2The FCO and the 2010 Spending Review
6.Savings of 25%, let alone 40%, are going to be very demanding for any Department. Similar scenarios were invited by the Treasury from Government departments as part of the 2010 Spending Review process. In the event, the average reduction in departmental resource budgets over the four years was 8.3%, although in some cases the reduction was significantly higher (29% at the Department for Environment, Food and Rural Affairs) and in others rather lower (3.4% at the Department for Education); and some areas of spending were protected and benefited from real growth in budgets. The reduction imposed on the Foreign and Commonwealth Office for the four-year period ending in March 2015 was overtly at the higher end of the range, at 24%.7 Apparent savings of 24% disguised the true level of savings thought achievable within the Department’s operational expenditure.
7.Most (14%) of these savings came from transferring the budget of the BBC World Service to the BBC Licence Fee. After the transfer of funding for the BBC World Service is taken into account, the real savings imposed on the operational part of the FCO were 10%. These were painful enough to achieve in the current unpredictable and demanding global context and security environment.
8.The Foreign Secretary pointed to the 2010 experience and suggested that initial pitching by the Treasury should be regarded as “aspirational” and as “a ranging shot”, but he was clear that Departments collectively would have to make double-digit percentage savings.8
9.The assessment of the predecessor Committee in the last Parliament was clear: “The next Government needs to protect future FCO budgets under the next Spending Review”.9
7 Spending Review 2010, Cm 7942, Table A.5
8 Evidence taken on 21 July 2015 on Foreign policy developments: July 2015, Q3
9 Ninth Report from the Foreign Affairs Committee, Session 2014-15,HC 605, paragraph 47
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Prepared 22 October 2015