FCDO main estimates memorandum 2021 to 2022 (accessible version)
Published 13 May 2021
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This memorandum gives background to the Foreign, Commonwealth & Development Office (FCDO) Main Estimate 2021 to 2022. The format of this document follows guidance from the Parliamentary Scrutiny Unit, to provide wider context about the department’s objectives and finances.
1. Overview
This is the FCDO’s first full financial year as a new department, and the FCDO’s estimate has been restructured for the Main Estimate 2021 to 2022. The former FCO and DFID estimate rows are now fully integrated; this means, for example, there are no longer two separate lines covering departmental running costs. Section 2.2 shows the row mapping between the Supplementary Estimate 2020 to 2021 and the Main Estimate 2021 to 2022.
1.1 Objectives
The FCDO’s priority outcomes, as set out in its Outcome Delivery Plan, are as follows:
-
Shape the international order and ensure the UK is a force for good in the world by supporting sustainable development and humanitarian needs; promoting human rights and democracy; and establishing common international standards.
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Make the UK safer and more resilient to global threats.
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Extend and amplify the UK’s influence in the world, including through successful application for ASEAN dialogue partner status.
1.2 Spending controls
The FCDO’s spending is broken down into several different spending totals, for which Parliament’s approval is sought.
The spending totals which Parliament votes are:
- resource Departmental Expenditure Limit (“Resource DEL”) – programme funds, running costs, frontline diplomacy, the overseas platform, scholarships, grants to international organisations and other bodies supporting FCDO objectives, and associated non-cash items
- capital Departmental Expenditure Limit (“Capital DEL”) – investment in capital assets, capital grants, research and development, loan funding to the British Council, and investments and assets to create growth in the future for either the UK or our partner governments
- resource Annually Managed Expenditure (“Resource AME”) – less predictable day-to-day spending: in the FCDO’s case this includes impairments, provisions, foreign exchange, and the refund of certain taxes and duties paid by certain foreign and Commonwealth governments
- capital Annually Managed Expenditure (“Capital AME”) – the FCDO is required to record capital injections in its wholly owned self-financing public corporation, CDC Group plc (CDC) as prescribed by the Government budgeting rules
In addition, Parliament votes a net cash requirement, designed to cover the elements of the above budgets that require the FCDO to pay cash in year.
1.3 Main areas of spending
The graphics below show the main components of the FCDO’s proposed budget included in the latest Main Estimate, and the proportions of funds spent on its main activities.
Resource DEL: total budget £7.432 billion, 2021 to 2022 (£ million)
| Section | Description | Spending |
|---|---|---|
| A | Operating costs, frontline diplomacy and overseas network | 1651.7 |
| B | Funding for NDPBs within Departmental Group (Net) | 40.2 |
| C | British Council | 189.0 |
| D | Strategic priorities and other programme spend | 3963.9 |
| E | International subscriptions, scholarships and BBC World Service | 258.7 |
| F | Conflict, Stability and Security Fund | 720.6 |
| G | European Union Attributed Aid | 608.0 |
Capital DEL: total budget £1.938 billion, 2021 to 2022 (£ million)
| Section | Description | Spending |
|---|---|---|
| A | Operating costs, frontline diplomacy and overseas network | 108.5 |
| C | British Council | 70.0 |
| D | Strategic priorities and other programme spend | 1759.5 |
| F | Conflict, Stability and Security Fund | 0.1 |
1.4 Comparison of spending totals sought
The tables below show how the totals sought for the FCDO Main Estimate compare with last year:
| Spending total: amounts sought this year (Main Estimate 2021-22) | £ million difference (+/-) compared to final budget last year (Supplementary Estimate 2020 to 2021) | % difference (+/-) compared to final budget last year (Supplementary Estimate 2020 to 2021) | £ million difference (+/-) compared to original budget last year (Main Estimate 2020 to 2021) | % difference (+/-) compared to original budget last year (Main Estimate 2020 to 2021) | |
|---|---|---|---|---|---|
| Resource DEL | 7,432 | -2,509 | -25% | -2,872 | -28% |
| Capital DEL | 1,938 | -1,039 | -35% | -787 | -29% |
| Resource AME | 181 | -522 | -74% | 50 | 39% |
| Capital AME | 646 | -4 | -1% | -488 | -43% |
FCDO budgets (£ million)
| Resource DEL | Capital DEL | Resource AME | Capital AME | |
|---|---|---|---|---|
| Budget sought now | 7,432.2 | 1,938.1 | 181.0 | 646.0 |
| Last year’s final budget | 9,941.2 | 2,977.3 | 703.5 | 650.0 |
| Last year’s original budget | 10,304.1 | 2,725.1 | 130.7 | 1,134.0 |
1.5 Key drivers of spending changes since last year
In comparison to the Main Estimate 2020 to 2021, there is a net reduction in Resource DEL of 28% and Capital DEL of 29%.
The main driver for change is the decision to reduce temporarily the overall amount spent on Official Development Assistance (ODA) from 0.7 to 0.5 per cent of Gross National Income (GNI).
Beyond aid, the department secured some crucial investment in Spending Review 2020 to complete the FCDO’s transformation, including funding to set up a joint HR and finance system. We will modernise our missions overseas to ensure they better represent the UK’s global ambition. In the UK, we will have an increased presence in East Kilbride, the Department’s second headquarters.
1.6 New policies and programmes; ambit changes
The Integrated Review set out how an independent and sovereign global Britain will act as a force for good and use its influence to shape the future international order. To deliver that vision, the Foreign Secretary allocated ODA resources to the seven priorities which he set out to Parliament on 26 November.
The cross-Whitehall Prosperity Fund closed on 31 March 2021 and prosperity programming transferred to the FCDO.
The text from the separate FCO and DFID ambits has been merged to form a single FCDO ambit. Duplicate text and an outdated reference to receipts from MOD and DFID for the Special Representative on Conflict Resolution have been removed.
1.7 Spending trends
The charts below show overall spending trends for the last five years and plans presented in the Estimate for 2021 to 2022. The figures have been combined for the former FCO and DFID budgets, which merged in September 2020. There were different drivers of spending in the two departments: for example, DFID’s overall spending was underpinned by the 0.7% ODA commitment and the share of ODA funding allocated to other departments.
Spending Trends: combined DFID and FCO budgets (£ million)
| Resource DEL | Capital DEL | Resource AME | Capital AME | |
|---|---|---|---|---|
| 2021 to 2022 | 7,432 | 1,938 | 181 | 646 |
| 2020 to 2021 | 9,941 | 2,977 | 703 | 650 |
| 2019 to 2020 | 10,584 | 2,184 | -159 | 955 |
| 2018 to 2019 | 9,606 | 3,247 | -124 | 736 |
| 2017 to 2018 | 9,766 | 2,461 | 445 | 395 |
| 2016 to 2017 | 9,465 | 2,651 | 106 | 285 |
- resource DEL has remained broadly stable: peaking in 2019-20 in part to meet the 0.7% commitment and due to a switch from Capital DEL to Resource DEL budget. Plans for 2021 to 2022 reflect the decision to reduce temporarily the overall amount spent on aid from 0.7 to 0.5% of GNI
- capital DEL saw a reduction in 2019 to 2020 predominantly the result of a reduction in some of the UK’s key multilateral commitments as we approached the end of previous replenishment cycles. Plans for 2021 to 2022 reflect the decision to reduce temporarily the overall amount spent on aid from 0.7 to 0.5% of GNI
- resource AME is used primarily for accounting adjustments to provisions and financial instruments such as loans and shares. AME expenditure, by definition, is volatile – and in some years shows as negative spend
- capital AME budget is used to make investments in the FCDO’s wholly owned self-financing public corporation, CDC Group plc (CDC). Capital injections into CDC contributes towards the FCDO’s financial transactions target. This increased steadily year on year until 2019 to 2020
1.8 Administration costs and efficiency plans
In the 2020 Spending Review (SR20) the FCDO received a flat settlement for Administration costs. The Administration budget shows a 4% reduction compared to last year: this reflects 20-21 budget transfers, mainly a £12.6 million transfer from the Cabinet Office for DExEU staff costs at the Main Estimate (which is included in the current year’s budget as Programme funding), and £1.6 million from DIT for trade officer costs in the Supplementary Estimate.
| Spending total £ million: amounts sought this year (Main Estimate 2021 to 2022) | £ million difference (+/-) compared to final budget last year (Supplementary Estimate 2020 to 2021) | % difference (+/-) compared to final budget last year (Supplementary Estimate 2020 to 2021) | £ million difference (+/-) compared to original budget last year (Main Estimate 2020-21) | % difference (+/-) compared to original budget last year (Main Estimate 2020-21) | |
|---|---|---|---|---|---|
| Resource DEL | 323 | -14 | -4% | -13 | -4% |
Following the merger, we expect the FCDO to realise efficiencies and be a leaner department. Details of future financial plans will be subject to the Comprehensive Spending Review expected later this year.
1.9 Funding: Spending Review and budgets
The levels of DEL funding for the FCDO for 2021 to 2022 are based on plans published in SR20. SR20 provides the first ever settlement for the newly formed FCDO, bringing together the UK’s development and diplomatic expertise into one department. This includes a 5.5 per cent average annual real terms increase in core non-ODA funding per year since 2019 to 2020.
On 26 January 2021, the Foreign Secretary laid a Written Ministerial Statement setting out the process and conclusion of the cross-government review of ODA. This ensured UK ODA is focused on strategic priorities, spent where it will have maximum impact, has greater coherence and delivers most value for money. The total FCDO ODA settlement is £8.115 billion.
The full list of funding changes since the Spending Review is set out in the Data Annex, Table B.
1.10 Funding: other funding announcements
On 21 April 2021 the Foreign Secretary set out the FCDO’s Official Development Assistance (ODA) allocations for 2021 to 2022 in a Written Ministerial Statement. The FCDO will be responsible for delivering approximately 80% of total UK ODA – or £8,115 million.
Guided by the Integrated Review, resources have been allocated to the seven priorities that the Foreign Secretary set out to Parliament on 26 November 2020: climate and biodiversity; global health security; girls’ education; humanitarian preparedness and response; science and technology; open societies and conflict resolution; and economic development and trade. In addition, we will meet the government’s cross-cutting contributions to multilateral partners and funds, support our Arm’s Length Bodies and cover the FCDO’s operating costs.
Within this framework around half our bilateral ODA budget will be spent in Africa, including a major shift to East Africa; and around a third will be spent in the Indo-Pacific and South Asia.
2. Spending detail
2.1 Explanation of changes in spending
Resource DEL
The table below shows how the FCDO’s spending plans for Resource DEL compare with last year.
| Subheads | Description | Resource DEL | ||||
|---|---|---|---|---|---|---|
| This year (2021 to 2022 Main Estimate budget sought) | Last year (2020 to 2021 Supplementary Estimate budget approved) | Change from last year £ million | Changes from last year % | see note number | ||
| A | Operating costs, frontline diplomacy and overseas network | 1,651.7 | 1,505.0 | 146.8 | 10% | I, III |
| B | Funding for NDPBs within Departmental Group (Net) | 40.2 | 35.7 | 4.5 | 13% | I |
| C | British Council | 189.0 | 152.9 | 36.1 | 24% | I |
| D | Strategic priorities and other programme spend | 3,963.9 | 6,313.2 | -2,349.3 | -37% | I, II |
| E | International subscriptions, scholarships and BBC World Service | 258.7 | 314.1 | -55.4 | -18% | I, IV |
| F | Conflict, Stability and Security Fund | 720.6 | 889.6 | -169.0 | -19% | II |
| Prosperity Fund | 209.7 | -209.7 | -100% | V | ||
| G | European Union Attributed Aid | 608.0 | 521.1 | 87.0 | 17% | I, VI |
I. The business planning process for 2021 to 2022 concluded after the Main Estimate deadline. Any internal reallocation will be reflected in the Supplementary Estimate 2021 to 2022.
II. Plans for 2021 to 2022 reflect the decision to reduce temporarily the overall amount spent on aid from 0.7 to 0.5% of GNI.
III. SR20 includes funding to deliver against the government’s levelling up agenda including an increased presence in East Kilbride, investment in a new IT system, funding to modernise the FCDO’s global estate, and technical adjustments relating to arrangements with the Government Property Agency.
IV. The FCDO settlement allows for Reserve Claims for international subscriptions, differential inflation, consular premium and BBC World Service in the Supplementary Estimate making direct comparison difficult.
V. The Prosperity Fund closed on 31 March 2021 and prosperity programming transferred to the FCDO; it is included within line D.
VI. Under the EU-UK Withdrawal Agreement, the UK will continue to meet outstanding commitments to EU development programmes, the EU budget (MFF 2014 to 2020) and the European Development Fund until around 2027.
Capital DEL
The table below shows how the FCDO’s spending plans for Capital DEL compare with last year.
| Subheads | Description | Capital DEL | ||||
|---|---|---|---|---|---|---|
| This year (2021 to 2022 Main Estimate budget sought) | Last year (2020 to 2021 Supplementary Estimate budget approved) | Change from last year £ million | Change from last year % | See note number | ||
| A | Operating costs, frontline diplomacy and overseas network | 108.5 | 118.5 | -10.0 | -8% | I |
| C | British Council | 70.0 | 130.0 | -60.0 | -46% | II |
| D | Strategic priorities and other programme spend | 1,759.5 | 2,686.6 | -927.1 | -35% | III |
| F | Conflict, Stability and Security Fund | 0.1 | 38.0 | -37.9 | -100% | IV |
| Prosperity Fund | 4.1 | -4.1 | -100% | V |
I. Last year’s Capital DEL operating budget includes changes made in the Supplementary Estimate, including a drawdown of £27.2 million of Bangkok asset sale receipts for estate investment, offset by a switch to Resource DEL of £10.5 million for the finance and HR system.
II. HMG has committed to provide the British Council with up to £145 million loan funding to help support their short-term cash flow. Of this, £70 million has been provided for in the Main Estimate, which will be disbursed to the British Council depending on need.
III. Plans for 2021 to 2022 reflect the decision to reduce temporarily the overall amount spent on aid from 0.7 to 0.5% of GNI.
IV. In 2020 to 2021 CSSF switched £38m Resource DEL to Capital CEL in the Supplementary Estimate for Capital Grants.
V. The Prosperity Fund closed on 31 March 2021 and prosperity programming transferred to FCDO.
Resource AME
The table below shows how the FCDO’s spending plans for Resource AME compare with last year.
| Subhead | Description | Resource AME | ||||
|---|---|---|---|---|---|---|
| This year (2021 to 2022 Main Estimate budget sought) | Last year (2020 to 2021 Supplementary Estimate budget approved) | Changes from last year £ million | Changes from last year % | See note number | ||
| H | Other central programme and technical costs | 181.0 | 703.5 | -522.4 | -74% |
Resource AME is used primarily for accounting adjustments and by definition is volatile. The 2020 to 2021 Supplementary Estimate budget included a £500 million provision, relating to the manufacturing, procurement and delivery of COVID-19 vaccines for the COVAX AMC (Advance Market Commitment) programme using IFFIm (International Financing Facility for Immunisation).
Capital AME
The table below shows how the FCDO’s spending plans for Capital AME compare with last year.
| Subheads | Description | Capital AME | ||||
|---|---|---|---|---|---|---|
| This year (2021 to 2022 Main Estimate budget sought) | Last year (2020 to 2021 Supplementary Estimate budget approved) | Changes from last year £ million | Changes from last year % | See note number | ||
| A | CDC Group plc | 646.0 | 650.0 | -4.0 | -1% |
2.2 Restructuring
The mapping below explains how the Supplementary Estimate rows from 2020-21 map to the Main Estimate 2021 to 2022.
| Main Estimates 2021 to 2022 | Supplementary Estimates 2020 to 2021 |
|---|---|
| DEL | DEL |
| A: Operating costs, frontline diplomacy and overseas network | B: Total Operating Costs G: Administration, frontline diplomacy and overseas network |
| B: Funding for NDPBs within Departmental Group (Net) | A: CSC (NDPB) (net) scholarship relating to developing countries C: Independent Commission for Aid Impact (NDPB) (net) J: Funding for NDPBs within Departmental Group (Net) |
| C: British Council | I: British Council |
| D: Strategic priorities and other programme spending | D: Regional Programmes E: Other Central Programmes F: Policy Priorities, International Organisations and Humanitarian H: Core FCO programme funds and third party activity (core programme funds are in new row D, International subscriptions, scholarships and BBC World Service are in new row E) |
| E:International subscriptions, scholarships and BBC World Service | H: Core FCO programme funds and third party activity (core programme funds are in new row D, International subscriptions, scholarships and BBC World Service are in new row E) |
| Prosperity Fund is no longer a cross-Whitehall Fund | K: Prosperity Fund |
| F: Conflict, Stability and Security Fund | L: Conflict, Stability and Security Fund: Programme Expenditure M: Conflict, Stability and Security Fund: Peacekeeping |
| G: European Union Attributed Aid | N: European Union Attributed Aid |
| AME | |
| H: Other central programme and technical costs | O: Other Central Programmes Q: AME Programme R: Reimbursement of certain duties taxes and licence fees |
| I: CDC Group plc | P: Policy Priorities, International Organisations and Humanitarian |
2.3 Ring-fenced budgets
Within the totals, financial transactions, depreciation and the cross-Whitehall Fund, CSSF, are ring-fenced, and funding cannot be transferred into other parts of the core FCDO budget without HMT approval.
2.4 Changes to contingent liabilities
There has been no significant change to contingent liabilities since last year.
3. Priorities and performance
3.1 How spending relates to objectives
The FCDO’s Outcome Delivery Plan sets out what we will achieve over the current Spending Review period against a series of Priority Outcomes and corporate Strategic Enablers.
It is not possible to reflect the breakdown of resources by Priority Outcome as the FCDO is not structured in this way. Our resources, both people and projects, often support multiple Priority Outcomes particularly overseas, therefore data is not captured in this way.
3.2 Measures of performance against each priority
For 2021 to 2022 we are developing a robust delivery framework to ensure we can track performance. We will ensure we can bring our strategic priorities to life with analysis and evidence based approaches, clear SMART key performance indicators and by making clear to our stakeholders what real world change we are delivering and when.
Data on performance will be given in the FCDO 2021 to 2022 Annual Report and Accounts.
3.3 Commentary on steps being taken to address performance issues
Spending specifically designed to address performance issues includes:
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Hera: The Hera programme (which built on the former FCO Atlas programme) will provide a new finance and HR system for the FCDO, to replace the former FCO and DFID systems. It will bring more processes on line and increase automation, improve user experience, and provide better management information. This will make it possible to integrate the department fully, and will help increase alignment across government work overseas
-
the estate: Following the Bangkok compound sale in 2018, we are investing the £400 million receipt on a large programme of global new build and refurbishment projects. The largest four projects underway are Washington DC, Ottawa, Paris and Mexico City. These “big four” all address urgent health and safety / end of life asset issues, and will reduce future running costs and liabilities. The remainder is being invested in a long line of smaller projects from £500,000 upwards. We are also working up an additional pipeline of projects for future delivery, which will depend on further funding
3.4 Major projects
The FCDO will deliver the following major projects as defined by the Infrastructure and Projects Authority (IPA):
- Echo 2: a joint project with the British Council to provide new network, telephony and video-conferencing services
- Hera: a programme to replace the finance and HR information system
- a major refurbishment of the embassy and ambassador’s residence in Washington DC
- Beijing: replacement for the current end of life ambassador’s residence and embassy; and
- St Helena Airport: a project to establish sustainable air services to St Helena
The FCDO Transformation Portfolio will join the Government Major Projects Portfolio this year.
Progress on major projects is recorded at: https://www.gov.uk/government/collections/major-projects-data
4. Accounting Officer Approval
This memorandum has been prepared according to the requirements and guidance set out by the House of Commons Scrutiny Unit, available on the Scrutiny Unit website.
The information in this Estimates Memorandum has been approved by myself as Departmental Accounting Officer.
Sir Philip Barton
Accounting Officer
Permanent Under-Secretary
Foreign, Commonwealth & Development Office
11 May 2021