This report is the Committee's annual review of how the FCO is managing its resources, examining the departmental annual report for 2007-08 (Cm. 7398, ISBN 9780101739825). Chapters cover: new strategic framework; performance measurement; global network; essential services; FCO Services; personnel issues; transparency and openness; financial management; public diplomacy and communication; the British Council; the BBC World Service. The Committee is concerned that the FCO is facing serious financial pressures in this financial year due to the Treasury's withdrawal of its support for the Overseas Pricing Mechanism (OPM) which used to protect departments from the weakening of sterling. There is a risk that the FCO may not be able to meet higher international subscriptions over the next two financial years, causing its performance against Public Service Agreement targets to suffer. The likely increase in the UN Regular Budget and other international subscriptions will push this figure even higher. The FCO should have to shoulder the financial burden from within its already tight budget to pay for subscriptions which also benefit other Government departments. The Committee recommends that additional nondiscretionary costs should properly be met by the Treasury.
This report is the Committee's annual review of how the FCO is managing its resources. This year a key area off interest has been the 2007 Comprehensive Spending Review because the Committee think it is one of the tightest in Whitehall and it risks jeopardising some of the FCO's important work. Apart from this the other subjects covered are: measuring performance; operational efficiency; management and leadership; FCO services; diplomatic representation overseas; transparency and openness; public diplomacy; British council; BBC World Service.
The Foreign and Commonwealth Office (FCO) provides a range of consular services to British nationals overseas, and when necessary, their families in the UK, including giving travel advice, issuing passports, assisting travellers in difficulty or distress, and dealing with major emergencies such as terrorist attacks or natural disasters. The total cost of consular services during 2004-05 was almost £80 million. Services are provided through over 200 diplomatic posts worldwide including embassies, high commissions and consulates. This NAO report examines the challenges involved in delivering effective consulate services, including providing high quality information to travellers and influencing the behaviour of travellers; providing a consistent frontline service with cost-effective use of resources; response to major emergencies overseas and preparedness response measures.
The 2012 Budget, announced the 'ambition' to double the value of exports by 2020 to £1 trillion a year. However current performance has been flat over the last two years and, to meet the Government's ambition, exports will have to grow by 10 per cent year on year. Many factors which affect export performance are outside the control of the FCO and UKTI, such as exchange rates and political and economic changes overseas. While the UK outperforms Germany, France and Italy in the Gulf, it has not traditionally performed as well in many other emerging markets, such as Russia, Brazil, Turkey and China. Success here is essential if the Government is to meet its target. There is a joint UKTI-FCO Board to oversee coordination of their work overseas but currently there is no further joint accountability for planning, monitoring and delivery against their goal. Their initial responses to the government's objectives have not been sufficiently coordinated. UKTI is now increasingly looking to measure actual business outcomes rather than volume of activity. Among the NAO's recommendations is that the FCO improve how it measures and monitors the impact of its activities supporting exports so that it can demonstrate that its spending of some £420 million a year yields tangible results. UKTI is piloting the use of external business partners to provide some of its services, and needs to implement lessons from the evaluation of its pilot initiative to use external partners if it decides to roll it out
The Foreign Affairs Committee publishes a wide-ranging report on the work of the Foreign and Commonwealth Office (FCO) and two of its sponsored bodies, the BBC World Service and the British Council. It makes key recommendations on language skills for top diplomats, BBC World service funding and priorities, and funding for the British Council. For the FCO, the exclusion of foreign language skills and reliance purely on general management competencies creates the risk of credibility in respect of key diplomatic postings. The Committee finds it unacceptable that the World Service will not know its budget, priorities or objectives before the transition to licence fee funding and the new arrangements for oversight by the BBC Trust from April 2014. The British Council will struggle to deliver the UK's foreign policy objectives if cuts to grant funding from the FCO continue at a similar rate. The Committee recommends that the FCO should shield the British Council from the effect of any further cuts to the FCO budget in 2015-16.
This report focusses on the FCO's financial situation and the implications of the Spending Review 2010 for its work and performance, and that of its associated body, the British Council. The FCO is one of the major departmental 'losers' in the Spending Review. Reductions in spending on the FCO, if they result in shortfalls in skilled personnel and technical support in key countries and regions, can have a serious effect in terms of the UK's relations with foreign countries, out of all proportion to the amounts of money involved, especially in relation to the UK's security and that of its Overseas Territories. Cuts to the core FCO budget of even 10% may have a damaging effect on the Department's ability to promote UK interests overseas. The FCO will also face cuts of 55% to its capital budget. The target of raising £50 million per year through selling existing buildings may be difficult to achieve, and may not secure savings in the long-term. A further reduction in the opportunities for more junior UK-based staff to serve in overseas posts, and a consequent diminishing of experience and morale among FCO employees, could over time have a damaging effect on the quality of British diplomacy and the effectiveness of the FCO. The British Council, facing a 25% cut in spending, should give detailed information on its strategy for implementing the cut, which may well trigger fundamental rethinking of the role and work of the Council.
The Consular Service of the Foreign and Commonwealth Office provides vital support to British nationals overseas. It offers a wide range of services, handling anything from lost passports to kidnap, a major crisis evacuation or verification of a document. It is the FCO's public face, and it is central to its reputation at home. Britons undertaking more adventurous travel, large expatriate populations and a series of major overseas crises have tested the Consular Service in recent years. In 2013, the FCO dealt with over 450,000 consular customers, over 17,000 of whom received personal assistance. The Consular Service has responded with a "strategic shift" to provide a more standardised and professional service. However, the strategic shift to a "smaller and better" consular service has also meant that some services have been limited or withdrawn, and standardisation has meant the end of so-called "over-service" as well as under-service. The FCO has consequently put great emphasis on encouraging self-help, managing expectations and explaining the limits of its assistance to British nationals. Despite these efforts to explain to the public what the FCO can and cannot do, there was still a significant gap between the high expectations of the public and the reality of what the FCO could provide.
The Foreign and Commonwealth Office lacks a clear strategy and comprehensive data to manage its overseas estate effectively. It is taking positive steps to adapt its properties to new global challenges but has not achieved value for money in the management of its estate as a whole. Without a clear framework to assess the estate's performance, it is difficult to evaluate the Department's progress. The Department has recently appointed an estates specialist as Director of Estates and Security who is developing a new strategy which should help secure improved value for money in the future. There are several factors, such as changing political issues, security restrictions and exchange rate pressures, which add to the complexity of managing the global estate. But lack of adequate financial and management information about the estate hampers good decision making on efficient use of space and the identification of surplus assets for potential sale. The management of projects to improve the estate could be better: a third of the projects that the NAO analysed exceeded their initial approved budget by over 10 per cent and two-thirds were delivered late. The total cost overrun since 2002 is approximately £57 million, against a total spent on capital projects of £250 million. The FCO does not always use space in its posts efficiently. Over half of the posts that responded to the NAO's survey have unused office space or staff accommodation. The FCO could do more to promote the use of its overseas estate by other UK government organisations where feasible.
The Foreign Affairs Committee believes the Foreign and Commonwealth Office (FCO) will not be back at the centre of Government and able to lead UK foreign policy, in line with the Foreign Secretary's ambitions, unless it can provide deep foreign policy expertise and judgement to underpin and implement Government decision-making. The FCO must have the resources and skills required to fulfil this role, especially specialist geographical expertise and knowledge of foreign languages. The FCO has a vital role to play for the Government, namely the timely provision of world-class foreign policy information, analysis, judgement and execution. Finances, people and buildings must be well-managed, but managerial requirements must not divert time and focus disproportionately from the FCO's core foreign policy functions. Given the resource constraints facing the FCO, however, there is doubt whether the department can achieve the Government's ambitions for enhanced commercial work while maintaining its core foreign policy functions at the required standard. The committee regards the FCO's network of overseas posts as integral to the department's ability to discharge its functions, and recommends that the FCO should seek to maintain a global UK presence. The committee also called "confusing" the fact that under the current Government the FCO has three sets of priorities: the Foreign Secretary's, the Cabinet Office's Business Plan for the department, and the 2010 Strategic Defence and Security Review.
Eighteen months since the Arab Spring began, there has been extraordinary progress in Egypt, Tunisia and Libya. Yet many challenges still lie ahead, not least the need to support and reform the economies of these Arab Spring states. In 2011, the G8 Deauville Partnership identified $38 billion of funding available to support reform. The UK must use its leadership in the EU and G8 to ensure that we deliver on our promises. The Government needs to learn lessons from its experience in anticipating and handling the Arab Spring. Questions arose about the FCO's staffing levels, linguistic expertise and information gathering in the Middle East and North Africa region, although diplomats understood well the long-term problems in the region. The report welcomes the Government's recent moves to establish contacts with Islamist parties in the region and calls for deeper engagement to demonstrate at an early stage the UK's support and assistance for democratically elected leaders who respect human rights and democratic reforms. The BBC's Arabic Service further highlighted the importance of the BBC World Service in providing an independent news service and enhancing the UK's standing in the region. The Committee welcomes the Government's decision to reverse planned cuts to the Arabic Service last year, expresses concerns that cuts made elsewhere in the World Service will prove detrimental to the national interest, and urges that there be a sustained investment in the World Service
It is inevitable that the UK will have strategic, commercial or security-related interests overseas which have the potential to conflict with its human rights work, says the Foreign Affairs Committee in a report published today. The Government should not be trying to assert that the two can co-exist freely: it should instead be explaining publicly its judgments on how to balance them in particular cases. The Committee's recommendation comes in the light of the FCO's decision not to designate Bahrain as a "country of concern" in its 2011 report on its human rights work, despite the repression of demonstrations in Bahrain in 2011. The Committee recommends that the criteria for designation should be based purely on assessments of human rights standards and should not be coloured by strategic or other considerations. The Committee also challenges the Government for being inconsistent in not taking a public stance on the Bahrain Grand Prix but boycotting group stage games at Euro 2012 in Ukraine. On rendition, the Committee finds that the protracted police investigations had an unacceptable impact on the work of the Gibson Inquiry and of relevant committees. The Government should explain why current investigations into claims of rendition made by two Libyans are expected to take so long. The Committee accepts that enough progress has been made in Burma to justify some relaxation of the EU's sanctions regime, but it says that Burma's human rights record remains seriously blemished. It recommends that the UK should call for better access to those still detained as political prisoners, and should press the Burmese authorities to allow independent observers to visit Rakhine state, to assess the extent to which the rights of the Rohingya minority are being respected.
Around half of the Foreign and Commonwealth Office's budget is spent in foreign currencies. In 2008, the Treasury removed the protection it had previously provided to the Department against exchange rate fluctuations. The FCO did not have the expertise or experience to effectively manage the risk of a fall in exchange rates, and that the Treasury imposed poor value for money conditions on forward purchasing foreign currency. As a result of a decline in the value of sterling, in September 2009 the FCO faced an overspend of £91 million on its 2009-10 budget (£72 million centrally and £18.8 million overseas), out of its total budget of £1.6 billion. It made drastic cuts to reduce this overspend. The FCO did well to reduce spending so quickly, which enabled it to live within its budget. However, many of the spending cuts made were short term in nature, and involved simply delaying or stopping some activities, rather than making lasting efficiency improvements. Not enough was done to monitor and measure the impact of the cuts and there is a risk that such short term cuts can lead to increased spending in the future. The FCO needs to achieve sustainable reductions in running costs of £100 million over the next four years, and sees the overseas estate as a potential source of these efficiencies and income. But in the past, high charges have had the unintended consequence of discouraging other government departments from sharing premises.
While strong Armed Forces remain the bedrock in safeguarding national interests new kinds of power projection are now required, both to make the use of force ('hard power') more effective and in some instances to replace it with the deployment of what has been labelled 'soft power'. Soft power involves getting what a country wants by influencing other countries to want the same thing, through attraction, persuasion and co-option. The information and digital revolution has transformed international relations and foreign policy, meaning that the UK must win over new and wider audiences to its point of view. The UK must change the way it interacts with other nations and communities, and is well-equipped to do so. Soft power methods of exercising international influence must now be combined with older approaches in order to secure and promote the UK's interests and purposes. To ensure that the exercise of soft power takes its place at the core of government policy-making, the Committee calls for the creation of a new strategic unit at the heart of Government. Its purpose would be to assist the Prime Minister in ensuring all Departments understand the importance of soft power and of upholding the UK's reputation, and in swiftly counteracting any potentially damaging policies or messages. While investing in soft power takes time to produce results, the Committee makes a number of recommendations including that BBC World Service's budget is not reduced any further in real terms and that the British Council is properly resourced to encourage the UK's creative industries
Government departments have been set a series of targets for implementing efficiency gains of £21.5 billion a year by 2007-08, as part of the Treasury's Efficiency Programme following on from the Gershon Review of public sector efficiency. This NAO report finds that considerable progress has been made by departments towards achieving the efficiency targets, and the Efficiency Programme has ensured a greater focus on value for money issues among senior staff. Progress has also been made in addressing measurement issues, supported by new guidance issued by the Office of Government Commerce, although some reported efficiency gains still carry a significant risk of inaccuracy. The OGC has also initiated a new reporting system to improve the accuracy of reported efficiency gains, but this would benefit from a greater review process to assess whether they meet good practice, either through a stronger internal audit within departments or by the OGC. Departments must improve the transparency of the reporting process, and do more to encourage staff to put forward ideas for efficiency improvements. A companion volume is available separately (HCP 156-II, session 2006-07, ISBN 9780102944372) containing twelve opinion pieces on options to improve efficiency in the public sector, written by commentators from the fields of business, trade unions, academia and management consultancy.
This report concludes that the Government is right to continue to support Turkey's accession to the European Union, as long as Ankara meets the accession criteria, and subject to the Government imposing restrictions on the right to free movement from Turkey after it joins. However, at the moment, shortcomings in Turkey's justice system are leading to human rights abuses, including as regards freedom of expression and the media, and making it harder to advocate Turkey's EU membership. Turkey's EU accession process is in any case stuck: effectively, it is hostage to the Cyprus dispute. The Committee said that, by undermining the force of EU leverage, the stalemate is having consequences that are detrimental to UK objectives in Turkey across a range of fields, including not only human rights but also energy and market access issues. The Committee found this especially regrettable given that Turkish democracy may be in a critical phase, and given the influence that Turkey may have at the moment over reforming Arab states. The Committee also said that, by creating uncertainty over the timing - if not the fact - of Turkey's EU accession, the stalemate was discouraging both the EU and Turkey from starting to address some of the most difficult issues that would be involved in Turkey's EU membership. The Government's continuing support for Turkey's EU membership has provided a strong basis for the further development of UK-Turkey bilateral relations which has significant potential. As a foreign policy partner Turkey could potentially add value to UK foreign policy
Response to HCP 594, session 2005-06 (ISBN 9780102936179). The report by the Committee of Public Accounts on the topic was published as HCP 813, session 2005-06 (ISBN 9780215028389)
UK Trade & Investment (UKTI) is three years into its five-year strategy to deliver improved support to UK exporters, and it is close to meeting most of its performance targets. UKTI has extensive arrangements to obtain regular and systematic feedback on the quality of its services. Some 52 per cent of businesses receiving support reported that their performance improved as a result of receiving support, exceeding its 50 per cent target. Users are also asked to estimate the financial benefit arising as a result of its support, and a 2008 figure of £229,000, on average, per business is used by UKTI to calculate its reported benefit to cost ratio of 15:1. But the underlying survey data shows that 29 per cent of users either did not know, or declined to provide an estimate, 30 per cent forecast some financial benefit and 40 per cent forecast no financial benefit. The survey focuses on forecast impact rather than actual financial impact. UKTI has sought to improve efficiency by shifting resources to better performing markets and services. In the year to March 2008 expenditure on trade support fell by 4.5 per cent while the number of businesses supported rose by 35 per cent. UKTI does not have a full picture of the costs of providing the individual services. It is not in a position to gauge reliably the efficiency of its activities, the contribution of different parts of the organisation to these services, or the relative costs and benefits of the different services it provides. In 2008 UKTI established a model for cost assessment, but this is not yet sophisticated enough to demonstrate whether value for money is being optimised.
The cuts imposed on the FCO since 2010 have been severe and have gone beyond just trimming fat: capacity now appears to be being damaged. If further cuts are imposed, the UK's diplomatic imprint and influence would probably reduce, and the Government would need to roll back some of its foreign policy objectives. The FCO's budget is a tiny element of Government expenditure, but the FCO makes disproportionate contribution to policy making at the highest level, including decisions on whether to commit to military action. The next Government needs to protect future FCO budgets under the next Spending Review.
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, the Foreign Affairs Committee believes that the FCO is under-funded. This situation has been exacerbated by the Spending Review 2010 and the lack of detail provided by the FCO and the BBC World Service as to exactly how the spending reductions target will be met is disappointing. There are concerns about the steps taken by the FCO to adjust to its reduced budget: reductions in the deployment of UK-based staff overseas and the optimistic planned programme of property sales will have a detrimental impact on the ability of the UK to protect its interests overseas. The establishment of the European External Action Service (EEAS) will place a further strain on the FCO's resources. The Committee welcomes the appointment of Lord Williams of Baglan to the post of "International Trustee" with responsibility for the BBC World Service, but reiterates its 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 budget cuts faced by the British Council 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.
The changes in the machinery of government, announced in June 2007, led to this assessment of the place of the Department for International Development (DFID) in trade policy structures and how this area could be best managed across government. The inquiry also followed up on the report 'Conflict and development: peacebuilding and post-conflict reconstruction' (HC 923-I 2005-06) and the responsibility of the former Department of Trade and Industry in relation to the regulation of activities of UK companies operating in developing countries. Although the reaction to the changes in the machinery of government are broadly positive, there are reservations about complexity, unclear lines of accountability and new layers of bureaucracy. The increase in the number of DFID ministers is welcomed but there are concerns that the brief of the Trade Policy Minister might be too wide.
A lack of strategic thinking at the heart of Government threatens the UK's national interests, the Public Administration Committee warns. The MPs note Whitehall's tendency to 'muddle through' and point to the UK's military engagements in Iraq and Afghanistan, as examples where there has been a lack of overarching strategy. The report says clear strategic leadership is indispensible to advance British interests in an increasingly fast changing world. But it raises serious concerns about Whitehall's capacity to support the Foreign Secretary's aspiration to extend the UK's 'global reach and influence' with the necessary strategic analysis and assessment. This applies particularly to the Government's Strategic Defence and Security Review and the MPs question how far this can actually be 'strategic'? The Committee calls for: ministers to invest more time and energy into strategic leadership; the creation of a 'community of strategic thinkers' across Whitehall, to provide ministers with the capacity for strategic analysis and assessment; the National Security Council's remit to encompass national strategy; greater emphasis to be placed on strategic studies and training both within Whitehall and in academia; Parliament's Joint Committee on National Security Strategy to extend its remit to include national strategy; a small central budget to be established to fund central coordination of departmental contributions to national strategy.
The Foreign Affairs Committee believes the events of the 'Arab Spring' should stand as a reminder to the Foreign and Commonwealth Office (FCO) that failing to take a stronger and more consistent stance against human rights violations by overseas regimes can carry risks for the UK. Any suggestion that the FCO downplays criticism of human rights abuses in countries with which the UK has close political and commercial links is damaging to the UK's reputation and undermines the department's overall work in promoting human rights overseas. The Committee is less confident than the FCO that there is little conflict between its simultaneous pursuit of both UK commercial interests and improved human rights standards overseas. The Committee heard concerns on this front with respect to Saudi Arabia and Bahrain in particular. There should be a more robust and significantly more consistent position on human rights violations in the Middle East and North Africa. On China, the Committee finds it difficult to support the Government's approach to human rights engagement with China in the continuing absence of any evidence that it is yielding results, and when the human rights situation in China appears to be deteriorating. The Government should engage in more explicit, hard-hitting and consistent public criticisms of human rights abuses in China. The Committee welcomes the FCO's continued production of an annual human rights report and the Government's recognition that the UK's own human rights practices affect its international reputation and ability to pursue improvements in human rights standards overseas.
Saudi Arabia and Bahrain remain key partners for the UK but relations are complicated by the differences between our societies and the pressing need for reform in the Gulf. Historic warm relations between the UK government and the leaders of Saudi Arabia and Bahrain are not mirrored in public opinion in Saudi Arabia and the UK, and the UK's reputation in Bahrain has also suffered since 2011. The Government must make its public profile and reputation a more central part of its work in the Gulf, consider how it can best support much-needed economic and political reforms, and how it can explain its policies and point to specific achievements when speaking to the public at home and in the Gulf. In Saudi Arabia, the Government must convert its promising steps so far in providing assistance on legal and judicial reform into solid and reportable programmes. In Bahrain, it must work to secure access for NGOs and the UN Special Rapporteur on Torture, and press more strongly for swifter implementation of reforms. Saudi Arabia's role as a key buyer for the UK defence industry is controversial but the report finds little to suggest that ending defence sales from the UK would have any positive effect. The aggressive way in which the Bahraini security forces handled events in 2011 has deeply damaged Bahrain's reputation. The recommendations of the Bahrain Independent Commission of Inquiry (BICI) were sensible and the Bahraini government's failure fully to implement them is inexplicable.
Many of the poorest countries in the world are affected by insecurity and violence. Insecurity has human and economic impacts, both for affected countries and their neighbours. Many insecure countries also receive lower levels of aid per capita than stable countries. These are good reasons to provide assistance to insecure countries, but there are also difficulties and risks. This report examines how the Department for International Development (DFID) works in insecure environments, ranging from some of the world's most insecure countries where armed conflict is still present and stabilisation is required, to less insecure contexts where donors may have more scope to engage in long term development projects. It examines what DFID is achieving and how it designs and manages its programmes, including dealing with risks to its staff. Insecurity is defined by reference to the incidence of political violence and the level of threat to aid workers. The NAO's work included four country case studies, literature and documentation review, data analysis and surveys. Their findings covered DFID's increasing interest in insecure environments, on what its expenditure has achieved in insecure environments, the design and management of country programmes, managing staff resources and costs and value for money. There are seven recommendations.
The Environmental Audit Committee established a sub-committee to explore concerns that Government policy on trade and development was not adequately incorporating the need for sustainable development and environmental protection. The series of inquiries have scrutinised DFID, the WTO and UK trade policy, the Government's response to the United Nations Millennium Ecosystem Assessment. This is the final inquiry and it looks at the role of the Foreign and Commonwealth Office in delivering international environmental objectives. Although it is not often the lead department it has a role in building international support for policy objectives and it also has direct responsibility, with DFID, towards the environment in UK Overseas Territories. The report looks at: FCO policy; FCO capacity on the environment; international environment strategy; setting an example; UK Overseas Territories.
This seventh annual report covers the 12 month period until the end of July 2004. The human rights report is designed to provide detailed information for Parliament and for other interested parties on the FCO's activities to promote human rights, democracy and good governance abroad. These activities cost over £12 million in 2003-04. The key human rights issues in some 20 countries, ranging from Afghanistan to Iraq and Zimbabwe, are described. The report also covers the course of international debate on human rights. Specific chapters deal with: human rights and conflict; economic, social and cultural rights; human rights and the rule of law; democracy, equality and freedom; women's rights and child rights.
The British Council is the UK's international organisation for educational opportunities and cultural relations. Its purpose is to "build engagement and trust for the UK through the exchange of knowledge and ideas between people worldwide." As well as education, it runs programmes in the arts, science, sport, governance and English language in 110 countries and territories worldwide. 2009 marked the 75th anniversary of the establishment of the Council. It receives Grant-in-Aid from the FCO for its public diplomacy activity: £209 million 2008-09, a 6% increase from 2007-08. The Committee concludes that the change in extent of data provided and the presentation of that data in the British Council's 2008-09 annual report makes it more difficult to track and evaluate the Council's performance over a period of years. In future the annual report should include fuller performance data, including corporate performance scores and reach, to facilitate year-on-year analysis. The recent decline in some of the scores achieved in relation to quality of service, particularly in that relating to engagement with decision makers and senior influencers, gives cause for concern. The Committee welcomes the Council's efforts to re-establish itself in Iran and Zimbabwe, its increased focus on China, and its progress in implementing NAO suggested administrative reforms (HC 625, session 2007-08, ISBN 9780102954173). 2009-10 will be a difficult year for the British Council and further cuts in staff and services may be unavoidable. In these circumstances it is important that the Council concentrates its activities on its core business and key objectives.
The Foreign and Commonwealth Office (FCO) has made good progress in its financial management, aiming to establish itself as one of the best departments in Whitehall in this respect. It has shown strong leadership in raising the profile of good financial management across the Department. Up to 2007-08, however, the FCO has underspent consistently against its budget. The Department has introduced a financial management improvement programme "Five Star Finance", the aim of which is for the department to be a Whitehall leader in financial management. It currently rates itself at three and a half stars on a 1(low) to 5 (high) scale, a rating confirmed by NAO. The FCO operates in a challenging environment in terms of the global nature of its operations. The fluctuations of global currency markets pose particular difficulties for the Department. Until 2007-08, its budgets were protected by the Treasury from exchange rate fluctuations. When this protection was withdrawn, the FCO introduced alternative measures to manage its exposure, principally the forward purchase of major foreign currencies. It needs to ensure that its finance team has the right skills and experience to manage the financial risks it now faces. The FCO is taking action to avoid future underspends against its budget. In other respects, FCO's financial management has improved. The accuracy, reliability and timeliness of its financial reporting have all been enhanced. In 2007-08 it laid its accounts on 30 June, the earliest date it has ever achieved after the March year-end.
From the environment to eating habits, and from the economy to equestrianism, this handbook combines material and detail with coverage of recent policy developments in Britain. Tables, maps, diagrams and colour photographs are used to illuminate a wide range of topics, and to mark the 50th anniversary of the Central Office of Information, there is a section of photographs reflecting life in Britain over the past five decades.
Against a backdrop of historically weak financial management and significant under-spending, the Foreign and Commonwealth Office has made considerable progress over the past three years to improve the accuracy, reliability and timeliness of financial information. Having recognised the need to take action, the Department set up its 'Five Star Finance' project which is due to completed in the summer of 2010. Of particular benefit has been the recruitment of a professionally qualified finance director and increasing the number of professionally qualified accountants within the finance function. An important factor has been the need for better information on the costs of individual embassies and this has been strengthened. Further action, though, is still required to implement a workable and effective system of costing activity in all locations to enable it to make informed decisions about its operational priorities. Given that over half of the Department's expenditure of some £2 billion is paid out in foreign currency the Department has suffered a significant reduction in purchasing power as a result of the weakening of the Sterling. The Department now forward purchases US dollars, euros and yen but with input from the Treasury it also needs to work with other Departments to identify the most effective way to manage exchange rate risk for the government as a whole. The Department confirmed that its aim is to maximise the benefits from each of its embassies in pursuit of British trade and foreign policy interests and that it has no plans to sell-off any of its prestigious buildings around the world
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