The FCO and the Spending Review 2015

John Baron Excerpts

Tuesday 1st March 2016 Commons Chamber

[Crispin Blunt]

The hon. Gentleman is absolutely right. I have made that point before and will make it again in respect of the inquiry we are conducting into the intervention in Libya. Just how deep was the knowledge on the basis of which we decided to intervene? It is the depth of knowledge that has been lost.

Another price that is being paid is that locally engaged staff do not really understand the UK context. It has been put to me that the quality of the reports that are coming through is not quite what it was because they are not addressed to the needs of the Ministers at whom they are aimed. The difficulty is that very overstretched UK-based staff in a post are, in addition, having to oversee the work of the locally engaged employees.

Returning to the issue of Tunisia, I accept that the security of our citizens must be a Government priority and that they cannot commend travel unless they have confidence that our citizens will be reasonably safe, but this decision had serious consequences for Tunisia’s stability and the security of the region. We must therefore be completely confident that we can make informed decisions, rather than simply defensive decisions because of an absence of capability.

Reports are, of course, the standard mechanism by which Select Committees express their views. I believe that Committees can miss opportunities by not getting inside the decision making cycle, or by devoting our energies to conducting retrospective analyses after policy has been formed and executed. The Government should welcome input at an early stage from an informed, cross-party Committee that could make practical, forward-looking suggestions, rather than just telling the Government where they went wrong.

We published our report on the Budget in October last year, almost exactly a month before the spending review, and we made just one recommendation:

“We recommend that the Treasury protect the FCO budget for the period covered by the 2015 Spending Review, with a view to increasing rather than cutting the funds available to support the diplomatic work on which the country’s security and prosperity depend.”

I am delighted that our recommendations were accepted, and that the settlement reflected our central recommendation.

We spent much of our first few evidence sessions looking at how the Foreign Office was preparing for the spending review, and at what scope there was for it to absorb further cuts of the scale already imposed over the previous four years. The Foreign Secretary gave oral evidence twice, and we tried to get a sense of his priorities and what he would seek to preserve. We then took evidence from Sir Simon McDonald, the new permanent under-secretary, and his senior management team, to try to understand the grit and detail of what might be achieved and how if—God forbid—savings of 25% or even 40% were required. That gloomy environment perhaps reflected our rather defensive recommendation, which was obviously designed to hold the current position, but the Committee clearly believes that more resources are needed to support our diplomacy.

[Mr John Baron (Basildon and Billericay) (Con)]

As a member of the previous Foreign Affairs Committee, may I suggest that trying to make unnecessary savings can prove to be a false economy in the longer term? If we do not invest in expertise and analytical skills, we could end up making errors that can cost a lot more than if we had a proper view of things in the first place. The extreme example of that is avoiding conflict, which is much cheaper than conflict itself.

[Crispin Blunt]

My hon. Friend makes an entirely valid point. He sat on the Committee in the last Parliament and in this one, and he will know about the diminution of our expertise, for example on Russia. When he and I were soldiers back in the 1980s there was a wealth of expertise about the Soviet Union, but that has simply been stripped away. When faced with a crisis in Crimea and Ukraine, the level and depth of our knowledge were certainly a handicap.

When looking at future Committee reports and how we might influence future events, I hope that we will be able to report with authority and fulfil a much requested public need about Brexit. The Committee is conducting an inquiry into the costs and benefits of European Union membership for Britain’s role in the world—whether we stay in the EU or whether we leave. Hon. Members will already have found that people are asking where they can turn for independent analysis and who will give them the facts. Unhappily, the Government have placed themselves in a position where they are unable to give an independent view, since the entire institution is placed firmly on one side of the campaign. Happily, however, I preside over a Committee of 11, and the publicly expressed views of my Committee are balanced at five each on either side of the question.

--- Later in debate ---

[Mr John Baron (Basildon and Billericay) (Con)]

There is an old Army adage, which has served the British Army well, that says time spent on reconnaissance is seldom wasted. I suggest that it could serve the Government well going forward when it comes to expenditure on the Foreign and Commonwealth Office.

Cuts to the Office by previous Governments on both sides of the House have led to staff shortages, which have contributed to a series of errors that have cost us dear. On the one hand, I congratulate the Government on protecting the budget in real terms; that is a backstop we have not had hitherto and is very much to be welcomed. At the same time, I urge the Government to look to increase the budget in real terms, as my hon. Friend the Member for Reigate (Crispin Blunt) has eloquently suggested. If the Government seriously think that cost savings in this area work, I would suggest that all the evidence shows that to be a false economy indeed, and for a variety of reasons.

First and foremost, the false economy does not reflect the importance of how we make foreign policy in this country. That is in contrast to the United States, where foreign policy making is much more of a diffuse process, with academics, career diplomats, think-tanks and politicians all much more widely involved. In this country, on the other hand, the pyramid is much narrower and policy making is structured and put into place by a smaller number of people and organisations—primarily senior people at the top of the FCO, senior people at No. 10 and perhaps a few others. It is therefore terribly important that all the components of our foreign policy making are firing on all cylinders, because if a particular part is not working, given the smaller number of components in the process, that can have a disproportionate effect on overall policy and its consequences.

There is no shortage of examples showing that we have not done as well as we should have in responding to international crises and other incidents that have perhaps left us floundering. With the Arab spring, for example, there were so few Arabists in the FCO that we had to call them out of retirement. When it came to Russia’s annexation of the Crimea, for another example, I think I am right in saying—my right hon. Friend the Minister for Europe will correct me if he so wishes—that we did not have one Kremlinologist in the FCO, which perhaps contributed to the somewhat unconvincing response. I suggest to the Government that our interventions over the last 12 years or so have suffered from a lack of analytical skill and expertise, which has been very costly to this country.

[Stephen Gethins]

The hon. Gentleman has a long track record on these issues, and I am particularly grateful for his work in the Foreign Affairs Committee. He will probably be more gentle on the Government than I will. If we look at Libya, Afghanistan and Iraq, among other places, the lack of proper interrogation of the facts has been a disaster.

[Mr Baron]

I made the mistake of not finishing my sentence; next time I will finish it. I was about to say that my examples included Iraq, Afghanistan, Libya and, I would suggest, Syria. In Iraq, there can be no doubt that we went to war on a false premise: there were no WMD. We were all deceived; the job of Chilcot is to determine whether No. 10 intentionally deceived us.

On Afghanistan, I supported the initial deployment in 2001 to rid the country of al-Qaeda, and there is strong evidence to suggest that we succeeded in that objective in the very early years. Where it went disastrously wrong—this takes us back to the fact that we did not fully understand events on the ground—was when we allowed the mission to morph into nation-building. We went into Helmand without fully realising what it involved, and we certainly under-resourced our operations, which was a bad mistake.

In Libya, we knocked down the door—that was the relatively easy bit—but the country has turned out to be a complete and utter shambles, in part because we failed to understand that the opposition to Gaddafi would splinter into 100-plus groups with different objectives. Law and order has been non-existent in Libya ever since, which has led to more bloodshed and a vicious civil war.

[Daniel Kawczynski]

At this juncture, with my hon. Friend referring to Libya, I must interject that he was the only Conservative Member of Parliament to speak out against that British military involvement at the time. If I recall correctly from his speeches from that time, he put some prescient and important questions to the Government, in respect of which hindsight has proved him to have been correct.

My hon. Friend referred to the small number of people who make foreign policy in this country. Does he agree that in advance of British military intervention overseas, as in the case of Libya, there might need to be in future a greater period of engagement and deliberation for those such as my hon. Friend who do not fully support such actions, so that these problems can be avoided?

[Mr Baron]

I thank my hon. Friend and fellow Select Committee member for his kind words. I agree: there does need to be more time for reflection on these issues. I would also suggest that we need greater investment in the FCO. We need greater expertise and analytical skills because we need to make sure that we have analysed a situation correctly. Our system of government performs better when we have a well-informed Executive being questioned by the legislature.

What we have seen is a series of errors through which it has become increasingly evident that the Executive do not have that expertise to hand. That is one reason why the legislature has raised the bar on military intervention—because it has lacked the trust in the Executive to make their case, analyse a situation correctly and make sound recommendations. Once that trust is lost, the legislature will raise the bar when it comes to military intervention, as we have seen.

Let me return to some of the other errors that we have made. I suggest that there were errors in Syria. The Government line that we did not intervene early enough on behalf of the rebels, which accounts for the mess that is evident there now, is simply not correct. The Government’s intention was to arm the rebels in the hope that they could keep the weapons confined to the “good” rebels and not allow them to spread to the “bad” rebels—in other words, to track and trace the weapons. Anybody who knows anything about the region, or who has visited the country or travelled through it, should know that everything is tradeable in the bazaar. Also, given that the situation was so fast moving, the idea that we could have stopped the rebels from falling into the hands of al-Qaeda, al-Nusra or other extremists was pure make-believe.

Then, within a couple of years, the Government, having been stopped by the House from intervening in a key vote in 2013, again proposed to intervene—but against the rebels. I would not be so unkind as to suggest that we swapped sides in a civil war within two years, but to the general public, it damn well nearly looks like that. It well illustrates how we have failed to analyse the situation correctly.

In the brief time left to me, I would argue that in many respects our interventions have been a distraction. I, for one—like many Members on both sides; some are in their places today—have long advocated the need to spend more on defence. The military interventions in Iraq, Afghanistan, Libya and indeed Syria have perhaps distracted us from the greater threat of nation states, not necessarily friendly to the west, re-arming and reasserting their power and influence. One thinks immediately of Russia and China, but there are others as well.

To those who suggest that the straits of Hormuz or the South China seas are far away and of little significance to us, I say that a country based to such an extent on maritime trade—about 90% of our trade comes by sea—would certainly know about it if those straits or seas were ever blocked. My suggestion is that we have been distracted and that that is partly a function of the fact that we are not investing enough in what I call our ears and eyes—in other words, our ability to understand what is happening out there.

We must have a margin of safety or comfort as regards our capability, because no one can confidently predict where the next trouble spot is going to be. History is littered with examples of our facing the wrong way. I suggest that without that margin of comfort, that margin of safety, in our analytical capability, we may well be caught short again if we have not made the necessary investment. I suggest that, without that investment, we make expensive mistakes—indeed, we have made them—and that it is therefore a false economy to talk about savings, particularly when the budget is so small relative to Government expenditure generally. If I may take the point to the extreme, avoiding unnecessary conflict is vastly cheaper than committing ourselves to conflict that is costly in terms of both lives and treasure.

We often talk about hard power in the House, but perhaps we do not talk enough about soft power, which is increasingly important. In the present information age, those who win the argument will be just as important as those who win the conflict. This is about a battle of ideas, a battle of ideologies. It is about persuading others to want what we want, rather than just rattling the sabre, which—as we have seen so many times in our recent history—can often be counterproductive. We do not attach enough importance to soft power in this country, certainly not when it comes to the making of foreign policy.

There are clear examples of our putting our soft power capability at risk. Past cuts to the BBC World Service have hindered our ability to reach out to people; the World Service budget has been transferred from the FCO’s ambit, but that was one example before the transfer.

An example that currently sits in the FCO is the British Council. That venerable organisation is doing tremendous work in spreading the word, encouraging people to want what we want, providing an educational service, and trying to bring peoples together to improve understanding for the benefit of all concerned, but what are we doing? We are making cuts there. What is the British Council having to do as a result? It is having to become even more commercial in trying to make up for those cuts.

Members may think that a 10% cut is very little, but given that 10% is sometimes the profit margin, the British Council must achieve a 100% increase in its revenue when engaging in commercial activities to make up for that cut. We, as a country, must think again about short-sightedness of that kind, because it is not serving us well—and, I would argue, not serving the international community well.

We need to ensure that our ears and eyes are working, because when they are not, we tend to make expensive mistakes in the world. The fact that we have not properly funded our analytical skills and our capabilities, and have not been as well-sighted as we should have been, has certainly contributed—although it has not been the only reason—to a series of errors that have proved exceedingly costly in lives first and foremost, but also in terms of treasure. That brings me back to the point about false economies. It is a false economy to make cuts in our ears and eyes—our Foreign and Commonwealth Office capabilities—if, as a result, we then blunder into interventions that cost us dearly in lives and treasure.

I am pleased to see that my right hon. Friend the Minister for Europe is present. Through him, I urge the Government to increase expenditure on the FCO in real terms. We will be better sighted for it, and will make fewer costly errors.

[Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)]

It is a pleasure to follow the hon. Member for Basildon and Billericay (Mr Baron). He made a very detailed, perceptive and interesting speech, which l thoroughly enjoyed.

The cut in funding for the Foreign Office, on top of the 10% budget cut since 2010, is directly contrary to the United Kingdom’s key strategic interests, and might prevent the Department from effectively addressing serious organisational issues of its own. We cannot properly address the threats to our security from Daesh solely by dropping bombs in Syria, Libya or Iraq, and threats to our economy from events in China and in the eurozone cannot simply be washed away by the Treasury. We need to equip the FCO not just to meet the challenges of today, but to rise to the unknown challenges of tomorrow. There must be a renewed focus on aid and diplomacy in all that it does.

A recent Foreign Affairs Committee report, “The FCO and the 2015 Spending Review, stated:

“In an increasingly unstable world, the Government relies on the FCO to have the necessary infrastructure in place so that it can make critical decisions at a moment’s notice. Over the last Parliament the country was found to be lacking in expertise, analytical capability and language skills to manage the fallout from the Arab Spring and the crisis in Ukraine. In 2010 it might have been thought that expertise on Benghazi, Donetsk, or Raqqa was surplus to requirement. These have become vital areas for our national security, evidencing the real dangers of an under-funded Foreign and Commonwealth Office”.

[Mr Baron]

The hon. Lady is making some excellent points, and I would love to remain in the Chamber to listen to the rest of her speech. I promise that I will pursue it in Hansard afterwards. However, my Whips have very thoughtfully put me on to a Statutory Instrument Committee, so would she forgive me if I left her at this point?

[Ms Ahmed-Sheikh]

I thank the hon. Gentleman for what he has said. On this occasion, I shall forgive him.

The FCO must have the capacity to be able to extend further than the issues with which it currently deals from day to day. In a speech to the Institute for Government last year, the outgoing permanent under-secretary at the FCO, Sir Simon Fraser, supported the protection of UK aid spending and the 2% commitment to defence spending, but lamented the fact that the FCO’s relatively small budget would be unprotected in the coming spending review. He described the FCO as

“the glue that holds everything together”.

He said that the FCO’s budget arguably deserved protection similar to that given to the larger budgets of the Department for International Development and the Ministry of Defence, whose operations overseas would only stand to benefit from a strong FCO. That being said, the FCO clearly needs to reform its overseas network to stem spiralling costs, particularly in the current climate, when cuts are hitting so many people so hard. At such times, the focus must be on efficiency and efficacy.

I hope that, when the Minister winds up the debate, he will be kind enough to answer the following questions. What changes will be made to the implementation of Government policy outside the United Kingdom when it spans a range of Departments? Who decides which Department is best placed to co-ordinate joint action between Departments, and how will funding to support that be secured? Will the cuts mean a diminution of the role of the FCO within the Government, and what impact will they have on its continued strategic role in that capacity? Is it not worrying that the United Kingdom’s international role will become further stratified and unbalanced, as Departments such as the MOD and DFID, which have protected budgets, will have a stronger role without the balancing mechanism that the FCO can bring to that work?

Sir Simon Fraser acknowledged that the issue of human rights was no longer a top priority, and it needs to be re-established as such.

Let me now say something about what the FCO looks like to the outside world. In the same speech, Sir Simon conceded that, in the past, the FCO’s culture had been

“too narrow, too white and too male”,

He argued that that culture had been improved on his watch, but acknowledged that there was still much more to be done to achieve more diversity, in the full sense of the word. Cuts in the Department may threaten progress in the vital area of equality and diversity. There were no women on the shortlist to replace Fraser as permanent under-secretary. He also noted that the FCO had yet to appoint a woman ambassador to its most prestigious posts, such as those in Washington and Paris, although he emphasised that women were now ambassadors in both Beijing and Kabul. He ascribed that to the “pipeline” of diversity in the organisation, pointing out that the FCO had started behind the rest of Whitehall, having been the last Department to abolish its marriage bar, as late as 1973. Fraser anticipated that there would be some competitive female candidates to replace his successor, both from within the FCO and from outside.

On the subject of wider diversity, although 12% of its total workforce is from a minority ethnic background, the FCO leadership at senior levels is almost exclusively white. Fraser said that there had been a cultural switch to understanding that diversity not only mattered but was good for the FCO, leading to better decisions and outcomes. That applies also to the wider workplace, wherever it might be, and indeed to this House itself.

So what impact will these proposed changes to the Department’s budget have on the work of the FCO to address this culture? What schemes and initiatives within the Department will be funded in the next year specifically to address these issues? An isolationist agenda in our international relations has already damaged the UK’s image. At the very least, let us make sure that this is not reflected in this country’s workforce diversity. This should be, and is indeed, our strength.