Examination of Witnesses (Questions 20
- 39)
TUESDAY 30 JANUARY 2001
MR D GREEN,
DR R BAKER
AND MR
A FOTHERINGHAM
20. In total the reorganisation of priorities
led to £4.5 million of resources being reallocated.
(Mr Fotheringham) Yes, of grant in aid from western
Europe.
21. That is the sum total of the change in resources
which took place as part of the restructuring.
(Mr Fotheringham) There are many redeployments between
individual countries and one of the problems of looking regionally
is that masks shifts of resource between individual countries.
For example, we have seen additional resource going into countries
like Russia and China, which are immense priorities for the Council.
There are other countries where there have been adjustments downwards
in terms of the funding they receive.
22. Is there a chart or appendix which shows
the gains and losses per country?
(Mr Fotheringham) We can certainly provide that information.
Dr Starkey
23. May I probe this business about spending
in western Europe a bit further? I noticed that you opened a new
British Council office in Berlin, for example, which must have
cost an enormous amount of money. I happened to be there on holiday
on the opening day so I popped in. It is a very impressive facility
but that must have cost a huge amount. Is it the case that the
overall spend in western Europe has reduced or have you made good
the removal of grant-aid by increasing income?
(Dr Baker) There is no doubt that there has been a
significant shift of money out of Europe, principally the larger
countries of western Europe, it has to be said. In terms of our
projections for income, in some countries our projections are
very low, for example Germany. I do not think that we shall see
a major increase in our income in Germany. What we are looking
at in net terms is a loss in Germany of £2 million a year.
Germany does carry a lot of the weight for the kind of transformations
we are seeking to achieve globally in the Council. There are other
major shifts too.
Mr Chidgey
24. Still looking at this issue of changing
priorities, my understanding is that The British Council base
the location of its directorate on the criteria of the importance
of each country to ourselves, historically, politically and economically
and the ability of the Council to achieve long-term influence
and impact for the UK. Clearly western Europe is far more sophisticated
than other parts of the world and there is no desperate fundamental
requirement to work with The British Council to get the information
and to exchange the influence we are talking about in other parts
of the world, particulary information-poor parts of the world
which is a far more fundamental aspect. I want to ask you how
you evaluated the concept of informing the information-poor in
terms of these criteria of influence and importance to the UK
historically, politically and economically. How did you evaluate
the continent of Africa with eastern Europe and with the fast-developing
Asian countries in changing your priorities?
(Mr Green) I mentioned earlier on that it was an art
form rather than a science and these things are very complex judgements.
The position in Africa was complicated by the fact that the infrastructure
we had and the staffing we had was built up on a platform of ODA
contracts, so that was distorting things. Our feeling was that
we could maintain, if not even increase, impact in Africa, at
reduced cost because we could strip out some of the fixed costs
within Africa. Our offer there is around cultural relations and
exchanges and also information and learning provision and we are
going to be stepping up the amount of provision we are able to
put into the information centres within Africa.
25. On the learning aspect, I imagine fundamentally
we are talking here about English language. Would that be the
most important one?
(Mr Green) Certainly, but also related to the reform
agenda we see we have a very strong role in providing networks
for NGOs within Africa on governance and society issues. What
we are trying to do is provide opportunities for those NGOs to
be able to come together in our centres within countries in Africa
and connect up with other NGOs across the country, across the
region and with the UK. We see that as a key area for us. We also
want to be targeting the people who are going to be in positions
of influence in the future in Africa, the young professionals,
and that would be the Chevening scholarship programme which we
administer for the FCO by providing other forms of entry to the
UK for education and for courses. The role of British Council
vis-a"-vis DFID is clearer perhaps now than it has been in
the past. Given the large amounts of money that DFID are putting
into Africa in targeting the poorest of the poor, our target groups
are more the young professionals and the people who are going
to become future leaders in Africa. We have a programme operating
at the moment in collaboration with Manchester University where
we have selected seven future leaders from Nigeria and from South
Africa for a four-month management training course, made up of
MPs, people from NGOs, from the commercial sector and so on.
Sir John Stanley
26. You said at the outset that you felt the
settlement you received from the comprehensive spending review
was a good one. However, it is the case that what you got was
substantially short of what you asked for. If I could take your
figures in your own supplementary note, we see in your line of
figures for the three financial years 2001-02 up to 2003-04 that
you asked for an aggregate total of £79 million for additional
funding. Over that three-year period you actually got a total
of £26 million which is just under one third of what you
asked for. Given the fact that there is a £53 million difference
between what you asked for and what you got, if you had got the
full amount of your bid, how would you have spent the £53
million extra?
(Mr Green) The bid was quite wide ranging and it covered
four key areas: it covered reputation of the UK, it covered export
promotion, it covered Europe and it covered reform. What we have
been able to do and what the Spending Review White Paper prescribed
that we should do is to increase our work in China, increase our
work in Russia and to extend our work through information communications
technology. We have been able to start the work on what we call
the knowledge and learning centres which is the bid we put in
and we are going to be operating a pilot for that in India. We
should have liked to have done more in those areas. We have not
been able to fund those to the extent that we should have liked
to have done. We also have not been able to do more work in protecting
UK science and technology, which we see as a priority. We have
not been able to do as much in education exports promotion as
we should have liked to have done. We wanted to do more work in
south Asia, reform and linkages there, and supporting reform in
Latin America. We have been able to do some of the other things
which are very much part of the strategy, such as strengthening
our ties with Iran and with Libya. We have now set up offices
in both those countries but that is part of the strategy and we
were not able to use the spending review money specifically for
that. The other item was a joint proposal with the BBC World Service
for centres for English language learning support. We are going
to be piloting the first of those in China and we should have
liked to have gone at a faster rate with those because we think
that has huge potential for English language teaching around the
world, but we have had to go at a slower rate because we did not
get the full amount we sought. Having said that, the spending
review has been very helpful in implementing the strategy, but
the strategy would have gone ahead even if we had got half as
much or twice as much.
27. I shall come back to how you are going to
spend the £26 million additional funds you have received
but following that last reply surely it must be the case that
if you had had the whole of the £53 million it would not
just have been a matter of being able to spend at the rate you
wanted on the programmes you wanted in the countries you have
referred to. Presumably if you had had the whole of the £53
million there would have been a whole clutch of countries where
you would have been able to establish a presence, or a very much
more significant presence than you have now? Could you illustrate
for us what countries, if you had had the whole of the £53
million, would now be having a British Council presence over the
next three years compared to what will actually be the case?
(Mr Green) Beyond opening up in Iran and in Libya,
which we had specified in the submission, we were not proposing
to open up in more countries. In fact The British Council was
overstretched. We have increased the size of our network since
1979 by 40 per cent and the increase in grant-in-aid over that
period has been 10 per cent. We did not feel we were in a position
to be opening up in more countries; that was not going to be the
strategy for us. There was a whole raft of other things in the
submission which we should ideally have liked to have done and
which will now have to wait. We have been able to do some of those
through the shifting of resources and the implementation of the
new strategy.
28. Are you saying to us that if you had got
the £53 million you would not have continued your offices
in countries like Ecuador which you had to withdraw from and in
the African countries you have had to withdraw from?
(Mr Green) No, I think we would not. The strategy
makes sense for The British Council long term. Yes, we would have
stuck with those closures.
29. On the other side of the coin, the £26
million, and again in as country-specific terms as you can, can
you give the Committee a quick factual perspective on where that
£26 million is going in country and in project and objective
terms?
(Mr Green) Certainly. It is going to focus on strengthening
our operations in China, it is going to strengthen our operations
in Russia. We are going to extend the network from currently 12
centres now to 18 centres across Russia, so a stronger presence
in both of those countries. It is also going to help us with the
information/communications/technology area which we need to invest
in and in particular I mentioned the knowledge and learning centres
and CELLS, the Centres for English Language Learning Support.
We see those as something which will help globally. They will
not be particularly related to countries in the longer term although
initially we are going to be piloting in India for the KLCs, Knowledge
and Learning Centres, and in China for the CELLS project. A Knowledge
and Learning Centre is a centre which will be state of the art
and will have very good connectivity, something we are working
on with the World Bank and in partnership with them and they will
help with the connectivity through their satellite links at reduced
cost to us. It will have video conferencing. It will have seminar
rooms and will be a centre for knowledge and learning, particularly
for young professionals and the younger audience we are seeking
to reach.
30. Are you suggesting with wide access from
outside the country in which it is actually located? How widely
will the Indian one be accessible? Well beyond India? Worldwide?
(Mr Green) Eventually the information we produce for
the web and services we are able to produce over the web will
certainly become global services, yes. The three really key elements
were China, Russia and the investment in electronic services and
new media in order to reach many more people across the world
and to complement our face to face interactions with people through
information which can be disseminated across the web. That may
be information about opportunities for education and education
provision in this country, or it may be to do with governance
and human rights information where people can plug into the latest
information on particular topics.
Mr Rowlands
31. The strategy includes re-allocating resources
from fixed assets to other programmes. How quickly can you realise
the fixed assets? What are they? Presumably you have surplus offices
and things do you? Is that what the fixed assets are?
(Mr Green) Certainly that is part of them, yes, and
that goes back to what I was saying about Africa. We are implementing
the strategy over a five-year period. We do not want to do it
all in one go for obvious reasons. We do think we can get to where
we need to be by 2005 and perhaps a bit earlier than that. If
you take the Germany example, we currently have 80 per cent of
our costs tied up in infrastructure, in staff and in buildings.
We think that is far too much and that we can actually keep the
same level of impact but at very much lower costs in terms of
infrastructure.
Mr Chidgey
32. You mentioned earlier that you are losing
£2 million a year in Germany. I should like to link your
costs and income, if I can, and have a little more information
about that. Can you give us some scope on this, some idea of whether
or not English language teaching in different areas of operation
is subsidised by the grant-in-aid or whether it is profitable?
In different cases can you give us different examples? I should
imagine that in Germany it is a loss maker; I do not know but
I am thinking of the sophisticated nature of that particular society
with a lot of opportunities for English language. Whereas in China
and Russia perhaps you see a market for teaching English language
which would support The British Council's work through the profits
you generate. I do not know. I am asking you whether you can give
us some specifics on this to see how you see it as an operation,
whether it is a marketing operation to a degree or whether it
is a cultural operation as far as The British Council is concerned.
(Mr Green) It is important to distinguish two parts
of our English language operation. The one is our direct English
language teaching operation, which we charge for and we accept
the fee-paying students for and we have to make that profitable
in the sense that it produces a surplus which we can then invest
in other aspects of The British Council and in particular in the
whole area of educational enterprises, which covers both English
language teaching and exams work. That is one area of our work
which has a value of £140 million.
(Mr Fotheringham) The educational enterprises English
language teaching account for something in the region of £80
million. We are looking at a total income from the paid services
activity of £130 to £140 million.
33. That compares to a grant-in-aid of about
£135 million a year, to put it in perspective.
(Mr Fotheringham) Yes, so it is approximately one
third of our total turnover.
(Mr Green) In addition to the direct teaching operation,
which across the world is in the region of 250 centres where we
are making a surplus but providing a very important service to
people wanting to learn English, not in countries such as China,
sadly, because we are not able to operate there. The government
will not allow us to operate there yet.
34. And Russia presumably.
(Mr Green) Russia, yes, and India and many, many parts
of the world. Then there is the work we do in terms of English
language work as part of the grant-in-aid and that is where we
are working in the state system and helping to improve the curriculum,
helping to train teachers of English. That is something again
which we do very extensively, particularly in central Europe and
we may come onto it but it is something we have been doing very
extensively in countries such as the Czech Republic, Poland and
Hungary.
Dr Starkey
35. I want to question you about your fixed
costs. You say you are rationalising the Council's headquarters
accommodation in London. What savings potential do you estimate
there is in moving to less expensive accommodation?
(Mr Fotheringham) I shall not be able to give you
a direct answer to that now but I can give you that information
afterwards. The intention is that we shall relinquish our premises
in Portland Place when the lease on that building expires in 2003.
We shall continue to have headquarters in London and Manchester
but our London accommodation will be consolidated in Spring Gardens.
The saving will principally be in the potential rent increase
which we would face if we stayed in Portland Place. At the moment
the rent is quite low, but the market for rents in London is such
that if we wished to extend that lease we would face significant
increases. The figure I would give you would be looking at the
potential saving which would result from that change.
36. Although a potential saving is important,
it would not be an actual saving then. You would effectively be
pegging your London costs essentially.
(Mr Fotheringham) Yes, that is right.
(Mr Green) The other thing we have made a commitment
to is to reduce our head count in the UK.
37. I was going to come to that next. The figures
we have are that you reckon there will be about 800 job cuts but
about 400 new jobs being created. Is that right?
(Mr Green) Yes.
38. What I should like to ask there is whether
the staff were part of the consultation process over those cuts
and new jobs and how confident you are that the net reduction
can be met by voluntary redundancies.
(Mr Green) We shall certainly do all we can either
through redeployment into the new posts which are being created,
but they will be different posts and therefore will require some
skills development, or through voluntary redundancy. We take very
seriously the way we look after staff and we shall do all we can
with those people we are not going to be able to place through
such mechanisms as career counselling and so on. Sorry, what was
the first part?
39. Whether your staff had been part of the
consultation process over the redundancies.
(Mr Green) They have, as far as has been possible.
In relation to country closures, it is rather difficult to consult
staff. In those cases we have only been able to consult the senior
staff before making the decision.
| 
