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PN A8

12 July 2004

FCO Spending Review 2004 settlement

Foreign and Commonwealth Office (FCO) spending in 2007/08 will be £188m higher than this year under new spending plans announced by the Chancellor today.

This extra funding builds on the significant increase announced in 2002 and will help FCO ensure the security of its overseas network of 233 posts in the higher threat environment following the Istanbul bombing last year. It will also enable FCO to continue to deliver against the key international priorities facing the UK, including Iraq, the Middle East and the threats posed by terrorism and Weapons of Mass Destruction (WMD).

The Global Opportunities Fund, created in 2002 to promote sustainable development, human rights and economic and political reform in transitional and developing countries, will, at £180m over three years, be 50% higher over this Spending Review period.

Building on their settlements in the last Spending Review, the British Council’s budget will be £24m higher in 2007-8 compared to this year with the BBC World Service’s budget £27m higher.

Following Sir Peter Gershon’s review of efficiency, FCO has also committed to realising at least £118m efficiency gains by 2007/08 through measures including improved Information and Communication Technology (ICT) and more efficient procurement practices. These plans mean that more money will be redeployed away from back office functions to frontline delivery areas.

The Chancellor of the Exchequer, Gordon Brown said:

“This settlement builds on the generous increases of 2002 and recognises the central role that the FCO play in promoting the Government’s international objectives of international security and global prosperity. In particular, it will help ensure that staff can continue to deliver the high quality outcomes for which they are renowned in a safe and secure manner, thus maintaining the UK’s global influence.”

The Foreign Secretary, Jack Straw added:

“The security of UK personnel has always been of paramount importance and this settlement will ensure that we can take the necessary steps to reduce the threat to those posts most at risk. There are many challenges facing the UK over the coming years, such as the threat of international terrorism and WMD, as well as rising demand for consular and visa services. This settlement will help FCO meet those challenges.”

Details

• FCO has received total resource and capital DEL additions of £0/141/175m over the SR2004 triennium. In total DEL terms this is an increase of £0/91/110m at an annual average real growth rate of 1.4%. This includes £0/35/33m capital and £0/35/50m non-cash.

1 Full resource budgeting basis, net of depreciation

• Between 1998 and 2008, the FCO budget will have increased by over 50%.
• The Global Opportunities Fund (GOF), which currently stands at £60m per annum, will be maintained over the SR period, totalling £180m compared to £120m over SR02.
• The Global Conflict Prevention Pool will be maintained at £74m over 2005-08, underlining the importance that the Government attaches to this area and in recognition of the Pool’s success to date.
• Building on their particularly generous settlements in SR2002, the British Council has received additions of £0/5.5/11m and the BBC World Service £0/6.5/13m.
• FCO have committed to find efficiency gains of £118m over the Spending Review period, of which the British Council and BBC World Service will contribute about a quarter. These will be realised through measures including reduced back office functions, more efficient procurement practices and improved ICT.
• The FCO Strategy, published in December 2003 and available at http://www.fco.gov.uk/, sets out the key international objectives for the UK and how the FCO will adapt in order to meet those challenges.
• Following on from that Strategy, FCO’s own re-organisation will be key to ensuring value for money and maximising the UK’s impact on the global stage. ‘The Organisation Project’ is looking to re-structure the FCO headquarters with more of an emphasis on thematic (e.g. counter-terrorism) rather than geographical directorates. These thematic centres of expertise will then be able to prioritise and direct funding to the geographical areas where it is most needed.

Notes for editors

1. Media enquiries to HM Treasury Press Office at 020 7270 5238.

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