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Pound's slide hits Foreign Office

The collapse of the pound will put the Foreign Office (FCO) under
"serious financial pressures" in the coming year, a parliamentary report
warns.

At a time when all Britons are finding the pound does not go as far as
it once did, the FCO's work abroad means it is feeling the pinch more
than most.

The Foreign Affairs Committee says the removal of Treasury protection
against currency fluctuations is another blow.

The pound's value against the euro and dollar has slid in recent months.

It is now trading at around 1.10 euros, compared with 1.50 in 2007, and
has crashed to around $1.45 in trading against the American dollar.

The FCO uses "hedging" arrangements to limit its exposure by securing
foreign currency in advance at a fixed rate, but told the committee it
acknowledged that it will face "a tougher challenge" to fund its
activities in the next financial year.

Meanwhile, the FCO warned that anticipated increases of more than £3m a
year in the cost of subscriptions to international bodies like the
United Nations may force it to cut other programmes.

The committee's chairman, Labour MP Mike Gapes, said it was "deplorable"
that the department was forced to shoulder alone the cost of
subscriptions which benefit the whole government, and urged the Treasury
to cover them.

Job security

The FCO expects its overall funding to grow from £1.6bn in 2007-08 to
£1.7bn by 2010-11. In the year ending 2007 it was able to spend £58m
less than expected.

The committee report also highlighted dissatisfaction among Foreign
Office staff about their career prospects and changes within the
service.

The FCO's own staff survey last year found just 35% believed the
promotion process was fair and objective, while feelings of job security
had dropped by 14% to 42%.

And an independent "cultural audit" carried out last year found that
most staff "loved" working for the FCO, but uncovered criticisms of the
department's "too conformist, consensual, bureaucratic and risk averse"
culture.

The FCO said in a statement: "We welcome the report and will respond to
specific points raised by the committee in our formal response."

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/uk_politics/7876614.stm

Published: 2009/02/08 01:51:51 GMT