UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 665-iv

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

THE ROLE OF THE FCO IN UK GOVERNMENT

WEDNESDAY 26 JANUARY 2011

SIR JEREMY GREENSTOCK GCMG

SIR PETER RICKETTS GCMG

ALASTAIR NEWTON

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Foreign Affairs Committee

on Wednesday 26 January 2011

Members present:

Richard Ottaway (Chair)

Mr Bob Ainsworth

Mr John Baron

Ann Clwyd

Mike Gapes

Mr Frank Roy

Sir John Stanley

Rory Stewart

Mr Dave Watts

Examination of Witness

Witness: Sir Jeremy Greenstock, GCMG, incoming Chairman, United Nations Association-UK; former diplomat (1969-2004), including UK Ambassador to the UN (1998-2003); former Director, the Ditchley Foundation (2004-2010); founder partner, Gatehouse Advisory Partners, gave evidence.

Q160 Chair: May I welcome members of the public to the Committee’s fourth evidence session in our inquiry into the role of Foreign Office in the UK Government? Today, we will be questioning the National Security Adviser, who is our second witness, and two senior former diplomats about the inquiry’s key issues, especially the National Security Council and the FCO’s work in multilateral institutions and in the commercial and economic sphere.

It is with great pleasure that I welcome our first witness, Sir Jeremy Greenstock. He is probably one of the most distinguished former diplomats-if I can put it that way. He is the incoming chairman of the United Nations Association, the former UK ambassador to the UN and a former director of the Ditchley Foundation. His service on behalf of this country was very distinguished. Welcome, Sir Jeremy. Apologies for holding you outside for a few minutes; we were having a quick emergency debate on the World Service cuts announced today. It is a huge pleasure and privilege to have you here. Would you like to open with a few words, and then we’ll get going with the questions?

Sir Jeremy Greenstock: Thank you, Chairman. I do not have any great statement to make to you; I want to respond to the Committee’s questions. I shall indicate briefly where I am coming from so that you are not surprised. If you are interested, in this session I would like to talk about how the world is changing and how the United Kingdom and its diplomatic instruments should respond, because I think it is very relevant to the how the Foreign Office is constructed, recruited and trained over the coming period. I think I have something to offer; not just from longevity, but from my experience with the Ditchley Foundation, where I ran 70 conferences on global change from a large number of aspects. There are some things in what I have seen of your witness statements so far and your hearings that have not yet been covered in enough detail to give you the right steer for what we need from diplomacy.

My second preliminary suggestion is that I do not think that Westminster and Whitehall should be thinking too radically about structural change to the Foreign Office. That will not solve any problems. I have seen a number of witness statements so far to you from Daniel Korski and others who have suggested that we might rearrange the furniture in some quite radical ways. That would be a mistake because we need to focus on not where the furniture is placed, but the quality of the furniture itself and particularly the human components of it. You will therefore find me much more in the camp of Charles Crawford and concentrating on what the skills of the Foreign Office need to be, how they should be developed, how they should serve Ministers and how they should be co-ordinated with the rest of Whitehall. It would be a grave mistake at this juncture to get into radical change of the structure. That is where I am coming from.

Q161 Chair: That is very helpful. Will you tell us if we are not asking you the right questions? It will allow you to get us going. I should have also mentioned your service in Iraq in my opening remarks.

Putting Iraq to one side, looking back over your time in the Foreign Office, can you think of any situation or any example where the failure of how the Foreign Office is structured led to problems?

Sir Jeremy Greenstock: No, I don’t think that the problems that we encountered in trying to manage our overseas interests came out of structure. They came perhaps out of relationships, whether international or internally political. They came out of policy making and policy decisions. At times, they perhaps came out of the inadequate personal capacity of a particular official or Minister at a particular time, trying to deal with a particular problem. I do not think that I can think of a structural problem that lay at the heart of the difficulties we were facing as a Government team trying to deal with British overseas interests.

I could, if you like, take your question and look at the relationship between the Department for International Development and the Foreign and Commonwealth Office, but I don’t think that that was the problem. If that was what Ministers decided should be in a structural relationship, it was up to individuals, leaders and Ministers to communicate, get together when necessary, discuss policy and how they shared an approach to a problem, and get on with it.

I am of the view that the British civil service as a whole is talented and adaptable, and is there to do what Ministers want, obviously within reasonable limits in terms of legal action and the rest of it, but that is a very wide spectrum of capacity to serve Ministers in the way that the Government of the day wish them to act and to work together. Then, it is a matter of addressing the issue in the most professional way possible, with people who are trained to do that.

Q162 Chair: That is consistent with your opening point that you don’t think it’s broke at the moment, so it does not need fundamental reform.

Can I put the question the other way round just to probe? Do you think that we have lost any traditional expertise at the Foreign Office, such as geographical expertise or policy expertise, in recent years or do you think that the Foreign Office is working as effectively now as it ever has done?

Sir Jeremy Greenstock: I have been worrying about the effectiveness of the Foreign Office in the system, and in the global system, but more from the point of view that resources have been lost for adequate staffing of the services that the Foreign Office needs to give-we can go into those-and from the tendency over the past couple of decades or so.

I can go back because I think I was at the origins of the original reforms at the Foreign Office in the early 1990s to bring management of the issues and resources together under the directors. With Anthony Goodenough, I led the research and the policy contemplation in the Foreign Office of what those reforms would mean. I think in the end that they were taken too far. The Treasury’s and the home civil service’s interest in getting the Foreign Office to conform to objective-setting and explanation of its work, against criteria that weren’t fully fitting for diplomacy and overseas work, damaged the capacity of the Foreign Office to focus on diplomacy. That has been cumulative in a sense as the years have rolled by and the cuts have taken increasing force.

I look upon the Foreign Office as distracted, to some extent, by things happening in the domestic arena, and as understaffed and under-resourced, for what the country could get out of a properly staffed and resourced Foreign Office. It is, therefore, not able to respond to the way the world has changed and the way that Whitehall and the Government need to react to the evolution of global events.

Chair: Rory, a quick one on this point.

Q163 Rory Stewart: Just to follow up on that, is there something we could do with promotion? One of the striking things is that promotion into the senior management stream is now very focused on an ability to manage budget and staff. Often, people with particular language area expertise feel that they are not being properly promoted or rewarded within the system. Is there anything we could do structurally in terms of promotions to address those issues?

Sir Jeremy Greenstock: I think there are things that could be done to alter the relative focus and priority of skills in looking for senior members of the service. There are difficulties, because the Foreign Office in my early days definitely needed to upgrade its management skills. There were some brilliant diplomats who were awful managers and who, therefore, wasted some of the talents of their own team because of their managerial deficiencies, but were able, almost on their own, to achieve diplomatic successes. How do you relatively score those skills? You obviously try to keep the good things and remedy the bad things.

In trying to remedy the bad things I think we took the accent off the real skills of diplomacy. I will give you a trivial example. When I was ambassador at the UN there was a series circulars round every post that asked ambassadors to talk to their staff about how they were developing their management skills-whether they were ticking boxes in various ways-and asked them to look at videos and read scripts that told them how to be better managers. I told the Foreign Office that I had never received any video or set of instructions on how to be a good diplomat; how to hone skills in analysing the political and other developments in the world we were dealing with, and how to refine the individual skills to analyse, report, negotiate and recommend policy evolution.

I never saw a single circular on that in my five years at the UN, so I did it with my staff off my own bat. I did that in other managerial positions in the Foreign Office. It indicated to me that the message being conveyed to the team of the Foreign Office was a distorted one, almost reverse discrimination. In order to correct a fault, you so over-emphasise it that you distort the priority that you give to other skills. That is probably to some extent still the case, but I am not claiming to be an expert on how exactly the Foreign Office and Whitehall operate at the moment.

Chair: We have some detailed questions about staffing coming and we can go on the back of that.

Q164 Mike Gapes: Can I take you to the realm of diplomacy and foreign ministries generally in the world? We have had written evidence from the former Canadian diplomat and academic Daryl Copeland, who claims that diplomacy, its institutions and practices have not adapted well to the challenges of globalisation generally. How do you think the Foreign and Commonwealth Office has adapted and how does it compare with other comparable foreign ministries in other parts of the world?

Sir Jeremy Greenstock: There could be a very long answer to your question, Mr Gapes.

Mike Gapes: I’ll interrupt you if it gets too long.

Sir Jeremy Greenstock: There are different aspects of where a diplomatic service can fail to meet the requirements of serving their country’s interests in the modern environment. One of them, of course, is in the whole arena of communications and public diplomacy, where I think the Foreign Office has tried very hard to match what is out there, in terms of fast and permanent news, spin, and answering and explaining what is happening in a crisis.

Individuals in the Foreign Office have learned quite well; particular ambassadors get pushed into the limelight-I suppose I was an example myself-and you have to learn on the job. Some respond well and some respond badly. I was never trained sufficiently to take on the challenges that I met, so I had to respond in my personal capacity. I got some things wrong, and maybe I got some things right. I took care at the same time, particularly at the United Nations, to bring my own team along with me, particularly my press officers, to handle the media. I suppose you would now have to handle more than just the recognisable media-there are also the social media out there, but that is a different question and, to some extent, irrelevant to what we are talking about-in a way that gave them an understanding of what was going on, but didn’t breach the lines of what was unclassified and what was not in what could be reported. So there is the communications area, where the Foreign Office is, on the whole, catching up, but not too badly.

In terms of diplomacy-as in observing, analysing, reporting, negotiating and communicating with other Governments-I am still to be convinced that there is a Government less incompetent than the British one in these fields.

Q165 Mike Gapes: Less incompetent?

Sir Jeremy Greenstock: Less incompetent. I formed the view over my career that all Governments are incompetent in one way or another. Where you have a civil service or a diplomatic service that minimises the mistakes; that can handle complex issues; and that can deal with a number of balls in the air at any one time, you have a comparative advantage against what is out there on the field of competition. Of course, some of the competition are allies and partners, but you would be surprised-I will name no names-how incompetent very close and admirable allies could be on particular cases. The British would come in, mop up, do the drafting, do the communication with other Governments and try to make the most of the situation. I think we’re very good at that.

Q166 Mike Gapes: You are talking about your UN experience.

Sir Jeremy Greenstock: I am talking about multilateral experience in the EU and in the UN, but the skills I’m talking about can be applied to the bilateral sphere, because in the bilateral sphere we also-as ambassadors with other ambassadors in that capital-work collectively on a number of issues, particularly as the European Union. Those skills that I’m talking about still apply.

Q167 Mike Gapes: Thank you. Can I take you on to something you touched on in an earlier answer: this Treasury-driven, tick-box mentality of public service agreements and "red", "green", "amber" and so on? Can you give any concrete examples of where these kinds of publicly announced priorities actually helped in carrying out foreign policy?

Sir Jeremy Greenstock: I’m going to have to search my mind, because they don’t come naturally. I realised that the objectives exercise had to be done well, because it was important in the system to get resources from the Treasury that way. Colleagues of my age and I played along with the quantification of those objectives, which I thought was irrelevant to the role of diplomacy-how many speeches you made a year, how many contacts you made with other Governments and all the rest of it-because, and this is a point that Charles Crawford made very clearly, the most important skill of a diplomat is his or her judgment. You can’t quantify the quality of judgment that you get, and the quality of experience that has been learned, in an individual diplomat. So I felt that we spent more time than was justified from the results, or from the utility, on the objectives exercise.

A Government have to make mission statements and explain policy, but politicians don’t have to drag everybody, down to the junior desk officer, into that process. It should come from the political voice. Civil servants can help refine the message that is delivered by the political voice, but there is no need to bring every serving member of the team into that exercise.

Q168 Mike Gapes: Would it be true to say that this whole exercise, which might be applicable to domestic Departments, actually damaged the quality of the diplomatic foreign policy work that is the priority of the Foreign and Commonwealth Office, by diverting effort and energy?

Sir Jeremy Greenstock: Yes, I do think that. That is not to say that I don’t think that the Foreign Office has to connect with the domestic scene-it has to work with Whitehall, and I always gave a lot of priority to that, whether I was a junior or more senior officer-and to an understanding of the society that we are representing. But the first call on a diplomat is to achieve results and understanding, both in the domestic observing of the world and in the observation of other Governments’ positions, with those who matter for producing the result-for producing greater stability-or collective results or progress forward in a more civilised and stable world.

Q169 Sir John Stanley: Sir Jeremy, if you got a call from the present Foreign Secretary and he said, "With your enormous experience as a top British diplomat, will you identify for me what you consider to be the top two or three dangers to the British diplomatic service over the lifetime of this Parliament, which could result in the British diplomatic service going down the league of effectiveness of international diplomatic services?" what would you say were those top two or three dangers to us?

Sir Jeremy Greenstock: I don’t know, in answering you, Sir John, whether I am choosing a priority, but let me answer you in the order that they come into my mind. Resources have to come into that. The trouble with cutting a unit like the diplomatic service is that each next layer after you’ve cut looks less valuable and therefore more vulnerable, and therefore you can go on cutting each onion-skin layer without coming to a decision on what the irreducible minimum is. I would like to say something to you at some stage in this hearing about why we need more rather than less bilateral and other types of diplomacy in a world that’s changing.

Chair: Feel free to open up now.

Sir Jeremy Greenstock: If you reduce an embassy to the point where the ambassador is the only political officer, you are taking away the capability of younger diplomats to learn the skills that they will need as an ambassador. Therefore your ambassador-when he gets to be ambassador-is less experienced, less well formed to do the job he needs to do when he is an ambassador. It looks today as though we might not need more than one political officer reporting in a small overseas country, but actually the ambassador needs support because he is doing a lot of other things on the observation of what is going on beyond the capital in that country. Therefore, there needs to be a team capacity as well as an individual capacity to handle the most important job overseas in a bilateral embassy, which is to understand and interpret the politics and, if necessary, to negotiate our interests with those powers. Diplomacy represents power, and we are dealing with power relationships. They have to be understood and interpreted.

After resources, I would mention the confused thinking about the way in which almost all parts of Whitehall have become international because of globalisation. That has come out in representations to this Committee, as many more Departments than just the Foreign Office deal with diplomatic action overseas. Actually, what they deal with is their overseas interest in their Department-in agriculture, health, education or transport, as well as in development or defence, and in international economics. They are dealing with their professional issues, but they are not trained to be diplomats, nor do they have experience of being diplomats, part of whose characteristics must include the ability to win things from foreigners or persuade foreigners. Therefore the best team representing British interests on a non-core Foreign Office subject overseas is a combination of the professionals from the right Department with the ambassador or his delegated officer in the post alongside them, handling and interpreting their dealings with that Government that they know so much about. There is a team approach in dealing with an overseas Government, or with a multilateral conference or community.

Q170 Sir John Stanley: Are you saying, then, that you are concerned that one of the dangers is that Government Departments here, other than the Foreign Office, are deployed overseas and are trying to take over a role that should have been discharged by the diplomats in post? Is that what you are saying to us?

Sir Jeremy Greenstock: I don’t think they particularly want to take it over, but there has been talk about people from other Departments-and indeed other professions, including business-becoming ambassadors. I think there is a risk in that, because an ambassador has to deal with things that the Foreign Office tends to be better trained for than any other Government Department across the whole spectrum of an ambassador’s duties in an embassy overseas. You are losing some of that if you bring people in from another profession. I am trying not to be defensive or protectionist about this; I actually think that those skills matter.

The third danger is of reducing the Foreign Office to a services role-services to business, services in the consular area, services to British citizens overseas. They must be part of the diplomatic offering, but they must not take away the skills that are necessary for Government, for the Foreign Secretary, for Foreign Office Ministers and for the Prime Minister and the people who are working with him on overseas issues, which are to interpret politics and economics and other things that they are observing that compose international politics, and recommend sensible policies. That must be at the core of what an embassy does in its own environment.

My very short paragraph on the environment for all of this is as follows. The world is fragmenting. Nation states are not only now the senior, most advanced level of political decision making; there is no supranational political decision making organisation. It is all about nation states, but nation states themselves are subject to forces that are fragmenting them. States are breaking up, as well as trying to represent their interests in the international field. Alongside that, with the evolution of globalisation, the international institutions are fading in their effectiveness for one very clear and logical reason, which is that institutions reform and adapt slower than global change. Therefore, with time, the mismatch increases between global circumstances and the effectiveness of the instruments that Governments singly or collectively have for dealing with those circumstances.

The world is becoming more à la carte, complex and ad hoc, and on any issue you could have a different set of partners or opponents from the previous issue you were dealing with. Nowadays you must have an ad hoc response to such issues, which may need a small country here, a region there, or a collection of states across the globe that only your diplomats can bring together for you. That is going to increase, not decrease. We are not globalising in politics and identity, we are polarising. Diplomacy has to interpret that, and the Government need instruments to understand how to get the most out of the next meeting on a given issue from the most important Governments at the table, which could be almost any one.

Whether you have an embassy in every capital or you have collectivised your regional approach to embassy building and have one ambassador for several countries, your ambassadors have to have the skills and the time to produce the briefing and the interpretation for the next big event. That is not being taken into account in the evolution of the Foreign Office.

Q171 Mr Watts: Given the Government’s drive to promote trade through the FCO, and that there has been a series of cuts over several years to the FCO budget, do you see any demonstration that its limited resources are affecting its ability to fulfil its functions?

Sir Jeremy Greenstock: What I have already said is an indication of my feelings. Are you asking for the specific areas in which those functions may have been under-resourced and, therefore, are fading?

Q172 Mr Watts: I’m saying that two things have happened. First, there have been continual cuts and, secondly, there seems to be a change of direction on what the FCO should be about. It is not just about diplomacy, there is now a far bigger push for trade. Given that fact-I don’t want to put words in your mouth-are the resources being depleted or stretched so far that there isn’t an opportunity for the diplomats to fulfil the role that everyone expects of them?

Sir Jeremy Greenstock: Yes, I do believe that. I very much regret that the Foreign Office lost its capacity in what I believe was a deliberate move to service British business in some detail on behalf of the Department of Trade and Industry, as it then was, for two reasons.

First, there is nothing more important for the United Kingdom overseas than to build the strength of the British economy, which is done more through trade than anything else. After pure security, nowadays-this has been true for some time-the Government have to focus on the economy, the economy, the economy. The Foreign Office should be part of that, because it can contribute. But what it contributes to business, for instance, or even to the understanding of geo-economics, which Mr Korski thought was a failing of the Foreign Office, is not necessarily professional business skill or professional economic skill. It is an understanding of the relationship between politics and trade and between politics and economics; it is the capacity to troubleshoot and problem-solve for business, and to explain the context and the environment for business and for economists. It is the capacity to get through to Ministers in the host state, to persuade them that the British approach is the right one for the commercial or economic interest that is involved.

If an ambassador does not have somebody serving him in his embassy, supporting him and being trained by him on the commercial side, the consular side, the political observation side and in various negotiations, you are leaving it to him, and he is being spasmodic and ephemeral in his approach to that, because of the cuts and the shortage of resources on his staff-I recognise that choices have to be made; I am not being dreamy-eyed about this-but my answer to your question is yes, the cuts have had an effect.

Q173 Ann Clwyd: Sir Jeremy, we have had evidence, which has suggested that "a genuine understanding of what is happening overseas requires people on the ground. And effective influencing-of government, countries and organisations-requires face to face contact." When you were at the UN, did you at any time feel that the existence, or the size, or the lack of existence of an FCO post overseas made any difference to your work or your understanding?

Sir Jeremy Greenstock: In my experience, no, not particularly. What would tend to concern me was whether the policy that the Government were choosing was going to be effective, realisable, negotiable, or was sufficiently supported by what they were putting in behind it to be successful. My job at the UN-there were some areas where we worked together on this, and saw things similarly-was to maximise the possibility of realising the result that we wanted with the resources that I had.

In the early stages, I would make sure that my personal communication, in my professional role with London, with senior policy makers and officials, was good enough to understand what I was really being asked to do, and then to get on and do it with the resources that I had. For that, I wanted my own team to be effective down to the most junior level possible, because I was going to delegate. I would say to my First Secretaries on a Security Council committee, "Go and negotiate that resolution. Do not come back to me halfway through and say, ‘Should I choose that word or that word?’ You choose what to do, against your understanding of the instructions. If the rest of them are going back to their ambassadors to ask for the wording, you have a time advantage and an intellectual advantage if you handle it yourself. If you make a mistake, I will support you publicly, but I might try to correct that mistake before you get to the next one."

I felt that my team developed with that responsibility at a junior level, which almost no other Government in the world-to come back to Mr Gapes’s question-were capable of producing for their teams. I would have thought that you would get similar answers from the Ministry of Defence and the Chiefs of Staff about what happens in the armed forces. You get things done at the lowest level possible. When everybody from the team understands what the policy is, and the ambassador on the spot is explaining that the whole time to his staff in his morning meeting, that is when things actually start to work and where we have a comparative advantage, because other Governments do not do it as well.

Q174 Ann Clwyd: What do you think about the FCO’s increasing use of overseas staff? Rather than posting people overseas, local staff are being used in overseas postings.

Sir Jeremy Greenstock: I think it was Mr Miliband who pointed out that they are two thirds of our employed staff and they vary in quality according to the individuals that we recruit. Sometimes, in an economy where the salary we can afford attracts really well-educated and professional people, overseas staff are very good. Where the economics are converse to that, you get poorer quality, and the UK-based staff have to do more of what I would call the lead work, the policy work or the managerial work.

In the commercial field, I worked with, in Saudi Arabia for instance, some very skilled locally engaged staff on information, on consular work, in particular, and on administrative work. You can get very skilled staff, particularly in the developing world, and it’s a very valuable asset. Sometimes, you touch real gold when a member of the locally engaged staff is the continuity for the ambassador and his Oriental adviser, if you like-to use an old-style phrase. You get high quality. It’s mixed, because of resource cuts, but it’s a vital part of an embassy, and an ambassador is wise to value it when he’s there.

Q175 Ann Clwyd: Could you say how the diplomatic service career has changed during your time as a diplomat? Would you advise any young person now to join the diplomatic service?

Sir Jeremy Greenstock: I think we were a much more independent Department in the 1960s and 1970s-I joined in 1969. I felt then that the Foreign Secretary maybe had the perspective of a junior officer. The Foreign Secretary seemed to control his environment. You had delegated senior officers who were doing the negotiating, at what is now a ministerial level, with professional diplomatic skill, because there weren’t so many meetings that Ministers went to. There weren’t so many summits or EU collectives happening. That layer of deputy and assistant Under-Secretaries, directors general and directors were free to do the negotiation-the intellectual and diplomatic leadership-in clearer-cut ways than is now the case.

Naturally, we have had to adapt as events have evolved, and more of Whitehall is involved internationally, so we have to do more diplomacy at home. Ministers have found that they’re working in a different public environment from 40 years ago in terms of the speed of media response, the response of the public and the openness of information. So you’re a much more open book, as a diplomatic service and as a Foreign Office, than you were 40 years ago, which does have an effect. Therefore, you have less room to manoeuvre in comfort; everything is much more uncomfortable all the time.

The fundamental skills, however, of personal and practical intelligence and of competence and communication are the same. It is the environment and the way that you adapt to the environment that has had to change.

Q176 Ann Clwyd: Can I ask you, as Head of Mission, to what extent the posting of staff from other Departments overseas caused any problems?

Sir Jeremy Greenstock: It never caused me any problems-I only ran one mission-because once somebody from another Department turned up in New York they were part of my team, and I would very easily forget whether they were Foreign Office or not. They were part of my team, but they had particular skills and you realised that they’d had a different experience, because in their negotiations or observations they were producing their experience and skills.

Every ambassador must be capable of working with whatever team the Government choose to send out to him, because they are bringing him a professional set of skills, which is presumably-one hopes-relevant to what Britain is being asked to do in that capital. It is his job to co-ordinate them into a team and to lead them and direct them and give them a political context, within which they understand the whole relationship. There is no difficulty for members of the Foreign Office in having other professions and Departments as part of their team.

Ann Clwyd: Thank you.

Q177 Mr Roy: Sir Jeremy, in relation to multilateral institutions, the Government seek explicitly to upgrade the UK’s bilateral relationships in certain areas around the world. From the perspective of an FCO mission to a multilateral organisation such as the United Nations, what is the role of the UK’s bilateral posts to the organisation’s member states?

Sir Jeremy Greenstock: What was most useful to me at the United Nations was quick-time reporting, the sharing of analysis and access to the decision makers who might be giving an instruction to my opposite number at the United Nations.

It was very important to judge, at the United Nations, whether another country’s position was coming from the individual across from me in the Security Council-an ambassador, powerful in his own country and in his own right, who was taking decisions himself on how he presented his Government’s policy, without instructions-or whether he was under detailed instructions from the capital, in which case I needed to know from my FCO DS colleague in that capital what instructions were coming and why, so that I could judge where to gather the mutuality of interest or where to knock down his position if it was antagonistic. So I wanted information, and I wanted access to the decision making, reported from that capital, in the system that was copied to me. It flows absolutely naturally, and you learn which of your colleagues in which important capitals are really producing the goods for you, and which are not.

Q178 Mr Roy: May I take you back to something that you said earlier on, in relation to cross-fertilisation of Departments speaking about and interested in one subject? Is there a case for making the UK’s membership dues to international organisations such as the United Nations a cross-Government cost, rather than an FCO cost only, if, as you say, others now have an interest and an input?

Sir Jeremy Greenstock: Yes, there is a case for that, because it is not something that the Foreign Office itself can control. We will be negotiating on UN dues, for instance. I was involved in that huge negotiation in 1999-2000, when the late Richard Holbrooke showed how much diplomatic genius is built up of sheer hard work and knowing your colleagues. We had some capacity to negotiate an advantage, or less of a disadvantage, for us as a permanent member of the Security Council, and I was under instructions to maximise my negotiating ability in that respect, but there comes a point when you just have to pay your dues, many of which come from history after all, and not from today’s policy making. They are as much a legacy as something that is alterable in tomorrow’s negotiation. So, the legacy aspect belongs to the whole of Government and therefore there is a case for saying that that should not be a determinant of the variant in the Foreign Office’s budget.

Q179 Mr Ainsworth: The previous Government had the National Security, International Relations and Development Committee. This Government have a catchier title at least, in the National Security Council, which is trumpeted as a very significant change. How significant do you think it is, and would the new structure have helped the Foreign Office in some of its problems in recent times? I don’t know how familiar you are with the structure of the National Security Council and whether you think it is just a change of title or a change of architecture. Is there something significant in the changes that have been made, and how helpful would they have been to the Foreign Office?

Sir Jeremy Greenstock: I was supportive of the idea of a National Security Council as a better constructed and more objective co-ordinator of cross-Government business in the international field, and particularly in the security field, than an ad hoc arrangement around a particular Prime Minister. There is no reason why the Foreign Office should not work with it. The Foreign Office should welcome it and work with it. It probably helps if somebody from the Foreign Office, and who understands the Foreign Office, is the National Security Adviser, but that will not always be the case.

The Foreign Office needs to have the capacity and the mental flexibility to work with the National Security Council in an adaptable, intelligent and sensible way, but that National Security Council should not be so big that it tries to take over the business of running our overseas interests in the diplomatic field, nor should it be a temptation for a Prime Minister, who at some point in the future may not get on with his Foreign Secretary, to use it as a replacement Foreign Office. The Foreign Office has to be taken seriously, whatever the political chemistries involved, as the Department that understands how to deal best in British interests with other Governments and in the multilateral field, whatever else is put into a particular negotiation.

However, we needed better co-ordination. Security is anyway being redefined in the modern age, as extending further than human enemies, to natural enemies and disasters, and beyond terrorism to disease, the environment and everything else. That has to be co-ordinated, and the Foreign Office certainly cannot do all that, although it must understand it all. If the National Security Council and the National Security Adviser work, as I would put it, in the best traditions of Whitehall at its best, the whole machine should work better for Ministers.

Q180 Mr Ainsworth: We live in a world that is changing massively. You have spoken about some of those changes, but it is changing in other ways as well. We are living now in the world of WikiLeaks. This morning, I had an e-mail from a constituent, who asked, "Do you believe in open government, and do you support WikiLeaks?" We have WikiLeaks, we have blogs, we have the internet and we have instant reporting of everything. How is the diplomatic service going to respond to that? Ambassadors have to be able to talk privately to their Governments, but I am not sure that my constituents believe that; I think an awful lot of them are on WikiLeaks’ side.

Sir Jeremy Greenstock: Yes, WikiLeaks is such fun. You see so much more than you might have done if they hadn’t leaked, but I think it damages good government. So, I was alarmed by WikiLeaks. There was a hypocrisy about it, a viciousness about it, which I didn’t like.

I don’t believe in the right of the people to know, because I think rights come from laws and international charters; they don’t come from some metaphorical wish to be more part of it because, "We are the people, and we are in control." In the end, every electorate or community, if it is not a democracy, wants to be well administered, and government is damaged if Government can’t do its business in a whole range of ways, some of which must be confidential. A Government must be allowed to think in private. The 24-hour news cycle has got to be adapted to and, for a popular understanding of what’s going on, it could be and very often is extremely useful. But that does not give the public or journalists, the media and the social media, the right to have everything revealed, because government does not have to show its workings. It has got to operate effectively, and that must be protected. So there is a limit, and WikiLeaks breached that limit.

Open government is wise, because if it is well handled it increases the confidence of your public that you are doing the right thing. Explanations and strategic mission speeches or expositions are necessary, but you do not have to go into every detail of the Government’s workings, interesting-almost salaciously interesting-as they are at times. That, to my mind, is a sign of a slight degradation of the understanding of society of what the contract is between Government and the governed.

Q181 Mr Ainsworth: One of the big fashions is the age of fame. It is not only politicians now who become famous, but diplomats. You receive a degree of fame in your position. People are writing books and memoirs almost while they are still in office. How does the diplomatic service cope with that? How do we maintain trust in the workings of government while that speed of response and the fame culture are impacting on it all the time?

Sir Jeremy Greenstock: By observing decent norms, which have in the past been very well explained by commissions and parliamentary committees. The public affairs committee has gone into this in some detail, and I think rather wisely. There are some things that can be said, and there are some things that can’t be said, and most of us round a dinner table know exactly what those things are. When you try to legislate for them, they tend to get a bit distorted. The rights here and the professional misbehaviour there get distorted. It is the journalist’s job to try and dig, challenge and shame, but within all that there is a norm of how British society and British Government machinery work, and I think that we should stay in that norm. If you are asked not to write a book because it doesn’t fit those norms, you hold back for a bit and wait for the time that is regarded as satisfactory.

But, at the same time, it would be a pity to ban civil servants from talking about their experiences in the right way because there are things to be learnt. We will learn things from the Chilcot inquiry, which is one way of bringing it all out into the public domain, with a set of people who I think are going to give a very objective judgment about happened on Iraq. There are ways of doing it, and there are ways not to do it.

Chair: Sir Jeremy, we have three or four minutes left of your session, and there are still a couple of groups of questions.

Q182 Mr Baron: Sir Jeremy, can I return to the issue of global themes, and how well the FCO is suited to advise and deal with them? I was interested in what you said earlier about how global themes are having the effect of fragmenting traditional alliances and you questioned whether international institutions are basically keeping up. Given your view that we are perhaps less incompetent than others, do you think the FCO is equipped well enough to face those global themes? If not, what would you do to change to get the right balance between geographical expertise-I agree with what you said about how important that is-and expertise on the global themes themselves?

Sir Jeremy Greenstock: I think there is a balance, and I wouldn’t want to drop either pillar from the Foreign Office’s structure because that feeds also into the overseas area. While I am answering your question, Mr Baron, I think it is important that one aspect of this is the continuity of analysis in a Department. In recent years, we have downgraded the work of the research analysts in the Foreign Office who were the continuity-the people who said, "Don’t reinvent that wheel; it doesn’t work," who would tell you what the forces are under the surface in a region or in a conflict, that the desk officer who has just come in will not be able to find the file on-to come back to Charles Crawford’s exposition. You do both, and they come together at the director or the director-general level.

I think it was a bit of a mistake to try and de-layer the Foreign Office because the redundancy in those layers was much less than the Foreign Secretary at the time who allowed the layers to be lessened understood. In the system, we choose who will direct a particular issue, crisis or negotiation according to who has the experience, and who has the time to go out and negotiate, and we lost interface with the overseas element-the other Governments-through de-layering and not having that negotiating capacity and that analytical capacity that brought functions and geography together. There was nothing wrong whatsoever in having the world divided up into geographical departments leading into one director, and the functions on economics, the environment, energy, human rights and other things coming in in the other direction would come to an apex; they would be brought together. It did not have all to be done by the one department looking at the human rights detail of the political position in the geography they were dealing with. The dialectic between the two was very productive and positive.

Q183 Mr Baron: Yes, it was-I can imagine. May I briefly press you on that, Sir Jeremy? You have talked about the de-layering and the research analysts providing an element of continuity. If you were in charge now, what would you do to get that balance right? You are telling us, or implying, that the balance is not right at the moment. What would you do to put it right?

Sir Jeremy Greenstock: I would give the planning unit in the Foreign Office authority and resources as it used to have-it dipped away for a while. The research analysts would have a double job. First, they would do the research for and support the planning capacity of the Foreign Office, because they have a longer perspective. They would also be there to serve the department, and it doesn’t matter whether the department is functional or geographical in terms of research and analytical expertise. There would be a research analyst dedicated to each department, or there could be one research analyst for more than one department. The structure does not have to be complicated, but the research analysts do need to be there, and the head of the Foreign Office and Ministers do need to give them value.

Q184 Mr Baron: And you would obviously agree that it is important to get this right, because otherwise there is a danger-looking at the title of our report-that the FCO could be downgraded within Government if it can’t provide the right service.

Sir Jeremy Greenstock: Yes, because you’re taking a layer out of the diplomatic analytical expertise if you remove it. As I understand it from a distance, the current permanent under-secretary is very interested in restoring that capacity, and needs to be supported therein.

Chair: Sir Jeremy, time’s up. Thank you very much indeed. I feel that we could have gone on for another hour. Your expertise is a huge help to us, and on behalf of the Committee I thank you.

Sir Jeremy Greenstock: Thank you, Chairman.

Examination of Witness

Witness: Sir Peter Ricketts, GCMG, National Security Adviser, gave evidence.

Q185 Chair: Welcome, Sir Peter. You are no stranger to appearing before this Committee, although we are a different one since you were last here. Members of the public: Sir Peter was a former PUS in the Foreign Office and is now the National Security Adviser, on secondment from the Foreign Office.

As you know, we are carrying out an inquiry into the role of the Foreign Office, but the Foreign Secretary has said that he very much wishes to use the National Security Council to project the Foreign Office’s influence. That is why we thought it appropriate for you to come along. I ask Frank Roy to open the questioning.

Q186 Mr Roy: Sir Peter, how are the new National Security Council structures bedding in? More specifically, will you describe how the FCO is contributing to the work of the NSC?

Sir Peter Ricketts: Absolutely, Mr Roy. I think that they are bedding in well. The NSC met for the first time on the first day of the new Government and has met pretty well every week since then. So we are into a systematic rhythm of weekly meetings with papers prepared by officials, which try to give Ministers options for decision. We have covered a wide range of national security issues in that time, including the work on the national security strategy and the strategic defence and security review, which was a big part of the work for the first four or five months. Therefore, we have established ourselves in Whitehall, and it has become a forum in which Ministers can have options presented to them and take decisions about a wide range of issues.

The FCO is at the centre of the work of the NSC. I think that the FCO’s memorandum to the Committee stated that at least half the papers to the NSC had been written by the FCO, and that certainly feels right to me. The Foreign Secretary is a major contributor to the NSC, and the FCO is the primary Department that brings international expertise to it, so it is at the heart of the NSC’s work.

Q187 Chair: May I go back to the point that I made when I introduced you? The Foreign Secretary says that he hopes to use the influence of the Foreign Office working through your council. To what degree do you feel that is happening?

Sir Peter Ricketts: I think, in a way, it is. The NSC can provide an amplifier for the Foreign Office in ensuring that all the Departments that are represented round that table are thinking about and taking into account the international dimension and are co-ordinated behind a single policy. Whether we are looking at geographical, country issues or functional issues such as counter-terrorism, the FCO has been able to present a significant input, which has been placed where we can co-ordinate the whole of Whitehall around what is often an FCO-led strategy.

Q188 Mr Ainsworth: Sir Peter, I can remember the old NSID meeting-coping with agendas with six or eight items. How long are the meetings?

Sir Peter Ricketts: We meet, typically, for one hour every week. We try to limit the agenda to two substantive items so that there is enough time for discussion.

Q189 Mr Ainsworth: So how are you managing to deal with matters? You have Afghanistan and terrorist threats, but so much more is supposed to be going through the National Security Council. How are you coping with the breadth of the agenda, which is all trying to go through the funnel?

Sir Peter Ricketts: First, it helps that we are on a systematic weekly pattern, because you can get through business if you are doing that. Afghanistan has been a major issue-absolutely. The Prime Minister said, I think before he came into government, that he wanted to have a War Cabinet and that the National Security Council should be that. So we have looked at Afghanistan pretty much every other week through that period, but we have also managed to get through a wide range of other business.

How do we decide which business? The national security strategy is helpful because it sets out a prioritisation of the most significant risks that we see to the nation, including, as you have seen, counter-terrorism, the risk of a future international military crisis, the cyber threat, and resilience issues-how the country would cope with a major natural disaster or other disruptive attack. Each of those has been on the National Security Council’s agenda.

We are using the national security strategy prioritisation, but we are also looking at any other issue that has national security importance that needs ministerial attention.

So far, we have more or less been able to balance the time we’ve got and the number of issues, but I agree with you that potentially we have to deal with a large range of issues and therefore I think the meetings will continue at a weekly rhythm.

Q190 Mr Ainsworth: We don’t have a single place for global analysis of international risks and security risks in the UK. Should we?

Sir Peter Ricketts: I think that the National Security Council is that place.

Q191 Mr Ainsworth: What about the analysis that backs it up? Who’s doing that? That’s not put in one location, is it? Should we establish such a capability?

Sir Peter Ricketts: I don’t think that we have the resources to establish a whole new strategy capability. The Public Administration Committee has been looking at strategy in government, and I think that the line the Government have taken there is that strategy is a whole-of-Government issue. A lot of the analysis needs to be done in the FCO in relation to individual countries, and in other Departments depending on the subject. I have a small team in the Cabinet Office but it can’t pretend to do strategy on a very wide scale across Government, so we can act as a co-ordinator and a convener, but the strategy thinking has to be done in the Departments.

Q192 Mr Ainsworth: I don’t think that the Public Administration Committee was all that happy with the Government’s response. I think the conclusion it reached was that nobody does strategy in the United Kingdom and it’s about time we started.

Sir Peter Ricketts: I think the Government would not accept that view. I would argue that the national security strategy shows that we can do strategy making, that we can do prioritising and that we can choose the top issues. I don’t think in the current resource climate it will be feasible to set up any new large analytical apparatus, but we need to make the best use of the talents that we have got across the Government.

Q193 Rory Stewart: One of the things that’s a bit concerning about the National Security Council is the focus on generic global threats-you mentioned counter-terrorism, cyber attacks and resilience-as opposed to very specific geographical expertise. For example, you are talking about Afghan analysis. Last time I checked, not a single staff member of the Foreign Office Afghan team in London had served a posting in Afghanistan. You have perhaps three Dari speakers out of an embassy of 300. You keep people for a year, or for two years maximum, on the ground and they are restricted by security. Whatever is going on at the top-whatever you have up at the council level-how good is the information that is feeding up to you, given the way that the Foreign Office has changed its attitude to immersion in language and place?

Sir Peter Ricketts: First, may I take issue with the general proposition? Yes, I am sure that we don’t have enough Dari and Pashto speakers, and of course Afghanistan is a particularly difficult place for FCO people to get expertise on the ground and to travel around the country. Mr Stewart, you know better than any of us how difficult that is. As a general proposition, however, I think that it’s simply wrong. I think the FCO still has profound language and cultural experience of countries around the world. If I look at our senior ambassadors, the great majority have had previous experience of the country in which they are now ambassador. They speak the language and they know the country inside out. I think that the FCO provides a reservoir of linguistic, cultural and policy expertise on countries around the world and brings that to bear in the National Security Council, as do our intelligence agencies. Another of the benefits of the NSC is that we have the intelligence agency heads around the table so we are able to bring to bear their expertise on the world as well, which doesn’t always depend on being on the ground in countries of high threat such as Afghanistan.

So I don’t agree with the general proposition. I think in the case of Afghanistan, of course, because it’s such a difficult working environment, we could do with more expertise-more people who had more experience there. Given how many people have now served not only in Kabul but in Lashkar Gah, I think there is an increasing number of people who have had some experience in Afghanistan in the system in the FCO and in Whitehall. We could always do better there, but generally I don’t believe that the FCO has lost focus or capacity in the area of deep knowledge of individual countries.

Q194 Rory Stewart: Almost every indicator over the past 30 or 40 years suggests that there has been a dramatic change in the number of ambassadors who have that kind of linguistic expertise. Part of that is simply the emergence of new priorities, and perhaps Michael Jay’s focus on other aspects of management, administration or global focus. Or simply the workload of diplomats-the fact that often on the ground in Afghanistan they’re now expected to spend 12 or 13 hours a day doing things that their predecessors didn’t have to do, in terms of what fills up their e-mail inboxes, visits, press dealings. All of that stuff needs to be negotiated and acknowledged, because your resources as an organisation are getting smaller and you can’t do everything. Are there any steps that you can take to try to make sure that you protect that expertise and you’re not going too far in that direction?

Sir Peter Ricketts: I’ve got to be careful here, Mr Stewart, because I’m no longer the permanent secretary of the FCO and you’re tempting me to speak as if I am. From my previous experience I would not make any apology for the work that the FCO has done, under Michael Jay and also under my period, to get better at the management of our people; for the £2 billion a year of taxpayers’ money that we spend; or for the major projects and programmes that we run around the world. I think that a Government Department has an obligation to be excellent in those areas, as well as excellent on policy. So I don’t believe that the FCO has taken the wrong route in putting effort into becoming thoroughly competent and professional in those sorts of areas, while at the same time of course maintaining a focus on excellence in diplomacy, and I’m obviously very supportive of the Foreign Secretary’s effort to put the spotlight on that.

Yes, we do want our diplomats to be out and about and picking up what’s going on in the country. We want to use our first-class modern IT system to make sure that expertise is focused back into the UK and that we use it in places like the NSC, but I think the improvements we’ve made in the way the Foreign Office runs itself helps that, actually.

Q195 Rory Stewart: A very final question. Are there any lessons that you could reflect on, from either Iraq or Afghanistan, about the way in which knowledge and understanding in the Foreign Office could have contributed to better policy formulation?

Sir Peter Ricketts: I think the creation of the National Security Council provides a more systematic vehicle for the FCO to make sure that Departments and Ministers across Whitehall are fully informed about the position on the ground. I think the fact that we have the intelligence community present when we are debating policy on Afghanistan or any other issue, is an advance. And the collective experience that we’re gaining in the National Security Council, with a whole range of ministers dealing with these issues week by week, often outside their departmental boundaries, is beneficial. I think that will be good for the future.

Q196 Chair: Sir Peter, just on your own personal position, is there a conflict between your role as a personal adviser to the Prime Minister and your responsibilities to the Cabinet Committee?

Sir Peter Ricketts: I don’t feel there to be, no. Because I’ve got a double hat, as it were, when I am working with Whitehall colleagues to prepare papers for the National Security Council, or the agenda for the council coordinating Whitehall Departments in national security issues, I think it helps that I know the Prime Minister’s mind on these issues, that I travel with him when he goes abroad, that I participate in his meetings. It enables me to be more effective as a bridge to Whitehall in preparing for NSC discussions, so I think it’s actually beneficial.

Q197 Chair: It’s an advantage rather than a disadvantage?

Sir Peter Ricketts: I think so.

Q198 Chair: And the fact that you’re travelling with the Prime Minister a lot-have you got a team working with you to help you, watching your back at home, as it were?

Sir Peter Ricketts: Yes. I have two deputies who can substitute for me when I’m away.

Q199 Chair: And do they?

Sir Peter Ricketts: Absolutely. They take my place in the National Security Council or they support the Prime Minister when I’m away.

Q200 Sir John Stanley: Sir Peter, it’s always easier to remember the foreign policy bilateral disasters than to remember all the foreign policy successes, and I acknowledge that and don’t discount those successes. But if you look across history within the lifetime of most of us, there have been some really conspicuous disasters: the failure to read Germany in the late ’30s; the Suez disaster; absolute failure to understand Argentina leading to the Falklands invasion; and I would say also an almost complete failure to understand what would happen if you created a sudden power vacuum in Iraq.

On the formation of the National Security Council and the new structure for producing bilateral assessments of risk and policy, would you say to the Committee that that’s going to give us any greater protection against those sort of disasters in the future than letting the FCO try to deal with this situation of bilateral relationships under the previous structure?

Sir Peter Ricketts: Sir John, I am not sure I want to comment on the past, except to say that I think that that is a partial list. I can think of areas where this country has played a major part in some successful foreign policy activity as well. I think, however, that it is a good thing for there to be a single collective group that can look across the national security landscape, not just with foreign policy, but with other threats to our security-domestic security, defence issues, development issues-and pull them all together. Having a group of Ministers who do that on a weekly basis, with the best information available in the Government to support them, is the best guide we are going to have to foreign policy making. So, I think that is definitely an improvement.

Q201 Sir John Stanley: So you’re telling us that we can all sleep much more easily at night, confident that we’re not going to wake up in the morning to find something completely unexpected hitting us in the news?

Sir Peter Ricketts: You can be sure that we shall be completely joined-up and co-ordinated in response to whatever hits us.

Q202 Sir John Stanley: Relying on accurate intelligence, Sir Peter.

Sir Peter Ricketts: Yes, and I believe that it is a real benefit to have, in the National Security Council, the chairman of the JIC and the heads of the intelligence agencies. Normally, whenever we look at a foreign policy issue, we have an intelligence assessment in front of Ministers, so that they have the most up-to-date intelligence and the best professional advice before they make policy decisions.

Q203 Sir John Stanley: Are you confident that that intelligence advice going to Ministers will be wholly objective and politically unvarnished?

Sir Peter Ricketts: Yes, I absolutely am, and that is not my job because I am involved in the policy process; it is the job of the Chairman of the Joint Intelligence Committee, who is an absolutely separate and independent figure.

Q204 Mr Watts: Sir Peter, do you see the National Security Council taking a bigger role in the allocation of Government international spending, and if so, would that be a good or bad thing?

Sir Peter Ricketts: I think individual Secretaries of State and their accounting officers will see Departments continuing to be the place where they make the spending decisions on the money that Parliament votes them. However, we saw, in the strategic defence and security review, that when we set overall Government priorities for national security work, the NSC could then have some influence on how departmental spending decisions were made.

For example, we were able to find another £650 million over the four years for cyber, as a cross-cutting governmental priority, which wouldn’t otherwise have fitted into any single budget. We were able to ensure that spending in the various Departments and agencies on counter-terrorism was protected. We made sure we had the same level of assurance on that, so I think the National Security Council can be an influence to make sure that the top priorities that are set are then funded. In the end, however, it has to be for the accounting officers and the Secretaries of State to make the final decisions within departmental budgets, and until such time as we have some sort of unified security budget across the whole Government, that will be true.

Q205 Mr Watts: You have given an example of the benefits of co-ordination. Are there any disadvantages? Is it likely that that will dominate departmental spending in the future?

Sir Peter Ricketts: That hasn’t been our experience so far. As I say, the Secretaries of State set the departmental spending priorities, but they are helped in that by sitting on the National Security Council and seeing what the overall priorities set there are. I think that structure worked through this spending round and enabled us to fund some high priorities that we set out, which otherwise might not have been funded because they fell between departmental stools.

Q206 Mr Watts: Were all the Departments involved in this process happy about identifying some slippage in their budgets to give to a different priority from the one they originally had?

Sir Peter Ricketts: I didn’t hear any complaints about the final shape of the outcome, because the departmental Secretaries of State were sitting on the National Security Council when the priorities were set, so they were acting collectively and collegially at that point. The amounts of money we were talking about were relatively small in relation to overall departmental budgets-£650 million, between all the Departments dealing with national security, is not an enormous sum of money. As far as I know, the Secretaries of State accepted that as a reasonable way of ensuring that Government-wide priorities were met.

Q207 Mr Watts: Finally, you say that is a relatively small amount of money. Is it likely that in future there will be a bigger top-slicing for the National Security Council’s priorities from the Department than there was this year? Is that something that will increase, decrease or stay the same?

Sir Peter Ricketts: I find it hard to know. Most of the spending on national security comes straight from departmental budgets. The £38 million of the MOD budget is all spent on national security priorities, by definition, as is a large part of the FCO’s budget and the intelligence agencies’ entire budget. There are very substantial budgets in Departments and agencies underpinning this. There is a small amount in this spending round that we found for cross-cutting priorities, but the great majority of the spending will still be done through Departments and I don’t think that will change.

Q208 Mr Ainsworth: Sir Peter, what can you tell us about the way that you are structuring advice to the Prime Minister? Obviously, there is the military advice. Is the National Security Council managing to ensure that there other views, that the Prime Minister sees a spectrum of opinion and gets the opportunity to be given options, rather than a staffed-out paper, where every edge has been battered off it until everybody agrees and you can hardly read it? How are you managing? What can you tell us about how the National Security Council is managing that?

Sir Peter Ricketts: Certainly, the Prime Minister expects and wants a range of views, options and choices that he and other Ministers can make. There is a variety of ways of doing that. We had, for example, as Mr Stewart knows, a seminar at Chequers on Afghanistan, early on in the life of the Government, when we assembled a number of people from different backgrounds to give advice before Ministers sat down to look at the overall strategy in Afghanistan. We have done similar things in other areas.

Q209 Mr Ainsworth: That was a one-off?

Sir Peter Ricketts: It was the first time we had done it on Afghanistan, but we have had discussions, for example, in the National Security Strategy context and the SDSR, where we brought in outside views to ensure we had a range of different commentators and experts looking at the process we were engaged with. Even when we don’t do that, we try to ensure there is a range of views going to the National Security Council. Often, there will be papers from a number of different Departments coming in to underpin a discussion of a particular country or issue. So, yes, there is a range of views.

Q210 Mr Ainsworth: I don’t know if you get the time, but I have just read "Obama’s Wars", which describes the frustrations of the American President in trying to get options and ranges of views. Do you think you have tackled that issue and that the Prime Minister is getting open analysis from the FCO, which disagrees slightly with the military perspective, and the intelligence agencies? Is it an open forum in which the Prime Minister is getting a good, solid, full range of opinion?

Sir Peter Ricketts: Yes, and we make sure that he is also seeing views from outside the Government: articles, books, commentaries from outside experts are fed to the Prime Minister. I know he reads them diligently. Without betraying the confidences of the room, there is a vigorous debate in the National Security Council, in which the Chief of the Defence Staff and the Defence Secretary participate, and there is a whole range of different Ministers round the table. From my experience of this first six to eight months, there is a genuine debate.

Q211 Mr Ainsworth: All within an hour?

Sir Peter Ricketts: Yes. With an intense discussion you can get a lot in in an hour.

Q212 Mike Gapes: May I take you to how the National Security Council might evolve? Clearly, this Government have a very powerful Foreign Secretary, who, because of his previous role as leader of his party and key role as effectively No. 2 to the Prime Minister, has a dominant position. Do you think that that process of evolution, as the National Security Council develops in future, will be dependent on that key position of the current Foreign Secretary being followed on in future? Or could you envisage a situation in which you had different personalities and a different Foreign Secretary, whereby another Department, or the Prime Minister himself, would become the dominant figure in the development of the National Security Council?

Sir Peter Ricketts: Mr Gapes, I think it depends as much on the quality of the material that the Foreign Office is producing for the Foreign Secretary and for the NSC, because the Foreign Office is and should be the main source of expertise, advice and knowledge on the world feeding into the NSC. It is not the only source, because other Departments and intelligence agencies are also international. But the FCO should be the primary source of knowledge on abroad, and the intellectual powerhouse for thinking about foreign policy and policy-setting. If that is the case, and if the FCO does that well, any Foreign Secretary will be well supported and provided for in dealing in the NSC. My experience of Foreign Secretaries is that they tend to be very effective in deploying their brief. If the brief is good and they deploy it effectively, the FCO will have a very strong role. I think the FCO, institutionally and structurally, will always be a prominent player in the NSC.

Q213 Mike Gapes: You were in your previous job with a Prime Minister who had come to that job and been there quite a long time. He became very dominant within his Government, and personalities clearly matter. What I’m putting to you is that five years down the line, perhaps, or four years down the line-not presuming what will happen at the next election-we will have a Prime Minister who is much more experienced and might therefore become far more dominant within this process. Do you see what I’m getting at?

Sir Peter Ricketts: Yes, I see what you’re getting at, but I don’t really see the risk, if only because Prime Ministers have very modest resources of their own on which to rely in preparing for National Security Council meetings. As I said, the FCO should be the source of the majority of the policy advice, the thinking, the expertise and the up-to-date information about what’s happening around the world. I would have thought that any Prime Minister is going to want to rely pretty heavily on that.

Q214 Mike Gapes: Taking Mr Ainsworth’s question a step further, is there a danger that, even though you might bring in experts and outside advice, there will be a development of what could be called a "group think" around the National Security Council and the National Security Strategy, so that in a sense it becomes an accepted wisdom and approach, and therefore, as John Stanley mentioned earlier, things that are off-field come in and hit you because they are not part of the collective way of thinking? Is there a danger of that?

Sir Peter Ricketts: If there is, I think it’s up to people like me to make sure that the National Security Council keeps being exposed to a different range of views, that we bring in expert presenters to present issues to the NSC, that we are watching for the left-field issues that may be brewing up and about to hit us, and that they are dealt with. The JIC has an important role in that as well. We need to make sure that the NSC keeps being alerted to developments such as that. I can only speak from my first eight months of experience. I don’t see any sign of a "group think" developing. I see pretty vigorous discussion and debate, I promise you. I expect that that will go on.

Q215 Mike Gapes: Are you currently considering what might be happening in Egypt, Algeria and Jordan as a result of what happened in Tunisia? Did you predict what was happening in Tunisia?

Sir Peter Ricketts: I confess I didn’t predict it, but yes, we are considering the implications of that.

Q216 Chair: May I go back to the questions that John Stanley asked about bilateral relations? Just give us an idea of the process in which policy emerges. You approved a bilateral strategy for our relationship with Brazil. What would you have gone through before you finally agreed that?

Sir Peter Ricketts: Perhaps I can use that as an opportunity to bring into the discussion the fact that we have set up a sub-committee of the National Security Council called the Emerging Powers Sub-Committee, which is chaired by the Foreign Secretary. It was established to create enough time to look in detail at the country strategies for the emerging powers, on which the Foreign Secretary is keen that the Government and the FCO should focus more attention. That helps to deal with the point raised by Mr Ainsworth that an hour a week is pretty hard-pressed time. We set up the Emerging Powers Sub-Committee to create time for more detailed scrutiny of individual country strategies. It has met two or three times, and, as you say, it has taken strategies on Brazil, China and others-we have others coming up shortly.

For something like that, the FCO originates the work, because the FCO is the only place in Whitehall where all the strands come together on a country such as Brazil. Obviously, it draws on work from other Departments, but the FCO pulls together the draft strategy. In the case of the Brazil strategy, it was then discussed with us in the National Security Secretariat, and we convened meetings of other Departments to ensure that the FCO strategy was discussed inter-departmentally. When that process had gone through, we updated the draft and put it to the Emerging Powers Sub-Committee under the Foreign Secretary. Ministers then discussed and agreed on the strategic approach. That is a typical pattern, because it recognises both that the FCO is the best place to co-ordinate this, and that other Departments also have an interest and have something to add to policy on Brazil.

Q217 Chair: Are you now the institutional home for analysis of global issues such as climate change, energy security and other thematic global issues?

Sir Peter Ricketts: No. I would say that the Department is still the home.

Q218 Chair: Which Department?

Sir Peter Ricketts: In the case of climate and energy it is DECC, and for trade policy, for example, it is BIS. Because we are a very small secretariat, we can’t really be the centre of expertise on big policy issues such as that. We can provide a co-ordinating forum to bring other Departments together, but the expertise still lies within the Departments.

Q219 Chair: Is there a case for a central, Whitehall-based institutional home for the analysis of such issues?

Sir Peter Ricketts: In the current resource climate, there simply aren’t the resources to do that. I already have a small secretariat, and we are subject to 25% reductions over the next four years. We will have to concentrate on the absolute essentials. There would be a risk of duplication if we tried to set up a central Whitehall function. The model for now is that Departments maintain the expertise and we operate a light co-ordinating function at the centre. As long as all the Departments with expertise to bring to bear can be brought around the table, I don’t think we lose from that.

Q220 Chair: Once the Treasury’s foot moves from the brake to the accelerator, might there be a case for revisiting that point?

Sir Peter Ricketts: It is always worth reconsidering it as the National Security Council structure settles down.

Q221 Chair: As I understand it, there is a forthcoming Government strategy for building stability overseas. Where has that got to?

Sir Peter Ricketts: That is really an extension of what existed for some time under the previous Government, which is our approach to conflict prevention and stabilisation, led by the Stabilisation Unit. It has always been a child of three parents. The FCO, the MOD and DFID have always worked closely together on that range of issues, and we have had previous structures in government to co-ordinate that and to support the Stabilisation Unit. The Building Stability Overseas Board is just a more systematic, formalised way of doing the same thing, bringing the three Departments together to work collectively on stability and conflict prevention.

Q222 Chair: What’s the FCO’s role in that?

Sir Peter Ricketts: The FCO is one of the three departmental owners of the strategy, and it is the source of much of the advice and part of the resources for it.

Q223 Chair: In your secretariat do you have a permanent link to the Foreign Office? Has one chap been told that he is the Foreign Office man?

Sir Peter Ricketts: Yes-a small handful of my people. The FCO has a policy unit that is the central co-ordinating function. So, yes, there is a standing channel between the FCO and my team.

Q224 Chair: That has exhausted my questions. Have we asked you all the right questions? Is there any other point that you could usefully make to us?

Mr Ainsworth: Do you wish to be interrogated?

Sir Peter Ricketts: That is a very kind invitation. I think that we have been over the ground. One of my other functions, just to put it on the table, is to maintain an international link to other national security advisers-my American and other counterparts. That is another part of the international network, which I think this job usefully anchors at the London end and which grows all the time.

I think that I have explained how the system is working, and I believe that, with this systematic weekly treatment of the wide range of national security issues, we are improving the way that the Government co-ordinate themselves.

Q225 Mike Gapes: You mentioned the US National Security Council, so I can’t resist. Do you think that there are any lessons we can learn from the dysfunctional way in which the US has turf wars between different Departments, or could we actually learn from some of the ways in which other countries have operated in these areas?

Sir Peter Ricketts: The US system has always been a competitive system in which policy is hammered out through strenuous disagreements between different Departments and agencies, which is no doubt a very effective way of stress-testing your policy making. That has never really been the British style.

Last week, I accompanied the Foreign and Defence Secretaries to Australia, where they set up a National Security Council and an NSA about four years ago. From comparing notes with my counterpart there, theirs is probably a more similar model to ours. You can still have vigorous debate without having quite the institutional clashes that characterise the US system. The British National Security Secretariat will always stay pretty small and not become a separate centre of policy making in perhaps the way that the NSA in Washington has done. I think that that would suit the British system more effectively.

Q226 Chair: Just one point that I meant to ask you earlier on. How do you work with Jon Cunliffe, who is the head of the Europe and Global Issues Secretariat in the Cabinet Office? How do you divide the issues between yourselves? He is also an adviser to the Prime Minister on this.

Sir Peter Ricketts: Yes. We physically work closely together and we talk all the time, but there are two relatively distinct areas of work: one is the national security, more highly classified, foreign intelligence and defence set of issues; and the other is the economic, financial, G20 and European Union set of issues, which have their own character and different international networks. Those two are reasonably distinct. There are one or two areas of overlap, and when that happens, we sit down and talk and our two secretariats work together. But there are two fairly distinct roles, and, under previous Governments, there have also been distinct foreign policy advisers and economic affairs and European advisers, which reflects that split.

Q227 Rory Stewart: Sir Peter, could you just clarify in detail the difference between your role and that of the chairman of the JIC-and indeed the difference between the JIC and the NSC?

Sir Peter Ricketts: Yes. I have a policy-advising role, so I offer advice to Ministers on policy. Alex Allan, as chairman of the JIC, has purely an intelligence-assessment role. He plays no part in the policy-making process. He has no view on what policy should be. He simply tells it like it is from the intelligence, and that reflects Lord Butler’s clear distinction that the chairman of the JIC should be an entirely separate independent figure who will speak truth unto power and not try to promote a particular policy agenda.

Q228 Rory Stewart: Traditionally, the chairman of the JIC was involved, through the Red Book, in setting intelligence requirements and assessing intelligence. To what extent do you get involved in setting requirements for assessing intelligence?

Sir Peter Ricketts: Assessing intelligence-not at all. That’s his job, and he produces the assessments that give us the best view from the intelligence community, whether it is convenient to the policy process or not.

Setting the requirements is legitimately a policy process, because you have to choose priorities for the intelligence community, and we are using the National Security Council for Ministers to set the overall priorities for the intelligence community and to say what they want the intelligence community particularly to concentrate on. With the priorities set, the substance of what they report and the assessment of what they report are then completely separate from Ministers and are done through the JIC.

Q229 Rory Stewart: But in no sense are you receiving raw intelligence and attempting to conduct your own independent assessment of that. You are leaving that to the chairman of the JIC.

Sir Peter Ricketts: Yes. From time to time I see bits of original intelligence, but I do not try to run my own assessment function. That’s clearly for Alex Allan.

Chair: May I just welcome the fact that yourself and the heads of the agencies have been prepared to open up a bit and lift some of the veil from what has, in the past, been a bit of a "cloak and dagger"? That gives greater confidence to the public and a greater degree of transparency, which is welcome. It is particularly helpful to us not only that you have this important national security role, but that your experience in the Foreign Office is particularly relevant to us. On behalf of the Committee, I thank you very much for coming along.

Examination of Witness

Witness: Alastair Newton, former member of the FCO’s Senior Management and Director of UKTI USA, gave evidence.

Q230 Chair: May I welcome Alastair Newton to the Committee? When Alastair and I met a few months ago, we had a good old chat about commercial activities, as far as diplomacy in the Foreign Office is concerned. I conveyed our conversation to the Committee. As the Foreign Office is very much moving into the commercial side and there is a need to promote Britain’s commercial interests abroad as much as our diplomatic interests, we thought that we should have a short-ish session with someone of your background, and I am really pleased that you accepted our invitation. Are there any general remarks that you would like to make by way of an opening statement?

Alastair Newton: Yes, thank you. Let me start by saying that I am going to speak in a personal capacity-my employer has asked me to make that clear. For those of you who do not know, after 20 years in the diplomatic service, I work for Nomura, a Japanese investment bank in the City of London.

I found what Jeremy was saying earlier about the importance of trade to the Foreign Office’s mission very interesting, and I would agree with that entirely. Historically it has been very important, and it is perhaps even more important today than ever before. As it happens, when I got the invitation, I was in the middle of reading a book with which I guess some of you may be familiar: Getting Our Way by Christopher Meyer. Christopher makes three points in it that I think are very pertinent to your inquiry today. The first is a reference to Lord Palmerston’s famous quote: "Our interests are eternal and perpetual, and those interests it is our duty to follow." Christopher cites those as still the keystone for setting Foreign Office priorities, and I would agree with that.

Secondly, Christopher says at many points in the text that trade is fundamental to the economic well-being of the UK. His third point, which in many respects is the most interesting to your inquiry, is that he says of his experience as a Minister for trade in Washington: "For all its interests, trade was not my natural habitat."

The point that I would like to make to the Committee as a starting point for this discussion is that the financial services industry is such an important part of the UK economy today-and will be for the foreseeable future-that its continued international well-being comes under Lord Palmerston’s definition of an eternal and perpetual interest. The diplomatic service rightly already devotes significant resources to trade and investment, including financial services, but is it doing enough? That is perhaps the question that you are looking to address. Related to that, Christopher, in my opinion, is far from an isolated example of a senior British diplomat who would feel that trade in general-and financial services in particular-is not a natural habitat. The question that you will want to look at today is, "Should we be doing something to redress that slightly, and if so what?"

Q231 Chair: Would you like to continue and tell us?

Alastair Newton: Well, I do have some suggestions. Let me start by telling you something that you might be aware of that is going on at the moment.

The Foreign Office is looking to recruit from the City of London someone to take the post of HM Consul General New York, which couples up with the Director General for UK Trade and Investment USA. The Foreign Office tried that, to my certain knowledge, in the late ’90s, but failed in the end to recruit a suitable individual because the remuneration was insufficient to attract the person it wanted. As it happens, it got an extremely good career diplomat-Tom Harris-to do the job.

I wish the Foreign Office luck this time, although I am not sure that it will be any more successful. I can tell you from personal experience that the remuneration package is not that attractive to the City, because I was invited to apply for that job, despite the fact that the Foreign Office was very happy to see me take voluntary early retirement from the deputy to that job in 2005.

That begs some questions about continuity and the retention of skills in the Foreign Office, which is a big generic issue at a time of successive downsizings in Foreign Office senior management staff. I imagine that you are discussing that with other witnesses, but I am happy to come back to it, if you wish me to.

In simple terms, I have five very brief, low-cost, concrete recommendations to suggest to the Committee for how the Foreign Office might boost its skills and knowledge in financial services among a select group of officers, in a similar way to how it has specific skill-sets career anchors in geographical and linguistic expertise and so on. If you wish me to, I am happy to go through those five recommendations briefly.

Chair: Great.

Alastair Newton: First, immediately before I went to New York as Director for UKTI USA, I spent two years on secondment from the Foreign Office at Lehman Brothers. There was one year in which I was followed to the City on secondment. I suggest that reinstating a secondment programme to the City would be a very positive avenue for developing these skills.

Q232 Chair: You stayed on? You got seconded and stayed there, did you?

Alastair Newton: No. I came back, went to New York for three years and was then offered early retirement in the downsizing that the Treasury initiated in 2004. Because of my secondment, to a large extent, I was able to get a job in the City at a time when I needed to find an exit strategy.

Secondly-it might be that these are still taking place, but I believe that they have lapsed-Sir John Kerr, when he was PUS in 1998, initiated regular meetings of himself and senior colleagues with the Governor of the Bank of England and senior members of the Bank staff. I was in the policy planning staff and then Head of Economic Relations during that period, and I found the meetings extremely useful in keeping us in touch with City thinking.

Thirdly, I suggest that the Director General for Europe and Globalisation in the Foreign Office-the slot responsible for economic-could usefully host regular round-table lunches with senior people from the City of London, if that is not already being done. Fourthly, the FCO is not represented on the LOTIS Committee of TheCityUK-for those of you not familiar with it, that is the London trading services committee, which includes heavy representation from BIS. Ironically, all the people-there are several of them-with Foreign Office connections who sit on it are retired from the Foreign Office. Fifthly, and perhaps most importantly but most difficult, I suggest effecting a culture change so that high-flying diplomats do not consider trade not to be real diplomacy, but see it as the important national priority that it is and something to which the Foreign Office can make a real contribution.

Q233 Chair: We have had some witnesses here who say that diplomats shouldn’t get bogged down with all this commercial stuff but should focus on diplomacy.

Alastair Newton: I don’t think the two are mutually exclusive, Chair. Instead of New York, I will take the example of the British Embassy in Tokyo-I work for a Japanese bank, so I see quite a lot of the British Embassy in Tokyo these days, although I did during my Foreign Office career as well. It is absolutely essential in my view-I am sure that the present ambassador would agree with me-that the mission there is not only capable of conventional, "real" diplomacy, if you like, but also understands the importance of continuing to nurture inward Japanese investment to the UK, including from the Japanese financial services sector. I could apply that just as profoundly to a significant number of other countries and, perhaps surprisingly in this day and age, particularly to countries that have significant sovereign wealth funds.

Q234 Chair: What does the City actually think of the Foreign Office?

Alastair Newton: It’s a rather distant organisation, from the perspective of people who work in the City. I suspect-I hope that my senior colleagues will forgive me for saying this-that some of them rather hold the Foreign Office in awe. They are never sure how to address eminent ambassadors, and they seek advice on that. They like talking to diplomats in posts overseas, and not just to British diplomats, of course. We devote a good deal of time to talking to embassies overseas, but there is not a huge amount of contact between senior people in the City and the senior echelons of the Foreign Office these days, so it is a bit of an unknown quantity.

Q235 Mr Watts: Alastair, I don’t think that there’s any doubt that a nation needs both diplomats and people promoting business and trade. The dilemma comes with whether that should be separated, so that the career diplomats deal with things that they are trained and able to do, but so that BIS officials, for example, have secondments in embassies to give them direct business advice. There is a view, and we have heard evidence about it, that trying to turn diplomats into business advocates is not necessarily the right thing to do, or is not likely to be the successful thing to do. What is your view about that?

Alastair Newton: I started life as a diplomat, doing conventional diplomatic work. My first posting was in Zaire. I came back to London and did intelligence co-ordination during the Gulf war, so I had a fairly conventional career track for quite some time. I did not find it too difficult to learn a sufficient amount about basic economics, financial services, trade promotion, investment promotion and trade policy to be able to do my job to at least a satisfactory level, as far as the Foreign Office-and the DTI, because I was attached to UKTI at that time-was concerned. It is very much a question of attitude.

I think that there are inherent dangers in separating the two jobs, because one of the aspects on which the Foreign Office can and does add value to British business is advising on the political context in which we are trying to do business in third countries. We want to be able to combine that in one co-ordinated package. I am not for one moment suggesting that every senior diplomat needs to have knowledge of how to do trade promotion or investment promotion, but there are certain key posts where it is essential that senior staff with real clout can bring their influence and knowledge to bear on the host Government, as well as on incoming British businessmen.

Q236 Mr Watts: How do you make sure that people have the right balance? The fear is that you would turn diplomats into business advocates, and that the diplomacy side of the business would be left, or not done adequately. How do you make sure, especially if the leadership-the Government-are saying that that is a priority?

Alastair Newton: Well, every mission that I have ever worked in, or had contact with, is stressed on an overburden of priority activities and has to make hard decisions about where to focus, and when and how to divide its time. It is up to the process of objective-setting and resource-setting between the posts and the centre to make sure that the balance is right for meeting the priorities that the Government hand down from the centre to the Foreign Office, and which then cascade through the system. It is not straightforward, and I would be the first to accept, Mr Watts, that the Foreign Office is overburdened with objective-setting exercises and with process, often to the detriment of getting on with the substance. There ought to be better ways of streamlining it, but I am not sufficiently expert in management consultancy to be able to advise on that.

As I say, I do see a big overlap between the two spheres in certain posts. New York was a classic example. Tom Harris was doing trade promotion there at the time of 9/11. Clearly, trade promotion went on to the back foot for a protracted period of time, as far as the head of mission was concerned, but his two deputies continued to work hard to try to promote British business and American investment into the UK.

Q237 Rory Stewart: Is there a way of trying to define what diplomats should and should not do, in relation to trade and commerce? Sometimes you hear businessmen complain and say, "If I’m selling electronic widgets in China, I may want to go to the embassy, but I don’t want the person in the embassy to tell me about the electronics industry, because they’re not going to know as much about it as I do." Can you give us a rule of thumb on what that person selling electronics in China actually wants out of the embassy and, therefore, what the diplomat and the commercial section should and shouldn’t focus on?

Alastair Newton: The problem, Mr Stewart, is that British business comes in all shapes and sizes. For a long time, the priority of the previous British Government, and perhaps of this Government, was that UKTI’s primary help should be given to small and medium-sized enterprises looking to export. Small and medium-sized enterprises generally need a great deal more support than big corporations that already have an established base, especially in breaking into new markets where they may need a 101. Big corporations are often much more interested in getting a better understanding of how the overall political system is working and in introductions to key Ministers and senior officials.

The British diplomatic service has to-and does at its best-tailor the service to the requirements of the individual firm and not assume that there is a one-size-fits-all solution. Clearly, that takes time. When I was running UK Trade and Investment in the USA, the first thing I did was ban my staff from using PowerPoint presentations, unless the clients specifically asked for them. That was for the very simple reason that if you are reading a PowerPoint presentation, you are not reading the client. I wanted them to read and respond to the client. It is that open mindset of looking at what the client really wants individually that we need to inculcate.

If I may take advantage of your question, Mr Stewart, I would like to add something relative to what Jeremy was saying earlier about locally engaged staff. I believe the Committee will go to the US as part of the inquiry. I would commend to you, lady and gentlemen, talking to some of the locally engaged staff on the UKTI team there. In my day, they were very good indeed. We had some not so good ones but we largely got rid of them. Overall, the quality of the locally engaged staff doing commercial work in the US was significantly higher than that of many of the UK-based staff who were sent out to do the job.

Q238 Rory Stewart: A quick follow up to that: what should they not be doing?

Alastair Newton: They shouldn’t be negotiating on behalf of individual companies.

Q239 Rory Stewart: Okay. Just to push back to where I was: in terms of knowledge, presumably with a small team you are never going to know as much about the electronics industry in China as somebody in the electronics business, so there should be a degree of humility in the team and an ability to say, "That is not our area of expertise. This we can provide; this we can’t".

Alastair Newton: I agree with you entirely, Mr Stewart, but I think there are two aspects here. First, very often commercial teams in missions overseas, particularly large commercial teams in important export markets, have specialists in particular areas. For example, in the US I had people working for me-local hires-who had specific sector expertise because they had worked in the sector in question. That ranged from retailing to IT to biotech. We had a significant body of expertise, and could sustain a dialogue-not a lecture, which was your point-with British companies interested in those sectors.

Secondly, in export promotion, British exporters pay a certain amount for the service they get from missions. Clearly, the fees vary according to the level of service being provided, and that is one way of ensuring that the British client is getting the service they want. They are paying for something specific, so if they are not getting that service or if they are getting more than that service, there are checks and balances in the system to militate against that.

Q240 Mr Baron: Mr Newton, there are those who believe that the staffing arrangements need to be more permeable-along the lines of the US-if only to encourage free flow of ideas when in government. Given your experience, I would be interested to know your view on that. For example, what were the results of your two-year secondment to Lehman Brothers? I know you joined Lehman after you left the FCO, but what was your experience? Do you think it made for a common goal?

Alastair Newton: The first thing it gave me, Mr Baron, was credibility with American financial services industry people, because I had actually been one of them. Credibility is incredibly important when you’re dealing with foreign firms. I will happily say this on the record: the simple fact is that most diplomats do not have a great deal of credibility with the private sector when it comes to business promotion. If you have actually been on that side of the fence, it helps.

Secondly, I also had a basic knowledge of how the financial services industry works, which doesn’t mean I understood things like complex derivative instruments, because there is no need for that in the diplomatic service. It was just about understanding the culture and what makes it tick, what makes London attractive to large banks looking for somewhere to establish in Europe, and how you persuade them that London is the place to expand their business. Those were the most valuable things I took with me. I didn’t learn anything about doing business at all, but I didn’t need that knowledge.

Q241 Mr Baron: No. I sense that you are implying that there are more advantages than disadvantages. Credibility is obviously very important. Apart from credibility-I am not undermining its importance-what are the other advantages, and what are the disadvantages that you have seen?

Alastair Newton: The first disadvantage is that, in principle at least, assuming that you’re sending good people out on secondment-there’s no point in sending indifferent people out on secondment, in my view-you will lose the service of an officer for one or two years; they will be out there in the boonies, not actually working for the British Government directly, but hopefully learning something that will bring skill sets back.

Regarding the second disadvantage-I am sure that if Foreign Office colleagues were sitting at this bench now they would disagree with me about this-I can give you several examples of friends who have gone out of the Foreign Office on secondment and come back to find that their promotion prospects have actually been slowed down, because they have not been in the office. It’s been explicit; it’s not been a subtle, "Well, you know, blah blah blah." They have been told, "You have not been working on diplomacy for two years, so you have to come back at your existing grade." There is a disadvantage to the individual officers as well, which can encourage individual officers to decide that maybe the grass is greener on the other side. Again, I know of specific examples where that has happened.

I think the other disadvantage is that if you don’t send good people who can really make a difference to the firm to which they are attached, it gives a bad impression of the Foreign Office. There have been some examples of that, although I would say that by and large they are very rare indeed. Foreign Office people and high-flying civil servants in general actually have a great deal to contribute to the private sector, in the skill sets that they can bring with them.

Q242 Sir John Stanley: Mr Newton, how do you respond to the accusation that is made that the present Government are trying to have their cake and eat it? On the one hand, they say to the diplomatic service, "Go out there, sell for all you’re worth and make money for the UK-that’s your top priority job," and on the other hand they say in the House and in front of this Committee, "Oh, well, we’re doing our very best on human rights." The reality surely is that if you are trying to land a big contract in China, the advice that will come up to Ministers and to the post in Beijing will be, "Well, go on, go through the motions on human rights to make certain that we’ve got something to say to these tedious people on the Foreign Affairs Committee and in the House who keep going on about human rights. Keep it at a low profile, don’t ruffle any feathers and sell for Britain for all it’s worth." Isn’t that the reality?

Alastair Newton: I never envy either Governments, or indeed Members of the House of Commons, some of the difficult decisions they have to make, striking balances between often conflicting objectives when promoting trade and passing Bills through the House of Commons. It’s not an easy task. I think my base case assumption when I was a civil servant was that Ministers will make a collective decision from their collective wisdom, and they will instruct their staff accordingly and hopefully get the balance right. For all that, Sir John, there are always going to be lobby groups out there who protest, whatever path we take on issues like this. The human rights lobby will protest if we are selling to China; the business lobby will protest if we don’t.

Q243 Ann Clwyd: My question is also somewhat related to that. I wonder what role you are expected to play in the promotion of arms exports, because they have been some of the most lucrative contracts for this country in the past. What is your view of that? How general is it? What role would you play as opposed to a defence attaché in an embassy?

Alastair Newton: I was never directly involved in anything relating to arms exports, Ms Clwyd. UK Trade and Investment USA could have been involved in arms exports at some stage, I guess. But big firms like BAE do not need help on export promotion-it is political access, which was handled by the Washington embassy rather than the New York consulate-general. I cannot speak from direct experience of this, let me be clear on that.

However, I know there to be checks and balances on the ministerial approval of arms exports to a whole range of countries. It is at that level that the decision making rightly rests. It is for people such as I used to be to implement those decisions as approved at a ministerial level.

Of course, with some countries we have arms embargoes in place. We do not always get it right, because we sell arms to countries in good faith and sometimes that good faith is broken by the country that receives them. But you are right, the arms industry is a major beneficiary to the UK economy. I am not sure what the figure is today, but when I was still a diplomat, the UK accounted for roughly 24% or 25% of global arms sales. I suspect that may have gone down a bit since then, but it is probably still a pretty significant number.

Q244 Mr Roy: In the incestuous relationship between the diplomatic and the commercial, and the movement between both, is there not a danger that those on the diplomatic side, who would be hoping to go into the commercial side, could abuse or misuse their position, knowing where they want to be in six months’ or a year’s time in the commercial sector?

Alastair Newton: First of all, Mr Roy, I don’t think that there is that much interchange between the two. Historically, there certainly has not been, because up until at least the start of this century, diplomats still considered that they had a job for life. I accept that that culture has changed. I understand that it is not now the expectation when one joins the foreign service that one will still be in it at the age of 60 or 65.

In 2004-05, the senior management service in the Foreign Office had to shed 120 staff. Yes, I have to admit to you, in all honesty, that in these days of downsizing, there is a tendency for people to think, "Secondment will give me the opportunity to see what it is like on the other side, to test the temperature, and so on." But an amazingly large number of people actually go back and do not jump ship in the immediate aftermath of a secondment, just as I did. I do not know whether I would have left the Foreign Office after my New York posting had it not been for the downsizing and the voluntary early retirement package that was being offered-it is a hypothetical question, so I cannot tell you.

I think that it is a minority who would abuse their position, because overall, with public sector Foreign Office people, the pay may not be very good, but they have a real commitment to what they are doing. Mostly, they believe very deeply in the public service ethos.

Q245 Chair: Thank you very much, Alastair. That was a rather refreshing and unstuffy contribution to our inquiry, which is much appreciated by everybody.

Alastair Newton: Thank you, Chairman. It has been a pleasure, and it goes without saying that if, in future, I were invited to speak to the Committee, I would be happy to do so.

Chair: Be careful what you wish for.