The Foreign and Commonwealth Office (FCO) has told the committee, chaired by former minister David Howell, that an efficiency programme has identified potential annual savings rising to pounds 28 million a year.
"The bulk of these savings have been required to enable the FCO to live within its previous baselines," the FCO said. "In 1996-97, the shortfall will be made up by a number of cuts to operating expenditure, including information programmes, travel andentertainment." No decisions have yet been taken on where expenditure reductions will fall in 1997-98.
Members of the committee were alarmed that the spending cuts on diplomatic posts abroad would be higher than previously stated. They were told that running costs were due to fall by pounds 17 million in this financial year, and pounds 11 million in 1997-98. But FCO officials said the cuts amounted to pounds 34 million this year and pounds 25 million next year when exchange rates and inflation overseas were taken into account.
The Treasury has also criticised the costs of overseas diplomatic posts, thoughthese days the posts are often geared to exporting British goods.
Last week a leaked report showed that middle-ranking Treasury officials, dubbed "kids" by the Chancellor, were warning that by hitching up to European markets Britain could lose its chance to win lucrative trade with emerging economies in the Far East and South America. The select committee was appalled to find that dozens of posts in British embassies and consulates had been cut.
Since October 1993, the FCO has found efficiency savings of pounds 22.4 million, representing nearly 11 per cent of corporate overheads and overseas support services. The number of staff slots in the UK has fallen by more than 18 per cent in the past three years. And the budget for the diplomatic wing of the FCO this year is due to fall from pounds 1,431 million to pounds 1,114 million - the lowest level since 1990-91. Some of the savings are being made by replacing UK staff in foreign posts with diplomats hired locally.
The Foreign Affairs Select Committee is also alarmed by the budget cuts proposed for the BBC World Service that are due to fall this year by pounds 8 million to pounds 170 million, and then by pounds 9 million next year. It is carrying out a separate report on the BBC World Service.Reuse content