Annex A
Answers to Questions from the Foreign
Affairs Committee
1. WHAT FUNDING
ASPIRATIONS DO
YOU HAVE
FOR THE
COMPREHENSIVE
SPENDING REVIEW?
HOW RECEPTIVE
HAS THE
FCO BEEN TO
THESE ASPIRATIONS?
The Council has submitted proposals for additional
funding totalling £10.5 million in 2001-02, £32 million
in 2002-03 and £37 million in 2003-04. If successful, the
additional funding would increase the Council's grant-in-aid to
£170 million—a figure consistent with the Foreign Affairs
Committee's recommendation that the Council's budget should be
increased to £160 million in real terms by 2002-03.
The relatively modest increase proposed for
2001-02 is partly to allow for the phased implementation of new
operational programmes, but is also in line with Treasury guidance
that increases in the first year of the Spending Review period
should be kept to a minimum.
With one exception—the Council's proposals
for work in human rights—the FCO has forwarded the Council's
Spending Review submission to the Treasury in its entirety. The
Council agreed that its proposals for work in human rights should
be incorporated into the FCO's bid for a doubling of the FCO Human
Rights Project Fund on the understanding that the Council would
have access to any additional funding which might be made available.
The FCO has described the Council's bid as a
"well-constructed and imaginative" set of proposals.
However, the FCO has also made it clear that it regards the scale
of the bid as unrealistic and has indicated that it will be recommending
to the Treasury that the Council should be given a proportionate
share of whatever increase is awarded to the FCO.
The Council's view is that this approach is
illogical. It implies that the needs of both organisations are
identical and that the opportunities for new work are on a similar
scale. We believe that the proposals should be considered on their
merits and that the outcome of the Spending Review should not
be based on an arbitrary arithmetic formula unrelated to need
or opportunity.
Where relevant, other government departments
have indicated their support for the Council's proposals. The
DfEE has endorsed the Council's proposals for additional funding
for the Prime Minister's initiative on international students,
while the Department of Culture, Media and Sport has welcomed
the Council's bid for additional funding for creative industries
export promotion.
2. COULD YOU
RE-PRESENT
THE FIGURE
IN TABLE
12 OF THE
FCO ANNUAL REPORT
IN REAL
TERMS?
Please see the following table, which represents
the figures in 1999-2000 prices using Treasury deflators as at
March 2000.
Table 12
THE BRITISH COUNCIL
BUDGET 1996-97 to 2001-02
Real terms, 1999-2000 price base £M
| |
1996-97 outturn | 1997-98 outturn
| 1998-99 outturn |
1999-2000 estimated outturn
| 2000-01 plan | 2001-02 plan
|
| Treasury deflator (March 2000) | 0.9189659
| 0.9445659 | 0.9756098
| 1 | 1.0224976
| 1.04805854 |
| Total turnover | 469.8
| 438.9 | 436.7
| 425.3 | 411.7
| 404.7 |
| Grant related contract activity | 50.2
| 52.6 | 52.5
| 52.1 | 48.7
| 48.3 |
| Development and training contract activity |
104.8 | 92.3
| 90.5 | 75.0
| 63.2 | 53.4
|
| Total contract and agency | 155.0
| 144.9 | 143.0
| 127.1 | 111.9
| 101.7 |
Income
FCO grant-in-aid | 103.6
| 101.8 | 130.1
| 133.1 | 132.7
| 132.1 |
| DFID grant-in-aid | 37.8
| 31.5 | —
| — | —
| — |
| Restructuring grant | 7.8
| — | —
| — | —
| — |
| DFID grant to fund for International Cooperation in
| 3.3 | 3.1
| 2.7 | 3.0
| 2.9 | 2.9
|
| DfEE, DENI and SOED grants | 5.1
| 5.0 | 5.3
| 5.1 | 5.0
| 4.9 |
| Government grants | 157.6
| 141.4 | 138.1
| 141.2 | 140.6
| 139.9 |
| Grant related income | 27.3
| 27.4 | 31.8
| 29.8 | 28.7
| 28.2 |
| Educational and development services income |
129.9 | 123.8
| 122.5 | 125.7
| 129.1 | 133.4
|
| Central services income | —
| 1.4 | 1.3
| 1.5 | 1.5
| 1.4 |
| Income from services | 157.2
| 152.6 | 155.6
| 157.0 | 159.2
| 163.1 |
| Total income | 314.8
| 294.0 | 293.7
| 298.2 | 299.9
| 302.9 |
Expenditure
Grant related expenditure
| 159.0 | 157.1
| 149.5 | 152.9
| 151.6 | 150.9
|
| Educational and development services expenditure
| 107.6 | 108.6
| 108.4 | 113.8
| 115.5 | 119.3
|
| Central services expenditure and investment |
36.6 | 29.5
| 26.9 | 30.7
| 30.0 | 29.8
|
| Total expenditure | 303.2
| 295.3 | 284.8
| 297.4 | 297.1
| 299.9 |
3. WHICH ACTIVITIES
WOULD THE
BRITISH COUNCIL
LIKE TO
DEVELOP FURTHER
IF ITS
INCOME WERE
TO INCREASE?
WHAT WILL
SUFFER IF
YOU DO
NOT RECEIVE
THE ADDITIONAL
EXPENDITURE YOU
HAVE REQUESTED?
The attached paper "Proposals for additional funding"
summarises the activities which the Council would like to develop
further if its funding were to increase.
If the Council does not receive the additional funding we
have requested, we will need to re-prioritise our activities and
decide which new programmes should be funded at the expense of
existing work and which should be dropped. In some cases, we are
already committed to programmes—for example, the establishment
of Council operations in Iran and Libya, and the Prime Minister's
initiative on international students—and we will need to
find the resources from our existing budget to fund these activities.
This will inevitably lead to cuts in other programmes and may
also result in the closure of Council directorates in some countries.
In our Spending Review submission, we have made it clear
that no increase in the Council's budget (ie maintaining the grant-in-aid
at its present level in cash terms) would have very serious consequences
for the Council. As a minimum, we estimate that this would oblige
us to withdraw from as many as 18 countries and close regional
offices in a further 16 countries by 2002-03. In practice, however,
given the urgent need to release funds to modernise our services
and re-shape our operations in many parts of the world, the impact
could be even more severe.
4. WHAT FINANCIAL
LEEWAY DO
YOU HAVE
TO RESPOND
TO NEW
REGIONAL CRISES?
The short answer is, very little. Following the Balkans war,
for example, we managed to find £200,000 from other budgets,
mainly in Central Europe, to fund a modest operation in Kosovo.
This was supplemented by non-recurrent funding from the FCO and
DFID. Our programmes focused on education, support for English
language teaching and information. However, we do not have the
resources to fund a sustainable, long-term presence in Kosovo
and this year have had to reduce our operation and withdraw the
UK-based director. We risk, therefore, raising expectations which
cannot be met and could easily generate more disappointment and
opprobrium if we eventually have to pull out than if we had not
gone in at all.
Our proposals for the 2000 Spending Review include a bid
for additional funding to strengthen the Council's operations
in SE Europe, including Kosovo.
5. WHAT ATTEMPTS
ARE BEING
MADE TO
INCREASE REVENUE
FROM NON-GOVERNMENT
SOURCES? HAS
THE BRITISH
COUNCIL REACHED
THE LIMIT
OF INCREASES
IN THIS
AREA, WITHOUT
ITS INDEPENDENCE
BEING COMPROMISED?
The Council has a successful track-record of increasing revenue
from non-government sources and is committed to identifying new
sources of funding for its activities which are compatible with
its purpose and do not compromise its status as a charity and
non-profit making organisation.
The Council's income falls into three broad categories:
— grant-related income (eg library fees and sponsorship);
— income from individual customers (eg English students
and exam candidates);
— income from institutional clients (eg DFID, the
EU, foreign governments etc)
Grant-Related Income
Income from traditional grant-related sources such as library
fees has declined in recent years with the phasing out of lending
library services in some parts of the world. As yet, income from
other overseas sources and IT-based information services remains
limited, though there may be scope for increasing the latter in
future. In the UK, the Council's Accreditation Scheme for ELT
schools and Global Education and Training Information Service
for UK education exporters operate on a full cost-recovery basis,
while universities and other subscribers contribute more than
half the cost of the Council's Education Counselling Service.
The main area of potential growth for grant-related income
is private sector sponsorship. The Council has set itself ambitious
sponsorship targets for the next four years:
|
| Results | Targets
|
|
| 1998-99 | 1999-00
| 2000-01 | 2001-02
| 2002-03 | 2003-04
|
| £8.5 million | £10 million
| £12 million | £15 million
| £16 million | £17 million
|
| +17.6% |
+20% | +25%
| +6.7% | +6.3%
|
|
These targets have to be seen against an environment in which
UK charities have seen a 15 per cent pa decline in income over
the last three years. To achieve these challenging targets, the
Council has undertaken a major review of its fundraising activities.
Key proposals include the professionalisation of the Council's
fundraising capacity, including the external recruitment of a
Director Fundraising, and improved liaison with the private sector
through the creation of a "Business Forum". However,
in pursuing fundraising initiatives, the Council's charitable
status has to be taken into account. This prevents us, for example,
from selling advertising in our web-sites and requires us to ensure
that any joint venture activities are made accessible to a range
of stakeholders (not just to a single sponsor). We are, thus,
trying to create new revenue opportunities and set challenging
targets without putting our status, objectivity or reputation
at risk.
In addition to private sector sponsorship, the Council has
established strategic partnerships with the British Tourist Authority,
the BBC World Service and the World Bank. These partnerships bring
a number of advantages, such as increasing our ability to lever
funding from a broader range of donors, offering us the opportunity
to sell services to these partners (eg information provision on
behalf of BTA) and more effective use of shared resources (eg
commissioning the BBC World Service to put together a web-site
rather than recruiting a Council web designer).
Income from the Council's Educational Enterprises (teaching
English and conducting British examinations abroad) already accounts
for 26 per cent of the Council's total turnover and is projected
to increase by 13 per cent in 2002-03. There is considerable scope
for increasing income from teaching English through the opening
of new teaching centres, developing new products and services
(particularly electronic learning and computer-based testing)
and expansion in Central and Eastern Europe. The growing demand
for internationally recognised qualifications also presents significant
opportunities for increasing income from examination services.
However, in assessing the potential for generating additional
income from such sources, a number of factors need to be taken
into account. The principal justification for the Council's involvement
in teaching English is not to maximise revenue, but to use its
network of teaching centres as a vehicle for reaching target audiences
(particularly young people) and influencing their perceptions
of the UK. Furthermore, in many countries, any suggestion that
the Council is extracting a profit from cultural relations would
be unacceptable to the host government and jeopardise the Council's
status. Finally, the potential for generating re-deployable surpluses
is likely to be constrained over the next three to five years
by the need to build up reserves to manage the risks of the Council's
paid services (which cannot, legally, be a charge to the grant-in-aid)
and to address the legacy of recent under-investment in the teaching
centre network by improving quality standards, upgrading premises
to meet UK health and safety standards, and re-skilling staff.
Income from Institutional Clients
In addition to its work on behalf of UK government departments
and agencies, the Council provides paid services to a wide range
of institutional clients, primarily in training and contract management.
These include the European Union, Multilateral agencies such as
the World Bank and the Asian Development Bank, foreign governments
(for example, the management of a training programme on behalf
of the Uzbek government) and bodies such as the Aga Khan Foundation.
Income from the management of development and training contracts
on behalf of non-HMG clients is expected to increase only slightly
over the next two to three years, reflecting a reduction in the
number and value of World Bank contracts which the council is
able to bid for and low margins on contracts managed on behalf
of the European Union.
The selection of contracts is determined by the extent to
which their successful delivery will contribute to the achievement
of the Council's purpose and is focused primarily on contracts
in education, health sector reform, governance and information.
Within this framework, we track and target contract opportunities
arising from the programmes of all the major multilateral development
agencies and overseas governments. We compete vigorously in these
markets (for example, the value of new non-HMG contacts signed
in 1999 was £25 million) and have a good success rate in
winning new business. However, the absolute volume of the Council's
development and training business is determined by the opportunities
available in the market, which is continuing to shrink in size.
6. WHY IS
THE ESTIMATED
OUTTURN FOR
PRIVATE SECTOR
SPONSORSHIP EXPECTED
TO FALL
TO £8 MILLION
IN 1999-00 FROM
THE £16 MILLION
ACHIEVED IN
1998-99?
The figure of £16 million which appears in Table 13
of the FCO Annual Report includes £9 million sponsorship
for the "UK-Japan Festival" in 1998-99. This money was
raised by the Council and other government departments and agencies
involved in the festival, including the FCO, DTI and the Britain-Japan
Chamber of Commerce. Following the revision of the Council's performance
measures in 1999-00, the methodology for collecting data for this
measure has been changed to include only sponsorship directly
attributable to Council programmes and activities. A sponsorship
target of £15 million has been agreed as part of the Council's
contribution to the FCO's Service Delivery Agreement with the
Treasury in 2001-02. This target will increase to £17 million
in 2003-04 (see Q5 above).
7. DO YOU
EXPECT THE
TREND OF
DECLINING INCOME
FROM UK GOVERNMENT
CONTRACTS TO
CONTINUE? IS
THE SHIFT
IN AID
POLICIES TO
CONCENTRATE ON
THE POOREST
THE PRINCIPAL
REASON FOR
THE CHANGE?
HOW CAN
THE DECLINE
BE REMEDIED?
We expect the decline in income from DFID contracts to continue.
The reason for the decline is not the shift in aid policies to
concentrate on the poorest per se, but is due principally to DFID's
adoption of sector wide approaches to development assistance.
This is a move which DFID has made in line with other major donors.
It involves entering into more direct partnership agreements with
recipient governments and therefore reduces the degree to which
the government and aid donor rely on the services of intermediaryproject
management agencies such as the Council. There is thus no "remedy"
for halting the decline in demand for the Council's services in
this area. We will continue to track the contract opportunities
which still arise with DFID and the other donors, and where appropriate
pursue and bid for contracts which will contribute to the achievement
of the Council's purpose within a commercially viable framework.
8. FIGURE 6 IN
THE FCO ANNUAL
REPORT BREAKS
DOWN YOUR
FCO GRANT-IN-AID
BY ACTIVITY.
WHAT OPPORTUNITY
DO YOU
HAVE TO
VARY THIS
BREAKDOWN? IS
IT THE
OPTIMUM BREAKDOWN,
OR WOULD
YOU WISH
TO CONCENTRATE
ON OTHER
AREAS.
Following a review of its purpose and strategy in 1998, the
Council agreed with the FCO that it would focus its work on six
core sectors: education, English language, information, arts,
science and governance and human rights. This arrangement plays
to the Council's strengths and ensures that our resources are
deployed to maximum effect.
The breakdown of the grant-in-aid expenditure between the
six sectors is partly the result of strategic decisions taken
by the Council in the UK and partly the result of decisions made
by country directors in response to local opportunities and needs.
In both cases, the deployment of resources is made in consultation
with the FCO.
In recent years, expenditure in areas such as education promotion
and governance and human rights has increased. However, given
the pressures on the grant-in-aid, this has necessarily been at
the expense of other areas of Council work. Expenditure on science
programmes has been particularly affected, with its share of the
grant-in-aid falling from 8 per cent in 1998-99 to 5 per cent
in 1999-2000, while grant-funded work in support of English language
teaching has also been squeezed.
The development of new IT-based services in all sectors will
require significant additional resources and will require us to
look critically at the provision of library and information services
around the world. Where there is continuing need for lending libraries,
we will need to invest in upgrading services to meet corporate
quality standards. Increasingly, however, information services
will be delivered electronically and the funding for these services
will need to be found from re-deployments within existing programmes.
9. WHAT ROLE
DOES THE
COUNCIL PLAY
IN SUPPORTING
THE PRIME
MINISTER'S
INITIATIVE TO
ATTRACT MORE
STUDENTS TO
THE UK? IS
THE CHEVENING
SCHOLARSHIP PROGRAMME
ADEQUATELY FUNDED
AND HOW
DOES IT
COMPARE TO
SIMILAR PROGRAMMES
OFFERED BY
OTHER EUROPEAN
COUNTRIES?
The Council was invited to join the working group set up
by the Cabinet Office to identify ways of attracting more international
students to the UK, and is now playing a key role in implementing
the recommendations of the original study. We are represented
on each of the steering groups chaired by the DfEE covering the
four main areas of the Prime Minister's initiative—students
visas, the right of students to work in the UK, a campaign to
recruit more students, and an increase in the Chevening scholarship
programme.
On student visas and the right to work, the Council has been
responsible for preparing guidance materials for use by applicants,
UK institutions, agents, and others involved; agreeing local partnership
arrangements with visa sections in selected countries with visa
problems; providing a "hot-line" for problem cases;
and providing feedback from market research on the views of students
on these issues.
The Council has been contracted by those departments providing
the funding for the initiative to design and deliver a re-branding
exercise for UK education, and to manage a five year global marketing
campaign to attract more students to the UK. The campaign will
focus initially on eight priority markets—Malaysia, Singapore,
China and Hong Kong, India, Brazil, Russia and Japan. The Council,
however, has put forward proposals for additional funding in the
2000 Spending Review to extend the campaign to a further 15 markets
in order to ensure that the ambitious targets for the Prime Minister's
initiative are achieved.
As part of the PM's initiative, it is envisaged that the
number of students funded under the Chevening scholarship programme
will be increased by up to a 1,000 from the present baseline of
2,200. In 1999-2000, the FCO provided £28.5 million towards
the programme, with a further £7 million coming from other
sources. Government departments have pledged £2.8 million
to fund the additional awards, while UK universities and colleges
have offered part-scholarships to the value of £2.6 million.
The FCO aims to raise an extra £10 million for three years
from other sources.
The Council is contracted by the FCO to administer study
fellows coming to the UK under the Chevening programme, but is
not responsible for policy relating to Chevening awards.
Evidence gathered by the FCO as part of its study of European
analogues of the Council (see Q12 below) suggests that, in 1998-99,
the French and German foreign ministries spent £43.5 million
and £49.5 million respectively on scholarships.
10. WHAT CHANGES
HAVE BEEN
MADE OR
WILL BE
INTRODUCED FOLLOWING
THE SIGNATURE
OF THE
MEMORANDUM OF
UNDERSTANDING BETWEEN
THE BRITISH
COUNCIL AND
THE BBC WORLD
SERVICE IN
1999?
The Memorandum of Understanding with the BBC World Service
has triggered a significant increase in the level of synergy between
the two organisations. There are now regular planning meetings
with BBC World Service and BBC Worldwide. These have contributed
to a 25 per cent increase in the number of joint projects since
the Memorandum was signed in December 1999 (to 50 as of May 2000).
Another outcome of the Memorandum has been the creation of a shared
website that will start functioning from 31 May 2000. This will
be used to share all examples of Council/BBC co-operation, to
provide key access points within each organisation and to disseminate
good practice. Examples of the joint working include:
— a Council conference on contemporary literature
which led to six BBC radio programmes, "Novel Ways",
and from which developed a joint Council/BBC website on the same
theme;
— the winner of the BBC Young Musician of the Year
award was sponsored by the Council to tour the Gulf States;
— a BBC producer has been seconded to the Council
to join the team developing the "LearnEnglish" website,
a portal to UK ELT. This will provide an opportunity for both
the Council and the BBC to learn about youth markets, how they
use the web, and how to identify the most appropriate pedagogy
for the web.
The joint Council-BBC World Service proposal for the 2000
Spending Review to establish Centres for English Language Learning
Support (CELLS) is a further example of the clear potential benefits
to be achieved through closer collaboration between the two organisations.
11. WHAT IS
THE OVERARCHING
STRATEGY BEHIND
THE DIVERSE
RANGE OF
PROJECTS MANAGED
BY THE
BRITISH COUNCIL
WHICH ARE
SPONSORED BY
THE FCO UNDER
THE HUMAN
RIGHTS PROJECT
FUND?
The Council has no overarching strategy specifically for
the projects which it manages under the FCO Human Rights Project
Fund. Projects are developed on a country-by-country basis and
the FCO is responsible for deciding which projects should receive
funding. However, the projects which the Council manages are developed
within the policy framework for the Council's work in governance
and human rights.
The Council works in partnership with both government and
civil society to advance debate, knowledge, and skills in the
areas of governance, human rights, gender equality, and social
inclusion. Our aim is to promote human rights and the rule of
law by helping to strengthen formal institutions such as the courts,
judiciary, legal professions, and the civil service while increasing
the effectiveness of civil society. We provide insights into the
UK and international experience of law and human rights. We do
this by developing understanding of how the legal system, educational
institutions and civil society groups can take forward the objectives
of human rights and the rule of law. Our work stresses the importance
of human rights and access to justice for all members of society,
the need for greater public awareness of legal and human rights,
and the promotion of the rights of disadvantaged groups.
In the area of gender equality, we work to promote the status
of women and their participation in the political, social, economic,
cultural and legal systems of their countries by providing access
to information, education and training. We work with UK and international
partners to equip women with the skills they need to put gender
issues on the national and international agenda. We place particular
emphasis on the rights to political participation, to a secure
livelihood, access to justice and freedom from violence and discrimination.
On the understanding that we will have access to any additional
money which might be made available, the Council has agreed that
our Spending Review proposals for increased work in human rights
should be subsumed within the FCO's bid for a doubling of the
Human Rights Project Fund.
12. WHAT FIGURES
DO YOU
HAVE AVAILABLE
AS TO
GOVERNMENT SUPPORT
IN FRANCE
AND GERMANY
TO BODIES
EQUIVALENT TO
THE COUNCIL?
In response to the Foreign Affairs Committee's recommendation
in its Fifth Report in Session 1998-99, the FCO is carrying out
a study into "the level of direct and indirect financial
support being given by the French and German governments to organisations
in those countries performing roles similar to those of the British
Council". The study does not set out to quantify the total
funding for overseas cultural relations work by the British, French
and German governments. Instead, it analyses in some detail the
activities of analogue organisations in order to identify and
cost those programme elements which are similar to those carried
out by the Council.
The draft report, which is currently being finalised, includes
figures which indicate that the French and German governments
spend approximately two and a half times as much on activities
similar to those of the Council as the UK government:
FRENCH AND GERMAN GOVERNMENT FUNDING FOR ACTIVITIES COMPARABLE
TO THOSE PERFORMED BY THE BRITISH COUNCIL1
|
| British Council
| France | Germany
|
|
| Direct government funding | £132.1m
| £325.9m | £328.6m
|
|
Note:
1. Figures are for 1998-99 (for the British Council)
and calendar year 1998 (for French and German organisations) which
is the most recent year for which full data are available.
| 
