British Council Faces Further Job Cuts and Closures Amid Loan Repayment Struggles
The British Council is set to reduce its workforce further and close operations in 11 countries as it attempts to repay a substantial £197 million government loan taken during the Covid-19 pandemic, according to the National Audit Office (NAO).
Despite its long-standing role in promoting English-language education and UK culture internationally, the agency remains loss-making six years after the pandemic and is not expected to return to profitability until 2029-30, the NAO report states.
The loan, originally £60 million plus market-value interest, was provided by the Foreign, Commonwealth and Development Office (FCDO) in 2020 and has grown to £197 million. Repayment is due by September 2027.
The British Council has not repaid any capital since 2024 but has paid £42 million in interest and anticipates paying an additional £53 million in interest by 2029-30. Since the pandemic, it has incurred net losses totaling £184 million.
The FCDO and the British Council are reportedly in the final stages of negotiations to agree on a repayment plan, focusing on settling the loan within 15 years, the report adds.
Turnaround Plan Includes Workforce Reductions and Country Closures
The agency’s turnaround plan involves reducing its global workforce by approximately 15%, equating to about 1,180 jobs out of 7,880, by 2029-30. These reductions will occur through redundancies, non-renewal of contracts, and natural attrition.
This follows a loss of 2,110 jobs since 2021. Additionally, operations will be closed in 11 countries and scaled back in 15 others, although the British Council has not confirmed specific details.
The NAO notes that the current plan requires ministerial approval.
Recent staff cuts and asset sales abroad have sparked protests among agency employees across Europe, particularly in Germany and Spain, alongside letters expressing no confidence in British Council management.
Loan Repayment Proposals and Rejections
The British Council had proposed repaying the loan through swaps involving its art collection, which includes works by LS Lowry, Francis Bacon, Tracey Emin, and David Hockney. This proposal was rejected.
It has also requested that the debt be written off, a request declined by the FCDO and Treasury due to compliance with the UK Subsidy Control Act 2022, the report states.
Official Statements
Gareth Davies, head of the NAO, said: "Any agreement needed to provide clarity to parliament on the financial future of the agency and the eventual settlement of the loan."
Geoffrey Clifton-Brown, chair of the public accounts committee, described the agency’s financial position as "deeply concerning and untenable" and stated: "It is not sustainable for the FCDO and the British Council to continuously extend the loan year after year, rather than agree on a lasting solution; they must do so as soon as possible to ensure that the British Council is viable for the long term."
A British Council spokesperson welcomed the report, stating:
"We are taking all necessary steps to significantly cut costs and grow our revenue, ensuring that the British Council is modern, efficient and able to adapt to changing economic conditions.
Alongside this, we continue to work with the FCDO to resolve the key issue of our £197m government loan, which was awarded on commercial terms, with interest at market rates. We look forward to agreeing a solution to the loan, enabling us to continue with our mission to support peace and prosperity for the people of the UK and millions of people across the globe."
The FCDO was approached for comment.
