Baroness Thornton
To ask His Majesty’s Government what progress they have made in supporting and funding the work of the British Council.
Lord in Waiting/Government Whip (Lord Lemos) (Lab)
My Lords, I declare my interest: I was a board member of the British Council for 12 years—an unbroken record, I am told—many of them as a trustee, deputy chair and as acting chair.
The Government have increased funding for the British Council, and we are allocating it £173 million grant in aid per year until 2028-29. In addition, we have provided a one-off cash injection of £10 million this year to support the British Council to restructure its grant-funded operations, in line with its financial turnaround plan. We have also agreed to the British Council retaining the proceeds of asset sales of £60 million. These are significant increases, from the 2024-25 baseline of £162.5 million, when this Government took office. This is a very positive settlement for the British Council in what all noble Lords know are challenging fiscal circumstances.
Baroness Thornton (Lab)
I thank my noble friend for that Answer. I have great affection and support for the British Council, having been a parliamentary ambassador for it for many years, and having met many incoming delegations over the years. What I did not hear in my noble friend’s Answer was a resolution of the punitive £200 million Covid-era solvency and restructuring loan handed to the British Council by the then Conservative Government. The costs are eye-watering: £15 million in interest every year before even making repayments. Can my noble friend tell me whether this is going to be resolved?
Lord Lemos (Lab)
As my noble friend knows, the loan was made on commercial terms to ensure compliance with the UK Subsidy Control Act, which means that interest rates are set at market rates. For the last five years, the British Council has made losses of around £50 million per year, greatly in excess of the loan repayments. The priority, therefore, is for the British Council to address these ongoing commercial losses, return to surplus and implement its financial turnaround plan, to get itself back on to a long-term financially sustainable footing. In the meantime, the British Council continues to do excellent and important work, funded by grant in aid.
Baroness Northover (LD)
My Lords, it is excellent that the British Council has been appointed as the UK’s national agency for the Erasmus programme. As we seek a closer relationship with the EU, how can we make sure that the British Council can play a full part in this, unhampered by this huge Covid debt?
Lord Lemos (Lab)
The noble Baroness is right: the Erasmus programme is an important part of the work the Government are doing with Europe, and the British Council has a big role to play in that. That is not one of the British Council’s commercial activities, as I understand it—but I will correct that if I have got that wrong—and therefore will continue and will not be affected by the discussions about the loan.
Baroness D'Souza (CB)
My Lords, the £15 million interest, which is paid annually by the British Council because of the £200 million Covid debt, is bringing the British Council to its knees. Would the Government consider some creative solution to this debt—for example, by granting the British Council a holiday or delaying the payment of that £15 million interest debt until its financial situation becomes a bit better? As we know, it is struggling, and it is doing everything it can to restructure, which includes the letting go of a huge number of staff around the world. This is very much to the detriment of the long-term future of the British Council.
Lord Lemos (Lab)
As I said, the loan must comply with the UK Subsidy Control Act, but the Government have already made some concessions by extending it to 2027. The British Council submitted its turnaround plan in August 2025, and it has been independently reviewed. It is obviously highly commercially sensitive, and therefore I will not give a running commentary. However, as I am sure the noble Baroness will be pleased to hear, we hope that the FCDO will agree to restructuring the loan in the coming weeks.
Lord Bellingham (Con)
My Lords, almost exactly one year ago, Russia designated the British Council an “undesirable organisation”, and the British Council was then forced to suspend all its remaining activities in Russia. Can the Minister tell us what the current situation is? Has any of its work there been reactivated? For example, are Russian students now able to access the IELTS, the global English standardised test?
Lord Lemos (Lab)
I thank the noble Lord for his questions. As he knows, the problems that the British Council has encountered in Russia go back a long time, and we take very seriously the recent problems that he mentioned. It is not a comfortable position for the British Council at all. I do not know the specific answer to the question about IELTS, but I am happy to come back to the noble Lord on that.
Baroness Alexander of Cleveden (Lab)
My Lords, I declare my interest as deputy chair of the British Council. On current plans, it is likely that this Covid-era loan will be paid down for the next 15 years plus. Can my noble friend the Minister say why the Government have not accepted the British Council’s offer of using its art collection in lieu of the loan, given that HMRC regularly accepts artwork from private estates in settlement of tax liabilities? Why can a comparable arrangement not be found for the Government’s own soft-power agency? I am aware of the complexities of the matter, so I invite my noble friend the Minister to write to me on the specific issue of the art collection paying down the loan and to place a copy in the Library for other noble Lords.
Lord Lemos (Lab)
I am of course happy to write to the noble Baroness, but I make it clear that I hesitate, with my noble friend Lord Livermore sitting next to me, to say anything other than that the Treasury expects the loan to be paid in cash. He has made that point before, so I dare say he may have some views on this letter too. The art collection is a matter for the British Council to decide on, not for the Government.
Lord Callanan (Con)
My Lords, the British Council has an important role to play in helping the UK to project its influence as a force for good on the world stage. It is, consequently, a member of the UK Government’s Soft Power Council. That council met four times last year, but it has not met once this year. Could the Minister tell the House why?
Lord Lemos (Lab)
As the noble Lord knows, soft power extends far beyond the Government, the British Council and, indeed, the BBC World Service to many other sectors—higher education, the creative industries and so on. The Soft Power Council had an independent review under Minister Elmore. Let me be clear that what is needed in the Soft Power Council is better co-ordination and more focus across all the different sectors, not just for the British Council and for the BBC World Service. That is what Minister Elmore will take forward.
Lord Ricketts (CB)
My Lords, over a long diplomatic career, I have seen a lot of the British Council’s work around the world and just how respected it is as a torch-bearer for British culture and education around the world. Is it true that the British Council has to dispose of properties and close down in a number of countries in order to deal with financial pressures? Is that really in the interest of British soft power?
Lord Lemos (Lab)
The British Council regularly reviews its estate, and it will continue to do so. The issue of soft power and Britain’s international reputation is about outcomes; it is not only about property. I have no doubt that, as part of the turnaround plan—and I will be straightforward about this—the British Council will have to review its estate, but it will continue to do its excellent work on cultural relations.
Baroness Kennedy of The Shaws (Lab)
My Lords, I had the great privilege, from 1998 until 2004, of being the chair of the British Council. Sometimes, it is useful to draw on one’s institutional memory. The reason that the British Council was set up in the middle of the 1930s was to share British values, as we saw the rise of fascism and Nazism across Europe. I just remind noble Lords that, as well as being a torch-bearer for our culture and language, it is also a torch-bearer for our values. Is that being understood by the Government and by the new arrivals in the Commons? Not very many of them will know that the British Council has been at the heart of promoting democracy, the rule of law and many other things and aspects of our culture.
Lord Lemos (Lab)
I entirely agree with my noble friend, and I was proud to be her deputy chair at the British Council. It is absolutely true that the British Council represents Britain’s values, and that helps with our standing in the world. In order to reinforce my noble friend’s point, I will draw attention to two of the British Council’s excellent programmes. The British Council continues to manage £78 million of scholarships —Chevening, Marshall and Commonwealth scholarships. Exactly in the way that my noble friend described, the British Council has a very big programme with Ukrainian schools, of which it should be extremely proud.