Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 23 JUNE 2004
SIR DAVID
GREEN KCMG, DR
ROBIN BAKER,
AND MRS
MARGARET MAYNE
Q80 Mr Olner: I accept all of that,
but is it a wish that you as British Council want to improve the
education of young people in these countries, or is it reacting
to what these countries themselves want?
Sir David Green: It is both and
it comes out of a reaction to the UN Arab Human Development
report, but it is also in the UK's interests as well. One of the
key areas in which we are working is English language teaching.
In most of the Middle Eastern countries we have an English-language
teaching centre and it is worth saying that at the time of the
war with Iraq, we had to close in the nine surrounding countries
and had by definition to suspend our English language teaching
activities. When we re-opened we gave students the option of either
having their money back or joining a new course. I think I am
right in saying that something like 98 or 99% of those decided
that they wanted to start a new course of English language teaching.
Q81 Mr Chidgey: I want to ask you
some questions about financial management. You will have heard
me go through the list with your colleague from the BBC World
Service, so you have an idea where I am going to. Just before
I get into the detail of that, I note in your memorandum to the
Committee that you pointed out that your grant from the Government
has been increased to £184 million for the year 2005-06,
but your turnover was around £485 million per annum, so about
two-thirds of your income is from elsewhere. I presume that is
all from English language teaching and the like, is it?
Sir David Green: No. One part
comes from the Government in the form of grant-in-aid, a further
two parts are from income we raise ourselves, some from English
language teaching and from the promotion of British examinations,
some from running development contracts for the Department for
International Development, others for the European Union. We also
undertake some contract work for the Foreign Office; we run the
Chevening scholarship scheme, which is worth about £44 million.
We run a number of contracts for the Department for Education
and Skills and we raise some money through commercial sponsorship;
in the last financial year in the region of £11 million.
All told it comes to £485 million.
Q82 Mr Chidgey: Fine; I am sorry
about the government bit. I picked that up in Moscow and that
is one of the problems which is being dealt with later on. I really
wanted to get to the dynamics, the effect this funding has on
your operations. The Committee has seen the British Council in
operation in many different parts of the world and we generally
are very welcoming and very supportive of your work. It does vary,
depending on the constituency you are in and the language of the
population, the level of education of the population, may I say
the wealth of the population. You get extremes, such as in certain
parts of the world your base will only have enough funding for
you to tick over and you cannot do any project work, whereas in
other parts of the world, in Europe, you have thousands of students
coming through the doors, paying good fees for English language
education which is great of course for the bottom line. However,
my worry here is that we could easily develop into an elitist
system, financially and intellectually, which rather cuts away
from what we consider the aims of the British Council to be. How
do you address that? I put it to you that it is very tempting
to go where the money is.
Sir David Green: The fact that
we are so broad ranging in terms of the activities we encompass
helps to address that. The fact that we are doing development
projects, those projects are, almost by definition, targeted at
the poorest of the poor, certainly not elites. For instance, an
access to justice project which we are running for the Department
for International Development in Nigeria, is seeking to improve
the rule of law and people's access to justice in a number of
states in Nigeria. That is not benefiting elites particularly.
Q83 Mr Chidgey: We do appreciate
that, but we also hear that in some countries you are targeting
young professionals because they are the movers and shakers of
the future. That is fine, but there is more to it than that; there
is the actual population at large which we must not ignore, which
I suspect those sorts of targets lead us to do.
Sir David Green: We have done
quite a lot of work in terms of trying to understand populations
and trying to identify who our target audiences should be. We
have in fact segmented our target audiences into four parts. At
the top of the pyramid are very influential people or already
influential people with whom we think it is very important to
continue an engagement. At the next level down we want to go for
people who are likely to get into that bracket and therefore will
have influence in terms of how things are managed within their
countries and therefore will be those influences you have described.
We then go down to another layer which consists of young professionals
and people who are interested in further and higher education.
Then below that are people of school age and people who are further
down the hierarchy, if I may use that word. In terms of whom we
are targeting through some of our programmes, it would be that
non-elite group. However, unashamedly we have decided that for
a lot of work, actually the most impact we can have, given our
limited resources, both in terms of the benefit to the UK, but
also in terms of providing services to that country, is by going
for people who are going to aspire to positions of authority,
because they will then have an impact within their own countries.
Q84 Mr Chidgey: You had a pretty
good settlement in the 2002 spending review. Are you optimistic
that you are going to get another one for 2004 which compares
with 2002?
Sir David Green: We have had two
good settlements.
Q85 Mr Chidgey: You are very optimistic
right now, so I presume that is going to translate into some cash,
is it?
Sir David Green: We had two good
settlements in both 2000 and 2002 with an increase of 9% in real
terms, which restored us to the levels of pre-1996, which was
very helpful. We are realistic about the current situation and
we know that it is a very much tighter round this time than it
was in 2002. Having said that, we have put in a number of very
important elements within our bid and it is up to Treasury to
decide whether or not it wishes to fund those.
Q86 Mr Chidgey: What areas are you
particularly targeting for extra money?
Sir David Green: I have mentioned
the US already; we have also had a brief discussion on the Middle
East and the role we can play in terms of education reform within
the Middle East. Those are two elements within the bid. There
is also international recruitment and the Prime Minister's initiative
on international recruitment, where we were charged with increasing
the numbers coming to the UK to study at higher education level.
We were asked whether we could raise that, along with DfES and
higher education institutions and universities in the UK by 50,000
at higher education level and 25,000 at further education level.
We have achieved that over the four years. If we are to sustain
that, then we have to keep investing in the campaign and in the
promotion of the UK as a study destination. So there is an element
of funding in the bid for that.
Q87 Mr Chidgey: Presumably if you
do not get that, none of these is going to happen. There is no
plan B as such, is there?
Sir David Green: The other ones
were sport and India, making five. If we do not get the bid, then
we will have to think again in terms of the extent to which we
reprioritise our existing programmes and certainly some of those
will need to be re-prioritised and other activities may have to
go.
Q88 Mr Chidgey: Is any of this dependent
upon you securing additional contracts from DfID and so on, doing
contract work for different agencies of government? Is that part
of the projected income?
Sir David Green: Only in relation
to the Prime Minister's initiative on international recruitment,
where we expect a continuing contribution from the Department
for Education and Skills and also from the devolved countries
who also benefit from that.
Q89 Mr Chidgey: Are these competitive
bids with other agencies?
Sir David Green: No, not in the
sense that we are putting in five elements we think are very attractive
and which would be useful in terms of benefit to the UK.
Q90 Mr Chidgey: Quickly, on efficiency
savings, and you will have heard the conversation I had with your
colleagues from the World Service. The key issue really is how
long you can continue finding efficiency savings of at least 2½%
over the coming spending review year on year?
Sir David Green: We certainly
believe we can do that over the next triennium and we have been
declared compliant through the Gershon process. They accept that
the proposal we have put, in terms of increasing our efficiency
and making those savings, is a viable one and is auditable. They
are tough and we have put two caveats. First of all that we can
only produce that level of saving if we receive at least an inflation-proof
increase to our level of grant funding over the period of the
three years; second, if we are allowed to spend some of the savings
we accrue on security. I know you are coming onto security in
a moment, but for us to maintain our premises and the safety of
our staff at standards which we think are acceptable, we will
need to invest further in security. We have put to Treasury the
idea that part of the savings we manage to make through the Gershon
efficiency process should be re-invested in security.
Q91 Mr Chidgey: I want to press a
little further on this. Whilst it is quite clear from the World
Service that there are technical improvements and changes which
will generate efficiency, the British Council by definition is
far more a people-intensive organisation. So it is difficult to
understand how you can expect year on year to get a 2½% increase
in efficiency out of the people you employ. There is a real concern
here that you will be led up to a situation where to achieve the
Treasury's efficiency gains you will simply be cutting your budgets
and activities. We are looking for reassurance here that you have
found a formula. If you have not found a formula, we should like
to know.
Sir David Green: We have found
a formula which does not involve cutting activity. There are several
elements to it. First of all, we have a massive project called
the finance and business systems which is integrating currently
20 different IT systems and bringing them all under one system.
This is a project which is costing an investment of something
like £96 million over a period of ten years, but the savings
which will accrue will contribute to the efficiency target. In
addition, we have done a lot of work on procurement and increasing
our ability in the area of procurement. We think that there are
savings to be gained from that area as well. The new strategy
we have just launched, which we call strategy 2010, has elements
in that which are about efficiency as well. One is regionalisation
and breaking the world into 13 regions rather than having direct
relationships between 110 countries and the centre, which has
a certain excess bureaucracy and also through improved commissioning
and the development of the products and services which we generate.
We think there are ways in which we can economise through rationalising
those systems as well. However, I do not pretend it will not be
tough and when I took over the running of the British Council,
you will remember me coming to this Committee and describing what
we needed to do in order to get the British Council onto a sustainable
footing. We had to close in four countries and we had to reduce
our presence in a number of cities within Western Europe, but
that was the only responsible thing to do in order to maintain
a healthy organisation. I hope we will not get to a position where
we have to start reducing our network again and we believe that
we can manage the efficiency savings being imposed upon us without
having to do that.
Q92 Sir John Stanley: I should like
to come onto the issue of the security problem which you face
and the issues for you are similar to those which I raised earlier
in this session with the BBC World Service, except that I would
judge you have a very much bigger problem, by virtue of having
substantially more people employed overseas, both British personnel
and local staff and also of course having a very much larger amount
of real estate which you need to protect, both your British Council
offices and also I imagine you are having to turn your attention
to some of the residential accommodation which your people occupy.
Can you tell us what, in ballpark terms, is the figure for which
you are having to bid for what you described as security investment
a few moments ago?
Sir David Green: This is the area
which keeps me awake at night: the security of our staff and the
people who come into our premises is a real concern for us. As
other embassies and high commissions—American and British
and other countries—become more fortified, which is the
trend, there is the danger that the British Council becomes a
displacement target. That is a real danger for us. So we have
to look at this area and we are looking at this area very, very
carefully. After 11 September, we did a review of our security.
We did a further review after the Istanbul bombing and we have
done a significant upgrade of those premises which were in urgent
need of an enhancement of their security. We still need to spend
a further £10 million over the next two years. We have a
reserve claim in, along with the Foreign Office, of £4 million
bid and then £6 million in for this financial year, the year
2005-06. That is to tackle the 29 properties which we have deemed
as ones which are top priority in terms of further enhancement
of security. As I said earlier, what we would then propose is,
since this will be an ongoing programme, that if we can be allowed
to recycle some of the Gershon efficiency saving into enhancing
security, then that will help and we think we can then do it without
making additional claims to the government. May I bring in Dr
Robin Baker, who actually chairs our security committee and who
may be able to comment further on this?
Dr Baker: We have spent £3
million since 11 September on urgent security work. Clearly this
is the biggest single issue facing the British Council, with so
many staff overseas. The dilemma we have is that the British Council
can bring most value for Britain in precisely those environments
which are most dangerous. The fact that we are not governmental
in those environments is particularly important in terms of the
impact we can achieve. Our strategy has been to look at every
installation we have. We have developed something called the vulnerability
model. In those situations where we know the threat is such, and
we have very good information on threat from the Foreign Office,
that our current arrangements are not sustainable, could not withstand
the kind of threat level which exists, then we will make and have
made urgent changes. In Saudi Arabia we are facing a particularly
acute problem, which has led us to take fairly urgent and immediate
action. This is something which we are looking at all the time.
The first bid is to reserve a claim for £4 million in the
current financial year and then £6 million in the spending
review for the first year of the triennium and this will enable
us, as far as we can, to protect our staff, our customers and
our property. Of course, the difficulty is that for an organisation
like the British Council, which in most places needs to offer
a public access facility, in some places that is becoming increasingly
dangerous and there are judgments to be made.
Sir David Green: It has also caused
us to think about new ways of working and it has meant that we
need to invest further in virtual services, because that is a
way of communicating with people without them having to have public
access. We have produced a very imaginative response in Pakistan,
where, after the bombing in Afghanistan, for security reasons
we had to close all our five offices to public access in Pakistan
and we have still managed to administer 150,000 British examinations
last year. This is done through an imaginative scheme involving
Standard Chartered Bank, where people can go to register to take
an exam at any branch in Pakistan and then they are told where
to turn up to take the exam. There are imaginative responses which
we can devise, but the very essence of the British Council is
about face-to-face work. To deny public access is taking away
one of our key tools of being able to engage.
Q93 Sir John Stanley: I have some
further factual questions which I just want to put to you. The
answer to my request for the ballpark figure, if I have understood
both your answers correctly, is that you have made a £4 million
bid from the contingency reserve in this financial year and you
are estimating something like £6 million per year subsequently
on additional security investment. Is that correct broadly?
Dr Baker: It is £6 million
next year; it then is £4 million the following year rising
to £8 million in the fourth year.
Q94 Sir John Stanley: Obviously,
Sir David, it is for you to decide how to play your hand with
the Treasury, but your comments filled me with a deep sense of
foreboding. I should be extremely concerned if you felt that there
was not going to be a price attached to your mainstream British
Council activities, if you offer up to the Treasury a trade-off
against your efficiency savings, against the security investment.
I can just hear the Treasury mandarin saying "That is fine,
thank you, Sir David, very much. We'll look to you to provide
100% of your security funding through efficiency savings".
As we know, in the real world that means a greater and greater
squeeze on the British Council. I just offer you that thought
from a certain amount of personal experience that some of us have.
However, it is your hand to play. Could I put it to you that it
is very, very important that you ring-fence your security bid
and, I trust, make it very clear to the Treasury that these are
events wholly outside the British Council's control and there
is absolutely no reason nor justification for you having in any
way to accept cutbacks on your main activities as a result of
these world events and terrorist activities over which you have
no control whatever.
Sir David Green: Which is why
we have put in a reserve claim and why we are putting in a bid
for £6 million in the first year, when actually the advice
is that you should not put in anything in the first year of the
spending review, and we have made the argument that we should
use part of the efficiency savings to fund security. We do think
it will be tough, but we do think we can do it, with those provisos
I have made, without actually jeopardising the work of the British
Council for the reasons I have explained in terms of efficiency
and also changes in the way we are working and our new strategy.
Q95 Sir John Stanley: I trust you
are right. I am sure you also might be entitled to feel that if
you make these efficiency savings, it would be good to plough
it back into the mainstream business rather than fences, etcetera.
Do you see any near time prospect of being able to re-open your
offices in Pakistan? Secondly, are you currently at risk of having
to bring about closure to public access elsewhere in the world?
Sir David Green: We do not see
any prospect at the moment of re-opening to public access in Pakistan.
As well as the examinations, we are able to do other activities
off site, so we are still able to run a viable programme, which
is valuable, within Pakistan. In terms of other countries, certainly
Saudi Arabia is one which we will have to be thinking about and
have had temporarily to close our operations in Riyadh for the
time being. That will be one which will be a question mark certainly,
but no others.
Q96 Mr Hamilton: Earlier this year
a group of external consultants produced a very comprehensive
report on the Chevening scholarship programme which you administer.
Did you agree with the conclusions of the report and did you take
any of its conclusions to be a criticism of the way you administer
the programme?
Sir David Green: On the latter
point first, certainly we did not feel that it was criticism of
the way we administered the programme and the consultants went
out of their way to compliment the British Council's administration
of the programme and said it was extremely well-managed. We obviously
co-operated fully with the review and I believe that the broad
thrust of the recommendations is very sensible. To have a combination
of the year-long programmes of scholars coming to the UK, coupled
with more flexibility in terms of providing fellowships for tailor-made
shorter courses, makes good sense and enables the Foreign and
Commonwealth Office to ensure that its priorities are being met.
So courses are related to their priorities and also we are able
to target people who are not able to take a year out of their
career. Talking to young professionals within Iraq recently, it
was quite clear that they could not, at this point, spend a year
out of Iraq, because there are too many pressing things for them
to do, but to come out for a month, or for six weeks, would be
a very viable option. I think the broad thrust is right.
Q97 Mr Hamilton: What do you think
the fellowships will achieve over the existing Chevening scholarships?
Sir David Green: Certainly to
come to study in the UK for a year...
Q98 Mr Hamilton: The shorter nature
of the courses, as you have outlined.
Sir David Green: Yes, but the
year-long one is very good and creates friends for life and we
now are able to tap into that friendship and those contacts in
the countries in which we have Chevening scholarships, which is
most of the countries in which the Foreign Office is present.
What the fellowship scheme enables us to do is target a different
group, people who cannot spare a whole year, but can spare a shorter
period. Also, if there are particular subject areas which we think
are important, whether to do with business or international law
or environmental protection or issues which are of particular
interest to the Foreign and Commonwealth Office and relate to
their priorities, this seems to be a very efficient way of tackling
that. Also, this would be less competitive. The Chevening scholarship
scheme is very open, transparent and competitive, with ads in
papers and people applying on a merit basis. The fellowship scheme
would be more by invitation, so it does enable the Foreign Office
to identify a number of people who it thinks would benefit from
attending such a course. It gives greater flexibility and by and
large we are very much in favour of it.
Q99 Mr Hamilton: The report strongly
recommends that priority countries be targeted. I just wondered
which would be the losers and which would be the winners in terms
of priority countries? Who are the priority countries?
Sir David Green: The priorities
are determined by the Foreign and Commonwealth Office. We are
the managers of the scheme, we administer the scheme, but in terms
of decisions about the number of places allocated to particular
countries, that is a matter for the Foreign and Commonwealth Office.
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