Future Diplomatic Network

Douglas Alexander Excerpts

Wednesday 11th May 2011 Commons Chamber

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

With permission, Mr Speaker, I will make a statement on Britain’s future diplomatic network.

Our embassies and high commissions are the essential infrastructure of our country’s influence overseas and of our economic recovery. They provide an early warning system for threats to our security and to wider peace, and assist British nationals in times of crisis. They support our economy and help British businesses to access markets abroad. They promote our values of democracy and political freedom across the world, and help to craft vital international agreements from nuclear proliferation to climate change. We could not do without them for a single day.

I promised in our first week in office as the coalition Government that there would be no strategic shrinkage of Britain’s diplomatic influence overseas under this Government, and that instead we would strengthen Britain’s diplomatic network. Today I want to set out how we will achieve this while saving money overall.

The spending review settlement for the Foreign Office requires a 10% real-terms reduction in the budget. That is, of course, on top of years of unplanned cuts after the last Government stripped the Foreign and Commonwealth Office budget, more than half of which is spent in foreign currencies, of its protection against exchange rate fluctuations in 2007, just before the sharp fall of sterling. In the last two years before the general election, the Foreign Office experienced a 14% real-terms reduction in its budget, resulting in the sudden loss of personnel and training in many embassies. The Foreign Affairs Committee has done much to sound a warning about these matters, and I have been unable to find any other major Foreign Ministry in the world that raises and reduces its diplomatic activity on the basis of movements in exchange rates. I promised to put an end to that ludicrous situation, and the protection is now being restored under a new foreign currency mechanism agreed with the Treasury. That means that the Foreign Office can once again plan properly for the future.

Fortified by that ability to plan, we will find £100 million per year of administrative savings by the end of the Parliament, on a carefully planned basis. We will save over £30 million by simplifying procedures, removing bureaucracy and ensuring that administrative work overseas is done by locally recruited staff or in regional centres. We will save over £34 million a year from our annual estates and security costs, for instance by moving to a single site in London. We will reduce our annual staff costs by £30 million a year by 2014 by reducing to a minimum the number of junior staff posted overseas from London, by removing or reorganising their positions or recruiting locally. We will do so in consultation with staff to mitigate the impact on individuals and their careers. Those savings are not easy but they are essential. They will allow us to live within the necessary financial constraints and to provide the diplomatic network we need for the future.

We will now reverse the previous Government’s policy of closing embassies and reducing our diplomatic presence in key parts of the world, as a result of which 45 UK posts were closed after 1997, including six in Africa, seven in Latin America and eight in Asia, and the overall number of UK posts in the world fell by more than 30.

We will embark on a substantial reinvigoration of the diplomatic network to make it ready for the 21st century, to expand our connections with the emerging powers of the world, and to signal that where Britain was retreating, it is now advancing. The case for a strengthened network is utterly compelling. The only way to increase our national prosperity and secure growth for our economy is through trade, and our embassies play a vital role in supporting British business. The emerging powers are expanding their diplomatic networks. Turkey is opening many new posts and Brazil already has more posts in more countries in Africa than Britain has. Given that political influence will follow economic trends in the world and increasingly shift to the countries of the south and east over the long term, we need to plan ahead and create the right network for the future.

Although we are working closely with the new European External Action Service and ensuring that talented British candidates enter it, there is not and will never be any substitute for a strong British diplomatic service that advances the interests of the United Kingdom. We can never rely on anyone else to do that.

We will therefore significantly increase our presence in India and China, the world’s two emerging superpowers. We will strengthen our front-line staff in China by up to 50 officials and in India by 30, and will work to transform Britain’s relationship with their fastest growing cities and regions. We will also expand substantially our diplomatic strength in Brazil, Turkey, Mexico and Indonesia. We will add diplomatic staff in the following countries and places: Thailand, Burma, South Korea, North Korea, Taiwan, Mongolia, Malaysia, Nigeria, Angola, Botswana, Chile, Argentina, Colombia, Panama, Peru, Pakistan, Vietnam and the Philippines.

We will maintain the strength of our delegations to multilateral institutions, such as the United Nations in New York and Geneva, NATO, and the European Union in Brussels, all of whom have done an outstanding job in recent months. We will maintain our active and substantial embassy in Washington and our network of consulates general across the United States, which remains our indispensable ally in defence, security, foreign policy and commerce.

We have a strong network in the middle east and north Africa, on which the demands have been so great in recent months. Although there is no need to open new posts there, we have frequently and substantially reinforced our diplomats there in recent months and have sent a special mission to Benghazi. Over the coming months, we will review the need for additional deployments.

This expansion does come at a price. In Europe, there have already been significant savings in our diplomatic network. I am determined not to hollow out our embassies there, but we will need to find further savings in recognition of the fact that only three of the world’s 30 richest cities in total gross domestic product terms are in Europe, and the fact that our embassies there still cost more than elsewhere. So although we will fully maintain our embassy network across Europe, we will also find additional resource for our expansion elsewhere in the world from the network of subordinate posts in Europe outside capital cities. We will withdraw diplomatic staff from some subordinate posts, while retaining UK Trade & Investment and consular staff in many cases. That will lead to there being fewer subordinate posts in European countries.

With those additional resources we will be able to open new British embassies, including in places where they had previously been closed. We will reopen the embassy in El Salvador, closed in 2003, as part of a major diplomatic advance in Latin America after years of retreat. We will open a new consulate general in Brazil at Recife, which will be one of approximately seven new consulates general that we will open in the emerging powers. We will open a new embassy in strategically important Kyrgyzstan, and another in July in the new nation of South Sudan.

I always doubted the last Government’s decision to close the embassy in Madagascar, to which I know many Members of all parties objected. I am delighted to say that we will reopen that embassy as soon as the local political situation is right. I will also consider upgrading our political office in Côte d’Ivoire to a full embassy. I have made provision within our budget to open a new embassy in Somalia when the security situation has improved sufficiently. It is vital for our security that we are present in the horn of Africa, so I have made that decision now so that we will be ready to open the new embassy as soon as possible.

In addition to those new embassies, I give the House a commitment today that whereas the previous Government shut 17 sovereign posts in their time in office, we intend to retain all 140 existing British embassies and high commissions throughout the life of this Parliament. Other savings will be found as we reduce, over time, our diplomatic footprint in Iraq and Afghanistan, which is very large relative to the rest of the network. As the nature of the UK military involvement in Afghanistan changes, we will redeploy staff elsewhere.

The strength of our embassies is a signal to the world of our engagement and our role in international peace and security. They are the platform for the strong bilateral relations that are increasingly vital in a networked world, and indispensable to success in multilateral diplomacy. Our decisions will mean that our reach when British companies need assistance or British nationals are in danger will go further and be stronger. That is why the maintenance, extension and strengthening of our global diplomatic network is a central objective of this Government and will be a priority for the use of Foreign and Commonwealth Office funds over the coming years.

Although I have increased programme funding in the FCO to £139 million this year, our financial constraints and the priority that I am placing on retaining and improving our diplomatic network for the future mean that it will have to fall in future years, although it will remain above £100 million. I am sure it is right to give priority to long-term relations and the reversal of Britain’s strategic shrinkage.

This development of our network should be seen alongside the diplomatic excellence initiative that I have instigated in the FCO, which began six months ago. That places a renewed emphasis on policy creativity, in-depth knowledge of other nations, geographic and linguistic expertise and the enhancement of traditional diplomatic skills in a manner suitable for the modern world. A combination of strict savings in administrative spending, reductions in our subordinate posts in Europe and the other savings that I have set out will allow us, for the first time in many years, to mount a diplomatic advance. For the first time in decades, our diplomatic reach will be extended, not reduced. That is the right use of public money, and it is the right course for Britain in this century.

This Government will work to build up Britain’s influence in the world, to forge stronger bilateral relations with emerging giants and some old allies that have been neglected for too long, and to seize opportunities for prosperity and advance democratic values. We will maintain and enhance the Foreign and Commonwealth Office as a central Department of State leading an ambitious and distinctive British foreign policy, and we will expand and use Britain’s diplomatic network to the very full, in the interests of the United Kingdom and in support of the wider peace and security of the world.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the right hon. Gentleman for advance sight of his statement. I first join him, of course, in paying tribute to the work of all Britain’s diplomats around the world. Their work often goes unrecognised here at home, but Britain’s prosperity and influence would be hugely diminished were it not for their considerable efforts.

The Government are right to assess where best to deploy the Foreign and Commonwealth Office’s finite resources. In particular, I welcome the decision to expand Britain’s diplomatic presence in China. UK exports to China were worth £5.5 billion in 2007—by 2009, that had grown by more than 40% in cash terms—and 17,000 British nationals are permanently resident in China. Next week, I will visit Britain’s embassy in Beijing. I am conscious that it is playing a hugely valuable role in supporting the promotion of Britain’s values and interests in the world’s most populous country.

The FCO should not, of course, be exempt from the need to reduce the deficit, but in making cuts to a relatively small budget that has a global impact, there is a need for particular care and clarity. The Foreign Secretary spent a great deal of time in his statement criticising Foreign Office expenditure decisions under the previous Government. Will he therefore confirm that it was under his leadership of the FCO that it was fined £20 million by the Treasury for its attitude to

“getting money out of the door”

before the end of the financial year?

The Foreign Secretary placed a great deal of emphasis on trade in his statement, but will he set out in greater detail the position on the headcount and resourcing of UKTI in the years ahead?

The Foreign Secretary briefly mentioned cuts in programme expenditure from the current level of £139 million to a figure, he said, that would be retained above £100 million. Perhaps, in the spirit of candour, he will share a little more of his thinking on which programmes he is contemplating cutting to make the reduction of which he spoke. He has already announced real-terms reductions in programme spending on counter-terrorism, and a £2 million cash reduction in spending on counter-narcotics and rule-of-law programmes in Afghanistan. Will he therefore confirm that the decisions announced today will mean no reduction in the levels of staffing dedicated to counter-terrorism and counter-narcotics, either in Afghanistan or across the whole diplomatic network?

The right hon. Gentleman is right to highlight the fact that as we draw down our forces from Afghanistan, greater resources will be freed up. However, given the repeated and urgent calls from both sides of the House for a diplomatic surge to match the military effort, will he set out precisely what will happen and when in relation to FCO staffing in Afghanistan for the remainder of this Parliament?

There is much to study in today’s announcement, and the Opposition will scrutinise in detail the specific changes in each country. I welcome the Foreign Secretary’s re-announcement of his commitment to ensuring that there is no strategic shrinkage of Britain’s influence under this Government, but such shrinkage cannot be prevented through diplomats alone. Many commentators saw the Government’s initial plan—to step back from foreign affairs and ensure that a quiet period on the world stage took place, reinforcing a domestic austerity agenda—as a profound error. Perhaps for the pre-Tahrir square era, such a plan seemed appropriate, but the Government’s passivity and lack of ambition for a bilateral, mercantilist approach to foreign policy has been found badly wanting by recent events in north Africa.

Will the Foreign Secretary therefore provide the House with more detail on Britain’s staffing of those multilateral institutions of which he spoke so warmly? Ours is the one country that can operate simultaneously through the EU, the Security Council, NATO and the Commonwealth. Will he therefore clarify what will happen to staffing in each of those institutions?

Is the Foreign Secretary really telling the House that, after the seismic political changes that have swept north Africa and the middle east in recent months, with protests from Morocco in the west to Iran in the east, the review makes no fundamental changes to the diplomatic distribution of assets in the region? That is what the Opposition heard him say, but many will think that that is unsustainable. I suggest that he commits now to a more fundamental review of diplomatic coverage in the region in the months ahead.

The review must not be a means by which the Government once again choose bilateralism over multilateralism, and trade over wider influence, and thereby, however inadvertently, sleepwalk into strategic shrinkage.

[Mr Hague]

I welcome some of the right hon. Gentleman’s comments, including his tribute to the diplomats who serve all Governments loyally and well, as, of course, they will continue to do in the future. I also welcome his welcome for the expansion of our presence in China; it is the largest of all these expansions of our diplomatic presence in the world. Relations with China have been built up and improved under successive Governments, and I welcome the fact that he is visiting it next week. This trend has been continued across parties.

I wish, however, that the right hon. Gentleman had felt able to welcome some of our changes to the previous Government’s policies, particularly the reopening of embassies they closed. The embassy in Côte d’Ivoire was closed not only under the previous Government, but while he was a Foreign Office Minister. Trade offices in Brazil were closed, which I hope Labour Members will now recognise was a short-sighted mistake given the expansion of the Brazilian economy, and posts were withdrawn from Latin America, which was a mistake he chose not to dwell on in his questions. Furthermore, consulates general were closed in Frankfurt, Stuttgart and elsewhere across Europe. Taken together, the closure of more than 30 posts under the previous Government was a fundamentally mistaken policy that we are now changing. The withdrawal of the overseas pricing mechanism, which led to so many unplanned and rather chaotic Foreign Office spending reductions, was also a mistake, and it is time that Opposition spokesmen acknowledged that and said, as I said when I was in opposition, that in the future there will be no changes to the Foreign Office budget according to exchange rate fluctuations.

All those things were missing from the right hon. Gentleman’s response to my statement. He asked about various other details this year. The Treasury has not fined the Foreign Office, which now has a much better relationship with the Treasury than it did under the previous Government. Last night my right hon. Friend the Business Secretary and I launched the new UK Trade & Investment strategy and the FCO charter for business. Like all parts of government, UKTI has to manage with expenditure reductions and will have to produce more for its budget, which, like that of the Foreign Office over time, will fall by 17%. However, it will be able to do more with its budget by running it well.

Our programme spending decisions this year have already been set out in detail, but obviously what happens in future years will depend on how the situation develops. I am simply sounding a cautionary note today that some of those programmes may have to be reduced. However, it is far too early to make decisions about that. Furthermore, reductions in Afghanistan are not immediate. I am merely foreshadowing changes, given that we have said that by 2015, our troops will not be engaged in combat operations, or in anything like the numbers they are now. It follows that there will be diplomatic changes as well.

The strength of our diplomatic presence in multilateral institutions will not be affected. As I said in my statement, our diplomatic team have done a great job. However, it is also time for the right hon. Gentleman to recognise that success in multilateral institutions often comes from strong bilateral relations, as well as a great diplomatic team in those multilateral institutions, which is one reason why we place such emphasis on bilateral relations with many of the leading world powers. In many cases, those relations need to be restored. I do not know where he got the idea that the Government planned to step back from foreign affairs and think the world peaceful, or that we planned to be passive. After all, I keep finding myself going to countries that no Foreign Secretary visited during the entire 13 years of the previous Government, whether they be rather troublesome spots such as Yemen or old allies such as Australia. The passivity was in the previous Administration, rather than the current one.