I was sent the actual testimony of British Council CEO Scott McDonald before the Foreign Affairs committee. The situation over at the BC seems even worse than the Times article made it out to be. Here are a few highlights:
- The British Council owes £200 million (from an original loan of £250 million) to the Foreign Office. At the end of each year this loan is rolled over to the next year. This is the reason for the regular delays in getting the British Council’s annual reports. Regarding the delay, McDonald said: “we cannot file our accounts until we have that rolled over, because without it we would be insolvent.” This is the problem of the moment.
- A lot of interest is paid. Noted McDonald: “Based on the way that it is structured at the moment, it is a high interest rate. It is pretty onerous. We pay £14 million a year in interest. Every year when we roll it over, there are a couple of million in admin costs for rolling it over.”
- BC is seeking a 20-25 year repayment plan for the loan, beginning 2-4 years from now.
- There are plans to reduce costs by £250 million over the next five years. So far, headcount has been reduced by 17%, and the BC has pulled out of 18 countries. All back-office functions have been outsourced.
- And BC’s IELTS operations in India have been sold. Regarding this sale: “When we first took the loan, which was in the middle of covid, it was £250 million. The first thing we did was sell one of our really good businesses, the English assessment business in India, so we could pay back some of the money and show goodwill right away. We sold that business and paid back £50 million of the loan right away and brought it down to £200 million.
- Aside from the loan, the BC gets £165 million yearly from the British government to support its operations. They are asking for an additional £75 million (plus support on the loan).
- Without the above bump-up (and loan support), the BC would likely pull out of 30-40 more countries.
- There is a weird dance between McDonald and the Chair about why and how the BC was 53 million in the red post-Covid (‘22-’23).
- Some of the BC art collection can be sold. Some of the 40 buildings owned by the BC can also be sold.
- McDonald: “There is lots of organised crime that tries to access those [IELTS] exams.”