FO flies boldly in the face of market forces

The Foreign Office has devoted an entire page of its 1995 annual report to a justification of the expenditure of £16.7m last year on the British Embassy in Paris and the ambassador's residence, "one of the finest diplomatic buildings in the world".

The 123-page report, issued yesterday, outlines the aims and objectives of British foreign policy while defending the Foreign Office against parliamentary criticism of lavish spending.

"There will be a tendency in today's world to search through the pages that follow for the bottom line," the Foreign Secretary, Douglas Hurd, concedes in a somewhat ambiguous introduction. But the bottom line is omnipresent through a comprehensive survey of British diplomacy and aid, extending even to the solemn inclusion of the initials VFM - Value For Money - in an index of official acronyms.

The report includes expenditure estimates of £836m for diplomacy in 1995-6 presented to parliament by Mr Hurd yesterday. This compares, the Foreign Office says, with estimated spending of £950m by Birmingham City Council last year.

The Foreign Office is responding to what one senior diplomat has privately termed the "rather weary ideology" of market testing, outside consultancy and the threat of performance-related fixed contracts.

It has therefore boldly - if, perhaps, rashly - decided to highlight the Paris embassy under Sir Christopher Mallaby, with eight counsellors and 19 first secretaries among its 89 UK-based staff, renowned for the glory of its official residence on the rue du Faubourg Saint-Honor, a building purchased in 1814 for £36,000.

Explaining Sir Christopher's current £359,000 entertainment budget as "a tool of the diplomatic trade", the Foreign Office points out that the residence played host last year to three members of the royal family, 20 government ministers, 57 MPs and almost 7,000 British and French businessmen.

In fact the residential properties abroad - 215 residences for envoys and 3,300 staff houses or flats - range from a gracious ambassadorial villa perched on the shores of Lake Geneva to a dusty estate of small houses in Riyadh's diplomatic compound, known to its inhabitants as "Brookside".

The thrust of the report is an attempt to come to terms with forces of economic rationalism that have cut through the civil service and, in the minds of many Foreign Office officials, risk submitting the unquantifiable art of diplomacy to the inflexible logic of accountants.

The report shows that out of 21 recruits last year to the lite "fast stream" of the diplomatic service, about three-quarters were at Oxford or Cambridge, more than half attended independent schools, less than a third were women and none came from ethnic minorities.

The Foreign Office says it wants to encourage advancement of women, recognising that with only three female ambassadors and five women at Senior Grade, its record needs improvement.

It offers women a maternity package, special unpaid leave, flexible working hours, part-time work, jobsharing and childcare help.

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