The FCO departmental report and resource accounts 2008-09 published as HC 460-I,II (ISBN 9780102961614)

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 examines the Government's record in relation to securing the human rights of British citizens and others overseas and its work in promoting human rights in other countries. The report covers rendition, allegations of UK complicity in torture, transfers of detainees in Iraq and Afghanistan and the regulation of private military and security companies. It also provides an examination of the international human rights framework and human rights abuses in individual countries of concern including Burma, China, Colombia, Iran, Iraq, North Korea, Pakistan, Russia, Saudi Arabia, Somalia, Sri Lanka, Sudan, Zimbabwe and also in the UK's overseas territories.

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.

This report examines the administration, expenditure, activities and achievements of the MoD during the 2008-09 financial year, as detailed in the Ministry of Defence annual report and accounts 2008-09 (ISBN 9780102962239). It continues a series of inquiries and, indeed, the Committee sees it as cause for concern that the NAO found the need to qualify the MoD's resource accounts for the third consecutive year. Whilst it is acknowledged that capability in theatre must be the Department's first concern, failing to maintain accurate and full information on personnel and to keep track of assets has the potential to threaten the long-term capability of the Department, including operational capability.

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.

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 Foreign Affairs Committee concludes that the UK has an extremely close and valuable relationship with the US in specific areas of co-operation, for instance in the fields of intelligence and security; that the historic, trading and cultural links between the two countries are profound; and that the two countries share common values in their commitment to freedom, democracy and the rule of law. However, the use of the phrase 'the special relationship' in its historical sense, to describe the totality of the ever-evolving UK-US relationship, is potentially misleading, and its use should be avoided. The report examines key areas of co-operation: military and defence; intelligence; security; nuclear. Other sections cover: the FCO's US network (under unacceptable financial pressure); the British political approach to UK-US relations; the future of the relationship. The Committee believe the UK must continue to position itself closely alongside the US in the future, recognising the many mutual benefits which flow from close co-operation in particular areas. But the UK needs to be less deferential and more willing to say no to the US on those issues where the two countries' interests and values diverge.

The Committee welcomes a strong performance by the BBC World Service across all media in 2008-09, particularly the unprecedented growth in online audiences. The report examines the overall performance, noting a global reach in radio and television of 185 million adults a week and the high regard for objectivity and relevance achieved by the Service in surveys of customers. Ratings for value and loyalty were also high in some countries. The report then reviews specific successes and problems in particular countries or services: BBC Arabic television; BBC Persian television; other language services; online and mobile technology; China; Russia; Sri Lanka; Rwanda; Azerbaijan; and administration. The Committee concludes that 2009-10 will be a difficult year for the BBC World Service and that further cuts in staff and services should be avoided. The World Service is of key importance in providing a source of high quality and politically independent broadcasting worldwide.

On cover and title page: House, committees of the whole House, general committees and select committees