The report finds that policies for safeguarding benefits had been introduced and sanctions were used to punish and deter benefits fraudsters. Recovery of housing benefits overpayments had improved markedly since the first inspection.

In 2002–03, Dundee City Council administered some£70 million in housing benefits, about 14 per cent. of its total gross revenue expenditure.

The report makes recommendations to help the council address weaknesses and to further improve the administration of Housing Benefit and Council Tax Benefit, as well as counter-fraud activities.

My right hon. Friend the Secretary of State is now considering the report and will be asking the council for its proposals in response to the BFI's findings and recommendations.

The Committee draws a number of conclusions and makes various recommendations in its Report on a variety of issues including staff management, resources and the FCO's overseas estate. My response covers all these points.

The FCO welcomes the Committee's recognition among other things of its staffs commitment, often in difficult circumstances; its Public Diplomacy efforts with the BBC World Service and British Council to improve perceptions of the UK in the Arab and Muslim worlds; the improved management of its locally-engaged staff overseas and its innovative and effective handling of rapidly increasing visa applications. The FCO will build on good practice in these areas and report on progress in future annual reports.

The Command Paper addresses the Foreign Affairs Committee's concerns about the FCO's asset recycling programme. The programme permits the FCO to invest part of the funds gained from the sale of underperforming or unsuitable property in other projects such as ICT development. The Response provides details of how we identify potential property for sale, in line with the FCO's strategic priorities. It also explains that half such capital is reinvested into the FCO's estate and that this figure will rise to 80 per cent from I April this year. The Paper admits the difficulties involved in sustaining the programme over the long term, but also describes how it has allowed the FCO to develop important capital estate projects such as the UK's new Embassies in Berlin and Moscow.

The paper takes issue with the Committee's observation that the FCO attempted to conceal losses associated with a cancelled ICT programme in its 2003 Annual Report and emphasises its commitment to reporting FCO activity, including costs incurred, as clearly as possible.

In its report the Committee highlighted the increasing demands being placed on the Foreign and Commonwealth Office from new challenges such as Iraq while operating within a finite resource climate. Its report recommended that the Government increase the resources allocated to the FCO to prevent erosion of its core activity. The FCO's response welcomes the Committee's recognition of the difficult resource climate in which the FCO currently has to operate. It describes how the new FCO Strategy (Government White Paper Command 6052, "UK International Priorities: A Strategy for the FCO") which I laid before Parliament on 2 December 2003 will be a major tool in prioritising our work in future and ensuring that resources are targeted to achieve the most important goals of the Government's international policies.

We are now in the process of putting the FCO Strategy into practice. We have established a departmental change programme, derived from the Strategy, which sets out what we intend to do to focus our resources on priorities, become more flexible and responsive, improve the diversity of our people, skills and experience, and target our activity to meet the needs of our customers across Government and the UK public. As part of the Change Programme we are reviewing our organisation in London and abroad to ensure that it is aligned with our priorities and able to deliver the outcomes we seek.

The Foreign Affairs Committee outlines some concerns it has about the FCO's posts overseas. It recommends that the FCO open a new post in Kyrgyzstan, and suggests that where post closures are being considered, the Department should seek creative alternatives. The Response explains that, to meet its strategic priorities and ensure safe and secure working environments for its staff while working within resource limitations, the FCO is obliged to adapt and amend its pattern of overseas representation. The FCO has already introduced alternative methods of representation in some parts of West Africa and agrees with the Committee that such options are preferable to Post closure. The FCO's network of diplomatic posts will remain a vital means of delivering the Government's priorities and building UK influence abroad. We need to ensure that it is adequately resourced, secure and tasked to address our most important priorities.

They have responded to this challenge and I am pleased to announce the following changes applicable to the remainder of the programme which will take immediate effect.

Post Office Limited will advise MPs and local authorities as soon as possible of the remaining timetable for commencing consultations on plans for their area.

Local authorities will be invited to provide relevant information, in advance, on infrastructure and regeneration projects to assist Post Office Limited in the preparation of area plans.

When preparing an area plan, Post Office Limited will achieve a balance between sub-postmasters volunteering to leave the network, those offices which are not viable and the need for relocations and new openings.

Post Office Limited will advise MPs and members of the devolved administrations on a strictly confidential basis of proposals, including the overall rationale for the proposed area plan, one week before they are put out to public consultation.

Public consultation will be on the proposal to close an individual office but Post Office Limited will also take account of, and respond to, views expressed about the proposed service provision in the area in reaching decisions on individual closures.

Once final decisions have been made and announced, Post Office Limited will write to Postwatch, Members of Parliament and local authorities referring to the main points raised during the consultation and giving the reasons for its decision.

Public consultation will normally last for six weeks but will in future be extended to take account of public holidays that occur during that period.

In view of Post Office Limited's responsibility to notify its staff at directly-managed offices of any proposal to close the office before the proposal is put to public consultation, the advance notification of Postwatch, MPs and of the devolved administrations will be replaced by notification of the proposal the day before the proposal is made public and the public consultation period will be extended to eight weeks.

If branches previously identified as expecting to receive additional custom following closure of nearby offices, are themselves subsequently proposed for closure, Post Office Limited will provide a detailed explanation of its reasoning in putting forward the proposal for consultation.

Post Office Limited will establish a separate team dedicated to promoting and supervising the implementation of investment required to upgrade remaining offices to ensure the provision of adequate facilities for the additional custom provoked by the closure of nearby offices.

Criteria have been agreed to define the "exceptional circumstances" which may justify putting into public consultation a closure proposal for an office located within the 10 per cent. most deprived urban wards and with no other office within half a mile. The core criteria are: the branch proposed for closure being relatively small; having experienced a significant decline in business between March 2000 and March 2003 with a continuing trend which, if it has not already done so, will render the business non-viable; and having a dense network of surrounding offices with several accessible by reasonable transport links within half a mile to a mile. Other criteria which might also apply include: significant depopulation of the surrounding area or the geography of public service and retail provision has shifted; a clear majority of customers of the branch proposed for closure live within half a mile of alternative branches; and security issues which make it unlikely to be feasible to continue service.

Finally Post Office Limited has confirmed that the documentation between itself and a sub-postmaster does not create any binding arrangement for closure until the public consultation has been completed. No contract binding on Post Office Limited is signed before the public consultation process has ended.

The above new arrangements will be reviewed by Post Office Limited and Postwatch one month after commencement to ensure that the implementation is satisfactory.

Post Office closures will inevitably continue to be contentious. However, these changes to procedure should ensure that there is confidence in the consultation process.

Post Office Limited is committed to the successful implementation of the new arrangements and to working with Postwatch to ensure an effective consultation process designed to maximise the quality of judgment and transparency, and to produce a fair result for customers and the Company.