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3 May 1989]
MINUTES OF EVIDENCE TAKEN BEFORE
[Continued
resource allocation process, known as the Top Management Round. This allows decisions on resources to be made in the context of overall priorities.
DELEGATION OF FINANCIAL RESPONSIBILITY
8. Cm 602 states that the Assistant-Under Secretary budgets scheme is likely to be extended. Could you describe these plans?
Could you also elaborate on the plans for developing further the delegation of authority for budget management in the UK?
(i) Small programme budgets were first made available to six Assistant Under Secretaries in 1987- 88. In 1988-89 one additional Assistant Under Secretary was included in the scheme and £1.65 million was allocated to the budgets (sums ranged from £500,000 to £100,000 for individual Under Secretaties). Of the Total, £500,000 was allocated to foreign policy related activities in support of the flight against drug-trafficking.
The scheme has proved successful and popular. The funds have helped fund a large number of projects which have contributed towards meeting FCO objectives and for which no alternative source of funding was available.
As a result of the 1988 PES settlement, an additional £200,000 will be devoted to the scheme in 1989- 90 making a total of £1.85 million. The exact division of this total has not been finalised. But seven Under Secretaries will again have individual budgets. Some of the extra sum is likely to be devoted to drugs-related activities (giving a probable total of £550,000 for this work), while the rest will go to Under Secretaries responsible for high priority areas such as the Soviet Union and Eastern Europe, and the Far East.
(ii) Apart from the development of AUS budgets, the other major experiment in devolved budgeting in the UK is the budget for the communications departments, largely based at Hanslope Park. Responsibility for financial and manpower resources at home and abroad administered by Hanslope Park was delegated to the Director of Communications on a two-year experimental basis from 1 April 1987. Information Technology Department joined the scheme on 1 April 1988, and consideration is being given to the inclusion of other departments. The experiment is due to be evaluated as part of the next major Efficiency Unit scrutiny of the FCO, on financial manage- ment in the UK, which is due to begin in June. The scrutiny will consider the application of Hanslope Park type devolved budgeting in other areas of FCO activity at home, including the extension of devolved budgeting to departments which are not at present budget holders.
VALUE FOR MONEY
9. Paragraph 36 of Cm 602 lists some of the 1988-89 value for money targets. Have these been achieved? Could you list the planned targets for 1989-90?
What is the amount of the savings you anticipate making?
Exact savings achieved as a result of the value for money targets listed in the White Paper will not be known until early in financial year 1989-90. But the FCO is on course to achieve substantial savings in these areas. A full review of value for money performance will be carried out after the end of the current financial year.
A complete list of value for money targets for 1989-90 is enclosed as an annex to this memorandum. The targets demonstrate the considerable benefits gained from a much more rigorous examination of the contents of major contracts by the FCO's Director of Purchasing, with a view to securing greater value for money in all contracts and increased contractual security. Directly identifiable savings in 1989-90 amount to approximately £2 million. This does not include efficiency gains set out in the list in areas such as communications, office accommodation and training.
10. What changes have there been in the way the FCO runs its Overseas Estate?
What have been the costs, and what are the savings?
(i) The FCO took over direct responsibility for the overseas estate from the PSA in 1983. FCO reorganised the Overseas Estate Department in 1985 and, in the same year, agreed arrangements for asset recycling with the Treasury. Since then we have applied a continuous policy of estate rationalisation, under which we have disposed of overscale and uneconomic properties where practicable, replaced expensive hirings with economic purchases where possible and made better use of latent assets. We have been guided particularly by the search for reduced running costs and
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