To ask Her Majesty's Government what are the implications of the reductions in the Foreign and Commonwealth Office's budget for the United Kingdom's ability to represent national interests overseas.

My Lords, as a result of exchange rate movements, the FCO faces a shortfall in its 2009-10 budget of an estimated £110 million. We estimate this shortfall will increase slightly in 2010-11. In addition, international peacekeeping costs, UK subscriptions to international organisations and the FCO's security costs have risen.

Although the FCO has pursued a vigorous efficiencies programme, these budget constraints have led to staff redundancies, cuts to travel and training, and reduced programme funding including our work on counterterrorism and climate change.

I thank the Minister for that reply. From the figures, it looks to me to be about a 20 per cent cut in the effective resources available to the FCO since the Treasury removed the overseas price mechanism which allowed it to compensate for the fall in sterling.

Can the Minister assure us that this has not made it impossible for the FCO to operate in the number of countries in which we need to operate? What does the FCO intend to do? Will it cut some major functions, such as consular support for people in developed democracies, or are we faced with having to put much more effort into making the European External Action Service work simply because we cannot do a lot of these things on our own in many UN member states?

The noble Lord clearly makes some good points. We must look at every aspect of the work of the Foreign and Commonwealth Office to ensure that we can make the cuts where possible, but it is not always easy. We have had staff redundancies in Argentina, Japan and across the United States. Counternarcotics programmes in Afghanistan, capacity building to help conflict prevention in Africa, and counterterrorism and counter-radicalisation in Pakistan have all been cut; the list goes on. However, we are extremely conscious of the need for the FCO to continue its essential work as a global player, taking into account the enormous influence we have, and need to have, across the world.

The European External Action Service issue will clearly impact on all work of the Foreign and Commonwealth Office. It will make the EU's foreign policy more effective. However, I assure the House that we have no plans for the EEAS to replace our global network of embassies and diplomats, which remain an important asset for this country that we should and must maintain. The Lisbon treaty makes it clear that the EEAS shall work in co-operation with the Diplomatic Services of member states.

My Lords, aside from the falling sterling problem, which has hit the Foreign Office very hard, is the Minister sure that the Government have the balance right between the departments? Does she agree with her immediate predecessor, the noble Lord, Lord Malloch-Brown, that at a time when Britain's interests are so global, the budget for our overseas representation has been steadily cut? That sounds crazy. Does she agree with him that, if things go on as they are, the Foreign Office will be reduced to landlord and events organiser for other parts of government? That seems a very dangerous trend. Is the noble Lord, Lord Malloch-Brown, who should have full experience of these matters, identifying a very serious problem?

None of us working in the Foreign and Commonwealth Office would disagree with the fact that we are in a time of a great pressure, not least because of the effects of the currency exchange rates on funding, and the effects of having to pay our subscription to the United Nations and the European Union in different currencies. Indeed, we work in about 120 currencies, which does create its problems. The FCO is adapting to reflect modern Britain and its place in the world. As my noble friend Lord Malloch-Brown, said, we are shifting in dangerous ways, and often to dangerous places, but we must maintain the United Kingdom's priorities. I can assure the noble Lord that we will continue to do that in a modern, cost-effective way.

My Lords, did my noble friend say that counterterrorism in Pakistan has been cut? If so, is that really wise? Will she consider looking at that again?

It is a fact that counterterrorism and counter-radicalisation projects in Pakistan and elsewhere have been subject to the cuts that the Foreign Office has been obliged to make. I listed others-on climate change and delivering key objectives on the Middle East, North Africa and the Balkans. I say these things to assure the House that none of this is done easily or lightly. It is an extremely difficult set of decisions that have to be made at a time when we are under such financial pressure.

Does the Minister not agree that her first Answer demonstrated that the Foreign and Commonwealth Office is subject to a number of cuts, exogenous in their origin, which do not apply to domestic departments? Would not it therefore make more sense if the Treasury, which seems to have a singular unwillingness ever to answer questions about the resources allocated to the Foreign Office, were to take that into account when dealing with the matters going forward? Does she not agree that a Government who say that their watchword is delivery are not going to get much successful delivery if the number of deliverers is constantly reduced?

I share the noble Lord's concern about the effects of these cuts, which he will understand very well. The FCO's resource budget is, in fact, one of the smallest in Whitehall. We receive £2 billion, of which more than £1.1 billion is ring-fenced for the British Council and the BBC World Service. Then there is peacekeeping and subscriptions to international organisations, as well. Only £830 million is discretionary spend, and that has to include our contribution to UKTI.

Is the Minister aware that, historically, Foreign Ministers of other countries have always been ready to declare the effectiveness of our Foreign Office and the distinguished quality thereof, which they always acknowledge, particularly the French, as being second only to their own? Is it not a fact that the management of major programmes such as the DfID programme and others referred to depend on the effectiveness, quality and professionalism of the Diplomatic Service? Is it not crucial that that should not be further jeopardised, otherwise other parts of the programme will continue to be badly managed?

I thank the noble and learned Lord, and I echo much of what he said about the importance of the FCO being Britain's voice overseas, where we protect and promote British values and make the international system work better for UK interests. The FCO supports the UK economy, saves money for the UK and helps Brits abroad; on average, 38,000 are helped and 75,000 inquiries are made. In our embassies, we also serve the needs of other departments of the United Kingdom, including on visas and other issues.

My Lords-

I am sorry, my Lords, but we will have to move on.