The British Council’s chief executive has warned it could "disappear" within a decade without a financial bailout from the UK government.
The organisation has a presence in 100 countries, including the UAE and elsewhere in the Middle East, promoting British culture and running IELTS, one of the world’s major English language tests for higher education and migration.
Scott McDonald said the British Council was looking at £250m in budget cuts, losing hundreds of staff and axing the council’s presence in up to 40 countries.
The organisation's financial problems stem from a £200 million Covid-era loan from the government, which comes with commercial interest rates on a rolling one-year term.
The government charges commercial interest rates with a rolling one-year term, requiring annual reauthorisation, which Mr McDonald told The Guardian is a “a very painful experience for us, because each year we’re going to be insolvent unless the loan is renewed”.
"I think we would be in real danger of disappearing, probably over a period of a decade. And don't think I'm saying this just for headlines, I think it's really true,” he said,
He warned that the British Council’s key role in showcasing Britain's soft power and cultural influence, which has positive effects on diplomacy, tourism and international student recruitment, would be in jeopardy in these countries.
“There’s no British Council there, promoting the UK and our culture, our education, and so that vacuum gets filled – maybe by allies of ours but maybe also by some non-allies.
“It opens up for Putin’s Russia to move into these places to teach language and promote culture and capture the minds of young people. So on a broader scale, that’s enormously detrimental.”
Mr McDonald said he offered the council’s £200 million art collection, including works by Barbara Hepworth, Steve McQueen, David Hockney and Rachel Whiteread, to the government in exchange for writing off the loan, but that was rejected.
“We really need help on that loan. The government’s got to turn it into something viable for us, and at reasonable terms. And they’ve got to start funding us so that we can do more around the world," he said.
“I would like the loan to be written off but I think in this economic environment, it’s very difficult to justify. So I would just like reasonable loan terms of something like 25 years and a lower interest rate, and then we’d commit to paying it back fully.”
The Foreign Office said it was “committed to ensuring the financial stability of the British Council, and our continued funding underlines our support for their important work in promoting the English language, UK arts and culture and education”.
“Due to its commercial activities, the British Council is legally subject to subsidy controls, ensuring fair and free market competition in the market, and we remain committed to recovering the loan once their finances allow. We continue to work closely with the British Council and the Treasury on this issue,” it added.
