APPENDIX 4
Memorandum submitted by The British Council
Further to the Council's appearance before the
Committee to give evidence on the Council's new strategy I enclose
further information that was requested by the Committee.
You will see that the grant-in-aid allocation
by region is marked "in confidence". This is because
discussions on the changes in Country Directorates with both staff
and local authorities are still in progress. The Council would
be grateful if the Committee did not publish these figures.
ESTIMATE OF
SAVINGS FROM
THE CLOSURE
OF PORTLAND
PLACE
The British Council plans to close its office
in Portland Place when the existing lease expires in July 2003
and to consolidate its London headquarters in its Spring Gardens
premises by investment in that building and in IT services to
support flexible working.
The rent for Portland Place is currently £47,500
a year. However, the building would need to be completely refurbished
before the lease is renewed or the building is let to another
tenant. Assuming the landlord carries out the refurbishment, we
would expect the rent to increase to approximately £800,000
a year from mid-2003. Leaving Portland Place saves us not just
rent, but buildings-related running costs of a further £450,000
a year at current prices. Estimated total savings are thus £1.25
million a year.
This figure needs to be adjusted in two ways:
— We have allowed £300,000 a year
to support flexible working and to accommodate some peripheral
functions outside central London;
— We currently estimate a cost of £3.3
million to refurbish Spring Gardens so as to cope with the influx
from Portland Place, to improve the environment, and to support
flexible working.
Using a 6 per cent discounted cash flow factor,
the break-even point for the payback on this investment of £3.3
million when balanced against the savings from leaving Portland
Place falls in 2007. Thereafter we expect a saving—compared
to continuing in Portland Place—of nearly £1 million
a year. The Spring Gardens lease runs to 2016.
ANALYSIS OF
STAFF TRANSITION
COSTS
A total of £18.6 million has been budgeted
for the HR transition costs of implementing the Council's strategy
over the next five years. This is made up of £9.2 million
for early retirement costs in the UK and £9.4 million for
staff restructuring overseas.
The overseas costs are broken down as follows:
— early retirement/redundancy payments £7.6
million
— re-training £1.4 million
— recruitment £0.4 million
In addition to the UK early retirement costs,
£0.4 million a year will be spent on managing the re-structuring
programme globally, including support for managers, and counselling
and outplacement services.
These figures are estimates only at this stage
and will be refined as detailed re-structuring plans are agreed
for overseas directorates and HQ departments.
11 April 2001
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