deliver the Government's Foreign Policy
Priorities. They encompass all of HMG's activity in country, reflecting
the requirement in the National Security Strategy and Strategic
Defence and Security Review that Ambassadors and High Commissioners
will lead closer coordination of all UK work overseas.
DIPLOMATIC EXCELLENCE
In December I launched the Diplomatic Excellence
initiative, which will be our programme for reform and modernisation
of the FCO over the next four years. It will replace the High
Level Change Plan, which closed at the end of 2010. The Diplomatic
Excellence Programme will have three interlinked goals of first
class foreign policy and diplomacy, a strong global network and
a strong and skilled workforce. It will build on the gains we've
made over the last few years on leadership, management, diversity
in the broadest sense, and the modernisation of our corporate
functions, but place a strong, renewal emphasis on driving forward
excellent policy making and diplomatic skills across the FCO in
London and abroad.
FCO FINANCES
The Foreign Secretary and the FCO Board are agreed
that resource allocation and spending should be guided by the
new priorities the Foreign Secretary has set for the FCO; by his
wish to sustain a strong global network; and by our determination
to keep our staff safe, secure, and well equipped. As I set out
in my letter to you following the November hearing the Foreign
Secretary has also required us to continue to seek efficiencies
and look for ways to reduce costs.
I have already written to the Committee on the outturn
of the Spending Review. Since then we have been preparing internal
budget allocations in line with the priorities set by the Foreign
Secretary. We aim to agree final allocations for 2011-12 shortly.
The Board has also discussed indicative allocations for 2012-13
to 2014-15 and intends to agree them early in the new year so
Directors and Posts can plan for the longer term.
FIVE STAR
FINANCE
In October/November we assessed the FCO's performance
against the standards set out in the National Audit Office (NAO)
Financial Management Maturity Model for the Public Sector with
which the Five Star Finance Programme is aligned. In tandem, the
NAO carried out their own independent assessment.
Our self-assessment concluded that, on balance, the
FCO is operating at the 4.5* level. In some areas such as governance
and leadership and decision-making, we found that the FCO is performing
above the 4.5* level. In others, such as training and the reporting
of our in-year working capital management, we found that we are
operating below the 4.5* level. We recognised a challenge in maintaining
standards against a constantly changing background and frequent
staff rotations.
The NAO validated this finding, commenting that the
FCO is "meeting the majority of the requirements of 4.5*
by November though this is not consistent across the network."
Our and the NAO full assessment reports will be put
to the FCO Board in January 2011 along with recommendations for
next steps.
EFFICIENCIES
The majority of our CSR07 Value for Money projects
continue to deliver on or above their targets and overall the
programme remains on course to deliver forecast savings of £190
million across the FCO family. Cumulative results to date are
£156m against a family target of £144 million.
On 15 November the Chief Secretary to the Treasury
announced that Departments would no longer be required to report
formally to HMT against the previous Government's CSR07 efficiency
target. However we will continue to track the programme internally
until the end of the current financial year/CSR period in line
with our commitment to utilise our resources as efficiently as
possible.
SERVICE LEVEL
AGREEMENT WITH
PARTNERS ACROSS
GOVERNMENT (PAGS)
- RECOVERY OF
COSTS FROM
PAGS ON
OUR NETWORK
We have been working with Whitehall Partners to agree
a new charging model for the next few years, based on cost-sharing
principles. The objective is to produce a simpler charging
arrangement that will reduce bureaucracy whilst ensuring
that the FCO is fairly compensated for the risks and contingent
liabilities it carries for others on the overseas platform.
TOP RISKS
REGISTER
In September the FCO Top Risk register, which is
made up of the most significant risks from both the Strategic
policy risk list and the Operational risk list, was updated. After
consideration by the Board we removed the operational risk (IT
Systems) leaving three operational risks on the Top Risk register:
- Physical, Technical and Personnel Security;
- Resources; and
- UKBA.
A new policy risk (Sudan) was added to the existing
risks top level (Iran, Afghanistan, Pakistan, Terrorism, Middle
East Instability, Horn of Africa, Overseas Territories, Litigation,
EU, Turkey, and Economic Outlook).
At the December update, new strategic risks on the
Eurozone and the Korean Peninsula were added. The operational
risk on Resources was downgraded and the strategic risks on Turkey,
EU, Economic Outlook and Litigation were also removed.
The FCO Board continues to discuss individual risks
in depth at its monthly meetings to make sure these risks are
being effectively managed.
FCO/IDENTITY AND
PASSPORT SERVICE
On 29 April 2009 the FCO and Home Office Permanent
Secretaries signed a Memorandum of Understanding on the integration
of the FCO and Identity and Passport Service (IPS) passport operations.
IPS agreed to take responsibility for the policies, finances and
oversight of the FCO's passport operation from 1 April 2011.
The strategic case for unifying the two passport
operations is straightforward. Having two UK passport services
is clearly less efficient than one. Through economies of scale
and by eliminating duplication, the cost of the overseas passport
service will fall from £42m a year to under £20m a year.
And having two UK passport services with two sets of security
procedures makes us more vulnerable. As the cost and security
around passports continue to increase, these changes will allow
us still to offer a passport service to British nationals living
abroad - and even bring down the fees we charge.
IPS and FCO are currently negotiating an Accord that
will govern the full integration of the two passport operations
after 1 April 2011 and set out the future shape
of the overseas passport service.
UKBA
As set out in the FCO's new Business Plan, the FCO
and UK Border Agency have committed "to control migration
to secure the UK's borders and to promote the UK's prosperity."
Recent collaboration has included work on the first measures to
implement the government's commitment to introduce an annual limit
on non-EU migration while continuing to attract the brightest
and best to build Britain's prosperity.
Following the Spending Review and in recognition
of the successful close working arrangement, the UK Border Agency
has agreed to continue funding the FCO's Migration activity until
March 2013. We have also secured cross-Government agreement to
continue the quadrilateral (UKBA/FCO/DIFD/Ministry of Justice)
Returns and Reintegration Fund until March 2015. This Fund is
integral to the UK's efforts in increasing the return of foreign
national prisoners and failed asylum seekers and helping them
reintegrate more effectively in their countries of origin.
ICT
In September, the FCO signed a contract with Cable
and Wireless Worldwide (C&WW) to introduce improved global
telephony, data and videoconferencing services (the Echo programme)
across the network between early 2011 and summer 2012. Echo is
a collaborative procurement and delivery programme involving the
FCO, UK Border Agency (UKBA) and the Department for International
Development (DFID). It has the potential to deliver savings to
the FCO of up to £90m through lower cost technologies, call
charges, support costs, and shared infrastructure. Staff can also
expect to see new and enhanced services, including unclassified
video conferencing facilities at 130 Posts and greater capabilities
for flexible working.
In the light of recent events, and in response to
a request from the National Security Adviser, the FCO is undertaking
a review of all measures in place to protect our information to
ensure these continue to be robust and proportionate. We are working
with recipient departments of FCO data to confirm with them that
appropriate measures are in place for any onward handling or distribution.
We continue to take the protection of our information seriously,
and comply with the Cabinet Office Security Policy Framework (SPF),
which covers all areas of security, including technical, physical,
procedural and personnel security.
We have completed the final two deployments of our
new Firecrest IT system (Beijing Visa Section and Alexandria)
and the global upgrade to Outlook 2007.
ESTATES
I promised to inform the Committee of any liability
following the flood at our Embassy in Madrid in late January.
We have now settled the claim in the sum of €331,954 which
represents a saving of over 18% compared to the original claim
of €405,457.
We completed a major project to provide a new embassy
and residence in Tbilisi in September/October at a total project
cost of £16.7 million. The location of the previous embassy
in the centre of Tbilisi was unacceptable on security grounds,
and the new build provides us with a modern, fit for purpose platform
from which to deliver the government's overseas priorities in
Georgia.
I should also note that we have also secured approval
from HM Treasury and from the Foreign Secretary to go ahead with
projects to provide new embassy buildings in Tel Aviv and Jakarta,
at an estimated cost of £19 million and £29.5 million
respectively. Both these projects are security-driven; you will
recall that James Bevan, Director-General Change and Delivery,
mentioned the Jakarta project as a high priority during the Committee's
evidence session on 24 November. I should be glad to write with
further information on any of these projects if the committee
wishes.
I attach at Annex A our report for properties sold
and purchased in the second quarter of financial year 2010-11.
One purchase not included in our last report is also included
for the first quarter of the current financial year.
SECURITY
Sana'a
As you are aware, a second terrorist attack took
place against an Embassy vehicle on 6 October 2010. Since the
attack a number of additional security measures have been taken,
including a further reduction in staff numbers, the development
of a quick reaction force and an operations centre, and an additional
security manager.
The threat is likely to remain high for the foreseeable
future and there is a limit to how much we can mitigate the threat
to staff travelling around Sana'a, even in armoured vehicles.
Therefore urgent work has begun to provide temporary, secure staff
accommodation on the well-protected Embassy compound, at an approximate
cost of £2 million, which will be met by re-prioritisation
of our capital budget this financial year. We are looking urgently
at a project to house staff securely in the longer term. We will
keep the FAC informed of progress.
MANAGEMENT STRUCTURES
Keith Luck, Director General for Finance, left the
FCO in December on the expiry of his fixed term contract. I have
decided to reorganise the operational side of the FCO in London
under a single DG level Chief Operating Officer. James Bevan has
now assumed this role. Our Finance Director, Alison Currie, has
joined the FCO Board of Management.
6 January 2011
SALES
| Sale Date | Post
| Property Types | Sale Price £
|
| July to Sep 2010 | 01/07/2010
| Stockholm | Residential |
532,559 |
| 02/07/2010 | Dar es Salaam
| Residential | 532,560 |
| 08/07/2010 | Copenhagen
| Residential | 807,472 |
| 14/08/2010 | Canberra
| Residential | 956,923 |
| 10/09/2010 | The Hague
| Residential | 299,055 |
| 13/09/2010 | Kuala Lumpar
| Residential | 4,593,039 |
| 27/08/10 | Ottawa
| Residential | 513,108 |
| 30/09/2010 | Washington
| Residential | 749,144 |
PURCHASES
| Purchase Date |
Post | Property Type
| Purchase Price £ |
| April 2010 | 01/04/2010 |
Warsaw | Residence | 3,349,473
|
| 
