Oral evidence: FCO budget and capacity, and Annual Report 2017-18, HC 1711
Tuesday 13 November 2018
Ordered by the House of Commons to be published on 13 November 2018.
Members present: Tom Tugendhat (Chair); Ian Austin; Chris Bryant; Mike Gapes; Stephen Gethins; Ian Murray; Priti Patel; Andrew Rosindell; Mr Bob Seely; Royston Smith.
Questions 1-20 and 87-186
Witnesses
I: Sir Simon McDonald, Permanent Under-Secretary of State, Andrew Sanderson, Finance Director, and Peter Jones, Chief Operating Officer, Foreign and Commonwealth Office.
Examination of witnesses
Witnesses: Sir Simon McDonald, Andrew Sanderson and Peter Jones.
Chair: Good afternoon. Welcome to this afternoon’s session of the Foreign Affairs Committee. Welcome PUS—it is very good to see you—Chief Operating Officer, and Political Director.
Andrew Sanderson: I am Director of Finance.
Chair: Forgive me; you’ve moved on. The Director of Finance—my apologies. It is very good to see the three of you. Thank you very much for coming.
Q1 Royston Smith: Sir Simon, we have a new Secretary of State. What impact has the change of Secretary of State had on the FCO?
Sir Simon McDonald: Well, there is no disguising the fact that Jeremy Hunt is a very different man from Boris Johnson. I think that personality does make a difference. The main impact is personal, because continuity of policy has been the keynote. The new Foreign Secretary has adopted the objectives of his predecessor. There is some detailed adjustment. He puts a greater stress even than Boris Johnson on soft power. He took up the previous campaign on illegal wildlife trade and we had a successful summit in London last month, but his soft power campaign focus for next year will be media freedom. We see adjustments in the detail, but continuity overall.
Q2 Royston Smith: We know from the Foreign Secretary that protecting press freedom is a priority—you just alluded to that. His predecessor’s was combatting illegal wildlife trade, and his predecessor’s was preventing sexual violence in conflict. Have priorities changed in that any of those have now been deprioritised in favour of new priorities?
Sir Simon McDonald: I would say that the work has adjusted. When we organised the PSVI summit that was a spike in work, but the successors to Lord Hague have both kept it on the roster. Lord Ahmad is the PSVI champion for this Government. Although it does not get the same resource that is needed for a huge international conference, it is still in the brief. I think that will be the attitude to the other campaigns: they are there on the roster, but they are not top of the bill.
Q3 Royston Smith: Those are the Foreign Secretary’s priorities, but how does that affect you? What about your priorities? Do they match exactly the Foreign Secretary’s priorities, or are yours subtly or markedly different?
Sir Simon McDonald: Again, there is a lot of continuity. We take our cue from the national security strategy, which was agreed in 2015. It has three basic pillars in the overseas policy space: protecting our people, promoting our prosperity and projecting our values. All of us have something to keep in our offices, which has the strategic objectives at the top and underneath the priority objectives for each given year under each of those headings. We have eight of those priority outcomes for this financial year ’18-’19. Jeremy Hunt has accepted those; we are now in the process of developing detailed priorities for financial year ’19-’20.
Q4 Chair: The Foreign Secretary has set out his vision for the United Kingdom to be the invisible chain—not a phrase that was met with universal glory—between democracies. What does that mean in practice for the Foreign Office, and what will change as a result of his speech?
Sir Simon McDonald: The Foreign Office, and the Government and country as a whole I would say, is looking forward to the time when we are outside the European Union. For the last 45 years, the European Union has become increasingly dominant in our dealings with the rest of the world, either directly or as a multiplier effect elsewhere. When we are outside the European Union it will be different.
We look at our fundamental objectives and strengths, and for the Foreign Secretary and the Foreign Office a lot are around our values and what we stand for—the rule of law, liberties and equalities and the rules-based international system. We think this is our USP. We have allies in many parts of the world but there is a blend that is distinctively British, which we believe is attractive beyond the borders of the United Kingdom. It is a thread through international policy and connections. Being more conscious of that thread, working on that and making democracies more resilient is our emerging strategic priority.
Q5 Chair: You have travelled a lot in recent years. What has been the purpose of your trips around the world?
Sir Simon McDonald: There have been a couple of principal reasons. First, the service is in 274 different places and so is a very disaggregated service, but it is one service. The boss going around seeing the different elements is an important part of informing the centre of what is going on, and is important in communicating a common agenda throughout that network in 169 countries and territories. So far, in three years and two months I have been to 84 different countries. I have been struck by the unity of purpose, but I am also struck by the detailed differences. What I have discovered I expect to help me answer your questions.
Q6 Chair: I am delighted to hear it. What would you say are your priorities as you arrive in a post in a particular territory or country?
Sir Simon McDonald: My most recent visit was to Saudi Arabia; over the weekend I represented the Prime Minister, so my priority was to represent the Government—a political agenda that is agreed before my departure. However, it is also a chance to look at the post—the personnel, the corporate side, the resourcing—and whether its priorities are in the right order and aligned with Head Office. I have to say that my experience of visiting 105 posts in 84 countries is that they are pretty high quality. Not absolutely everywhere, but the general standard is high. I hope that has been the Committee’s experience in its visits.
Q7 Chair: When you have been to posts, how have you found things like personnel management, accommodation, security and those sort of areas—the harder management issues?
Sir Simon McDonald: It is different in different places, but I think a base standard is universally and successfully applied. In Riyadh the day before yesterday, security clearly featured larger than in Western European posts. However, over time—since I was posted there 17 years ago—the effort matches the requirement. It is different in every place, but over time we match what is needed.
Q8 Chair: Are there any areas where you would say it is not quite appropriately matched and where there is more to do?
Sir Simon McDonald: One area where we are doing a lot right now is in sub-Saharan Africa. As you know, the Government decided that there should be a “One HMG” platform, so we took on a lot of accommodation from other bits of Government, particularly the Department for International Development. Making sure that all properties, whatever their provenance, are of the same high standard is one challenge that we are dealing with right now. We have a multi-year programme and we are confident that we will get there.
Q9 Chair: On security, are you content that everywhere is at the highest standard that you would expect?
Sir Simon McDonald: Security is one of our top priorities. We need to keep our people safe everywhere. We spend about £180 million a year on security, all told. Yes, as a general statement, I will say that we have what we need, although we are always looking. We have a director in Head Office who is responsible for estates and security, so it is held at a senior level in London.
Q10 Chair: You would not say, then, that there is anywhere where the security implications in-post have implications for our policy?
Sir Simon McDonald: Again, it shifts, but we are vigilant. It is not a static position or picture, so we need to adjust. One example right now is in Pakistan, where the publicity around the Asia Bibi case and the UK’s interest in it means that the high commissioner has to be very aware of what that means right now for his staff, so there is at least a short-term adjustment, because there is a need to do more in the short term.
Q11 Chair: Would you say that the security implications in Pakistan, for example, have in any way changed or influenced Government policy?
Sir Simon McDonald: I would say that the high commissioner is feeding in what his judgment is. That is happening right now.
Q12 Chair: I was going to go on. We have been made aware that the Home Office has made some suggestions, including offering asylum to an individual who, according to publicly understood definitions of asylum, would qualify on absolutely every ground, and that one reason why that has not been done is because the head of post in-country is concerned about the security implications for their staff. Does that not raise the question that either staff should be withdrawn or security increased? Otherwise, British policy is effectively being dictated to by a mob.
Sir Simon McDonald: I think that, in this specific case, the objectives are not exclusively British. I think that our objectives are shared by close allies and partners, so I think it is legitimate for our response to go wider than the United Kingdom.
Q13 Mr Seely: Is there any truth to the allegation that we are potentially not offering this lady asylum because we are scared of the repercussions in Pakistan? If that is true, it is not great.
Sir Simon McDonald: As all the Committee knows, this is a very active bit of policy right now. I think a Minister is the correct target for this detailed policy questioning, because it is under active discussion. So I will talk about systemic things, but the detail of policy choices I don’t think is for me.
Q14 Chair: You are the principal professional diplomatic adviser to the Government.
Sir Simon McDonald: This is true.
Q15 Chair: This is one of the clearest examples of freedom of conscience being challenged today, and you are responsible for a Department that is preparing advice on freedom of conscience to a Government who have got some very tough decisions to make. Are you advising the Government that they should change their policy, withdraw their staff or increase security?
Sir Simon McDonald: I am advising that we can be consistent with our fundamental policy aims at the same time as protecting the security of our staff and working closely with allies.
Q16 Mike Gapes: The problem of British staff in Pakistan is not a new one. We have had to withdraw people from a number of posts in the past, including the consular work that was completely relocated to be done from the Gulf. Given the clear inability of this new Pakistani Government of Imran Khan to stop these mobs from intimidating and killing Christians in Pakistan, is it not time that we reassessed our relations with Pakistan? I say that as a Member of Parliament with a large number of British Pakistani constituents, and constituents who travel regularly and have visitors and relations. Clearly, there are big concerns if we have a situation where religious minorities in Pakistan are not safe.
Sir Simon McDonald: I agree, Mr Gapes. I think the relationship with Pakistan, as every member of the Committee knows, is big and important to both parties. In this case, we can successfully defend the priority we give to freedom of expression. I hope that we can help Asia Bibi personally. I think it legitimate to do this as part of a wider effort, wider than the United Kingdom.
Q17 Chair: Are you saying that the policy of the British Government is to hope that somebody else offers her asylum?
Sir Simon McDonald: No, not to hope, Mr Chairman: to work with others. If the objective is to protect a life, and some other country can offer a more complete safe harbour than the United Kingdom, why wouldn’t the United Kingdom be open to working with that country?
Q18 Chair: Right. So the expectation of the British Government is that somebody else will offer asylum to a woman whose freedom of conscience—
Sir Simon McDonald: We know that other countries already have done. There has been some publicity.
Chair: Indeed, but why does—
Sir Simon McDonald: Italy made an offer and then withdrew it because of the reaction to publicity around the offer.
Q19 Chair: So we are not making an offer because we are afraid of the reaction.
Sir Simon McDonald: I am not saying in public exactly what we are doing.
Q20 Chair: Would you like to go into private session?
Sir Simon McDonald: Yes, I think it would help to go into private session.
Sitting suspended for private session.
On resuming—
Chair: We are back in public session.
Q87 Andrew Rosindell: Sir Simon, we would like to move on to a different subject, which is the strategy that the Government have adopted known as Global Britain. We are all very enthusiastic to see this succeed, but to do so we need a clear understanding of where it is going and what progress we are making, bearing in mind that it is only a few months now until we leave the EU, and that we will be pushing the Global Britain strategy after 29 March. Can you update us on whether a clear plan will be laid out?
Sir Simon McDonald: Mr Rosindell, this is still a work in progress, but I think its general shape is evident. The Government and the country are not reducing ambition on the international stage as the UK leaves the EU. We have done a stocktake of our effort. In order to raise our impact around the world, we have used the extra money that the Government have already given us in the current and next financial year to concentrate on four things in particular. The first is fulfilling our international obligations, including the Overseas Territories where we have underinvested in recent years. The second is reinforcing the multilateral system because we still believe in it. We are leaving only one international organisation; we belong to 80 others and we rely on them to deliver results.
The third is the so-called regulatory diplomacy that is shaping the agenda. Proposals arrive in Brussels or at the WTO from multiple sources, and the United Kingdom can help shape the emerging proposals in new policy areas. We are going to have to work harder at that outside the room than we have latterly got used to inside the room. The fourth is soft power: part of what the UK offers is the whole package of the country we are; not just our diplomatic and other overseas efforts, but our education, culture and judicial offer. We are doing more to promote that.
Q88 Andrew Rosindell: A few points come out of this. Obviously we are very pleased to see new missions opening in various countries, particularly in the Caribbean and the south Pacific—that is extremely good news. The decision to close those high commissions and embassies in the first place was, I think, a huge mistake and has left a very bad taste in the mouth. New missions opening is good news, but could you tell us whether you feel, given the way this is currently being operated—UK plc has DFID, the Foreign Office, the British Council and various other institutions doing different things—that it is time for the Foreign Office to be the premier Department that leads on everything, rather than having a divided UK plc in terms of how are perceived in other countries? We have lots of different silos for things going on, but not one clear, strong impact on countries with an ambassador or high commissioner—or governor in the case of the Overseas Territories—that can actually show a strong British presence and make decisions in those countries.
Sir Simon McDonald: I see all our high commissioners, ambassadors and governors before they take up post. I tell them all that they need to lead the effort in the country to which they are posted. I think that leadership is compatible with having a number of players. As you know, the international scene is more complicated than it used to be, and there is plenty of work to go around. DFID has a distinct role; DIT has a different role; the Ministry of Defence clearly has a different role. The overall effort needs to be harmonious and I think we can achieve that, but there is still a need for leadership and I think that is what the Foreign Office or our ambassadors, high commissioners and governors around the world provide—harmony and leadership.
Q89 Andrew Rosindell: I notice you mentioned that you felt we had underinvested in our Overseas Territories—I think that was exactly what you said.
Sir Simon McDonald: They were my words, Mr Rosindell.
Andrew Rosindell: That is an interesting admission from HMG; I have being saying that for a long time. What is your plan to invest in the Overseas Territories?
Sir Simon McDonald: We are doing it territory by territory, but in the first place we are reinforcing the offices of governors with extra staff. As you know, in many places they are very, very small staffs—one or two people—so getting an extra few bodies from head office is an initial part. I want to look at the relationship in a more fundamental way because that is a part of fulfilling our global responsibilities.
Q90 Andrew Rosindell: Even though constitutionally they are not, do you see them as, effectively, parts of the UK or outposts that could be better utilised as part of the Global Britain strategy by involving them and giving them greater opportunities to play a part in that strategy?
Sir Simon McDonald: I have now visited some of the Overseas Territories myself, and I see that they are all very different from each other. I see that in all cases we have to listen very closely to the citizens of those territories about their ambitions. I see overall that we have a good relationship with them, and the work of people such as yourself has kept the relationship overall in good fettle over the years, but there is clearly room for improvement. The development of the relationship is a conversation between us and them, but I listen carefully to their views.
Q91 Priti Patel: I was just listening to your comments regarding the Overseas Territories, Sir Simon. We sat here last week as part of our own inquiry into the OTs, and we heard clearly and categorically from two representatives that they felt there was not much of a relationship, particularly looking at wider economic development, the financial support and that wider prosperity agenda. How do you see the Foreign Office trying to turn that around? I guess it will be working across the whole of Government, but is this a genuine priority for the Department and will that mean more resources as well as greater strategic focus?
Sir Simon McDonald: As you know, Ms Patel, there are many competing priorities right now, but as I have already said, fulfilling our obligations is explicitly part of how we are using extra money. The Overseas Territories are the first line in that extra work. So yes, there will be extra resources, because there is clearly work to be done.
Q92 Mike Gapes: On that point, there is a view that the Foreign and Commonwealth Office is not really the appropriate place to administer the Overseas Territories, because many of the issues they are confronting involve them dealing with other Government Departments and you do not give sufficient resources or administer them at a particularly high level. Isn’t it time there was a rethink of that relationship?
Sir Simon McDonald: If I may say so, Mr Gapes, I think part of that is an out-of-date view. It is true that there was a time when the seniority of governors was drifting downward—
Q93 Mike Gapes: I am not talking about governors; I am talking about the Overseas Territories department within the FCO.
Sir Simon McDonald: Ah. That has a director, one of my nine geographical directors. The man running the Overseas Territories directorate is on a par in our organisation with Africa, the Americas and Asia-Pacific. We have raised the seniority of the people dealing with this key issue in London, as well as in the territories themselves, where the default setting is now SMS2, among our most senior ambassadors.
Q94 Mike Gapes: But in terms of priority and focus, you have bigger fish to fry and so have Ministers.
Sir Simon McDonald: We do, but we accommodate the Overseas Territories within those priorities. I said right at the beginning of the meeting that we are organised under the three pillars of the national security strategy. We have eight priority outcomes for this financial year. One of those eight priority outcomes is specifically about the Overseas Territories, so they are there. I know the Committee is holding an inquiry into the best way to deal with the Overseas Territories—
Mike Gapes: That is why I asked the question.
Sir Simon McDonald: Mr Rosindell pointed out the disadvantages of fragmentation. I hope that the Overseas Territories can continue to be handled from the FCO and I hope that our increasingly good performance will be part of making the case for that effectively.
Q95 Chair: You don’t think that, given the number of cross-cutting issues, they should perhaps be in the Cabinet Office?
Sir Simon McDonald: I am sure the case could be made, but in the Cabinet Office there are even more distractions than there are in the Foreign Office.
Chair: That’s true.
Q96 Priti Patel: I would like to talk about the Foreign Secretary’s recent comments on external appointments and the speech he gave either last week or the week before last. Do you agree with the Foreign Secretary’s overall premise that the Foreign and Commonwealth Office should broaden the pool of talent when it comes to searching for future ambassadors and high commissioners, and that we should be looking outside the Government?
Sir Simon McDonald: Well, Ms Patel, I agree that the best people should represent the United Kingdom in these jobs overseas. I think generally the best people will have had training in foreign policy and diplomacy, so I do not fear that if we open up we will be deluged with outside appointments. The model that I have agreed with the Foreign Secretary is that each year we will run three competitions that are completely open. They will be open to people from within the diplomatic service and indeed the home civil service and also to outsiders, not only from business but from other possible sources. The competitions will be run through existing structures, so through the senior appointments board. The expectation—the Foreign Secretary’s hope—is that through the three competitions, there will be one, maybe two, external appointments per year, but it is important for the diplomatic service that these should be open competitions, open to my colleagues as well as to outsiders, and that the reward package is the same no matter who wins. The Foreign Secretary has explicitly endorsed that, so we will include that reward package in the initial advert.
Q97 Chair: Would it only be for the head of mission posts? Would you ever look at it for the deputy head of mission post or for maybe one of the heads of a department within a mission?
Sir Simon McDonald: We are starting with head of mission only. I have to point out—you are right, Chair—that in the past we have opened up to consul-general jobs and deputy high commissioner jobs, which is where we got outside appointments in New York and Mumbai, I think in 2010.
Q98 Priti Patel: That is the point, because the Foreign Secretary told us very explicitly that recruiting ambassadors from outside the civil service is not a significant change to the existing policy framework at all.
In your time as PUS—more than three years—what changes have you put forward within the Foreign and Commonwealth Office to facilitate that open competition and bringing people in from outside?
Sir Simon McDonald: First, we have always been open to the home civil service—the rest of the civil service. Right now, there are five heads of mission in Africa who basically had DFID training. That has always been part of our approach. In my time, last year we ran a completely open competition for ambassador to the United Arab Emirates. We had some very interesting applications from the private sector, but it went through our processes and in the end, it was an FCO officer who was chosen and who has now taken up his post in Abu Dhabi. So this is something that we know about and we have done in a small way already.
Q99 Priti Patel: Would you look to use external agencies to help, such as recruitment companies or consultants, depending on particular posts?
Sir Simon McDonald: That is a possibility, Ms Patel, but in the first place I want to test the market. It has had quite a lot of publicity, so I think an advert in the usual places may mean that we can cut out the middle man and save ourselves some money.
Q100 Priti Patel: Sure. Are there any lessons to learn from other Government Departments in terms of external recruiting?
Sir Simon McDonald: The main lesson I draw is the importance of the reward package. I think in other Government Departments having people come from outside whose pay is double that of colleagues doing comparable work is problematic.
Q101 Priti Patel: When the announcement was made by the Foreign Secretary 10 days ago, what was the reaction internally in the Department?
Sir Simon McDonald: People thought they had heard this before and they were most concerned about the openness, that these jobs should not be reserved for outsiders, and about the rewards package. What I am describing to you is something that our trade union side has welcomed.
Q102 Priti Patel: Has anyone raised any concerns about the prospect of political involvement in some decision making on appointments?
Sir Simon McDonald: As you know, Ms Patel, political appointments are also available and are different. Under CRAG 2010, the Prime Minister has the right to make political appointments. Traditionally in the UK we have had one or two at any given time. Right now we have one—Lord Llewellyn in Paris. He came to give evidence to a previous incarnation of this Committee after his appointment.
Q103 Chair: Indeed. At the time a form of supervisory role of the Committee was permitted. It would seem like an area that—
Sir Simon McDonald: I note that he came after he had taken up his job.
Chair: We note that interesting point.
Q104 Ian Austin: How will you be choosing which positions might be opened up?
Sir Simon McDonald: As I said, we have 169 around the world. I am discussing with my board which the three from 2019 should be. It is agreed with the Foreign Secretary that they can be across the full range of heads of mission. Heads of mission go from D7 up to SMS4, so we will be looking across the full range. I think it will be important that at least one of the jobs is a very high-profile job. I do not think I would be playing ball if I nominated the positions in Paraguay, Madagascar and Cambodia as the first three. I think it needs to show more leg than that.
Q105 Chair: Which one are you thinking of—as a hypothetical?
Sir Simon McDonald: We have not yet decided.
Q106 Chair: You must know which ones are coming out next year.
Sir Simon McDonald: The highest profile jobs that will be boarded next year are the United States and India. There are also some medium-sized posts like Kuwait coming up. I could imagine one or two of those being on the list, but there is no decision yet.
Chair: I am sure that the Committee has ideas about who could possibly do your high commissioner in New Delhi job. I raise that and move on. Bob, you wanted to come in.
Q107 Mr Seely: The Foreign Secretary has told us that FCO expansion was planned using three processes: Global Britain, the Africa strategy and EU exit requirements. If Global Britain is just one of many plans and not the overarching framework in UK policy, what is the point of it and where does it sit?
Sir Simon McDonald: These are, indeed, the sources of different moneys. The reason why they are in different places is that they answer different needs, but they can and, I think, will be part of a coherent whole. The Africa strategy was launched, I believe, when Ms Patel was Secretary of State for International Development and partly was the consequence of having, for the first time, joint Ministers between DFID and the FCO. The joint Minister noticed that the development assistance spend in Africa was over £4 billion a year, and the political effort did not measure up to that. So the Minister at the time, Rory Stewart, proposed a 1% shift from the development assistance budget into the political effort. This has been through the system and, in principle, been endorsed. That is why we have moneys specifically focused on Africa, but I think it can fit completely logically with the overall Global Britain strategy of engaging around the world.
Q108 Mr Seely: Just for my own understanding, is Global Britain some kind of irrelevant white elephant of branding? I thought Global Britain was good for having a brand strategy, but strategy and brand strategy is not necessarily something that British people tend to be very good at. We can muddle through and all that sort of good stuff. If we are going to have a national brand strategy, I thought it was going to be called Global Britain, but then, as you point out, you have got the national security strategy. Is that our brand strategy or is that just a security strategy? Is that part of a brand strategy that does not yet exist and is Global Britain part of it? It is a slightly incoherent question, but I am sure you can see where I am going with it.
Sir Simon McDonald: I think I know what you mean, Mr Seely. The national security strategy originated at the end of 2015, so from before the referendum. Global Britain was initially a slogan. They were amongst the first words spoken by Boris Johnson as Foreign Secretary, but the idea was taken up by the Prime Minister and by the Cabinet and has been endorsed now by Mr Johnson’s successor. This is and must be a work in progress. The ambition to remain one of the vital international players when we are playing by ourselves is one that motivates us.
Q109 Chair: May I ask quickly for a point of clarification? It is a “work in progress”, but it has informed the decisions on new posts.
Sir Simon McDonald: Correct. These things are compatible. The new Foreign Secretary, in a series of speeches starting in Washington in August and including his Policy Exchange speech of 31 October and a speech in Paris last week, is fleshing this out.
Q110 Mr Seely: So does Britain have something that you recognise as overarching—something that Liddell Hart would recognise as grand strategy? If so, where is it? Do you have it in a document, or is this hanging around Whitehall as some amorphous cloud of knowledge?
Sir Simon McDonald: What I take away is that there is a need to put this in one place. The Foreign Secretary’s speeches in the last three months have been a good starting point, but to have a succinct document that tells us and our country what our ambition is post 29 March is something that would help.
Q111 Mr Seely: Do you not see it as something that would be, if nothing else, a beneficial exercise?
Sir Simon McDonald: We are already discussing this at the Foreign Office board. In the first quarter of 2019, I would expect to be able to publish something—before exit day.
Mr Seely: Just on that—
Sir Simon McDonald: That is my proposal, of course; it is a ministerial decision. But it is something that I will propose.
Q112 Mr Seely: On that point, you were talking about “hopefully”. When you said “hopefully”, I know you want it to be harmonious—you were using words such as harmonious and coherent a couple of answers ago. Coherence seems to me to be absolutely vital in setting your national strategy—
Sir Simon McDonald: Yes.
Mr Seely: And the more your power—our overseas state power—is divvied up, the less ability you have to be harmonious and to cohere, because you are not necessarily setting how other Departments behave. There is a danger that the more these powers are siloed up, the weaker our ability—we become less than the sum of our parts in our overseas policy. Would you agree that is a risk?
Sir Simon McDonald: There is a danger, but I think that the machinery of the National Security Council and the National Security Secretariat is an insurance policy against that danger. There have always been Cabinet Committees to co-ordinate cross-Government policy, because it is nothing new for multiple Ministries to have a stake. This was reformed in 2010 and it has been given greater profile. The National Security Council, as Ms Patel knows, meets every week. That was not the previous rhythm. I think that there is greater coherence now, because of that new machinery.
Q113 Mr Seely: But there is a danger with that, isn’t there? That is setting very high-level strategy for key things, but at an operational level, a continental level and some major-country levels, it is you that has got to be leading, so that your strategy still works at your level, and not just at a National Security Council level—the danger of that is that it would be almost a bit too distant from the reality of your operations.
Sir Simon McDonald: The way that the national security strategy is implemented is through national security strategy implementation groups, or NSIGs. There are 18 of these, they cover the whole of the policy spectrum and five of them are chaired by people from the Foreign Office, so even though the centre is taking a greater role, the Foreign Office is deeply part of the central effort. But the 18 groups do not cover all of foreign policy, so most country strategies are in the hands of the FCO director and of the ambassadors and high commissioners in the field.
Q114 Mr Seely: One final question, if I may. If I wanted to find out—if we collectively wanted to find out—about the mechanics of the National Security Secretariat and the implementation groups, how does one do that? I feel that I am blind to this, and when I try to talk to them, it’s, “We’ll get back to you in about three months”, which is rather frustrating.
Sir Simon McDonald: One extra twist, latterly, is that the National Security Adviser—a post that Prime Minister Cameron established in 2010—has just been combined with the role of Secretary to the Cabinet, so Sir Mark Sedwill is doing both roles at the moment. I would recommend engaging with him and his team.
Mr Seely: I have tried to. I have been waiting four months.
Q115 Chair: Can I ask something very quickly? Sir Mark Lyall Grant, just before he retired, said that the rhythm had gone down significantly due to Brexit. Is that your experience?
Sir Simon McDonald: My meeting before this one was of the National Security Council. We have had more than four meetings since the return. The rhythm is now more once a fortnight than once a week, and Brexit is the main reason for that.
Q116 Ian Austin: As I understand it, only 55%—just over half—of FCO staff are at their target language level. Given that, how can you be expected to fulfil the Foreign Secretary’s ambition of doubling the number of foreign language speakers when the Department is already well below—
Sir Simon McDonald: Mr Austin, that 55% already represents very significant progress. When I started in this job, the TLA across the service was 35%. In three years, we have risen 20 percentage points. We have a target of 80% by 2020, so that is stretching, but targets should be stretching and we intend to hit that target. I hope that you also know about the increasing language attainment of our heads of mission. That was about 50% when I started and is now 74%. That has shown significant improvement in the past three years.
Q117 Ian Murray: Can I ask you about the UK Government footprint in foreign missions, particularly in Europe? Are you aware of any reduction in staff from either FCO resources or Department for International Development resources?
Sir Simon McDonald: For the FCO, we have reinforced our Europe network. We had a zero-based review about 12 years ago. The strategic decision then was to focus more of our effort within the European Union in Brussels. At the time, it was a logical conclusion, because more and more of the relationship with our European partners was being brokered through Brussels. As a first reaction to the referendum result, we put 50 jobs back into the Europe network and increased the seniority of the junior ambassadors in terms of the senior management structure. In the past two years, we have put nearly 150 new slots in the EU network because there is more work to do. In the future, we will need those bilateral relationships more than in the recent past.
Q118 Ian Murray: Can I link that to the less complicated and controversial subject of Brexit? The NAO report suggested that the Foreign Office would have to not do certain things or pause things or row back on some responsibilities to concentrate on EU exit. Can you give us a flavour of what those might be?
Sir Simon McDonald: In the first place, Mr Murray, we got some extra money. We have been able to recruit new staff to take on the new work. In the first place, absolutely there was reprioritisation, which is where we got the initial 50 from. By the end of this financial year, we will have had £43 million specifically for EU exit work, and we have used that to reinforce at home and in the Europe network.
Q119 Ian Murray: So nothing has been paused, or no work has been put on the back-burner, as a result of that additional work?
Sir Simon McDonald: There has in detail, but most of it has been done with new resource.
Q120 Ian Murray: What do you do with all these additional resources if we don’t leave?
Sir Simon McDonald: If we don’t leave? That, if I may say, is a speculative question. We are planning on the basis that we leave on 29 March next year.
Q121 Ian Austin: I read in The Guardian at the weekend that you decided to take part in one of these fly-on-the-wall documentaries, which in my experience have always been a complete triumph and have not caused any difficulties at all. It says that you told the ambassadors that the role of the diplomatic service was to help convince other European countries not to “exploit the full strength of their position” in relation to Britain, and to be generous with the UK. How do we think that is going?
Sir Simon McDonald: Could you repeat the question, please, Mr Austin?
Q122 Ian Austin: You said it.
Sir Simon McDonald: I was distracted by a note. Let me just correct myself. Since the referendum, the FCO has created 300 new roles in the Europe network.
Q123 Ian Austin: According to the reports of this fly-on-the-wall documentary, you said that the role of the diplomatic service was to help to convince other European countries not to “exploit the full strength of their position” in relation to Britain, and to be generous with us. I was just wondering how you think that is going.
Sir Simon McDonald: I think, Mr Austin, that we will find out in the next 24 hours.
Q124 Chair: Actually, the reports are coming in at the moment. Can I just ask a bit about the Brexit negotiation, given that it is clearly the biggest foreign policy challenge for the UK for a long time—a generation or so? What has your role been in it?
Sir Simon McDonald: The role of the Foreign Office has been several. First, we provided a lot of the personnel for the new Ministries that were created on 13 July 2016. Secondly, we have provided the network throughout. There is only one overseas network, and colleagues in Warsaw, Dublin and Rome have been directly linked into us and the new Ministries. Thirdly, the Foreign Office has been leading in certain policy areas in co-ordination with DExEU, very particularly on sanctions policy—the FCO was the lead Ministry on the Sanctions and Anti-Money Laundering Bill, now Act—on the Overseas Territories, with particular reference to Gibraltar and the sovereign base areas, and on consular matters.
Q125 Chair: So would you say you have been the lead adviser on foreign positions—on the position of Germany, Italy or whoever it might be—towards the negotiations?
Sir Simon McDonald: I would say yes.
Q126 Chair: So if I were to ask you, for example, about the five key stakeholders you have been trying to influence, or who have been supportive of the UK Government’s position, in Italy, could you tell me who they were?
Sir Simon McDonald: In Italy? I am sorry that you didn’t ask about Berlin. I know that Jill Morris would have that answer readily.
Q127 Chair: Okay, give me Berlin.
Sir Simon McDonald: In Berlin, the top man is Uwe Corsepius, who is Chancellor Merkel’s Europe policy adviser.
Q128 Chair: He is the one who is most supportive of the British position?
Sir Simon McDonald: He is the key one in determining the Chancellor’s, and I believe the German Government’s, view.
Q129 Chair: Which group of two or three people is most supportive of Britain’s position—not just commenting on our position, but actually supporting it?
Sir Simon McDonald: I don’t want to undermine them by publicly endorsing what they have done.
Q130 Chair: I’m sure they would be proud.
Sir Simon McDonald: In Berlin, the leader of the CDU/CSU fraction, Ralph Brinkhaus, has been consistently helpful.
Q131 Chair: And in France? These aren’t supposed to be gotcha questions.
Sir Simon McDonald: If I had Ed Llewellyn sitting here, he would have the answer like that. I read the product that he produces; I don’t examine all his sources in each of his reports.
Q132 Chair: I do know that your predecessor could have run through all the Iraq folk at the time of the Iraq war, and I do know that your predecessor would have known many of the European officials who were supportive, or not, of military intervention in 2003, because I remember reading that and hearing from them. Clearly, that has changed.
Sir Simon McDonald: I can tell you that, on my own network, I am very active. The secretary general of the Quai d’Orsay, Maurice Gourdault-Montagne, is someone I see regularly. He was my guest in London two weeks ago. The state secretary of the Auswärtiges Amt, Andreas Michaelis, is also someone I see regularly face to face.
Q133 Chair: And the other 25?
Sir Simon McDonald: I see twice a year at meetings of state secretaries, which are still organised by the EEAS, with the participation of the UK.
Q134 Chair: Excellent. What advice did you give No. 10 before the Salzburg summit?
Sir Simon McDonald: What are you getting at, Mr Chairman?
Q135 Chair: I am getting at the fact that No. 10 appeared to be rather surprised by the reaction it got, and for the Prime Minister of the United Kingdom to walk into a meeting of that importance and be surprised at the reaction that her words got, it strikes me that somebody got that wrong. Was the advice poor? Was the advice not listened to? Was the advice not handled properly?
Sir Simon McDonald: I can say that the network of ambassadors reported into London in the usual way before any European summit, and that Salzburg was no exception.
Q136 Chair: Was their advice surprising? Did it correlate with the reaction from the other 27 leaders?
Sir Simon McDonald: I was not surprised by what happened in Salzburg.
Q137 Chair: So No. 10 ploughed on regardless.
Sir Simon McDonald: There are multiple sources of advice, as you know, but our team was doing its job, in my view.
Q138 Chair: So your team knew what was going to happen.
Sir Simon McDonald: They are not seers, but I think they had a good idea of where their hosts were, and they reported that.
Q139 Chair: So the surprise actually was a surprise only to No. 10, and not to you.
Sir Simon McDonald: You would have to ask No. 10.
Q140 Mike Gapes: Can I take you to what might happen in the next few months? The Financial Times on 29 October said that the United Kingdom needs to roll over 236 international treaties that the EU has with other countries. Previously, in May 2017, they cited the figure of 750 treaties. I would be interested to know which is the accurate figure, or whether it is somewhere else.
Secondly, the Financial Times says that we have so far rolled over only 14 of those 236. Can you tell the Committee when you expect the rest of them to be agreed, and what happens if there is no deal?
Sir Simon McDonald: The total number of international agreements is, I believe, bigger than 700. I think it is more than 1,000, as we have looked and rescrubbed the figures, but they are in different categories of importance and they have been prioritised. The Foreign Office is leading on about 40 of those.
If there is an agreement, there will be an implementation period, so the task is less urgent because all of these agreements will be in force through that implementation agreement. If there is no agreement, then we have our work cut out, although there are a few that are agreed so far. We still have four months.
Q141 Mike Gapes: Right, so we have 14 agreed. Are they the ones that the Foreign Office has been working on?
Sir Simon McDonald: That is a figure across the Government.
Q142 Mike Gapes: Across the Government, 14 are agreed and there are potentially more than 1,000 altogether.
Sir Simon McDonald: Altogether, but of all levels of importance.
Q143 Mike Gapes: How many staff do you have working on this monumental task if we have no agreement and, within just a few months, have to deal with the fact that we are no longer part of these international treaties because of our leaving the European Union?
Sir Simon McDonald: Because this is a key policy area, under the director-general for Europe we have appointed a director—a two-star officer whose job is international agreements. The director has just changed. Sarah Taylor is now our director who is charged with this. It is all of her job to prioritise these agreements and get as many over the line as possible, but there is no disguising that if there is no—
Q144 Mike Gapes: Hundreds of treaties for one person.
Sir Simon McDonald: No, it’s not just one. She is the leader of the team, Mr Gapes. She is a director, so a two-star officer, which is a senior person in our system, as you know. She has a team working for her. But there is no disguising that if there is no agreement, it will be a very painful exercise of prioritisation deciding which of the ones we have to get over the line come what may.
Q145 Chair: Some of these agreements are more bilateral, even within the EU. Why have attempts to bypass the Commission so spectacularly failed?
Sir Simon McDonald: As you know, the Commission is a forceful player in the European architecture. The Commission was given the task by the Heads of Government at the European Council to lead the negotiation, and it is protecting that prerogative effectively.
Q146 Mike Gapes: Can I then go back to what might happen in the next few months? Can you tell us what has happened with regard to our consular services since the referendum? Has there been a significant increase in the demand from UK citizens living in other EU member states? Related to that question, I understand that we have an official figure of 1.3 million people who are registered as permanently residing in other EU member states, but I know for a fact, because I have friends in this situation, that there are huge numbers of British people who may have a second home or who may live for several months of the year in another European Union state, and I have heard figures of 2 million British people who live in other EU countries. Do we have a central record of how many there are and what their status is? How many of them, for example living in Spain, have acquired the necessary documentation to be registered with the Spanish authorities for health reasons or others?
Sir Simon McDonald: As you know, Mr Gapes, we do not require our citizens to register. But I agree, it is not only those who are resident, of whom we think there are just over a million, but there are about 2 million British citizens at any one time who are visiting—
Q147 Mike Gapes: I am not talking about visitors, but people who might have a house where they go for several months.
Sir Simon McDonald: The count is part of our responsibility. There has been an uptick in work, in answer to your question. We have noticed that particularly in France. The network in Spain has been very proactive in addressing the problems of the community there, which is the biggest anywhere in the EU. Normally we have 172 consular staff working in the EU. We are recruiting 20 regional consular policy officers right now. We are also recruiting 37 new local consular officers. The effort is getting bigger. We have already decided that in the event of no deal we will double our consular capacity in the EU.
Q148 Mike Gapes: I visited our embassy in Madrid 10 years ago. At that point people from Age UK had been seconded to work in Spain, in our embassy, for elderly British people living in Spain, who did not speak any Spanish and had no real integration with Spanish society. Do we still have that kind of network? Do we still use those kinds of organisations and do we think we may need far more of them in the event of no deal?
Sir Simon McDonald: I think that the network is even more developed than when you visited 10 years ago. I encourage you to get in touch with Simon Manley, our ambassador, because the network of subordinate posts and consular officers is among the most impressive we have.
Q149 Mike Gapes: Do we have any central FCO record of where we have this use of people from our voluntary sector assisting—not only in Spain, but elsewhere—the British communities living in other European Union countries?
Sir Simon McDonald: I do not have a central register, because in my judgment, I do not require one, but I expect ambassadors to have the networks they need to do the job in their country, including with the voluntary sector. That is organised country by country.
Mike Gapes: Perhaps you could send us a note of what information you do have. That would be helpful to the Committee.
Chair: Very short, Andrew—go on.
Andrew Rosindell: We are talking about Brexit at this point, are we?
Chair: We are talking about consular services.
Andrew Rosindell: Okay, can I come in in a second about Brexit?
Chair: Sure.
Q150 Mike Gapes: I have another question that I was going to raise straight after my contribution.
Chair: Very quickly, go on.
Mike Gapes: A few days ago, we got the response from your Department to our Committee’s report, which was on the responsibility to protect and humanitarian intervention. We will no doubt be publishing that in the near future, but I have to say that personally, and I think I speak for other Committee members, I was very disappointed by the dismissive way in which you responded to our recommendations and did not actually engage with some of them.
Without prolonging the discussion here, I would just say that when the Committee produces a report calling for the Government to take these issues more seriously, and to move to having a proper inquiry into the lessons of Syria, it is helpful for us if the Department actually responds to our recommendations as a whole, rather than partially responding, as it has done in this case.
Sir Simon McDonald: Noted, Mr Gapes.
Q151 Chair: Would you have another look at it and come back to us?
Sir Simon McDonald: I will.
Q152 Ian Austin: I have a question on staffing and skills. How can the FCO expect to attract and retain skilled staff when salaries are so low, especially compared with DFID, for example?
Sir Simon McDonald: The reward package is a persistent challenge for the Foreign Office—that is true. The last few years have been very difficult because we have had either no pay rise or a 1% pay rise, but we still get very good people, Mr Austin—
Ian Austin: Yes, I did not mean to criticise, by the way, or call into question—
Sir Simon McDonald: As a matter of fact, the thing I most enjoy each year is meeting our new fast-stream entrants, who continue to be the brightest and the best of the United Kingdom. The overall package is clearly still compelling. People join not only for the salary but for the subjects they deal with, the responsibilities that they are given and the colleagues they acquire. Fortunately, the overall package is still strong.
Ian Austin: Good.
Chair: Priti, you wanted to come in on DFID.
Q153 Priti Patel: Because of the links between the Foreign and Commonwealth Office and DFID, which I obviously know a bit about, I would like to ask about money between the two Departments. We have touched on things such as the National Security Council in earlier remarks. I am going to refer to ODA, which we both know quite a bit about, around joint funds, transparency and reporting in particular. What is your sense, in terms of the Department’s reporting on ODA, when it comes to the transparency of the spending of public money on key projects?
Sir Simon McDonald: We have been learning, Ms Patel, and we have used a lot of DFID expertise to do that. Melinda Simmons, for example, came from DFID and did a fantastic job of getting our procedures into a fit state and of helping to train our staff, because the ability to programme and project-manage is going to be a core diplomatic ability in future.
I see it as we nest alongside what DFID does. DFID is still overwhelmingly the largest spender of ODA—about 73%. The Foreign Office spend is only about 7%. Your timelines tend to be longer than ours, and the number of countries that DFID works in is a smaller list than the Foreign Office—it is about 40 for DFID and over 100 for the Foreign Office. As you know, there are over 130 countries theoretically eligible to receive ODA. So I think the different timelines and the different sorts of projects allow the two Departments to work alongside each other. But this has been a major change for the Foreign Office in recent years and it is a transformation that continues.
Q154 Priti Patel: What about the transformation in terms of attitude in the Department to public funds, because it’s fair to say—I speak, obviously, with experience—that there is public criticism of DFID when it comes to a lot of public spending on projects, and I found that for the majority of my time I was defending not DFID projects but projects and spending from other Government Departments? Do you think that there is more focus and, I guess, self-awareness or consciousness, that these are public funds? And is the Department moving towards something that I know I changed in DFID, that is, conditionality in performance agreements, to drive and follow outcomes effectively, so that money can be traced—track and tracing—and then driving very specific outcomes that obviously help to meet our foreign policy objectives, our foreign policy values and the objectives set around Global Britain as a strategy?
Sir Simon McDonald: I agree with all of that, Ms Patel. The exco—executive committee—had a discussion in the last couple of weeks about the spending of ODA and the need to make sure that heads of mission were personally engaged in the projects in their territory. It’s amongst the most important things we do, spending taxpayers’ money. So, correct spending, accounted spending, impactful spending is a priority for the Foreign Office.
Q155 Mr Seely: Just on that point, there is an argument about the 0.7 budget; one could say, “Should we be agreeing it, or should we be doing it according to other people’s definitions of that 0.7%?” However, whether you like it or not, DFID has a reputation for spending money really quite well and getting better at it. There is a related argument, therefore, to suggest that they should oversee more, or indeed take control of not only the money that you spend—having worked abroad, I know some other Government Departments don’t have a great reputation of spending money well on projects, and it’s not just yourselves but the Home Office as well. So, is there an argument to suggest that DFID should pretty much take over these budgets?
Sir Simon McDonald: I think the Foreign Office is spending ODA well; I think we are getting better at it; and I think the sort of projects that we do are sufficiently different from DFID that it is correct that they are done in a different place. I note that a lot of the spend these days is through the central Whitehall funds—the CSSF, and the Prosperity Fund—and we are very, very attentive to the spend. The Prosperity Fund, as you know, is a new one, and with anything new I think we have to anticipate that there will be problems, but we are monitoring them very, very closely, because, as Ms Patel says, this is taxpayers’ money and the taxpayer has a right to know that their money is being well spent, and that, I think, we will show.
Q156 Priti Patel: May I just come in with another question in the same territory, effectively? It is quite clear that our objectives as a nation internationally and protecting our values in particular come through the multilateral system, and a lot of that is through the United Nations as well—a big multilateral institution. There are some reports today—I think it was today that someone told me—about pressures on UNESCO funding again. I say “again”, because it is a fact—Sir Simon, you will know this, that 18 months or so ago performance criteria were put in and a condition regime was put forward. Do you see, particularly from the Foreign Office and the levers that your diplomatic team have, especially within multilateral organisations, an ability to bring new standards of accountability to the moneys that we push forward?
Sir Simon McDonald: This is one of our priorities. Our minister in the embassy in Paris is our ambassador to UNESCO. He spends a lot of his professional life on this agenda. But, you know, UNESCO has been controversial within the Government—
Priti Patel: Sure, and the—
Sir Simon McDonald: Which I think has helped; the new director-general is much stronger. However, the Government have decided that as we leave the European Union, we do not want to be signalling that we are disengaging from other bits of the multilateral system, so we are maintaining our membership of UNESCO, but trying to reform from within.
Q157 Priti Patel: And that would apply to other United Nations agencies as well? I am clearly speaking and thinking of the UN, where there are significant challenges. The UN is very important in projecting our values, and to our seat at the table as well, but when it comes to peacekeeping and some of the really awful issues, we have heard about the responsibility to protect, but on the sexual abuse scandals and things of that nature, are we doing enough? Is there more that we could be doing to condition UK taxpayers’ funds across the board and use our foreign policy levers accordingly?
Sir Simon McDonald: I think yes, but it is the Forth Bridge equivalent in diplomatic work. As you know, there is a committee in New York that looks at all spending, ACABQ, and we are active in that to ensure that in all these areas, which in principle we support, there is a good and defensible spend. Reform is always on our mind, and I note that Secretary-General Guterres is also a keen reformer, so we are doing a lot with him.
Q158 Chris Bryant: Whose idea was it to invite Jovah Kamateeka to the Women MPs session in the House of Commons last year, paid for by the Foreign Office?
Sir Simon McDonald: I don’t know.
Q159 Chris Bryant: Can you find out? Her views do not really chime with British parliamentary values.
Sir Simon McDonald: I will find out.
Q160 Chris Bryant: In particular, she believes that homosexuals should be imprisoned for the whole of their lives.
Sir Simon McDonald: We do not believe that.
Q161 Chris Bryant: It would just be good to know not only that, but what kind of vetting process or thinking process there was about who it would be suitable to invite to something like that. It was a great event, wonderful optics for the world, but—
Sir Simon McDonald: I am glad, Mr Bryant, that you endorse the event, which I agree had a great impact.
Chris Bryant: It was wonderful.
Sir Simon McDonald: I will find out the point of detail and get back to you.
Q162 Chris Bryant: Thank you. On Magnitsky, we have passed legislation in the Sanctions and Anti-Money Laundering Bill, which is now an Act, but the Foreign Secretary tells us that it cannot be implemented until after Brexit, and he says that, if there is a deal, after Brexit means after the transition phase. Is that your understanding?
Sir Simon McDonald: We have looked into this since the Foreign Secretary’s evidence session and, as you say, the Bill is now an Act, but the SIs that are needed to implement the Act are not yet in place. It will be some months before the full structure is in place.
Q163 Chris Bryant: So the Foreign Secretary was wrong?
Sir Simon McDonald: No, the Foreign Secretary was right.
Q164 Chris Bryant: He said it was impossible to do this until we had left the European Union.
Sir Simon McDonald: Okay. The reconciliation is that there are a group of SIs in support of the Act, which will take some time to put in place. My understanding is that that time cannot be before the end of March next year, so in effect it is the same thing.
Q165 Chris Bryant: No, it’s not, because he said after the transition period. He was suggesting, quite clearly, that it was EU law that prevented us from enacting our own sanctions. That is not true, then?
Sir Simon McDonald: Well, we can only use our sanctions power under the Act when we have put in place the proper processes. We are working intensively to prepare those in time for EU exit. That is it.
Q166 Chris Bryant: He has answered it in two different places now. You are saying that because of our membership of the EU there is no bar to our bringing these SIs forward and starting the process of coming up with a Magnitsky list.
Sir Simon McDonald: Indeed, but there is a lot of competition for SI time, so I do not think we can commit that all those SIs will—
Q167 Chris Bryant: So it is not about the law, it is about priority and whether we think this is a priority?
Sir Simon McDonald: It is about both.
Q168 Chris Bryant: You think the law prevents the Government from doing this now.
Sir Simon McDonald: I think that the processes—i.e. the SIs—have to be in place. That clearly takes a certain amount of time, but then the priority given to those SIs, against the other thousand that are needed, is something for ministerial decision.
Q169 Chris Bryant: No, to be clear, it is the Government who draft the SIs. It is the Government who decide the timetable for when they are considered. There is no impediment, other than the Government’s will and prioritisation, to getting this happening now, is there?
Sir Simon McDonald:—
Chris Bryant: Do the SIs exist yet?
Sir Simon McDonald: All I know is that they are being worked on. How quickly they come forward I do not know, but I can write to the Committee about that timetable.
Chris Bryant: But our membership of the EU does not preclude us from having our own sanctions regime.
Sir Simon McDonald: As long as we are a part of the EU, sanctions are a part of that. That applies to 29 March. What the detail of the transition—
Q170 Chris Bryant: Sorry, I think you are wrong. This is important because it is a clear matter of what we are legally able to do. I think some people have bought some Brexit baloney, to be honest. There is nothing in EU law that prevents us from introducing these sanctions. Estonia and three other countries I think have already done so. When the Foreign Secretary told ambassadors of other countries that we were unable to do this because of our membership of the European Union and that we would not be able to do so until after the transition—or after Brexit if there is no deal—he was just factually wrong. They all told him so.
Sir Simon McDonald: For the last time, I will say that it needs a structure of SIs to be implemented. I believe that that structure will not be in place before the end of March next year, but if it is then in place, yes we can do this in anticipation of the end of the implementation period. I also believe, Mr Bryant, that the EU can do Magnitsky sanctions in any case. This is something that is being debated in the EU.
Q171 Chris Bryant: But it just feels as if the Government have found excuses for dragging their heels. Against the background of our relationship with Russia, where we have been trying to drive forward some of these issues—the Prime Minister and the Foreign Secretary have taken leadership in that—it feels as if someone is giving duff advice somewhere along the line.
Sir Simon McDonald: Okay. I believe that the system will be in place by the end of March and that, after that, we would be able, even in the implementation period, to act nationally.
Q172 Chris Bryant: But why do you mention the implementation period? What has that got to do with it?
Sir Simon McDonald: Because it depends on the detail of the implementation period where we are still bound by EU action.
Q173 Chris Bryant: Why? The EU does not bind us.
Sir Simon McDonald: I am saying that we will be able to act nationally. If we cannot do that, I will write and correct myself.
Chris Bryant: I find this deeply frustrating because, honestly, in 2011 we introduced our own financial sanctions against Iran, which were not the sanctions that other countries in Europe were in favour of—in fact, they opposed them and it took them about 18 months to implement them. We are entirely free, as members of the European Union, to implement our own sanctions regime. Other countries—Canada and the United States of America—already have lists. I would beg you to look at whether we could not do this much more swiftly.
Sir Simon McDonald: I will, but I hope you agree that this still needs the necessary SIs to be in place.
Q174 Chris Bryant: I am not sure that I agree with that because it is the first time I have ever heard it, and this seems like the third legal reason that we have been given that has never thus far been advanced. When talking to ambassadors earlier this week, the Foreign Secretary still seemed to be under the impression that our membership of the EU or our being in the transition period somehow prevented us from doing our own actions—and you still seem to think that.
Sir Simon McDonald: Okay. Thank you; you have explained your position clearly. The Foreign Secretary will write.
Chris Bryant: Hurrah.
Chair: Let me come on to one almost final issue, which is—
Mr Seely: Sorry, have I missed my chance to contribute?
Chair: No. Do you want to contribute?
Q175 Mr Seely: Just a little. I have heard from one specific country that it turned up with a list of names of people it wished to give you in relation to the Magnitsky Act: hundreds of Russians who have been engaged in the torture and imprisonment—illegal, clearly—of Ukrainians in the Russian-Ukrainian war in eastern Ukraine. The Foreign Office was reluctant to take those names. I do not know if that is because you have a backlog of stuff or because the wheels of the Magnitsky Act have not yet come into gear, for reasons which Chris may or may not be correct on. I do not know, but I am just highlighting that. It would be great to get your comments and thoughts on that. If you do not feel able to give them now, as I suspect you might not be able to, it would be good to have something in writing, because it would be a shame if we have signed up to something and then were reluctant to use it.
Sir Simon McDonald: Magnitsky was explicitly one of the things we wanted to include in the new Act to give us more possibilities in sanctions policy, so that is a clear intent of the Government. I do not know of the specific case. If whoever you are in touch with wants to put their list to me, that person or organisation is welcome to do so.
Q176 Chair: You will be aware of the interest that this Committee has had in corrupt money—dirty money—flowing through the City of London. You will also be aware of Minister Wallace’s work responding to that and the strategy document he published very recently. You will no doubt be aware that his strategy is very dependent on the co-operation of the Foreign Office in identifying individuals who may require investigation by UK authorities. Could you assure me that you have spoken or written to posts around the world asking for them to co-operate with the National Crime Agency on this?
Sir Simon McDonald: As you know, we do not lead on money laundering for the Government, but we have a network of officers in the network that plugs into the National Economic Crime Centre. Our network is being expanded right now. We will be in over 80 countries by April 2019. I would be very happy, Mr Chairman, to write to all heads of mission stressing the importance of this work among the other responsibilities they have. I agree this is a key priority. We are acting by placing extra people in the network, but it is not only a job for them.
Q177 Chair: No, it is not only a job for them. It is also a job for other agencies and indeed British companies overseas. We are aware of that, but it is also particularly a job for the network because, as you rightly identify, they are the lead actors on Her Majesty’s behalf overseas. It is also one of the areas, as you know, that this Committee has been very seized with. Mr Bryant just raised it on Magnitsky, but we have all raised it in various different ways, particularly relating to Russian dirty money, which we have seen flowing through London and then used to corrupt allies and undermine our national security, in parts of Europe even, let alone around the world. It is raising enormous concerns for us in many countries, even among NATO partners. We would be very grateful if you would do that, stressing that this is not simply a matter of a little tax evasion but is very much in the national security interest of the British people.
Sir Simon McDonald: It is, and it is important to be consistent in our application of policy.
Q178 Chair: Absolutely, which is why I was going to come on to my second point and ask what you are doing to ensure that the Overseas Territories are included in this element.
Sir Simon McDonald: We have a programme of work with the Overseas Territories so that they are able to implement the provisions of the Sanctions and Anti-Money Laundering Act 2018. As you know, the provisions were controversial in the Overseas Territories, but the governors have a programme of work to help the Overseas Territories to implement the provisions of the Act by 2020. It is not popular with them, as you know, but this is now the law.
Q179 Chair: Would you be kind enough to share a copy of your letter to the heads of missions?
Sir Simon McDonald: I shall.
Q180 Chair: May I just ask a final question? You raised £420 million—
Sir Simon McDonald: £426 million. I assume you are talking about the sale of the Bangkok compound.
Q181 Chair: You are exactly right. What have you done with it?
Sir Simon McDonald: We have a large programme of work to reinforce the estate. There are two bits of money that are hypothecated. As part of the sale, we put £80 million aside for a new embassy build in Beijing and £40 million aside for a new build in Kabul. I do not, in the end, expect those sums of money to be enough to achieve both those big projects but that was the deal within the £426 million. We have a full programme of work around the world.
We are already seeing the first fruits. The Chancery building in Yerevan this year has been restored. It is now earthquake-proof. There is work under way in Paris, in Washington, and in Cairo, and the programme of work, which I think is now 60 projects long, will mean that the money is fully committed by 2020. In the next spending round we will have to have another conversation with the Treasury about further capital for the diplomatic estate. This is the first time in a long time that we have had proper money.
Q182 Chair: I realise that, and having visited the estate over many different parts of the world it is quite clear to me that we need to invest properly in it. Could you tell me how you are prioritising?
Sir Simon McDonald: I am now going to look to my right, I think for the first time.
Peter Jones: We have a global asset management plan that in effect is a prioritisation of all the projects that we have to work through over a multi-year period. Everything that is in there is discussed with our geographical directors and prioritised—the bigger projects, and the smaller but still necessary ones.
I might just mention that there is a very essential maintenance, health and safety backlog—seismic work—as well that we will address with some of the proceeds. The new embassies and missions that have been announced obviously now get factored into that. They are part of the global asset management plan too, and we work our way down that systematically.
Q183 Chair: Is any security element included in that?
Peter Jones: Security works will be part of some of the programmes that we do, obviously depending on the location. The PUS mentioned the future Kabul build, for example. That will be a major consideration.
Q184 Chair: But that is as part of an entire build. I am interested in security upgrades, and I am particularly thinking of places such as, as we have discussed, Islamabad. One could always spend more, but how much is allocated?
Peter Jones: We will look at it case by case. It will vary, but in locations such as that obviously security provisions and protections will be a big part of the equation.
Q185 Chair: May I finish by placing on record my enormous thanks to the high commission in New Delhi and to our high commissioner, Sir Dominic Asquith? He has been truly exceptional in transforming an aspect of the relationship—not alone, but with his defence attaché Brigadier Mark Goldsack—and re-engaging in many ways with the Indian military over our shared history of fighting in the cause of freedom in two world wars, and indeed in other campaigns. I visited this weekend, and I—
Sir Simon McDonald: I return the favour, Mr Chairman. Your work resonated around the world, and what undivided India did in the wars is now recognised in a way that it was not before—more than 74,000 casualties and about a million soldiers taking part in the first world war. Through the Khadi poppy campaign that is now much better known.
Q186 Chair: Thank you. Please pass on my thanks to everybody involved. It was a very impressive piece of work over many years in transforming the relationship.
Sir Simon McDonald: I have one piece of information, not for the public session.
Chair: In that case, we will go into private session quickly.
Sitting suspended for private session.