British Council loan – long-term restructuring

The FCDO, the British Council, and HM Treasury have formally agreed the long-term restructuring of the British Council’s £197m loan. This is underpinned by a five-year restructuring plan to bring the British Council back into profitability across its commercial business.

This agreement provides a balance between ensuring full repayment of the loan, and therefore protecting the interests of the taxpayer, while enabling the British Council to deliver as one of the UK’s most important soft power levers.

The core tenets of the agreement are:

the loan will be restructured for a 15-year term until 2041, with a pause on capital repayments for a five-year period;from financial year 2031/32, capital repayments will be paid in equal instalments for the remaining 10-year period, ensuring full repayment of the loan;the loan will be provided on commercial terms, as required by the Subsidy Control Act, in recognition of the British Council’s commercial Teaching and Exams business;where possible, and subject to legal compliance in local jurisdictions, the FCDO is supporting the British Council in accessing local currency trapped overseas due to exchange controls. This trapped cash is expected to substantially cover the annual interest charge due on the loan;the five-year restructuring plan involves a significant efficiency drive, including the sale of assets to the value of £130 million, which will be reinvested back into the British Council business.The British Council is now able to refocus on delivering against the turnaround plan and core remit to promote UK values and interests overseas through its work in arts and culture, education, and promotion of the English language.