House of Commons - Foreign Affairs

Select Committee on Foreign Affairs First Report

10 British Council

2006-07 Annual Report

230. The British Council prepared a memorandum for our inquiry and provided us with a draft copy of its Annual Report 2006-07. Over the past twelve months the British Council has also continued to submit evidence explaining its ongoing work in regions in which we were holding inquiries. We are very grateful for all this material.

231. Last year we welcomed the structuring of the Council's Annual Report into 13 global regions, with case studies showing how the Council had achieved impact against its corporate outputs and narratives of activity accompanied by regional performance, audience and income data. In particular we found the breakdown of income data by country very useful.[383] This year's Annual Report has retained this structure, but does not mention corporate outputs. The country share of regional income is only presented in tabular form, unlike last year's helpful pie charts. We recommend that the British Council presents income data by country in both tables and piecharts in its next Annual Report.

232. Our previous Report also welcomed the increased transparency about measurement of performance, in particular the simplification of its scorecard system for measuring performance outputs and the introduction of a traffic light system similar to those used by other Government departments.[384] We are pleased to see that this year's Annual Report has retained this performance measurement system.

Activities in 2006-07

233. In the financial year 2006-07, the British Council received £188.1 million in grant-in-aid from the FCO for its public diplomacy activity.[385] The Council's memorandum highlighted its main activity in 2006-07. Examples of the programmes and initiatives included were:

- working with 100 schools, including madrassahs, in Pakistan in order to tackle alienation and radicalisation;

- agreeing a deal with Iraq to fund 1000 Iraqi scholars over five years and create partnerships between Iraq's 18 universities and UK institutions;

- organising a UK/Iranian medical week attended by over 2000 medical professionals and the first UK stand at the Tehran international education exhibition;

- the Network Effects initiative, which brought together young leaders from northern, central and eastern Europe for collaboration with the UK;

- continuing the ZeroCarbonCity initiative with projects in Russia, China and Brazil;

- a three year Climate Cool programme in China, including a documentary "Environmental Celluloid" seen by 10 million people;

- establishing an extensive internet-based programme in Brazil to reach younger audiences on climate change issues;

- designing and launching the UK-China Connections Through Culture programme in partnership with DCMA, FCO and the Scottish Executive;

- awarding £5million for 30 collaborative research projects, in partnership with the DfES, FCO and DTI, under the UK-India Education and Research Initiative;

- supporting pilot courses for 60,000 in-service teachers in Brazil;

- extending the scope of the pan-African InterAction programme for leaders, by running spin-off activities, such as training for ministers and ministries;

- running programmes for the Sudanese judiciary, Tanzanian women and young African English and French-speaking leaders in partnership with the UN Economic Commission for Africa; and

- organising the commemorative event for Ghana's 200th anniversary.[386]

234. We asked the British Council about the extent to which it was co-operating with other organisations, such as the Westminster Foundation for Democracy, in carrying out these activities. Martin Davidson told us that the Council worked with a range of partners and was seeking not only to maintain these partnerships but also to expand them in every possible case. He added:

Our whole approach is moving away from the belief that we have all the expertise within our organisation, towards trying to find expertise from other British organisations that can work in partnership with us.[387]

235. We also asked the British Council what its least successful activity had been. Lord Kinnock told us that he was most dissatisfied with the speed in which the Council had completed "residual commitments", stating that there were a number of British Council activities in Europe that he wished had ended in 2005-06 rather than 2006-07.[388] We discuss the British Council's shift of resources out of Europe and increased reliance on partnerships in paragraphs 250 to 254 below.

Performance in 2006-07

236. The Council measures its performance against its own objectives rather than directly against the strategic priorities of the FCO (the development of a shared evaluation framework was discussed in the previous Chapter).[389] It uses five corporate outputs as performance indicators for overall impact. These are: internationalism, long-term relationships, positive partnerships, self development, creative ideas and evaluation of long-term outcomes. This year the Council has also added an output measuring long-term relationships at a global level: evaluation of long-term outcomes. Since the 2005-06 Annual Report, the Council's indicators have been measured out of 100, a change which we welcomed in our last Report since it makes the results easier to interpret.[390] The Council also measures the size of its audiences in two separate categories - those it engages with directly through its activities and those it reaches remotely through web and broadcast media. It also measure customer satisfaction and reputation with its customers.

237. The Council's Annual Report shows improvement against its 2005-06 results in five out of its six corporate outputs. However, three of its results were still below target.[391] This is disappointing since during our last Annual Report inquiry, the Council told us that its 2006-07 targets reflected "a more realistic view of the impact of change".[392]

238. The Council has made large increases in its audience figures. The numbers of people taking part in its events and direct activity internationally rose by nearly 10% in 2006-07, from 15.1 million to 16.5 million. There was a huge increase in its remote reach, attracting audiences of 86.8 million, compared to 35.4 million in 2005-06.The Council's Annual Report stated that this was largely due to successful engagement with partner websites in China.[393]

239. In our last Annual Report inquiry, the Council admitted to us that while it was successful in reaching new audiences it had given less attention to strengthening long-term relationships.[394] We were therefore pleased to see that there was a large rise in the index of those who felt ties with the UK were strengthened as a result of the Council's activity - from 61 to 74%, although this was still 4% below the target of 78%.[395]

240. The Council scored 80 points in customer satisfaction and 81 for reputation with customers, up two and one points respectively from the previous year. The Council told us it was aiming to improve customer satisfaction further since the targets were still lower than it wanted them to be.[396]

241. Regarding its business performance, the Council's revenue-earning services accounted for 65% of turnover, up by 3% in the previous year.[397] Its teaching and examination businesses exceeded their targets "largely as a result of a 15 per cent increase in the volume of exams" they administered.[398]

242. We welcome the British Council's increased audience figures, in particular the huge rise in its remote reach. However, three of its corporate outputs are still below target. We recommend that the FCO set out in its response to this Report what steps the British Council is taking to ensure it meets these targets the following year.

Efficiencies

243. The British Council had a target for Gershon efficiency savings as a component of its Grant-in-aid of £4million cashable and £4.6million non-cashable for 2006-07. It fully met this target by introducing a global finance and business system in four more regions and reducing posts and closing seven regional offices in the UK.[399] Lord Kinnock told us the Council was "reasonably proud of the fact that we have been reaching targets, and satisfaction has been expressed by external examiners at the way in which we have achieved that."[400]

244. The Council now has what its memorandum described as a "more stretching target" of finding a further £4.4 million in efficiency savings in 2007-08.[401] Margaret Mayne expressed confidence that the Council would meet this target, arguing that the savings were "part of a planned programme of change". She explained:

[…] the roll-out, for example, of our new IT software has already led to some efficiency savings, and it will lead to more next year. Likewise, on our IT programme, we have already, for example, implemented voice over internet protocol, which will save us quite a lot of money next year. So, it is an ongoing rolling programme, which, in a sense, comes to fruition year on year.[402]

245. However, Martin Davidson suggested that the FCO would have to be careful to ensure meeting its efficiency target did not impact on its effectiveness:

[…] as an organisation, we have been subject to such efficiency savings over such a long time, there is no longer the space simply to find a bit of money here and there to meet them. The disciplines that we are under mean that we have to shift substantially and radically the way in which we do our work. So, for example, the move from a large number of small-scale activities to a smaller number of large ones is part of the process of trying to get much more benefit out of a given level of expenditure. So, the move towards regionalisation is again about making a step change in the way in which we work, which gives us the capacity to draw efficiency savings. Of course, it also has an impact on effectiveness, and the critical thing for us is making sure that we are aware of the likely impact of any change on how effective we will be as an organisation.[403]

246. We recommend that in its response to this Report the FCO set out what safeguards are in place to ensure that the British Council meets its 2007-08 efficiencies target without reducing its effectiveness.

247. In 2006-07, the Council employed an average of 1097 staff in the UK of a total workforce of 7925.[404] We asked Margaret Mayne whether it was surprising that such a significant proportion of the Council's staff were based in the UK. She replied:

It is not a surprise. A lot of our support services sit within the UK, and of course, the staff in the UK are a very important link between our stakeholders in the UK and our customers overseas. […]

She further argued that the Council had reduced its number of staff in the UK over past years, and that restructuring within UK operations would see a greater reduction in the number the following year.[405] Lord Kinnock added that the regionalisation of some back-office operations might lead to those functions being transferred out of the UK and into those regions. However, he warned that the Council had to make these changes "carefully", since it could not "afford to lose links in the chain when international connections and conformity to high standards are fundamental requirements.[406]

248. In our Public Diplomacy Report we recommended that the NAO urgently consider a value for money examination of the British Council.[407] We received a positive response to this recommendation[408] and look forward to reading the review's findings.

Strategic change

NEW OBJECTIVES

249. The British Council's memorandum states that the new definition of public diplomacy (see paragraph 204 above) has provided it "with clarity about how our work relates to the Government's international strategic priorities."[409] The Council also commits to setting out the contribution which its work makes to meeting these priorities.[410] However, it also emphasises that it will fulfil and measure its work against its own purpose, which continues to be, "to build mutually beneficial relationships between people in the UK and other countries and to increase appreciation of the UK's creative ideas and achievements."[411]

250. As we noted in our Public Diplomacy Report, this rationale has not changed since the British Council was instituted in 1934. In our Report we therefore recommended that the FCO should commission an independent review, as part of the CSR07 examining "what the British Council does, why it is doing it, what it should be doing, and whether any of its activity would be better conducted in other ways or by different organisations".[412] The Government's response disagreed, stating that this was not the time for such a review and that its top priority was to drive forward the recommendations of the Carter review.[413]

251. The Council's memorandum stated that it was currently "undertaking significant strategic change", restructuring its work around the following four objectives:

- inter-cultural understanding, with an emphasis on the Muslim world;

- increasing ties for the UK's creative and knowledge economies;

- helping tackle climate change; and

- making the UK a strong multilateral partner in tackling agendas of common interest in Europe and its neighbourhood.[414]

Work under these objectives would include: a new Reconnect initiative, providing leadership training for 10,000 young people from the Muslim world; strengthening education reform work, particularly in the Near and Middle East, as well as in Pakistan; a multi-country project in Europe called European Islam aiming to raise awareness of the roots of European culture and explore the contribution made by Islam; strengthening the UK's position in student recruitment and educational partnerships via the renewed Prime Minister's Initiative; a new programme called Low Carbon options to be launched in 2008; three pilot projects on climate security; and partnership funding in Europe on areas of importance to the UK.[415]

252. We asked Lord Kinnock whether the latter two of the Council's four new objectives fitted within its traditional raison d'être. He argued that the climate change programme was "utterly consistent" with the 1934 objective, since it generated "understanding and appreciation of expertise and the inquiring nature of British science and society". Likewise, he argued that the Council's activities in Europe and its neighbourhood were "completely consistent with the business of spreading appreciation, understanding and a mutuality of knowledge and values in the way that we have been trying to do for the past 73 years."[416]

253. We also asked the British Council whether by including the Middle East in its objectives, it was neglecting China and Russia. Lord Kinnock described the work the Council was doing in these two nations,[417] but conceded that it was a bit odd that they were not included.[418] Martin Davidson argued:

With the statement, we were also giving an indication of some of the shifts of resource that we are making. While we have over the last few years made substantial shifts of money into the Middle East and central and south Asia, into those largely Islamic countries—we are making more shifts to deal with them—that does not underplay the importance of Russia and China to us in those two critical areas of intercultural dialogue and so on.[419]

254. We welcome the fact that the British Council has further defined its aims beyond the 1934 objective. However, we conclude that China and Russia should be a major part of the British Council's strategy and recommend that the British Council refers to these countries in its four objectives.

SHIFTING RESOURCES OUT OF EUROPE

255. As part of its new strategy, the Council is shifting 30% of its Grant-in-Aid resources out of European operations to high priority regions for the UK. It moved £1million from Europe in 2006/07 and it will move an extra £2million into the Middle East, £2.5million into the Near East and North Africa and £3million into sub-Saharan Africa by early 2008.[420]

256. When we expressed concern about resources being withdrawn from certain countries, Lord Kinnock explained that the Council was taking three different approaches in Europe. In countries like Bulgaria, Romania and Turkey, the Council's front offices would remain open and "be very active, very obvious and very tangible". In Western Europe, it would no longer have a high level of activity since "the level of capability there among our partner and potential partner operations, including the established international cultural organisations […].is now at a mature level". Finally in those countries where it had strong English language teaching programmes which generated substantial revenue, it would retain these programmes.[421] We asked Lord Kinnock in which category he placed the Balkans. He replied that they were taking a separate approach to the Balkans because the Council was strengthening and developing its activities in several of these countries. He assured us that they would be "beneficiaries of the transfer and reorientation strategy and are not countries in which commitment or presence will be reduced."[422]

257. The Council's memorandum stated that its new approach to Europe would involve "building pan-European networks", rather than traditional bilateral activity, except with the most important bilateral partners. It would aim to increase impact through partnership funding, focusing on areas of importance to the UK, as well as expanding web-based products and services to reach larger audiences, primarily targeting students, young professionals and young leaders, up to the age of 35.[423] Martin Davidson explained:

Rather than putting money into a particular arts visit or tour[…] we will emphasise the knowledge, contacts and non-financial support that we can provide for that sort of activity.[424]

258. We asked the British Council how it would ensure it retained control of its activities when working with partners. Martin Davidson replied:

[…] while we will have a partnership approach to those major organisations, the individual partnership will be on a project-by-project basis. It will be a clearly defined project, with a clearly defined set of inputs and outcomes, so that we ensure that we are putting resources into things that matter only to the UK rather than more generally.[425]

259. We welcome Lord Kinnock's confirmation that the British Council's shift in resources out of Europe will not involve a reduction in funding for activities in Bulgaria, Romania or Turkey and his reassurance that British Council operations in the Balkans will continue to receive increased resources. We recommend that in its response to this Report, the FCO clarify whether it has any concerns about the extent to which the Council will be able to achieve its objectives and retain control of projects when relying on partners.

260. As part of its shift in resources out of Europe, in certain European countries, the British Council will retain direct public access facilities, such as teaching facilities, only where services are paid for on a full cost recovery basis by individual users.[426] However, we were surprised to find that the British Council was charging for language teaching in Afghanistan, clearly a high priority area. When we questioned Martin Davidson about this, he replied that it was due to the Treasury requirement to ensure its commercial activities were not subsidised by public money. He added that the Council was trying to expand its English teaching work, first by establishing whether it could find the resources to find cheaper or free places for target audiences and second by working with countries' public education systems. He told us that the Council collaborated "with virtually every Education Ministry" in the Middle East.[427]

261. We recommend that as part of its shift of resources into the Middle East, North Africa and South and Central Asia, the British Council should be aiming to expand its English language teaching work. We recommend that, as well as strengthening links with countries' education systems, this expansion should include providing cheaper or free places for English language lessons in the highest priority areas, such as Afghanistan.

CLOSURES

262. In our last Report we recommended that the FCO should explain the basis for the proposed closures of the British Council's teaching centres in Kosice, Varna, Chittagong, Istanbul and Tel Aviv, whether it had approved each closure and the assessment it had made of the effects of the Council's withdrawal from these cities in terms of the benefit that language teaching brought to the overall public diplomacy effort.[428] In response the FCO said that it had been consulted about the closures, which had been based on evaluation of commercial sustainability and the effectiveness of their contribution to wider public diplomacy objectives, as well as security.[429]

263. We asked Lord Kinnock if the Council had assessed whether the closures had had an impact on public diplomacy or language teaching. He replied, "Yes, we have. I do not think that anybody could claim that it is even marginal."[430] He added:

To take your Istanbul example […] The city has between 15 million and 20 million people […] We were offering teaching to about 500 or 600 individuals within Istanbul, and there was a huge diversion of our time and effort from management and other resources into doing that. We are now working with education authorities across all the major cities in Turkey on the use of English within the public education system.[431]

264. Martin Davidson explained that the Council was expanding virtual educational services in order to reach a wider audience:

We have, for example, a service now in Arabic, called Go4English […] in partnership with the BBC. We have more than 200,000 individuals using that service regularly. It is on a completely different scale from that which we can deliver through our direct teaching operations.[432]

265. In November 2006, we were informed about the permanent closure of the Council's library services in Jerusalem, in place since 1946, and the movement to shared office space in the city with "a trusted international partner". The Council wrote:

The need for reassessment and change arises from the reality that out West Jerusalem Office and its public access service […] are not well used. There are only 690 members of our library of which only 380 can be considered "active". 80% of our library members fall outside our target audience.[433]

Lord Kinnock explained that the library's resources had now been shifted into the public library in Jerusalem and that the "initial indication" was that the material was getting more use there than it had when in the Council's premises.[434]

266. On 1 July 2007, the Council also closed its library in Athens, citing the need to "release time/space/staff for the provision of new value-added services to our customers including online resources."[435] Martin Davidson told us that the library had:

[…] filled a very important role for many years, but it no longer does so. We are moving away from that style of work and recognising that a very large number of young people in Europe with whom we are seeking to work get their information in a variety of ways. I think that making that shift and taking the money out and putting it into other things is critical.[436]

267. We accept that in some circumstances it may not make financial sense to keep traditional library or teaching facilities open and we welcome the expansion of virtual educational services as a means of reaching a wider audience. However, we recommend that the British Council ensure that in any alternatives it provides to direct language training or library services, it is made clear that the British Council is the source of the material.

Status in Russia

268. Three years ago Russian police raided the British Council's offices, claiming the Council was involved in illegal commercial activity on which no tax was paid. During our Public Diplomacy inquiry, the Council explained that it was operating in Russia under a cultural agreement signed when it first entered the country in 1994. The Russian government had indicated that it no longer considered the agreement to be an adequate framework, but the Russian Ministry of Foreign Affairs had repeatedly assured the Council that it would be able to negotiate its tax status with the tax authorities as soon as a new Cultural Centres Agreement was signed. The last assurance was made in May 2004, but the Russian authorities had carried out the raids nonetheless.[437]

269. In 2005, the Council settled all outstanding tax claims, totalling £1.4million and registered itself as a regular tax payer. The case was formally closed in December 2005, but the investigation was reopened the following month.[438] The Council's memorandum to our Global Security: Russia inquiry stated that it was being subjected to a further tax inspection.[439] Lord Kinnock told us that other cultural organisations were facing some problems, but that the pressure on the Council was "unique in degree and intensity".[440]

270. In December 2006 the Council informed us that it was closing down all language teaching in Moscow.[441] This was due to the imposition of a licence requirement, which the Council had previously been told it did not need. The Council has now also discontinued teaching in St Petersburg. Lord Kinnock told us:

It was a matter of great regret to us that because of an absolutely intolerable statutory environment, which suddenly came upon us, we were not able to continue our teaching English language in Moscow, and, for similar reasons, we had to cease our very well attended, over-subscribed classes in St. Petersburg a year before that.[442]

On 15 June 2007, Russia demanded that the Council move out of one of its offices in Ekaterinburg.[443]

271. As well as leaving the Council's diplomatic and taxation status uncertain, the inability to conclude a Cultural Centres Agreement is also having consequences for the Council's staff. Lord Kinnock explained to us that the failure to conclude the Cultural Centres Agreement left the migration and citizenship status of both British and locally-engaged staff in doubt.[444]

272. The Council's memorandum to our Global Security: Russia inquiry stated that it was "continuing to seek agreement on a new Cultural Centres Agreement, working closely with the Foreign and Commonwealth Office to achieve this".[445] Lord Kinnock told us that when the British Council heard, in early 2006, that Russia wanted to return to discussions on a near final draft, it thought this was "evidence of a fresh initiative from the relevant Russian minister", although it did not "build […] hopes too high". He added:

Those discussions continue. […] The impression is conveyed that there are only one or two small outstanding issues, and it could be concluded.

[…] We persist in our efforts. We are always ready to undertake fresh initiatives. Some of our interlocutors give us the impression that they are just as anxious as we are, but for reasons of what I will call superior political consideration in the Russian authorities, we have not yet been able to conclude that agreement.[446]

273. We asked the Council what lessons it had learned from its experience in Russia. Martin Davidson told us that the Council was examining its status in all countries at present to ensure it matched "both the range of activity that we undertake and the shifts and changes in the nature of cultural relations around the world." He explained that many countries were finding this "curious, if not slightly uncomfortable", but that because of its experience in Russia the Council had to seek this greater clarity.[447]

274. Despite its difficulties, the Council has been able to achieve some successes in Russia. Lord Kinnock told us:

[…h]alf the primary schools in Russia are using British Council English language primers. We have huge programmes of cultural, economic and scientific activities that attract immense attention and strong commitment from Russians, especially young Russians.[448]

The Council also ran a successful Whistler exhibition in partnership with the Tretyakov Gallery in Moscow.[449]

275. We welcome the successful activities the British Council has been able to carry out in Russia, against a background of obstruction from the Russian authorities. We recommend that in its response to this Report, the FCO set out what representations it has made to Russia to urge it to conclude a Cultural Centre Agreement as soon as possible.

276. In October 2007, the British Council informed us that it was going to transfer its network of nine regional centres in Russia to local partners by the end of December 2007, retaining offices in Moscow, St Petersburg and Ekaterinburg only.[450] We will consider this and other aspects of British Council's operations in Russia further in our future Global Security: Russia Report.

Comprehensive Spending Review 2007

277. In June 2007, Lord Kinnock told us that the British Council was having "reasonable" negotiations with the Treasury on its CSR07 settlement. He argued that anything below a flat cash settlement would jeopardise the British Council's operations, but that, "with difficulty", the Council could accommodate a flat cash settlement.[451] However, the Council was negotiating with the Treasury for additional sums in two particular areas. The first was for a "significant, but not huge, additional sum" with which, the Council argued, it would be able to get quicker returns from its shift in resources to the Middle East, in particular in terms of impact with young people. The second area was for additional investment in the Reconnect programme, which worked to reduce marginalisation and the possibility of alienation and radicalisation of Islamic youth. The British Council argued:

The reality is that, having undertaken very significant activities with success in several places in this programme, we know that if we could spend more we could extend that success and we could do it particularly in what we can describe as high priority areas.[452]

278. The Council received £4 million in 2005-06 and £6 million in 2006-07 from the Treasury to assist in upgrading the security of its estate.[453] Lord Kinnock informed us that the Council had not asked for any additional sums specifically for security in the CSR07, but that it was "assisted by the fact that we know that if evident needs arise the Treasury and the Foreign Office are prepared to be helpful".[454] Martin Davidson added, "[…]we have spent something like £14 million over the past three years in upgrading security and at the moment we feel that we can manage the security environment that we are in."[455]

279. The British Council received the following settlement in CSR07:

Figure 2: CSR07: British Council baseline and additions

£million

Baseline Additions

2007-08 2008-09 2009-10 2010-2011

British Council 193 3 8 4

Source: HM Treasury[456]

As Figure 2 shows, the British Council's allocation only increases from £194 million in 2007-08 to £198 million in 2010-11, an average real terms reduction of 2% per annum. However, CSR07 announced that the Council would receive an additional £3million funding a year for its Reconnect initiative.[457]

280. Given that the British Council is facing a real reduction in its total budget over the three year CSR07 period, we recommend that in its response to this Report the FCO set out whether the Council will now have to divert funding from more activities than previously planned in order to fund the additional investment in its Reconnect programme. We conclude that the Council should also have received additional funding for restructuring in this period so that it could achieve greater successes more quickly. We also recommend that the Government give a firm statement that it would be willing to give the British Council additional resources to further improve the security of its estates if it faced unexpected security issues during the SR07 period.

383 Foreign Affairs Committee, Eighth Report of Session 2005-06, Foreign and Commonwealth Office Annual Report 2005-06, HC 1371, para 116 Back

384 Foreign Affairs Committee, Eighth Report of Session 2005-06, Foreign and Commonwealth Office Annual Report 2005-06, HC 1371, para 117 Back

385 Foreign and Commonwealth Office, Departmental Report 2006-07, p 109 Back

386 Ev 125 Back

387 Ev 132 Back

388 Ev 133 Back

389 Ev 125 Back

390 Foreign Affairs Committee, Eighth Report of Session 2005-06, Foreign and Commonwealth Office Annual Report 2005-06, HC 903, para 117 Back

391 British Council, Annual Report 2006-07, p 7 Back

392 Foreign Affairs Committee, Eighth Report of Session 2005-06, Foreign and Commonwealth Office Annual Report 2005-06, HC 903, para 120 Back

393 British Council, Annual Report 2006-07, p 7 Back

394 Foreign Affairs Committee, Eighth Report of Session 2005-06, Foreign and Commonwealth Office Annual Report 2005-06, HC 903, para 120 Back