UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 690-ii

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

THE FCO’S PERFORMANCE AND FINANCES IN 2011-12

PETER HORROCKS and RICHARD THOMAS

MARTIN DAVIDSON and PROFESSOR PAMELA GILLIES

Evidence heard in Public

Questions 108 - 209

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Oral Evidence

Taken before the Foreign Affairs Committee

on Tuesday 18 December 2012

Members present:

Richard Ottaway (Chair)

Mr Bob Ainsworth

Mr John Baron

Sir Menzies Campbell

Mike Gapes

Mark Hendrick

Andrew Rosindell

Sir John Stanley

Rory Stewart

Examination of Witnesses

Witnesses: Peter Horrocks, Director, BBC Global News, and Richard Thomas, Chief Operating Officer, BBC World Service, gave evidence.

Q108 Chair: I welcome members of the public to this sitting of the Foreign Affairs Committee, the second evidence session of our inquiry into the FCO’s performance and finances for the year 2011-12. The focus of the first part of the session is on the World Service and that of the second on the British Council.

I welcome our two witnesses from the World Service: Peter Horrocks, the director of BBC Global News, and Richard Thomas, the chief operating officer. Mr Horrocks, do you have any opening remarks?

Peter Horrocks: Briefly, I would characterise the year as one of recovery for the World Service. The previous year had been one of the toughest in our history, with some very substantial cuts and drops in audience. This year we have moved sadly from our former headquarters at Bush house, but happily into our new building at New Broadcasting house. We have been investing in new services; our teams have been dealing as bravely as ever with extraordinary stories, particularly in the Middle East, but in other parts of the world; and our audience levels have started to spring back very well. It has been a year of recovery but there are clearly some significant challenges ahead. That is the context I would like to set quickly.

Q109 Chair: I recognise that it has been a big year, though I have to say that when I went to the new building, I didn’t see many long faces. People seemed to like the new building.

Peter Horrocks: There is a spring in the step of those in the new building, definitely.

Q110 Chair: Exactly. As you say, it has been a very big year for Britain. We’ve had the Olympic games and the jubilee. Has that been an opportunity to build audiences during the year?

Peter Horrocks: It has certainly been an opportunity to reflect Britain’s strengths to the world. The World Service and BBC World News, our television arm, did not have all the rights to the actual coverage of the Olympics, so what we did was to build our Olympics and our 2012 year around the theme of London Calling, and that was something our audiences found of real interest. London is the capital city and the place people look to for international leadership, and they were fascinated by all the athletes coming here and the world arriving in London for the jubilee, for all the cultural events and for the Olympics themselves.

We were able to create a real sense of event throughout the course of the whole year. That is something that I think will lead us to put London at the centre of things in the future-for instance, when BBC World News, our television channel, launches in its new studios in Broadcasting house next year, you will see the London skyline as one of the key features of the news studios. That sense of projection of Britain’s values has been an important part of this year.

Q111 Chair: I don’t know whether you heard the piece on the "Today" programme this morning, but it seems that was done with some success. The public’s appreciation of Britain has grown quite considerably as a result.

Peter Horrocks: Absolutely. Our colleagues in the British Council, along with Visit Britain, carried out that survey. It is very encouraging to see that perceptions of the UK seem to have shifted in many countries in a positive direction. We hope that the BBC’s coverage helped play some part in that.

Q112 Chair: You did not have the rights to broadcast the Olympics and Paralympics outside the UK. Did that affect you in any way?

Peter Horrocks: Yes, it was a constraint.

Q113 Chair: Was it for financial reasons?

Peter Horrocks: Absolutely. You just need to be aware of the costs of the rights for the American broadcaster NBC, which paid more than $1 billion simply for the rights for those two weeks of coverage. I am afraid it would soak up the World Service’s budget for many years to compete for that kind of television rights. We were able to do a lot in radio, though, and around the television coverage. We were able to be around the event, talking to athletes, officials and, of course, the vast numbers of members of the public from around the world who came to London. That is how we told the story, which was exciting.

Q114 Mr Baron: We have had the diamond jubilee and the London games, which were a tremendous success on all fronts, as we all acknowledge, but has the BBC World Service done any scoping or general work on the issue of soft power beyond those immediate successes, to help it to assess where it should invest for the future to reach more audiences, where its influence might best be felt, and so on? These have been tremendous short-term successes, but I am trying to look beyond them, perhaps using them as a springboard to look forward a few years. Have you any early indications or thoughts on this changing world?

Peter Horrocks: In terms of our strategic priorities and the things that we are focusing on, I think the things we have launched this year give you a good indication of the kinds of thing we are interested in. For instance, for the first time, we have been producing television for Russia, delivered via the internet. Our audiences in Russia are now bigger than they were when we only had the last vestiges of radio, after all the jamming and problems that we had in Russia. We have launched new television for Africa, both on BBC World News and distributed through local partners across sub-Saharan Africa. We also recently launched new television programming in Hindi, and we will shortly be launching new programming in Urdu.

That is part of the restorative strategy that we set out as part of dealing with the substantial reductions through the reduction in FCO grant in aid. We are starting to focus on those target markets where there is both a need for BBC news and information and a real opportunity in terms of the connection to Britain. One thing that we looked at as part of the examination that you did of the Commonwealth is that we broadcast to every single Commonwealth country bar one, Samoa. That connection with the UK, which often provides the basis on which the BBC’s brand and reputation are understood, is an important part of our consideration. Of course, we are completely editorially independent in our coverage, covering UK policy issues as fearlessly and without favour as we do those of any other country, but understanding our rootedness in the UK is a very important part of our strategy.

Q115 Mr Baron: Obviously, to a certain extent it comes down to resources, but have any lessons been learned, whether within the World Service or indeed within Government, from, for example, cutting back the BBC Arabic service just as the so-called Arab spring was taking off? Do you think any lessons have been learned there?

Peter Horrocks: I do not know in terms of Government. Clearly, the funding responsibility of the World Service is moving in April 2014 to the BBC and the licence fee. There was a small restoration of some of the cut to the Arabic service, not least following interventions by this Committee. It is very striking that the most significant audience increases that we have had in the past two years, and particularly in the past 12 months, have been in the Middle East, for both the Persian service and the Arabic service.

One of the other things that we have also been able to take advantage of is the DFID funding that supports some of the governance programming and debate programmes that we do around the core news coverage of the World Service. The Arabic service is a very important part of that package. We still have further savings to achieve, and you may wish to discuss that subsequently, but the importance of our services to the Middle East is absolutely central.

Chair: We have more questions on the Arabic service. Mr Baron has leapt ahead to someone else’s questions.

Q116 Sir Menzies Campbell: I have a question on the coverage of the summer. May I take it that there was equivalent coverage of the Paralympics as well as the Olympics?

Peter Horrocks: Absolutely. We were fortunate to have marginally better access and rights to that material, so for the Paralympics we were able to do more through the coverage of the sporting events themselves as well as the events around them. What we used it for was really to have a debate with our audiences around the world about the position of disabled people in their communities-there is a very significant difference between perceptions in the UK. In many parts of the world that we were broadcasting to, people could not see or hear anything at all about the Paralympic games, so the BBC was often the only way for them to access them, unlike the Olympics, which were broadcast by national broadcasters around the world.

Q117 Sir Menzies Campbell: That is very encouraging. You have not just a new building, but new technology. Have those who used to operate on the brown carpets with the microphones that came down from the ceiling adjusted to the new technology?

Peter Horrocks: We have had problems with technology in the past, but, touching as much wood as possible, so far, the transition to New Broadcasting house has been going very smoothly. All the BBC’s radio services-the World Service and domestic radio as well, so the "Today" programme, "World at One", "PM" and so on-are coming from New Broadcasting house. That has happened completely flawlessly, and I pay tribute to our technical support, who have carried that out brilliantly. So that is working. The big change still to happen, in January through to March, is the move of the major television output from Television Centre-that is, BBC World News and, subsequently, the BBC News channel in the UK. We hope that will go as smoothly.

Q118 Sir Menzies Campbell: Does this new technology allow the World Service either to do things that it could not do before, or to do better things that it was doing before?

Peter Horrocks: Certainly we are able to do things that we were not able to do before.

Q119 Sir Menzies Campbell: Could you give us an example?

Peter Horrocks: The new television services, for instance-we just didn’t have proper television facilities in Bush house. Now we are working alongside our UK news colleagues, and the building has been designed to enable us to be able to do that kind of broadcasting. I did not mention that, for instance, we are now broadcasting half an hour every evening in Swahili. That team are able to work with their colleagues who are producing the English Africa programme, and a number of people who broadcast in both Swahili and English are able to work on both programmes because they are co-sited. That is the kind of thing that is made possible by the new building and its facilities.

Those facilities have involved significant capital investment, but the marginal cost for using them once they have been installed is relatively small, which is enabling us to do a number of new things. It is also helping much more effective collaboration between the different teams, and we are seeing interesting editorial stories being created by teams that previously were physically very separate because of the architecture of the old-style Bush house, but who are now able, in an open plan environment, to share ideas and build creatively.

Q120 Sir Menzies Campbell: You will remember from previous occasions when you have given evidence that, when these proposals for the BBC were being discussed, there was a certain amount of anxiety on the part of members of the Committee that the particular style and, I suppose, the production values and culture of the World Service ought not to be subsumed into Radio 5 Live. Is that still the case?

Peter Horrocks: So far, I would say that the output is improved and has not deteriorated or been subsumed in that way. I think that the basis on which the World Service works, both within the new building and within the licence fee, is something that is ultimately the responsibility of the BBC Trust, with the Trust setting down what the World Service should be achieving. That will be accomplished over the course of the next year through a public consultation exercise that I understand the BBC Trust is to carry out. That will be very important in giving that clear statement and the level of resource that will be available.

What we have in the new building, and in a more combined culture between the domestic news and international news operations, is absolutely the ability to serve international audiences as well if not better than before, and also to broadcast into the UK and to bring the World Service’s international perspective to bear for the benefit of UK audiences. But it does need that clarity about the statement of purpose, which is what I know the BBC Trust intends to do over the course of the next 12 months.

Sir Menzies Campbell: You may be asked some questions about that a little later, so I will not presume to anticipate them.

Q121 Mike Gapes: Mr Horrocks, you said that last year had been a very difficult year. At the beginning of last year, you announced significant reductions in some language services, and some other reductions. Can I ask you whether, as a result of the changes you have made, there are now areas of the world where BBC World Service can no longer be received in any language on a traditional radio?

Peter Horrocks: Yes, there are some parts of the world. I can give you an exhaustive list as a written note.

Mike Gapes: That would be very helpful.

Peter Horrocks: For instance, in South America and Central America, World Service in English is not broadcast and there is no other radio distribution there. We stopped our short wave service to North America many years ago. Of course, World Service in English is heard quite widely through rebroadcasting on public radio, and that is the situation in substantial parts of the world. In the main places where audiences in English still listen on short wave, which is largely in Africa and Asia, we are retaining hours of short wave for the peak hours of listening, but we no longer have a comprehensive, 24-hour short wave service around the world. That ended many years ago.

Q122 Mike Gapes: In those areas of the world where people cannot get the World Service on the radio, would you expect them normally to get access through the internet?

Peter Horrocks: Or, more likely, because it is more widely distributed, through BBC World News. BBC World News is the largest channel that the BBC has, with more than 70 million viewers a week, and that is pretty widely distributed. Of course, not everyone has a satellite dish and not everyone has access to the internet, but most of the places where we have stopped our short wave services, largely through cost pressures, are also the places where the audiences had declined to negligible levels. We have had to be very careful about not taking away services where people were still listening in numbers, and that is a difficult balancing act given the financial pressure that we are under.

Q123 Mike Gapes: Are there any parts of Europe where what you have just said also applies?

Peter Horrocks: Absolutely. We have stopped our medium wave service to Europe. Western Europe used to be able to listen to our medium wave service, but that is no longer available. That was one of the painful cuts that we had to make as a result of the reductions that were announced in 2011.

Q124 Mike Gapes: Okay. When you move towards using new technologies and new media, what criteria do you take on board to make that decision and to give up broadcasting in older forms? You have referred to short wave and you have stopped broadcasting in Arabic in short wave, but is there not a danger that you will actually lose access to significant numbers of people? Similarly with medium wave, is there not a danger that you are not getting wide distribution? You may be getting to the elite and perhaps a younger population, but there is a balance, is there not?

Peter Horrocks: There is a balance, yes. It is not true that we have stopped distribution of short wave to Arabic audiences entirely. We are retaining our short wave service, in particular the service that reaches Sudan, where there is a very large audience that is very loyal to the BBC-

Q125 Mike Gapes: That is only for Sudan, though?

Peter Horrocks: It is targeted at Sudan, although it can be heard slightly more widely. However, the medium wave service that services the eastern Mediterranean is being retained, and that can be heard in Lebanon, Syria and Egypt, so we still do have the medium wave service.

It is not particularly the case that new media replace traditional radio; it tends to be either television, where we have it available-clearly, in the Arab world, Arabic television is very widely watched; even in relatively poor areas people do see television-or local FM radio. That is very true in Africa, so in places such as Kenya, where people listen on short wave much less than they used to, we are now heard much more both on FM transmitters that we own, or on local broadcasters.

Q126 Mike Gapes: But how do you make that decision? What is driving it? Is it financial, or are you making a decision about the political situation, the level of repression, or the access according to rural/urban balance? What is driving the decision?

Peter Horrocks: The needs of the audience come first-

Q127 Mike Gapes: Your existing audience or your potential audience?

Peter Horrocks: The potential audience, or what the level of media freedom is in that country, or what the requirement is for the BBC to be providing something that the local market cannot provide in terms of quality, range or impartiality. Then we look at how we can get to audiences and what the opportunity is. If audiences are no longer listening on short wave, or those audiences are declining fast, then we think about alternative means of getting to them. If you look, there is a graph in the evidence that we put forward that shows that already the short wave audience is only marginally above the audience for rebroadcasting on FM, and I believe that next year the short wave audience will no longer be the largest element of the World Service. It is still really important to us, but it is declining, irrespective of what we do. The financial pressure then exacerbates that, and sometimes it has pushed us to making changes sooner than might have been ideal; that has certainly happened in India.

Q128 Mike Gapes: Have you got any way of deciding what the cost per minute of broadcasting on different platforms and different methods is, so that there can be a comparison?

Peter Horrocks: Yes, we do.

Q129 Mike Gapes: And do you have that for all countries in the world?

Peter Horrocks: Yes. The average would be about £1 per user a year. The new television, which I mentioned in a couple of my previous answers, we are estimating at the moment is costing about 50p per user per year. Although television is quite expensive, if it gets to enough people it can be quite cost-effective. We do have those kinds of measures, and we can break it down by language and by service.

Q130 Mike Gapes: Could you give us that information?

Peter Horrocks: I think we could, yes.

Q131 Sir John Stanley: Mr Horrocks, if your director-general came to you tomorrow and said, "As my Christmas present to the World Service, you can have one of the cuts that you have had to make restored to you," which one would you choose?

Peter Horrocks: You are asking me to play a favourites game among all those different, very valuable services. We are making cuts across a number of areas. It would actually be where we need to invest to hold on to audiences that would be most important for me. I was in Burma in September, and the affection and support for the BBC is enormous there. We would like to be able to complement our existing radio service, the listenership of which is going down, with television for Burma. That would be something I would really like to be able to do.

Q132 Sir John Stanley: That would be your top restoration.

Peter Horrocks: Of the things we have not already announced that we are going to do, yes.

Q133 Sir John Stanley: And could you just explain why you feel that the cuts you have had to make in Burma are particularly damaging and unhelpful to people in Burma?

Peter Horrocks: I think that in a country that is emerging from the level of repression that they have had-it is a bit like after the dissolution of Yugoslavia-there is a real danger of ethnic tension. It is a different kind of issue from the one that existed during the pure repression under the military dictatorship, but the media plays a role in divided societies and the World Service can bring a calming influence and the potential for a more tolerant approach and a mutual understanding. We played that role very significantly in the Great Lakes area of Africa following the Rwandan genocide.

That is a very special role that I believe that we can play, and because of the relationship with the UK and the special strength of the Burmese service over many years, I think it would be a tragedy if we were not able to do that in the ways that the population in Burma are now starting to consume content. When I was in Rangoon recently, I was astonished to see how many satellite dishes there are on all the apartment buildings. It is not a purely backward society, by any means. Fortunately, only in the last few days we announced that BBC World News in English will be available in Burma, and that is good for those who can speak English, but I think it would be a wonderful thing if we were able to deliver the Burmese service to audiences there.

Q134 Chair: Mr Horrocks, I think you may have answered this question to Mr Gapes. The cut in the Arabic service is not financial; it is more technical and a shift of demand. Is that right? To put it another way, if you had had more money, would you have kept the present Arabic service?

Peter Horrocks: The money that was restored was put into the Arabic service and its editorial services. We have distribution cuts in relation to Arabic, and the savings from those are substantially larger than the funding that we had returned to us. The saving that is achieved through the loss of Arabic short wave is very significant-almost £5 million a year-and that formed a major part of our plans, so the distribution changes to BBC Arabic are not as severe as they would have been if we had not had that extra money, but we are still making significant changes to the delivery as opposed to the creation of the content in Arabic.

Q135 Chair: So if you had an extra £5 million, you would still keep the short wave?

Peter Horrocks: No, I would not, because people are not listening in those numbers, and that would be £5 million less to spend on Burma, Pakistan or India.

Q136 Mr Ainsworth: You are getting more into partnership working with local broadcasters. I would take it that the driver for that, or at least part of it, is cost. Is it always cheaper, what are you doing to protect against potential reputational damage, and are you not worried about the potential invisibility of the World Service?

Peter Horrocks: We have to be very careful. The BBC has had editorial embarrassments in recent months. How we use information from other parties and the serious consequences when the BBC makes mistakes-no one could be in any doubt of the significant dangers.

Q137 Mr Ainsworth: What has been your biggest embarrassment?

Peter Horrocks: Through partnerships in the World Service? There have not been embarrassments through that route, but I am very alert to that danger. However, in some parts of the world it is right that we work with local partners, because improving the quality of local media-not just the BBC’s own broadcasts, but working with local media-can help those countries so that politics is more accountable and can work as an antidote to corruption.

The grant that we have from DFID through BBC Media Action, which used to be the BBC World Service Trust, does some fantastic work. Only in the past 10 days, the BBC World Service, working alongside the national broadcaster in Afghanistan, RTA, has broadcast a series of radio and television discussions about the future of Afghanistan. We were working with the local national broadcaster and with funding that has come through DFID to support those debate programmes. The audience in Afghanistan that has heard BBC content is significantly larger than those who listen only to the BBC World Service, because RTA is their BBC equivalent and it is better distributed than we are. So by working carefully with them and improving their editorial and technical standards, we have had more impact in the past two weeks in Afghanistan than we have had for many years. That is a good example of effective partnership using flexible sources of UK Government funding to support high quality debates that add to the World Service’s strength. We have done similar things in Kenya and Bangladesh, and we have other examples that we will be rolling out. Carefully handled partnership can enrich our airwaves and improve the quality of journalism in the countries we are serving.

Q138 Mr Ainsworth: Another area that I would have thought is increasing, again, driven largely by cost, is what we call video reportage. I believe you have trained 200 people in that. What is the risk of reputational damage to professional standards? How big an impact do you think viewers will see through this increased use of video?

Peter Horrocks: The journalists who are shooting these pictures do not have the skills that the best of the BBC’s professional news cameramen do, it would be ridiculous to imagine that. For instance, the kind of extraordinary reporting we have seen in recent months from Syria, where cameramen are working with reporters such as Paul Wood and Ian Pannell-that is not what we are talking about. We are talking about the very many journalists we have around the world who may see something or come across something and gather pictures that otherwise would not be available.

I remember an example in Pakistan a little while ago, where there was a Taliban attack on a NATO fuel convoy, and our local reporter happened to have one of those little cameras from the training project that you were referring to. He took some extraordinary pictures of it, and people saw the consequences of the political violence in Pakistan and the dangers posed to the NATO mission. We did not have a professional cameraman there, but the pictures were shown on the "Ten O’Clock News" and on BBC World News. That is a benefit to audiences. We just need to be clear about what that can do compared to the highest quality professional video journalism that we do with the crafted reports.

Q139 Mr Ainsworth: You see this as all opportunity, rather than risk.

Peter Horrocks: I do largely. There are some risks to the journalists involved-a radio journalist can go around quite quietly, just keeping notes or maybe recording some sound, but as soon as you have a camera, no matter how small, you become a target. Our locally hired journalists are often more of a target than a European filmmaker or cameraman who may be going into a situation, so they are exposed to risks. We have to be careful about quality, but if someone gives me a picture of something that BBC audiences otherwise would not be able to see, I think that that is a plus, rather than a minus.

Q140 Mr Ainsworth: You said that you hit five of your performance targets-there are seven at the moment-and you partially made another. Do they need reviewing, and are they skewed at the moment towards change and innovation, rather than the maintenance of the necessary core services-the knitting of the BBC World Service, if you like?

Peter Horrocks: There can be a danger that what you measure drives behaviour, and some of the new things happen to be slightly easier to measure. For instance, use of mobile and online services is easier to measure than the consumption of radio, which involves doing surveys that are quite expensive and difficult to carry out. That is something that we need to guard against. The strength of our traditional delivery and the size of those audiences on radio are still absolutely vital to us. They are key to us and they are the mainstay of what we do, so we have to attach equal weight to the new and the old.

Q141 Mr Ainsworth: Do you need to change the targets, then?

Peter Horrocks: We always need to review targets. Some possibly need to be more ambitious. We have an audience target of 250 million, which has been set for many years. We got near it, it dipped, it climbed back up and it is within sight now. If we achieved that in the future, I am sure that we would want to set a new target.

Q142 Mr Baron: I would like you to look out to the spring of 2014. I think it is fair to say that the Committee has concerns about the transfer from grant in aid to licence fee that will take place then. Part of that process will involve a transition from the Framework Agreement to the operating licence issued by the BBC Trust. That will set out budgets, mission, parameters and that sort of stuff, yet it still has not been issued by the BBC Trust. Is that of concern to you, given that presumably there has to be a bit of planning with regards to the spring of 2014? Perhaps we are not asking too much that some wise heads have looked that far ahead.

Peter Horrocks: I am looking forward to seeing it. The BBC Trust, and in particular the Chairman of the BBC, Lord Patten, is making a commitment. There was a wonderful service of thanksgiving for the World Service, which was held last week at St Martin-in-the-Fields, which the Archbishop of Canterbury attended and at which Lord Patten spoke. He talked about how the BBC Trust is "seized of the importance of discharging" its task-the BBC’s global purpose of "bringing the United Kingdom to the world and the world to the United Kingdom"-which it is approaching with "wholehearted commitment".

That overall commitment to the importance of the World Service and to sustaining the funding of the World Service at the same or above the level that will end when Foreign Office funding comes to an end is clear and clearly on the record from the BBC Trust. I look forward in the next year to the clarification of exactly the things you referred to: the nature of the mission and-most importantly for me-retaining the ethos. Someone asked whether we might be subsumed. I am confident that we can offer hugely to audiences in the UK, and that that will not happen. However, the most important protection against that will be the way in which the BBC Trust defines that mission and ethos and then requires members of BBC management such as myself to deliver it.

I do not have a concern about the fundamental support for the World Service, but there should be clarification of what it is about, what our priorities should be-the kinds of questions that you have been asking-and whether that is going to change as a result of the views of licence fee payers. We have started to do some research on that and I could talk about that if you would like. Ultimately, that will be something for the BBC Trust to determine and for people such as myself to respond to.

Q143 Mr Baron: I will come on to funding in a second. Can I come back to the clarification point? I do not doubt the support of the BBC Trust for the World Service, but presumably there has to be some sort of clear indication with regards to brief, mission and parameters. All that needs to be clarified a bit before spring of 2014, because presumably you are making financial decisions, or certainly plans, now for that period. Or are you suggesting that there will be hardly any difference in the brief? This sort of approach suggests that you are not expecting much change from the Trust by way of definitions and missions from where you are at the moment. I mean, how can you say that with certainty, and what financial plans are you putting in place if there are going to be differences?

Peter Horrocks: The planning that we have done goes into the licence fee period. That is why I say we have confidence about that overall funding. It still has to be precisely set out in the new operating licence but we have planning assumptions which we have been working to which are agreed with the BBC Executive and the BBC Trust. We do have visibility beyond April 2014 in terms of the funding. We have operated on the basis of an agreement between the BBC and the Foreign Office in the past which sets out the basis on which we are operating.

Q144 Mr Baron: Is there any sort of timetable, any sort of timeline as to when the Trust may come out with this operating licence? I am sure you are in close communication with them, but there may be some surprises in there which you perhaps might want to know about sooner rather than later.

Peter Horrocks: I understand that the public consultation will happen either in the late summer or the autumn. We will be working with the BBC Trust putting forward proposals for the wording to deal with the kinds of questions that you have asked. There will be a public consultation to which there will be an opportunity for anyone with an interest in the World Service to contribute.

Q145 Mr Baron: Can I move us quickly on to funding? There is a concern, which was intimated in your previous answer, that you expect the funding to be at least at the level at which the grant in aid has left off and so forth. A number of us in the Committee, if not all of us, have a concern, however, that when the funding starts coming from the licence fee, you will be up against all sorts of popular programmes. Short of a personal appearance on something like "Strictly Come Dancing", for example-you will be in competition with programmes like that. You are as confident as you can be, are you, that funding for the World Service will not suffer because you are in competition with some very popular programmes out there?

Peter Horrocks: When the BBC Trust sets the amount of money for any of our services, whether it is Radio 3 or local radio, the BBC management has to be able to report back on that and to satisfy the BBC Trust that it has been spent according to that determination. The way that that is set down by the Trust will be critical. In terms of the editorial services that we deliver, those are clearly defined and it is quite easy to say how the money is being spent on them. The area that needs a little bit more exploration and work is how, when our technology, or our finances, or other kinds of support areas, or our marketing, are supported by an overall licence fee, the bulk of which is focused on domestic delivery, we make sure that those shared teams have also got the resource and the focus to ensure the rather different kind of delivery that the World Service needs. We don’t want things that are too complicated because obviously we want to create efficiencies in doing this, but it is important that the international requirements are properly thought about by the BBC, alongside those domestic ones, so that we have the ability to create great programmes but tell our audiences about them and to pay for the distribution or whatever it might be.

Q146 Mr Baron: Finally, you won’t find anyone who disagrees with you about this on this Committee, but what assurances have you been given? Cast-iron guarantees are not possible, but what assurances have you been given? What you say are fine words, but at the end of the day selling the concept of the BBC World Service to the general populace who pay their licence fee will be harder than selling the support for very popular programmes. Have you been given any assurances from the BBC Trust, or anyone else for that matter, about protecting the World Service from a funding point of view?

Peter Horrocks: The assurances are to do with that overall level of funding and the quote that I gave you from Lord Patten. Personally, I think that the BBC should be confident about its international role. Of course there will be a minority of the population who probably might have questions about the licence fee being used to pay for something that they do not consume directly, but the initial research that we have done shows that there is widespread support for the World Service. Many people actually believe that it is currently funded by the licence fee and they don’t understand these distinctions, but for those who do understand them, the initial research that we have done shows that they are more than willing to support that. I believe that in the future, the global role for the BBC in the World Service but beyond that, the educational content that the BBC produces and its ability to do good in the world, ought to be even more important. The World Service becoming part of the BBC and part of the licence fee is part of potentially strengthening the argument for a proper public service BBC. That is the discussion that we will be having within the BBC and with the BBC Trust over the years ahead.

Q147 Chair: You talk about Lord Patten’s wholehearted support. Have you had a chance to discuss this with the DG designate, Lord Hall?

Peter Horrocks: I have not had an in-depth conversation with him. The very day that his appointment was announced, however, he toured round the newsroom and then I took him to the fifth floor, which is the place that all the language services of the World Service occupy. He chatted to the Urdu team, the Burmese team and the Somali team and he was clearly enthused by the range of international staff that are within the World Service. I took that as a positive sign.

Q148 Chair: Keep him at it. Are there any forms of commercial activity that you would see as unacceptable for the World Service?

Peter Horrocks: That is a very interesting question. Clearly World Service English in the UK would never take adverts. That would be an absolute no-go, unless the BBC as a whole changed its funding model, but that would not happen.

The indications that we have from the three pilots that we have done so far on taking adverts on three of our language service websites show that audiences do not react in a hostile fashion to it. There were one or two complaints, but it was very small numbers. I believe that there is public support in the UK for us to build on the public funding where we can with commercial income, as long as it does not affect the editorial integrity of what the World Service does-that is non-negotiable. We need to be able to leverage that public funding as far as we can. It will never be a huge amount of money, because the places we serve by definition tend to be places where commercial media is not well established, but we have some targets, which I believe you are aware of, to increase that money where we can make money, and we are on our way to achieving those targets.

Richard Thomas: We should also say that the BBC has quite stringent guidelines about commercial income and about what we are allowed to do and what we are not allowed to do.

Q149 Chair: But outside the UK they are fairly flexible.

Peter Horrocks: Yes. We take adverts for BBC World News and the BBC website in English. For appropriate categories of content, we also have sponsors for non-news programming.

Q150 Chair: I have seen them, and I did not feel offended, I must say. How are the staff adapting to this? Is it unreasonable to ask them to be more commercially-minded in their outlook?

Peter Horrocks: The actual commercial activity is carried out by separate teams, so editorial teams do not go around the world selling the website or selling our radio services. As part of making our content more attractive, we ask them to think about ideas which will help that commercial process, but they are editorial ideas that have integrity and are separate from any direct commercial influence. It is about saying, "You are really good journalists, but how can we compete in this market and ensure that our content is really strong?" The advertising team will come along and sell adverts against that, but there is separation between those teams.

Q151 Rory Stewart: I still do not fully understand the idea. What is the idea? Is it that, instead of the old-fashioned way of simply determining what the most important stories are, journalists will now try to pick stories that will bring in more listeners and be more appealing to advertisers so that you can make more money out of advertising?

Peter Horrocks: To make that content more appealing and to focus on audiences, yes. It can sometimes be easy just to think about your own interests as an editor, but you need to think about your audience and we encourage all staff to do that. There is a particular extra emphasis when part of what we are trying to do is create some commercial income. It is fundamentally about thinking about audiences and editorial activity.

Q152 Rory Stewart: And how does that avoid the danger that Sir Menzies pointed out? The incentive then is presumably to appeal to a broader and broader mass audience and that would carry challenges, would it not?

Peter Horrocks: It could do, of course it could. That is where the BBC’s editorial values and the integrity of our journalism and the significance tests that we apply to the stories that we do come in. BBC World News has taken adverts around the world for more than 20 years and is an absolutely thorough news service that is founded in the BBC’s values and is reported by exactly the same journalists who report for the 10 o’clock news, the "Today" programme or World Service English.

Q153 Rory Stewart: Could you give us a concrete example of a journalist producing a story idea that was more appealing to advertisers and in doing so changing the content of a particular transmission?

Peter Horrocks: It would not be about directly changing it. It would be about saying, "Here is an editorial proposal that we believe should be invested in, which may then also subsequently be of interest to advertisers." For instance, there is the knowledge economy around the world and the way that universities are increasingly seeing opportunities in selling learning. That is a trend that we are seeing in many of the places that we report from. We have created supplements on our website-bbc.com-based around the knowledge economy, so they are special supplements that are created editorially. Subsequently, the advertising team take those to potential advertisers and say, "Here’s some really strong BBC content that might be relevant to you", but they are not directly to do with stories being commissioned that are to do with the advertisers at all; it is the other way round. That was something created by a team thinking, "This is strong editorially, but perhaps it also has some commercial potential."

Q154 Rory Stewart: What are your forecasts for possible future pension liabilities?

Peter Horrocks: We have the pension figures-the contributions we are making to the BBC pension deficit-set for the next few years. Richard might want to say a few words.

Richard Thomas: The World Service has got to pay, in the report year, about an extra £11 million into the pension fund for the deficit. The payments coming up are between £6 million and £8 million. They are not the same each year. The next pension revaluation is dated for March next year. Obviously, the BBC will have to recalibrate its pension arrangements after that.

Q155 Rory Stewart: Am I right in saying that pension costs have risen from £10.6 million in 2010-11 to £19.7 million in 2011-12, which is already an increase of 86%. Can you give us an idea of what sort of increase you are now expecting between now and, for example, 2015?

Richard Thomas: The increase in that year was actually a double whammy, because it took so long to negotiate with the pension trustees. The pension payments increase, which in the accounts for that year was about £12 million, will be less in the current year and the year after, so it will be pretty much £6 million or £7 million. That number will actually go down and then it will go up again a little bit, because the pension payments are not the same in every year.

Q156 Rory Stewart: By 2015, are you going to be spending a considerably increased proportion of your budget annually on pensions?

Richard Thomas: No, a bit less than in those accounts, because that year we had a catch-up payment for the year before.

Q157 Rory Stewart: Going forward, is that going to be a problem? If people try to control your budget, will you find pensions occupying a larger and larger proportion of your budget, thus putting pressure on your ability to fund other services?

Peter Horrocks: One of the differences under licence fee funding is that this will be dealt with on a pan-BBC basis. The figures that we have just quoted were assessed on the BBC World Service’s liabilities. Because there was a larger, substantial staff previously, proportionately we are paying quite a large amount. Now we will be treated as part of the BBC Group. However, if the pension deficit overall gets worse, everyone in the BBC will need to be contributing to making good that deficit according to the law. There are some swings and roundabouts, and the extent of the further contribution that we might need to make will depend on the revaluation that Thomas referred to.

Q158 Rory Stewart: Finally, presumably the future of the BBC World Service is going to depend on somebody defending you strongly on the board. We had this big push for an international trustee. The Committee also examined the idea of you or your successor being on the board. That has been rejected, so it is now run by Helen Boaden. What evidence can you give the Committee of her ability to defend the interests of the World Service among all of her other enormous responsibilities? Is there anything that you have seen in the last few months that shows her fighting your corner, which can give us confidence that this governance structure is the correct one to ensure that the World Service is prioritised and protected?

Peter Horrocks: At the moment, because the World Service still has separate funding, that has not been required in quite the way that you described it. Clearly, it will be important in future that that international interest is properly represented, and there are appropriate mechanisms for that. I do not think that it has to be through the executive board itself, which is a deliberately streamlined group of people, along with non-executive directors, who can take decisions to run the BBC. It is important for that international dimension-the World Service element-to be able to have proper accountability, and in particular to be able to ensure the support of the technology and other services that we need, which will be shared across the BBC. We will no longer be running everything within the World Service.

We will no longer have a single budget in quite the same way; some of those things will be shared across the organisation.

For the World Service to be effective, the importance of that international mission and the ability of the World Service and the people leading the World Service to get support from the rest of the organisation, are clearly things that, as the mechanisms are discussed over the next year or so, need to be in place to ensure that the World Service has the support it needs to be successful.

Q159 Mark Hendrick: Freedom House and The Economist Intelligence Unit have found evidence of a decline in media freedoms worldwide. BBC World Service, in a memorandum published in October, describes "deliberate jamming" of BBC services around the world. Where do you think that the best chances of finding a solution to jamming or censoring of broadcasts lie? Is it in international pressure being brought to bear on countries, or do you see technological solutions as the way forward?

Peter Horrocks: Thank you very much for bringing that issue up; it is a severe one, and particularly acute in Iran. As a brief aside, it is not just the jamming that is a particular problem in Iran; only today I learnt of further efforts made by the Iranians to intimidate the families of BBC Persian television staff members. The families of half a dozen of our staff in London have been intimidated by security officials in Iran, receiving threats that their family members should stop working for BBC Persian. That was a problem in the past and it has recently come back.

As you say, jamming has been really intense, and not only of BBC Persian. BBC World News in Europe was also affected by the jamming, so widespread was it. The BBC held a conference on this issue in New Broadcasting house recently, and the Chair of this Committee kindly attended and spoke about its political importance. The political pressure needs to be maintained on all the countries that are involved in this. The Foreign Office is being helpful with that, working along with Ofcom and European communications regulators to put on pressure. In fact, the Iranians have recently stopped it, possibly because of measures taken by one of the satellite operators responding more to regulatory concerns in France, where that operator is based, and also because of some sanctions provisions made against the Iranians. Those measures may be necessary to put pressure on. In the long run-in five to ten years’ time-technical solutions may provide the answer, but in the interim we need to maintain pressure on the countries, particularly Iran, that most indulge in this.

Q160 Mark Hendrick: Are you investing in technical solutions at the moment?

Peter Horrocks: They are largely being done through the commercial companies that provide the satellite services. They realise that having their satellites vulnerable to interference is bad for their business, so they need to start the work to make their satellites jamming-proof in order to protect their commercial revenues. They are doing that work. We have convened these competitor organisations, encouraged them and made it clear that the world is looking to them to come up with some solutions, in the same way as they are looking at the international regulators to put maximum pressure on Iran.

Q161 Mark Hendrick: Does that include internet services as well?

Peter Horrocks: That is slightly separate issue as the internet works in a different way from satellites; there is only a small number of satellite operators and a small number of ways in which you can stop the signals. The internet works in a much more diffused way.

Q162 Mark Hendrick: You mentioned Iran. Are there any other countries that you would like to add to a list of shame, if I can call it that?

Peter Horrocks: Well, Syria has been involved in it, but it is not clear whether that is the Syrian Government acting on its own account, as it were, or whether that is because of its relationship with Iran. It has also been reported that there has been some jamming coming from Gulf countries, including Bahrain.

Q163 Sir John Stanley: Mr Horrocks, you have just touched on the issue I wanted to raise. In your answer to Bob Ainsworth, you referred to the physical risks that your locally employed BBC world journalists face, particularly in areas of conflict. I want to explore the political risks that those journalists and their families may face. Apart from Iran, could you tell us in which countries worldwide do the BBC’s staff-particularly locally employed staff-face threats, intimidation and persecution attempts to try to prevent them from fulfilling their remit of freedom of expression? Which are the offending countries?

Peter Horrocks: Not all of these are necessarily actions by the Governments concerned; it can be other groups in those countries. However, without going into all the details-I would not want to go into all the details, because there are continuing security situations, which I would not want to identify, where we have had significant problems this year-there have been particular problems this year in Somalia and Syria and in a number of central Asian countries. In China, the BBC Chinese service is not able to operate at all, because we are never granted visas for our BBC Chinese teams. The BBC News English teams are able to operate there, but the BBC Mandarin service is not able to operate in China, for instance. That is not about physical intimidation; it is just about an inability to be able to report. However, Somalia, Syria and parts of central Asia have been the most problematic in the past year.

Q164 Sir John Stanley: In terms of physical intimidation, suppose that one of your journalists wanted to cover a peaceful demonstration in Moscow against the Putin regime, are they likely to face threats from the Russian intelligence service?

Peter Horrocks: Not normally physical threats. There is a background climate of concern there, but the protection that the BBC can provide in terms of supporting its journalists, certainly compared with independent local journalists, means that people look to the BBC as a relatively protected space. I was in Moscow earlier in the year and I asked my teams whether they felt able to report freely and openly, and they do. They are aware that there is the potential, but as things stands, there have not been those direct threats recently.

Q165 Sir John Stanley: Lastly, is there anything further that you would like to see the British Government doing to give your local journalists a greater degree of support and protection in discharging their freedom of expression responsibilities to the World Service?

Peter Horrocks: No, I think the Foreign Office is extremely supportive in all the issues. Sometimes we need to operate separately from the Foreign Office, for obvious reasons-it is not necessarily always helpful for the British Government to be representing our interests-but where we do ask the Foreign Office to be supportive, it is extremely helpful to us.

Q166 Mike Gapes: You referred to the BBC Chinese service not being able to be broadcast in China, but the English language service can be. Is that via radio, as opposed to the internet? Is there a specific problem with the internet? Is the current situation in China easier or more difficult than it was? I know that there was a slight relaxation around the previous Olympic games and a clampdown afterwards, but, given the process of political change in China and an increase in assertiveness in their foreign policy, I am interested in whether it is more difficult now in China to get things through, both by radio and by the internet.

Peter Horrocks: The difficulties are at both ends of the chain. The difficulty that I was referring to was on the news gathering and reporting side so the BBC Mandarin team cannot report from China. With the recent political changes, we were able to send in someone from BBC Vietnamese, interestingly enough, but not from BBC Chinese. The Vietnamese helped us to report from there for that part of the world.

In our broadcasting to China, we no longer have Mandarin radio. It was so jammed so effectively and the listening to shortwave in that country was so small that we stopped those services. The internet is selectively blocked through the filtering of the so-called great firewall of China. I think our content does get through more effectively now, because of social media and the smartness of our users, and that is helping the BBC to be able to get more information in.

BBC World News television, which is available in a number of hotels and has distribution in western-oriented parts of China, is still selectively censored. Someone flicks the switch the moment we mention anything about a human rights issue in China. We decided that it was best to keep the service going and to make it available, even though we know that it is regularly censored, but it becomes quite farcical when China is a significant part of the news and large elements of our news bulletins are blanked out by the Chinese censors.

Q167 Mike Gapes: Is this a specific problem that the BBC has, or do they behave the same way towards other international broadcasters?

Peter Horrocks: They do behave like that towards other broadcasters, but they reserve a special place in their hearts for us.

Chair: Mr Horrocks and Mr Thomas, thank you very much. We have been supporters of yours in the past. We remain supporters of yours. We are quite prepared to offer criticism, but it is always constructive. As you make the transition and as it comes closer and closer, please do not hesitate to refer to us anything that you think we ought to be looking at, as we are as keen as you are that this transition goes through smoothly.

Peter Horrocks: Thank you for your support, Chairman, and for the Committee’s support as well.

Examination of Witnesses

Witnesses: Professor Pamela Gillies, Member, Board of Trustees, British Council, and Martin Davidson, CMG, Chief Executive, British Council, gave evidence.

Q168 Chair: I am pleased to welcome Professor Pamela Gillies, a member of the board of trustees of the British Council, and Martin Davidson, its chief executive, whom we know well. Would you like to make an opening statement?

Professor Gillies: Yes. The chair of the British Council, Sir Vernon Ellis, would like me to make a few comments, if that is acceptable.

I am Pamela Gillies; I have been a trustee at the British Council for four years and I am also the vice-chancellor of Glasgow Caledonian university. Today, I am representing Sir Vernon Ellis who is, as you are aware, in the United States. It is a great pleasure for me to be able to do so.

You know us quite well as an organisation. We are focused on supporting the UK’s prosperity, security and international standing. We were gratified to note that research undertaken by Ipsos MORI and YouGov confirmed that our cultural relations activities grow trust, and where there is trust, organisations and Governments are more likely to do business with the United Kingdom. Our partnership with the UK Government and the grant we receive are critical both to our ability to deliver trust and also to deliver trusting relationships for the UK, and to our ability to attract and work with multinational companies such as Microsoft and HSBC.

We are very proud of our capacity to grow our organisation and to reduce dependence on our grant. However-before you get too excited-our grant is essential, not just because of its ability to fund programmes but because of its link to the FCO and our activity to inform and deliver the UK’s foreign policy agenda. Only the margin generated from our income-growing activities, such as exams and the teaching of English, can contribute to cover costs to replace reductions in grant. It would require entrepreneurial spurts in activity of 10 times the amount of any reduction to make up the shortfall. We are being more efficient and effective in difficult economic times, as I am sure you would expect.

What have been the highlights of the past year? From February to November this year the British Council managed the biggest ever festival of UK arts and culture in China to capitalise on increased levels of awareness of the UK, as a result of the fabulous seed-pod building at the Shanghai expo. We made a substantial contribution to the success of the 2012 Cultural Olympiad, and the International Inspiration programme that we run with UNICEF and UK Sport has touched the lives of more than 12 million children through the power of sport. We are using our experience to contribute to making the Commonwealth games in Glasgow in 2014 a success and to winning the Youth Olympics for Britain in 2018.

My personal highlight is really recognising the lifeline and the educational opportunity that the British Council offers to ordinary folk in difficult circumstances around the world. I was personally very touched when, during the monsoon, I came across a huge queue outside our library in Pune-young and old alike, laughing and joking in the rain, desperate to get into our safe haven, a haven of excitement and learning, as well as a haven of security-and secondly, opening our new English language teaching centre in Bangkok in a shopping mall. Now that is our entrepreneurial spirit in action, underpinning our determination to reach out for Britain, providing opportunities for every willing heart. Thank you very much for allowing me to make my statement.

Q169 Chair: Professor Gillies, thank you very much. Mr Davidson, as Professor Gillies said, 2012 has been a good year and it is important that we capitalise on it and sustain the momentum. You have set that out in some detail in your written evidence, for which I thank you very much. How are you going to keep it going?

Martin Davidson: 2012 has been an exceptional year. We produced some data only this morning about how a number of countries have responded to both the Olympics and the jubilee. The data showed that 80% of the people questioned in India had an improved perception of the UK: they thought that we were more open, that life was more fun here and that the way in which we could organise was exceptional, but, interestingly, their willingness to study here, visit here and do business here was also improved as a result. One of the big challenges for us over the next three or four years is how we capitalise on that and keep it going. For all countries that have been involved in the Olympics, one of the key problems has been how to keep that positive response going in the future. That is important for some of the things that we are involved in. In particular, in Brazil, we have launched a four-year programme bridging between London and Rio to build a stronger arts and cultural relationship through our programmes.

We have the Qatar UK year of culture for 2013, and I was in Qatar last week talking to people there about how we can take that forward. We have agreement with Russia on a UK-Russia year of culture for 2014. There are also three very substantial anniversaries coming up, which I think are going to be important. One is the anniversary of Magna Carta in 2015, which gives us an opportunity to say something quite special about the UK and the UK’s role in building liberal societies around the world. There is the 400th anniversary of Shakespeare’s death in 2016, and the 450th anniversary of his birth in 2014, so we are thinking about how we can bridge those two years. Also in 2014 is the anniversary of the outbreak of the first world war-perhaps not something to be celebrated, but certainly something to be noted. We are working with a number of people here in the UK to think about how we can make the most out of those sorts of anniversaries. Of course, as Professor Gillies has also said, there are the Commonwealth games in 2014. All of these events give us an opportunity to build on the work we have already done this year around the Olympics.

Q170 Rory Stewart: You have described very well the funding challenges in your spending review. To what extent did the Chancellor’s autumn statement introduce more pressures on your budget?

Martin Davidson: We are obviously in discussion with the Foreign Office at the moment to understand exactly how this is going to be implemented. Our understanding of the Chancellor’s announcement of a 1% reduction in the coming year and 2% in the subsequent year is that that will be based on non-ODA activity-as the Committee is aware, a substantial proportion of our grant is now ODA denominated. We also expect that to be implemented proportionately. We recognise that we will have to take a proportion of the cut, but we would expect it to be of the same sort of order as that of the Foreign Office.

More concerning, perhaps, is the position moving into a post-2015 spending settlement. Again, it is not completely clear at the moment what the position will be, but our understanding is that it is likely that that will be a one-year settlement on broadly a reduction commensurate with the four-year spending review period. If that is the case then that would be a further £8 million cut in the British Council’s grant in aid. As Professor Gillies said, the thing that concerns us is the continuing reduction of the total turnover of the organisation. By 2014-15 about 15% of our total income will be from the grant. Maintaining that connection between us and the public service and the foreign policy agenda of this country remains vitally important. We are concerned that if the grant continues to decline as a proportion, that becomes increasingly difficult to maintain.

Q171 Rory Stewart: Are you able within the ODA envelope to increase significantly the amount of ODA-related activity, and in doing so draw down the very substantial funds available to DFID?

Martin Davidson: At the moment our understanding is that the proportion of our grant which is ODA denominated is rising. I think there is more that we can do, but the net impact of that shift is that a significant proportion of the reductions in grant is now falling on our work in the developed world. In effect, the grant going into Europe and the developed parts of east Asia is reducing by 55% over the four-year period. That is a significant challenge to our ability to maintain an effective programme of work in some quite important countries for us. This is not simply countries which are marginal: our work in places like Japan or Korea, and parts of western Europe such as France and Germany, is under huge pressure because of this reduction.

Q172 Rory Stewart: You set very challenging targets for contracts and partnerships, which you missed. You now have targets coming forward on 2015, which are clearly very important to your bottom line. What will happen if you miss those, too?

Martin Davidson: The challenge for us is obviously that the very difficult economic environment, most particularly in western Europe, allied with the rise in the value of the pound against the euro, has made a significant difference to the redeployable resource that we have available to us. At the end of the day, we will not be able to spend money that we are unable to collect. A significant part of the strategy that we have put in place is that we should be able to draw a dividend from our income-generating activity, which we are able to apply to what previously would have been funded through the Government grant. At the moment we are taking something like £3 million a year directly into that; we expect that to rise to £8 million a year by the end of the period. In addition we are investing up to £9 million a year on the development of new programmes, again funded by that. The first call on any shortfall will be not being able to make that investment in the growth of the organisation.

Q173 Rory Stewart: What lessons have you learnt from losing the Chevening contracts?

Martin Davidson: I think there are two important lessons. One has been that we were positing a level of activity which, in the end, the Foreign Office did not want to buy. Some of the work we were doing in maintaining connections with the Chevening scholars, in a very hands-on process of selection and preparing students for study in the UK, was not something which the client, in that case, wanted to pay for, so we were actually putting in place a bid for those scholarships which was significantly higher than the competition. We have to make sure that we are clear about what the client wishes to purchase and make sure that we deliver that. However, I will say that for us as an organisation, the value of a programme like Chevening is our ability to continue to exploit and exercise those relationships built for the good of the country for the future. That remains a very important part of it. That is why we do these programmes: not because of the income they generate, but because they build the purpose of the organisation.

Q174 Rory Stewart: How would you describe the loss to HMG of the loss of that connection between the Foreign Office and the British Council on Chevening? What has been the effect on Britain’s overseas position?

Martin Davidson: I think it is probably a little too early to say. I am clear that the loss to the British Council is that we no longer have a connection with a very important group of people, who, if they are well selected, are going to be important for the future. That is a loss in the effectiveness of the organisation.

Professor Gillies: When I am travelling for the British Council, one of the first questions that colleagues ask me, from Algeria to India, is: "Why aren’t you now managing the Chevening scholarships, because we reckon the British Council is a mark of quality?" I get that question everywhere I go.

Q175 Rory Stewart: There seems to have been a rather significant rise in higher wage earners. We have heard reference to 78 individuals earning £60,000 or more against 63 the previous year, and a slight increase in the number of staff earning more than £110,000 a year. Can you explain the background to that?

Martin Davidson: Indeed. It is part of a conscious strategy by the organisation. Traditionally, we have had a structure and approach that is about an end-to-end delivery of our programmes. That means that we employ quite large numbers of people at relatively low pay. As you know, we have significantly reduced the total number of staff we employ, but that also means that we have to up the professionalism of the individuals we do employ. That means having people who have stronger professional qualifications and who are accepted as expert in their particular field, and it does mean that we are employing people at higher wages. I believe that the overall balance is that the organisation’s total wage bill is significantly lower, but we have fewer people being paid more.

I will give you two examples. Over the last year, we have brought in a new director of education and society, Dr Jo Beall, who is a former deputy vice-chancellor of the university of Cape Town. I believe that she has transformed the way in which we are able to respond to the expectations of higher education organisations in this country. Graham Sheffield, who is our new director of arts, was previously the artistic director at the Barbican, and he is clearly a substantial and significant player in the arts field. Again, I think that he has changed the way in which our arts work is perceived, and, indeed, the quality of the arts work that we are now able to deliver overseas.

Q176 Mr Baron: You suggested earlier that the message from your survey, or certainly one of the key messages, was that trust leads to better business or business opportunities. Most people would have accepted that, with or without the survey. Do I sense that you are trying to get out more of a message to the general public, perhaps to us, and to the Government, if they are listening? In the written evidence you submitted, you start referring to the fact that other countries-China and Turkey-are increasing their spending on so-called soft or smart power. Is there more of a message that you want to give us, but you are just being a bit too polite?

Professor Gillies: We are very polite, but we are not as stuffy as we used to be at the British Council, I can tell you! It’s really important. We are valued and recognised overseas in a way that we are not at home. We would probably both agree that we need to tell our story better at home-what it means to have soft power influence; what it means to work with Microsoft to deliver digital hubs in Africa; offering opportunity to young people who really thought that they would be for ever at the bottom of the heap. It is amazing how well we are received overseas, and it really does get you-it makes you feel quite emotional.

We need to capture those narratives and deliver them in a strong way here at home. I think that we need to convince you that the partnerships we have with some of these multinational companies, or with other public service organisations, are genuinely delivering tremendous amounts, not just in cash. We set Martin terribly tough targets last year. As Mr Stewart said, his organisation didn’t quite reach all those targets, but my goodness, we are ambitious for the organisation. Martin increased the turnover by £46 million in a really tough environment. So we are ambitious and we know where we need to go, but we probably need to tell our story better at home.

Q177 Mr Baron: The majority of the Committee accept the importance of soft power, and a number of us are very critical of Government cutbacks in soft power funding-whether at the British Council or the BBC World Service. May I suggest that you need to be a little more robust in getting the message across here in the UK? In your report, you suggest that, on the back of the 2012 Olympics, we are now near the top-if not at the top-of the soft power rankings however you determine these things. What would be your overriding message to the Government now?

Martin Davidson: My message would be that we must not undervalue soft power. The Olympics have given us an extraordinary boost; they have changed people’s expectations of this country overseas, but that will fade extraordinarily quickly. It is not something that you can rely upon; therefore, you need to continue to invest.

The link between this organisation, the British Council, and the UK’s foreign policy objectives is absolutely critical. If we have one concern, it is that a continuing reduction in our grant-in-aid is going to make that connection extremely difficult to maintain.

We talk in terms of becoming an entrepreneurial public service, and that is what we believe we are. We recognise under any likely future that the British Government will not want to fund an organisation like ours at something like £1 billion, which is where we expect to be in two or three years’ time. But we must maintain that connection; otherwise, we are simply another commercial organisation and not delivering the soft power of this country. That would be a tragedy not just for us as an organisation, but for the UK.

Q178 Mike Gapes: May I take you up directly on that point? Your charter says that your purpose is to advance any purpose which is exclusively charitable. Is there not a contradiction between that statement and the fact that you are increasingly reliant on, as you just said, an "entrepreneurial" public sector approach? That is not exclusively charitable. In a sense, I know that you cannot stay in the circus unless you can ride two horses, but nevertheless the reality is that your charter, the basis on which you are established and the financial position that you have been put into by the Government, are contradictory.

Martin Davidson: I do not think that we believe that they are. Certainly, the point about being an entrepreneurial public service, delivering the charitable purpose of the organisation, requires us constantly to ask the question, "Should we take this particular opportunity to earn income or, in doing so, would that contradict the charitable purpose of the organisation?" There are many charities that earn significant sums of income and apply that. Some do that through a trading arm-running shops or whatever-which is clearly not a charitable purpose, but then they take the profit from that and apply it to their charitable purpose. That is not an approach that we have decided to take.

We believe that, for example, delivering our English language work is directly in the core purpose of the organisation as set out in our charter, but it also allows us to draw income in an effective way from those who can afford to pay for it. Out of that, we are able to maximise further English language work in the public education system.

Q179 Mike Gapes: Have you taken advice on whether your commercial business dealings and activity are consistent with your charitable purposes?

Martin Davidson: We have taken advice on a number of occasions and, indeed, consulted with the charity commissioners on this. We are aware that we need constantly to ask the question, "Is this delivering the core charitable purpose of the organisation?" If it is not, we have a trading arm that we could deliver some of that activity through-as other charities do-and then apply the profit to the charitable purpose. At the moment, the advice we have is that the work we undertake fits within the definition of our charitable purposes.

Q180 Mike Gapes: A related question: the Government continue to give you some funding, but very much emphasise developmental issues. That means that in practice work that you are doing in Europe and East Asia is essentially paid for by the revenue you get from your English language teaching and the commercial side.

You referred to the importance of the brand and the link. Does that mean that in practice it becomes more and more difficult for people to learn about the UK and Britain through the British Council? You are a good provider of English language teaching, perhaps an even better provider than some of your UK-based or American competitors? There is not a British image and a British brand in that sense; going through the British Council is just a good way to learn English.

Martin Davidson: Absolutely at the heart of what we are trying to do in places such as western Europe is a balance between the income-generating aspects of our work and what we would call the cultural relations part. Take France as a case in point. The French Government have decided to emphasise the learning of English within their school system. We have two teaching centres in Paris and we will be expanding to Lyon, Marseilles and Lille in the coming year. We are also working with the French Government to support the development of English language learning within the public education system. That is not something we are paid for; it is provided out of the income we generate from direct teaching. In addition, the income dividend that I was talking about earlier enables us to deliver the arts programme and the broader education programme in that country. The big challenge for us as we move into a more difficult environment in the next two years is to ensure that we do not become an organisation that is purely an income generator, but remain a genuine cultural relations organisation delivering this wider public benefit.

Q181 Mike Gapes: You refer to France, and perhaps you can answer in the context of other countries too. Would an ordinary French man or woman know that this is a British Government brand, as opposed to a way to learn English?

Martin Davidson: It’s a good question. I don’t have firm data, but certainly in the past year we have had people at both the Aix and Avignon arts festivals presenting UK arts as a key part of those festivals. I think that people would see that as the cultural relations element of what the British Council is doing.

Q182 Mike Gapes: Eighteen months ago, we went to Turkey. I was quite struck by how little British Council branding there was in your offices there. There was a lot about the Olympics, but there was very little about the UK. I wonder whether that is a general problem throughout Europe.

Martin Davidson: I don’t think so. Turkey was a particular problem because, as you are aware, we very much retreated behind closed doors following the terrorist attacks in Istanbul. We are now quite clear that we need to break out of that fortress mentality. Turkey is clearly a critically important partner for the UK, and the contribution that we are capable of making is much greater than the contribution we are making at the moment.

At the moment, we are in discussion with the Turkish Government and we are three quarters of the way towards getting an appropriate status that will enable us to become more entrepreneurial and outward-looking than we have been. Turkey is an excellent example of where there will be some capacity for us to earn some income through direct teaching. Clearly, to deliver what we need to do in Turkey, we will need to work with the education authorities on English language, both at basic education level and in universities. We have to put significant effort into growing links between universities in the UK and in Turkey, and the arts continue to be a significant opportunity. There is a big draw from Turkey for more work in that area. The whole area of the development of civil society and its institutions is another aspect. We would expect in the next two years to build each one of those areas for a more effective British Council presence in Turkey.

Professor Gillies: May I give you a little observation? The curriculum that we use to deliver English is absolutely steeped in British culture. I went to Riyadh for one day-it was a challenging day-and turned on the television at 7 o’clock, to hear a young woman talking about learning English with the British Council. This was on their prime time TV. She was telling people to go and see the great British Council film, which was a fabulous rom-com-I think that means romantic comedy-and it was "Twelfth Night" by Shakespeare. That really brought it home to me that we truly are delivering aspects of culture that are being embedded in the way young people think, in even the most challenging cultural contexts.

Q183 Mark Hendrick: May I follow on from what Professor Gillies was just saying? I think it is important that when we deliver anything, particularly in the English language, a particularly British flavour is given to it within the curriculum as well. I would like to focus specifically on English language teaching. There has been some concern particularly from private language organisations that want to deliver-not specifically in Europe but particularly in less developed places-about the possibility of grant income being used to subsidise commercial services such as English language teaching. Would you like to comment on that?

Martin Davidson: We are obviously aware of some of the concerns, some of which have been in the public papers as well from a certain number of organisations. One of the difficulties, to be honest, that I have with this is that I hear a generalised air of concern, but I find it difficult to get the specifics to enable me to examine-

Q184 Mark Hendrick: It is a straightforward question: do you subsidise delivery?

Martin Davidson: No, we do not. We have a very clear policy. It is part of the audit process that we do not subsidise teaching from the grant. Indeed, all the development of new activity within the English side, including that which might previously have been funded through grant, we now fund through income because we recognise that we need to have an absolutely clear line. Our commercial English work and the development of new programmes for English are all funded out of the commercial income of the organisation.

Q185 Mark Hendrick: I am quite encouraged by that. Like many members of this Committee who have travelled around the world and visited British Council establishments here, there and everywhere, I am particularly pleased when I hear local people say, "I use the British Council and I learn English through the British Council." Many people claim that the British Council is far more expensive than other providers. What is your view? I would like to see English language provided on a basis that makes it more open to the masses in countries such as China, rather than something that is a premium offer because the quality of English language teaching with the British Council is perceived to be high. How exactly do you pitch the price at which you offer the lessons?

Martin Davidson: We recognise that we tend to operate in the upper quartile of the market. We are not a cheap offer. That is in part driven by the fact that central to the way in which we teach English is that our teachers are native English speakers-essentially expatriates-and they are extremely expensive. Rather than weakening that commercial offer, we are focusing on how we can provide additional activity for the broader masses through our work. For example, we have just reached agreement with the Thai Government, who are producing a million tablets for their school children. We will supply free a minimum of five hours of English language teaching for each child using those tablets. We now have more than 2.2 million users of our online services for teachers as well as learners of English, so people teaching in the public education system are able to draw down English lesson plans and support to improve their teaching.

We would find it very difficult to operate a low-cost direct teaching operation, and indeed we would be open to a lot of criticism locally, because much of that is delivered by local commercial organisations. What we are doing, however, is building the capacity to deliver a free-to-user service to individuals who want to learn English, particularly online and by supporting the public education systems in different countries.

Q186 Mark Hendrick: What are you doing to teach teachers?

Martin Davidson: One example of that is our work with 11 states in India on delivering trainer training to the teacher training schools, which have now produced something like 750,000 teachers of English. The cost for that: we put £400,000 a year into that programme; the Indian states put in £800,000. That is a £1.2 million programme-over five years-to deliver teacher training. What is important for us is that our effort is going into training the trainers. It is not just putting a British teacher to train a few people; it is being genuinely sustainable for the long-term, to improve English language teaching across the country.

Q187 Sir Menzies Campbell: Forgive me for returning to the question of entrepreneurial spirit. I was on the board of the British Council when Helena Kennedy was in the chair. There was a discussion about creating an arm’s length company to produce resources that could be applied for the charitable purposes of the council.

I understood from your answers to these questions that there was no clear determination in one direction or the other. Some of what the trading company does is used, but there are other activities that you think are better done by the council than the trading company. If the trading company were the sole provider, it would remove the question of whether what you are doing is charitable or commercial, would it not? Have you taken further advice on that recently?

Martin Davidson: It is an area of some discussion with trustees. There has certainly been a view that you put into a trading company the commercial activities, you drive for maximum profit out of those, and then you apply that profit in order to do good. My view and that of the trustee board is that there is a great danger that that drives you into chasing after short-term profit. Overall, the organisation is better at delivering our charitable purpose in a way that enables those who can afford to pay, to pay for it, but is also part of the overall charitable purpose of the organisation.

Q188 Sir Menzies Campbell: Against the background of a reduction in support from public funds, you are going to have to be more entrepreneurial even to maintain current levels of activity.

Martin Davidson: Yes.

Professor Gillies: Yes.

Q189 Sir Menzies Campbell: To some extent, you may have answered these questions in response to other members of the Committee. Are any closures of overseas offices forecast for the immediate future?

Martin Davidson: We have not announced a programme of closures.

Q190 Sir Menzies Campbell: I understand the sensitivity about that. Perhaps you could give me some indication in broad and unspecific terms.

Martin Davidson: There is no question-particularly if what we fear is likely to come from a further reduction into 2015-16-but that our ability to maintain the scale of operation we have, for example, in western Europe is going to come under real challenge. While I think we have some very fine small offices, there comes a point when the cost of being there is simply excessive compared with what you are actually able to achieve.

One thing we are examining at the moment is how we can offer an effective set of services into countries without a physical presence-whether through online, digital or other means. My expectation is that we will move towards a position of reducing the total footprint of the organisation in the next three years.

Q191 Sir Menzies Campbell: The World Service is in the course of adopting a hub-and-spoke approach. Is that something you have considered?

Martin Davidson: We already do have a hub-and-spoke approach. For example, we now have a number of country operations where we employ local country directors rather than UK-based staff, managed out of a central hub. That is particularly the case, for example, in our wider Europe region-in the Caucasus and central Asia-parts of east Asia and also Latin America. Some of that hub-and-spoke is also looking at delivering services that do not require a physical presence in the country.

Q192 Sir Menzies Campbell: Co-location with embassies? Is that something that you are applying your minds to at the moment?

Martin Davidson: Yes. We have made a number of co-locations recently. Not all of them involved us going into embassies. In Johannesburg, for example, the UKTI has come into our offices as a means of balancing out the challenges for both organisations. We are very comfortable with co-locating, but we need to recognise that there are some places where that is difficult, either because of external expectations of us as an organisation or because, to be honest, not all ambassadors are completely happy about having five to 15-year-olds running around their embassy learning English.

Q193 Sir Menzies Campbell: They should be. I am disappointed if Her Majesty’s diplomatic service is not receptive in that regard.

There are other sensitivities, which I think you hinted at a moment or two ago, because the perception in some countries and among some Governments is that the British Council is, as it were, a mouthpiece of British foreign policy. We know and understand that that is quite different and that the analysis is not justified. Does that consideration inhibit what I might describe as a wholesale co-location with embassies?

Martin Davidson: We have to ensure that, first of all, it is acceptable within the local circumstances and people’s expectations of us as an organisation. Secondly, the embassies have to provide an appropriate environment for us. One of the things that we are extremely wary of is going behind high walls and closed doors, because we are essentially an organisation that is open to the public to the extent that we possibly can be.

Q194 Sir Menzies Campbell: And increased security, because of threats of various kinds.

Martin Davidson: Correct.

Q195 Sir Menzies Campbell: May I just quickly deal with one region and one country? How successful has the Young Arab Voices programme been? Are the financial cuts that we have been discussing likely to have an impact on that programme? If so, what kind of impact?

Martin Davidson: We believe that it has been an extremely successful programme. It is providing an opportunity for a substantial number of young people across the Arab world, particularly in North Africa, to, first of all, come together. Secondly, we are working with them on issues such as how to debate. It seems like a remarkably simple thing to do, but actually providing people with the skill set that enables them to disagree with each other, rather than simply taking positions on what they believe, is important.

The programme also enables us to hear from those young people about the expectations that they have of both their own society and the sort of support that they want from other countries. The sorts of things that we hear are demands for English language, for education opportunities, for skills development and for connections with other parts of the world. At the moment, our intention is to protect the work that we do-particularly in North Africa, but also in the wider Middle East-to the maximum that we can. It would be right at the most extreme end of a future funding scenario for us to actually cut those programmes.

Q196 Sir Menzies Campbell: Does the scheme apply to all the countries in the Arab League?

Martin Davidson: It applies principally to the five countries across North Africa.

Q197 Sir Menzies Campbell: Not to the same extent in the Gulf?

Martin Davidson: Not at the moment.

Q198 Sir Menzies Campbell: If you had the money, would you do it?

Martin Davidson: Yes, we would. Indeed, as I said, I was in Qatar last week, and we are talking to some potential partners there to see whether we can also support a widening of that programme.

Q199 Sir Menzies Campbell: Very good. On China, because of the nature of China and the extent to which Government and economics are more integrated, shall we say, than in other countries, do you find any conflict in the role of the Council not prejudicing the strengthening of economic relations, which is part of the UK Government’s policy, while maintaining a proper dialogue and, if necessary, criticism in the realm of human rights?

Martin Davidson: It is an extraordinarily sensitive area, as you are more than aware. You will know, for example, about the work that we did with the London book fair this year in bringing writers from China to the UK. We faced considerable criticism that we had not brought some dissident writers. We were quite proud of the fact that one of the key writers we brought has now been awarded the Nobel literature prize. For us, what is critical is that we do not look at a single event like the London book fair, but at a broader sweep. For example, over this year we have brought Chinese writers to the London book fair, the Hay festival, and the Edinburgh international book festival, and we have brought a number of people who have been much more vocal in criticising the Chinese Government than perhaps those we brought to the London book fair.

Central to our core belief is that exposing influential people in China to a wider and different set of expectations is a key part of what we do. We are not afraid, either, to introduce into China people who are going to be critical of the Chinese Government in public. Indeed, on Friday, I was in Beijing closing the UK Now festival with a one-day conference on the arts and the power of the arts to change people’s expectations of their future. We had speakers from the UK who were quite openly critical of what they saw as aspects of the Chinese Government’s agenda.

Having such conversations in an environment that is relatively safe and acceptable to the Chinese Government or the Chinese participants is important. We would not expect those criticisms to be reported in the Chinese newspapers, but there are certainly people who are having day-to-day conversations and will continue to have those conversations through the sort of work that we do, which enables those criticisms to be both voiced and heard.

Q200 Andrew Rosindell: I have a couple of questions about the activity of the British Council in certain parts of the world, and then I have a final question.

First, Russia. The office in St Petersburg remains closed. Obviously, there have been serious issues with Russia’s acceptance of foreign institutions operating in that country. How are you going to approach this in the coming months and years, and what are your plans to find a way of re-engaging with Russia and perhaps reopening that office and expanding?

Martin Davidson: Over the last couple of years, our relationship with Russia has significantly improved. Members of the Committee will recall the considerable difficulties that we had three or four years ago. The tax issues that arose in that period have now been settled, I am pleased to say, very satisfactorily as far as we are concerned. Essentially, the tax demands were reduced by something between 95% and 98%, depending on which particular ones were in question.

We have had a series of significant high-profile exhibitions over the last year. We had William Blake in Moscow. We had the very substantial Henry Moore exhibition, which opened in February. I was there for the opening. It was the first time I have actually been able to visit Russia for the past five years, and that was in the Kremlin. It was a very significant event. We also had Antony Gormley’s exhibition in St Petersburg. So we have a series of significant arts events now taking place, and the Foreign Secretary agreed with Mr Lavrov to have 2014 as a UK-Russia year of culture. So on the cultural side there are significant advances.

We were also pleased that, when the Foreign Secretary visited Russia, it was also agreed-with the right legal framework, which, of course, is a rather broad-based term-that the Russians would welcome our re-starting teaching and exam work in Moscow. We feel that we have moved to a different recognition and welcome in Russia. We are very clear in all the conversations that we wish to reopen our office in St Petersburg as soon as we possibly can, but we will do so only with a clear and unequivocal acceptance by the Russian authorities that that is both welcomed and approved. We will continue to press for that approval to be given.

Q201 Andrew Rosindell: On to another part of the world: Latin America. Obviously you are aware that Government policy is to do a lot more in terms of trade and reopening diplomatic missions in that part of the world. How is the British Council reacting to that? Having literally just arrived back in Heathrow this weekend, having been in Latin America, it struck me how amazing it is that the English language is not spoken widely at all. This is clearly an area of the world that we need to do a lot more work in, so how will the British Council respond to that challenge?

Professor Gillies: Speaking as a vice-chancellor of a university, we are absolutely delighted that the British Council is managing the Science without Borders programme, bringing 10,000 Brazilian students to the UK to study in a range of our universities. It is a tremendously exciting programme, supported by those in the highest office in Brazil. They are very keen to engage with us and the door has been firmly opened. I was recently in Algeria-an interesting country-where the Minister for higher education said, "We wish we could send some of the 100,000 students that we send to France to British universities. We wish your visa system was a little bit more friendly." The programme that the British Council managed for universities has been hugely powerful as a first step.

Martin Davidson: Brazil is really interesting and we are supporting Universities UK in the management of the programme that Professor Gillies mentioned. Of all the regions, Latin America is the one where we have the least widespread presence.

Q202 Sir Menzies Campbell: That is because we did not have a colonial presence there, is it not?

Martin Davidson: In part, although, unfortunately, we did also make a number of closures 10 years ago. Again, one of the great problems we always have as an organisation is that you never know, when you are making decisions on where you are going to close this year, what will be critically important next year. We could, quite frankly, have been closed in two places in North Africa three years ago, and quite clearly it would have been disastrous had we done so.

We closed, for example, in Bolivia, Peru and Ecuador, and ideally we would not have closed, particularly in Peru. We are looking at the moment at whether we can reopen our office in Peru. We are in negotiations with the Peruvian Government to see whether we can get an appropriate arrangement. We are also currently working with the Uruguayan Government, who have asked us to support a significant programme of development of English language in their school system. I was with the Prime Minister in Brazil earlier in the year, talking to the Brazilian authorities, which have a huge issue around the English language, not least in preparation for both the World Cup and the Rio Olympics, let alone in having students with the capacity to make the most of the Science without Borders programme.

English language is a huge opportunity and challenge and we were delighted that President Santos in Colombia asked to be able to attend and open a regional meeting that we held in November to look at the growth of English language, and teaching English language across the region. It is an area where we need to do more. There are certainly big opportunities and we need to find a more effective way of picking up on them. For that reason, we have just agreed that we will put an additional £3 million into our work in Latin America for the coming year.

Q203 Andrew Rosindell: Just on that, is that likely to happen with Venezuela?

Martin Davidson: We have an operation in Venezuela. It is a very challenging place in which to operate, both politically and from a criminal security perspective. For example, a director was held at knifepoint overnight in her own home only two years ago by raiders. It is a challenging place to operate and we will continue to manage that. It is not the easiest place to expand in the immediate future, but obviously, given the present political circumstances there, it is difficult to know what the opportunities might be in the near future.

Q204 Andrew Rosindell: I have one final, general question, which really follows on from Mr Gapes’s question a little earlier, and is about branding. I have been to British Council offices around the world over the years, and am a huge admirer of the British Council’s work. However, there is one thing that I think needs to be addressed. We talked strongly about the British brand, we talk about British values and all the things that we are promoting, but I have a question here that I feel needs to be looked at: why is it that the branding of the British Council is in some senses so soft that it almost lacks any colour whatever? I feel that there needs to be more clearly British branding about it.

For instance, when I go to British Council offices, I never see a map of the United Kingdom and what the United Kingdom is-what Britain actually is. We talk about "British", but do these people in all these countries know what Britain actually is? Do they know what it is made up of? Do they know about the Queen? Do they know about all those sorts of things? There is no flag; there is nothing that is distinctly British about British Council offices. How would you respond to that? Of course, there is soft power, and you do not want to overdo it, but when you walk into a British Council office, you have almost nothing that indicates anything that is distinctly British. Even the logo is these four nicely rounded circles, but nothing that is red, white and blue. It is completely bland. Isn’t it time that the British Council was more distinctly British?

Martin Davidson: I would challenge you on how British we are. Our very name is quite clearly a branding. If you look at our teaching centres, in virtually all of them you will see a series of posters, which we repeat every year in different formats, of great British icons-quite clearly so. We have also bought in, with financial contribution, to the Great campaign, and many of our offices are using that: all our public-facing computers, for example, have screensavers that are Great campaign screensavers. I hear the challenge and I accept that we need to be very clear that we are a British organisation and we are representing this country in all its manifestations. We have huge pride, for example, that the Queen is our patron, and that is something that we constantly refer to.

Q205 Andrew Rosindell: Is there a portrait of the Queen in British Council offices? When you walk in can people see that?

Martin Davidson: Yes.

Andrew Rosindell: There is?

Martin Davidson: Yes.

Q206 Andrew Rosindell: I have never seen one.

Martin Davidson: I am surprised. Certainly I would expect there to be a portrait.

Andrew Rosindell: I am delighted to hear that.

Q207 Sir Menzies Campbell: Can we get posters of Jessica Ennis and Mo Farah, who represent the quintessence of Britishness, at least as demonstrated this summer?

Martin Davidson: Absolutely. There is no question but that just the Paralympics alone completely changed the way that people thought about this country and the way in which we are an open and welcoming society for people who come from a whole variety of backgrounds.

Professor Gillies: The key thing is that we are not delivering to the countries we are working in, we are learning with them. We actually learn a lot from the colleagues we work with, from India to Bangladesh to South America. So we have to be slightly cautious about how we push the brand, remembering that the brand is encapsulated in the curriculum content of everything that we do. But I think it is a good point.

Q208 Rory Stewart: In the three minutes remaining, what has been the impact of the Government’s immigration policy on your ability to exploit these wonderful educational and business opportunities for all these people who you say are now desperate to come to the UK?

Professor Gillies: Well, I had a really uncomfortable meeting with the British ambassador to Algeria, Martyn Roper, and the Minister for Higher Education of Algeria just last Monday. He perceives us to be unfriendly. We are actually not unfriendly but he definitely perceives us to be. I think it is seriously damaging our ability to work with countries, and not just in higher education-it is poisoning a wide range of activities that we are engaged in. We need to work hard to turn around those negative perceptions.

Martin Davidson: There is no doubt that, over the last year, issues like London Metropolitan university have had a very deleterious effect on the sense that the UK welcomes foreign students, most particularly in India. The other aspect is that, very often, statements which are made for domestic consumption in this country, appear on the front pages of The Times of India or the New Straits Times rather sooner than they do on the front page of The Times in London, and they are read as Government statements about how welcome foreign students are to this country.

Q209 Chair: Is that purely because of visas?

Martin Davidson: Purely because of visas. There is a sense that foreign students are not welcome. That is why we very much welcomed the statement made by the Home Secretary last week in terms of there not being a cap. Many countries believe there is a cap on visas, and many people believe that the systems are designed to make it difficult to come here. Much of my colleagues’ time is taken up trying to convince local authorities, agents and other organisations that that is not the case.

Chair: Mr Davidson, Professor Gillies, thank you very much. That is very helpful. We wish you well, and we remain your supporters.

Prepared 27th December 2012