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Foreign and Commonwealth Office: Funding

Volume 768: debated on Tuesday 9 February 2016

Question for Short Debate

Asked by

To ask Her Majesty’s Government what is their policy for funding the Foreign and Commonwealth Office, in the light of their foreign policy interests.

My Lords, I welcome the opportunity to clarify how the Government are matching the funding of our diplomacy in relation to our foreign policy priorities. I am grateful to all noble Lords who are participating, with all their experience, and to the Minister for responding.

I support the Government’s commitment in the Queen’s Speech to continue to play a leading role in global affairs, and I welcome the autumn spending review decision to preserve the FCO budget in real terms. However, I suggest that there is still a serious mismatch between our foreign policy priorities and available diplomatic resources. The result is that we cannot properly fulfil our ambitions.

We need to look at this issue in a broader context to see why this is the case. Between 1997 and 2010 there were considerable reductions in the service. These included the closure of more than 30 UK overseas posts across Africa, Latin America and Asia. The coalition Government then embarked on tough new economic policies. During their five years in office, this led to a 16% core spending cut in real terms and a consequent reduction in UK-based staff from just under 5,000 to just under 4,500, although this was buttressed by a larger locally engaged staff.

I should acknowledge that in 2011, the then Foreign Secretary, now Lord Hague, did everything he could to retain our embassies. As a result, the total number of overall posts overseas has increased from 258 to 268, and the numbers are maintained in 168 countries and nine multilateral bodies. However, the danger now is that our very high-quality UK-based staff are too few, trying to do too many things. They are too thinly spread.

I was struck by the Foreign Secretary’s own admission of this when he said to the Select Committee on Foreign Affairs, just before the Autumn Statement:

“The ability to maintain the network at its current level and to sustain that in the future, and the ability to have a sufficient density of policy-making capacity here in London so that we can lead the foreign-policy-making process across Government and beyond are the key to the Foreign Office’s raison d’etre”.

He went on to say that,

“we are pretty close to the irreducible minimum of UK-based staff on the network”.

By comparison, we spend less per capita on diplomacy than the United States, Germany, France, Australia and Canada.

Another way of looking at this is in the context of HMG’s spending on international policy. Of every £1,000 the Government spend, £2 goes to the Foreign Office, £50 goes to defence and £10 goes to DfID for development aid. I note that the MoD and DfID shares are now formally linked to international targets; the FCO’s is not, and so is vulnerable to squeeze.

It is increasingly clear that the capability of the FCO to undertake its vital work has been declining. There have been noticeable weaknesses in managing the outcome of crises in Iraq and Afghanistan and in the operational handling of the Russia/Ukraine region, Syria and Libya. Also, for example, only 23% of the jobs in eastern Europe and Central Asia and only 27% in the Middle East and north Africa have the required number of local language speakers. In this context, I welcome the new Language Centre and the Diplomatic Academy. Further problems arise from underinvestment in modern equipment and ageing IT systems.

It seems to me that we now face a choice: either we continue to play a global role, punching above our weight, as the noble Lord, Lord Hurd, once suggested, or we recognise that we are no longer willing to afford what it takes, sharpen our priorities and reduce or eliminate some of our roles. I, like the Government, am in favour of the first choice. There are many reasons for this.

In my student days at Cambridge, I had the privilege of meeting Dean Acheson, who had famously proclaimed that Britain had lost an empire but not yet found a role. I believe that this is no longer true. We have seen a successful transformation of an empire into a Commonwealth of 53 equal nations whose potential we have yet to fulfil. We are anxious to play a full role globally, but no longer as an imperial superpower.

It is worth reminding ourselves of our position in the world. We are the fifth-largest economy. We are a nuclear weapon state within the non-proliferation treaty. We are members of more multilateral international bodies than any other nation, ranging from the UN—with our permanent membership of the Security Council—to the EU, NATO, IMF and so on. We can add to all this our “accumulated estate of soft power”, so well summarised by the 2014 Lords Select Committee on Soft Power, ably chaired by the noble Lord, Lord Howell. It showed that we have the strongest cultural assets in the world. We are a leading digitally connected society. We are ethnically diverse and therefore outward looking. The BBC World Service and the British Council are outstanding in communicating our values to the world.

At the same time, Britain’s security and prosperity are under threat and likely to remain so. If anything, the world is more troubled than it was in 2010. Moreover, it is changing fast. We have seen the rapid rise of China, an aggressive Russia, disintegration in the Middle East spurred on by Daesh, a weakening of the EU and of transatlantic cohesion, an international humanitarian system at breaking point, with 60 million displaced people and mass migration towards Europe, and a sketchy global economy and financial system, in addition to the fact that the end of the Cold War has seen the return of local conflicts, many failed states and the increase of terrorism. In the face of all this, it must be in our British interests to continue using our diplomatic assets around the world, and within alliances and international organisations, to work actively for peace, stability and the promotion of free trade. But we can only do that if our diplomacy is adequately funded and supported.

In my five years as a Minister in the FCO, I grew to admire the immense skills and intellectual judgment of many independent-minded diplomats. But I recognise that the role of the diplomat is changing with the digital age. The range of tasks facing a diplomat today demand a multiskilled approach. Our embassies provide a platform for 26 government departments, promote trade, deliver consular services and contribute to global issues such as tackling climate change and cybersecurity. This must mean attracting and retaining sufficient highly qualified people, who these days have many other career choices open to them. If we spread them too thinly around the world and give them inadequate training, we will both overstrain them and fail to provide the quality needed for an effective foreign policy.

I suggest we need more of these highly qualified people as well as better resources to support them. I am not convinced that the settlement the FCO has now reached with the Treasury for the next five years provides for this. The cost would be peanuts compared to the DfID budget of over £13 billion. I want to see us using all our strengths as a country—strengths that we tend to understate and underplay—to try to contribute to a better and more stable world.

We need to take every opportunity within the Commonwealth to use our soft power to our mutual benefit. We need to be active in Europe, whatever form it takes. We need to remain a robust partner in NATO through strengthened Armed Forces and as a nuclear power. We need to be actively working with our friends in the Gulf countries to reduce tension and to end conflict. We need to work hard to understand the importance of new relationships in Asia while keeping close to our neighbours in Europe and our old friends in the States. In all this, effective diplomacy will be at a premium. I look forward to hearing the Minister’s response to this debate and, in particular, to the urgent need for the Government to provide adequate diplomatic support to enable us to continue to play an effective global role.

My Lords, I listened with great respect to that masterly overview from the noble Lord, Lord Luce. He has no greater admirer than me for all that he achieved as a Foreign Office Minister, and indeed later in Gibraltar. I would seek to correct him on only one minor point. He paid us all some advance compliments on being great experts on foreign affairs. Alas, not me. I was never considered by the powers that be to have the subtlety of mind to be appointed to the Foreign and Commonwealth Office. I equally admire the work now being done by Philip Hammond, building on that of his predecessors such as my noble friend Lord Hague, in continuing to focus the FCO within resources.

This is a never-ending task: it will never be completed, but has to be done year in, year out. We must recognise that in an age of austerity—or restraint, or whatever the current polite phrase is—it is far from over, and that any great expenditure increases in the next five years are unlikely, after the five-year settlement. We must also recognise, however—this is a positive point—how many other departments are pitching in, and increasingly so, on the foreign affairs front. Some of them were enumerated by the noble Lord. They are not just the obvious ones such as DfID or the MoD: there is also BIS, with its welcome refettling of UKTI activities to create greater focus, as well as helping to proselytise for the university achievements of this country worldwide. The Department for Education is also increasingly concerned with educational exports—and other departments are getting involved too.

All this is becoming much more joined up, albeit perhaps not by design but by chance. Many departments are now much more foreign-facing than they may have been when the noble Lord, Lord Luce, first went to the Foreign and Commonwealth Office. That is a very good thing, and should be encouraged across Government. I urge the Minister to carry back the message to Foreign and Commonwealth Ministers that they should tell taxpayers just how many other departments beside the FCO are intimately involved in foreign affairs, albeit sometimes at one remove.

Finally, if I may strike a personal note, I much admire the individual civil servants in the Foreign and Commonwealth Office who are on the front line, dealing with difficult and sometimes, I have to say, morally challenging matters—for instance, if they are in Saudi Arabia, wanting to maintain our important strategic interests there, but in a country that routinely crucifies and cuts off heads week by week. That is a great moral challenge for those young men and young women. It is exactly the same with Turkey—a country that is using military force against its own citizens today, but is also playing a very welcome and important role in the Syrian refugee context. Those are truly examples of the diplomat’s personal dilemma, which people must face on a day to day basis.

I end by saying that the people of Gibraltar would wish that the noble Lord, Lord Luce, was back there, dealing with an increasingly intransigent Spanish Government, who are conducting their affairs in a most un-European way.

Not for the first time, I thank the noble Lord, Lord Luce. I thank him for having introduced this debate today, for having done it so well, and for having set out the challenges so clearly. The first reality of existence, and certainly the first reality for Britain, is that we are all now part of a highly interdependent world. The challenge for politicians in this generation, under Governments of all persuasions, is the contribution, and the value of that contribution, that we can make to meeting this global reality—strengthening global governance and the effective delivery, for people all over the world, of the policies that are necessary.

This is true of migration. We are only beginning to see what is going to face us in the future, with climate change and the rest. It will become a gigantic issue, which will require all nations to co-operate. It is obviously also true of security, and of economic affairs and many other things.

One thing that has come out in the debate is that many significant departments of state have, in effect, their own foreign policy. That makes the Foreign Office’s work in co-ordinating that reality, and in making sure that the policies individual departments are following are well informed and based on sound judgment, more important than ever. That is tremendously demanding.

It is also important to recognise that if we are to make an effective contribution to global governance, we need good intelligence—we need to be able to understand the world in which we are working. That makes the front-line work of the Foreign Office crucial. One of the changes we have to make in any leadership role we may want to play is that we have to understand that we cannot cruise on our past status—we cannot take for granted that the world is going to listen to us because we have been a great power, an imperial power, and the rest. We have to earn our laurels and that means the quality of what we are contributing will be vital. That rams home again the crucial challenges to the Foreign Office and its personnel.

When I was in the Foreign Office, like the noble Lord, I was incredibly impressed by the quality and dedication of the people I was working with. But it is a changing demand and therefore we will have to have in the Foreign Office the people who are right for meeting that demand and playing it in the directions I have indicated.

I thank the noble Lord, Lord Luce, for introducing this debate. I hope it will be one more spur to seeing that whatever we do with the future of public expenditure and government priorities in this country, the Foreign Office will remain pre-eminent.

My Lords, I, too, congratulate the noble Lord, Lord Luce, on securing this debate and the admirable way in which he introduced it.

I want to talk about something related. In last year’s strategic defence and security review, the Government decided to place greater emphasis on soft power as part of their national security strategy. The decision to bring the funding of the BBC World Service back into the remit of the Foreign Office, with a budget of £85 million each year by 2017-18, was therefore widely welcomed.

I know that many noble Lords will recall their past dependence on the often crackly and faint yet measured tones of the BBC World Service shortwave reception. Calmly, it brought reliable news and comment to the remote and sometimes unstable locations to which noble Lords’ employment had taken them. Currently reaching 308 million people worldwide, and with a goal to reach 500 million by 2022, the BBC World Service has established an envious reputation for delivering trusted, impartial news. Plans for investing here, where a global gap has never been wider, will be very welcome, particularly in Africa, where audience figures outstrip all other areas of the world.

During previous rounds of spending cuts, replacing the extensive World Service network of shortwave radio transmitters with cheaper, local, city-based FM stations seemed like a good wheeze. The problem was, and is, that these FM stations are particularly vulnerable to political interference and closure when countries become unstable. Closure of FM stations compromises the delivery of the BBC’s flagship: trusted and impartial news. In Answers to Written Questions, the Government have told me that forced closures of FM stations have occurred in numerous African countries, including Somalia, Sudan and Rwanda—perhaps not surprisingly —but also, I believe, in Nigeria. Nevertheless, while audiences have switched from shortwave to FM, the total audience across all platforms in sub-Saharan Africa has risen from some 53 million to 82 million over the past 10 years.

Here lies the challenge to increasing the BBC World Service’s audience from 308 million to the target of 500 million by 2022: half the world’s population is under 35. The BBC’s future plans need to target aspiring youth overseas. The rise in TV audiences will continue to outstrip radio; digital platforms will continue to expand; and, particularly in Africa, mobile phone technology will challenge other news-delivery media. For the BBC World Service to keep pace and to be ahead of the curve in the future, there has to be some certainty now in funding streams beyond 2018.

My Lords, the subject of this debate is broad and important, but time is very short indeed, so I shall concentrate on one issue: the importance of regional and country expertise if we are to have an effective foreign policy and, it follows from that, the need for consistent funding to support it.

A good many years ago, when I was a relatively junior member of the Foreign Office, I was summoned to 10 Downing Street to brief the Prime Minister on a visit to south-east Asia. The meeting started with the Prime Minister, the then Mrs Thatcher, roundly condemning the Foreign Office for its written briefing: what was the point of it all? She could get just the same sort of thing from the special supplements in the Financial Times.

Of course, that was all to ginger people up, and there is no harm in that, but it reflected a view that was beginning to be current then and which has continued in the minds of some people that globalisation means that the whole world is coming together, similarities between countries are now much greater, so why, then, have specialist diplomats? Rely instead on the newspapers and the news media. It was not true then; it is not true now. I am no expert on the area, but it seems clear that in recent years, we have desperately needed more and greater expertise on Iraq and Afghanistan and now on Syria and Libya as well.

There have been very welcome signs that the Foreign Office, particularly under the noble Lord, Lord Hague, has again taken to heart the traditional need for regional and language expertise. The setting up of a new Foreign Office language school, to which my noble friend Lord Luce referred, just over two years ago, is a very welcome sign. After all, the value of learning a language is not just the ability to speak it; it is a means of understanding the history and culture of a country—in other words, to understand how people think. This sort of training cannot be short-term; it needs time, effort and consistency.

I hope that the Minister can reassure us all that regional and country expertise, together with language training, is now high on the agenda of the FCO, and that funding will be there to achieve it. It would also be useful to know how many people are now being trained in each year in so-called hard languages: in particular, Arabic, Japanese and Chinese. Perhaps it is not fair to ask for an answer of the cuff, but if the Minister would like to write to me and place the letter in the Library, that would be very useful.

My Lords, I, too, thank the noble Lord, Lord Luce, for his excellent résumé. I also declare interests as chairman of the Commonwealth Enterprise and Investment Council and as the Prime Minister’s former trade envoy. In the limited time available—which is shameful really; three minutes to talk about such an important subject—I will pose two questions to my noble friend and hope that he will respond either here or in writing.

We all agree with the noble Lord, Lord Luce, who put it beautifully, that resources in the Foreign Office are extremely limited and, much more importantly, unevenly spread. My first question is: how many people work on the European desk and how many work on the Commonwealth desk? I will give a rough answer: it is probably 10 to 15 on the Commonwealth desk and 100 on the European desk. The Commonwealth, incidentally, comprises one-third of the world’s population and 53 countries which all speak the same language. It is probably our oldest trading relationship, on which a small group of people in the Foreign Office work tirelessly to try to maintain the lights, under the spectacular leadership of a Minister, Hugo Swire.

My second question is about Africa. We have lost our pre-eminence. China is now overrunning Africa with its investment and its new set of rules, which are not necessarily conducive to our rules of engagement. When I was a Minister, I invited the Foreign Office to produce a report on how it should reallocate resources for Africa and redistribute personnel to reflect the differing and emerging countries. So my second question is: how has that report gone? Has it been enacted? Have steps been taken to make it happen? From the outside, it does not look so. I was with the Cameroon high commissioner yesterday. He was bemoaning the fact that no Cabinet Minister has ever visited Cameroon in its history. I think we could say the same for Angola, Mozambique and for a lot of African countries. This is shameful, given the resources and wealth that are now happening in these countries.

The Foreign Office is an excellent institution, but it is spread too thinly. It needs our support and it needs greater resources. It is up to us to put pressure on the Government—our own party—to ensure that resources are created for it.

My Lords, I should like to speak in support of the points made so eloquently and powerfully by my noble friend Lord Luce in his opening speech. I await with anticipation the contribution of my noble friend Lord Kerr, who ran the service for five years and who should certainly be listened to.

For my part, I should like to offer a view from the coalface at which I strove for some 35 years, including in Saudi Arabia. It is self-evident that the effectiveness of the Diplomatic Service depends on the quality and experience of our staff in the overseas posts. I was, therefore, shocked to discover that, in nearly half of them, there are two or fewer UK-based staff. I take nothing away from the value of local staff—they make a great contribution to many parts of our work—but the key task of interpreting a foreign society to our own society relies on capable and experienced staff, as the noble Lord, Lord Wilson, has just pointed out. Much of that art is learned from your superiors. In two-man posts, you are not going to learn very much; you are not even going to be there together for very long.

To be effective in any post requires a steady building of trust at senior levels in the other Government. This, in turn, requires that our representatives know the language, culture, history and the way that people think in those countries. This is absolutely vital. We have to earn our laurels, as the noble Lord, Lord Judd, pointed out. We have to be good but, sadly, this expertise has been hollowed out. It is almost beyond belief that about a quarter of the jobs in the Middle East that should have Arabic speakers do not have them. The cost of the lack of that expertise is and can be immense. It is surely apparent that the Government’s performance in recent years in Iraq, Libya and Syria has revealed at every stage an inadequate knowledge of the vertical, social realities of these countries.

The same remarks about expertise apply in London also. My noble friend Lord Luce quoted the Foreign Secretary as referring to,

“a sufficient density of policy-making capacity”.

Well, well, well. I think what that means is people who actually know what they are talking about. This is rather important because, if officials are going to stand up to Ministers, it is not good enough that they have simply read the same telegrams. They will not be taken any notice of. They have to speak from a real experience of the region; a real knowledge of the leaders of the countries we are talking about; how they think; what their priorities are, and what the pressures on them are. They need a long experience, the longer the better, especially in stable countries—if there are any left—in such countries that have had a stable Government for some time.

Regrettably, it has now become quite clear that the Diplomatic Service is stretched far too thinly. Its capability to promote and defend our national interest is declining and this is a decline which the Government must bring urgently to a halt.

My Lords, I welcome this debate on the funding and policy of the Foreign and Commonwealth Office. Important parts of UK foreign policy also concern working with other countries to create opportunities for UK business and to deal with major challenges that affect both developed and developing countries around the world. These include diseases, global climate change and, as is described in this week’s New Scientist, the transformation or long-term storage of nuclear waste, which may be a 1,000-year problem.

I hope that the Government will be more proactive in participating in the organisations of the EU, the Commonwealth and the UN, as other noble Lords have mentioned. In my experience as a chief executive of the Met Office, and now working with high-tech companies abroad much of the time, I have seen the technical and commercial value of collaboration with the EU networks and UN agencies. Also working with the Commonwealth is very important, particularly on climate change. The Foreign and Commonwealth Office and government departments are not seen by other countries to be as effective in advertising and making use of these collaborative programmes. Our embassies and government offices do not do not regularly fly the EU and UN flag. One embassy I visited celebrated pulling down the EU flag at the end of Britain’s period of the presidency and hoped that it would never have to put it up again.

The UK’s involvement in the EU and the UN is not advertised on the UK Government webpage. It is noticeable, however, that other EU countries that have bigger budgets, as has been commented on, nevertheless advertise their role in the EU very considerably. How would a foreign businessman or a technical institute know about the UK’s participation? Surely the FCO should be expanding its work in this way and demonstrating its participation. I hope the Minister will perhaps respond to that.

I am afraid that the House of Lords Science and Technology Committee, which has been looking into the consequences of the UK leaving the EU, has had evidence from UK and non-UK companies showing that UK business will lose its influence in steering the new technological initiatives that will emerge from Horizon 2020. In that event, the Foreign and Commonwealth Office and other departments will have to spend more money to ensure strong participation. It is very important for the Foreign Office budget that we remain in the EU. The days of a UK FCO just physically and metaphorically displaying the union jack should be over.

My Lords, I, too, commend the noble Lord, Lord Luce, for securing this all-too-brief debate. If money is short, why not try melding better together the efforts of charity and other bodies with those of FCO staffs in posts overseas?

I am a fellow of the Commonwealth Partnership for Technology Management—CPTM, for short. It has a remarkable track record: more than 20 years of organising yearly, or near-yearly large-scale meetings attended by heads of government or states from a variety of Commonwealth and other countries in the developing world. The host head will personally be present and take full part in the two or three-day event. All these heads are themselves fellows of CPTM. In addition to the wider gatherings, we have fellows only sessions. I have met and dined with heads on these occasions informally, without any of the normal protocol to arrange meetings or discussions with such individuals. Participants at these gatherings are drawn from business, labour, academia, the media, government and other public sector bodies. All can enjoy the freedom of direct interaction at every level, including with the heads attending. These meetings invariably lead to wide-ranging and fascinating exchanges between those present.

CPTM’s vision is to encourage by interaction a smart approach to activity between all sectors, to achieve win-win outcomes, and to reflect Commonwealth values of tolerance and co-operation rather than an attitude of beggar my neighbour and confrontation. Indeed, the fact that successive heads from those countries participating have been interested in CPTM and followed so closely the involvement with it of their predecessors in office, is a strong indicator that CPTM has lasting value. It has done much to help those developing nations and their leaders to formulate their vision and approach to national growth and prosperity.

I am afraid that UK Governments have shown scant interest in this successful enterprise and the work of CPTM. They miss out. Involvement in these gatherings would give local high commission staff the opportunity to network informally with key regional individuals and to better appreciate the complex of feelings and attitudes about the United Kingdom held by many of those from the developing world. May I encourage the Minister to get briefed about CPTM? I am, of course, willing to facilitate any meeting between the CEO of CPTM and the FCO to assist.

My Lords, I will speak not so much on funding, important as that is, but rather on our foreign policy interests. This country is by far the largest European provider of aid for refugees and displaced people from Iraq and Syria, and it is therefore very much in our interests that these large sums be spent effectively and fairly. I have two questions on our interests as regards Syria.

First, what are the Government doing to ensure that the largest share of food aid does not go to areas controlled by Assad? This will serve only to prolong the war and thus displace more people. Aid must, surely, go fairly to all those in need. Secondly, why has it taken from 2013 until just last month for British officials to visit the free cantons of north Syria? I was briefly in Jazira last May. It was quite easy to get in, yet it took the visit of the United States diplomat Mr Brett McGurk before our people went—with him—to Kobane. The cantons of Rojava may well hold the key to the future of Syria. We should therefore work with them. I look forward to the ministerial reply, since I have given him notice.

My Lords, my noble friend Lord Luce was indeed an excellent Minister and governor and deserves to be congratulated on having made every single one of the points that I had intended to make. Undeterred, I will add a couple.

First, the funding situation is a little worse that my noble friend describes. In my five years, the FCO secured real-terms increases in its vote every year, but in the 15 years since I left, there has been a real-terms cut of 20%. It is actually bigger than 20% if you think of its effect on the front line, because when you strip out the programme spending on UN contributions, international subscriptions and the conferences, exhibitions and stunts which are so popular with Ministers of every political complexion, what you are left with for funding the service is much more steeply reduced.

The paradigm case is language skills, and I entirely agree with the points already made. When I was Permanent Secretary, there were some 400 to 500 people —my noble friend Lord Green among them—who spoke Arabic in the service. There now are 131. When I learned Russian, I was one of about 300 in the service who spoke it; there now are 56. That is very worrying.

As my noble friend Lord Green said, what Whitehall, Ministers and businesses look for from the Diplomatic Service is considered advice from people who know what they are talking about because they have been in the country more than once. They have got about and know who is in and who is out, who is going to be the next President, and who is rising and who is falling. They know who, in each decision tree, is the real decision-maker or influencer. They have been round the bazaars and the restive provinces, and they know what is being said in the mosques. They have made friends and done favours. They have been to the funerals and to the weddings: they have become trusted, so they can go and listen. Most importantly, they have to be good listeners.

I worry that our staff, much more thinly spread than they used to be, are now required to spend far too much of their time preaching rather than listening. It seems to me that the key thing that the Foreign Office adds is local knowledge distilled from a long stay and lots of contacts. I wonder whether this is the reason we were blindsided by the Russians when they attacked Ukraine or why we unwisely derecognised President Assad on the grounds that we assumed he was about to fall. I wonder whether we sometimes have such a tin ear for the resonance in other countries of our EU rhetoric because we do not have enough people explaining the local impact and effect of our actions.

The noble Lord, Lord Luce, is quite right to talk about a mismatch. Our talk about a global role and global responsibilities will be more posturing than performance if it is not backed with adequate resources.

My Lords, I strongly agree with the noble Lord, Lord Luce, about the loss of analytical and linguistic capability in the Foreign Office over the past 20 years or more.

I spent a little time as a very junior member of the ministerial team in the Foreign Office saying that we should be spending more time looking at the eastern neighbourhood and being told that it was not a high priority. When the Ukraine crisis broke out, we were desperately short of people who understood Ukraine and Russia, and others who had retired had to be brought back in. That is a good example of how if you do not follow things through—if you do not understand the language or have sufficient understanding of where a country’s elite is coming from to be able to empathise, even if you disagree with its point of view—you get things wrong.

I also strongly agree with the dangers of reducing the number of overseas posts to a point when you have one or two that are home-based. We are asking the locally employed in a number of posts to do things which are, frankly, dangerous for them and, incidentally, do not provide good enough political reporting for us.

I disagree strongly with the noble Lord about whether or not we have a foreign policy. I have read the 1961 report to Harold Macmillan which said that unless we have a coherent European policy, we will not have an overall strategic foreign policy. That is as true now as it was in 1961. I will take that no further but say simply that in terms of where the Foreign Office goes from here, we also need to recognise that the Foreign Office can no longer make foreign policy. It is a great source of expertise and advice but we make foreign policy across Whitehall. In this Government—too much, I think—the Treasury makes foreign policy, No 10 makes foreign policy, the Cabinet Office makes foreign policy, and the Foreign Office has been to some extent pushed out. But if we want to deal with climate change, management of the internet, cybersecurity, global pandemics or migration, we have to have people across Whitehall with skills, understanding of foreign countries and negotiating capabilities, and we are not good at doing that.

Those noble Lords old enough to remember the Berrill report, which said that we needed to have a proper overseas cadre across Whitehall, will remember that that was unfortunately resisted by the Foreign Office. I tried when in government to look at language skills across Whitehall. There was very little evidence that departments even kept proper account of who spoke what languages. That is simply not good enough. We need the cross-posting of people from other departments when they are young and unmarried or without children to go abroad, partly because that is when it is much easier to get them to do that, so that we build those sorts of external understandings and languages in other departments.

My final comment is that the biggest threat to the FCO’s future overseas budget is the Government’s announcement that they are going to impose economic rent on government departments across Whitehall. The FCO would make a wonderful hotel. I am not sure the FCO budget could stand the comparable rent.

My Lords, I, too, thank the noble Lord, Lord Luce, for putting this issue on to the agenda and for his exposition of his analysis of the situation.

I am sure that for us all the world feels more unpredictable than it has felt in decades. We have terrorism, mass migration, the shift from west to east, and Russia now throwing its weight around again. On top of that, we have the spread of nuclear weapons and the need to tackle cybercrime. We have the challenge of climate change. These are all new challenges, yet what have we seen? A reduction in the Foreign Office budget of 16%. Yes, we should all be happy that we saw only a freeze this year, but that does not make up for the fact that we have seen a 16% cut since 2010. The task of the FCO is substantial, but we spend even less on it than New Zealand does on its foreign affairs ministry. Germany spends almost 50% more than us and, while France has cut its diplomatic effort, its operating budget is still over one-quarter larger than the UK’s. Is it any wonder that we were frozen out of the discussions over the Ukraine crisis and had to watch France and Germany taking the lead?

It is a shame that we have seen such a substantial shift in the responsibility of our embassies, so that today they are so focused on promoting exports. For every minute spent on promoting British exports, less time is spent developing an in-depth understanding of the country. The LSE Diplomacy Commission recently noted that, to make the FCO more effective, part of the solution lies in preventing UK foreign policy from prioritising commercial diplomacy above all else. The licensing of strategic arms exports is a particular case in point: in Egypt, British foreign policy is delivering development and governance assistance on the one hand while supplying arms on the other.

We should not underestimate the damage that leaving the EU would make to Britain’s ability to influence events and policies on the global stage. We could no longer count on the EU to represent us in many countries around the world and we would have to negotiate a whole raft of our own trade agreements. In theory, this would be the responsibility of the Department for Business, Innovation and Skills, but the fact is that we have no skills whatever to negotiate trade deals in this country; we have not needed to do so for over 40 years. Undoubtedly the Department for Business, Innovation and Skills would have to rely on Foreign Office expertise and there would be great pressure to redirect resources from the FCO to BIS.

Traditionally, the FCO has been the Rolls-Royce of the Civil Service machine. Its strength has a direct bearing on our position and influence in the world. We cannot let the service erode any further.

My Lords, I thank the noble Lord, Lord Luce, for his thoughtful and comprehensive contribution to this debate, and welcome this opportunity to address the issue of funding for the Foreign and Commonwealth Office and our foreign policy interests. We last debated the subject in November in response to a Question from my noble friend Lady Helic. That was prior to the publication of the strategic defence and security review, the spending review and the new development strategy. At that time I reassured the House of the Government’s commitment to eliminating the deficit. I confirmed that the FCO had played its part through cutting its operating costs while continuing to respond to new challenges and opportunities.

The noble Lord, Lord Luce, highlighted the importance of soft power and praised the chairmanship of a committee of your Lordships’ House by my noble friend Lord Howell, as did the noble Lord, Lord Chidgey. The noble Lord is quite right about the importance of soft power and sought assurance that the Government would continue to invest in our diplomatic resources, as well as in military and development activity, in order to protect and advance of the UK’s interests globally. It therefore gives me great pleasure to confirm the commitments made in another place by the Chancellor of the Exchequer in the Autumn Statement on the spending review. The Chancellor announced that the Government would protect the FCO in real terms. I am sure that noble Lords will all want to know what that protection means in practice. First and foremost, the overall resource departmental expenditure limits for the FCO will rise in line with inflation in each of the four years covered by the spending review. This will raise funding from £1.1 billion in 2015-16 to £1.24 billion by 2019-20. This settlement will enable the department to maintain our world-class diplomatic service, including our network of diplomatic posts, which host 26 different government departments and agencies around the world. This global presence, and continued foreign policy leadership in Whitehall by the Foreign and Commonwealth Office, will serve to protect our national security, promote our prosperity, and project the UK’s values.

In line with this Government’s commitment to spending 0.7% of gross national income on development assistance, the FCO will be allocated additional ODA-eligible resources, more than doubling our spending—from £273 million in 2015-16 to £560 million in 2019-20. This will enable us to pursue our key foreign policy priorities and deliver the ambition set out in the new development strategy.

Within this settlement the Foreign and Commonwealth Office will undertake new work. This includes hosting the presidency of the European Union in 2017, and increased spending to support the UK’s Overseas Territories, in order to meet our long-standing commitment to address their reasonable needs. To that end, the Foreign and Commonwealth Office will co-ordinate a new strategy for the Overseas Territories and chair a new director-level board, to direct cross-government activity. In addition, the Foreign and Commonwealth Office will spend up to £24 million over the next four years to increase the presence of its counter-terrorism and extremism experts overseas. The noble Lords, Lord Kerr, Lord Luce, Lord Wilson of Tillyorn, Lord Green and Lord Wallace of Saltaire, all commented on the language capabilities of our service. The Foreign and Commonwealth Office will allocate new funds to improve Mandarin, Russian and Arabic language skills. It will enhance country and regional expertise across the former Soviet Union and the Gulf, and invest in electronic data collection and analysis to maximise the benefits of open-source information.

May I come back very briefly on that point about language skills, to ask if that list could be extended to take in more people trained in Farsi, given the growing importance of Iran, which is opening up to the world?

On that issue, I will have to write to my noble friend. On the same topic, the noble Lord, Lord Wilson of Tillyorn, asked about the teaching of hard languages and how many students come out of the excellent FCO language centre, which opened in 2013. It accommodates approximately 1,000 students per year, including those from other government departments.

The noble Lord, Lord Luce, suggested—as did other noble Lords—that the Foreign and Commonwealth Office is under-resourced to address the myriad challenges that we face. While protection of the Foreign and Commonwealth Office’s departmental resources is an important signal of the Government’s commitment to maintaining our global role, I acknowledge that it is not likely to be sufficient in an increasingly challenging international context. I am therefore pleased to confirm that spending on the Government’s international priorities will increase, with a larger Conflict, Stability and Security Fund, a new Prosperity Fund and more funding for the British Council and BBC World Service. I noted what the noble Lord, Lord Chidgey, had to say but I will have to write to him on the details. This is intended to increase the impact of the United Kingdom’s soft power assets, as mentioned by other noble Lords.

The Conflict, Stability and Security Fund, through which the Foreign and Commonwealth Office funds much of its conflict prevention work, will grow by 19% in real terms by 2019-20, to a total of £1.5 billion per year. This will strengthen the UK’s ability to support stabilisation in countries including Syria, Ukraine, Somalia and Pakistan. It will increase the United Kingdom’s response to serious transnational threats, including extremism, serious and organised crime and illegal migration.

As I have already mentioned, a new Prosperity Fund, worth £1.3 billion over the next five years, will be used to support global growth, trade and stability. This will reduce poverty in emerging and developing countries, and open up new markets and opportunities to the United Kingdom. Funding for the British Council will also be protected in real terms. In addition, the council will be able to bid for up to £700 million from a cross-government fund to improve links with emerging economies, help tackle extremism globally, and support good governance.

The noble Lord, Lord Hylton, gave me prior notice of a couple of questions that he wished me to answer. I will answer them, but if there is anything more I can add later, I will. Basically, he was asking me what Her Majesty’s Government are doing to prevent the largest share of food aid going to Assad-controlled areas. All UK-funded assistance is distributed on the basis of need to ensure that civilians are not discriminated against on the grounds of race, religion or ethnicity. The Department for International Development continues to work with the United Nations and the international community to ensure that all minorities’ rights are protected and our aid reaches those in greatest need.

We recognise that the Syrian Kurds are in the midst of the continuing civil war, and their fight against Daesh. However, we do not recognise calls by the PYD for an autonomous Kurdish area. We continue to use our contact with Kurdish groups to encourage commitment to pluralism, respect for the other political forces within the Kurdish areas and co-operation with the rest of the Syrian opposition to work towards a political solution to the conflict.

Lastly, the Foreign and Commonwealth Office will be provided with a flat cash settlement of £98 million capital funding per year to invest in its real estate. This will fund new embassy buildings in Abuja and Budapest and provide further investment across the Foreign and Commonwealth Office estate to keep people safe while they are working for the UK abroad.

At the risk of being a Commonwealth bore, the Minister made the point that the UK will be president of Europe for six months. It will also be chairman of the Commonwealth for two years. The Minister has been at great pains to refer to the Foreign and Commonwealth Office, but he has not said at any point what the Government intend to do there; I would like him to write to me.

My Lords, of course I will. With the time allowed, I was unable to extend my remarks to all issues.

This Government’s investment in our foreign policy capability delivers results on many fronts: whether the key role we played in the Iran nuclear negotiations, or our leadership in tackling the Ebola crisis. Meanwhile, our commitment to protect the Foreign and Commonwealth Office budget and to provide additional funds for cross-government activity internationally will ensure the UK continues to play a pivotal role in tackling the most important global challenges in the years to come.