PAC calls for action from government to address shocking state of overseas properties
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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. In a new report scrutinising the management of this
£2.5bn estate, the Public Accounts Committee 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...Request free trial
Government has acknowledged that the FCDO's 6,500 overseas properties are in a shocking state, presenting a severe risk to the organisation. In a new report scrutinising the management of this £2.5bn estate, the Public Accounts Committee 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. 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.”
PAC report conclusions and recommendations FCDO does not have a coherent overall strategy for getting the most out of its £2.5 billion overseas estate. FCDO has a number of strategies to support UK government initiatives. These can have consequences for the overseas estate; for example, the post EU-exit Global Britain strategy led to the creation of 10 new posts, but FCDO acknowledges that the impact on the estate has too often been a secondary consideration. FCDO does not have an overall estate strategy that sets out the overseas estate footprint it needs to support UK government objectives, or ranks its posts by strategic importance to inform any estate rationalisation exercise. We acknowledge the challenges that FCDO faces in developing a strategy for its diverse and complex estate, but we are disappointed that FCDO has not made more progress since the previous Committee examined the same subject in 2010. We note that FCDO intends to use the resources it has been given in the 2025 spending review to 'turbocharge' the development of a coherent global strategy for its estate, alongside its workforce strategy - detailing where it needs people and what type of people it needs. Recommendation 1.
Much of FCDO's overseas estate is in poor condition, and its estates maintenance backlog would cost an estimated £450 million to resolve. FCDO's first priority with its overseas estate is providing a safe and legally compliant estate for staff and visitors. However, 933 of its 6,500 properties (around 15%) fail to meet its own condition targets and a £450 million overseas maintenance backlog has built up over time. FCDO acknowledged that the state of its overseas estate was quite shocking and that it was a severe risk to the organisation. FCDO also has an estimated £2.1 billion pipeline of larger estate renewal or replacement projects. Since 2010, FCDO has funded its estate requirements through large asset sales, in particular in Bangkok and Tokyo. However, FCDO and HM Treasury have agreed that major asset sales are no longer viable, and, in the 2025 Spending Review, FCDO agreed with HM Treasury an annual settlement of £50 million resource funding and £100 million capital funding to maintain its estate. This new funding model alone will not address the scale of the current backlog, and FCDO's estate remains one of its top department risks. FCDO's 2025 Spending Review settlement also requires it to make 5% efficiency savings annually. FCDO acknowledges that getting its overseas estate right is one of its top priorities. It has committed to reduce the size and complexity of its estate, prioritise its resource and capital spending to have the greatest impact, and to identify efficiencies. Recommendation 2. FCDO should:
FCDO's central estate function does not have adequate oversight of estate activities, both at overseas posts and across its project portfolio. Eighty-four percent of overseas posts have responsibility for maintaining their own estate, either through in-house teams or local contractors, with support from the FCDO central estate function in Whitehall. These posts have responsibility for managing their local budgets and can choose what they spend on maintenance, but are not always aware of their estate responsibilities, such as the need to carry out preventative maintenance. As we have highlighted before, most recently in our June 2025 report, Condition of Government property, failure to carry out preventative maintenance is poor value for money as it can mean more expensive emergency works are required later. FCDO plans to publish in October 2025 a revised maintenance strategy which will give clearer guidance to posts on their maintenance responsibilities, based on learning drawn from its outsourced facilities management contracts. The central estate function is not able to monitor posts' maintenance spending and does not have adequate oversight of its project portfolio. FCDO plans to establish a new estates governance board in the autumn, with the aim of bringing together issues of spending, policy, projects and programmes. Recommendation 3. FCDO should implement its plans to improve its governance model, including establishing a new estates governance board and publishing a new maintenance strategy for posts. FCDO should update the Committee in its Treasury Minute response on its progress in improving central oversight of its overseas estate. FCDO does not have all the data it needs to manage its estate effectively. FCDO has developed its central IT systems separately and they are not integrated with each other, or with systems at overseas posts. Overseas posts are responsible for collecting their own estate data, such as on building size and condition, but do not always have the resources or skills to do so. In 2023, FCDO reported that 85% of posts did not have a complete register of their estate assets. In 2023, FCDO recognised its £150 million estimate of its maintenance backlog was probably too low and commissioned surveys which found that the true backlog was actually £450 million. This was a one-off exercise, but FCDO has since trained 1,500 staff to improve data collection. Even if more data is collected, however, FCDO is currently unable to bring it together to give it an organisational view as data is spread out across different systems, individual spreadsheets and paper files. FCDO accepts that its digital systems are not up to scratch and require a thorough overhaul. FCDO is currently moving all of its estate data to a new integrated management system, but this will not be complete until 2028. Recommendation 4. Alongside its Treasury Minute response, FCDO should write to the Committee setting out the progress it has made:
Some FCDO high-profile estate projects have run significantly over time and budget. FCDO carries out large scale estate capital projects to refurbish or replace its buildings, but some recent projects, such as in Washington D.C. and Ottawa, have run significantly over time and budget. This has been due to issues such as industrial action, unexpected problems in buildings requiring remediation and the impact of COVID-19. FCDO conducts lessons learned activities for all its projects but has stopped recording them centrally as its portfolio management office prioritised other work. FCDO plans to deliver around 120 capital projects in future and has confirmed that central collation of lessons learned activity will restart soon. FCDO is also taking other actions to improve its project management, including introducing a design authority with the responsibility for checking project designs and implementing gateway reviews to improve external scrutiny of projects as they are developed. Recommendation 5. FCDO should immediately restart centrally collecting and analysing lessons learned from its estate capital projects, to ensure it has appropriate oversight of project risks and can manage delivery effectively. FCDO should update the Committee in its Treasury Minute response on its progress, including the impact of its new design authority and gateway review processes. FCDO's ability to manage its estate is hampered by a lack of staff with the necessary skills and experience. Larger FCDO posts can have dedicated estate managers and teams, but smaller posts do not always have estate specialists on site. The NAO's survey of posts found that 65% of respondents reported a lack of staff and other resources for estate management and 44% a lack of relevant training, skills and experience. FCDO's central estate function provides posts with detailed guidance and deploys around 75 technical experts, based regionally, that also provide guidance and services to posts. It also commissions a specialist service to carry out annual inspections of high-risk systems including gas and electrics. However, FCDO acknowledges it does not have all the staff and capabilities needed at posts. FCDO does not have a workforce strategy that identifies the resources and skills it needs to manage its estate and set out how it will address any gaps. FCDO is developing an estate workforce strategy to set out what resources and skills are necessary at individual posts (including the appropriate mix of internal training and external recruitment), what expertise can be deployed at a regional level and what is required centrally to provide support and advice. Recommendation 6. FCDO should complete its estate workforce strategy, which should set out:
FCDO should update the Committee on this alongside its Treasury Minute response. |