Target for FO property sale is cut 
by £100m

The Foreign Affairs Committee said the original estimate that property sales would generate £240m between April 2011 and March 2015 was “poorly founded” and the target had now been cut to £140m.

The MPs also warned of “unacceptable” uncertainty over future arrangements for the BBC World Service and urged the Foreign Office (FCO) to spare the British Council further cuts in the next spending round.

Under a deal with the Treasury, the FCO is allowed to invest up to £100m a year of receipts from property sales back into its diplomatic network.

In June the FCO maintained its £240m target was “challenging but realistic” but by November sales had raised just £36m.

The target was later revised down to £140m, partly due to the committee’s warning in an earlier report about the danger of going “too far, too fast” in selling off “heritage” buildings.

But the FCO’s chief operating officer, Matthew Rycroft, told the committee that “spiralling property prices” in some parts of the world would enable the FCO to generate higher revenue than expected, with the sale in December last year of the High Commission in Kuala Lumpur, Malaysia, raising approximately £60m.

The committee report said the original estimate was “clearly poorly founded” and there were “forecasting failures within the FCO”.

The MPs called on the FCO to take steps to improve its procedures for assessing future needs across the estate and its forecasting of local property markets.

In the wide-ranging report on the FCO’s performance and finances in 2011/12, the committee expressed concern about plans for the World Service, which will be funded from the TV licence fee from 2014.