Examination of Witnesses (Questions 1-19)
BRITISH COUNCIL
& FOREIGN & COMMONWEALTH
OFFICE
23 JUNE 2008
Q1 Chairman: Good afternoon and welcome
to the Committee of Public Accounts where today we are considering
the Comptroller and Auditor General's Report on the British Council.
We welcome from the British Council Martin Davidson and Rob Lynes,
and Keith Luck from the Foreign and Commonwealth Office which
provides most of the Council's public funding. Mr Davidson, I
would say generally it is a good Report.
Mr Davidson: Thank you, Chairman.
Q2 Chairman: Clearly we would value
the work which the Council does around the world. You have an
advantage because there is an insatiable appetite around the world
to learn English; it is the leading business language. How much
added value do you add? How much work do you do which could be
done perfectly adequately by the private sector?
Mr Davidson: As you say, we do
have this enormous advantage over our counterparts from other
countries. The French and the Germans are essentially using language
as a means of expressing their culture, whereas for the UK the
English language is almost a commodity language which everybody
wants to learn. I think we add value in perhaps two particularly
important ways: one is we are delivering English language directly
to 300,000 learners in over 50 countries. If you compare that
with our leading commercial competitors: for example, Bell International
delivers their English language teaching in 13 countries; International
House delivers it in nine countries; and our principal American
competitor, the Wall Street Institute, delivers in 27 countries.
So we are more widely spread and we are delivering it into a whole
range of countries where there are not large-scale resources and
it is not simply a game for the rich people. Out of our English
language teaching we are also making particular emphasis on providing
support to teaching of English within the public education system.
We are providing support to teachers' associations; we are providing
lesson plans and other teacher support on the internet which teachers
are able to download; and we have about one million users a month
who take three million pages of English language support work
out of our internet site. It is about delivery of direct teaching
to a relatively small number, but also providing support to the
English language learning for a much wider number.
Q3 Chairman: What I was hoping you
were going to say to me also is that we are not just teaching
language, we are not just a commercial operation, we are instilling
interest in British culture, tradition and values and all the
rest of it?
Mr Davidson: That is absolutely
the case.
Q4 Chairman: What do you do to add
value as far as the British taxpayer is concerned in spreading
the good name of Britain abroad, and not just teaching the English
language?
Mr Davidson: What English language
provides is, first of all, a presence in a range of countries
where we would not otherwise be present; but on the back of that,
of course, we are delivering a whole set of other services, including
information services, education support services. We are working
with organisations in different countries, principally public
organisations, on things like education reform. We are also looking
at a range of issues around good governance—working with
authorities on the development of support for civil society; but,
most importantly, we are dealing with a very large number of people.
We have direct engagement with over 15 million people a year.
We have reach to a further 112 million, all of whom are getting
access to information, knowledge and understanding about the UK.
Q5 Chairman: We read in paragraph
2.16 that you are moving to regional projects. There does not
seem to be any systematic evaluation of this. Is there not a risk
that you might lose local contacts?
Mr Davidson: The purpose of the
move towards regional programmes is really twofold: one is to
improve efficiency; and the other one is to improve effectiveness.
The first thing is that, as an organisation we have traditionally
built our programmes around the 110 countries and that means there
is regular duplication of effort. The move towards regional programmes
is to try and drive that duplication out of the system. For example,
our Interaction programme in Africa, by moving from a country
focus programme towards a regional one, we have taken the unit
cost per trainee from £8,000 per person down to £4,000
per person. Also, obviously the big issue for us is about effectiveness.
While it is early days, I think there are good signs that through
our performance management systems we are seeing that the large-scale
regional programmes are getting greater impact than our local
programmes. The great trick for us—and you are quite right
that our focus must remain local—is to develop programmes
at a regional level but apply them locally in a way which as far
as the end user is concerned is focused on their specific and
personal needs.
Q6 Chairman: In paragraph 2.34 we
see ideas developing for having lower cost teaching. These are
not particularly innovative ideas. Why has it taken them so long
to roll-out?
Mr Davidson: If I could, I would
ask Mr Lynes who has direct control of some of these programmes.
We have had a traditional method of delivering English language
teaching. Really over the last 18 months or so we are looking
to find ways of doing it differently. Perhaps, Mr Lynes, you could
give a view of what we are doing in your region.
Mr Lynes: Chairman, in some ways
some of the suggestions in the Report are not innovative, but
we have been working in partnerships in a lot of our centres around
the world, for example in Hong Kong and Madrid, where we teach
out of schools or universities, and we are expanding that now,
for example, in the region I look after in the Middle East. The
benefits of that are: greater access for learners; but also a
lower cost in terms that there is no capital expenditure in buildings.
However, the Report from KPMG actually looked at other models
of operation, possibly in the area of franchising through a trading
arm or joint ventures. So partnerships are certainly an area we
will continue to expand. We are looking at further models which
will be quite innovative.
Q7 Chairman: It is quite important
that you get contributions from third parties. If we look at figure
7, which you can read on page 15, you see that actually between
2001 and 2007 there is a worrying decline in income from sponsorship
and commercial partnerships. Why is that and what are you doing
about it?
Mr Davidson: I accept that it
is a worrying decline. I perhaps should say that 2000 and 2001
was a slightly unusual year being both the Millennium and the
year when we had a very major programme of sponsorship of activity
in China; but over the last five or six years we have averaged
about £28 million in sponsorship. In our recently published
corporate plan we intend to increase our sponsorship by 12% per
year over the coming three years, which should bring us back up
to broadly where we were at its peak. We are also looking at ways
in which we can develop an additional set of programmes which
will take it beyond that. I think the reason why perhaps we have
allowed this to slip has been the move towards regional programmes
and away from some of the very large-scale arts programmes at
a country level which have largely been the major recipients of
sponsorship; but we already have signs, through our UK-India Education
Research Initiative where we are getting significant commercial
sponsorship, about £1.8 million a year,[1]
the large-scale regional programmes do have the opportunity to
attract the sponsorship that we are looking for.
Q8 Chairman: You had a staff survey,
and we can read about that in figure 12, page 24. It is not a
bad survey except where you are weakest is what your staff think
about you—the leadership that you and your senior managers
provide. Why is that, do you think?
Mr Davidson: We have taken our
staff through a very significant set of changes both overseas,
the move from a traditional way of working for over 60 years at
a country level towards regionalisation; and a move in the UK
away from very significant management at a very hands-on level
towards working in teams, rather than personal responsibility.
I think the particular survey you see here is a response to the
shifts in-year. Of course it is something which we are worried
about. We are looking and making strenuous efforts to see how
we can improve both the way in which we talk to our staff throughout
the organisation but, perhaps more importantly, the way in which
we listen to our staff as well.
Q9 Chairman: Can you assure us that
your financial success is not based on your charitable and official
status, which may be unfair competition with commercial providers
in these countries?
Mr Davidson: We believe that our
financial success is not dependent upon any form of unfair competition.
It is something which we are extremely conscious of. Of course
charities right across the country undertake a range of commercial
or pseudo-commercial activity in the same way as we do. The monies
that we receive through our commercial activities are all applied
into the charitable purposes of the organisation. The sorts of
measures we take to try and ensure there is not unfair competition
we ensure through a clear firewall, that there is no subsidy of
our teaching or other operations from the grant. We also ensure
that the commercial activities pay a proportion of overheads which
match the benefit they get from the main organisation. Those splits
are looked at by the NAO as part of our annual audit. We have
a range of policies in the organisation to try and ensure that
we do not engage in any form of unfair competition.
Q10 Mr Touhig: Mr Davidson, the British
Council needs to be congratulated on the financial success and
strong reputation of your English language examinations business,
but I am concerned to read in paragraph 5 of the summary on page
6 that the business "charges premium prices" and has
a limited reach outside overseas capitals. You said in answer
to a question from the Chairman you are not simply going "for
the rich". Is that not precisely what you are doing when
you are in danger of providing a service that only the rich can
access?
Mr Davidson: I am very conscious
of the comments made by the NAO in the Report. It is true that
our direct teaching operations are principally located in the
capital cities; but, as Mr Lynes pointed out a few moments ago,
part of our development programme is to find ways in which we
can deliver teaching at lower cost through partnerships both within
capital cities but also in other cities across the country. Also
we make a particular effort to build out from those teaching centres
in a way which actually does help deliver English language through
the public education system—so it is not just aimed at those
who are the richest in society but we use it as a base on which
we can deliver further.
Q11 Mr Touhig: I accept it is not
"aimed at", but if the Report says on page 6 that you
are charging "premium prices" then only the rich can
afford them?
Mr Davidson: I think the question
here is: what do we do on the back of that? The teaching centres
themselves do charge premium prices because of the way in which
we actually teach. We, for example, use largely native teachers,
although again we are looking at developing teaching centres which
use non-native speakers of English to make sure that we both bring
down costs but also make it more widely available.
Q12 Mr Touhig: You have reduced the
number of teaching centres in recent years, have you not, rather
than expand them. Why have you done that?
Mr Davidson: We split the teaching
centres into two groups: those which operate in the wealthier
countries and where we are able to develop a substantially increased
range of activity; but also identifying the poorer countries where
perhaps we are operating only on the margins of profitability,
but where the public diplomacy/cultural relations impact of our
teaching is greatest. Where we found that we were not able to
teach effectively because of either local restrictions, or that
we were unable to do so in a way which covered its costs in those
countries where it was not a major public diplomacy agenda, then
we closed those centres.
Q13 Mr Touhig: Cost was a factor.
Are British interests in that country a factor?
Mr Davidson: That is correct,
yes.
Q14 Mr Touhig: You consult the Foreign
Office on that?
Mr Davidson: We do consult the
Foreign Office on that, yes.
Q15 Mr Touhig: It is in our interests,
is it not, to ensure the British Council English teaching gets
to as many people as practically possible for philanthropic and
for our own national interests, and developing our interests with
our countries?
Mr Davidson: It is indeed. I think
we see our direct teaching as only being able to reach a small
proportion of the potential market. We estimate there are probably
something like a billion people around the world wanting to learn
English at the moment. While it provides us a base on which we
can develop the programmes, we must also develop a whole range
of other activities which enable us to provide support to those
people as well.
Q16 Mr Touhig: There are about ten
centres you have closed since 2005—how many have you opened
since then?
Mr Davidson: I do not have the
figure off the top of my head.
Q17 Mr Touhig: You have opened some?
Mr Davidson: I believe we have,
yes. I am not sure that we have opened any new country operations.
We have certainly opened branch operations in a number of existing
countries.
Q18 Mr Touhig: Could you let us have
some figures and perhaps how they are progressing?[2]
Mr Davidson: Yes, indeed, I will
give you a note.
Q19 Mr Touhig: Paragraph 2.28 of
the Report suggests that the Council's approach to setting up
new centres of English teaching is not very systematic. What are
you going to do about that? Your systems are not very good, it
says in the Report.
Mr Davidson: I think what the
Report is referring to is an approach which focuses on an existing
model of operation. What we are looking for is developing new
models which are going to enable us to develop in centres in the
countries where we perhaps have not been before. For example,
we did indeed recently open a new operation in Libya, and in doing
so we were looking at ways in which we can develop that in a slightly
different model than perhaps our traditional one. The sorts of
things we will be looking at are: non-native speakers of English;
branch and working with partners. Indeed we are using commercial
advisers looking at issues like franchising or other approaches,
which are completely non-traditional for us as an organisation.
1 Note by witness: UKIERI has secured £1.8m sponsorship
so far and plans to raise £4.15million over five years from
06 to 2011. Back
2
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