(2) what proportion of his Department's budget was spent on foreign currency transactions in the latest period for which figures are available; and if he will make a statement;
(3) what estimate he has made of the cost to his Department of managing the system of forward purchases of currencies in the latest year for which figures are available; and how many staff have responsibilities connected to this function;
(4) how much was (a) claimed from and (b) returned to the Treasury under the Overseas Price Mechanism in each year since the mechanism's adoption;
(5) with reference to the answer of 16 March 2009, Official Report, column 219W, on departmental public expenditure, how many UK overseas posts have required additional funding to maintain the purchasing power of their local budget since Autumn 2007; and how much additional funding was provided for that purpose;
(6) which UK posts overseas have reported a further decline in the purchasing power of their local budget since that answer was given; and what the value in UK sterling was of the total reported decline.
Over half the Foreign and Commonwealth Office's (FCO) spend is in foreign currencies. Exchange rate pressures impact FCO in three main areas: overseas Posts' spending in foreign currencies; contributions to international organisations and peacekeeping; and spending in sterling on items affected by exchange rates. Until 2007, FCO and the Treasury used the Overseas Price Movements (OPM) mechanism to maintain the local purchasing power of our Posts (the first category) despite any movements in exchange rates and differential inflation rates. Recent OPM transfers between FCO and HM Treasury are:
Financial year Impact on Posts (million) Notes 2004-05 -14.1 Returned to HMT 2005-06 -4.9 Returned to HMT 2006-07 -9.6 Returned to HMT 2007-08 +1.4 HMT Funded FCO Pressure 2008-09 +59.2 OPM withdrawn 2009-10 +80.0
The withdrawal of OPM became effective from April 2008. Since then, 190 of our Posts have faced exchange rate and inflationary pressures. In 2008-09 the exchange and inflation rate pressure on our Posts' budgets was £59.2 million. In 2009-10 the exchange and inflation rate pressures on our Posts' budgets is expected to be £80 million. I have placed details in the Library of the House. Additional exchange rate pressures have impacted our international organisations subscriptions, peacekeeping assessed contributions and some other budgets spent in sterling but impacted by exchange rate movements.
The FCO monitors the impact of foreign currency movements on budgets on a continuing basis. The FCO Board of Management has met frequently and offered me advice on how best to meet the estimated impact (including OPM) of over £100 million in 2009-10.
FCO's discretionary budget from which Posts are funded is £830million (which includes FCO's contributions to UKTI, but excludes all our contributions to UN Peacekeeping and the costs of International Organisations subscriptions). Our Posts have responded impressively with a range of efficiency savings. Programme spend has also been reduced to meet the new budgets.
The foreign currency forward purchase programme to help manage our foreign exchange needs is carried out through our Strategic Treasury Team of three people, drawing on wider skills as and when necessary. A number of more senior staff, including the FCO's Finance Committee, have overseen the operation. HiFX Intelligent Financial Services also provide specialist support at the cost of £41,400 per year.
I refer the right hon. Member to the replies I gave on 1 April 2009, Official Report, columns 1194-95W.
I refer the right hon. Member to the reply I gave him on 1 April 2009, Official Report, column 1194W.