British Council’s £197m debt should mostly be written off, MPs say | Foreign, Commonwealth and Development Office

Ministers should explore writing off a crippling £197m loan to the British Council by converting as much of it as possible into “a grant or similar”, MPs have said.

The Commons public accounts committee said the government lacked a “positive vision” for the council, whose soft power value to the UK is put at £1bn a year. The MPs called on the Foreign, Commonwealth and Development Office (FCDO) to set out what more it could do to support the council and its work.

Despite slashing a third of its headcount and selling off historical assets, the council’s future remains precarious because a £60m Covid-era FCDO loan on commercial terms has grown to £197m.

The loan was agreed by Boris Johnson’s Conservative government when the pandemic shuttered the council’s English teaching and exams business overseas. The loan was due to have been repaid this year but was restructured to be cleared over the next 15 years.

Even with a turnaround plan to reduce staffing by a further 25% as well as dispose of more assets and close operations in nine countries, the council forecasts it will not generate an operating surplus until 2029–30, according to the committee.

The report said: “The FCDO should write to us on what steps could be taken to offset the loan against the soft power value provided by the British Council and convert as much of the loan as possible into a grant or similar.”

British Council staff across Europe have staged widespread strikes and protests against the cuts. The planned further job losses will mean numbers will have almost halved since 2020, with more than 2,000 full-time equivalent posts lost since 2021.

The report called on the FCDO and the council “to work together to set out a positive vision for the future of the British Council that will build on its soft power value to the UK”.

“It seems to the public accounts committee that the future of the British Council is still precarious and both it and the FCDO need to carefully monitor the situation as partners so that the British Council can confidently demonstrate to the world that the UK values its work in providing soft power,” it said.

The committee said it recognised the council’s “inestimable value” and called for a “more collaborative tone” in relations between the FCDO and council, where there has been “a lack of trust”.

Geoffrey Clifton-Brown, who chairs the committee, said: “With the council seeking a leaner operation at a time of continuing precarity and obvious vulnerability for its finances, it needs the government’s help to continue its vital work, not to be simply pursued as a debtor. The FCDO says the British Council must adapt to survive. That may be true – but it will fail to do so without the government’s full-throated support.”

The council is an arm’s-length body of the FCDO as well as an established charity and a commercial organisation. It operates in just under 100 countries and claims a reach of more than 700 million people a year.

The majority of its income is from its teaching and exams business, while grant-in-aid from the FCDO accounts for about 15% of its annual revenue. The funding is used to support the council’s three charitable objectives: cultural relationships, the English language and education.