Select Committee on Foreign Affairs Appendices to the Minutes of Evidence


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


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2000
Prepared 4 July 2000