Embassies for hire to plug funding gap

The cash-strapped Foreign Office has found novel ways to meet its £135m funding shortfall, including the hiring out of its prestige embassies and cutting perks, it was revealed in the department’s response to the latest Foreign Affairs Committee (FAC) report.

Earlier, MPs had criticised the decision to stop protecting the FCO budget from exchange rate fluctuations, leading to a 13 per cent decrease in the department’s purchasing when the pound’s value dropped.

To raise revenue the Foreign Office revealed that it made £1.46m by hiring out its prestige properties to third parties. Examples include hiring out Lancaster House in London, as well as the use of the Ambassador’s Residence in Paris for a major fashion show by British designer Stella McCartney and renting out the Ambassador’s Residence in Tokyo for a Nature Mentoring Awards in Science ceremony.

While welcoming the innovation, the FAC cautioned that these revenue-raising efforts may generate conflicts of interest or harm the department’s reputation.

To make a dent in the deficit, the FCO will have to make deep cuts, however. Schooling allowances cost the FCO £11.5m annually and from September, diplomats who send their children to top boarding schools face losing up to £1,200 in allowances.

Other perks to go include the scrapping of business class flights for plane journeys under five hours, a “wear and tear” allowance for crockery and cutlery used for entertaining and a “wasted food” payment in countries with frequent power cuts.

According to a Foreign Office spokesman, the spending review was likely to claw back around £10m per year.

The FCO intends to save a further £12m by ‘localising’ management and administrative positions at diplomatic posts, a move that caused concern among MPs who said local staff in sensitive positions may leave embassies open to security leaks and fraud in certain postings.

Referring to the imprisonment of local staff from the British Embassy in Iran, MPs warned that local staff were not protected by immunity laws and urged the FCO to confer diplomatic status to them, where permitted under the Vienna Conventions.