Recommendation 2

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 2 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 FCDO should: a. Ensure that it builds upon the more certain funding for its overseas estate it received in the 2025 Spending Review to put its overseas estate onto a sustainable footing. b. Alongside its Treasury Minute response, write to the Committee setting out its plans for reducing its maintenance backlog, prioritising its resource and capital funding, and achieving efficiencies from its estate. c. Write to the Committee within six months categorising which build