The Role of the FCO in UK Government

Written evidence from the City of London Corporation


1. This memorandum is submitted on behalf of the City of London Corporation in the context of its role in promoting and reinforcing the competitiveness of the UK-based financial services sector, for which ‘the City’ is now commonly used as shorthand. The City engages closely with professional services and other businesses in carrying out its overseas visits and works to represent businesses across the UK. The City Corporation’s promotion of London and the UK as a centre for business and finance is spear-headed by the Lord Mayor who, in collaboration with the Foreign & Commonwealth Office and UK Trade and Investment, leads business delegations to financial markets around the world. In this capacity the City engages with emerging as well as established financial centres. The City Corporation also supports TheCityUK – an independent body recently created, with Government and industry support, to promote the UK’s financial and professional services sector.

2. The "Square Mile" is internationally-owned, internationally-managed and internationally-staffed. Much of the business done could be undertaken in other centres where the two key factors, capital and expertise, are present. Nevertheless the fact that it is done in London and elsewhere in the UK has positive benefits for the UK in terms of corporate profits, tax receipts, employment and export earnings.


3. Especially given the spending constraints set out in the 2010 Comprehensive Spending Review, how - if at all - could the FCO better organise and utilise its financial and human resources so as to fulfil its role:

· The City Corporation accepts the need for the spending constraints in the CSR and the consequent requirement to rationalise resources deployed in overseas Posts. It is however suggested that this should not be seen as a one–way process: the world economy is changing shape and focus rapidly and it is likely that new centres of political and commercial importance will emerge, requiring new or additional resource to promote and protect British interests. This evidently applies today to Asia. The Lord Mayor’s and City Corporation’s programme of visits is well places to help UKTI and FCO maximise their impact in overseas markets.

4. How does the FCO work across Whitehall; Are the FCO and its resources organised so as to facilitate cross-Government cooperation;

· The City Corporation welcomes the FCO’s new focus on trade and investment issues. It is however important that UKTI’s existing role in supporting and engaging with business should not be overshadowed by its larger parent department, and that the complementary roles of BIS and HM Treasury (with its particular focus on financial services and the encouragement of capital flows) should also be recognised.From the City's perspective it would be particularly valuable if the FCO's stepped-up engagement in this area could focus on building on the intelligence it generates, the opportunities it opens up and ensuring that commercial issues are more fully integrated with the political agenda. The distinction between departments is not significant to overseas stakeholders dealing with staff at Post, and City businesses and stakeholders look for a similarly joined up approach in the UK – ideally UKTI as the lead body dealing directly with them, and engaging the wider scope of FCO, BIS and HMT capacity on a more strategic level.

5. What should be the role of the FCO’s network of overseas posts:

· The City Corporation works closely with the FCO’s overseas posts in support of a number of objectives:

- The promotion of the UK based financial and professional services industry and work to break down barriers to market entry for international firms. The Lord Mayor as de facto ambassador for the UK based F&PS industry will travel to around 25 overseas markets and 36 cities promoting the industry. On each visit the Lord Mayor heads a relevant and targeted delegation chosen to reflect issues relevant to the host country. The business group invariably comprises CEO and senior practitioner level members – by way of example, the London Stock Exchange chairman, alongside a small high-powered team, accompanied the Lord Mayor on a recent trip to India. FCO and UKTI staff in overseas Posts own, manage and deliver these programmes in market, and further support the accompanying business delegations that join these visits. Each visit seeks to advance FCO/HMG policy objectives as well as those of the business community;

- The promotion of opportunities to influence senior visitors to the UK, in support of UK objectives. The City of London host a large throughput of senior decision makers (both Government and business) to promote the strengths of the City and facilitate introductions to UK-based financial and professional services firms;

- The overseas post network provides valuable intelligence on changes in regulation, legislation and economic developments throughout the globe – the City Corporation on behalf of professional services, and with a view to maximising efficiency of resources, would welcome the ability to tap more easily into this flow of relevant information.

- The City Corporation believes that overseas posts need to retain a strong focus on promoting British business in terms of both attracting enhanced levels of foreign direct investment and identifying and supporting trade development opportunities. Overseas posts need to be staffed and resourced with a high calibre of staff, with the ability to break down market access issues and set them in the wider politico-economic context as the UK seeks to stimulate a trade driven recovery.

- There is considerable value added to business promotion by high quality economic reporting. It is desirable that economic and trade intelligence amassed by Posts should have a wider distribution than it currently receives.

- High level engagement at post on business issues by Political and Economic staff – including Heads of Mission – adds huge value to the UK’s trade promotion. The City Corporation is greatly encouraged by signs of such engagement among many of those currently occupying Head of Mission and other senior roles, and hopes that the "new commercial diplomacy" will reinforce this focus.

- It is essential that FCO Posts retain a sense of ownership over the issue of business visas for short-term business visitors to the UK. While it is accepted that the management of this system has been "contracted out" and the responsible home department is UKBA, the prompt and efficient issuing of visas to legitimate business visitors is essential to our commercial interests, and reinforces the perception that the UK is indeed "open for business". Delayed, inefficient or unnecessarily prescriptive treatment of applicants can in contrast leave a lasting bad impression. Better co-ordination on visa issues, and recognition of the importance of commercial priorities (for example, staff of an inward investment target or major investor), could make a large difference - but the responses of UKBA and UKTI often seem to be at odds. HMG should also be aware that in other countries, there is significant discretion over the granting of visas – treating this simply as a processing issue is detrimental to wider trade and business engagement efforts.

2 December 2010