British Council in ‘precarious financial situation’ after failing to repay £197m Covid loan

British Council in ‘precarious financial situation’ after failing to repay £197m Covid loan There could now be a drastic reduction in the council’s operations, including making around a quarter of staff redundant and closing offices in 11 countries - Bookmark - CommentsGo to comments The British Council has yet to repay any of a £197 million government loan as it struggles to recover from the Covid-19 pandemic, the public spending watchdog has found. Six years on, the soft power body continues to lose money and does not anticipate returning to profit until 2029/30, according to a National Audit Office (NAO) report published on Wednesday. Kept afloat by a Foreign Office loan, initially £60 million in 2020, it has now reached £197 million. The NAO revealed the British Council has only met interest payments since April 2024, with the capital remaining untouched. NAO chief Gareth Davies said the loan arrangements caused “uncertainty” and raised questions about the whether the British Council “can be financially sustainable in the long term”. The British Council has offered to pay off the loan with its art collection, which includes works by LS Lowry, Francis Bacon, Tracey Emin and David Hockney. But the Government has rejected the offer, with Government minister Lord Gerard Lemos telling peers last week the Treasury “expects the loan to be paid in cash”. With the loan due to expire in September 2027 – more than three years after its original expiry date of March 2024 – the British Council and the Foreign Office continue to negotiate a plan to turn the organisation around and repay the debt within 15 years. But the NAO report said the current plan – which still needs ministerial approval – could see a drastic reduction in the council’s operations, including making around a quarter of staff redundant and closing offices in 11 countries. Sir Geoffrey Clifton-Brown, chairman of the Commons Public Accounts Committee, said the British Council played a “vital role in promoting the UK” but described its financial position as “deeply concerning and untenable”. He said: “Despite cutting its spending, the British Council’s financial situation is increasingly precarious. “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 said: “We welcome the NAO’s report which clearly sets out the challenges we have faced since our operations around the world were hit hard by the Covid-19 pandemic. “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 £197 million 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.” Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments