APPENDIX 1
Memorandum submitted by The British Council
INTRODUCTION
This paper has been written in response to the
Foreign Affairs Committee's request for a memorandum in connection
with its inquiry into the FCO's Annual Report. The inquiry is
taking place against the background of the 2000 Spending Review.
This paper focuses, therefore, on the British Council's submission
for the Review. It takes forward the issues raised in the Council's
evidence to the Committee in its inquiry into FCO resources and
summarises the main features of the Council's proposals for additional
funding. It also addresses a number of specific questions raised
by the Committee (see Annex A).[1]
CUTS IN
FUNDING
The British Council, as the Foreign Affairs
Committee recognised in its inquiry into FCO resources in 1999,
is seriously under-funded. This is a result both of cuts in government
funding and of growing demand for our services. The Council currently
has a grant-in-aid of £136 million. In the mid-90s, however,
the grant-in-aid was worth 13 per cent more in real terms. Following
a sharp reduction in its grant-in-aid in 1996-97, UK posts were
cut by 26 per cent and the Council went through a major re-structuring
programme. The 2 per cent increase which we received in the Comprehensive
Spending Review arrested the decline in our grant-in-aid, but
only went part of the way towards restoring its purchasing power.
Since then, our operations in the developing world, especially
sub-Saharan Africa and South Asia, have been hit by a 55 per cent
drop (from £94 million in 1996-97 to £42 million in
2000-01) in the volume of contract management work undertaken
on behalf of DFID, following changes in aid policy.
GROWING DEMAND
FOR COUNCIL
SERVICES
The pressures on funding come at a time when
the Government attaches greater importance to public diplomacy
than ever before. The Council is playing a key role in taking
forward the work of FCO Panel 2000 (for example, by measuring
perceptions of the UK among young people overseas). We are spearheading
the marketing campaign launched by the Prime Minister last year
to attract more international students to study in the UK and
are working with DCMS and others on creative industries export
promotion. We are also making a significant contribution to the
Government's efforts to promote good governance and civil society
through our work in human rights.
OVER-STRETCH
The Council currently has offices in 110 countries
(compared with 79 in 1979) and with FCO encouragement (but no
additional funding), we will shortly be establishing operations
in Iran and Libya. In response to government priorities, the size
of the Council's overseas network has increased by 40 per cent
during the past 20 years, whereas the value of the grant-in-aid
went up by just 10 per cent in real terms over the same period.
The effect of this expansion, combined with the growing demand
for the Council's services, has been to stretch our funding ever
more thinly. Operational programmes are being constantly squeezed
and insufficient investment in buildings and IT threatens to undermine
the quality of our work and the image which we project of the
UK. We also lack the resources to develop and re-skill our staff
adequately to meet changing needs (for example, in marketing and
IT). We are "running on empty".
CHANGE PROGRAMME
However, we have not been sitting back waiting
for additional funding. The Council has initiated a major process
of change. Following the appointment of a new Director General
and senior management team, the Council has embarked on a thoroughgoing
review of its operations with the aim of maximising its effectiveness.
The review will involve re-defining the Council's geographical
priorities to focus resources not only on countries which are
important to UK interests, but also where the Council is most
able to achieve impact. It will lead to a significant re-shaping
of the Council's operations overseas with greater emphasis on
reaching younger audiences and developing IT-based services to
complement the Council's traditional programmes. The review will
also set ambitious targets for reducing expenditure on premises
and other overheads to enable us to move more money from support
costs into programmes.
IMPROVING EFFICIENCY
In the UK, we are continuing to keep up the
pressure on costs. Corporate overheads have been reduced by 23
per cent since 1995-96, with other efficiency savings being made
by contracting out services and through increased use of IT. In
addition, we have commissioned a strategic review of our headquarters
accommodation which should enable us to achieve substantial savings
through more efficient use of premises and the introduction of
new ways of working.
GENERATING INCOME
We are also actively seeking other sources of
funding. Already income from teaching English, administering British
examinations and managing development contracts accounts for 66
per cent of our turnover—far more than that of our French
or German analogues. We are building relationships with a range
of public and private sector partners which enable us to extent
our operations. For example, BP Amoco is co-funding two new centres
in Sakhalin and Irkutsk as part of our outreach programme in Russia.
We have set challenging targets for private sector sponsorship
and we also have plans to recruit professional fundraising staff
to increase our income from non-government sources. Despite these
efforts, however, the problem of over-stretch remains.
2000 SPENDING REVIEW
Our proposals for the 2000 Spending Review focus
on the need to re-engineer the Council's operations for the 21st
century. They do not directly address the issue of over-stretch—the
Review process requires bids for additional funding to be justified
in terms of additional outputs—but the submission nevertheless
includes a number of proposals which, if successful, will enable
us to begin the process of transforming our overseas operations
and to take advantage of the opportunities afforded by new technology
to reach a wider, younger audience.
The submission is built around four themes:
— reputation—enhancing the UK's
reputation for creativity and innovation
— exports—increasing the UK's
share of international markets for education and the creative
industries
— Europe—strengthening the UK's
role in Europe
— reform—promoting reform and
good governance
The following table provides a summary of the
Council's proposals for additional funding. More detailed information
about each proposal is given in the attached paper.
BRITISH COUNCIL 2000 SPENDING REVIEW PROPOSALS
|
| Reputation | 2001-02
| 2002-03 | 2003-04
|
|
| Knowledge and Learning Centres | 0.6
| 4.4 | 7
|
| Virtual communities | 0.5
| 1 | 1.5
|
| Changing perceptions | 1
| 2 | 2
|
| Projecting UK Science and Technology | 0
| 0.7 | 0.7
|
| Strengthening ties with Iran | 0.25
| 0.5 | 0.75
|
| Building links with Libya | 0.25
| 0.5 | 0.5
|
| Central Asia & South Caucasus | 0.25
| 1 | 1
|
| Sub Total | 2.85
| 10.1 | 13.45
|
| Exports | |
| |
| Increasing UK share of students | 1.5
| 3 | 3
|
| Expanding the UK's outreach in China | 0
| 0.2 | 0.15
|
| Education exports promotion | 0.35
| 1.6 | 1.6
|
| Creative industries promotion | 0
| 2 | 2
|
| Sub Total | 1.85
| 6.8 | 6.75
|
| Europe | |
| |
| Re-shaping operations in West Europe | 3
| 3 | 3
|
| Promoting stability in South East Europe |
0 | 2
| 2 |
| Strengthening ties with Russia | 0
| 1.7 | 1.8
|
| Supporting EU enlargement in Central Europe
| 0 | 1
| 1.7 |
| Sub Total | 3
| 7.7 | 8.5
|
| Reform | |
| |
| African Young Leaders | 0
| 1.5 | 2
|
| South Asia reform links | 0
| 0.41 | 0.8
|
| Supporting reform in Latin America | 0
| 0.6 | 0.9
|
| Supporting democracy in Indonesia | 0.65
| 0.6 | 0.5
|
| Sub Total | 0.65
| 3.11 | 4.2
|
| Joint Proposal with BBC World Service
| | | |
| Centres for English Language Learning Support1
| 2.1 | 4.2
| 4.2 |
|
| Total (£m) | 10.45
| 31.91 | 37.1
|
|
1 Council element 75 per cent of total.
WORKING IN
PARTNERSHIP
In addition to working closely with the FCO, the Council
is committed to joined-up government. A common thread which runs
throughout the proposals, therefore, is working in partnership
with other government departments and agencies:
— with the DfEE and education departments in Scotland
and Northern Ireland, on the Prime Minister's initiative to attract
international students to the UK;
— with DCMS, on creative industries export promotion;
— with British Trade International, on education
export promotion.
A key learning element of our submission is a proposal to
establish Centres for English Language Learning Support (CELLS)
in six regions of the world with the BBC World Service. This initiative
seeks to improve the English language skills of young people overseas
by drawing on the complementary strengths of both organisations—bringing
together the Council's network of teaching centres and experience
of ELT work overseas, with the World Service's broadcasting and
programme-making skills. This is a textbook example of joined-up
government.
REACHING A
YOUNGER AUDIENCE
All the proposals reflect a greater emphasis on reaching
a wider, younger audience. In the past, the Council has primarily
targeted the authority generation. However, if we are to change
perceptions of the UK and influence the decision-makers and opinion-formers
of the future we must give increased attention to the successor
generation. Shaping their perceptions of the UK will be crucial
for the UK's long-term prosperity and security. Our work in education
and ELT gives us unrivalled access to this audience and provides
the UK with an opportunity to change for the better the lives
of millions of young ambitious people around the world by providing
access to information, knowledge and skills through the Council's
global network. For example, our proposals for re-shaping the
Council's operations in Western Europe are geared towards reaching
this younger, wider audience. The opening of cyber-centres in
Russia and the creation of a youth internet portal will also be
aimed at enhancing the UK's reputation among young Russians.
EXPLOITING THE
POTENTIAL OF
INFORMATION AND
COMMUNICATIONS TECHNOLOGY
Information and communication technology (ICT) is the key
to modernising the Council's services and reaching this new audience.
To date, given the constraints on our funding, our investment
in ICT has been barely sufficient to meet the Council's basic
infrastructure needs. We need to develop our web-based services
and other ICT products if the UK is to remain a credible force
in cultural relations. Our proposals to establish a network of
knowledge and learning centres using ICT and other media will
transform the Council's traditional library services. These centres
will be targeted at young professionals and will provide access
to the best UK information resources, support for the delivery
of UK distance learning courses and facilities for video-conferenced
links and seminars. In developing countries, they will be linked
into the World Bank's global knowledge initiative. The centres
will also support virtual communities which share ideas and information
on the web and will provide opportunities for target audiences
overseas, especially young people, to engage with their UK counterparts.
CASE FOR
ADDITIONAL FUNDING
The Council is committed to projecting modern Britain and
enhancing our reputation in the world by capitalising on the UK's
strengths in education, ELT and the arts. However, a step change
in the Council's funding is needed if the UK is to continue using
cultural relations imaginatively as a vehicle for influence. Maintaining
the same level of funding would give us no option but to reduce
our overseas network and cut operational programmes. Our proposals
for additional funding total £10.5 million in 2001-02, £32
million in 2002-03 and £37 million in 2003-04. This is consistent
with the evidence which we gave to the Foreign Affairs Committee
last year, where we made the case for a £30 million increase
in real terms in our grant-in-aid. Given the funding constraints
under which we currently operate and the opportunities to achieve
greater impact through the Council's work, we believe strongly
that these proposals are both reasonable and in the UK's interests.
The FCO has recommended that the Council should receive the
same percentage increase in the Spending Review as the FCO. The
logic of this approach, however, is questionable. It implies that
the needs of the two organisations are identical. The Council
has reached the point, however, where significant investment is
urgently required to modernise the delivery of its services. We
suggest, therefore, that our proposals should be considered on
their merits, not linked arbitrarily to whatever increase is awarded
to the FCO.
The percentage increase argument also ignores the growing
importance of public diplomacy. The French and German governments
already spend two and a half times as much on cultural relations
as the UK. The communication of the UK's interests and values
beyond governments to foreign publics is assuming greater importance.
We need to find ways of making friends and influencing people
across a much wider section of the population in other countries,
especially young people. This argues for greater investment in
public diplomacy—in the Foreign Secretary's words a "re-balancing"
of resources.
BENEFIT TO
BRITAIN
The Council's work brings direct benefits to Britain. Earnings
from international students, for example, amount to £1.5
billion a year, while the creative industries account for an estimated
£7 billion a year in exports. Cultural relations also play
an important role in creating a positive climate overseas for
UK trade and inward investment. The benefits, however, are not
purely economic. The Council's work enhances the UK's reputation
in the world, challenging outmoded perceptions and reaching out
beyond governments to foreign publics to communicate our ideas
and values. By building long-term relationships based on mutual
respect and trust, the Council plays a crucial part in supporting
UK efforts to strengthen the international community while advancing
our national interests and reputation. We believe that a step
change in funding for the Council at this point will secure long-term
political and economic benefits for the UK.
1
Evidence p 47. Back
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