Developments in UK Foreign Policy

UKFP 01: Letter to the Chair of the Committee from the Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs and First Secretary of State

FOREIGN AFFAIRS COMMITTEE ORAL EVIDENCE SESSION — 8 SEPTEMBER 2010: “DEVELOPMENTS IN UK FOREIGN POLICY

Thank you for your note of 26 July asking for written evidence before my appearance before your committee on 8 September. Your original questions are shown below in bold followed by my responses.

1. What concrete things do you want to achieve as Foreign Secretary by 2015? What milestones have you in mind on the way to your key goals?

We have set out to pursue a distinctive British foreign policy that builds up the UK’s global influence, that is active and activist in Europe and around the world and that promotes the UK’s national interest while working with other countries and strengthening the rules-based international system in support of our values. By 2015 we therefore hope to have achieved visibly strengthened bilateral relationships for Britain with a number of key countries including India, Turkey, Brazil the Gulf States. Over the next five years we will use the National Security Council framework to elevate relationships with individual countries in a systematic fashion across the board, in areas such as health, education and commerce as well as diplomacy. This work is discussed in more detail in the answer to question 2 below. We believe this approach will benefit the British economy and support successful multilateral action against nuclear proliferation and climate change a s well as effective UK diplomacy in regions that affect UK interests.

We are also ambitious about what the Foreign and Commonwealth Office can achieve. By 2015 we also wish to see an FCO that leads foreign policy thinking across the whole of Government, that makes a first class contribution to the work of the National Security Council, that has a sharpened commercial focus and that successfully promotes British interests overseas through the UK’s overseas network.

My Ministerial colleagues and I also wish to see a Foreign Office that is a strong institution for the future, in 2015 and beyond; continuing to attract the most talented entrants from diverse backgrounds , and home to , and in future years placing a greater emphasis on geographic expertise, counter-terrorism and counter-proliferation and experience of working in difficult countries overseas as well as management and leadership ability.

We want to play a highly active and activist role in the European Union.

We want to see the EU bill we will bring before the House later this autumn become law next year, to strengthen the democratic accountability of EU decision-making in this country.

We want the EU’s agenda to focus on the areas we believe should be the EU’s priorities for delivery over the next few years: on energy security, climate change and, above all, on improving the growth and competitiveness of European economies.

A new multi-annual EU budget needs to be agreed for the years from 2014, and i s important that it reflects the straightened circumstances most EU countries find themselves in.

By 2015 we hope to see the European External Action Service set firmly on a course that complements and supplements the execution of our foreign policy and does not interfere with it. It is in our national interest that the countries of the EU become more effective at using their collective weight in the world and addressing challenges such as energy security and the Western Balkans.

We will ensure that there is no further transfer of competence from Britain to the EU.

2. As you know, we hope to hold evidence sessions with you on ‘Developments in UK foreign policy’ once every six months or so. What are the Foreign Office’s immediate priorities (between now and spring 2011) in terms of both policy and administration? What measures/ markers will be put in place in order to determine whether these priorities have been achieved?

We 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 national security by countering terrorism and weapons proliferation, and working to reduce conflict.

· Build Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources, and prom oting sustainable global growth.

· Support British nationals around the world through modern and efficient consular services.

These are the overarching priorities that will guide the Foreign and Commonwealth Office.

SPECIFIC FOREIGN POLICY ISSUES:

Afghanistan remains the most important foreign policy priority for the Government. Our aim is to ensure that Afghanistan will not again become a haven for international terrorists who threaten our security. We will continue to work with our NATO allies in ISAF to confront the insurgency, while promoting coalition cohesion and burden sharing. The Lisbon NATO summit in November will be a key assessment point and will feed into the US review of Afghanistan policy at the end of the year. We will also continue to work with our Afghan partners to improve their ability to take on an increasing share of the security burden and to provide proper and appropriate governance to the Afghan people. This will be in line with commitments made at the London and Kabul conferences earlier this year, now known as the Kabul process, in which the Parliamentary elections in September will be an important milestone.

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.

The Middle East will also be a priority over the next six months. We are working to elevate our political, economic, commercial and defence relationships with the Gulf States. We also aim to relaunch the Friends of Yemen process in September, looking to work with President Saleh and Gulf partners to support Yemen in taking the reforms necessary to meet its economic, political and security challenges. On Iran, we will implement the significant EU sanctions package agreed in July and continue to exert concerted diplomatic pressure to persuade Iran to engage positively with the E3+3 process. We will engage with the new government in Iraq, when formed, to deepen ties and help build stability. We welcome the launch of direct talks on the Middle East Peace Process on 2 September. The UK will do all it can to support the parties and buttress these important talks, working with the United States, the EU and our other international partners. We will also continue to press to ensure full implementation of the steps Israel announced on 20 June to ease restrictions on Gaza.

The Government will build on the Prime Minister s successful visit to Washington in July and the working relationships that I and my ministerial colleagues have established with our US opposite numbers. We will continue to exchange analysis and thinking and to work closely with the US in all areas of shared interest. We will also promote the UK s commercial goals in the US, working for tax and regulatory policies that are in the interests of UK businesses.

Over the next six months we will work intensively on UK relationships with key emerging powers. I will build on the Prime Minister s successful visit to India to embed the enhanced partnership with India. This will include deepening our cooperation on trade, in particular supporting early conclusion of the EU/India Free Trade Agreement, education, and climate, working with other Government departments (more detail in answer 13 below).

Strengthening our commercial relationship with China will be a particular priority, including progress on market access. We will work with China, including within the G20 to ensure a sustained, stable and balanced global recovery, promoting better regulation, an open global trading system, low carbon development and international action to prevent dangerous climate change. We will support China’s process of modernisation and internal reform, including pressing for more progress on human rights, which we judge to be in China’s and the UK’s interests. All of these will feature as themes of the next UK-China Summit, scheduled for early November. I will also work to build our other bilateral relationships in East Asia.

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. The Secretary of State for Business Innovation and Skills represented the UK at the Joint Economic and Trade Committee (JETCO) meeting in Sao Paulo at the end of August and we will seek to establish a UK/Brazil CEO Forum.

We hope that the G20 Seoul Summit in November will commit to financial regulatory reform with a target date for implementation, economic cooperation under the G20 s Framework for Strong, Sustainable and Balanced Growth as well as action to address the development needs of low income countries through multi-year targets. I will also work to put multilateral negotiations back on track to conclude an ambitious Doha trade round.

We will also 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 agree practical measures to help limit global warming to 2 degrees and to build the foundations for a comprehensive global agreement on climate change.

On EU matters, we will bring an EU bill before the House later this autumn. We are already engaging with our fellow EU member countries and EU institutions on what we see as the EU’s priorities and that engagement will continue intensively. We have before us a number of pieces of legislation on financial services being considered at the European level. They are of great importance to our economy and we are working extremely closely with the Treasury to ensure that they reflect Britain’s interests and advance our broader priority of promoting growth and competitiveness across the EU.

Now that the European External Action Service has been established, we want to support Cathy Ashton in her efforts to take its work forward in ways that complement and supplement, but do not compete with, Member States’ foreign policy priorities. We want the best British candidates to be successful in a merit-based appointment process, for the service to bear down on costs in a way that reflects the tightening of public expenditure across the EU, and for the EEAS to respect fully member state competences consistent with the Lisbon Treaty.

The EU’s finances are an important item on the EU’s agenda in the near future. Again, the FCO is working very closely with our colleagues in the Treasury. We must agree the EU’s annual budget for 2011. This is going to be a difficult issue. We are working within the overall multi-annual framework agreed in December 2005, a framework that does not reflect where we are now economically, and the budget will be decided by QMV. We also begin preparing discussions on the next multi-annual EU budget framework. This will begin with the Commission’s EU budget review. We expect that to be published later this month. We are disappointed by the delay in that publication. We expect this to be a difficult process, but it is important for the EU’s credibility that, when across Europe governments are having to tighten their belts, the EU tightens its belt too.

The FCO will continue to support British nationals around the world through modern and efficient consular services. Over the next six months, we will:

· 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.

My key priorities on the administration side are to conclude the Spending Review to deliver a sustainable FCO and allocating resources within the FCO for maximum impact and efficiency; and to agree a new Business Plan to deliver the Coalition Priorities and the outcomes of the Strategic Defence and Security review and the Spending Round. That work includes continuing the existing, and establishing a new, aggressive efficiencies programme - not least in the Administration itself. The FCO will also be working up an implementation plan for the Estates Strategy to respond to the NAO report earlier this year and maintain an effective global network for the whole of Government.

Like other Government Departments we are drafting a Business Plan, which will be reviewed by Treasury and the Efficiency and Reform Group. The Business Plan will contain measures of success, which will be cascaded down through the organisation into unit business plans.

APPOINTMENTS

3. Please give a complete list of FCO Special Representatives and Envoys currently in post, with details of their responsibilities and their terms of reference. Are there currently any plans to create any more such posts?

Special Representatives are appointed at the discretion of the Foreign Secretary. The four Special Representative positions were established under the last government and confirmed by the Foreign Secretary. The Post-Holocaust Envoy is a new appointment. They are appointed to provide strategic advice to ministers, to increase British influence internationally and to help co-ordinate cross-Whitehall policy.

There are no plans to create any more such positions.

The Special Representatives and Envoy are:

Mr John Ashton, Special Representative for Climate Change

Sir Andrew Burns, UK Envoy for post-Holocaust issues

Michael Ryder, UK Special Representative for Sudan

Sir Brian Fall, UK Special Representative for the South Caucasus

Sir Sherard Cowper-Coles, Special Representative for Afghanistan and Pakistan. Sir Sherard has been on leave during the summer. Karen Pierce has been filling the role.

4. Has any evaluation been carried out of the work of FCO Special Representatives and Envoys? If so, please supply details.

There has been no formal evaluation of the work of FCO Special Representatives and Envoys. But regular assessments of the activities of individual representatives are carried out by the FCO Directorates in whose areas of responsibility the representative s work falls, for example as part of regular reviews during the annual business planning cycle.

FCO PRIORITIES

5. We understand that the new Government has abolished its predecessor’s framework of Public Service Agreements (PSAs) and Departmental Strategic Objectives (DSOs), and that Departments are now to have Structural Reform Plans (SRPs). These are currently being published in draft form and will be finalised after publication of the Comprehensive Spending Review. When will the FCO’s draft SRP be published? Will the SRP contain formal priorities or objectives for the FCO? If so, will they be linked to a formal system of performance reporting and measurement like the previous PSAs and DSOs? If the SRP will not contain formal objectives, is the Government or Foreign Secretary otherwise formulating or publishing a set of priorities or objectives for the FCO, over and above the points you are setting out in your series of four keynote speeches?

I have replaced the Departmental Strategic Objectives (DSOs) with three new three foreign policy priorities. Britain 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 national security by countering terrorism and weapons proliferation and working to reduce conflict.

· Build Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources, and promoting sustainable global growth.

· Support British nationals around the world through modern and efficient consular services.

These will feature prominently in the forthcoming FCO s Departmental Business Plan, one element of which will be the Structural Reform Plan, and a reformed Business Planning framework to deliver them. This is work in process, and we aim to publish further details in the autumn.

FCO FINANCES AND THE CSR

6. The FCO is contributing £55 million towards the £6 billion in cuts announced by the new Government on 24 May. On 29 June, you announced cuts of over £18 million in the FCO’s programme spend. What specific cuts are you making to other areas of FCO spending in order to make up the £55 million figure?

The Government has made it clear that our most urgent priority is to tackle the UK s deficit in order to restore confidence in our economy and support the recovery. The review of our Strategic Programme funds led to a significant contribution to the required savings. We are finding the remaining savings from a number of areas; from the government’s spending moratorium, reduced consultancy spend, savings on procurement, reduced capital spend and asset sales. The British Council and the BBC World Service have also agreed to contribute to meeting a share of the cut.

By reprioritising the FCO’s overall spending we will seek to ensure that these reductions will not adversely impact the services provided to UK citizens abroad and that we retain a global network of Posts in order best to promote the interests of the UK overseas including our work on increasing Britain’s prosperity and security.

7. We understand that some FCO spending already counts towards the UK’s official overseas development spending. How much, and what, FCO spending counts in this way? What proportion of the UK’s current official overseas development spending comes from the FCO’s budget?

In 2009-10, £137m of FCO expenditure was assessed as ODA, about 2% of total UK ODA.  This expenditure included:

· some Strategic Programme Funds, including those supporting action on climate change, governance and human rights, and capacity building in ODA-eligible countries.

· internationally-agreed proportions of UK contributions to the UN regular budget,  and to the Commonwealth Fund and the Commonwealth Small States Office. 

· a proportion of the FCO's Grant-in-aid to the British Council.

The FCO delivers ODA-eligible work in around 100 countries, including preventing conflict, strengthening political and economic governance and accountability, and capacity building.   FCO and DFID are reviewing the FCO s ODA scoring methodology to ensure that this work is fully captured and consistent with the OECD s guidelines for ODA scoring.

8. You will be aware that, in its Report on the FCO’s 2008-09 Departmental Annual Report, the previous FAC recommended that "the Overseas Price Mechanism should be re-established, or an alternative mechanism put in place to protect the FCO from suffering severe financial consequences" as a result of exchange-rate fluctuations. As part of the current Comprehensive Spending Review, is the FCO discussing with its Treasury colleagues the possibility of restoring the OPM, or of establishing a similar alternative mechanism?

This matter is under discussion at present. Further information will be available in due course.

THE FCO’S OVERSEAS NETWORK

9. To enable effective scrutiny of the FCO’s decisions on the shape of its overseas network, on 8 September and beyond, we would be grateful if the FCO could tell us, for all UN Member States (plus such other territories as are relevant), whether it has a sovereign Post there and if not, when the sovereign Post was closed (if relevant); whether the FCO has any subordinate Post(s) there; whether DFID has an office there and if so, whether it is co-located with the FCO Post; and whether the UK has a resident Ambassador/High Commissioner there, and if not, which Ambassador/High Commissioner is accredited. This information might be most easily presented in the form of a table, with the following headings:

Country/Territory – Sovereign Post Y/N? – If none, closed when? Subordinate Post(s) Y/N? – DFID office Y/N? – I f yes, co-located with FCO Y/N? Resident Ambassador/High Commissioner Y/N? – If none, which Ambassador/High Commissioner is accredited?

It would also be helpful if the FCO could state the total number of overseas Posts which it currently maintains (sovereign and subordinate Posts, including representations/delegations to international organisations).

A. The table below summarises the number of Posts we have in our overseas network. Further details on individual Posts can be found at Annex "A".

OVERSEAS NETWORK SUMMARY

Total Number of United Nation Member States (UNMS)

192

Total Number of UNMS with FCO sovereign posts (bilateral posts in capitals with resident UK Head of Mission)

140

Total Number of UNMS with cross-accredited representation (non-resident UK Head of Mission)

52

Total Number of UNMS with no FCO sovereign post or cross-accreditation

0

Total Number of UNMS with DfiD Representation

44

Total Number of Subordinate Posts (bilateral posts outside capitals)

96

Total number of Overseas Territories with resident Governor

9

Total Number of Delegations to international Organisations

9

Total Number of FCO posts

254

THE FCO AND NATIONAL SECURITY

10. In your 1 July speech you referred to the National Security Council, not the FCO, as the key forum that ensures that "foreign policy runs through the veins of the entire administration"; but you also said that the FCO "has not been encouraged to be ambitious enough in articulating and leading Britain’s efforts overseas and foreign policy thinking across Government." Is there not a potential contradiction between seeking a stronger role for the FCO within Whitehall compared to the previous Government, and the creation of a substantial new security policy-making machinery in the Cabinet Office?

The National Security Council provides for the first time an effective mechanism to bring together strategic decisions about foreign affairs, security, defence and development and to align national objectives in these areas. It does not replace decision making in departments but ensures that these decisions are brought aligned where appropriate and that they support clear national objectives. It is right and practical that the Secretariat which supports the Council and coordinates its work is based in the Cabinet Office, particularly as the Council covers domestic as well as international security issues. This is entirely consistent with the FCO articulating and leading Britain’s efforts overseas and foreign policy thinking across government, with Secretaries of State deciding the strategic direction in the National Security Council, for example through the Strategic Defence and Security Review.

11 . How will the FCO relate to and work with the National Security Council in practical terms (preparation of papers, contact between staff, internal FCO structures, etc)?

I want the FCO to be ambitious in articulating and leading foreign policy thinking across the Government. The FCO has led the Foreign Policy agenda of the NSC. With papers on a wide range of priorities including India, Afghanistan and Pakistan. In practical terms, the FCO has a core team of staff acting as an interface with the National Security Council’s Secretariat in the Cabinet Office, managing the FCO’s internal procedures to ensure that papers get to the people who need to see them, and ensuring that FCO contributions to the Council have maximum impact. Policy departments across the FCO take the lead in preparing for Council discussion of subjects for which they are responsible, including liaising with colleagues across government. These arrangements are working well, although they will continue to evolve as the Council’s work develops.

12. In your speech of 1 July, you called the Strategic Defence and Security Review "a fundamental reappraisal of Britain’s place in the world and how we operate within it as well as of the capability we need to protect our security." In concrete terms, how is the FCO contributing to the SDSR process? In that process, what is the FCO saying that the UK needs to be able to do, in terms of acting internationally to ensure its security?

The Defence Secretary told the House of Commons on 21 June that the starting point for the SDSR would be the UK’s foreign policy priorities. [ HC Hansard 21 June 2010 col 61 ] FCO has played a lead role in setting the context for the Review through its work on the changing threats and opportunities the UK faces. In concrete terms, this has meant intensive contact between officials in the FCO, NSC and other departments, and between Ministers, setting out the FCO’s views and analysis.

The FCO itself will be covered by the review, which I am convinced will confirm that our skills and expertise and our global network are more necessary than ever to protect our security, promote our economy and support British citizens overseas.  

The Review will be published in the autumn in coordination with the Spending Review (SR).   FCO officials will continue to be involved until the conclusion of the review and I shall remain engaged in the process through discussions in the National Security Council.

BILATERAL RELATIONS

13. The Prime Minister has spoken of the importance of the relationship between the United Kingdom and India, and has described this as "the new special relationship". The bilateral UK-India relationship was singled out in the Queen’s Speech as being of special importance to the Government in going forward. What has the Indian Government’s response been to the renewed emphasis on the UK-India relationship?

The Indian Government s response has been very positive. The Prime Minister visited India on 29-30 July. I accompanied him as did the Chancellor of the Exchequer and Business Secretary and a large delegation of business people and leaders from education, culture and sport. After the UK-India Summit on 30 July Indian Prime Minister Manmohan Singh said that the visit had demonstrated " the strength of the bonds that tie India and the UK " Prime Minister Singh added that he had " no doubt that this will be good for both our countries, and responds to the wishes and aspiration of both our peoples " . Throughout the visit Ministers had productive and wide ranging discussions with their Indian counterparts. Both sides agreed specific initiatives to develop economic and trade relations, science and technology, energy, education, defence, culture and people to people contacts.

14. The Prime Minister is taking the lead for the UK Government towards India, while the Deputy Prime Minister will take the lead in relation to China. What does this involve and what does it mean in practice for the FCO’s work in and with these countries?

The Prime Minister told President Hu Jintao in Toronto that he would lead the UK s relationship with China and agreed to visit China in November for the annual Summit. The Summit is reinforced by the Strategic Dialogue which I lead for the UK, and the Economic and Financial Dialogue led by the Chancellor of the Exchequer. The only other countries to have this range of formal high level mechanisms with China are the US and Japan. The Deputy Prime Minister s contacts with Chinese leaders will further add to the relationship. The FCO will coordinate work across Government Departments on the strategic partnerships with India and China, both of which are of fundamental importance to the UK s prosperity and security.

INTERNATIONAL INSTITUTIONS

UN Security Council reform

15. In the second of your recent speeches setting out UK foreign policy, in July in Tokyo, you said that the UK and Japan "will one day work alongside each other as permanent members of an expanded United Nations Security Council". When do you expect that day to be?

As I said in my speech on 1 July:  this Government will be at the forefront of those arguing for the expansion of the United Nations Security Council .  We are clear and unambiguous in our support for permanent membership in the Security Council 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 21st century. But reform is not in our gift.  It can only happen when two thirds of the UN membership agree, including the 5 current permanent members. While there is currently broad support for the idea of reform, there is no agreement on how this should happen, and fundamental divides remain.

Intergovernmental Negotiations in informal plenary of the United Nations General Assembly started in 2009 in New York under the chairmanship of Ambassador Tanin of Afghanistan. We continue to support Ambassador Tanin s ongoing efforts to bring about consensus. In the absence of agreement on a permanent reform model, we have, with France, suggested that an intermediate solution could break the deadlock.  We are ready to work with others in considering what an intermediate solution might look like.

The UK will continue to urge UNSG reform while accepting that progress will be gradual.

Commonwealth

16. In your 1 July speech, you said that the Government wished to "reinvigorate" the Commonwealth and "help it develop a clearer agenda for the future". We are aware that Sir Malcolm Rifkind has been appointed to the Eminent Persons Group which Commonwealth Heads of Government have asked to examine the future role of the Commonwealth. Could you provide further information about the Government’s plans to "reinvigorate" the Commonwealth? When is the EPG due to report?

We believe that we need to think afresh about the UK’s relationship with the Commonwealth and encourage other member states to work with us to reinvigorate this extraordinary organisation. It has unique value as a diverse network of states spanning five continents and thirty percent of the world’s population. 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 ahead of 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. My Ministerial colleagues and I will work with other government departments, particularly DFID, to strengthen UK ties with Commonwealth countries.

EU

17. The EU General Affairs Council adopted its Decision establishing the European External Action Service on 26 July. The EU’s 2010 budget will now be amended to allow for the costs of the new Service in the remainder of the current calendar year. We would be grateful to know:

· For the rest of 2010 (pro rata) and for 2011, the likely budget for the EEAS (including the EU Delegations in third countries), broken down into operational and administrative spending if relevant; and a statement of the way in which this compares with the budgets for the units of the Commission and Council Secretariat that are becoming part of the EEAS, in order to be able to identify any additional spending arising from the creation of the EEAS

The EEAS budget is entirely administrative spend.  Operational spend forms part of Heading 4 ( " EU as a global player " ) of the EU budget.  The Commission published  " Draft Amending Budget No 6 "  on 17 June. This amends the 2010 EU budget to account for the additional costs this year from the creation of the EAS, including newly created posts. These total €9.5m (HMT Explanatory Memorandum (EM) 11251/10 of 13 July refers).  The costs of the Commission and Council Secretariat units that will become part of the EEAS will not transfer on to the EAS budget until 2011.  This is a special arrangement to avoid moving costs around in the middle of the budget year. 

The EEAS budget for 2011 is not yet agreed. The European Commission will present proposals in September.  The cost of the Commission and Council units that we expect to be transferred to the EEAS in 2009 was around €398.5m.  However, the EEAS budget will also have to meet the additional costs of member state nationals that will be seconded to the EEAS and part of the staff of EU Special Representatives.

· The expected number of EEAS staff, on 1 January 2011 when the initial transfers of personnel from the Commission and Council Secretariat take place, and when the EEAS reaches its full strength

· "Draft Amending Budget Number 6" (HMT EM 11251/10 of 13 July refers) sets out that the current establishment plan for the EEAS involves 1,114 posts transferred from the Commission; 411 posts transferred from the General Secretariat of the Council; and 100 new posts for member states’ diplomats.

· The number of UK civil servants whom you expect to be seconded into the EEAS, when the Service is first set up and when it reaches its full strength. Have any UK officials been appointed already to any EEAS posts?

EEAS appointments should be made through a transparent procedure and be based on merit, not nationality. There are a large number of FCO staff who are keen to go on secondment and who would contribute effectively to the formulation and delivery of EU external policy. We are doing all we can to support good UK civil servants in their applications. The UK represents 12% of the EU population and we must ensure that greater numbers of bright British officials enter all the EU institutions.

The recruitment process for the first round of 30 EEAS jobs is under way. In the last few weeks, a further 10 senior positions in Brussels have also been published. The deadline for these applications is 6 September 2010. A further 81 new positions in EU delegations abroad have also been advertised, with a deadline of 10 September 2010. Finally, 10 additional roles have been advertised with the application date of 16 September 2010. I will keep the Committee informed of the outcome of these recruitments.

18. In your 1 July speech, you identified a developing "generation gap" in terms of the presence of British personnel among the staff of the EU institutions. What is the FCO doing to address this, including as regards the re-introduction of the European Fast Stream in the civil service?

I consider it a strategic priority, as part of our broader approach to the EU, to take action to increase the relative number of UK personnel working in the EU Institutions. I have already written to Cabinet colleagues highlighting this issue and seeking their support and Europe Directorate of the FCO, in close coordination with UKREP and the Cabinet Office, is actively developing a campaign to raise interest in careers in the EU institutions. This will need to be a sustained and long-term campaign and its success is linked to us continuing to explain the facts about the UK's relationship with the EU as part of our commitment to being active and activist.

Given that recruitment for permanent staff in the policy stream of the EU Institutions is only open at the most junior level, my first priority is to raise the overall number and quality of UK applicants applying to sit the entrance tests (the concours ) in March 2011 and beyond. These will tend to be recent graduates (Bachelors and those with postgraduate qualifications) and in particular those who have studied French or German or who are competent for other reasons. Working with the European Personnel Selection Office, which is responsible for all recruitment into the EU Institutions, my officials intend to hold a series of events to raise awareness amongst young people of the opportunities presented by a career in the EU. The first is scheduled for mid-October, when I hope to be joined by the Deputy Prime Minister and the Minister for Europe at a reception in the FCO where our guests will include university Vice Chancellors, Heads of Language Departments, careers advisers and interested members of the media. We will also launch an area on the FCO website dedicated to EU careers.

The reintroduction of the European Fast Stream is also an important element of our effort since these officers will receive development training and support specifically tailored to passing the concours . The Government has recruited 21 such officers this year and intend to maintain this level of recruitment in future years. I hope that most of this year s intake will be present at the October FCO event.

In addition, it is important that we continue to second UK experts from across Whitehall and externally to the EU Institutions to supplement their full time staff. BIS is already leading work to develop a more strategic approach to the use of secondments of UK Civil Servants to posts in the EU institutions, where UK experience and insight can add real value.

OVERSEAS TERRITORIES

19. In his letter to the Chairman of the Committee dated 1 July 2010, Henry Bellingham MP, Parliamentary Under Secretary of State, wrote that the Government was developing "a more dynamic relationship" with the Overseas Territories. What does this mean in practice? What concrete steps has the Government taken in pursuing this relationship?

The great majority of those living in the Territories are British citizens. I welcome the opportunity as Foreign Secretary to lead the Government's work on the Overseas Territories. We have a responsibility to ensure the security and good governance of the Territories and to support their economic wellbeing.  This is a responsibility I take extremely seriously. I also recognise that the Territories can create substantial challenges for the UK Government. We need a vigilant and active approach to managing these risks. This is especially true at a time when a number of our Territories have been hit hard by the global recession.

We have moved rapidly to tackle some of the problems left unaddressed by the previous government:

· In July the Secretary of State for International Development announced the resumption of the St Helena Air Access Project. This is a major project which will transform the lives of the people of St Helena and for the first time offer them the prospect of a future free from dependence on the UK taxpayer.  

· In July, following a joint review by the FCO and DfID  of the UK s intervention in the Turks and Caicos Islands, the Government moved to stabilise the territory s public finances. The terms of this support were set out in the Written Ministerial Statement by the Secretary of State for International Development on 1 July. We are now working towards a longer term fiscal stabilisation plan.  This will provide a basis for completing the reform programme which is required before the territory can confidently return to full democratic government.  We have also established a Joint FCO/ DfID Ministerial Steering Group on the Turks and Caicos Islands to ensure effective and coordinated policy-making and delivery. 

· Between May and July the Government worked in partnership with governments of the Caribbean Territories in fiscal crisis to take urgent steps to control their deficits and to develop plans to put their finances on a stable footing. This resulted in the territories presenting credible budgets, supported, for the first time, by 3-year fiscal recovery plans. Our approach to public spending in the UK has lent authority to our encouragement to Territory authorities to bring their own expenditure under control. 

· From our first days in office we have been firm and clear about our support for the Falkland Islands and their right to develop a hydrocarbons industry.

This is a broad and complex agenda involving many government departments. The FCO and DfID are working together to review the development needs of all the Overseas Territories. I have also asked officials to review the Government s overall approach to the Territories. I look forward to discussing this review with the Committee in the months ahead.

FCO TRADE AND INVESTMENT WORK

20. The Prime Minister has stated that the FCO’s diplomats must become" economic ambassadors for Britain" and that there needs to be "quite a big step change in our approach to foreign and diplomatic relations in massively upgrading the importance of trade in terms of the contacts that we have with other countries". What practical steps are being taken to respond to the Prime Minister’s call for change as outlined above?

The Prime Minister has stated that the Coalition Government s top priority is reducing the deficit and returning Britain to strong, sustainable growth. There are two overarching objectives for the Government’s agenda for recovery in which the FCO will play a central role: Direct support for the British economy and British firms, to help them exploit global opportunities; and the creation of a strong, sustainable and open global economy. UK exports of goods and services of £387 billion in 2009 corresponded to 27.7% of GDP at market prices of £1396 billion (down from 29.2% in 2008). Exports will therefore be crucial to the UK’s successful economic recovery.

The international environment is increasingly competitive, with nations such as France, Germany, the USA and Japan all in the process of building up their export capability and appeal to foreign investment in order to drive their own economic recovery. This brings the need for the UK Government to offer support to British companies into sharper focus.

The FCO is responding energetically to the Prime Minister’s call for a step change in its approach to foreign and diplomatic relations. I have recently announced that building Britain’s prosperity (by increasing exports and investment, opening markets, ensuring access to resources and promoting sustainable global growth) will be one of three key priorities for the FCO. Trade and investment already forms a core part of the FCO s work. We have a network of 1,300 trade and investment staff operating through our posts in 96 different markets. Customers attribute bottom line profits of £5 billion per year to UKTI support, and this has doubled over the last three years.

I aim to establish a new commercial culture across the FCO and throughout our overseas posts, so that our ministers and senior officials - in the FCO and across Government - are briefed to press key commercial issues in every meeting and visit. I am keen to ensure that ministerial visits across government are coordinated better, to ensure maximum coverage and impact on commercial matters. I am also keen to strengthen the links between business and FCO Ministers, senior officials and Heads of Mission. And I have asked FCO officials to carry out an audit of other FCO activity to ensure that opportunities for UK business are being properly identified and supported.

I have established a new joint FCO/UKTI Commercial Task Force. This is led by a senior FCO officer with extensive UK Trade and Investment experience, and will incorporate FCO and UKTI officers. It will work closely with all parts of the FCO to establish this commercial culture in the FCO.

The FCO has also created a new team to lead cross-Government work on the emerging powers, and will develop action plans for those countries with the highest potential for UK business. Officials are also strengthening the FCO’s resources for work on trade policy and in support of the UK economy.

Simon Fraser, the new FCO Permanent Under-Secretary, has extensive experience of trade issues. I have asked him to take forward the programme of increasing the importance of trade and investment in the FCO’s work.

21. What is being done to ensure that diplomatic staff who have not previously worked in this area are able to acquire the necessary trade and commercial expertise that may be required of them?

The FCO provides economic training to all staff going overseas to take a job with significant economic content, including those working on joint economic and commercial jobs. This training is also available to staff in London and to Heads of Mission. The training includes tailor-made economic courses on the specifics of international trade and macroeconomics, as well as the opportunity for ad-hoc training on related issues. In response to the economic crisis, and as recommended by a review of the FCO’s economic capability, the FCO has expanded the availability of economics training to greater numbers of officers, including those overseas. I and senior FCO officials will continue to ensure that staff develop the skills and capacity necessary to meet the new level of commercial and economic ambition within the FCO.

In addition, UKTI training is available to all FCO staff going overseas to take a job which has a high commercial (trade and inward investment) content. UKTI training is modular, with FCO officers taking the modules relevant to their particular post and responsibilities. UKTI also runs courses specifically for new Heads of Missions and Deputy Heads of Missions before they take up their posting; these include a session on the skills needed in developing strategic conversations with businesses. Once in the post, staff have the opportunity to continue to develop trade and commercial expertise through locally-run FCO and UKTI workshops and distance learning via the Open University. In addition to training, UKTI also offers staff the opportunity to further develop their understanding of business issues, through secondments to other government departments, attachments to business, and industry briefing visits.

The FCO currently has some 71 members of staff on outward secondment, many to the private sector. In addition, our programme of short-term attachments to business for outgoing Heads of Mission enables them to gain first hand business experience.

22. How can you ensure that the FCO’s culture evolves swiftly to reflect one which gives the highest priority to trade?

As I have described above, the Commercial Diplomacy Taskforce will carry out an intensive programme over the next 6 months. It will establish clear milestones for its work and will evaluate its work on a regular basis. It will work closely with UKTI, and with the FCO’s New Emerging Powers, Trade Policy and UK Economy teams.

I have made clear that Ambassadors and High Commissioners will be expected to meet challenging targets for UK exports and inward investment to the UK, linked to UKTI targets. A substantial proportion of the economic work of our Embassies will be more clearly focused on working to achieve demonstrable benefits for British business and the British economy, for example making sure that new opportunities in free trade agreements, are communicated effectively so that British firms can take advantage of them. Ambassadors and High Commissioners will also be expected to develop even stronger links with the UK regions to promote opportunities in their markets for UK companies.

Officials will improve the present system of coordinating Ministerial visits across government to ensure that all Ministerial visits take full advantage of the opportunity to focus on commercial matters. This will ensure Ministers are fully briefed and able to lobby their counterparts on the key commercial issues in the markets they visit, whether that is on market access, trade agreements, taxation agreements or specific issues.

I will ensure that FCO input on Trade Policy is increased. Our International Trade Team has already been strengthened with additional trade policy officers including a supporting hub of economic analysts. This team will work closely with BIS to provide strategic advice to our Embassies. An international network of trade policy advisors will work across embassies to further mainstream trade into the bilateral dialogue. Our Embassies will lobby to build momentum behind the Doha Round, drive progress on EU Free Trade Agreements, and address the barriers which prevent British businesses accessing key markets. The FCO will also support the Intellectual Property Office (IPO) in shaping and delivering its international objectives.

I have already reinforced the FCO team which supports the UK Economy with an additional four policy officers and a supporting hub of economic analysts. This team will work very closely with other Whitehall departments including HM T reasury and BIS, with UKTI and the Commercial Diplomacy Taskforce. The team will coordinate a whole of Government effort, setting the strategic direction for the Government’s work to promote the UK Economy overseas and provide material and central direction to our posts to highlight the strengths of the UK economy and help build the UK s economic credibility internationally. It will also task posts to explore barriers to greater economic relations for example with emerging powers as well as identifying innovative economic policies from overseas that could work here. It will generate ideas for sectors where there are specific new opportunities which could be taken forward by different Government departments, including in education, health services and defence.

23. When will a new FCO-BIS Trade Minister be appointed?

An appointment will be made soon. The Prime Minister is keen that a permanent Minister for UKTI is appointed as soon as possible. However, it is also important that the person appointed has the right business credentials for the post.

The Prime Minister has stated that he expects all of his Ministers to promote British business as a core part of their international work. FCO Ministers and I have already begun to do so. Until a permanent UKTI Minister is appointed, Business Minister Mark Prisk will continue to have responsibility for UK Trade and Investment, and he is fulfilling this role very successfully. He has already been focused on driving forward the trade and investment agenda and involved in developing relationships with investors. The Prime Minister has also appointed Lord Brittan for a six month period as Trade Adviser. He will work closely with Ministers across the Government to define an overarching trade and investment strategy, and to help to drive forward the Government’s trade agenda, including the forthcoming Trade White Paper.

I hope you find these answers useful and I look forward to appearing before your committee soon.

2 September 2010