British Council records deficit of more than £50m amid restructure

28 Mar 2024 News

By mojo_cp/Adobe

The British Council, one of the largest UK charities, recorded a deficit of more than £50m last year.

Its accounts for the year ending 31 March 2023 were filed 50 days late and record a deficit for another year in a row.

They reveal how the charity restructured frontline operations, which was supported by a £200m loan from the Foreign, Commonwealth & Development Office (FCDO).

“The British Council launched a radical transformation programme in 2021-22 to increase focus, reduce costs, streamline operations and improve efficiency,” the accounts read.

By the end of the agreed transformation programme, it aims to have increased focus on core activities, consolidated its global country portfolio (including office closures), reduced headcount by 15-20% over two years, and reduced overall costs by £185m.

The accounts warn of an uncertain future for the charity as a result of a lack of certainty regarding government funding from March 2025. 

Nonetheless, the accounts state: “Progress continues to be made in respect of our overall financial sustainability” and constructive discussion is ongoing with the FCDO on future financing arrangements.

£10m on exit packages

Total income generated by the British Council dropped to £873m (2021–22: £897m) “principally due to the reduction in contract income as the Erasmus+ scheme came to an end”. 

Its pre-tax expenditure reduced to £914m (2021–22: £935m) as the British Council adjusted its operational expenditure globally to mitigate the impact of Covid-19 and continued winding down the Erasmus+ scheme.

Most of its income comes from partnership agreements, contracts, philanthropy, teaching and exams, and grant-in-aid funding from the UK government.

Total income from teaching and exams grew by 17.2% from £513m in 2021–22 to £601m in 2022-23.

The accounts also show total reserves decreased overall by £45m to £402m (2021-22: £447m) whilst the British Council’s free reserves also decreased by £58m to £35m (2021–22: £93m).

It spent £6m on exit packages for UK staff, and a further £4m on packages for overseas staff. 

Remuneration of the highest-paid director in the British Council in the financial year was £245,000–£250,000 compared to a median remuneration of the workforce of £46,173, which increased by 7% on the year.

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