Foreign &
Commonwealth
Office
Sir Simon Fraser KCMG
Permanent Under-Secretary of State
Foreign & Commonwealth Office
King Charles Street
London
SW1A2AH
Mr Crispin Blunt MP
Chairman of the House of Commons
Foreign Affairs Committee
House of Commons
London SW1A OAA
Tel: 020 7008 2150
Fax: 020 7008 3776
Email: [email protected]
www.fco.gov.uk
[by email]
27 July 2015
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QUARTERLY UPDATE ON FCO MANAGEMENT ISSUES.
It was a pleasure to host you at the FCO Leadership Conference and then again in
the FCO on14 July. It is usual practice for the PUS to send you a quarterly update on
FCO management issues. However, due to the election, this latest update covers the
period January 2015 to July 2015.
My final months as Permanent Under-Secretary have seen another busy period in
foreign affairs. These have included major incidents such as the earthquake in Nepal
in April which resulted in the deaths of 9,000 people including 2 British nationals and
the dreadful attack in Tunisia in June in which 38 people were murdered including 30
British nationals. Migration issues, the serious economic situation in Greece, the
threat of extremism and preparations for the renegotiation and EU referendum have
all required significant diplomatic activity. I want to highlight the Iran nuclear talks
which concluded in a deal that was the result of more than a decade of diplomacy,
with consistently strong UK engagement and involvement, led by the FCO, involving
many parts of government and many parts of our global diplomatic network. This is
an important example of the value of diplomacy.
Last month we shared with you an advance version of the FCO Annual Report and
Accounts 2014-15. On 29 June this was signed off by the National Audit Office and
laid in Parliament (copies were sent to the Committee). The report sets out how we
have performed against our priority outcomes in 2014-15, including case studies. It
also provides an update on Diplomatic Excellence and gives accounting and
expenditure information.
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We have now met our £100 million efficiency target agreed under the 2010 Spending
Review. Further savings of £22 million for this year 15/16 were agreed under the
2013 Spending Review and you will be aware that in June the Chancellor asked us
to find a further £20 million for 15/16. We are on track to meet our 10% UK Based
headcount reduction by March 2016. Work continues on the One HMG Overseas
Agenda which brings together all parts of the British government overseas to
improve HMG's effectiveness and efficiency overseas. The UK Estates Reform
programme should be completed this year though there have been some delays in
some aspects of the project which will not stop us leaving the Old Admiralty Building
on schedule. Modernisation of our systems including the Technology Overhaul
programme to achieve a significant upgrade to our IT are also big priorities: full
implementation will be dependent on funding agreed under the expected 2015
Spending Review. We have also appointed Danny Payne as the new Chief
Executive for FCO Services. He started in this new role on 1 July.
POLICY
The Diplomatic Academy was formally launched by the Foreign Secretary in
February this year. Its Foundation Level curriculum was introduced in April. We are
supporting staff to access it and make full use of the learning opportunities it
provides. It is available to staff across Whitehall who work on international issues.
From October a City and Guilds accredited qualification will be available to staff who
complete and pass Foundation Level. The Practioner and Expert Level curricula are
now under development.
Protocol Directorate is ensuring smooth-running visits to the UK by senior foreign
representatives, including the State Visit by President Xi of China this Autumn. Early
planning for the commemoration of the Battle of the Somme· in France in 2016 has
started. You will have seen the annual statement on the conduct of the foreign
diplomatic corps in the UK, including serious offences allegedly committed by
diplomats, and outstanding parking fines and other debts owed by diplomatic
missions.
PEOPLE
We will shortly begin negotiations with the Trades Unions on the pay deal for UK
based staff for 2015-16. Median average pay at some grades in the FCO is below
other Whitehall departments operating on the FCO's platform overseas (for example,
around 10% behind at C4, 06 and SMS1). We have secured HMT agreement to
move money from non-consolidated bonuses to fund a competency point of up to
10% for C4 and 06 officers after two years service subject to satisfactory
performance. This is in line with public sector pay policy. HM Treasury guidance
also increases all government departments' pay bills by 1% this year. We continue to
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take steps to make local staff pay more affordable and sustainable for the long term
although this is creating recruitment and retention issues in some of our Posts.
We have just completed validation of performance and talent ratings for senior staff
and for UK based staff in the Band D delegated grade (civil service grade 6/7) and
have met the centrally-fixed distribution for senior grade (SMS) staff. We have also
implemented arrangements whereby staff in UK based Bands C (civil service grade
HEO/SEO) and D delegated grades receive performance pay if they are in the top
'exceeded' box for performance. This will apply to all UK based staff, including those
in Bands A and B (civil service grades AA- EO), from now on.
The FCO Management Board agreed five priorities for diversity, based on
consultations with staff associations and diversity champions, and building on the
Civil Service Talent Action Plan (TAP).This was in part in response to the
Committee's report on the FCO's Performance and Finances 2013/14 which said we
were not doing enough to support gender diversity. We have recently been able to
report improvement: Women now make up over 27% of the Senior Management
Service (SMS) and 45% of our Management Board. We have 36 female heads of
mission (19%) up from 22 in 2008, and set to reach 50 appointed by the end of this
year. Cabinet Office have rated us in the top four departments for implementation of
the civil service Talent Action Plan.
Network
ONE HMG OVERSEAS
To date, the One HMG Overseas programme has been delivered through five work
streams: Regionalisation; Consolidation; Co-location; Harmonisation;
Collaboration. We made significant progress on delivery of these work streams, as
confirmed by the NAO's report of March 2015. We have saved at least £48 million as
a result of this work.
Implementation of the Regionalisation Programme is now complete with financial
benefits of over £Sm net annual savings achieved on schedule, and 8 new regional
hubs delivering HR, finance, procurement and transaction processing to our global
network. The Consolidation with DFID Programme is nearing completion, with the
FCO providing 26 DFID Country Offices with corporate services. 3 Country Offices
remain, with Sierra Leone and Nigeria due to consolidate by the beginning of 2016­
17 (Yemen is currently closed). DFID's overseas assets worth approximately £35m
will transfer to FCO by the end of the financial year.
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As part of Spending Round preparations, the Network Board has agreed that One
HMG Overseas partners should coordinate SR15 bids for the cost of the overseas
platform. We are working on a methodology for doing so. The outcome should result
in greater transparency around the costs of the platform and a more whole of
government approach in terms of spending decisions by individual departments.
The aim will continue to be to improve policy impact overseas while driving improved
value for the taxpayer.
FINANCE
In response to the Chancellor's announcement on 4th June of a £20m cut to our
resource delegation baseline, we have applied these reductions - including £3.5m
from the non-ODA grant-in-aid to the British Council. Work continues to identify
further efficiencies within the business, to meet the expected challenges of the SR 15
settlement. To improve the FCO's management of programme funds handled from
the new £1 billion Conflict, Stability and Security Fund (CSSF), we have
implemented changes to our internal financial management systems and all CSSF
finances are now being reported through online dashboards to the CSSF secretariat,
improving the quality of financial management information available to Board
members.
ESTATES
Progress continues with our UK Estate Reform project, which will consolidate all
London staff into our King Charles Street (KCS) building, allowing us to move out of
the Old Admiralty building, saving the FCO £5 million per annum in running costs.
We are creating the space to accommodate all of these staff with more open plan
offices and encouraging more flexible working. The second and third floors of KCS
are being refurbished and the first directorates moved to their new offices in March.
The timetable for completing construction work will be extended due to an error on
the part of the contractors. The full extent of this is not yet clear, but the issue is
being closely managed. We continue to address health and safety and legal
statutory compliance works through our centrally managed global maintenance
investment programme.
I attach an annex of property sales and purchases achieved and planned for 2014­
15 and 2015-16. I would be grateful if, as in the past, the Committee would keep this
information in strict confidence due to the commercial sensitivities. This year the
majority of funding for capital projects has to be found from sales, hence the long
list. As always, I add the caveat that the future sales programme is subject to
change and will be balanced to meet the capital requirement.
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SECURITY
Across the network, we continue to experience a high tempo of security incidents,
ranging from crime through civil unrest to conflict, terrorism and harassment of staff
by hostile intelligence services. As a result, we are constantly adjusting our posture
and/or deploying a range of protective equipment, such as armoured vehicles,
tracking, body armour etc. Since my last letter to your predecessor, a sustained
period of civil and political unrest in Yemen resulting in a deteriorating security
situation there led to the evacuation of our Post in Sana'a in February. The
subsequent Saudi-led bombing campaign damaged our Embassy and injured one of
our locally employed guards.
There were two separate incidents in Kabul in May which resulted in the deaths of a
British, and dual British-Afghan, nationals. The former, employed as a close
protection officer by Hart Security, was killed during a SVBIED attack on a EUPOL
convoy; while the latter, who was a British Council contractor working on a project to
strengthen civil society in Afghanistan, was killed in a complex attack at a Kabul
hotel involving a suicide bomber and armed insurgents. The British Council have
reviewed their policy of allowing some ex-pat contractors to be based outside the
Embassy in Kabul, and the remaining British-Afghani contractor has moved onto our
site.
The physical threat from lslamist terrorism to our staff remains high and is evolving.
Da'ish/lSIL have expanded their physical reach and influence through things like
sophisticated use of the internet to stimulate so-called "lone-wolf' attacks. There
have been a series of deadly attacks, including those recently on the second Friday
in Ramadan in Tunisia, Kuwait and Grenoble. New threats continue to emerge and
we are monitoring them closely.
INFORMATION TECHNOLOGY
Cyber activities against the FCO - including major phishing attacks earlier this year ­
confirm that there is a persistent cyber threat to the UK. A lthough our robust
defences help mitigate their effect, these attacks underline that cyber defence is
critical to delivering UK diplomacy.
The FCO's main information technology system, Firecrest, is ageing and
increasingly failing to meet current requirements. This poses a serious operational
risk. Work is in hand for a Technology Overhaul programme to replace Firecrest over
the next three years. The FCO Management Board is considering the options for the
overall scope and affordability this month.
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On Knowledge Management, in response to the Home Secretary's announcement
of the Goddard Inquiry, the FCO has implemented a moratorium on destruction of
any information relevant to the terms of the Inquiry. We are currently reviewing the
scope of our moratorium in line with guidance recently received from the Inquiry.
There will be resource implications involved in keeping additional material. We
expect close media scrutiny, including of the FCO's handling of cases relating to
former FCO staff. We are working on a new record management system as part of
Technology Overhaul. In the meantime, we are simplifying the process of registering
documents to help Departments meet the FCO's obligations under the Public
Records Act.
Simon Fraser
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