How the British Council  steals an advantage  abroad  over other UK education suppliers


The British Council has long used taxpayers money, our money that is, to subsidise its  education operations abroad and to undercut other non-subsidised competitors from  both the profit and not for profit sectors in order  to win contracts . There is  new evidence that it uses its diplomatic ‘ top cover’  to gain an unfair  competitive advantage   in the market  with our own Governments collusion,  to help it see off   other UK   competitors.

Malaysia’s Ministry of Education tendered recently  for the supply of 360 native English  language trainers. The contract was  awarded to three providers, the British Council being one of them. The  Malaysia MoE required each provider to supply a M$4m (about £800k) performance bond. Two providers put the money on the table. The British Council didn’t . It  argued that its constitution  didn’t permit it to put up bonds. So what happened? The British High Commissioner requested that the Malaysian government waive the requirement for a bond from the British Council . This request  allegedly went to the  Malaysian Cabinet and they agreed to waive the requirement on the basis that this was a government to government agreement.  Confirming  in other words the British Council operates with a Government guarantee behind it, to help it to  win contracts even  when competing against UK companies abroad.

This particular  arrangement, of course, worked to the advantage of the British Council  and to the disadvantage of other UK education companies, as often happens.

So, what  is the status of the British Council that allows it to bend the rules when it suits its perceived interests?

Is it the cultural  arm of the FCO? Or is  it a straightforward  commercial operation?  Is it charity,  fulfilling a public benefit ie justifying its charitable status (it cant be both a charity and commercial operator can it ?) Or  is  it a quango, at arms length from the Government?  Then again, maybe its an aid agency supporting our development goals  and the  DfID (its tapping in to the DFIDs  aid budget after all).The answer is- it tries to be all of these things .  Like  a chameleon it changes its status to suit  any given circumstance.  And it has been allowed up until now to get away with it . But one has to ask, for how much longer?

Why does all  this matter anyway?  Well a publicly funded    quango that doesn’t know what it is  and has an on-going  identity crisis    is a quango ripe for culling under the Governments efficiency drive  . It cannot  for starters prove that it is indispensable. In other words private sector  and not for profit  providers could deliver  most of the services it delivers, if there is a demand for them that is  , at lower cost (and  for the most part at no cost to the taxpayer)  while delivering better quality. Few in the market doubt this.

The shenanigans in Malaysia tell us a number of other truths.  Firstly  it confirms something that UK education service providers have known for a while , that in the eyes of our diplomats and those who purport to  ‘represent’ our trade and investment interests  abroad, the British Council  is special and has a privileged status, and  is given a helping hand in the markets (with the implicit guarantee behind it). Secondly, it confirms that the British Council is effectively an arm of the FCO (subsidised now also by the DFID budget) and not an independent bona fide commercial operator, as it would have it. Thirdly, it confirms that if the British Council pitches for a contract then there is no level playing field,  and, importantly, the very  presence of the BC  raises the costs and risks  for other competitors while  deterring new  market entrants.

The protected status of the BC is from another era.  It was never easy to justify its chameleon status, its even less so now. It cannot secure value for money for  us taxpayers. The way it conducts its  business abroad and in the markets lacks transparency ,accountability and is demonstrably unfair on  other non-subsidised  competitors . It is doubly unfair because the British Council  competes head on for the same contracts with the very  companies it  is supposed to be supporting in the markets  (with taxpayers money).It  is aided in  all this  by our public servants. This is not acceptable. At a time when our Government seeks better value for money and  more engagement from the private and not for  profit sectors, in public service delivery and for small and medium sized enterprises to be awarded  a greater share of public service contracts, here and abroad , its  activities clearly serve to undermine a key Government policy  and work  against the  longer term interests  of UK plc. It is time for the Government to act to protect the interests of us  taxpayers and the education market.

The Government, according to the Cabinet Office ‘ will be establishing new procedures for  reviewing public bodies  to challenge whether there is still a requirement for them to continue  and if there is ,that they are fit  for purpose ‘. If that is  case and its  not window-dressing then the British Council should be worried.  Over to Francis  Maude and his  reform team in the Cabinet office on this one.


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