British Council faces further job cuts to repay £197m loan

The British Council, 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, the National Audit Office (NAO) has said. The agency is grappling with a £197m loan from the Foreign, Commonwealth and Development Office (FCDO), originally £60m plus market-rate interest, due in September 2027.

Since 2024, the British Council has not repaid any capital, but has paid £42m in interest and expects to pay another £53m by 2029-30. The agency has incurred net losses of £184m since the pandemic. The FCDO and the British Council are in final negotiations to agree on a repayment plan, with a focus on a 15-year term, the NAO report states.

A turnaround plan involves further staff reductions of about 15%, or roughly 1,180 of its 7,880 global employees, by 2029-30 through redundancies, non-renewal of contracts, and natural wastage. This is in addition to 2,110 jobs already lost since 2021. Operations would close in 11 countries and be scaled back in 15 others.

The cuts and sale of overseas assets have led to protests by staff across Europe, especially in Spain and Italy, and letters of no confidence in management.

The British Council offered to repay the loan with its art collection, including works by LS Lowry, Francis Bacon, Tracey Emin, and David Hockney, but the offer was rejected. It also asked for the debt to be written off, which the FCDO and Treasury refused, citing the UK Subsidy Control Act 2022.

NAO head Gareth Davies said any agreement must provide clarity to parliament on the agency's financial future. Geoffrey Clifton-Brown, chair of the public accounts committee, described the financial position as "deeply concerning and untenable."

A British Council spokesperson welcomed the report, saying the agency is "taking all necessary steps to significantly cut costs and grow our revenue" and is working with the FCDO to resolve the loan issue.