HC Deb 12 January 1976 vol 903 cc69-70W
Mr. Wigley

asked the Secretary of State for Foreign and Commonwealth Affairs if he will analyse the increase of £3 million in the Supplementary Estimates section B1(5) of Class II, 1 (Overseas Representation), showing the effect of increased rates of pay variations of exchange rates and changes in staff numbers, and indicating within each group the countries where the major contributors to the increased estimate have arisen.

Mr. Ennals

This subhead covers the cost of locally-engaged staff at 267 posts in 127 countries. It includes salaries, overtime payments, contributions to pensions schemes, terminal gratuities, stipends for honorary consuls and, for some staff, contributions to United Kingdon national insurance.

Between the dates on which the main Estimate for 1975–76 and the Winter Supplementary Estimate were prepared, the rate of exchange moved in favour of the £ sterling in only 19 countries; in eight it remained virtually unchanged; in the remainder it moved against sterling by up to 33–4 per cent.

Of countries in which major expenditure occurs, sterling fell against local currencies as follows:

France … 14.9 per cent.
Belgium … 9.9 per cent.
Japan … 9.7 per cent.
German FR … 9.6 per cent.
USA … 9.0 per cent.

The average world-wide increase in the cost of local staff during the period arising from the combined effects of inflation and variations in the exchange rate was 16 per cent.

Rates of pay for local staff are set on the basis of salaries paid by good employers in the same city to staff engaged on broadly comparable work. They are adjusted periodically to take into account changes in local conditions.

The largest increases in salaries in local currency terms occurred in

Spain 71 per cent.
Japan 46 per cent.
Federal Republic of Germany 32 per cent.
Italy 31 per cent.
The Lebanon 31 per cent.
France 31 per cent.

Provision for contributions to local pensions schemes had to be increased by 44 per cent. owing partly to new schemes in Spain, India and Jamaica and partly to higher contributions following salary increases in other countries. Also, as the rate of redundancies is somewhat higher as a result of public expenditure cuts now being put into effect, increased provision has been made for terminal payments.