1.  The Department has responsibility for managing risks such as crime and disasters, but does not have direct control over funding, which is provided by Territory governments. The Department should go beyond its usual reliance on persuasion, and be more prepared to require money from Territory governments in areas where the UK has constitutional responsibility. It should also publicise where standards are not being met, better to inform Territory citizens.

2.  Overall regulatory standards in most Territories, particularly those with smaller financial centres, are poor compared to standards achieved in the Crown Dependencies. The Department and other relevant UK agencies, such as the Financial Services Authority, the Treasury and the Serious Organised Crime Agency need to deploy their expertise and capacity jointly to manage the risks better, particularly in the smaller offshore centres.

3.  Territories' financial services lack the investigative capacity to scrutinise suspected money laundering activity fully and Governors have not used their reserve powers to rectify this. In such a sensitive aspect of the global financial system it is complacent to allow territories for which the UK is responsible entirely to manage the risk themselves. UK technical assistance and advice should be matched by local efforts and funding to drive forward regulatory improvements. The Department and the UK agencies should bring in more external investigators or prosecutors from the UK to bolster capacity until the Territories can be self-sufficient in this area.

4.  The Department has no dedicated training programme for Governors, despite the special characteristics of the role compared to mainstream diplomatic activities. The Department should provide all Governors and other key staff with training in the key risk areas relevant to their post, including financial services. Training needs should be assessed throughout each Governor's posting.

5.  The Department acknowledges that policing standards in the Territories fall short of its expectations, yet has used external inspection by HM Inspectorate of Constabulary on only three occasions. Territory citizens should not have to accept less efficient use of police resources, nor less professional oversight than citizens in the UK. The Department should lay down the policing standards expected of the Territories, and test whether they are met on a more consistent basis.

6.  There have been improvements in standards of disaster management, but ten years after this Committee's last report on the subject not all Territories have comprehensive disaster management strategies. The increased risks posed by climate change and rising sea levels make disaster planning especially important for low-lying Caribbean Territories. The Department, together with the Department for International Development and Territory governments, should draw up disaster management strategies where they do not exist, setting out the responsibilities of each party and the minimum requirements for the frequency of disaster plan tests.

7.  The Department's Overseas Territories Programme Fund has been too thinly spread over too many projects to be effective in increasing capacity or promoting sustainable development in the Territories. The Department proposes to move to fewer, larger projects in 2008/09, which should have the potential to generate a greater impact. The Department should develop benefits realisation for these projects to verify that they have lasting effect.

8.  The UK continues to subsidise wealthier Territories such as Bermuda and the British Virgin Islands, in the latter case providing over £600,000 of free services each year to regulate civil aviation on their behalf. Unless there are compelling reasons to the contrary, the UK should charge for services such as aviation regulation where Territories are able to pay from their own resources.

9.  Public accountability in the Territories is difficult to sustain in small communities, and not all Territories have functioning Public Accounts Committees. In dialogue with individual Territory governments, the Department should also explore how Territories can better use the expertise available in the UK to support the development of their own capability, and whether more use could be made of ex-officio members in individual Public Accounts Committees.

10.  Civilian use of regular military flights between the UK and the Falklands has become vital to the social and economic development of the Islands since the closure of Argentine airspace to civilian services. The Department, the Ministry of Defence and the Falklands Government have been successful in jointly developing civilian use of these capabilities. As the new operator contract is taken forward, costs, risks and rewards should be apportioned between the partners so that reliable public access to the Islands is provided, and the requirements of all parties (such as a set number of premium seats) are met.