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Government has acknowledged that the FCDO’s 6,500 overseas properties are in a shocking state, presenting a severe risk to the organisation.

• Read the report
• Read the report (PDF)
• Cost of maintaining the FCDO's overseas estate
• Public Accounts Committee

In a new report scrutinising the management of this £2.5bn estate, the PAC calls on the FCDO to set out its plans for reducing the accompanying c.£450m maintenance backlog, while warning it does not currently have enough funding to cover its estate needs.

The FCDO rates around 15%, or 933, of its properties as not being sound or operationally safe. The report calls for a full categorisation by government of which buildings pose a risk to health and safety, to FCDO operations, and require urgent maintenance.

The PAC’s inquiry heard that since 2010 the FCDO has funded its estate through major sales of its own assets, primarily in Bangkok and Tokyo, but that government now agrees that this approach is no longer viable, with no remaining large assets it can sell.

The PAC recommends the FCDO develop a new overseas estates strategy that sets out the size, shape and location of the estate it needs to support UK government objectives. Its report makes clear that the FCDO’s agreed annual estates budget of £150m will not address its existing maintenance backlog.

The FCDO, which also has an estimated £2.1bn pipeline of larger estate renewal or replacement projects, told the PAC that its capital funding increase was valuable and gives it a chance to sort out its estate, but it does not by itself get it out of the danger zone.

The report calls on FCDO to now identify where it can make savings from its overseas estate and to set out its spending priorities.

The report also highlights several high-profile projects which have run significantly over time and budget, including the Washington Embassy and the High Commission building in Ottawa.

In Washington, where costs increased from £112m to £160m, the PAC’s inquiry heard this was due to starting the project during the pandemic, with the 90-year-old residence being in poorer condition than expected.

For Ottawa, where the new building was completed 18 months behind schedule and c.£10m over budget, the PAC heard this was also due to the pandemic, as well as industrial action in the Canadian construction industry. 

The FCDO accepted to the PAC that with hindsight it was a mistake to start both projects during a pandemic, and the report calls for lessons learned from estate capital projects to be collected and analysed to ensure appropriate oversight and effective management.

The report further warns that the FCDO’s ability to manage its estate is hampered by a lack of staff with the necessary skills and experience, with a National Audit Office survey finding 65% of overseas posts reporting a lack of staff and other resources for estate management.

The PAC recommends the FCDO develop a strategy setting out the staff and skills it needs and where they should be best located and a delivery plan explaining how it will close any current gaps.

Chair comment

Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said:

“It is with great disappointment that our Committee reports on the FCDO’s overseas estate, given that we have found many of the same problems that existed 15 years ago. 

"However, we are now in a worse position, because the FCDO is running out of road. It is widely agreed that its approach of funding its own estate management by cannibalising its own assets is no longer viable, and the annual budget agreed with Treasury will not cover its own maintenance backlog.  

"As a chartered surveyor, I know there is much more that the FCDO can do to modernise the management of its estate, particularly by obtaining better digital information using modern property portfolio management tools.

“A clear-eyed assessment of the management of these assets must now be made. The FCDO must decide where it can make savings and what kind of estate it needs in order to deliver on UK government priorities.

"For this to happen, a proper strategy for its workforce, and central oversight of its spending is needed. Significant budget and schedule overruns resulting from mistakes made in the refurbishments of the British Embassies in Washington DC and Ottawa demonstrate this necessity.

"We of course recognise the challenges inherent in managing such a complex, multibillion-pound endeavour. It is welcome to hear that FCDO views getting its estates strategy right as one of its top priorities – what is at stake if it does not, is the very edifice that the UK relies upon to deliver its foreign policy.”

Further information

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