MPs: Write Off £197m British Council Debt, Turn It Into a Grant

The British Council's £197m debt to the government should mostly be wiped out, according to MPs who want ministers to turn the loan into something closer to a grant. The Commons public accounts committee says the Foreign, Commonwealth and Development Office (FCDO) should explore converting as much of the loan as possible, offsetting it against the soft power value the council delivers — estimated at £1bn a year.

The maths are brutal. A £60m Covid-era loan struck on commercial terms by Boris Johnson's Conservative government has ballooned to £197m, because the pandemic shut down the council's English teaching and exams business overseas. It was meant to be repaid this year, but the terms were reworked so it clears over the next 15 years instead.

The council has already cut a third of its headcount and sold off historical assets to stay afloat. Its turnaround plan goes further: another 25% off staffing, more asset sales and operations closed in nine countries. Even then, the committee says, the council doesn't expect an operating surplus until 2029–30.

Staff aren't taking it quietly. British Council employees across Europe have staged widespread strikes and protests against the cuts. Once the planned losses land, the workforce will have almost halved since 2020, with more than 2,000 full-time equivalent posts gone since 2021.

The committee also wants a warmer relationship between the FCDO and the council, noting a lack of trust between them, and says the government has lacked a positive vision for the organisation. Chair Geoffrey Clifton-Brown said the council needs government help to continue its vital work rather than being pursued as a debtor, adding it will fail to adapt without full-throated support.

The council operates in just under 100 countries and claims to reach more than 700 million people a year. Its teaching and exams business supplies most of its income, while FCDO grant-in-aid makes up roughly 15% of annual revenue — money that backs its charitable goals in cultural relationships, the English language and education.