Select Committee on Foreign Affairs Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. In total the reorganisation of priorities led to £4.5 million of resources being reallocated.
  (Mr Fotheringham) Yes, of grant in aid from western Europe.

  21. That is the sum total of the change in resources which took place as part of the restructuring.
  (Mr Fotheringham) There are many redeployments between individual countries and one of the problems of looking regionally is that masks shifts of resource between individual countries. For example, we have seen additional resource going into countries like Russia and China, which are immense priorities for the Council. There are other countries where there have been adjustments downwards in terms of the funding they receive.

  22. Is there a chart or appendix which shows the gains and losses per country?
  (Mr Fotheringham) We can certainly provide that information.

Dr Starkey

  23. May I probe this business about spending in western Europe a bit further? I noticed that you opened a new British Council office in Berlin, for example, which must have cost an enormous amount of money. I happened to be there on holiday on the opening day so I popped in. It is a very impressive facility but that must have cost a huge amount. Is it the case that the overall spend in western Europe has reduced or have you made good the removal of grant-aid by increasing income?
  (Dr Baker) There is no doubt that there has been a significant shift of money out of Europe, principally the larger countries of western Europe, it has to be said. In terms of our projections for income, in some countries our projections are very low, for example Germany. I do not think that we shall see a major increase in our income in Germany. What we are looking at in net terms is a loss in Germany of £2 million a year. Germany does carry a lot of the weight for the kind of transformations we are seeking to achieve globally in the Council. There are other major shifts too.

Mr Chidgey

  24. Still looking at this issue of changing priorities, my understanding is that The British Council base the location of its directorate on the criteria of the importance of each country to ourselves, historically, politically and economically and the ability of the Council to achieve long-term influence and impact for the UK. Clearly western Europe is far more sophisticated than other parts of the world and there is no desperate fundamental requirement to work with The British Council to get the information and to exchange the influence we are talking about in other parts of the world, particulary information-poor parts of the world which is a far more fundamental aspect. I want to ask you how you evaluated the concept of informing the information-poor in terms of these criteria of influence and importance to the UK historically, politically and economically. How did you evaluate the continent of Africa with eastern Europe and with the fast-developing Asian countries in changing your priorities?
  (Mr Green) I mentioned earlier on that it was an art form rather than a science and these things are very complex judgements. The position in Africa was complicated by the fact that the infrastructure we had and the staffing we had was built up on a platform of ODA contracts, so that was distorting things. Our feeling was that we could maintain, if not even increase, impact in Africa, at reduced cost because we could strip out some of the fixed costs within Africa. Our offer there is around cultural relations and exchanges and also information and learning provision and we are going to be stepping up the amount of provision we are able to put into the information centres within Africa.

  25. On the learning aspect, I imagine fundamentally we are talking here about English language. Would that be the most important one?
  (Mr Green) Certainly, but also related to the reform agenda we see we have a very strong role in providing networks for NGOs within Africa on governance and society issues. What we are trying to do is provide opportunities for those NGOs to be able to come together in our centres within countries in Africa and connect up with other NGOs across the country, across the region and with the UK. We see that as a key area for us. We also want to be targeting the people who are going to be in positions of influence in the future in Africa, the young professionals, and that would be the Chevening scholarship programme which we administer for the FCO by providing other forms of entry to the UK for education and for courses. The role of British Council vis-a"-vis DFID is clearer perhaps now than it has been in the past. Given the large amounts of money that DFID are putting into Africa in targeting the poorest of the poor, our target groups are more the young professionals and the people who are going to become future leaders in Africa. We have a programme operating at the moment in collaboration with Manchester University where we have selected seven future leaders from Nigeria and from South Africa for a four-month management training course, made up of MPs, people from NGOs, from the commercial sector and so on.

Sir John Stanley

  26. You said at the outset that you felt the settlement you received from the comprehensive spending review was a good one. However, it is the case that what you got was substantially short of what you asked for. If I could take your figures in your own supplementary note, we see in your line of figures for the three financial years 2001-02 up to 2003-04 that you asked for an aggregate total of £79 million for additional funding. Over that three-year period you actually got a total of £26 million which is just under one third of what you asked for. Given the fact that there is a £53 million difference between what you asked for and what you got, if you had got the full amount of your bid, how would you have spent the £53 million extra?
  (Mr Green) The bid was quite wide ranging and it covered four key areas: it covered reputation of the UK, it covered export promotion, it covered Europe and it covered reform. What we have been able to do and what the Spending Review White Paper prescribed that we should do is to increase our work in China, increase our work in Russia and to extend our work through information communications technology. We have been able to start the work on what we call the knowledge and learning centres which is the bid we put in and we are going to be operating a pilot for that in India. We should have liked to have done more in those areas. We have not been able to fund those to the extent that we should have liked to have done. We also have not been able to do more work in protecting UK science and technology, which we see as a priority. We have not been able to do as much in education exports promotion as we should have liked to have done. We wanted to do more work in south Asia, reform and linkages there, and supporting reform in Latin America. We have been able to do some of the other things which are very much part of the strategy, such as strengthening our ties with Iran and with Libya. We have now set up offices in both those countries but that is part of the strategy and we were not able to use the spending review money specifically for that. The other item was a joint proposal with the BBC World Service for centres for English language learning support. We are going to be piloting the first of those in China and we should have liked to have gone at a faster rate with those because we think that has huge potential for English language teaching around the world, but we have had to go at a slower rate because we did not get the full amount we sought. Having said that, the spending review has been very helpful in implementing the strategy, but the strategy would have gone ahead even if we had got half as much or twice as much.

  27. I shall come back to how you are going to spend the £26 million additional funds you have received but following that last reply surely it must be the case that if you had had the whole of the £53 million it would not just have been a matter of being able to spend at the rate you wanted on the programmes you wanted in the countries you have referred to. Presumably if you had had the whole of the £53 million there would have been a whole clutch of countries where you would have been able to establish a presence, or a very much more significant presence than you have now? Could you illustrate for us what countries, if you had had the whole of the £53 million, would now be having a British Council presence over the next three years compared to what will actually be the case?
  (Mr Green) Beyond opening up in Iran and in Libya, which we had specified in the submission, we were not proposing to open up in more countries. In fact The British Council was overstretched. We have increased the size of our network since 1979 by 40 per cent and the increase in grant-in-aid over that period has been 10 per cent. We did not feel we were in a position to be opening up in more countries; that was not going to be the strategy for us. There was a whole raft of other things in the submission which we should ideally have liked to have done and which will now have to wait. We have been able to do some of those through the shifting of resources and the implementation of the new strategy.

  28. Are you saying to us that if you had got the £53 million you would not have continued your offices in countries like Ecuador which you had to withdraw from and in the African countries you have had to withdraw from?
  (Mr Green) No, I think we would not. The strategy makes sense for The British Council long term. Yes, we would have stuck with those closures.

  29. On the other side of the coin, the £26 million, and again in as country-specific terms as you can, can you give the Committee a quick factual perspective on where that £26 million is going in country and in project and objective terms?
  (Mr Green) Certainly. It is going to focus on strengthening our operations in China, it is going to strengthen our operations in Russia. We are going to extend the network from currently 12 centres now to 18 centres across Russia, so a stronger presence in both of those countries. It is also going to help us with the information/communications/technology area which we need to invest in and in particular I mentioned the knowledge and learning centres and CELLS, the Centres for English Language Learning Support. We see those as something which will help globally. They will not be particularly related to countries in the longer term although initially we are going to be piloting in India for the KLCs, Knowledge and Learning Centres, and in China for the CELLS project. A Knowledge and Learning Centre is a centre which will be state of the art and will have very good connectivity, something we are working on with the World Bank and in partnership with them and they will help with the connectivity through their satellite links at reduced cost to us. It will have video conferencing. It will have seminar rooms and will be a centre for knowledge and learning, particularly for young professionals and the younger audience we are seeking to reach.

  30. Are you suggesting with wide access from outside the country in which it is actually located? How widely will the Indian one be accessible? Well beyond India? Worldwide?
  (Mr Green) Eventually the information we produce for the web and services we are able to produce over the web will certainly become global services, yes. The three really key elements were China, Russia and the investment in electronic services and new media in order to reach many more people across the world and to complement our face to face interactions with people through information which can be disseminated across the web. That may be information about opportunities for education and education provision in this country, or it may be to do with governance and human rights information where people can plug into the latest information on particular topics.

Mr Rowlands

  31. The strategy includes re-allocating resources from fixed assets to other programmes. How quickly can you realise the fixed assets? What are they? Presumably you have surplus offices and things do you? Is that what the fixed assets are?
  (Mr Green) Certainly that is part of them, yes, and that goes back to what I was saying about Africa. We are implementing the strategy over a five-year period. We do not want to do it all in one go for obvious reasons. We do think we can get to where we need to be by 2005 and perhaps a bit earlier than that. If you take the Germany example, we currently have 80 per cent of our costs tied up in infrastructure, in staff and in buildings. We think that is far too much and that we can actually keep the same level of impact but at very much lower costs in terms of infrastructure.

Mr Chidgey

  32. You mentioned earlier that you are losing £2 million a year in Germany. I should like to link your costs and income, if I can, and have a little more information about that. Can you give us some scope on this, some idea of whether or not English language teaching in different areas of operation is subsidised by the grant-in-aid or whether it is profitable? In different cases can you give us different examples? I should imagine that in Germany it is a loss maker; I do not know but I am thinking of the sophisticated nature of that particular society with a lot of opportunities for English language. Whereas in China and Russia perhaps you see a market for teaching English language which would support The British Council's work through the profits you generate. I do not know. I am asking you whether you can give us some specifics on this to see how you see it as an operation, whether it is a marketing operation to a degree or whether it is a cultural operation as far as The British Council is concerned.
  (Mr Green) It is important to distinguish two parts of our English language operation. The one is our direct English language teaching operation, which we charge for and we accept the fee-paying students for and we have to make that profitable in the sense that it produces a surplus which we can then invest in other aspects of The British Council and in particular in the whole area of educational enterprises, which covers both English language teaching and exams work. That is one area of our work which has a value of £140 million.
  (Mr Fotheringham) The educational enterprises English language teaching account for something in the region of £80 million. We are looking at a total income from the paid services activity of £130 to £140 million.

  33. That compares to a grant-in-aid of about £135 million a year, to put it in perspective.
  (Mr Fotheringham) Yes, so it is approximately one third of our total turnover.
  (Mr Green) In addition to the direct teaching operation, which across the world is in the region of 250 centres where we are making a surplus but providing a very important service to people wanting to learn English, not in countries such as China, sadly, because we are not able to operate there. The government will not allow us to operate there yet.

  34. And Russia presumably.
  (Mr Green) Russia, yes, and India and many, many parts of the world. Then there is the work we do in terms of English language work as part of the grant-in-aid and that is where we are working in the state system and helping to improve the curriculum, helping to train teachers of English. That is something again which we do very extensively, particularly in central Europe and we may come onto it but it is something we have been doing very extensively in countries such as the Czech Republic, Poland and Hungary.

Dr Starkey

  35. I want to question you about your fixed costs. You say you are rationalising the Council's headquarters accommodation in London. What savings potential do you estimate there is in moving to less expensive accommodation?
  (Mr Fotheringham) I shall not be able to give you a direct answer to that now but I can give you that information afterwards. The intention is that we shall relinquish our premises in Portland Place when the lease on that building expires in 2003. We shall continue to have headquarters in London and Manchester but our London accommodation will be consolidated in Spring Gardens. The saving will principally be in the potential rent increase which we would face if we stayed in Portland Place. At the moment the rent is quite low, but the market for rents in London is such that if we wished to extend that lease we would face significant increases. The figure I would give you would be looking at the potential saving which would result from that change.

  36. Although a potential saving is important, it would not be an actual saving then. You would effectively be pegging your London costs essentially.
  (Mr Fotheringham) Yes, that is right.
  (Mr Green) The other thing we have made a commitment to is to reduce our head count in the UK.

  37. I was going to come to that next. The figures we have are that you reckon there will be about 800 job cuts but about 400 new jobs being created. Is that right?
  (Mr Green) Yes.

  38. What I should like to ask there is whether the staff were part of the consultation process over those cuts and new jobs and how confident you are that the net reduction can be met by voluntary redundancies.
  (Mr Green) We shall certainly do all we can either through redeployment into the new posts which are being created, but they will be different posts and therefore will require some skills development, or through voluntary redundancy. We take very seriously the way we look after staff and we shall do all we can with those people we are not going to be able to place through such mechanisms as career counselling and so on. Sorry, what was the first part?

  39. Whether your staff had been part of the consultation process over the redundancies.
  (Mr Green) They have, as far as has been possible. In relation to country closures, it is rather difficult to consult staff. In those cases we have only been able to consult the senior staff before making the decision.

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