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12.12 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley): As the Minister responsible for the British Council, it is my privilege to reply, on behalf of the Government, on the subject chosen by the hon. Member for Manchester, Central(Mr. Litherland)--the British Council. I am very grateful to the hon. Gentleman for initiating the debate, and for
giving me the opportunity to make clear the Government's appreciation of, and strong and continuing support for, the British Council.
As my noble Friend Lord Chesham said in the other place on 1 February 1996, the council is an integral and essential part of the United Kingdom's diplomatic and aid effort, and has been working in support of British interests overseas for more than 60 years.
Hon. Members on both sides of the House have spoken in glowing terms of the council's activities in a broad range of areas. I do not want to pick any particular speech. I shall mention the sacrifice of the hon. Member for Glasgow, Central (Mr. Watson); I believe that he is speaking on his birthday, and it cannot but be a great tribute to the British Council that he should give his time for that cause.
The scope of the council's work is indeed impressive: from promotion of the English language to the recruitment of overseas students, from high-tech information services to the promotion of development and good government, from scientific collaboration to the contemporary arts. All those activities have something in common: by highlighting British excellence and creativity, they enhance our prestige, support our exports and make long-term friends for the United Kingdom. In doing so, they complement and contribute to the work of the Foreign and Commonwealth Office in diplomacy, overseas aid and export promotion.
During the past 10 months, I have been most impressed by the council's operations, and have tried to visit them in every country I have been to. In Vietnam, the council is teaching English to officials who need English so that the country can play a full role in the Association of South-East Asian Nations. The Vietnamese Government were warm in their appreciation when we discussed the subject.
In Japan--to which the hon. Member for Gateshead, East (Ms Quin) referred--the council's activities support and underpin our important political and economic relationship and help to satisfy the hunger of a discriminating Japanese public for the best that is available in the arts and sciences. They succeed so well that the council's input often triggers a much larger contribution from the Japanese themselves, to which the hon. Lady also referred.
In India, I was especially struck by the council's network of libraries, which are an important source of information and expertise to their very large membership--people who are working hard to transform that country, already the world's largest democracy, into a developed and prosperous state. The libraries are also used by students seeking information about study in the United Kingdom. In some cities where we have no official commercial presence, the council's Department of Trade and Industry-funded overseas business centres provide facilities and contacts for visiting British business men and women.
The hon. Member for Linlithgow (Mr. Dalyell) asked where the council stood in the list of priorities for Government resources. We have recognised the council's valuable role in public diplomacy and development by substantially increasing its grant in aid, which we have increased by more than one third in real terms since we took office--between 1979-80 and 1995-96. That, together with internal efficiency savings and an expansion
of non-grant activity, has enabled the council to expand its operations massively. It now has more than twice as many officers as, and operates in a third more countries than, in 1980.
The hon. Member for Torridge and West Devon(Miss Nicholson) said that we now operate in 109 countries, and she is right, but she did not say what the growth had been, because the council now has 229 offices in 109 countries, as against 108 offices in 79 countries in 1980. That extremely good record of expansion has been achieved under Conservative Governments.
We have been especially pleased that the council was able to seize opportunities opening up in central and eastern Europe after 1989, capitalising on the good will created and the friends made as a result of its persevering work during the dark days of communism. In the subsequent years, the council has helped those countries build up their English language teaching capacity and restore a flourishing network of contacts with fellow professionals in the west. The council's resource centres have also given the United Kingdom a high profile in many cities throughout the region.
Mr. Dalyell:
Will the Minister give way?
Mr. Hanley:
I am sorry: I really must place on record what I want to say, and I am sure that the hon. Gentleman, with his customary courtesy, will allow me. If I have time towards the end, I may allow him to intervene.
I say all this to emphasise that the Government recognise and very much appreciate the council's work throughout the world. Against that background, I turn to the subject that most interests hon. Members today--the reductions in the council's grant in aid during the next three years.
Hon. Members will know that the council receives two separate grants in aid, one from the diplomatic wing of the FCO and the other from the ODA. The diplomatic wing at present provides about three quarters of the total.
As hon. Members will also recognise, pressure for further efficiency means that the last public expenditure round was extremely rigorous, and all Government Departments have been involved in a drive to cut costs and sharpen priorities. In the public expenditure survey settlement, the FCO diplomatic wing took a cut of about 7 per cent. in its baseline in each of the three years covered by the survey. As a result, the diplomatic wing budget is scheduled to fall by about 12 per cent. in real terms over the period.
As it is Government policy to strengthen, rather than reduce, the promotion of British interests overseas, that represents no mean efficiency challenge. In those circumstances, inevitably the council could not be exempt from the need to make further savings.
In deciding the grant in aid for the council, the diplomatic wing took account of the fact that the council's baseline was already declining following the 1994 PES, and sought to lessen the impact of the 1995 settlement. Accordingly, we passed on to the council only part of last autumn's cut, imposing an extra burden on the diplomatic wing. In that way, we ensured that the percentage reduction in the diplomatic wing's grant in aid to the
council over the three-year PES period was broadly in line with the reduction in the diplomatic service's budget as a whole.
That was a tribute to the value that we attach to the council's work, given the pressure for extra effort and resources for other FCO activities, including the promotion of exports and inward investment, consular work and immigration control overseas, diplomacy and negotiation--all of which are crucial to the prosperity and well-being of the people of this country.
As for the ODA grant in aid, hon. Members will be aware of the pressure on the aid budget, especially given the inexorable rise in our binding commitments to the multilateral agencies and European Union programmes. Within the reduced bilateral aid budget, Ministers' first priority remains the country programmes, which provide direct assistance to those developing countries working to put in place sound development policies and good government. That placed additional pressure on other parts of the aid budget. The real terms reduction in the British Council grant in aid was comparable with that for non-country bilateral programmes as a whole.
However, the council contributes to development, not only through its grant-in-aid work, but through contract work under the bilateral aid programme, for which it competes with other British suppliers. The council has a good record in winning such business. Overseas Development Administration contracts will account for nearly £100 million of the council's turnover this year. We expect that project work to continue, and hope that the council will also be able to promote development increasingly through the management of multilateral aid programmes.
The Government welcome the fact that, in the present circumstances, the council has chosen to take a radical look at all its operations in order to focus on what is essential and what might be done differently. It has concluded that its most valuable asset is its network of overseas offices, which has enabled it to build up extensive contacts with overseas Governments and organisations. It has decided--rightly, in the Government's view--that the first priority must be to preserve that overseas network as far as possible.
The corollary to that is that there will have to be radical changes in the United Kingdom. How the council chooses to restructure its operations in those circumstances is largely a matter for its management. We understand that its management propose to make greater use of specialist advisers from outside the council rather than in-house expertise, and to concentrate on front-line functions by making reductions in support staff--both proposals are very much in line with trends in other organisations in both the public and private sectors.
The hon. Member for Manchester, Central and other right hon. and hon. Members have drawn attention to the staffing reductions that that process will entail--on top of reductions that have taken place over the past few years. The council has already embarked on a new voluntary early retirement programme. Some compulsory redundancies will almost certainly be required, too, although the actual number is not yet known. That is always a painful process, especially with staff who have given loyal and committed service to a cause in which they strongly believe.
We naturally regret the distress that the process will inevitably cause to those involved. We understand that staffing reductions are likely to occur in both London and Manchester, but that the council is most unlikely to withdraw from Manchester completely. I have visited the office, and share the admiration that has been expressed for it in the House today.
The Government recognise that, even after restructuring in the United Kingdom, the council will need to make some adjustments to operations overseas. The council is currently discussing its plans with the Foreign Office, to try to ensure that the impact on our interests overseas is kept to a minimum. The Government do not want to see the closure of British Council posts.
Studies are therefore being undertaken with the aim of avoiding closures. The results of those studies should be available later this month, and I cannot today anticipate the outcome, but I believe that the results will emerge before the end of the month. We do, however, recognise the council's urgent need for clarification of the funding prospects.
Studies are also being undertaken by the efficiency unit, which is looking at the council's proposals for dealing with the projected decline in the grant in aid following the 1995 PES settlement, including redundancy plans, and its approach to improving the efficiency and effectiveness of its operations at home and overseas. The council is co-operating fully with the efficiency unit in its work. We expect that report by the end of this week.
The council is, of course, much less dependent on the grants in aid than it used to be, with nearly half its income now drawn from revenue-earning activities. The council's English teaching operations in particular have expanded rapidly, spreading the highest professional standards and attracting an influential clientele in a wide range of countries.
I have visited many posts throughout the world and seen English teaching in action--it is popular, and there should be more of it. We are delighted that the council, together with other organisations involved in English teaching, is taking advantage of the huge demand for English overseas to promote the language at no cost to the taxpayer. I agree with those right hon. and hon. Members who have today said that they want English English, not some other version of English, to be taught around the world.
The council's direct teaching operation is entirely self-financing--there is no question of subsidy from the grants in aid. People sometimes level criticism at the British Council because they believe that it subsidises the teaching of English, and is unfair to those who teach English in the private sector. I can assure the House that I have looked into the matter, and that the council's teaching of English is on a very fair cost basis--there is no subsidy from grants in aid for it.
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