THE BRITISH COUNCIL
Helping sell UK education abroad? Well not quite
Cull it or Reform it
It has long been part of the British Councils remit to represent British culture and education abroad. It has described itself as the UK’s international organisation for educational opportunities and cultural relations, and operates in over 100 countries.
In support of its role, it is given taxpayers money in grant form. And allowed to undertake commercial operations too, by most accounts of variable quality. But there’s a big problem.
For at the core of the BCs operations lies a corrosive conflict of interests that is damaging for UK commercial interests, stifles the development of an education market abroad and tarnishes the reputation of the BC to such a degree that it raises serious questions over its very purpose and whether it actually works against rather than for the UKs commercial interests.
The Council’s main activities in English teaching and exams comprise seven main product areas; adult learners, young learners, professional learners, online content, peacekeeping English and teacher development. Some of the work it does is quite good, certainly according to the National Audit Office and it works from time to time with highly regarded UK education specialists. A Commercial Director was appointed from the private sector in mid-2007 to develop a new strategy, a key element of which is a new network of 40 in-house champions to stimulate activity in each business area and region.
However, while this quango claims on the one hand to represent UK education abroad, it has a rather perverse, one might even say counterintuitive way of going about it. It competes directly against UK suppliers in these markets. More than that, because it is, in part, grant funded it competes against them at a considerable advantage, and it does not have to demonstrate there is no material cross-subsidy of its commercial activities out of public funds.
It is doubly advantaged because it gets the active support of local diplomats with BC offices often co-located with the local British Embassy, tied as if by an umbilical cord. It has privileged access too and early warning of new information of new local business opportunities which as it happens is not passed with alacrity to competitors. And the Council derives a cost advantage in particular countries through its diplomatic and charitable status, and can use this to offer better terms and conditions to attract good teachers and centre managers, and students.
So, one has to ask a pretty basic question -is it possible for it to wear two hats at the same time? To be on the one hand a disinterested promoter and champion of the education sector and concurrently a direct, in your face, subsidised competitor? Certainly, not on the face of it. And, if you ask UK suppliers, not in practice either.
Significantly, a 2008 National Audit Office Report ‘ The British Council: Achieving Impact’ said that the Council ‘ needs to demonstrate more clearly to its stakeholders and competitors how growth supports the Council’s mission and charitable purposes and that it does not represent unfair competition. The Council can draw on methods used by, amongst others, the BBC, to give added assurance on fair competition.’ Something of a strange observation given that most of the BBC’s competitors whinge about its anti-competitive practices. Since the reports publication, needless to say ,the BC has done nothing to act on this recommendation.
The BC is, of course, aware of the charges against it. It thinks it has got around this little issue of conflicted interests by claiming, at least that is until now, that it maintains Chinese walls between its cultural and contracting activities (remember, these ‘walls’ have worked so well in the City context! Or not).
But a new pamphlet out from the BC appears to blow this claim right out of the water. In its booklet titled ‘2010/11 Our Scale of Ambition’ the BC says that ‘the British Council gets its revenue from many different sources including a number of contracts with external bodies. Even though those contracts are large, worth £87 million in 2008/2009, we believe the scope exists to increase them in number and value. Specifically we plan to increase their value to £197 million by 2014. The aims are for the British Council to be seen as an important player in our priority markets and sectors by clients and competitors and to present our contracts business as a fully integral part of our cultural relations programme.’
Some Wall! A sieve springs to mind.
At least the truth is now out there.
One of the major constraints on the development of an education market abroad has been the presence of the commercial wing of the BC in those markets. It uses its subsidized position and political leverage and patronage to get pretty much what it wants with its diplomatic top cover. However, its presence and threat to other UK companies increases their costs and the risks of UK companies entering markets where the BC is operating. But there have also been instances too where British companies have sought to exploit a market, taken on the up front development and marketing costs with the attendant risks, established themselves, bedded in , only to watch the BC come in on their coattails and undercut them.
Who cares about this? Well, the taxpayer should care because quite often a service being provided, subsidized by the taxpayer, could be provided but at no expense to the taxpayer. Politicians should care because their job is to ensure that taxpayers get value for money and should be keen to see the development a mature education market abroad (good for our balance of payments) and in an area where the UK should have a competitive advantage. They should also care if markets are not fair and are not competitively neutral because, if they are neither of these things then the end user, normally in the third world, will not be getting value for money. And perish the thought that we should be exploiting the most disadvantaged! And, needless to say education providers in both the profit and not for profit sectors aren’t happy about it either because it denies them business and they worry about much of the quality of provision being offered by the Council, which might tarnish the UK education brand .They are particularly unhappy that politicians don’t seem to care very much about it. But then again that’s not so hard to understand .If you were an MP or Peer (in previous Parliaments at least) you would probably get up in the Commons, or other place and support an organisation that has just given you an all expenses paid trip to an exotic location abroad to attend a ‘cultural event’ ,with partner in tow.
One well known critic of the BC is David Blackie an education service provider. He has highlighted, interalia, the perceived inadequacies of the Councils Education UK web site (ie its rubbish) . On the Council, he said on his blog, “It cannot be dependent as it is on government funding and be independent of government. It cannot be dependent on government funding and be a charity (which it is of course). It cannot be dependent on government funding, operate out of diplomatic premises, enjoy civil service pension arrangements, and compete on a level playing field with genuine risk-taking enterprise either at home or abroad. It cannot have monopoly powers and multiple privileges in any sector while also being allowed to compete in that sector. It cannot both explore business links…..on Britain’s behalf, and then unilaterally decide to exploit those business links for itself, as in North Africa for example’… Well actually it can. But, maybe not for much longer.
Maybe, just maybe, we are seeing the dawn of a new politics ,where accountability and transparency and value for taxpayers money really does matter. Certainly it’s a new age of austerity and the government is looking for new efficiencies, greater productivity and a big reduction in waste. Quangos and the BC in particular are very much in the frame.
The Government needs to get quickly to a rather fundamental question in its review of quangos. What actually is the point of the BC? Is it vital to our national interests? If so how? If it has a point ie promotion of culture then make it an arm of the FCO, grant funded and a lot smaller, leaner and more focused. Stop pretending its independent of the Government. Few abroad thinks that’s the case. If it is so vital to education abroad make it a genuine commercial enterprise, with no subsidies, competing freely in an open market and with no special privileges. If there is demand for its services, it will thrive. Let the market decide.
The BC is elitist, arrogant and self-serving. It cannot demonstrate that it adds value, and damages the education market, deterring new entrants and increasing the costs and risks of those suppliers already in the market. It has been afforded deference, privileges and patronage in equal measure for far too long . As with any protected producer interest it is complacent, bureaucratic and largely unaccountable . Worse though, it stands charged that it damages UK commercial interests abroad. Its surely time for a reckoning.
Note: The BCs new focus on countering Islamic extremism will almost certainly reinforce the perception that the BC is a (propaganda) arm of the government and increase its difficulties in operating in some countries and may expose its staff to increased risk.