Despite the impressive performance of the Foreign and Commonwealth Office in representing the UK's interests across the globe with what is, in Governmental terms, a particularly small budget, we believe that the FCO is under-funded. This situation has been exacerbated by the Spending Review 2010. The lack of detail provided by the FCO and the BBC World Service as to exactly how the spending reductions target set by SR2010 will be met is disappointing. Our last Report into the FCO's Performance and Finances concluded that the Spending Review 2010 may "have a very damaging effect on the Department's ability to promote UK overseas interests." The evidence we have received suggests that this is proving to be the case. We have concerns about the steps taken by the FCO in the past year to adjust to its reduced budget: reductions in the deployment of UK-based staff overseas and the planned programme of property sales will have a detrimental impact on the ability of the UK to protect its interests overseas.
The FCO's programme of property sales is extremely optimistic, and the plans adopted to meet this target are hampered by Treasury rules on spending which will harm the FCO's ability to sell a large proportion of its overseas network and reinvest the proceeds elsewhere. Treasury budgetary rules must be loosened if the FCO is to ensure value for money for the taxpayer.
The establishment of the European External Action Service (EEAS) will place a strain on the FCO's resources. The Government should produce an assessment on whether the EEAS has to date been a help or hindrance to the FCO in promoting and safeguarding the UK's interests.
While we welcome the appointment of Lord Williams of Baglan to the post of "International Trustee" with responsibility for the BBC World Service and give him our full support, we maintain our earlier belief that a formal concordat governing the World Service's budget and output should be drawn up setting out the World Service's independence from budgetary pressures elsewhere in the BBC. The Government should monitor the role and performance of the International Trustee after 2014 when funding responsibility for the BBC World Service will be formally transferred from the FCO.
The budget cuts faced by the British Council - the largest cuts of any member of the "FCO family" - will lead to the Council becoming a substantially different organisation by the end of the Spending Review period. The greater emphasis that the British Council will place on commercial activity risks a diminution of the UK's influence and soft power. This change is regrettable but understandable given the reduction in the FCO's grant-in-aid. While we give a cautious welcome to the British Council's plans, care must be taken to avoid the British Council becoming predominantly an international English language school rather than a promoter of the UK's reputation, culture and influence.
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