Cultural body in crisis
The British Council is in “real financial peril” and selling off assets to stay afloat, its chief executive Scott McDonald has warned MPs, urging ministers to restart stalled talks over a £197 million Covid-era loan.
Speaking to the House of Commons foreign affairs committee, McDonald said the organisation, the UK’s flagship international cultural and educational body, had reached breaking point after months of deadlock with the Foreign, Commonwealth and Development Office (FCDO).
“We’ve made close to no progress and everything has now stalled,” he said.
“We are now selling everything the British Council has that we are able to sell. We don’t have anything else.”
Assets sold and jobs cut
McDonald confirmed a second major restructuring was under way, including further job losses, the sale of buildings worth about £90 million, and plans to shut operations in 35 countries. These measures, however, require FCDO approval, as does access to the cash raised from the sales.
Founded in 1934, the British Council operates in roughly 100 countries and reached 650 million people in 2021–22 through its teaching, exams, and cultural programmes. But its revenues have been severely hit since the pandemic, with falling demand and currency losses squeezing income.
“If soft power is worth it, the UK needs to fund it,” McDonald said.
“If it’s not worth it, then we can get to work shrinking further.”
Loan repayment threat
The £197 million loan, issued during the pandemic to keep the council solvent, is due for repayment in September 2026. McDonald warned that enforced repayment would mean the council’s “complete withdrawal” from its global work.
He suggested transferring the organisation’s 9,000-piece art collection, worth an estimated £200 million, to the government as a way of settling the debt, or alternatively writing off the loan “with the right political will.”
Annual interest payments of up to £15 million were “not wise,” he added.
Government response
An FCDO spokesperson said: “Our record of support to the British Council is clear. No decisions have been made on future grant funding, but we continue to work with the British Council and HM Treasury on a resolution for the outstanding loan.”
McDonald, who sits on the government’s new Soft Power Council, said former foreign secretary David Lammy had been “excited” about Britain’s cultural diplomacy but questioned whether successor Yvette Cooper would share the same enthusiasm.
Without urgent action, he warned, “it’s very hard for us to tell the world we’re actually a viable organisation.”
