National Audit Office report: FCDO must improve management of its overseas estate to halt further deterioration

FCDO has made improvements in managing its overseas estate, but still faces significant challenges, including a backlog of required maintenance work of nearly half a billion pounds, poor building conditions and staffing shortages, according to a new National Audit Office (NAO) report.¹

FCDO's overseas estate consists of around 6,500 properties, including Embassies, High Commissions, Consulates, offices, official Residences and staff accommodation. Most of these properties, which have a total value of £2.5 billion, are in 282 posts around the world. Managing these properties requires FCDO to handle risks, such as extreme climates and earthquakes, not commonly experienced by the government's UK estate.

FCDO's overseas estate is seen by government as a crucial ‘soft power' asset in support of its strategic goals. The overseas estate also brings together the UK government presence overseas, and hosts over 35 other UK government departments, the devolved administrations, and other bodies.

However, the estate is in a declining condition, with FCDO assessing 933 buildings as not meeting its required standards.² FCDO has prioritised spending on immediate health and safety risks, instead of longer-term preventative maintenance, or investing to improve the estate or reduce its cost. It estimated in 2024 that the maintenance backlog was £450 million, which would take a decade to clear at the pace of spending at the time.³

FCDO faces challenges recruiting and retaining staff locally with the necessary skills and has capacity and capability gaps in its central estates function. Although FCDO has outsourced some facilities management within Europe and Asia, this has had mixed results.⁴

Between 2018 and 2024, FCDO completed or approved construction on 200 capital projects.⁵These included the Washington Embassy refurbishment programme and the new High Commission in Ottawa, which were delivered late and over budget due to factors such as the Covid-19 pandemic, and scope and design changes. FCDO estimates its pipeline of capital projects will cost a further £2.1 billion for more substantial refurbishments, acquisitions and new construction.

Since 2010, FCDO has funded its overseas estate capital and maintenance projects by selling £1.47 billion worth of property, largely from the sale of sites in Bangkok and Tokyo. But with no more assets of a similar value to sell this approach is not sustainable. FCDO is working with HM Treasury to establish future funding.

FCDO has in recent years taken positive actions to improve its management of its overseas estate. These include commissioning surveys to better understand the true condition of its overseas estate and improving its estate strategy and planning tools.⁶ The NAO recommends that FCDO should develop its estates strategy and review how it can use its estate to fulfil government objectives. FCDO needs to produce a fully costed delivery plan for this strategy, review its estate governance structures and produce a plan for its estates workforce. It should also gather consistent, good quality data, develop performance benchmarks and ensure it has oversight of risks at a portfolio level.⁷

Gareth Davies, head of the NAO, said:

“FCDO's overseas estate helps to deliver UK government objectives and support UK diplomatic efforts around the world. But much of the overseas estate is in poor condition, and there are significant challenges in maintaining it.

“FCDO has made some improvements, but it needs to do more to achieve value for money from its overseas estate.”

ENDS
Notes to editors

1. The report will be available on the NAO website via the following link from 00:01 Friday 23 May: https://www.nao.org.uk/reports/managing-fcdos-overseas-estate/  
2. FCDO's target condition score of 70% or higher is an internal target that is based on achieving Cabinet Office Condition B standard for government properties, that buildings should be sound, operationally safe and exhibit only minor deterioration. This is based on an assessment of building fabric and condition.
3. In November 2023, FCDO decided to commission professional surveys to confirm the true extent of the maintenance backlog across its overseas estate. This exercise, named FMR24, was a one-off exercise to provide a snapshot of the FCDO estate. It reported in November 2024 that the total maintenance backlog liability was £450 million. At the time FCDO spent around £50 million per year on reactive maintenance work, and FCDO noted that at that pace of spending it would take a decade to clear its backlog, assuming that no further maintenance needs were identified.
4. In November 2024, FCDO's principal risk register rated the risk of inadequate capacity and capability at posts as severe, and stated this could affect progress clearing maintenance backlogs. FCDO contracted out facilities management for 24 locations in Asia Pacific in 2021, and for 22 locations in Europe in 2023 through Jones Lang LaSalle (JLL).
5. As well as maintenance, FCDO also manages large capital estates projects, including major refurbishments, upgrades, or completely new buildings.
6. In November 2023, FCDO reported 85% of posts either did not have an asset register containing a record of building components and physical assets at that post, or that the register was incomplete, and commissioned surveys to try and fill this gap.
7. Previous relevant NAO work includes Adapting the Foreign and Commonwealth Office's global estate to the modern world (2010) and our recent cross-government report Maintaining public service facilities (2025).