The British Council is facing further workforce reductions and the closure of operations in 11 countries as it struggles to repay a crippling £197m Covid-era government loan that threatens its survival, according to the public spending watchdog.
Financial Struggles Persist
The UK's soft-power agency remains loss-making six years after the pandemic and is not expected to turn a profit until 2029-30, a report from the National Audit Office (NAO) reveals. Repayment of the 2020 loan from the Foreign, Commonwealth and Development Office (FCDO), originally £60m plus market-value interest and now standing at £197m, is due in September 2027.
The agency, which has promoted English-language teaching and UK culture abroad for nearly a century, has not repaid any capital since 2024 but has paid £42m in interest and expects to pay another £53m in interest by 2029-30. It has incurred net losses of £184m since the pandemic.
Negotiations Underway
The FCDO and the British Council are said to be in the final stages of negotiations to agree on loan repayment, with the focus on a 15-year repayment plan, according to the report. A turnaround plan proposed by the agency would involve further staff reductions of about 15%, or roughly 1,180 of its 7,880-strong global workforce, by 2029-30 through redundancies, non-renewal of contracts, and natural wastage. This is in addition to the 2,110 jobs already lost since 2021.
Operations would close in 11 countries and be scaled back in 15 others, though the agency would not confirm details. The NAO stated that the current plan would require ministerial approval.
Protests and Asset Sales
Staff cuts and the sale of assets abroad have sparked protests by agency staff across Europe, particularly in Spain and Italy, as well as letters of no confidence in British Council management. The British Council had offered to repay the loan through swaps for its art collection, which includes works by LS Lowry, Francis Bacon, Tracey Emin, and David Hockney, but this was rejected. It has also called for the debt to be written off, a move rejected by the FCDO and Treasury due to compliance with the UK Subsidy Control Act 2022.
Official Reactions
Gareth Davies, head of the NAO, said any agreement must provide clarity to parliament on the agency's financial future and eventual loan settlement. Geoffrey Clifton-Brown, chair of the public accounts committee, described the agency's financial position as “deeply concerning and untenable.” He added, “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, noting it “clearly sets out the challenges we have faced since our operations around the world were hit hard by the Covid-19 pandemic.” The spokesperson said, “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.”
A UK government spokesperson said, “Government support was necessary to stabilise the British Council following an unprecedented shock to its income during the pandemic. Our focus is on reaching a long-term sustainable agreement that supports the British Council’s recovery while protecting public finances.”
