British Council Annual Report 2009/2010 by Chaudhry Javed Iqbal

AnnuAl report 2009â&#x20AC;&#x201C;10

www.britishcouncil.org

2009–10 In brIef

If you would like a copy of this publication in large print or another format, please email your request to communications@britishcouncil.org

Our work directly engaged 18.4 million people – an increase of 5.2 million on last year. We reached 652 million people through the web, radio and television – almost treble last year’s result. However, in a world of six billion people this is just a start. Our turnover for the year was £705 million. This was an increase of £60 million on 2008–09. We are not complacent. This outcome is, in part, a result of our relentless focus on efficiency and long-term sustainability. Our results show that we generated £2.50 for every £1 of public money received. This represents good value for money. We implemented difficult cuts in the UK and 330 people accepted voluntary early retirement. We have moved as much money as we can to our frontline services and programmes, and away from back-office functions.

Represents countries where the British Council has offices. A full list of the countries where the British Council is active can be found on the back cover of this document.

We are ahead of most public sector organisations in making cuts to invest in growth and develop partnerships to meet the demand for what the UK has to offer. This is our annual report for 2009–10.

We were established in 1934 and incorporated by royal Charter in 1940 to: n promote a wider knowledge of the

united Kingdom n develop a wider knowledge of the

english language

n encourage cultural, scientific, technological

and other educational co-operation between the united Kingdom and other countries n otherwise promote the advancement of education.

our patron is HM Queen elizabeth II and HrH the prince of Wales is our Vice-patron.

We are the united Kingdom’s international organisation for cultural and educational relations. www.britishcouncil.org

HoW to use tHIs report

this document is in four sections but tells one story. It is of a year of success and growth in our work for the UK against a period of significant change. We faced, and continue to face, considerable economic pressure across the organisation, which has resulted in a series of cuts to our UK workforce. The first section begins with a foreword by our new Chair, Vernon Ellis, and an introduction from our Chief Executive, Martin Davidson. We then provide a short introduction to who we are and what we do, where we work and who we work with. The second section is a collection of short case studies about our work from across the global network and the UK. They focus on three themes: n on the ground where it matters looks at the

work we are doing on behalf of the UK in difficult and demanding places. n Investing in the uK’s most attractive assets

looks at our work in the major emerging economies and with established partners to provide access to English, education, culture and sport. n building uK cultural relations as a force for

global good looks at how cultural relations is meeting global challenges across the world and its role in building people-to-people links for a lifetime.

The third section focuses on our performance in engaging with and reaching audiences overseas in our 11 regions. We provide background on how we measure our work, whether we have met our targets and what the results are telling us. This section also gives a country-by-country breakdown of expenditure. For the first time, we have provided information on our impact in the UK. The fourth and final section includes the formal report on our financial performance – the annual accounts, which have been approved by the National Audit Office – and our governance arrangements. It describes how we are meeting our ongoing efficiency savings targets from the last Comprehensive Spending Review and our contribution to the UK government’s Operational Efficiency Programme. It includes information on our equal opportunity and diversity policies and practice and our environmental policy.

Contents

1 Introduction 2009–10 in brief How to use this report Chair’s foreword Chief Executive’s introduction Introduction to the British Council

2 our work On the ground where it matters Investing in the UK’s most attractive assets Building UK cultural relations as a force for global good

3 4 7 8 10

15 19 23

3 our performance Measuring performance Global performance results United Kingdom Central and South Asia China East Asia India and Sri Lanka Latin America and the Caribbean Middle East Near East and North Africa Russia and North Europe South-East Europe Sub-Saharan Africa West Europe and North America

27 29 30 31 32 33 34 35 36 37 38 39 40 41

4 our report Governance Equal opportunity and diversity Our people Environmental policy Financial review Accounts

43 54 55 57 58 64

CHAIr’s foreWorD It is a great privilege to be the Chair of the British Council. I have been in this role for only a matter of weeks, but the more I learn and the more I see of this great British institution, the more exciting and relevant it seems. The British Council has worked on behalf of the UK throughout the world for over 75 years. Nonetheless, I am amazed at its vast scope and impact.

We also have to look forwards in ensuring that we operate as efficiently and effectively as possible. The Executive Board has already made some bold and successful moves by restructuring to realise cost savings. But they are also now looking at how we can deliver our work even more effectively.

Of course, like many people, I knew something about the work of the British Council. But, perhaps typically, my knowledge was very narrow.

Over the last few years big strides have been made in aligning our global operations and in developing some common programmes and approaches across our network so as to maximise our impact. But now this global approach is successfully working, we can see ways in which we can simplify our organisation and processes. I see many parallels here with the journeys undertaken by many international organisations as they become more globally connected.

I was attracted to working with the British Council for a number of reasons. I have a strong personal interest in the arts and I felt that my experience as Chair of the English National Opera would be highly relevant. Equally, I hoped my international experience with Accenture would be useful and relevant. This has proved so. But I was also attracted to the idea of supporting an organisation that promotes and delivers cultural relations. As Martin Davidson notes in his introduction to this annual report, the investment in the British Council and its cultural relations work is an investment in the UK’s global reputation. We bring people together. We share knowledge and ideas. We generate opportunities to learn. Cultural relations may not have the same immediate impact of traditional government-to-government diplomacy, but its effects are often deeper, richer and longer lasting. We provide access and opportunity. In some parts of the world we build capacity through our work in education, English, vocational skills and access to higher education. We can help build a better civil society and tackle the fundamental governance barriers. In developed economies we provide access to UK assets and build multilateral, multilevel partnerships to tackle big issues. In my short time in my role I have been impressed not only by the relevance of our work but also by the scale of our reach in terms of sheer numbers of people involved. The rewards of over 75 years of the British Council’s work are still benefiting the UK. I saw this for myself in Poland where our proven commitment has allowed us to build up trust for the UK. As a result, we are known as a source of excellence in English language teaching and viewed as a trusted partner on wider educational and cultural issues.

the rewards of over 75 years of the british Council are still benefiting the uK

I have been impressed by the passion, dedication and professionalism of the British Council’s talented staff wherever and whenever I have met them. But we have to look to the future too. I am keenly interested in working with the Executive to ensure that in future we continue to attract the best talent and to develop the talent already with us.

They, like me, believe that the British Council is winning influence for UK’s interests with the very best of the UK’s assets. The Board of Trustees and I will support the Executive Board in making our case for the future. We are fortunate to have the advantage of a great cause being central to what we do. Like all great causes, finding the single, clear message to convey to our customers, partners and stakeholders is of paramount importance to me. As the world changes, we must adapt and change too. However, we must retain our focus at all times on our core purpose. This document seeks to tell a clear, simple story about our achievements in 2009–10. You will find a great deal to be impressed by in this annual report, much to inspire and stories that no other organisation I know of could tell. Indeed it is something to be proud of. The British Council – something to be proud of.

Vernon ellis Chair

Meanwhile, I recognise that in recent years we have come a long, long way. Much of the modernising that has taken place over these last years has been achieved under the leadership and guidance of Lord Kinnock, who left the British Council last July. I would like to record my thanks and that of the whole organisation to Neil – the success you find in this annual report stands as fitting tribute to his time as Chair. In addition, the organisation owes a great deal of gratitude to Gerard Lemos for the ten years of service to the organisation as a Trustee, then Deputy Chair and – prior to my arrival in late March – Acting Chair.

people want to connect with the uK’s world-class higher education institutions

CHIef exeCutIVe’s IntroDuCtIon The British Council is working for the UK around the world. We are building trust and engagement between the people of the UK and other countries.

The year 2009–10 was one of great change. It was to the great regret of us all that Neil Kinnock resigned as Chair of the British Council last July. This followed the appointment of Baroness Kinnock as Minister of State in the Foreign and Commonwealth Office. I am extremely grateful for the support and guidance given by Gerard Lemos as Acting Chair for much of the year. Our new Chair, Vernon Ellis, joined us on 24 March 2010. Vernon brings exceptional experience of international business through a long and distinguished career with Accenture, most recently as International Chairman, as well as unrivalled connections in the arts as Chair of English National Opera. Over the last year, we have, like many other public organisations in this country, been challenged to demonstrate value for money for our use of the £200 million of public money we are entrusted with. This report provides clear testimony to the benefit of our work to the UK’s cultural, economic and diplomatic relationships with other countries. We have generated almost £500 million income from our commercial businesses. Tough economic conditions in many parts of the world have meant that we have had to work harder than ever to achieve this result. We are able to generate £2.50 for every £1 of government grant recieved. This is good value for money. It represents a valuable investment in this country’s global reputation and the long-term relationships that benefit the UK and the world. Our relentless focus on becoming more effective has also meant becoming ever more efficient so that we can meet the challenges of the world around us. Securing our future has meant cutting some longstanding and valued programmes as well as implementing difficult changes across the organisation – these as well as other savings are detailed throughout this report. This has included losing 500 posts in the UK in 2009–10 and 2010–11, with a very large number of staff leaving after many years of service. I am enormously proud and grateful for all they have achieved in their service with the British Council.

Despite 2009–10 being a year of great change and challenge for the British Council we were able to engage with over 18 million people around the world, many of whom look to the UK as a source of ideas, inspiration and innovation. For the first time we also count the two million people in the UK who directly benefit from their involvement in international exchanges through our work. This annual report draws on some inspiring examples of our work. Some are on a huge scale in emerging economies, like the success of the Turner exhibition in China. Others are on a smaller scale but no less important, in harsh environments like Afghanistan, where we are helping tens of thousands of people learn English. A few examples focus on very personal stories like Hassan and Ahmed’s tale of travelling from Baghdad to Belfast because they believe in being global citizens. It is ever more important in this economic environment that the UK has access to global markets, global ideas and global opportunities. The report looks in brief at how we are supporting the English language industry in the UK, which is worth £3–4 billion a year, and the success of the world’s number one exam in its field, IELTS. The UK’s higher education is an asset to be proud of. Along with our leading institutions we believe that its future lies in truly internationalising itself beyond the traditional recruitment-led approach of the past. You can find out what our plans are to work with the sector to support this multi-billion pound industry in this report.

This has been another year of significant growth. More people have been involved than ever before with our work and we have increased the financial turnover of our organisation.

The next generation remains a focus for us in countries across the world and also here in the UK. Next Generation Pakistan reported how young people in that country want to be active citizens, helping to shape their future and that of their nation to take advantage of all the opportunities of being part of a young growing country. We have been asked by the Pakistani government to work with them as they look at the questions the report raises. At home, we brought the world into the classrooms of young people in more than 7,000 schools last year. We think that young people in our country must develop a better understanding of the world beyond our borders if they are to be successful as adults in a global economy. It is for this reason and many more that the British Council puts the UK at the heart of everything we do because we know that cultural relations benefits the people of this country.

The UK has rich cultural and educational resources with which to renew and develop the relationships we need to build a more prosperous, secure and better future.

We want people of all ages and every background in the UK and throughout the world to get involved in cultural relations and the work of the British Council.

People want to connect with the UK’s world-class higher education institutions. We can ensure policy makers have contact with those in the UK who can help in reforming classroom practice so children all over the world have better prospects. People want to learn English and governments understand that English can help them with economic progress. People want to draw inspiration from the UK’s creativity and tens of millions of young people are improving their lives thanks to the UK’s most attractive of assets, sport.

Our plans for the future mean we want to do more, even at a time when we are thinking about having to spend less. It means that we are winning influence for British interests. It means that we are there working for the UK where it matters.

Martin Davidson CMG Chief Executive

An IntroDuCtIon to tHe brItIsH CounCIl

WHo We Are We are the United Kingdom’s international organisation for cultural and educational relations. We are the UK’s second biggest charity. We have offices in over 100 countries and territories and are active in many more. We call what we do cultural relations. We build engagement and trust for the UK through the exchange of knowledge and ideas between people worldwide. We create long-term relationships that provide cultural, diplomatic and economic benefit for the UK. We provide access to the UK’s assets in big, emerging markets, by providing opportunities for millions of people to engage in global dialogue. We are operationally independent from the UK government, which enables us to build trust on the ground in places and with people where relationships with our country, society and values are strained. We are living within our means and we have ambitious plans to grow. We place the UK at the heart of everything that we do. We are working for the UK where it matters.

11 A graffiti artist’s work outside our office in Tanzania © Chuck Koor Hargrove

WHere We WorK AnD WHAt We Do The following summary describes the cultural relations activities we believe are effective in the six broad geopolitical types of country: lifeline countries

n We are one of the very few points of international contact.

e.g. Burma, Zimbabwe

n We provide a lifeline to the outside world through educational,

WHo We WorK WItH Our work targets three main groups overseas and in the UK, and we work with a range of partners: Aspirants

partnership

Aspirants are generally younger people who are in education, or starting out in their careers. Counted in the millions, they may be opinion formers within their own networks and may become influencers.

Partnership is at the heart of our work and central to our plans for growth.

cultural and social programmes. Read about how we are supporting development in Burma, on page 16.

building trust countries e.g. Pakistan, Middle East

n We work on dialogue, access to English language, education

and skills, as well as sharing culture to tackle misconceptions on both sides and build employability, prosperity and trust. Read about how we are giving the next generation in Pakistan a voice, on page 15.

new and emerging economies e.g. India, China

n We work with a wide range of UK partners – educational,

cultural and business – to increase access to UK education and culture and build prosperity and sustainability. Read about how English is changing lives in India, on page 21.

Developing countries e.g. Nigeria

n We provide access to social and educational development,

deliver development contracts and enable cultural exchange that builds capacity, understanding and prosperity. Read about how we are working with faith leaders in Nigeria to improve understanding about the threat of climate change, on page 23.

open and developed countries with strong, pre-existing ties with the uK e.g. France, USA

n We work in partnership with education and cultural institutions,

business, the EU and international bodies. n We connect young people through school links, scholarships

and exchange programmes and build influential networks across continents to share experiences, solve common problems and maintain and strengthen international relationships.

Influencers Influencers are mid or mature career professionals, educators, artists, scientists, community or business leaders, and policy makers. This is a critical group for us, particularly as, through them, we can reach many more people and maximise the impact we make.

leaders Though a very small proportion of our target audience, this group is essential to give access to wider groups and to enable us to operate effectively.

our work in the uK n We work with young people in the UK – helping them

to widen their horizons and develop international links, to gain access to opportunities for self-development and to make a global contribution. n We work with people in influential positions and roles

in the UK – improving access to the opportunities we provide for international engagement, or enabling them to experience this at first hand.

Cultural relations matters. We want to increase the impact of our work by working with and through others. We want to build the cultural relations capacity of others. From small community organisations to important UK-based institutions, global multilaterals and host governments, we work with more than 300 partners every year. The stories speak for themselves. This year our partnership with the Open University and the Foreign and Commonwealth Office helped us to deliver courses to people in Burma. We are working with the government of Rwanda to support their move to English as the language of choice. New partnerships with Microsoft and Tata Sky are bringing English to the otherwise excluded in India and the International Inspiration team will deliver a lasting legacy for London 2012. We are proud to work with the BBC World Service again to bring issues that matter to millions, whether faith and climate change in Nigeria or the ideas that Darwin’s work continues to raise in the year of his anniversary celebrations. More people involved in more cultural relations will help make the world a better place.

n We link with the UK’s leaders – involving them

in our programmes as participants, or working with them to show the power of international engagement.

Read about the UK–USA New Partnership Fund which will re-invigorate collaboration in higher education, on page 20.

united Kingdom

n We provide educational opportunities for young people,

internationally linking schools and educational institutions throughout the UK. n We work with the UK higher education sector to attract

international students to the UK and internationalise the sector. n We support the best of the UK’s artistic, creative and scientific

content to reach overseas audiences, as well as linking UK experts in education, arts, sports, science and governance with experts all around the world. Read what Professor Joseph Nye said about us, on page 30.

our WorK

on tHe GrounD WHere It MAtters Our work in many countries focuses on building long-term, two-way relationships and trust for the UK, creating opportunities for development and providing lifelines to the outside world. We are active in some of the world’s most difficult environments and important places. We offer access to the UK’s education and culture, our knowledge and ideas. We think cultural relations can tackle misconceptions of the UK and we operate in the belief that it is in our national interests to build trust with people in places where the UK can divide opinion. Our overseas network is a unique resource for the UK, with offices in over 100 countries, and we are active in 30 more. We have been in Iraq and Afghanistan since 2003 making a distinctive contribution to the economic and cultural development of both countries. Over the last three years we have shifted resources to meet geopolitical priorities. We want to bring the UK’s ideas and creativity into contact with more and more people so that our work can help create a more peaceful and prosperous world.

In Afghanistan, we helped more than 10,000 english teachers develop their classroom skills

As this annual report shows, our programmes can reach the lives of millions and make a difference to smaller numbers of people where access to the outside world is restricted. Our English language teaching work in North Korea is on a small scale and we constantly have to find new ways to bring our work to audiences in the West Bank and Gaza. For us, not being in these places is not an option. Provided we can ensure the safety of our staff, we will always be where the demand is for our work.

We provide real opportunities for young people from every socio-economic background to improve their lives by accessing the UK’s skills, knowledge and experience. We know that economic opportunity leads to better security and we want to help people contribute to their own country’s future and create stronger relationships with the UK. Playing a part in the development of countries throughout the world is important to us because it is important to the UK. These short stories illustrate a sample of the work we are doing across the world in different geographies and on very different scales.

building english capacity in Afghanistan In Afghanistan, we helped more than 10,000 English teachers develop their classroom skills. We want to reach 33,000 teachers, to build their confidence. This will provide them with up-to-date teaching resources from the UK.

We are meeting the challenge of poor internet coverage in remote regions with a combination of CD-ROM materials and a national radio series, which teachers can access through battery and wind-up radios.

Giving voice to pakistan’s next generation We commissioned a ground-breaking study of the attitudes and aspirations of young Pakistanis, which hit the headlines across the world and is helping to reshape the debate on the future of young people in Pakistan. The Next Generation report highlighted the projections for Pakistan’s population to grow by more than 85 million in 20 years. Half the population is aged under 20 and the report set out how young people wanted to help shape policies affecting their futures. The report explored the identity dilemmas of young people and their lack of confidence in the institutions of Pakistan and it captured their eagerness to contribute as good, active citizens. We were invited by the National Planning Commission to convene an inter-ministerial team to review youth policies and stimulate ways of involving youth more closely in development issues, education priorities and building economic stability for this country that is hugely important to the UK. The Chair of the Youth Parliament of Pakistan, Abrar ul-Haq, a member of the Next Generation task force, called Next Generation a landmark: ‘The report shows how eager and willing are young people – whether from the teeming cities or rural outskirts – to take on the responsibility of deciding their own future.’ Pakistan’s media described the report as a ‘wake-up call’ to the authorities. This work forms part of our Active Citizens programme, which is assisting more than 17,400 young volunteers across Pakistan, Bangladesh and Nepal to develop their leadership skills and contribute to sustainable development.

15 © Geoff Crawford

In Zimbabwe, we are one of the very few points of contact to the outside world. We are providing an educational and cultural ‘lifeline’ to the UK. Here are a few examples of what we did this year. Demand for our work is higher than ever. Our libraries in Harare and Bulawayo are open for business and 76,000 people visited last year. We are meeting the needs of young professionals of all backgrounds in Zimbabwe, who are facing an acute shortage of books and study materials. Zimbabwe’s universities are desperate for high-quality links with the UK and we are helping them. Our Development Partnerships in Higher Education (DelPHE) scheme, which is funded by the UK’s Department for International Development, has brokered six partnerships already and more are coming. Connecting Classrooms is one of the largest British Council school links programmes in Africa. We have linked more than 70 schools, covering all the provinces of Zimbabwe, to schools in both the UK and other African countries. Even during recent political tension between Zimbabwe and the UK, the Permanent Secretary of the Ministry of Education supported the programme, describing the British teachers visiting the country as the ‘best ambassadors for Zimbabwe in Britain’. Zimbabwe left the Commonwealth in 2003, and since then there has been little contact for ordinary Zimbabweans. In 2009, to celebrate its 60th anniversary, a ‘Commonwealth Conversation’ was held in many member countries. The British Council organised the Commonwealth Conversation in Harare, at the University of Zimbabwe, so that for the first time since their country left, several hundred young, intelligent Zimbabweans could talk openly about what the Commonwealth means to them. We are getting things done in Zimbabwe. We are providing a lifeline to the UK and to the wider world for young Zimbabweans. We want them to last for a lifetime.

uK at the forefront of rebuilding education in Iraq In January 2010 we signed a three-year, £3 million, DFID-funded DelPHE contract to restore excellence in Iraq’s universities by renewing links with UK universities. YouGov polling showed that 45 per cent of respondents believe that improving education in Iraq’s schools and universities is the best contribution the UK can make to helping Iraq become stable and prosperous. That is what we are doing. Using the UK’s world-class expertise in education and our presence on the ground, these partnerships emphasise the UK’s long-term commitment to Iraq. Major contracts signed during 2009–10 in Iraq are building trust for the UK by placing us at the forefront 16

of developing a high-quality education system that will give Iraq what it needs for the future.

Working behind the scenes to bring the royal ballet to Cuba

This followed the launch of a 16-month, $2 million, UNICEF-funded project to improve education for more than 150,000 Iraqi schoolchildren by transforming approaches to teaching, learning and school leadership in the country.

The Royal Ballet’s visit to Cuba last year was called ‘transcendental’ and ‘the most important cultural event in Cuba for 30 years’ (since the visit of the Bolshoi).

english for rwanda’s development We are working with the government of Rwanda and the UK’s Department for International Development to bring English into the classroom as the country continues on its remarkable road to recovery. We answered a call from President Kagame in 2008 to help his country make the change from French to English as the language of instruction in schools. This decision will support the country’s economic growth and provide opportunities for thousands of young Rwandans to participate in their country’s development. The Ministry of Education has to date, with our support, trained over 44,000 English teachers. Sharon Haba, Permanent Secretary, Rwanda Ministry of Education, said: ‘The Ministry of Education values its partnership with the British Council and looks forward to another year of collaboration on the Rwanda English Action Programme.’

Throughout our history we have played the role of broker and facilitator. Sometimes this means working behind the scenes to make things happen. This is what we did in Cuba.

Organisers also obtained the all-important blessing and goodwill of Alicia Alonso, who created the Ballet Nacional de Cuba. In one performance, Cuban dancers joined dancers from the Royal Ballet on stage, in a tribute to her. Amid the roar of the headlines – ‘Delirio cubano con el Royal (Cuba is in delirium for the Royal Ballet)’, ‘Royal Ballet seducción cubana (seduces cuba)’ – were the quiet and special words spoken when Alicia met Dame Monica Mason, director of the Royal Ballet, ‘Please come again.’

The Royal Ballet arrived in Cuba at the end of their summer tour to Washington and Grenada. This followed a year of close co-operation with local producers, the Ministry of Culture and the British Embassy. Since we opened our office in 1998 our team has developed strong networks among cultural and educational contacts. Our role was to ensure that we helped the right people from the UK talk to the right people in Cuba. We invested the time of our people, our knowledge and experience to make this happen.

This people-to-people partnership provided Cuba with a stunning display of quality, diversity and positive perceptions of contemporary Britain.

Around 15,000 Cubans saw the Royal Ballet’s performances with Cuban dancer Carlos Acosta on the stages of the Gran Teatro and Teatro Karl Marx in Havana. Giant screens on the steps of the Capitolio relayed the spectacle to 5,000 people and many more enjoyed it thanks to the Cuban television broadcast.

The Cambridge Teaching Knowledge Test course has provided teachers from Darfur to Khartoum with the first step on the road to becoming better qualified and better able to meet the demands of rebuilding their country.

Getting qualified in sudan In Sudan, we are working in the north and south of the country to give every university teacher of English a professional teaching qualification from the UK by 2012.

supporting development in burma with british expertise We are working with the Open University and the Foreign and Commonwealth Office to strengthen local institutions, support positive social change and create networks of empowered non-state actors using British expertise in Burma. Responding to demand in Burma for what the UK can offer, we have delivered Open University social studies courses for Burmese civil society activists. One of the trainers said: ‘What do they have in common, these students? All have suffered, to some extent, from economic hardships that make good-quality further study an impossible dream. All have been active in their respective communities and all are singularly enthusiastic about what they can achieve if just given the chance.’

our Active Citizens programme is assisting more than 17,400 young volunteers across pakistan, bangladesh and nepal

We provide a safe space for civil society volunteer networks where hundreds of our library members and students work on community environmental projects, with, for example, HIV-positive street children, or as teacher trainers. Our library and information centres in Rangoon and Mandalay are providing more than 220,000 visitors a year with a window to the world and information about the UK.

lifelines for a lifetime in Zimbabwe

InVestInG In tHe uK’s Most AttrACtIVe Assets The UK’s assets of English, education, sport and culture are attractive to leaders and learners across the world. We work to increase access for the millions of people who want to learn from, share in and access what the UK has to offer. In the big emerging economies, we are working with people of every age and background and with partners in the public and private sectors to support economic, social and cultural development. This work will help secure the UK’s long-term relationships, as well as our partnership, with these countries and will contribute to the growth of our own economy.

Denise lewis in a playing field in Vasant Vihar, new Delhi

Languages are the backbone of cultural relations. A core part of our mission is to make a significant contribution to the global development of English and the opportunities which it offers for people and nations. Our vision is that each of the 11 million teachers and every one of the two billion learners of English in the world will have access to the skills, ideas and materials they need from the UK. Our work in education helps young people in schools, professionals in higher education and policy makers in governments to improve their prospects. We bring together specialist expertise and knowledge from the UK with policy makers and practitioners from other countries. We help broker the exchange of excellence and facilitate development and growth in education, both for the UK and other countries. The UK’s cultural assets enjoy an excellent international reputation. We are helping meet the demand for access by bringing new work from the UK to new audiences all over the world. We are showcasing exciting modern visual artists, performing artists and established works from this country. For example, Connected showcased new work from the UK during the Tokyo Performing Arts Market. We use culture to bring people together to build bridges, build relationships and to celebrate excellence. Sport, like English, is a global language. It is one of our country’s greatest assets. It transcends borders, has a universal set of rules and is a simple, practical way of bringing people together. The first story here is an example of work with our partners in the build-up to London 2012.

shining a light for sport Young people look to their favourite swimmer, footballer or athlete for inspiration or as a role model and we know that professional sportsmen and women can be powerful advocates for our sport programmes.

Denise Lewis, Olympic gold medallist and official International Inspiration Ambassador, travelled to India last year to see our work first hand. She visited schools in Delhi where International Inspiration has helped to develop high-quality and inclusive approaches to the teaching of PE. It has provided opportunities for children to engage in meaningful sport activity – often for the first time. Denise said: ‘In my own life I have seen and experienced the transformative power of the Olympic Games, but here in India I have seen something truly special. Through International Inspiration, the Olympic and Paralympic Games have made, and will continue to make, a real and lasting difference to the lives of millions of young people in India and across the world, no matter what their ability, social status or gender.’ Such powerful engagement from high-profile sports personalities helps to amplify our message. It means we can reach a much wider audience. It helps us to engage the media and the general public to show how International Inspiration is delivering real impact for the UK. International Inspiration is the official international sport legacy programme of the London 2012 Olympic and Paralympic Games. We have been working with our partners at LOCOG, UNICEF, UK Sport and others to maximise the impact of the International Inspiration Ambassadors. David Beckham, Dame Tanni GreyThompson, Sir Chris Hoy and Colin Jackson are also Ambassadors for the programme. We know that sport changes lives. International Inspiration will change the lives of 12 million children and young people in 20 countries, and role models like Denise Lewis are helping to make this dream a reality.

english for the uK, english for the world We estimate that English language teaching is worth £3–4 billion a year to the UK’s economy. We are helping the industry here in the UK. We provide accreditation services to English language schools so that they can attract students from all over the world, using our global quality mark. We continue to recognise innovation and excellence in English language teaching from the UK. The ELTons awards showcase and reward outstanding new language learning products from the UK. 19

Our LearnEnglish website attracts over one million unique users per month. We launched our LearnEnglish iPhone and Android applications this year. They are helping young learners and their parents, from a range of socio-economic backgrounds, to develop their skills and support each other. Over eight million users visited the English Online website in China in 2009. They can practise English and pick up useful advice. In a joint promotion with Nokia and the China Youth League users can play an English Online word game and receive virtual points to donate books for schools in less developed regions of China. Over the period of the promotion 300,000 users took part in the game. We are also launching new mobile products for English learners, including a spell check game, which was launched for Android system phones in China.

A new approach to international education Our Chief Executive, Martin Davidson, announced a £17 million investment for international collaboration and partnerships for UK universities at the largest higher education conference of its kind in this country. We brought more than 1,200 people from over 70 countries to London to participate in Going Global 4 to hear from policy makers and practitioners from all over the world about the challenges faced by education in a global age. We have pledged our support for a new approach to international education that will no longer be characterised solely by a recruitment-led approach. We will: n build capacity in the provision of strategic education

intelligence, to identify trends and opportunities on a global basis n develop a global programme of sustainable

partnerships, linking businesses, governments and higher education institutions to strengthen knowledge economies n support new models of student mobility that start

to rebalance inward and outbound student flows n convene global policy dialogues that build a deeper

understanding of developments and insights in education and promote knowledge sharing. For example, the UK–US New Partnership Fund is worth $500,000. By using money from the Prime Minister’s Initiative (PMI2), we are helping to develop strategic links between the UK, USA and third countries like China, Pakistan and India to support existing or pilot partnerships. 20

The fund follows research that we commissioned, which argued that only renewed investment by the UK in its bilateral relationship with the US will help us retain our leading position – worth $1 billion a year.

rebuilding in russia The opportunities in Russia are enormous. Over the last year our work has tried to meet the demand for connections with the UK. Strong cultural relations between the UK and Russia help the wider bilateral relationship and we are focusing on what we do well in the arts, education and English. For example, we are building a Russia-wide community of English teachers by providing training for trainers and videos of classes and classroom exercises. We have been working closely with our partners at the Moscow City government, Russian architects, city planners, designers and community workers. Our Creative Cities programme is helping them to rethink the use and redesign of unused public spaces in urban environments. The new Strelka Institute of Architecture was influenced by this work and we helped them to find UK expert partners to develop short courses and postgraduate programmes. We teamed up with lookatme.ru, a leading Russian fashion and design web portal, to launch the International Young Fashion Entrepreneur Award, which reached an audience of 500,000 people a month. As a result, we have built stronger ties with fashion and creative entrepreneurs in Russia, helping them to make connections with British designers. This led to a high-profile British presence at Russian Fashion week. We want more people-to-people links between the UK and Russia so that we build a future between our countries which is founded on understanding and trust. That is a prize worth pursuing.

supplying the demand for the uK’s art in China There is huge demand in China for access to the UK’s art and creative industries. In partnership with Tate Britain and the National Art Museum of China we took an exhibition of Turner’s masterpieces to Beijing last year. Over 200,000 people experienced the exhibition first-hand. Beijing News described it as ‘an important exhibition introducing European art and culture to China’. It was a first for the UK and a first for China. The exhibition stood as one of the longest-running shows of international art masterpieces ever held at the National Art Museum. In the build-up to this year’s Expo we took works by contemporary UK artists from our collection to Shanghai. The Future Demands Your Participation: Contemporary Art from the British Council Collection featured 40 artists, including 12 Turner Prize winners and 21 Turner Prize nominees. They included

Installation view of The Future Demands Your Participation: Contemporary Art from the British Council Collection

IELTS is the world’s leading English language test. We celebrated our 25-year partnership with Cambridge ESOL and IDP Australia last year. It is still setting the standard for people all over the world and more than 1.4 million people have taken IELTS this year alone.

Mona Hatoum, Damien Hirst, Anish Kapoor and Steve McQueen. Looking ahead, we are reaching out to the next generation of arts producers to position the UK as a leading partner for China’s ‘cultural renaissance’. This approach has already led to major tours by many of the UK’s prominent dance companies, orchestras and contemporary theatre companies. We have brokered partnerships between Chinese institutions and their UK counterparts, including the Royal Opera House, the British Museum and National Museum Wales.

english changing lives in India and sri lanka We commissioned David Graddol to look at how the English language can help sustain the growth of the world’s biggest democracy and one of the fastest growing economies. English Next India tells us that from education to the economy, from employability to social mobility, the prospects for India and its people will be greatly enhanced by bringing English into every classroom, every office and every home. We are helping English to reach people regardless of income. In India and Sri Lanka, we have continued to build ground-breaking partnerships with state governments, state boards and corporate partners, using English to transform people’s lives.

We have now worked with 2,348 master trainers throughout India who themselves reached over 450,000 teachers who, in turn, taught 17 million learners. We have developed a partnership with Tata Sky to develop a conversational English language course targeted at homemakers as part of their Active Channels offering. This has reached more than 120,000 subscribers since January 2010. We have opened new teaching centres in our office in Chennai and in partner premises in Kolkata. Using local teachers and these partner premises, we have been able to set fees affordable to people with lower incomes. By doing this we are attracting new learners who would not have otherwise been able to access our classes. In partnership with Microsoft India we have developed a Skills for Employability programme aimed at helping aspiring rural youth to gain a first step on the employment ladder. The online course follows the story of Ishan, a young man who leaves his village to travel to Delhi in search of a job. We are working with the Sri Lankan government – supported by USAID and UNICEF – to manage the Training for Language Teaching Communities (TELT) project, which aims to build a more skilled and cohesive teaching community in the conflict-affected north and east provinces of Sri Lanka. Our library in Colombo is the largest in our global network, with 25,000 members.

buIlDInG uK CulturAl relAtIons As A forCe for GlobAl GooD Cultural relations provides a genuine and highly effective alternative to other forms of international relations. We have over 75 years of experience in the field and we work with people on issues that are important to the UK and important to them. Tackling the big global issues of our time requires a multilevel and multilateral approach. Much of our focus is on the 50 per cent of the world’s population who are under 25. We aim to give voice to the next generation: to those who are not always heard and to whom we must listen. Cultural relations works for them because its starting point is open and honest exchange. In a world where people are hungry for direct communication with their global peers, it works beyond government-to-government diplomacy towards a new people-to-people diplomacy. Cultural relations appeals to partners from across the UK, the European Union and a range of international organisations. We form and forge partnerships to build networks that make a difference and help change minds, lives and relationships between the people of the world and the people of the UK.

We want to create better relationships between the people of the world and the people of the uK

Our work creates access and opportunity for people to act on big global issues and make a positive change in their communities. New global citizens care about climate change and we are helping the Chinese government develop resources for the new UK–China National Teaching Training Centre for Climate Change. Young people want to know how to reach out to the world around them and create better prospects for themselves. Cultural relations is a means to discuss big and sometimes difficult issues. We have taken debates about evolution and the impact of Charles Darwin’s work into the Muslim world. We have been working with faith leaders in sub-Saharan Africa to improve understanding of the threat of climate change to their congregations. Over the last year we have worked with people and partners on issues that matter across the world. Here are some examples.

This led to the creation and signing of an Interfaith Declaration on Climate Change, which aims to set out a roadmap for adaptation and mitigation strategies on this issue. The BBC World Service and the Islam Channel covered the event, bringing the total audience reached through the event and subsequent talks by religious leaders to over 100 million. Our faith and climate change work was inspired by research we commissioned from the BBC World Service Trust in 2008 into public attitudes to climate change in sub-Saharan Africa. We know that climate issues are the responsibility of governments, but faith leaders have influence in ways that political leaders do not. Sheikh Kabara, leader of an Islamic sect in Nigeria and West Africa with over 10 million members, recently talked to a large congregation of 300,000 followers about the need for environmental protection and action on climate change.

Global citizens: from baghdad to belfast Hassan and Ahmed (pictured left) arrived in London as the Iraqi winners of the ‘I’m a Global Citizen’ competition to meet 70 young people from across the Middle East and the UK. They talked about climate change, the effects of globalisation and what it meant to be a global citizen. We took them to St Patrick’s Academy in County Tyrone, Northern Ireland, to spend time working on their school partnership and building long-term friendships that will benefit both countries.

living Darwin’s legacy faith and climate change In February 2010, in Nigeria, we brought together faith leaders from Christian and Muslim communities from across sub-Saharan Africa to discuss the role that religious leaders can play in raising awareness of climate change in their communities.

The Darwin Now, Living Legacy Conference in Alexandria, Egypt, marked the 150th anniversary of the publication of On the Origin of Species and 200 years since Darwin’s birth. Darwin Now is our international cultural relations contribution to the celebration of these anniversaries and the impact of Darwin’s ideas of evolution on contemporary biology, medicine and society. 23

We invited people of all ages and from every background to ask the question: ‘What is the relevance of evolution to me, my life and my society?’

Evidence of change is marked in Pakistan: almost all of the 130 schools involved have set up student councils, transforming student–teacher relations.

We highlighted the impact of Darwin’s work and emphasised the UK’s contribution as a respected international partner in science, arts and the humanities. Our partners for the anniversary celebrations included the BBC, the Open University and the Wellcome Trust.

A head teacher in the North-West Frontier Province spoke of the culture of physical punishment, often in front of other students, which prevailed before the Connecting Classrooms project: ‘Now this has stopped. When there is a problem we try to talk to the students and find out what the problem is. Our trainers gave us the idea of motivating students through respect and love. We learnt we can’t achieve this through fear.’

In Latin America alone more than 1.6 million people engaged with Darwin Now and the exhibition toured 27 cities in seven countries across the continent. Two of Darwin’s descendants participated in activities in Argentina and Brazil. His great-great-grandson, Randal Keynes, gave talks at the exhibition in parts of Brazil, including the Brazil Annual Science Festival in Manaus.

springboard to building understanding and trust between the uK and the Middle east Springboard is a self-development programme for women. This year, 1,000 participants completed the training programme in the Middle East, starting new partnerships between women’s organisations in the UK and the region. This programme’s first UK study tour helped women’s organisations in this country and the Middle East share experiences and build a greater understanding about the role of women today in the different societies. We adapted the Springboard Consultancy’s awardwinning UK programme for the Arab region to become the only programme of its kind there. It is supporting many of the region’s governments in their efforts to open up new opportunities for women from a range of backgrounds. Participants will go on and inspire others to make a greater contribution to the political, economic and social development of a dynamic and hugely important region to the UK.

Connecting Classrooms revolutionises teaching practices Education ministries from Afghanistan, Bangladesh and Pakistan have agreed to work more closely together in modernising teacher training practices as a result of exchanges with UK schools. An external evaluation by the Institute of Education in Dhaka demonstrates that Connecting Classrooms, after two years, is achieving a ‘paradigm shift’ in participating schools in Bangladesh, moving teaching practices from traditional methods to the use of a wider range of modern schooling practices. More than 1,800 teachers and head teachers have taken part in capacity-building and leadership activities, drawing on exchanges with teaching staff from the schools they are grouped with in the UK. 24

Winning the peace We invited NATO to share a platform with us to engage the Brussels international community about the role cultural relations can play in conflict prevention and resolution. The timing was significant as NATO is currently reassessing its doctrine for partnerships with civilian organisations and rewriting its Strategic Concept for the first time in 11 years. Drawing on our experience of more than 75 years, our design of the conference encouraged NATO – and others – to consider the dynamics of soft and hard power, and how cultural relations can build understanding and trust. A 16-year-old boy from Afghanistan summed up the issue by saying that his trust in ISAF and NATO would have been different if more effort had been made to understand and connect with the people. The soft power of cultural relations may never replace the hard power of military action but there is a growing recognition of the complementarity between the two: cultural relations are necessary to secure long-term stability and win the peace.

Crossing borders with words and movement in south-east europe More than 200,000 people in the UK and south-east Europe have taken part in Creative Collaboration. This cross-border, 18-country arts initiative has united artists, producers and creative entrepreneurs in more than 30 projects. We know that culture and cultural exchange have an important role to play in helping people understand each other better, improving social cohesion and driving economic growth. From Albania to Azerbaijan and Croatia to Cyprus, British expertise in the creative industries has demonstrated that the arts can have, in the words of Turkish novelist Bariß Müstecaplıo©lu, real ‘economic heft’. Bariß was participating in Word Express, which brought 20 young writers from countries including Serbia, Bosnia and Herzegovina, Turkey, Greece, Armenia, Bulgaria and Israel together for a train journey that connected countries and regions where past political conflict has prevented cultural contact.

We are helping women in egypt, Jordan, Morocco, syria, tunisia and the palestinian territories to decide on their careers © Jenny Matthew

Our partners on Word Express were Literature Across Frontiers, who are based at the Mercator Institute for Media, Languages and Culture, Aberystwyth University. Creative Collaboration was able to attract over 50 per cent of its funding through partners in the UK and south-east Europe, all of whom wanted to be part of something new, exciting and of genuine value to millions of people. Many of the projects focused on equal opportunities and diversity. We took StopGAP – the UK’s top contemporary dance company, which has dancers with and without disabilities – to Romania, Bulgaria and Albania, where they trained dancers to teach integrated dance as a means of inclusion for people with disabilities in society. StopGAP went on to perform on national television at the Academy of Art in Tirana, not long after Albania had passed its own anti-discrimination legislation. Media coverage for Creative Collaboration has now reached more than 28 million people.

Women at Work The economic development and success of countries across our Near East and North Africa region depends on the contribution of women in the work place and throughout society. However, female participation across the region and the wider Middle East is the lowest in the world at only 23 per cent (EUROMED study). We also know that traditional stereotypes and cultural

boundaries about the role of women at work remain a challenge to progress. Over the last year, our Women at Work project has continued to go from strength to strength since its launch on International Women’s Day in 2007. In order to help women to access opportunities in the market, we promoted and encouraged new relationships between professional women from the UK and Egypt, Jordan, Lebanon, Morocco, the Palestinian Territories, Syria and Tunisia. We have drawn on the expertise and experience of UK partners including the Association of Women Judges, Women into the Network and the Royal Institute of British Architects. To mark the final year of the programme we developed a guide for women to help them decide on their career path, how to get started and testimonials from several of the hundreds of Women at Work participants. The advice draws on professional UK expertise and looks at career options from the creative industries to law, from scientific disciplines to public policy and from education to finance. We have supported participants with a series of seminars, and in Syria last year Hana Hallaj said: ‘It would be an understatement to say that this conference changed my life forever ... I would like to thank the British Council for giving me this opportunity to develop my new business and build a network of important successful women in their careers.’ Powerful testimony from women who are working towards success, thanks to their partnership with the UK. 25

our perforMAnCe

MeAsurInG perforMAnCe Every one of our performance measures for 2009–10 is up. We have directly engaged 18.4 million people overseas, which is an increase of 5.2 million on last year. We have reached 652 million people, which is an increase of 431 million. Against the backdrop of difficult economic circumstances and a major internal change programme, these results are something to be proud of.

How we measure our performance Our corporate scorecard tracks the scale and scope, quality and impact of our cultural relations work. Over the last year we have been even more rigorous and placed tighter emphasis on monitoring and evaluation across all of our work.

reach: bringing information to individuals

scale and scope

For example, the Our Shared Europe programme debate on Muslims in Europe was broadcast by BBC World and reached an audience of 70 million.

The scale of our work is measured through the numbers of people who: n we engage with by bringing people together in

cultural relations activity, face to face or online n we reach by bringing information to individuals

through communication channels such as radio and television broadcasts, publications and websites.

engagement: bringing people together We have engaged 18.4 million people overseas, which is an increase of 5.2 million. Our global programmes are performing well and engaging very large numbers of people. For example, Darwin Now engaged 3.1 million people and Connecting Classrooms 1.4 million. These results were achieved through school linking, exhibitions, online person-to-person activity, exchanges and volunteering programmes.

Our local cultural relations work engaged up to 3.8 million. Customer surveys reflect that local cultural relations work is also highly valued by organisations across the range of our activity. Our contract work accounts for up to half a million people overseas, which rises to one million if you count the UK and the full scope of work undertaken by programmes such as DFID School Partnerships and the European Union-funded Comenius.

We reached 652 million people this year

We have taught English to almost 300,000 students across our teaching centre network and over 1.5 million people sat exams administered by us.

Our work in promoting educational opportunities for the Prime Minister’s Initiative 2 Connect programme has supported 93 higher education projects in 2009–10. These projects generate partnerships between the UK and countries overseas in research, collaborative delivery of teaching programmes, student exchanges and strategic links at an institutional level.

We have reached 652 million people through the internet and radio, television programmes and publications.

In total, our Climate Generation programme reached nearly 70 million television viewers. In China, we reached 16.2 million through a five-part documentary on our Climate Champions. The documentary was produced by the British Council in partnership with China Central Television Channel 10. Our English language websites – LearnEnglish, LearnEnglish Kids, TeachingEnglish and Premier Skills – reached over 13 million people across the world in 2009–10.

uK audiences We collected data for UK audiences for the first time this year. We will be tracking and reporting on our audiences in full from 2010–11. The highlights are: n We have engaged over two million people in the UK

in our work. n More than 350,000 people have visited the Whitechapel

exhibition of works from the British Council’s collection during our 75th anniversary celebrations. n We have reached more than eight million people

in the UK through a range of activities including our school linking programmes, the International Student Awards and our London 2012 legacy programme, International Inspirations.

Quality We measure the quality of our work through: n a customer satisfaction indicator n a reputation indicator, which shows whether

we are perceived as being a leader in our field n an advocacy indicator score, which is a measure

of the willingness of our audiences to recommend the work of the British Council to others. This year we collected feedback from over 300,000 participants from a wide range of our programmes. The results are positive and there has been an increase in each quality score. This is a reflection of the British Council placing even more emphasis on the quality of engagement rather than just focusing on audience numbers.

Impact of our work We have evaluated our impact through:

evaluation of long-term outcomes (elto) research ELTO is conducted every year. Qualitative research is undertaken by external professional research agencies in each British Council region. A total of 100 of our most important stakeholders were interviewed. The research assesses whether the recipient’s engagement has led to: n personal beneficial changes resulting from new

or continuing engagement with the British Council n organisational beneficial changes resulting from new

or continuing engagement with the British Council n strengthening of ties with the UK resulting from new

or continuing engagement with the British Council. Compared with last year, we have increased our results in all three areas. Indications are that our programmes such as Connecting Classrooms are demonstrating substantial success in bringing about these changes.

Heads of Mission survey The 2009–10 survey was completed by 91 Heads of Mission. This year’s global average score of 81 was two percentage points higher than the previous year.

GlobAl perforMAnCe results 2007–08

2008–09

2009–10

Overall assessment by senior decision makers and influencers (ELTO)

77*

78*

Much of this feedback is encouraging. It gives us confidence that our work is making a difference on the ground and contributing to the broader international agenda of UK government.

Strengthening of ties with the UK resulting from new or continuing engagement with the British Council

69*

70*

Personal beneficial changes resulting from new or continuing engagement with the British Council

81*

83*

For example, a Head of Mission in Africa said: ‘Excellent programmes, high reputation, proactive approach and ability to have real impact among a wide range of people.’

Organisational beneficial changes resulting from new or continuing engagement with the British Council

81*

82*

Foreign and Commonwealth Office assessment of British Council impact and value for money

81*

83*

Heads of Mission feedback is summarised in a score which aggregates ratings of the British Council’s impact across its three main programme areas and perceived value for money for the UK government.

research building trust for uK through cultural relations We commissioned research* in China, India, Poland and Saudi Arabia to find out whether young people who took part in cultural relations programmes increased their level of trust in the UK. The results of this research show a clear relationship in each of the four countries between levels of trust in the UK and participation in cultural relations activities. The exact strength of this relationship varies by country and programme mix. Generalising across the four countries, the level of trust in the UK among those young people who have participated in cultural relations activities is 10–20 per cent higher than among similar young people who have not participated. The results also show that the level of trust in the UK is positively related to the number of cultural relations activities in which the young people have participated.

The majority of the regional reports highlighted the power of exchanges in helping people to immerse themselves in each other’s cultures. This leads to positive personal and organisational outcomes as well as strengthening of ties with the UK. In most regions our participants continue to report that they would like us to focus on sustaining relationships with them beyond the completion of projects and programmes.

Impact perspective

reputation and satisfaction perspective Overall customer satisfaction with their engagement with the British Council n Quality of engagement

83*

n Engagement met expectations

83*

Customers perceive the British Council as a leader in its field

82*

83*

47%*

50%*

15.6

13.2**

18.4

n Leaders engaged (thousands)

n Influencers engaged (thousands)

255

282

443

n Aspirants engaged (millions)

Customers would recommend the British Council (net advocacy)

Audience perspective Engagement (millions)

Reach through broadcast, online and publications (millions)

112

221

652

International students in UK higher education

389,330

415,585

n/a***

International students in UK further education

76,785

76,305****

n/a***

Teaching centre students and examination candidates (millions)

1.5

1.9

1.8

* Weighted score: in 2006–09, in response to NAO feedback, we have weighted the score to reflect the numbers of people with whom we work in different regions. ** This figure has been rebased to reflect a tighter definition of direct engagement that excludes some participants in major festivals and exhibitions. On a like-for-like basis the 2007–08 result would be restated at 13.8 million. *** Figures not available at time of going to print. **** This includes England, Scotland and Northern Ireland. The numbers from Wales are not yet available.

*Respondents to the research were chosen and interviewed independently by YouGov and their overseas partners 28

unIteD KInGDoM

CentrAl AnD soutH AsIA

The year 2009–10 was an important one for our work in the UK. We engaged over two million people in our work this year and reached 8.3 million.

Regional performance

Our work is respected by the world’s political and thought leaders. We have brought their views on issues like public diplomacy and climate change to UK audiences. For example, President Calderón of Mexico gave a British Council lecture on climate change in the lead-up to the G20.

funding

Professor Joseph Nye gave our inaugural Parliamentary Lecture in January, at which he said, ‘the British Council discovered [soft power] and has been practising it effectively since 1934, which is being celebrated with this 75th anniversary. It is intriguing to hear Hillary Clinton say that smart power, or the combination of hard and soft, is the new policy.’ Shami Chakrabati, Director of Liberty, delivered the first ever British Council lecture in Derry/Londonderry on the role of public diplomacy. The event coincided with the 75th anniversary celebrations of both the British Council and Liberty.

We have offices in belfast, Cardiff, edinburgh, london and Manchester Our work in the UK broadens the world view of thousands of young people. For example:

Our work benefits the UK’s creative and knowledge economy. For example: n Our international higher education strategy is

brokering policy dialogue with governments overseas. It is creating new teaching partnerships. It provides market intelligence to UK institutions to increase the flow of students in and out of the UK. This is part of our contribution to a sector that is worth at least £5 billion in export earnings to the UK economy. n Over 200 further education and sixth-form colleges

took part in British Council initiatives. This included our ground-breaking Skills for Employability, where we’re opening up new markets for UK FE partners, including Pakistan.

Country Iran Uzbekistan Kazakhstan Afghanistan Nepal Bangladesh Pakistan Regional budget Total 2009–10 2008–09 2007–08

HMG grant * 0.1 0.8 0.9 1.5 0.4 2.1 2.9 1.3 10.1 9.5 7.6 0

5 HMG +

Other income 0.0 0.2 0.6 0.2 2.3 7.0 14.7 0.0 24.9 27.1 24.0

(£ millions)

Other =

Total 0.1 1.0 1.5 1.7 2.7 9.1 17.6 1.4 35.1 36.7 31.6

Total

n Over 350,000 people saw the British Council

Collection shows in the Whitechapel Gallery; and Resound at the Barbican was a highlight of our Birthday celebrations.

We reached over 43 million people and english language projects trained over 22,000 teachers

n Selector gigs in Cardiff and Edinburgh showcased

British talent that we are taking to the world. We engaged more than 320 UK arts organisations on over 100 different initiatives. n The biennial British Council Edinburgh Showcase

generates an estimated £1 million for the UK theatre industry.

In Kazakhstan, more than 10,000 students a year in 70 state colleges will benefit from a new construction curriculum piloted by a Skills for Employability partnership between Wakefield and Almaty. International Inspiration has trained 14,000 young leaders in schools and communities and a further 500 sports and educational professionals in Bangladesh alone.

engagement: bringing people together

n Over 7,000 schools across the UK are involved

in long-term programmes for the direct exchange of knowledge, people and ideas.

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

84 84 80

n Through us, over 1,800 of these schools had

2009–10 2008–09 2007–08 0

a partnership with one or more schools in one or more of 84 countries worldwide. assistants overseas, gaining an extended experience of another culture, developing themselves and the UK’s cultural ties.

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10

n More than 2,300 UK students were language

1.1 0.8 0.9

Quality of activity

Meeting expectations

(Measured in millions) 43.1 38.4 2.0

2009–10 2008–09 2007–08

n Global Xchange helps young people and youth

workers from the UK and across the world to live, learn and work together on programmes that promote volunteering, development awareness and active citizenship. More than 500 participants from the UK and another 28 countries in the Middle East, Asia and Africa participated in Youth and Community Xchange programmes to gain a deeper understanding of issues affecting sustainable community development.

Leaders (T1) 972 Influencers (T2) 61,739 Aspirants (T3) 2,013,616

* Refers throughout this section to the core UK government grant we receive through our sponsoring department, the Foreign and Commonwealth Office.

CHInA

eAst AsIA

Regional performance

funding Country Hong Kong China Regional budget Total 2009–10 2008–09 2007–08

funding HMG grant 2.0 7.4 2.4 11.8 8.5 5.9 0

10 HMG +

Other income Total 13.1 15.1 42.1 49.5 0.8 3.2 56.0 67.8 49.5 57.9 34.9 40.8

(£ millions)

Other =

Total

We reached 20 million learners of English, working with a range of partners including publishers, websites and mobile providers such as Nokia. Connecting Classrooms has created over 1,000 school partnerships between the two countries and our Experience! 2009 campaign brought the benefits of studying in the UK directly to 190,000 people.

our large-scale programmes helped us to reach over 134 million people in China last year

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

81 80 77

2009–10 2008–09 2007–08 0

1.5 1.3 3.6

2009–10 2008–09 2007–08

100

Country New Zealand Australia Philippines Taipei Indonesia Burma Vietnam Thailand Republic of Korea Malaysia Japan Singapore Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.3 0.7 0.4 0.6 1.8 0.3 1.6 1.0 1.2 1.0 3.2 0.8 1.4 14.3 13.3 11.6 0

10 HMG +

20 Other =

our work directly engaged 1.3 million more people and we reached almost 100 million people

reach: bringing information to individuals

breakdown 2009–10 Quality of activity

Meeting expectations

Total

Access English, Creative Cities and partnership agreements for our new Social Entrepreneurship programme all contributed to improvements in direct engagement and increased partnership income – this was up ten per cent. We are leading on the UK–Vietnam agreement to support the development of an international standard state university in Vietnam, based on our own university models.

(Measured in millions) 134.5 46.7 32.6

2009–10 2008–09 2007–08

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

81 80 77 0

2009–10 2008–09 2007–08

2.3 1.7 2.2

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10

Other income Total 0.0 0.3 0.2 0.8 1.6 2.0 1.8 2.4 0.6 2.4 2.8 3.1 4.1 5.8 5.4 6.4 5.3 6.5 5.8 6.8 5.4 8.6 10.4 11.1 0.6 1.9 43.8 58.1 42.3 55.6 32.9 44.5

(£ millions)

Quality of activity

Meeting expectations

(Measured in millions) 99.5 38.4 13.8

2009–10 2008–09 2007–08

InDIA AnD srI lAnKA

lAtIn AMerICA AnD tHe CArIbbeAn

Regional performance

Regional performance funding Country Sri Lanka India Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.5 7.7 0.2 8.4 6.9 6.5 0

Other income 6.7 12.2 5.7 24.6 24.7 16.3

(£ millions)

5 HMG +

10 Other =

Total 7.2 19.9 5.9 33.0 31.6 22.8

Total

Broadcast partners at Tata Sky, the Discovery Channel and MTV India helped our work reach 54 million people across India. International Inspirations, UKIERI and Connecting Classrooms contributed to direct engagement exceeding planned targets. New, low-cost teaching offers opportunities to people of limited means. Our Colombo and Kandy teaching centres are operating at capacity, meeting high demand for English.

project english has now reached more than 17 million language learners

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

83 82 81 0

2009–10 2008–09 2007–08

2.4 2.5 1.8

2009–10 2008–09 2007–08

funding Country Cuba Chile Caribbean* Argentina Mexico Venezuela Brazil Colombia Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.2 0.3 0.4 0.6 1.3 0.7 3.5 0.6 1.2 9.0 9.2 9.1 0

*Jamaica and Trinidad and Tobago

5 HMG +

10 Other =

Total

We are working with Colombia’s Ministry of Education in their 23 teacher training programmes to help 7,000 English language teacher trainers across the country. Our partnership with the Commonwealth Foundation connected young people to the debate at CHOGM on our People’s Forum blog. Connecting Classrooms is up and running in Venezuela, enabling new conversations with the UK and positive bilateral engagement between our countries.

We are working with 115,000 Mexican schoolchildren on our climate change programmes

100

reach: bringing information to individuals

breakdown 2009–10 Quality of activity

Meeting expectations

(Measured in millions) 54.7 10.8 1.5

2009–10 2008–09 2007–08

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

83 83 81 0

2009–10 2008–09 2007–08

2.3 0.8 0.4

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10

Other income Total 0.0 0.2 0.2 0.5 0.2 0.6 0.1 0.6 1.9 3.1 2.6 3.4 1.2 4.7 5.2 5.8 0.0 1.2 11.3 20.2 10.3 19.5 8.8 17.9

(£ millions)

Quality of activity

Meeting expectations

(Measured in millions) 35.2 3.8 0.4

2009–10 2008–09 2007–08

MIDDle eAst

neAr eAst AnD nortH AfrICA

Regional performance

funding Country Yemen Iraq Oman Bahrain Kuwait Qatar United Arab Emirates Saudi Arabia Regional budget Total 2009–10 2008–09 2007–08

funding HMG grant 0.6 1.1 0.4 0.4 0.6 0.6 1.2 1.7 3.1 9.7 9.1 7.5 0

10 HMG +

Other income 0.4 0.2 1.7 2.2 2.7 5.0 8.9 9.6 0.0 30.7 23.0 17.9

(£ millions)

20 Other =

Total 1.0 1.3 2.1 2.6 3.3 5.6 10.1 11.3 3.1 40.4 32.1 25.4

Country Algeria Tunisia Lebanon Palestinian Territories Syria Morocco Libya Jordan Egypt Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.7 0.7 1.0 2.0 1.5 0.9 0.7 1.1 2.0 1.5 12.1 10.9 8.6 0

Total

5 HMG +

We are helping to assure the quality of Saudi Arabia’s 58 universities and colleges, including the expansion of women’s access to education. In Qatar, we are delivering a £3 million contract to help 600 Qatari teachers at the State’s independent schools switch to English-medium teaching of mathematics and science. My Father’s House gave UK and Middle East artists a platform across the region involving more than 25,000 people.

In one month our go4english website attracted more than 500,000 users

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

79 79 77

2009–10 2008–09 2007–08 0

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10

0.8 0.7 0.6

Quality of activity

Meeting expectations

(Measured in millions) 4.4 0.4 0.6

10 Other =

We have reached 19.3 million more people in the near east and north Africa

Total

Teachers are helping their students develop English skills using the Premier Skills website following Algeria’s qualification for the World Cup. We are leading on the delivery of a UK–Libya agreement to provide co-operation and support for education reform. English for the Future is providing a pathway to a successful career for young learners to recent graduates, and for trainee teachers to qualified English teachers.

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

81 80 79 0

2009–10 2008–09 2007–08

0.9 1.2 1.0

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10 2009–10 2008–09 2007–08

Other income Total 0.1 0.8 0.9 1.6 0.8 1.8 0.2 2.1 1.4 2.9 2.0 2.9 2.9 3.6 3.4 4.5 7.6 9.6 0.0 1.5 19.2 31.3 15.7 26.6 13.8 22.4

(£ millions)

Quality of activity

Meeting expectations

(Measured in millions) 20.8 1.2 0.8

2009–10 2008–09 2007–08

russIA AnD nortH europe

soutH-eAst europe

Regional performance

funding Country Estonia Latvia Norway Denmark Lithuania Finland Slovenia Sweden Hungary Slovakia Russia Czech Republic Poland Regional budget Total 2009–10 2008–09 2007–08

funding HMG grant 0.2 0.3 0.4 0.4 0.2 0.5 0.5 0.8 0.6 0.5 2.2 0.8 1.6 1.0 10.1 11.4 14.9 0

5 HMG +

Other income 0.0 0.0 0.0 0.0 0.2 0.0 0.1 0.0 0.3 0.7 0.1 2.1 3.6 0.0 7.1 8.5 8.7

(£ millions)

10 Other =

Total 0.2 0.3 0.4 0.4 0.4 0.5 0.7 0.8 0.9 1.2 2.3 2.9 5.2 1.0 17.3 19.9 23.6

Total

Country Kosovo Macedonia Albania Bosnia and Herzegovina Austria Croatia Serbia and Montenegro Israel Bulgaria Ukraine South Caucasus * Romania Cyprus Turkey Greece Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.3 0.3 0.4 0.5 0.4 0.7 0.7 0.9 0.8 0.7 1.6 0.9 0.5 3.2 0.7 1.7 14.2 15.8 15.7 0

*Armenia, Azerbaijan, Georgia

Global English for Europe has helped more than 135,000 parents support their children’s learning thanks to more affordable ways to access materials. We are helping people and professionals to improve their surroundings through Creative Cities, which reached over 20 million people in the media. Ministries of Education across the region signed up to Connecting Classrooms so that we can help them bring an international dimension into the classroom.

Cop15 resounded to the voice of our International Climate Champions demanding change

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

82 81 83 0

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10

0.8 0.7 1.0

Quality of activity

Meeting expectations

5 HMG +

Other =

2009–10 2008–09 2007–08

Total

Our English and Exams business generated £20 million, including contracts with NATO and OSCE. In total, the region’s income from partners, both in cash and in kind, amounted to £4.1 million. Our successful Football for Peace project in Israel, now in its tenth year, will continue with EU co-funding as Playing for Peace. Between them, our Beautiful Science and Darwin Now programmes reached 27 million people.

skills for employability reached more than 800,000 people in 12 countries in the region

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

83 83 83

2009–10 2008–09 2007–08 0

1.7 1.4 1.0

2009–10 2008–09 2007–08

100

(Measured in millions) 26.7 6.6 7.1

Other income Total 0.0 0.3 0.1 0.4 0.1 0.5 0.3 0.8 0.6 1.0 0.6 1.3 0.7 1.4 0.7 1.6 1.7 2.5 1.7 2.5 1.0 2.6 2.8 3.7 3.6 4.1 1.8 5.0 7.6 8.3 0.0 1.7 23.5 37.7 23.0 38.8 22.0 37.6

(£ millions)

reach: bringing information to individuals

breakdown 2009–10 Quality of activity

Meeting expectations

(Measured in millions) 36.3 27.8 5.6

2009–10 2008–09 2007–08

sub-sAHArAn AfrICA

West europe AnD nortH AMerICA

Regional performance

Regional performance funding Country Rwanda Botswana Mauritius Cameroon Senegal Mozambique Eritrea Malawi Ethiopia Uganda Tanzania Zambia Zimbabwe Sudan Ghana Kenya South Africa (incl. Namibia) Sierra Leone Nigeria Regional budget Total 2009–10 2008–09 2007–08

HMG grant 0.1 0.3 0.4 0.3 0.7 0.5 0.2 0.6 0.7 1.0 0.8 0.7 1.3 1.1 1.1 1.2 2.5 0.5 3.6 5.1 22.7 20.3 17.9 0

10 HMG +

20 Other =

Customer satisfaction

(Measured in millions)

86 82 81

1.2 1.2 1.3

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10 Quality of activity

Meeting expectations

Country Malta Ireland Canada Switzerland United States Germany Belgium and Netherlands France Portugal Italy Spain Regional budget Total 2009–10 2008–09 2007–08

(Measured in millions) 79.1 39.6 1.4

HMG grant 0.1 0.4 0.6 0.8 1.6 2.1 1.9 1.4 0.6 1.1 2.0 1.1 13.6 13.6 13.2 0

Other income Total 0.0 0.1 0.0 0.4 0.0 0.6 0.4 1.2 0.1 1.6 1.4 3.5 1.9 3.8 4.9 6.4 8.5 9.1 11.4 12.5 53.2 55.3 0.0 1.1 81.9 95.5 72.3 85.9 57.1 70.3

(£ millions)

20 HMG +

engagement: bringing people together 2009–10 2008–09 2007–08

funding

Other =

our teaching and exams businesses grew by 18 per cent despite tough economic conditions

Total

Score from 0–100

Total 0.4 0.8 0.8 1.0 1.1 1.1 1.3 1.4 1.4 1.4 1.5 1.6 1.7 1.7 1.8 2.0 3.5 4.8 12.6 5.2 47.2 52.9 45.1

Over 750,000 young people and teachers connected their classrooms with the UK. We are delivering English by radio to countries where internet penetration is low and demand for UK exams reached over 500,000 people. Our development work for DFID is making a real difference to people, to governments and quality of life in Sudan, Nigeria and Sierra Leone.

We are investing in the development of Angola, the Democratic republic of Congo and rwanda

Other income 0.3 0.4 0.5 0.7 0.3 0.6 1.2 0.8 0.7 0.5 0.7 0.9 0.4 0.6 0.8 0.8 1.0 4.3 9.0 0.0 24.5 32.6 27.2

(£ millions)

100

Total

We are playing a leading role in developing the cultural relationship between the European Union and China. Our Shared Europe is creating greater understanding of the Muslim contribution to European society, culture and identity. Global Changemakers lobbied UK and world leaders for a better, brighter future at the G20 in London. We helped students, teachers and politicians from across Europe to think about inclusion and diversity in schools.

Customer satisfaction

engagement: bringing people together

Score from 0–100

(Measured in millions)

77 76 77

2009–10 2008–09 2007–08 0

3.1 1.9 2.0

2009–10 2008–09 2007–08

100

reach: bringing information to individuals

breakdown 2009–10 Quality of activity

Meeting expectations

(Measured in millions) 117 15.4 5.5

2009–10 2008–09 2007–08

our report

GoVernAnCe The British Council is a charity and an executive non-departmental public body audited by the National Audit Office.

The rules for Board membership are set out in the Royal Charter. Members are elected by the Board following an open recruitment process. They must be British citizens and are chosen for their ability to contribute experience and expertise to the British Council. The term of appointment to the Board is three years, with the possibility of renewal for a further three years. Appointment to the offices of Chair and Deputy Chair requires the prior approval of the Foreign Secretary. The Chair, Deputy Chair and members of the Board are not remunerated. However, out-of-pocket expenses are reimbursed where incurred on British Council business. If a Board member undertakes work in a professional capacity at the request of the British Council, fees for such work may be paid. The Board Code of Practice requires members to declare any interest that may conflict with their responsibilities as Board members. This information is available for inspection.

principal address 10 Spring Gardens London SW1A 2BN Telephone +44 (0)20 7930 8466

Auditors Comptroller and Auditor General National Audit Office 157–197 Buckingham Palace Road Victoria, London SW1W 9SP

bankers HSBC 129 New Bond Street London W1A 2JA

legal status The British Council is registered as a charity under registration numbers 209131 (England and Wales) and SC037733 (Scotland). The British Council was established in 1934 and incorporated by Royal Charter in 1940. A Supplemental Charter of Incorporation was granted in 1993.

patron Her Majesty the Queen Vice-patron His Royal Highness The Prince of Wales

objects The objects (as defined in its Royal Charter) for which the British Council is established and incorporated are to advance any purpose that is exclusively charitable and that shall: n promote a wider knowledge of the United Kingdom n develop a wider knowledge of the English language n encourage cultural, scientific, technological and

other educational co-operation between the United Kingdom and other countries n otherwise promote the advancement of education.

The purpose of the British Council is to: n build engagement and trust for the UK through

the exchange of knowledge and ideas between people worldwide. Our Trustees have given careful consideration to the Charity Commission’s general guidance to ensure that there is clear evidence of how the aims of the British Council are carried out through the activities undertaken for public benefit.

Governance The Royal Charter vests all the powers of the British Council in a Board of Trustees. The Board has three sub-committees: Audit, Remuneration, and Nominations, to which it has delegated certain responsibilities. The British Council has robust governance arrangements to promote high performance and safeguard propriety and regularity. Corporate governance was reviewed in 2007.

Audit Committee The Audit Committee is a sub-committee of the Board of Trustees, chaired by Claire Ighodaro, a non-executive Trustee. The principal functions of the committee are to report to the Board on the adequacy of the British Council’s internal control. It reviews and monitors risk management processes, and reviews arrangements for compliance with regulatory and financial reporting requirements.

43 © Mat Wright

It also agrees a programme for internal audit and to report on any other financial or accounting matters that the Board might specify.

executive board (at 31 March 2010)

Martin Davidson CMG

remuneration Committee The Remuneration Committee of the British Council is a sub-committee of the Board of Trustees, chaired by the Chair of the British Council. The principal functions of the committee are to set annual performance measures and policy for total remuneration and benefits for the Chief Executive. They agree his annual performance evaluation. The committee also determines policy for remuneration of members of the Executive Board. It reviews and agrees their performance evaluation reports, ratings and eligibility for bonus. Finally, the committee considers the impact of its work on remuneration policy for the organisation as a whole and addresses any other matters referred to it by the Board. For further details on Executive Board remuneration, please see page 53.

nominations Committee The Nominations Committee is a sub-committee of the Board of Trustees, chaired by the Chair of the British Council. It maintains an overview of the composition of the Board of Trustees and ensures that the Trustees collectively provide the expertise and experience required for the governance of the British Council, as determined by the Board and the Royal Charter. It also leads recruitment of the Chair, Deputy Chair and Chief Executive, ensuring that these persons hold the expertise and experience required. The Board receives reports on the work of these sub-committees. The Board also delegates certain authorities to the Chair and to the Chief Executive, who in turn can delegate them wholly, or in part. Trustees are additionally given guidance on their responsibilities and accountabilities.

Chief Executive

Mark robson Director, Operations

Cathy stephens obe Director, Programmes

bidesh sarkar Chief Financial Officer

John Worne Director, Strategy and External Relations

Maureen laurie Director, Global HR (from September 2009) The board of management for the British Council is the Executive Board. The identification of candidates with the appropriate balance of skills and experience for both the non-executive and executive roles is undertaken by open recruitment. Members of both the Board of Trustees and the Executive Board are provided with induction and training in their roles. Induction includes briefing and familiarisation with the governance, structure and operations of the British Council.

foreign and Commonwealth office The British Council is also an executive nondepartmental public body sponsored by the Foreign and Commonwealth Office (FCO) under the responsibility of the Rt Hon. Caroline Flint who was Minister of State for Europe until June 2009 and Chris Bryant, Parliamentary Under Secretary of State thereafter. The FCO/British Council management status was renegotiated and agreed in October 2006 and the financial memorandum in November 2007.

risk management The British Council has a system of internal control based on a continuing process designed to identify and prioritise the risks to the achievement of the British Council’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. Strategic and operational risks are identified through the global risk reporting process, the Enterprise Risk Management Framework, and discussed by the Executive Board quarterly and the Board of Trustees annually. Financial risks are identified through the Financial Control and Compliance Framework, and reviewed by the Executive Board each month. In addition, any specific material risks emerging are addressed as required. The Executive Board is responsible for establishing and maintaining the system of internal control, for reviewing its effectiveness and for ensuring necessary actions are taken to remediate significant failings or weaknesses. To provide assurance to the Executive Board that risks are being managed effectively, a Risk Board meets quarterly to review the assessment of risks, consider whether the existing and proposed mitigation is sufficient and make recommendations for strengthening mitigation where necessary. The Risk Board is chaired by Deputy Director Operations and made up of senior managers from operational departments and support services. A report from the Risk Board highlighting significant issues and concerns is considered by the Executive Board at its risk meeting each quarter.

Connected charities and organisations Audit These accounts have been audited by the Comptroller and Auditor General by agreement with HM Treasury and are, with the annual report, laid in the Library of the House of Commons. The audit fee for 2009–10 was £130,000. The Companies Act now permits the Comptroller and Auditor General to audit the accounts of companies. Therefore, following direction from the Foreign and Commonwealth Office, the accounts of BC Trading International Limited were audited by the National Audit Office for 2009–10 for a fee of £6,500. Through his staff, the Chief Executive has taken all steps that he ought to have taken to make himself aware

of any relevant audit information and to establish that the auditors are aware of that information. So far as the Chief Executive is aware, there is no relevant audit information of which the auditors are unaware.

The British Council co-operates with many organisations in the pursuit of its charitable objectives. Other than related parties the British Council has no direct relationship with any organisation other than by way of normal contract. The British Council is the sole corporate trustee of a number of small trusts of which the three largest are the United Kingdom 9/11 Scholarships Fund, the Lefèvre Trust and the Sir Shiu Kin Tang Educational Trust.

Disabled employees We are committed to ensuring disabled employees are able to progress in and develop their careers. The Positive about Disabled People symbol is displayed on our recruitment advertisements and our web pages. This is an attempt to encourage disabled people

to consider applying to work with us and to reflect our commitment to existing employees. We guarantee an interview to all disabled people who meet the required criteria. Our terms and conditions of service ensure that staff with disabilities are not discriminated against. Where appropriate, reasonable adjustments are made to enable disabled people to carry out their duties and to compete for other jobs and promotion. We have a Disability Working Group. Their remit includes raising awareness of disability-related issues across the organisation. A range of training and development materials to explore disability issues in the workplace have been developed, including e-learning modules and a video about working in the British Council with a disability. Our Disability Advisory Panel is drawn from people with a wide range of personal and/or professional experience of disability. The panel meets twice a year to advise and share good practice about disability equality.

equal opportunity and environmental issues Reports on our equal opportunity and diversity commitment and environmental policy can be found on pages 54 and 57.

Consultation with employees The British Council recognises advantages in its staff joining trade unions and/or staff associations, and taking part in their activities. There are mechanisms in each country in which the British Council operates for consulting staff that reflect local practice and employment legislation. Management also meet with representatives from British Council offices in EU countries to discuss transnational European issues via a European Works Council. Managers are responsible for consultation with trade unions, staff associations and individual staff members on proposals for change. Where managers are proposing changes that have significant implications for staff, it is British Council policy to consult on any such proposals. The British Council produces a range of internal communications to inform and involve our staff. They encourage debate and discussion of issues that are relevant to colleagues in addition to providing the information that they need to do their jobs. A monthly bulletin of strategic and management information is sent by email to regional and country directors and UK managers. The British Council publishes weekly online news and information on its intranet site. We also keep staff informed through British Council LiFE, our quarterly print magazine. All staff have access to email and the intranet.

the board of trustees

british Council country committees and advisory groups

(at 31 March 2010)

(at 31 March 2010) Chair Vernon ellis

board Members who served during part of the year

‡ ††

Deputy Chair Alan buckle ‡ †† Global Head of Advisory, KPMG

Members nihal Arthanayake Musician, broadcaster and DJ professor pamela Gillies ‡ †† Principal and Vice-Chancellor, Glasgow Caledonian University lord Hall of birkenhead Cbe Chief Executive, Royal Opera House brian Hanna Cbe Chair of the Northern Ireland Committee sue Hoyle † Director, Clore Leadership Programme Claire Ighodaro Cbe † Independent director professor steve Jones Professor of Genetics, University College London patrick McKenna Chief Executive, Ingenious Media plc †

raoul shah Founder and Chief Executive, Exposure

secretary Andy Mackay obe

rt Hon. lord Kinnock of bedwellty Chair of the British Council until 7 July 2009 Gerard lemos CMG Deputy Chair of the British Council and Acting Chair from 8 July 2009 until 24 March 2010 Zeinab badawi Broadcaster and journalist until 30 November 2009 professor sir timothy o’shea Principal and Vice-Chancellor, University of Edinburgh until 31 August 2009

‡ Member of the Nominations Committee †† Member of the Remuneration Committee † Member of the Audit Committee

northern Ireland Committee

Wales Committee

english language

Chair

Professor Elan Closs Stephens CBE

Dr Catherine Walter

Members

Gary Davies Richard J. Davies Aled Eirug Lynne Hamilton John Howells Yasmin Hussein Euryn Ogwen Williams Berwyn Rowlands Professor Stephen Tomlinson

Steve Brent Professor Chris Kennedy John McGovern Peter Mothersole Professor Alison Phipps Dr Philida Schellekens Andrew Thompson Professor Brian Tomlinson

Brian Hanna CBE

Members Professor Alastair Adair The Hon. Mr Justice Deeny Rosalie Flanagan Rosemary Kelly OBE Jim Kitchen Dr Aideen McGinley OBE Seamus McKee Jonna Monaghan Duncan Morrow Helen Osborn Joan Reilly Trevor Ringland Professor Gillian Robinson Alan Shannon Paul Sweeney

secretary Shona McCarthy

scotland Committee Chair James Boyle

Members Sir David Edward Sir John Grant Ken Greer Mukami McCrum Sheena McDonald Graham MacNaughton Francesca Osowska Dr Dave Reay Rt Hon. George Reid Professor Joan Stringer CBE FRSE Professor Allan Walker

secretary secretary

Melissa Cudmore

Dr Kevin Higgins

education and Governance Chair

science and engineering Chair Dr Gill Samuels CBE

Professor Michael Worton

Members Members Dr Rob Berkeley David Cargo Professor Lynn Davies Dr Rita Gardner CBE Steve Grainger MBE Jacqui Henderson CBE Rajiv Joshi Professor Liz Kelly CBE Graham Leicester Nina Panayis Professor Sir Peter Scott

secretary John Payne

Anjana Ahuja Professor Steve Albon Professor Jim Al-Khalili Professor Polina Bayvel Professor Neil Champness Professor Mike Hulme Tony Juniper Professor Mike Lamb Dr Vicky Pope

secretary Dr Lloyd Anderson

Arts advisory Group Graham Sheffield was appointed as Arts and Creative Economy Advisor in June 2009. An advisory group will be formed in 2010–11 as a result of his work.

secretary Paul Docherty

Professor Kenneth Brown left the Northern Ireland Committee in October 2009 Will Haire left the Northern Ireland Committee in February 2010 Leslie Evans left the Scotland Committee in September 2009 46

statement of the trustees’ responsibilities

statement on internal control Scope of responsibility

Under the Charities Act, the Trustees are responsible for the preparation of financial statements for each financial year in the form and on the basis prescribed by regulations made by the Secretary of State for the Home Department. The accounts are prepared on an accruals basis and must give a true and fair view of the British Council’s incoming resources and application of resources during the year and of its state of affairs at the end of the year.

The Trustees are responsible for reporting on public benefit, having regard to the guidance issued by the Charity Commission to ensure that there is clear evidence of how the aims of the British Council are carried out, through the activities undertaken for the public benefit. Details of any related party transactions undertaken by the Trustees are detailed in note 20 to the accounts.

In preparing those financial statements the Trustees are required to:

statement of the Accounting officer’s responsibilities

n observe the accounts direction issued by the

The Accounting Officer for the Foreign and Commonwealth Office has designated the Chief Executive as the Accounting Officer for the British Council. His relevant responsibilities as Accounting Officer, including his responsibility for the propriety and regularity of the public finances and for the keeping of proper records, are set out in the Non-Departmental Public Bodies’ Accounting Officers’ Memorandum issued by HM Treasury and published in Managing Public Money.

Secretary of State for Foreign and Commonwealth Affairs, including the relevant accounting and disclosure requirements; select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable accounting standards and statements of recommended practice have been followed, subject to any departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the British Council will continue in operation. The Trustees’ responsibilities include keeping proper accounting records. These disclose with reasonable accuracy at any time the financial position of the British Council and enable it to ensure that the financial statements comply with Accounting and Reporting by Charities: Statement of Recommended Practice (revised 2005) (SORP) and United Kingdom Generally Accepted Accounting Practice (UK GAAP). The Trustees are also responsible for safeguarding the British Council’s assets and hence for taking reasonable steps for the prevention and detection of fraud and breaches of law and regulations.

Vernon ellis Chair, British Council 23 June 2010

As Accounting Officer, I, Martin Davidson, have responsibility for maintaining a sound system of internal control that supports the achievement of the British Council’s policies, aims and objectives, while safeguarding the public funds and assets for which I am personally responsible, in accordance with the responsibilities assigned to me in Managing Public Money. I am also responsible for ensuring compliance with parliamentary requirements, the Financial Memorandum between the Foreign and Commonwealth Office (FCO) and the British Council, and the accounting and reporting requirements of the Charity Commission and the Office of the Scottish Charity Regulator (OSCR). As Chair of the Board of Trustees, I, Vernon Ellis, have responsibility for satisfying myself and the Board that a sound system of internal control is maintained within the British Council.

A range of risk management training is provided to staff to ensure that they are equipped to manage risks appropriate to their duties and level of authority. Guidance is revised as necessary to take account of changes and improvements to risk and control practices, and regular updates are provided on risk management issues. The Board of Trustees undertakes an annual review of strategic risks facing the British Council to satisfy itself that these risks have been adequately mitigated. In addition, the Board of Trustees, through the Audit Committee, reviews the effectiveness of the risk and control processes in the organisation.

the purpose of the system of internal control

the risk and control framework

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

As part of a process of continuous improvement, new risk management arrangements were implemented with effect from April 2009 to strengthen financial control and give greater emphasis to the management of operational risk through two discrete, but complementary, frameworks:

The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.

n Financial Control and Compliance Framework (FCCF).

The system of internal control has been in place in the British Council for the year ended 31 March 2010 and up to the date of approval of the annual report and accounts, and accords with Treasury guidance.

Capacity to handle risk The British Council’s Executive Board is responsible for the management of the risks facing the British Council and ensuring that effective risk management processes are in place throughout the organisation. Ultimate accountability, including responsibility for determining the British Council’s risk appetite, resides with the Board of Trustees. Specialist functions oversee and provide support for the management of key areas of risk, developing corporate policies and standards, and ensuring that appropriate frameworks and arrangements are in place to enable managers to manage the risks which may impact on the achievement of their objectives. An Enterprise Risk Management team, comprising specialists in security, business continuity, health and safety, fire safety, insurance and risk management, 48

is in place to strengthen the British Council’s capacity to manage risk, to improve the co-ordination of risk management initiatives and to create and sustain a culture of effective risk management throughout the organisation.

n Enterprise Risk Management Framework (ERMF).

financial Control and Compliance framework The primary tool for managing financial risk during the year ended 31 March 2010 was the Financial Control and Compliance Framework. This framework provides evidence on compliance with minimum standards of financial control, which enables the Board, Financial Controller and management at regional and country levels to be in a position to give certification of compliance. The framework has supported the Risk Board and the Executive Board by monitoring minimum standards of financial control and compliance with financial policies and procedures across the British Council through self-certification at both country and UK department levels. The consolidation of returns and the resulting reports and dashboards have ensured that risks and non-compliance issues are easily identified, escalated and tracked by both the centre and regions through to resolution.

enterprise risk Management framework The Enterprise Risk Management Framework comprises a ‘bottom-up’ process for identifying, assessing, controlling and reporting on operational risks by countries and UK departments, complemented by a ‘top-down’ process for managing strategic risks. 49

All business units are required to create and maintain a risk register describing the risks to the achievement of their objectives, assessing the level of inherent and residual risk, summarising the existing and proposed controls (with target dates) and identifying the owner of each risk. As a minimum, registers are reviewed and updated every quarter and are completely refreshed at the start of each year to ensure that they are aligned with the business unit’s objectives for the coming year. In addition to scrutiny by the business unit itself, each register is reviewed by the directorate to which it reports to ensure the visibility of risks across the directorate, improve the quality of risk reporting and facilitate the sharing of good practice in risk management. The Strategic Risk Register is revised annually by the Executive Board and each risk on the register is owned by a member of the Executive Board, who is accountable for ensuring that effective mitigation is put in place to manage the risk across the organisation. Risk tolerances for each strategic risk are set by the Executive Board, based on the Statement of Risk Appetite approved by the Board of Trustees. In addition to operational and strategic risks, change programme risks are also managed through the Enterprise Risk Management Framework. The Scale of Ambition Board is responsible for ensuring that risks to the achievement of Scale of Ambition objectives are managed effectively and individual programme and project managers are responsible for maintaining risk registers for their programmes and projects. The Enterprise Risk Management team is responsible for analysing and providing a commentary on the risk data from all business units for the Risk Board, which provides assurance to the Executive Board that risks to the achievement of the British Council’s objectives are being managed effectively. The Risk Board meets quarterly to monitor changes to the British Council’s risk profile, review the mitigation of strategic, operational and change programme risks and mandate action to improve mitigation where necessary. It also considers reports from the Security and Health and Safety committees. The Risk Board is chaired by Deputy Director Operations and made up of senior managers from across the organisation. A report from the Risk Board highlighting key issues and concerns is considered by the Executive Board at its risk meeting each quarter.

embedding risk management All staff are responsible for managing risks within the scope of their responsibilities as employees of the British Council and as professionals working to professional codes of conduct. The Financial Control and Compliance Framework and the Enterprise Risk Management Framework have been in place for one year. Both are working well and have significantly enhanced the British Council’s capacity to manage risk. Minor adjustments have been made to each framework during the course of the year and further improvements will be made during 2010–11. 50

The main focus during the coming year will be to embed risk management more fully in all the British Council’s activities. Work needs to be done to improve the completeness and quality of risk registers, while at the same time encouraging all staff to see risk management as an integral part of effective management. A key focus for the ERM team, therefore, will be to provide further training and support for staff throughout the organisation in managing risk.

All business units in the UK and overseas are required to have business continuity plans in place, which are reviewed and updated annually. A sample audit of some plans is also carried out. In 2009–10, business continuity plans were drawn up by many directorates to deal specifically with the threat of pandemic flu. In addition, a major incident team was convened to co-ordinate the British Council’s response to the threat.

The priorities for risk management in the British Council during the past year included:

In 2009–10, 60 per cent of plans were tested annually. Following a risk assessment of the business continuity planning framework, however, annual testing will only be carried out in future in business units where testing is required to demonstrate the required level of resilience.

economic environment

status and tax

risk priorities

Managing the effect of the global recession continued to be a significant focus of risk management for the Executive Board and business managers during 2009–10. The continuing weakness of sterling against major currencies has substantially reduced the purchasing power of the grant-in-aid. In addition, demand for teaching services has been weaker than planned, although higher than 2008–09. However, the overall impact of the global recession has had minimal impact on targets. This has been achieved through a number of interventions, including: n taking advantage of market opportunities to deliver

more exams services than planned n delivering more activity through large scale

programmes so that higher audience numbers are delivered at lower unit cost n reducing back office and operational support costs n introducing a global cashflow forecasting process so

that future liquidity requirements and foreign exchange exposures are better anticipated. This has allowed better utilisation of natural hedges and the ability to enter into forward contracts for dollars and euros, increasing budget certainty on future exchange rates.

security and business continuity Political instability, conflicts and natural disasters continue to pose a threat to our staff and customers, and to programme delivery, in many parts of the world. Given the priority attached to working in countries which have a deficit of trust with the UK, some operations are exposed to terrorist attack, while in others our programmes are disrupted by civil unrest and other forms of conflict. During the past year, we have continued to maintain operations in Afghanistan, Iraq and Pakistan, while in Georgia our office had to close temporarily due to the conflict with Russia. Priority is given to ensuring the safety of staff, customers and partners through a combination of risk assessments, briefing, training, and the use of appropriate protective measures. Security is an intrinsic element of all premises projects and a service level agreement with FCO Estates and Security Division provides for the cyclical inspection of all properties globally. The Security Committee, which reports to the Risk Board, is responsible for monitoring the effectiveness of security arrangements.

During the past year, work has continued on the review of the British Council’s status. The Status and Tax programme aims to establish a robust platform for the growth of income-generating activities in line with strategic priorities and to address the reputational and financial risks associated with our status in some countries. The review of status options has been completed in 90 directorates and the remaining 20, mainly small-scale directorates, are due to be reviewed by 30 June 2010. A five-year implementation plan has been agreed and to date implementation has been completed in 46 countries. Progress has also been made on the development of a group structure for the British Council and the financial and legal framework needed to support it. A holding company, BC Holdings (United Kingdom) Ltd, was incorporated in December 2009 and FCO approval was given for the establishment of subsidiaries in China, India, Thailand and the USA. A funding policy for subsidiaries has been approved by HM Treasury and a transfer pricing policy has also been developed to provide a transparent mechanism for charging between different entities. In view of the increased complexity of the group structure and the risks associated with it, ensuring that the British Council’s governance, risk management and control framework are aligned with the new arrangements and remains fit for purpose will be a key focus for management attention during the coming year.

fraud and money-laundering The British Council remains vulnerable to fraud in some parts of the world, particularly in cash economies, and as a consequence, may suffer financial loss. Enhancements to processes and controls are introduced regularly to prevent and detect fraud, and the responsibility to minimise any consequential loss is taken very seriously. Despite these measures, the risk of fraud cannot be entirely eliminated and during the past year, a fraud of £55,000 was identified in Sierra Leone (£11,000 of which was a loss to the British Council). To further protect the British Council from fraud, a fraud and anti-money-laundering awareness programme was launched in 2009–10.

Information management The British Council is committed to protecting and using its information securely and effectively, in compliance with its legal obligations and the standards and

requirements set out by the Cabinet Office, including the Data Protection, Freedom of Information and Public Records Acts, and the Government’s Data Handling Review. The Senior Information Risk Owner is a member of the Executive Board and chairs the Information Assurance Committee, which reports to the Risk Board and is responsible for monitoring compliance with relevant legislation and the implementation of the Addressing Information Risk programme, a comprehensive set of initiatives aimed at improving all aspects of information governance and management in the British Council. During the past year, training has been provided for staff responsible for handling sensitive data and an information risk awareness campaign has been rolled out throughout the UK. Retention schedules have been developed for key business units and a global review of contracts has been initiated to ensure that information shared with partners and suppliers is managed in accordance with the British Council’s legal obligations. A revised protective marking scheme is due to be implemented shortly. Progress is being measured against the standards set out in the government’s Information Assurance Maturity Model (IAMM). By the end of 2009–10, the British Council had achieved compliance with the entry level standards of the IAMM (Level 1) in the UK. Our target is to achieve IAMM Level 2 in the UK and Level 1 in all overseas operations by April 2011.

Intellectual property In December 2009, a complaint from a photographer highlighted a potentially serious risk relating to the unauthorised use of images on the British Council’s websites. Although the original complaint was resolved, the incident prompted the Risk Board to order an urgent review to confirm that all images on British Council websites are appropriately licensed and being used in accordance with the terms of our licence. This was the first invocation of the new ERMF risk escalation process. Following this incident, action is being taken to increase awareness of intellectual property issues and strengthen the governance arrangements for the use of third party intellectual property. An intellectual property policy has been drafted and a specialist intellectual property manager will be appointed to develop an action plan, together with guidance and training materials for all staff.

Child protection An increasing proportion of the British Council’s programmes involve work with young people. Safeguarding the children who come into contact with the British Council, whether directly or through our partners, therefore, is a top priority. To date, risk mitigation in this area has focused largely on completing criminal records checks for teachers employed in British Council teaching centres. However, recognising the limitations of this approach and the need to extend the scope of child protection measures to all British Council activities, a specialist Child Protection Manager was appointed in January 2010. Work has now started on the development of a comprehensive child protection strategy, which will be rolled out in 2010–11. 51

expenses A review of expenses, including Executive Board expenses, conducted by Internal Audit revealed some areas of non-compliance. Urgent remedial action is being taken to address the issues identified and to enhance the monitoring and sample checking of claims.

Health and safety The British Council is committed to providing a safe working environment for its staff, customers and partners. The Health and Safety Committee, reporting to the Risk Board, is responsible for reviewing health and safety policies and monitoring compliance with health and safety standards throughout the organisation. During the past year, a revised fire safety policy and standards for British Council buildings have been developed, together with a risk assessment framework for the use of partner premises. In addition to the health and safety training provided for staff in the UK, the first of a series of training courses for overseas staff was delivered and a targeted programme of health and safety and fire safety audits initiated in selected UK offices and overseas directorates.

business transformation The management of the risks inherent in the Business Transformation programme is the responsibility of the Programme Lead, reporting to the programme board. Risk registers have been put in place for all projects and are reviewed regularly by the programme board. Any significant emerging risks or changes in risk exposure are highlighted in monthly reports to the Scale of Ambition Board. A major concern during the past year has been the potential disruption to business and the impact on staff morale as a result of restructuring and the voluntary early retirement programme. The implementation of the programme, therefore, has been closely monitored by the Scale of Ambition Board. Detailed guidance and support has been provided both to line managers and to staff taking voluntary early retirement. Arrangements have also been made to protect IT systems, financial information and other sensitive data and to facilitate knowledge retention during this period of transition.

special payments During the year the British Council made payments totalling £504,214 that fall within the category of special payments as defined in Managing Public Money. The British Council relied upon its Financial Memorandum with the Foreign and Commonwealth Office and had not understood that it required formal advance approval from HM Treasury for these special payments. However, it subsequently sought retrospective approval and HM Treasury gave approval for all but one compromise agreement (for details see page 86). The British Council has taken steps to ensure that all staff making policy decisions that come within the scope of Managing Public Money are briefed on its obligations and requirements. The British Council is also seeking

to update and clarify its delegated authorities under its Financial Memorandum with the FCO, so that it is consistent with Managing Public Money.

review of effectiveness As Accounting Officer, the Chief Executive has responsibility for reviewing the effectiveness of the system of internal control. His review of the effectiveness of the system of internal control is informed by the work of the internal auditors and members of the Executive Board who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letter and other reports. The Chief Executive and the Chair of the Board of Trustees have been advised on the implications of the result of the Chief Executive’s review of the effectiveness of the system of internal control by the Risk Board, the Executive Board and the Audit Committee, and a plan to address weaknesses and ensure continuous improvement of the system is in place. The effectiveness of the system of internal control was maintained and reviewed through: n comprehensive operational and financial planning

and reporting processes within the organisation n key policies and procedures, to support the flow

of timely, relevant and reliable information across the organisation n formalised authorisation processes, with the

maintenance of delegated authorities covering financial transactions and contracts n year end self-certification by all country and UK

executive board remuneration report The British Council, as an executive non-departmental public body, is not required to apply the government’s centralised pay system, adopted in 2002, to its Senior Civil Service (SCS) equivalent staff at pay bands 10 and above. However, the British Council does mirror some of the broad principles of the system. The British Council broadly follows the SCS pay ranges for pay band 10 and members of the Executive Board.

a member of the Executive Board could be eligible for a non-consolidated performance-related payment as part of their total remuneration if he or she is successful in meeting a number of targets and objectives. Any increase to Executive Board remuneration is directly related to performance and is applied in the form of an increase to base pay and a non-pensionable payment linked to achievement of specific targets and objectives. In the case of the Chief Executive, this is up to a maximum of 20 per cent of base salary and in the case of other Executive Board members, up to 15 per cent of base salary.

There are three SCS pay ranges, which are determined using the Job Evaluation of Senior Posts (JESP) system. As a general rule: n all British Council pay band 10 jobs fall into

the SCS pay band 1

Executive Board members are appointed on a fixedterm contract of three years. The notice period for termination, for either side, is three months. Early termination, other than for misconduct, may result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

n jobs on the Executive Board fall into SCS pay

bands 2 and 3. Executive Board members’ annual salary increases are determined by their position in the pay band and performance rating. There are five performance ratings: outstanding; exceeds expectations; good performer; improvement/development required; and unsatisfactory. Performance is assessed on how far objectives and targets have been met or exceeded in the individual’s performance agreement and how far duties have been completed to standards agreed in the job description. One of the five ratings is then given, which will determine the level of pay award given each year. In addition name and position

directors giving assurance that our organisation’s accounting procedures have been understood and followed

salary 2009–10

salary 2008–09

(in bands of £5,000)

Accrued pension as at 31/03/10

Emoluments (salaries, including allowances and performance bonuses subject to UK taxation) paid to members of the Executive Board and their pension entitlements are set out below. All those individuals are members of the Principal Civil Service Pension Scheme. An overview of retirement benefits can be found in section 2 (l) and full details in note 7 to the financial statements.

Accrued real lump sum increase as at in pension (in bands of 31/03/10

(in bands of £5,000)

£2,500)

real increase in lump sum

CetV at 31/03/10

CetV at 31/03/09

(to the nearest £1,000)

(to the nearest £1,000)*

(in bands of £2,500)

(to the nearest £1,000)

n the work of Internal Audit, which provides an

independent and objective opinion on the adequacy of processes on risk, control, governance and finance systems n the Audit Committee, which provides oversight

and guidance where necessary on the work of Finance and Internal Audit, providing an interface between the organisation and the National Audit Office n work of the National Audit Office, as external auditor,

in forming an opinion on the financial statements and in reporting the results of their value for money examination. Based on the above, we are satisfied that we can sign the Statement on Internal Control.

real increase in CetV funded by employer

Davidson, M.s. Chief Executive

165–170 **

185–190

55–60

165–170

2.5–5

10–12.5

1,151

1,018

robson, M.W. Director Operations

150 –155

135–140

5–10

n/a

2.5–5

n/a

sarkar, b. Chief Financial Officer

125–130

115–120

5–10

n/a

2.5–5

n/a

stephens, C.A. Director Innovation

145–150

135–140

65–70

195–200

2.5–5

12.5–15

1,529

1,350

Worne, J.p. Director Stategy and External Relations

130–135

115–120

25–30

n/a

2.5–5

n/a

322

267

–

0–5

n/a

0–2.5

n/a

laurie, M.*** Director, Global HR

70–75 ****

The information in this table has been subject to audit. CETV – Cash equivalent transfer value.

Martin Davidson CMG Chief Executive 23 June 2010

Vernon ellis Chair of the Board of Trustees 23 June 2010

* The figure may be different for the closing figure in last year’s accounts. This is due to the CETV factors being updated to comply with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008. ** Martin Davidson waived 2009–10 performance-related payment. *** Appointed 01/09/09. **** Full year equivalent 125-–30.

Martin Davidson CMG Chief Executive 23 June 2010 53

eQuAl opportunIty AnD DIVersIty

our people In 2009–10 we took the decision to redevelop our business model, to reduce overheads and to reduce the number of permanent posts in the UK by one-third to allow us to invest our resources in activity.

As an international organisation working in over 100 countries, we place equality and diversity at the heart of everything we do, wherever we do it. Diversity assessment framework

We are committed to treating our staff, our customers and our partners fairly, removing barriers to equal treatment and acting to redress existing imbalances.

The diversity assessment framework is a global tool that supports our attempts to embed equality and diversity principles into all aspects of our work. The cumulative framework consists of five levels, with a number of indicators at each level, against which evidence is presented and assessed.

Our agenda is based on the idea of societies and working environments where people are understood and their differences are respected. In recognising, valuing and managing diversity between people and cultures, we seek to demonstrate these principles and deliver impact for the UK.

DAF results for 2009–10 were encouraging, with 100 per cent engagement level maintained, and an organisational average of 2.3 for the second year running.

We focus on seven main areas of diversity – age, disability, ethnicity/race, gender, religion/belief, sexual orientation and work–life balance – and have developed an equal opportunities policy and a diversity strategy around them. Documents explaining both policies can be found on our website.

The DAF is an internal benchmarking tool; however, it has attracted considerable interest from the public and private sector in the UK and from around the world. We have been asked to share our approach to equal opportunities and diversity with partners in a host of countries, including China–Hong Kong, Nigeria, Kuwait, Saudi Arabia and Turkey.

Measuring progress By measuring and monitoring our actions we can make progress in bringing equality and diversity into the mainstream. We have a number of ways of doing this, including equality monitoring, an integrated equality scheme and a diversity assessment framework (DAF).

equality monitoring Equality monitoring is used to review the reflective diversity of our workforce. We have been monitoring our UK-contracted staff since 2001 and analyse the data annually to track progress and take action to address under-representation.

Integrated equality scheme To meet our UK equality legislation obligations, we have established an integrated equality scheme. Details of this scheme are available on our website, with progress reports that explain how we are seeking to eliminate unjustified discrimination in the areas of disability, gender and race, and how we are seeking to promote equality and inclusion, specifically the inclusion of disabled people.

We also monitor minority ethnic, women and disabled staff progressing to pay band 10 posts. The target for minority ethnic staff was 12 per cent and we achieved 5.6 per cent; for women it was 37 per cent and we achieved 20.4 per cent; and for disabled staff the target was 5 per cent and we achieved 0 per cent. The first two categories show an improvement on 2008–09. We will continue to monitor progress in this area and seek to address any underlying causes.

www.britishcouncil.org/home-diversityour-approach-ies.htm

As a result of our restructuring, a total of 330 colleagues are leaving through a voluntary early retirement (VER) programme. By the end of March 2010, 113 colleagues had departed the organisation and a further 217 people will have left by October 2010.

Leadership scores in the UK have dropped by ten per cent and there has been a decline of four per cent in the Executive Board’s score. This is not unexpected given the level of change in the UK and the tough decisions that the top team has made over the last year.

The net result of the change programme will be a reduction of over 500 posts in the UK. We will not be replacing colleagues leaving on VER, other than in business-critical posts, and we are reducing the number of non-permanent staff. In addition, we took the decision to impose a pay freeze, affecting all UK-appointed staff for 2010–11 during the year.

The Executive Board will continue to invest considerable time and resource in addressing colleagues’ concerns during 2010–11 as the full impact of our change programme comes into effect.

staff survey

The results show that there is a strong relationship between employees and the British Council. As a place to work, 70 per cent of our colleagues would speak highly of the organisation, as opposed to 55 per cent in the private sector.

The 2009–10 staff survey was completed by 4,768 colleagues. This is in line with previous years and continues to represent a return rate significantly higher than in the public and private sectors.

Levels of satisfaction with working for the British Council are at 65 per cent, which compares well with 67 per cent in the private sector and is just above the public sector at 64 per cent.

This is the second year of our new engagement index, which consists of five questions asked by Ipsos MORI for the staff survey, focusing on goals and objectives, communication, management, fairness and change management.

Colleagues feeling valued and recognised (55 per cent) compares well with private and public sector benchmark data of 41 per cent and 48 per cent respectively.

Our engagement index is 65 per cent. This is a two-point drop. However, we compare well with other organisations. We outperform the Ipsos MORI private sector norm by eight percentage points and their public sector norm by 14 percentage points. Set against a backdrop of considerable organisational change, this is a good result and action taken following last year’s staff survey has shown an increase in engagement by country directors. However, we know that there is still work to do increasing engagement by middle managers throughout the organisation.

Absence monitoring The British Council has a sickness absence monitoring process in place in the UK, managed by Absence Line. Monthly internal reporting on the data is produced and analysed to assess trends and inform management. For the year 2009–10, 2.72 per cent of staff days were lost due to sickness absence.

At 31 March 2010 our UK-contracted staff profile looked like this: staff category

total

total number as a percentage 2009–10

total number as a percentage 2008–09

Women

743

53.8

Minority ethnic

218

15.8

2.8

Disabled Total UK contracted staff

1,380

our new office in Addis Ababa, ethiopia, incorporated eft guidance into the development of its energy and waste management

enVIronMentAl polICy We are an organisation with a large global footprint and want to tread lightly wherever we are in the world. low carbon for cultural relations We are committed to positive action on climate change in our programmes and we have embedded environmental principles into our work. We have developed a sustainable Transformation action plan for the organisation which underpins our commitment to the environment and our ethos of low carbon for cultural relations. We are cutting our carbon emissions to meet environmental legislation in the UK and incorporating sustainability into the design of our programmes, our procurement and our travel. We have signed up to 10:10 campaign and encourage our staff, our suppliers and our customers to cut their own emissions by ten per cent.

environmental Management system (eMs) Since its introduction in 2008, the system has successfully regained certification to International standard for EMS ISO 14001 and is minimising our impact on the environment in the UK. We have developed an environmental management plan, which sets targets and objectives for reducing carbon, energy, water and waste. There was a 9.4 per cent reduction in electricity use from 2007–08 to 2009–10 and Spring Gardens had an overall 17.5 per cent decrease from 2006–07 to 2009–10.

GlA 500 The British Council received a Gold Award at the Green500 Awards in May 2009. Green500 is a London Development Agency carbon mentoring scheme that recognises organisations in London taking action to reduce their carbon emissions.

We were also nominated for a GLA 500 Special Award – the Indirect Leader Award – and given a special mention in this category for the development of our environmental framework tool for our overseas estate.

overseas environmental framework tool (eft) The Environmental Framework Tool (EFT) provides guidance to our staff throughout our global network on how to manage and mitigate the impact of our work on the environment. EFT is fully operational throughout our overseas network with 70 per cent of our offices achieving Level one, and is playing an important role in our new building projects. Our new office in Addis Ababa, Ethiopia, incorporated EFT guidance into the development of its energy and waste management. The building itself is naturally ventilated and uses wind catchers set into the roof structure while innovative design features minimise the amount of energy required to heat and cool the building. Sun pipes in the roof bring natural light to the heart of the building. They save on the use of electricity and solar panels provide all of the hot water for the building. EFT is helping teams throughout the world demonstrate local leadership. Our office in Kuwait is working towards Level three and in partnership with the British Embassy to reduce their combined carbon footprint.

eft targets: n Level one: making a commitment and mobilising

by 31 March 2009. n Level two: understanding and responding

by 31 March 2010. n Level three: performance improvements

by 31 March 2011. n Level four: strong performance. n Provisional level five: showing leadership.

By 31 March 2010 45 per cent of overseas offices had completed level two. EFT is a guidance tool and we continue to provide training and support.

FINANCIAL REVIEW

fInAnCIAl reVIeW Income has increased by nine per cent and for every £1 of government grant we receive, we earn £2.50 from other sources. efficiency savings

1 Detailed results total income received 2009–10 Total income for 2009–10 increased by nine per cent (£60 million) to £705 million, compared with last year. This increase came principally from fees and income from services, including from teaching and examinations operations, which rose by £49 million (16 per cent) to £362 million. Examinations performed particularly strongly despite the economic downturn. Contract activity, carried out on behalf of clients such as the European Union, rose by eight per cent. The figures above include £25 million of additional income resulting from movements in exchange rates.

51% 0%

The British Council’s efficiency programme is designed to respond to the decline in the purchasing power of the grant, and to ensure delivery of its Comprehensive Spending Review (CSR) and Operational Efficiency Programme (OEP) commitments. For CSR07 and OEP, the British Council will generate £20.8 million Grants receivable £211 millionon * its grant by March 2011 (£18.2 million for CSR07, of savings Fees and income from£2.6 services £362 million million for OEP). The British Council is on track to meet Contract activity £130 million these targets, with £4.6 million delivered in 2008–09 and Other income £2 million a further £9.8 million of savings made in 2009–10 against the original target of £6.1 million. This has been achieved through: n a challenging restructuring programme which involves cutting

UK staffing by one-third (500 posts) by March 2011, involving changes to the way that support services are delivered, restructuring of operations and changes in working practice

30%

Grants receivable £211 million * Fees and income from services £362 million Contract activity £130 million Other income £2 million

n the creation of ‘hubs’ in the UK, Poland, India, China and Mexico 19%

to manage overseas and UK support functions centrally. The India hub is being further developed into a global shared services centre in 2010 n a continuing restructuring programme to reduce office

costs overseas n value for money savings on travel and IT.

total resources expended 2009–10 Total expenditure for the year has increased by 14 per cent (£87 million) to £708 million, compared with last year. This increase reflects a growth in services and a major programme of investment. Significant investments have been made to enable future expansion of our teaching operations and to reduce the cost of our operating platform, in particular relating to back office activities through the creation of a global shared services centre and in project delivery. The programme of investment has been funded largely from fees and income from services. The figures above include £14 million of additional expenditure resulting from movements in exchange rates.

22%

7% 63% 1%

Developing a wider knowledge of English language £157 million Encouraging educational co-operation and promoting the advancement of education £443 million Encouraging cultural scientific and technological co-operation £52 million Building capacity for social change £49 million Governance costs £6 million

* In this second year of the Comprehensive Spending Review settlement, the British Council has continued with its focus on the three programme areas – intercultural dialogue, creative and knowledge economy and climate change – which provide the programme framework for all British Council activity. In 2009–10, the British Council further increased direct spend on programmes from grants receivable by £7 million to £102 million. The increase in programme spend has been funded through a reduction in administration and operational support costs.

In addition to these savings targets, the British Council is contributing a further £5 million to the Foreign and Commonwealth in 2010–11. Developing a wider knowledgeOffice of English language £157 million Encouraging educational co-operation and promoting 2 reserves policy the advancement of education £443 million The reserves policy, reviewed and agreed by the Board Encouraging cultural scientific andlast technological of Trustees in April 2009, ensures the British Council has sufficient co-operation £52 million reserves to allow it to cover known liabilities and contingencies, Building capacity for social change £49 million absorb setbacks and take advantage of change and opportunities. Governance costs £6 million The assessment of the appropriate level of reserves is made with reference to the following categories: n to fund working capital requirements n to fund specific liabilities in the future n to fund future investment n to protect the organisation against business continuity risks when

there is a short-term reduction in income n to provide protection for the rest of the business where there

is a catastrophe in one part of it, resulting in exit from a particular business activity. A risk-based approach has been used to estimate the appropriate level of reserves. The current strategic risks have been mapped against five categories or reasons (above) to hold reserves. Reserves levels have then been estimated based on likelihood of risks crystallising, future investment needs and external perceptions of overall reserves levels.

The Board of Trustees periodically reviews the reserves policy to reflect changes in the size of the business, risk profile and investment requirements. At 31 March 2010 the total general reserve was £46 million. This is a composite figure combining the reserves related to both the full-cost recovery activities, which comprise teaching, examinations and contract delivery plus any reserves related to the grant- and partnership-funded activities. The general reserve includes a debit balance of £17 million. When the accounting basis was changed from cash to accruals on 1 April 1995, liabilities for terminal gratuities and continuing early retirement schemes were brought into the accounts on the balance sheet for the first time. Accordingly, a debit balance on the general reserve was recorded. The Trustees, management and the Foreign and Commonwealth Office are committed to continuing activities at current levels and therefore there is no immediate requirement to restrict operations to cover these liabilities. The British Council must manage its affairs to ensure that the level of reserves and associated cash balances related to activity substantially funded by the government grant are kept at an acceptable level in accordance with its responsibilities under Managing Public Money.

3 Aims and objectives In 2010–11, we will continue to encourage cultural co-operation between the United Kingdom and other countries through our work in three programme areas: Intercultural dialogue: we will strengthen levels of understanding and trust between people in the UK and other societies, focusing our activities on younger people and encouraging them to realise the benefits of intercultural relationships. Our priority regions will be Central and South Asia, the Middle East, and Near East and North Africa. the creative and knowledge economy: we will build openness and the sharing of knowledge and ideas, both to position the UK as a leading international partner and to ensure that others benefit from the exchange. We will continue to promote English as a tool for global communication, intercultural understanding and the basis for self-improvement. Climate change: we will work with young people and policy makers to support the growing international consensus on climate change, both the need to tackle its causes and to adapt to the changes it will bring.

4 Grant-making policy Part of our charitable activity is undertaken by making grants to individuals and organisations to facilitate their participation in events, schemes or programmes set up to achieve our

objectives. The grants are made to successful applicants, both from overseas and the United Kingdom, who fulfil the published criteria for each scheme and who are best suited to deliver the outputs intended by the activity.

5 financial instruments, credit, liquidity and market risk The Statement on Internal Control sets out the British Council’s approach to managing its main financial risks. In addition the British Council is required to make the following disclosures under the UK Financial Reporting Standard 29. The categories of financial instruments held within the British Council are: n Loans and receivables: the British Council values receivables

initially at fair value and subsequently at amortised cost. The British Council has no intention of trading receivables and currently holds no loans. n Assets available for sale: the only assets that the British Council

holds under this category are cash and short-term investments as described below. These are stated in the accounts at fair value. n Financial liabilities: the British Council’s policy is that short-term

creditors are recorded at fair value and long-term creditors are reflected at amortised cost where reasonable timescales exist over which to discount and where this is materially different from carrying value. n Financial assets and liabilities at fair value through profit or

loss: the British Council uses forward foreign exchange contracts to reduce exposure to movements in exchange rates. These contracts are carried at fair value, and any gains or losses in fair value are recognised in the Statement of Financial Activities.

Credit risk The British Council is exposed to credit risk on trade debtors over 120 days of £1.5 million. This risk is not considered significant as a number of these debts relate to European Union projects on which the British Council is protected from financial risk provided criteria are met. In addition, experience in many overseas regions demonstrates that aged debts in this timeframe remain valid and collectable. Bad and doubtful debts are provided for on an individual basis. Write-offs in the year for bad debts amounted to £103,000 (£141,000 in 2008–09). No individual write-off was greater than £30,000. Counterparty credit limits, which take published credit rating and other factors into account, are set to cover the total aggregate exposure to a single financial institution. Exposures and limits applicable to each financial institution are reviewed on a regular basis. The British Council has not suffered any loss in relation

to cash held by its banks. The counterparty for all forward foreign exchange contracts is the Bank of England.

liquidity risk Core grants from government departments, principally the Foreign and Commonwealth Office, comprise 28 per cent of total income of the British Council. The remainder is funded via self-generating income. Any liquidity risk is minimal, as overseas current account balances are generally maintained at five weeks’ working capital requirement to ensure sufficient cash for operational activities. Surplus cash is repatriated to the UK where local foreign exchange controls permit, and invested in the UK. Otherwise surplus funds are invested overseas. All investments are in accordance with the British Council’s investment policy. Non-restricted cash is held on short-term deposit accounts or via money market deposits with a maturity of not more than three months at market rates. The British Council is therefore securing interest returns on cash holdings largely held in the UK on a short- to medium-term basis. Surplus funds which cannot be repatriated to the UK (due to local foreign exchange controls) are currently invested for periods up to six months. The British Council Group, as at 31 March 2010, held cash and cash equivalents amounting to £196 million, of which £92 million (2009: £53 million) was held in sterling, £43 million (2009: £48 million) was held in euros and £2 million (2009: £5 million) was held in US dollars. Other currency holdings amounted to £59 million (2009: £49 million).

During the financial year the British Council implemented a foreign exchange forward hedging programme to cover up to 80 per cent of euro and US dollar exposures, the objective being to assist in achieving budget certainty. The British Council’s euro exposure is limited by significant natural hedges. As at 31 March 2010 the notional value of open US dollar forward contracts amounted to £10.6 million, all held for maturity during 2010–11. The British Council held no open euro forward contracts at 31 March 2010. Cash balances in currencies where local foreign exchange regulatory environments make it difficult for the British Council to repatriate or convert currency balances into hard currency positions amounted to a sterling equivalent of £52 million at 31 March 2010, including working capital requirements. The British Council is actively seeking ways to manage and limit the effect of foreign exchange movements on cash balances held in those currencies.

6 Information on payment policy The British Council’s payment policy in respect of third-party creditors is to settle on the contractual payment date or within 30 days from the date of the invoice receipt, provided that the relevant goods and/or services have been supplied (in line with the Better Payment Practice Code).

During the financial year 2009–10, 97 per cent (2008–09: 97 per cent) of valid invoices were paid within this target period. This figure includes payment of grants and stipends. The total number of payment transactions processed in 2009–10 was 91,850 (2008–09: 91,557). These figures relate only to UK activity.

7 estates management The purpose of the British Council estate is to support the function and business objectives of the organisation. The British Council aims to ensure an efficient and effective estate by basing estates decision making around core priorities reflecting the needs of the British Council and market opportunities to ensure that the estate is value for money, flexible, functional, safe, secure and sustainable. The majority of the estate, which is largely based overseas, is held on a leasehold basis. The UK estate consists of two head-office buildings in London and Manchester and operational premises in Edinburgh, Cardiff and Belfast, all of which are leased. The owned estate is all overseas and is made up of a mix of residential and commercial properties.

Of the total cash balances of £196 million, £66 million (34 per cent) was held in overseas bank accounts of which £50 million was held with banks incorporated in the UK and regulated by the Financial Services Authority. £16 million (eight per cent) of total cash was held with overseas banks outside the UK bank portfolio. Counterparty risks relating to our banks holding balances overseas are reviewed regularly. At 31 March 2010 total interest income amounted to £1.6 million, of which £0.3 million was earned in the UK and the balance of £1.3 million attributable to cash invested overseas.

Currency risk The British Council operates in over 100 countries and carries out transactions in sterling, US dollars, euros and a variety of local currencies. The British Council manages its exposure to foreign currency risk on cash balances by maintaining operational funding balances in local currency bank accounts where possible to no more than working capital requirements. Where countries have deregulated foreign exchange controls any excess funds over and above working capital requirements are repatriated to the UK, invested and/or held in convertible hard currency accounts.

We are driving efficiencies and making savings throughout the organisation 61 © Mat Wright

the Independent Auditor’s report to the trustees of the british Council

I have audited the financial statements of the British Council for the year ended 31 March 2010. These comprise the Consolidated Statement of Financial Activities, the Consolidated and Council Balance Sheet and the Consolidated Cash Flow Statement and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

respective responsibilities of the board of trustees, Chief executive and auditor The Board of Trustees and Chief Executive as Accounting Officer are responsible for preparing the Annual Report, which includes the Remuneration Report, and the financial statements in accordance with the Charities Act 1993 and directions made by the Secretary of State for Foreign and Commonwealth Affairs and for ensuring the regularity of financial transactions funded by Parliamentary grant-in-aid. These responsibilities are set out in the Statement of Trustees’ Responsibilities and Statement of Accounting Officer’s Responsibilities. My responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in accordance with relevant legal and regulatory requirements, and with International Standards on Auditing (UK and Ireland). I report to you my opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Charities Act 1993 and directions made by the Secretary of State for Foreign and Commonwealth Affairs. I report to you whether, in my opinion, the information given in the ‘Financial Review’ commentary within the Annual Report, is consistent with the financial statements. I also report whether in all material respects the expenditure, income and resources funded by grant-in-aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In addition, I report to you if the British Council has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specified by relevant authorities regarding remuneration and other transactions is not disclosed.

I review whether the Statement on Internal Control reflects the British Council’s compliance with HM Treasury’s guidance, and I report if it does not. I am not required to consider whether this statement covers all risks and controls, or form an opinion on the effectiveness of the British Council’s corporate governance procedures or its risk and control procedures. I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.

basis of audit opinions I conducted my audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the Board of Trustees and Chief Executive as Accounting Officer in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the British Council’s circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure, income and resources funded by grant-in-aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.

opinions In my opinion: n the financial statements give a true and fair view, in accordance

with the Charities Act 1993 and directions made by the Secretary of State for Foreign and Commonwealth Affairs, of the state of British Council’s and the group’s affairs as at 31 March 2010 and of its incoming resources and application of resources of the group for the year then ended n the financial statements and the part of the Remuneration Report

to be audited have been properly prepared in accordance with the Charities Act 1993 and directions made by the Secretary of State for Foreign and Commonwealth Affairs n information, which comprises the ‘Financial Review’ commentary,

included within the Annual Report, is consistent with the financial statements.

opinion on regularity In my opinion, in all material respects, the expenditure, income and resources funded by grant-in-aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. I have no observations to make on these financial statements. Amyas C e Morse Comptroller and Auditor General National Audit Office 157–197 Buckingham Palace Road London SWIW 9SP 24 June 2010

ACCounts Consolidated statement of financial Activities for the year ended 31 March 2010 unrestricted

Consolidated balance sheet as at 31 March 2010

restricted

2009–10 total

2008–09 total

Notes

£’000

Grants receivable

211,319

–

211,319

209,429

Fees and gross income from services and other sources

361,844

–

361,844

313,228

1,608

–

1,608

2,469

–

129,759

119,698

574,771

129,759

704,530

644,824

Incoming resources

Interest earned Funding for contract activity

2(o)

total incoming resources

Group 2009

2010

2009

Notes

£’000

Intangible fixed assets

4,526

4,643

4,526

4,643

Tangible fixed assets

174,063

176,115

174,063

176,115

Investments

231

234

225

234

178,820

180,992

178,814

180,992

–

2,300

–

303

235

303

235

111,453

116,009

111,698

117,181

fixed assets

long-term assets

resources expended

loan to subsidiary

Charitable expenditure Cost of activities and grants made in furtherance of the objects:

12(d)

Current assets

Developing a wider knowledge of the English language

153,905

3,559

157,464

132,724

Encouraging educational co-operation and promoting the advancement of education

Debtors

337,883

105,406

443,289

413,668

Derivative financial assets

Encouraging cultural, scientific and technological co-operation

51,380

502

51,882

42,611

Cash at bank and in hand

Building capacity for social change

28,852

20,292

49,144

26,925

6,304

–

6,304

5,651

578,324

129,759

708,083

621,579

–

8,686

Governance costs total resources expended

Gain on revaluation of assets

net (outgoing)/incoming resources for the year after exceptional items Notional cost of capital

net (outgoing)/incoming resources for the year after notional costs Reversal of notional cost of capital net (outgoing)/incoming resources for the year after reversal of notional costs

(3,553)

–

(3,553)

31,931

2,032

–

2,032

–

(1,521)

–

(1,521)

31,931

(8,018)

–

(8,018)

(6,298)

(9,539)

–

(9,539)

25,633

8,018

–

8,018

6,298

(1,521)

–

(1,521)

31,931

Actuarial loss recognised in the retirement benefits scheme

(2,798)

–

(2,798)

(71)

Valuation account movement – on general fixed assets

(278)

–

(278)

71,065

(4,597)

–

(4,597)

102,925

Funds brought forward at start of year

231,397

–

231,397

128,472

funds carried forward at end of year

226,800

–

226,800

231,397

net movement in funds

Stock

663

–

663

–

195,838

154,953

193,277

153,742

308,257

271,197

305,941

271,158

(217,191)

(206,882)

(217,181)

(206,855)

16(a)

(24,341)

(2,243)

(24,341)

(2,243)

66,725

62,072

64,419

62,060

245,545

243,064

245,533

243,052

(20,948)

(16,486)

(20,948)

(16,486)

224,597

226,578

224,585

226,566

2,203

4,819

2,203

4,819

226,800

231,397

226,788

231,385

103,206

104,990

103,206

104,990

Revaluation account

75,383

75,768

75,383

75,768

General account

46,008

45,820

45,996

45,808

2,203

4,819

2,203

4,819

226,800

231,397

226,788

231,385

liabilities: amounts falling due within one year Creditors Short-term provisions for liabilities and charges

net (outgoing)/incoming resources before exceptional items and notional cost of capital Exceptional item: profit on disposal of fixed assets

british Council

2010

net current assets total assets less current liabilities

liabilities: amounts falling due after more than one year Long-term provisions for liabilities and charges

16(b)

net assets excluding retirement benefits scheme asset Retirement benefits scheme asset

7(h)

net assets

unrestricted funds and reserves Capital account

Retirement benefits scheme reserve 17 The notes on pages 67 to 87 form part of these accounts.

The British Council’s non-consolidated total incoming resources for 2009–10 were £704.5 million; total resources expended were £708.1 million; and total net outgoing resources after reversal of notional costs were £1.5 million.

Approved by the Board of Trustees and signed on its behalf on 23 June 2010.

Restricted activity includes £53 million of income and expenditure relating to projects carried out on behalf of the European Union. There are no other recognised gains and losses other than those passing through the Statement of Financial Activities. All activities are continuing. The notes on pages 67 to 87 form part of these accounts.

Vernon ellis Chair, Trustee 64

Martin Davidson CMG Chief executive, Accounting Officer 65

notes to the accounts for the year ended 31 March 2010

Consolidated Cash flow statement for the year ended 31 March 2010

1 basis of preparation and consolidation

2009–10 £’000

net (outgoing)/incoming resources for the year Less: contribution made to retirement benefits scheme

2008 –09

£’000

(1,521) (182)

(182)

£’000

31,931 (528)

(1,703)

(528) 31,403

Add/(deduct): Interest receivable

(1,608)

(2,469)

Depreciation charge including impairments

10,609

10,254

(8,686)

(2,032)

(363)

(77)

Unrealised (gain)/loss on exchange

(566)

2,420

Unrealised (gain) on revaluation of financial assets

(663)

–

(68)

106

4,556

(43,165)

Increase in creditors

10,309

66,238

Movement in provisions including short-term element

27,126

(Gain) on revaluation of assets (Gain) on sale of tangible fixed assets Loss/(gain) on revaluation of fixed asset investment

(Increase)/decrease in stocks Decrease/(increase) in debtors

net cash inflow from operating activities

47,671

(4,840)

45,968

As at 31 March 2010, the British Council had four wholly-owned subsidiary undertakings; BC Trading International Limited, BC English Services Trans-National Limited, BC Holdings (United Kingdom) Limited and BCT Events and Promotions India Private Limited. BCT Events and Promotions India Private Limited is exempt from consolidation into the British Council group accounts under Charities SORP, section 383(c). The British Council financial statements consolidate the results of its other wholly-owned subsidiaries under merger accounting. BC Trading International Limited was the only subsidiary with trading activity during the financial year.

19,418 50,821

returns on investments and servicing of finance Interest receivable

1,608

2,469 1,608

2,469

Payments to acquire intangible fixed assets Payments to acquire tangible fixed assets Receipts from sales of tangible fixed assets

(6)

–

The results of a joint venture, IELTS Inc., in which the British Council has a long-term interest and over which it exercises joint control, have not been consolidated as they are not material.

2 Accounting policies

(700)

(1,446)

(11,887)

(8,985)

5,902

1,380

Fees and income are credited to the Statement of Financial Activities when they are earned.

(b) Grants receivable and payable Grants receivable and payable from own resources are taken to account when due.

(6,691)

(9,051)

40,885

44,239

Cash at start of year

154,953

110,714

Cash at end of year

195,838

154,953

Increase in cash

Intra-group transactions are eliminated on consolidation and all income and expenditure figures in the Statement of Financial Activities relate to external transactions only.

(a) fees and income

Capital expenditure and investments activities Investment in subsidiary

The accounts have been prepared under the historical cost convention modified by the inclusion of certain fixed assets at their current cost. They comply with Accounting and Reporting by Charities: Statement of Recommended Practice (Revised 2005) (‘the SORP’), and applicable accounting standards. They are also prepared to comply with the accounts direction issued by the Secretary of State for Foreign and Commonwealth Affairs.

These financial statements were authorised by the Chair of the Trustees and the Chief Executive for issue on the date that the Comptroller and the Auditor General signed the Audit Certificate.

(c) basis of allocation of expenditure Charitable expenditure comprises all expenditure directly relating to charitable activities of the British Council, resources expended on managing and administering the charity and the support infrastructure in the UK and overseas which enables these activities to take place. Support costs have been allocated to the charitable objects based on a combination of corporate drivers and pro rata basis on total expenditure. Corporate drivers (such as income, staff numbers, square metreage, etc.) have been applied to ‘developing a wider knowledge of the English language’. The balance has then been apportioned between the remaining three categories of charitable activity on a pro rata basis. Governance costs are directly attributable costs that represent salaries, overheads and expenditure related to central departments

involved in the management of the business including the Secretariat, Internal Audit, Legal and Communications departments. Irrecoverable VAT is allocated to the principal areas in which it is incurred. The British Council as a registered charity is exempt from corporation tax under Section 505 ICTA 1988. BC Trading International Limited did not incur corporation tax in 2009–10.

(d) Development of new products and services The cost of development of new products and services is taken to expenditure in the year in which it is incurred.

(e) Valuation, capitalisation and depreciation of intangible and tangible fixed assets Software licences, valued at cost, have been treated as intangibles. All intangible fixed assets are depreciated using the straight-line method over ten years. All tangible fixed assets are included at their value to the business by reference to current costs, except the permanent collection of works of art, which is included at the cost of acquisition, and land and property, which are included at periodic valuations. Freehold and long-leasehold land and buildings were valued externally on the basis of open market value for existing use as at 31 March 2009. Subsequent additions are included at cost. Land and buildings revaluation on a yearly basis is not practicable, because this category of fixed assets is held globally and there are no indices that would account for this meaningfully. All tangible fixed assets, other than freehold land, the permanent collection of works of art and assets in progress, are depreciated using the straight-line method over their estimated useful lives as follows: Freehold and long-leasehold buildings

30–50 years

Long-leasehold land

term of lease

Building improvements

5–25 years

Furniture and equipment

4 years

Plant and machinery

7 years

Motor vehicles

4–7 years

Major IT projects

4–5 years

Major IT projects include system developments. The useful life for each has been set to end on the expected date of replacement. Fixed assets costing less than £3,000 are charged to the income and expenditure account in the year of purchase.

(f) Investments Fixed asset investments are stated at cost less provision for diminution in value.

(g) financial assets and liabilities

(k) exchange differences

Financial instruments are contractual arrangements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Transactions in foreign currencies are recorded in sterling on a monthly basis at rates approximating to the average rate of exchange for the month. Assets and liabilities in foreign currencies are expressed in sterling at the rates of exchange ruling on the balance sheet date. All exchange differences incurred in the year are taken to the Statement of Financial Activities.

The British Council classifies its financial instruments into the following four categories: loans and receivables, assets available for sale, financial assets and liabilities at fair value through profit or loss, and financial liabilities. Loans and receivables are initially recognised at fair value and subsequently measured at amortised cost. Assets available for sale are carried at fair value. Financial assets and liabilities at fair value through profit or loss are carried at fair value, with any gains or losses being recognised in the Statement of Financial Activities. Financial liabilities are initially recognised at fair value and subsequently measured at amortised cost. Fair value is defined as the amount for which an asset is settled or a liability extinguished, between knowledgeable parties, in an arm’s length transaction. This is generally taken to be the transaction value, unless, where material the fair value needs to reflect the time value of money, in which case the fair value is calculated from discounted cash flows. The British Council holds derivative financial instruments in the form of forward foreign exchange contracts. Derivative financial instruments are classified as financial assets and liabilities at fair value through profit or loss.

(h) stocks Stocks of items for resale are valued at the lower of historical cost and net realisable value. Replacement cost is not materially different from historical cost. Purchases of consumable items are taken to expenditure as incurred. The British Council does not recognise any value for work-inprogress for contract and restricted funds.

(i) Gifts in kind Companies, organisations and individuals have provided the use of facilities, equipment and premises mainly supplied at no cost to the donor to facilitate specific activities organised by the British Council. The value of these gifts, which is not considered material, is not included in the accounts.

( j) leases Land and buildings held under finance leases are capitalised and included in tangible fixed assets at fair value. Obligations related to finance leases, net of finance charges in respect of future periods, are included as appropriate under creditors: amounts falling due within or after more than one year. The interest element of the rental obligation is allocated to accounting periods during the lease term to reflect a constant rate of interest on the remaining balance of the obligation for each accounting period. Rentals under operating leases are charged to expenditure as incurred. 68

(l) retirement benefits Past and present employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS). The defined benefit schemes are unfunded. The British Council recognises the expected cost of providing pensions on a systematic and rational basis over the period during which it benefits from employees’ services by payment to the PCSPS of amounts calculated on an accruing basis. Liability to pay future benefits is a charge on the PCSPS rather than the British Council. In respect of the defined contribution schemes, the British Council recognises the contributions payable for the year in accordance with UK Financial Reporting Standard 17. There is also a defined benefit scheme, which is funded and contributory, for UK-appointed employees formerly employed by the Central Bureau for Educational Visits and Exchanges. The expected cost of providing pensions as calculated periodically by independent actuaries is charged so as to spread the cost over the expected average remaining service lives of current employees.

All current cost accounting adjustments to reflect modified historic cost accounting are recorded in, or transferred to, a revaluation account. In addition, any upward revaluation adjustments for existing properties are held in the revaluation account. When a property is sold the revaluation adjustment is released to capital account to offset the adjustment for disposals mentioned above.

them on to a third party, or monies may be disbursed by the British Council and subsequently reimbursed by the client.

(o) revenue and expenditure under contracts or agreements (restricted funds)

The difference between receipts and expenditure is carried forward in the balance sheet as debtor or creditor balances, depending on the status of the balance for each individual contract or overall client agreement.

These relate to activities falling within the objects of the British Council executed by it on behalf of third parties under contract or agreement. The contract or agreement will specify the purpose of the activities. The British Council may collect receipts and pass

Expenditure on activities under contracts or agreements is brought to account when incurred. Revenue is recognised as an incoming resource on the Statement of Financial Activities as an amount equivalent to the expenditure on the activity.

3 Grants receivable The principal grant-in-aid is received from the Foreign and Commonwealth Office. There are also specific grants to deliver education activity on behalf of the education departments of England, Scotland, Wales and Northern Ireland. 2009–10 £’000

Provision is made for future liabilities on the basis of costs estimated at the balance sheet date in respect of payments to employees in the UK who have retired, or are expected to retire early as part of structured retirement schemes. Payments are due from the British Council from the date of early retirement until age 60 when the liability is assumed by the Principal Civil Service Pension Scheme. Retirement scheme provisions are discounted to present value using the official discount rate for pensions.

£’000

foreign and Commonwealth office Revenue grant-in-aid Capital grant-in-aid

192,963

194,863

7,800

6,100 200,763

(m) provisions Provisions are recognised when the British Council has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are discounted to present value where the effect is material.

2008–09

200,963

education grants Grants receivable from: Department for Children, Schools and Families

7,172

6,941

Department for Business, Innovation and Skills

2,496

680

Department of Education – Northern Ireland

370

359

Scottish Government Schools Directorate (formerly Scottish Executive Education Department)

291

280

Department for Children, Education, Lifelong Learning and Skills (Welsh Assembly Government)

227

206

total grants receivable

10,556

8,466

211,319

209,429

In many overseas offices the British Council operates terminal gratuity schemes for its locally engaged employees. The value of the final payment is based on final salary and length of employment. Full provision is made in the accounts for the British Council’s liability on the basis of service accrued as at the balance sheet date.

(n) Capital account and revaluation account Each year an amount equivalent to the costs expended by the British Council on tangible fixed assets less depreciation or impairment, adjusted for disposals, is transferred to or from the capital account. 69

4 fees and income from services and other income

Included in total resources expended are amounts in respect of: 2009–10

2008–09

2009–10

2008–09

£’000

Audit services

206

167

Taxation advice

755

722

1,066

372

319

208

2,346

1,469

fees, sponsorship and other income received from activities in furtherance of the objects: 116,522

Consultancy

218,935

187,739

Financial advice and accountancy

Encouraging cultural, scientific and technological co-operation

3,565

4,701

total

Building capacity for social change

4,464

3,367

Payments for travel, subsistence, etc.

13,947

10,365

Property rental costs relating to operating leases

24,068

21,124

Depreciation charged

10,609

10,254

Developing a wider knowledge of the English language

134,865

Encouraging educational co-operation and promoting the advancement of education

Miscellaneous income total

899

361,844

313,228

Included in the above is £4.9 million income received in relation to European Union projects.

5 Analysis of total resources expended Grants payable

staff costs

other direct costs

support costs

2009–10 total

2008–09 total

£’000

Encouraging educational co-operation and promoting the advancement of education

100

89,322

36,330

31,712

157,464

132,724

13,343

159,759

227,942

42,245

443,289

413,668

Encouraging cultural, scientific and technological co-operation

4,726

22,641

19,370

5,145

51,882

42,611

Building capacity for social change

1,688

13,883

30,906

2,667

49,144

26,925

–

3,547

2,757

–

6,304

5,651

19,857

289,152

317,305

81,769

708,083

621,579

Governance costs total

Included in total resources expended are costs of a structured voluntary early retirement scheme totalling £24.1 million.

number of staff 2009–10

2008–09

1,117

1,094

Management and administrative (senior managers – 267)

4,440

4,575

Teachers

1,820

1,815

total

7,377

7,484

Home Management and administrative (senior managers – 146)

overseas

It is not practicable to calculate full-time equivalents as casual staff are employed by the British Council at various times during the year. Casual staff are excluded from the above figures.

6 exceptional item Profit on disposal of fixed assets consists of gains of £3,125,497 and losses of £1,093,897. Included in the gains of £3,125,497 is an amount of £2,400,000 relating to the sale of an office property in Mumbai, India.

Cost of activities in furtherance of the objects: Developing a wider knowledge of the English language

(b) The average monthly number of employees during the year was 7,377, analysed as follows:

(c) The Chief Executive’s total actual emoluments plus pension were £209,506, comprising salary of £168,549 and pension contributions of £40,957. The Chief Executive is a member of the Principal Civil Service Pension Scheme. (d) The following number of other employees (excluding members of the Executive Board) received annual remuneration falling within the following ranges:

7 staff emoluments and related costs (a) Total staff costs: 2009–10

2008 –09

£’000

235,799

209,839

Social security costs

11,940

10,891

Other pension costs

15,067

14,584

Early retirement costs

26,346

1,172

289,152

236,486

Wages and salaries

total

number of staff 2009–10

2008–09

£40,001–£50,000

109

£50,001–£60,000

114

£60,001–£70,000

£70,001–£80,000

£80,001–£90,000

£90,001–£100,000

£100,001–£110,000

Of staff with remuneration over £60,000, one is a member of a defined contribution pension scheme and 63 are members of a defined benefit pension scheme. Contributions of staff in this range to defined contribution pension schemes during the year were £5,302.

(e) Travel expenses reimbursed to six members of the Board

CAsH eQuIVAlent trAnsfer VAlues

of Trustees amounted to £5,182.

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

(f) Pension benefits are provided through the Civil Service pension arrangements. From 30 July 2007, civil servants may be in one of four defined benefit schemes: either a ‘final salary’ scheme (classic, premium or classic plus), or a ‘whole career’ scheme (nuvos). These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus and nuvos are increased annually in line with changes in the Retail Prices Index (RPI). Members who joined from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account). (i) ClAssIC, preMIuM, ClAssIC plus AnD nuVos sCHeMes

Employee contributions are set at the rate of 1.5 per cent of pensionable earnings for classic and 3.5 per cent for premium, classic plus and nuvos. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years’ initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos members build up a pension based on pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3 per cent of their pensionable earnings in that scheme year and the accrued pension is uprated in line with RPI. In all cases members may opt to give up (commute) pension for lump sum up to the limits set by the Finance Act 2004. (ii) pArtnersHIp pensIon ACCount

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between three per cent and 12.5 per cent (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of three providers. The employee does not have to contribute but where the employee does make contributions, the employer will match these up to a limit of three per cent of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8 per cent of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill-health retirement). The accrued pension quoted, is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus and 65 for members of nuvos. Further details about the Civil Service pension arrangements can be found at the website www.civilservice-pensions.gov.uk. 72

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out within the guidelines and framework prescribed by the Institute and Faculty of Actuaries and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken. reAl InCreAse In CetV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period. The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined benefit scheme but the British Council is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2007. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk). For 2009–10, employer’s contributions of £9,333,875 were payable to the PCSPS (2008–09: £8,313,339) at one of four rates in the range of 16.7 per cent to 24.3 per cent of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions usually every four years following a full scheme valuation. From 2010–11, the rates will be in the range of 16.7 per cent to 24.3 per cent. The contribution rates are set to meet the cost of the benefits accruing during 2009–10 to be paid when the member retires, and not the benefits paid during this period to existing pensioners. Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers’ contributions of £69,119 were paid to one or more of a panel of three appointed stakeholder pension providers. Employer contributions are age-related and range from three per cent to 12.5 per cent of pensionable pay. The employer also matches employee contributions up to three per cent of pensionable pay. In addition, employer contributions of £5,797, which is 0.8 per cent

reconciliation of opening and closing balances of the present value of the scheme liabilities

of pensionable pay, were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill-health retirement of these employees. Contributions due to the partnership pension providers at the balance sheet date were £5,967. Contributions prepaid at that date were nil.

Scheme liabilities at start of period

2010

2009

£’000

11,213

13,747

One individual retired early on ill-health grounds. The total additional annual pension granted to that person amounted to £1,699.

Current service cost

133

126

Interest cost

656

728

(g) The British Council operates a number of insured schemes

Actuarial losses/(gains)

3,076

(3,255)

Contributions by scheme participants

for overseas appointed staff. None of these schemes is of a significant size.

(h) The British Council operates a defined benefit scheme for UK-appointed employees formerly employed by the Central Bureau for Educational Visits and Exchanges. UK Financial Reporting Standard 17 Retirement Benefits has been adopted. The scheme is closed to new entrants. As a consequence the current service cost calculated under the projected unit method can be expected to increase over time, as the average age of the membership increases. A preliminary actuarial valuation was carried out at 1 April 2008 and updated to 31 March 2010 by a qualified actuary, independent of the scheme’s sponsoring employer. The major assumptions used by the actuary are shown below.

Benefits paid and death in service insurance premiums

(1,084)

(160)

scheme liabilities at end of period

14,014

11,213

reconciliation of opening and closing balances of the fair value of the scheme assets 2010

The British Council currently pays contributions at the rate of 35.4 per cent of pensionable pay. Member contributions are payable in addition at the rate of five per cent of pensionable pay.

£’000

Fair value of scheme assets at start of period

16,032

18,109

Expected return on scheme assets

789

854

Actuarial gains/(losses)

278

(3,326)

Contributions by the British Council

182

528

Benefits paid and death in service insurance premiums

(1,084)

(160)

fair value of scheme assets at end of period

16,217

16,032

Contributions by scheme participants

present values of scheme liabilities, fair value of assets and surplus/(deficit)

2009

2010

2009

2008

£’000

Fair value of scheme assets

16,217

16,032

18,109

Present value of scheme liabilities

14,014

11,213

13,747

2,203

4,819

4,362

995

3,541

3,052

1,208

1,278

1,310

2010

2009

–

£’000

133

126

Surplus/(deficit) in scheme Unrecognised surplus Asset/(liability) to be recognised Deferred tax net asset/(liability) to be recognised

The actual return on the scheme assets over the period ending 31 March 2010 was £1,067,000.

total expense recognised in the statement of financial Activities

Current service cost –

–

Interest cost

656

728

Expected return on scheme assets

(789)

(854)

total expense recognised in the statement of financial Activities

–

statement of total recognised gains and losses

Difference between expected and actual return on scheme assets: Amount: gain/(loss) Experience gains and losses arising on the scheme liabilities: Amount: gain/(loss) Effects of changes in the demographic and financial assumptions underlying the present value of the scheme liabilities: Amount: gain/(loss) total actuarial gains and losses (before restriction due to some of the surplus not being recognisable): Amount: gain/(loss)

Assumptions

2010

2009

£’000

278

116

(3,192)

(2,798)

(3,326)

1,764

(71)

2,546

(489)

total amount recognised in statement of total recognised gains and losses: Amount: gain/(loss)

(252)

(560)

The cumulative amount of actuarial gains and losses recognised in the statement of total recognised gains and losses since adoption of UK Financial Reporting Standard 17 is £1,705,000.

Assets 2010

2009

2008

£’000

Equity

6,130

8,513

9,616

Bonds

6,892

3,527

3,984

Property

2,903

2,950

3,332

total assets

292

1,042

1,177

16,217

16,032

18,109

None of the fair values of the assets shown above include any of the British Council’s own financial instruments or any property occupied by, or other assets used by, the British Council.

% per annum

2010

2009

2008

2007

2006

£’000

2010

2009

2008

Inflation

2.75

Fair value of scheme assets

16,217

16,032

18,109

17,045

10,849

Salary increases

4.75

4.00

Present value of scheme liabilities

14,014

11,213

13,747

14,765

14,957

Rate of discount

4.60

6.04

5.32

Surplus/(deficit) in scheme

2,203

4,819

4,362

2,280

(4,108)

Experience adjustment on scheme assets

278

(3,326)

1,036

2,084

(426)

Experience adjustment on scheme liabilities

116

1,764

515

1,022

(3,153)

Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less

2.75

Allowance for commutation of pension for cash at retirement

None

1,491

Effect of limit on amount of surplus recognised due to some of the surplus not being recognisable: Amount: gain/(loss)

Cash

Amounts for the current and previous four years

The best estimate of contributions to be paid by the British Council to the scheme for the period beginning after 31 March 2010 is £141,621.

(i) trustees

the mortality assumptions adopted at 31 March 2010 imply the following life expectancies: Male retiring at age 60 in 2010

28.8

Female retiring at age 60 in 2010

31.4

Male retiring at age 60 in 2030

31.1

Female retiring at age 60 in 2030

33.5

Capita ATL Pension Trustees Limited, independent Trustee to the Scheme, was paid fees amounting to £17,153 excluding VAT during the year. No other Trustees of the Scheme either received or waived any emoluments during the year. No travel expenses were reimbursed to Trustees during the year (2008–09: travel expenses amounting to £247 were reimbursed to one Trustee).

expected long-term rates of return The long-term expected rate of return on cash is determined by reference to bank base rates at the balance sheet dates. The long-term expected return on bonds is determined by reference to UK long-dated government and corporate bond yields at the balance sheet dates. The long-term expected rate of return on equities is based on the rate of return on bonds with an allowance for out-performance. The expected long-term rates of return applicable for each period are as follows: % per annum 2010

2009

Equity

7.79

7.57

Bonds

6.04

5.32

Property

7.79

7.57

Cash

0.50

5.00

Overall for scheme

6.93

6.91

8 Grants payable

Tel Aviv University Coventry University

(a) The British Council gives financial support to particular programmes and activities in the form of grants to institutions and individuals. 2009–10 £’000 Grants to institutions (2008–09: £11.37 million)

17,791

Grants to individuals (2008-09: £1.93 million)

2,066

total

19,857

(b) Analysis of grant recipients by objects and value Institution

Voluntary Services Overseas City University

building capacity for social change

Developing a wider knowledge of the english language

total

Turkish Radio Television

–

Newcastle University

–

Sheffield Hallam University

–

University of Brighton

–

University of Essex

–

Northumbria University

–

Highbury College

–

Bournemouth University

–

University of Leeds

–

Middlesex University

–

Tipping Point

–

Open Society Foundation

–

Cardiff University

–

University of Bradford

–

encouraging educational co-operation and promoting the advancement of education

encouraging cultural, scientific and technological co-operation

£’000

–

798

–

798

London College of Fashion

–

260

–

260

Brunel University

–

Institute for Strategic Dialogue

–

250

–

250

University College London

–

University of Birmingham

232

–

233

University of Liverpool

–

University of Manchester

161

–

199

University of Sheffield

–

Leeds Metropolitan University

199

–

199

University of Glasgow

–

University of Greenwich

198

–

198

Dundee College

–

The Open University

181

–

198

Nargis Action Group

–

Lisson Gallery, London

University of Cambridge

173

–

193

Derby College

University of Reading

158

–

161

University of Warwick

–

King’s College London

150

–

151

Loughborough University

–

150

–

150

Heriot-Watt University

–

148

City College Birmingham

–

Complicite, London University of East Anglia Imperial College London

128

–

139

VGBIL Library

University of Nottingham

124

–

134

University of Northampton

–

Bradford College

124

–

124

University of Hertfordshire

–

University of Leicester

113

–

122

Echo Culture Limited

–

116

University of Exeter

–

University of Durham

108

–

110

University of Central Lancashire

–

University of Teesside

106

–

106

Kingston University

–

103

Oxford Brookes University

–

102

–

102

Grants to other institutions

7,994

2,401

364

10,819

University of Oxford

–

102

total grants to institutions

12,750

3,459

1,522

17,791

University of Ulster

–

593

1,267

166

2,066

13,343

4,726

1,688

100

19,857

University of Southampton

University of Edinburgh ISCOS

Grants to individuals (2,247 recipients) total grants

9 Cost of capital

11 tangible fixed assets

Notional cost of capital is calculated as 3.5 per cent of the average capital employed in the year.

10 Intangible fixed assets

Disposals At 31 March 2010

furniture and equipment

Information technology

Vehicles and plant

Art collection

total

£’000

£‘000

£’000

At 1 April 2009

98,621

89,341

10,811

23,084

9,807

3,836

235,500

5,104

4,453

587

1,051

626

11,887

£’000

Additions Transfers

–

6,433

Disposals

(596)

(12,254)

(2,201)

(7,748)

(890)

–

(23,689)

Revaluations (CCA)

–

803

334

919

–

2,056

Revaluations

–

103,129

81,540

10,000

16,721

10,462

3,902

225,754

At 1 April 2009

(1,802)

(25,082)

(9,391)

(15,293)

(7,817)

–

(59,385)

Charge for the year

(2,068)

(3,169)

(459)

(3,260)

(836)

–

(9,792)

Disposals/transfers

Modified cost or valuation Additions/transfers

leasehold land and property

Modified cost or valuation software licences

At 1 April 2009

freehold land and property

700 – 7,133

Amortisation

At 31 March 2010

Depreciation

At 1 April 2009

(1,790)

Charge for year

(817)

Disposals/transfers

–

At 31 March 2010

(2,607)

net book value At 31 March 2010

4,526

At 1 April 2009

4,643

100

8,760

2,189

7,744

836

–

19,629

Backlog depreciation (CCA)

–

257

(2,340)

(60)

–

(2,143)

Revaluations

–

(3,770)

(19,491)

(7,404)

(13,149)

(7,877)

–

(51,691)

99,359

62,049

2,596

3,572

2,585

3,902

174,063

96,819

64,259

1,420

7,791

1,990

3,836

176,115

land and property

furniture and equipment

Information technology

Vehicles and plant

Art collection

total

£’000

6,416

146

184

125

–

6,871

At 31 March 2010

net book value At 31 March 2010 At 1 April 2009

Included in the above: Assets in progress (AIp)

AIP at 1 April 2009 AIP items capitalised in 2009–10

(4,687)

(150)

(156)

(124)

–

(5,117)

2009–10 AIP items to be capitalised

2,354

295

268

–

3,001

total AIp at 31 March 2010

4,083

323

269

–

4,755

Included in tangible fixed assets are assets to the value of £19.5 million which have been fully depreciated. These assets are still in use and provide value to the business. The British Council considers that the useful lives of its tangible fixed assets remain appropriate. All tangible fixed assets acquired are used to support the British Council’s charitable activities. Freehold and long-leasehold land and buildings are revalued every five years. Freehold and long-leasehold land and buildings were valued on the basis of open market value for existing use at 31 March 2009 by DTZ Real Estate Advisers, in accordance with the guidelines issued by the Royal Institution of Chartered Surveyors. The British Council has concluded that there was no significant movement in the value of its properties during the year. Included within the freehold and leasehold property categories are land and buildings for dwelling purposes valued at a cost of £13.5 million and net book value of £13.1 million (2009: cost £14.1 million and net book value £13.9 million). The adjustments for current cost accounting revaluation and backlog depreciation include the effect of both upward and downward indices. The net result has been added to the revaluation account because the downward movements are considered to be of a temporary nature. Within the freehold land and properties category, there is one building allocated a useful life of 60 years in 2009 that will expire in 2069. The current book value in 2009–10 was £2.1 million. The British Council maintains a permanent collection of works of art which started in 1938 and at present has over 8,000 works. The current estimated value as valued by the Curator of the collection is £78 million (2009: £61 million). The purpose of the collection is to increase the understanding and appreciation of British art overseas in furtherance of the British Council’s objectives for cultural co-operation. It is not held for investment or resale. Many works have been acquired from emerging artists and on beneficial terms because of the collection’s purpose. For the above reasons, the collection is included in the accounts at cost or nil value in the case of donated items. The art collection is not depreciated since the assets are considered to have an indefinite life and the residual values of the assets are considered to be either in line or above costs. The British Council valued its fixed assets in 1994 when changing from cash to resource accounting principles. It is not practical to identify the original cost and accumulated depreciation of those assets included at valuation at that date.

12 fixed asset investments The group fixed asset investment of £231,113 is comprised of investment in a non-consolidated subsidiary of £5,750 and investment in a joint venture of £225,363. Arising from the British Council’s Status and Tax programme, which aims to establish a robust platform for the growth of income-generating activities in line with strategic priorities, the British Council has further developed its group structure. As at 31 March 2010, there were four subsidiary undertakings within the group; BC Trading International Limited, BC English Services Trans-National Limited, BC Holdings (United Kingdom) Limited and BCT Events and Promotions India Private Limited. The British Council also incorporated a further subsidiary, BC Management Services Private Limited, on 12 May 2010. BC Trading International Limited was incorporated on 5 April 2004 as a wholly owned subsidiary of the British Council and is a company limited by shares. It carries out general commercial activities predominantly generating sponsorship income through British Council events. The main profit from such activities is paid by gift aid to the British Council. BCT Events and Promotions India Private Limited is a wholly owned company incorporated in India which was acquired in July 2009 by the group. There were no trading activities during the year to 31 March 2010 and the company is exempt from consolidation in the British Council group accounts under Charities SORP, section 383(c). BC English Services Trans-National Limited and BC Holdings (United Kingdom) Limited were incorporated during the financial year to enable the British Council to carry out its charitable objectives in a more efficient and effective manner. As at the year end neither of these companies had commenced trading. BC Management Services Private Limited was incorporated in India on 12 May 2010 with an authorised share capital of 50,000 shares of 10 rupees each. 10,000 shares have been issued; 9,900 of the issued shares are held by the British Council and 100 are held by BC Holdings (United Kingdom) Limited. BC Management Services Private Limited was set up to provide services to the British Council to support its charitable objectives. The British Council has a long-term interest in a joint venture, IELTS Inc., over which it exercises joint control. IELTS Inc. is a not for profit organisation formed for the charitable and educational purposes of supporting and improving the teaching of English.

(a) subsidiary undertakings organisation name

Country of registration

nature of business

ownership

Class of shares and % held

BC Trading International Limited

England and Wales

Raise funds through trading activities

The British Council is the sole shareholder

Ordinary/100%

BC English Services Trans-National Limited

Hong Kong

Holding company

The British Council is the sole shareholder

Ordinary/100%

BC Holdings (United Kingdom) Limited

England and Wales

Holding company

The British Council is the sole shareholder

Ordinary/100%

BCT Events and Promotions India Private Limited

India

Raise funds through trading activities

BC Trading International Limited and the British Council are the shareholders

Ordinary/100%

(b) Investment in subsidiaries

Investment at 1 April 2009 Additions Investment at 31 March 2010

bC trading International limited

bC english services trans-national limited

bC Holdings (united Kingdom) limited

bCt events and promotions India private limited

100

–

5,750

100

5,750

(c) financial summary of bC trading International limited 2010 £’000 Assets including current assets Current liabilities Reserves

(d) During the financial year the British Council made a registered capital investment in the form of a loan of £2.3 million to BC English Services Trans-National Limited. This loan remained payable by BC English Services Trans-National Limited as at 31 March 2010.

466 (454) 12 2009–10 £’000

Revenue Operational expenses and gift aid Profit/(loss)

1,044 (1,044) –

(e) Joint venture

(b) Intra-government debtors

organisation name

Country of registration

nature of business

Interest held

IELTS Inc.

Delaware, USA

Developing, administering and marketing the IELTS examinations

33.3%

Group 2009–10

2008–09

£’000

8,480

19,017

8,536

19,031

Balances with bodies external to government

102,917

96,978

total

111,453

116,009

2009–10

2008–09

£’000

663

–

Balances with central government bodies Balances with local authorities Balances with public corporations and trading funds

InVestMent In Ielts InC.

Total intra-government debtors

2010 £’000 At 1 April 2009

234

Programme-related investment Interest receivable

Loss on revaluation

(14)

14 Derivative financial assets

At 31 March 2010

225

The British Council uses forward foreign exchange contracts to reduce exposure to movements in exchange rates. At 31 March 2010 the British Council held 12 open forward foreign exchange contracts, under which the British Council will receive a total of US$17 million in exchange for £10.6 million. The contracts all have maturity dates falling due in less than one year. These contracts are carried at fair value on the balance sheet. The fair value of the forward foreign exchange contracts reflects the difference between the contracted forward rate and the market forward rate at 31 March 2010 for delivery on the contracted maturity date. The market forward rate used to determine the fair value is the mid-market rate for 31 March 2010, obtained from Reuters.

The results of the joint venture are not material and as a result have not been consolidated.

13 Debtors (amounts falling due within one year) (a) Analysis by type Group

british Council

forward contracts

Forward foreign exchange contracts – fair value

2009–10

2008–09

2009–10

2008–09

£’000

48,334

59,275

48,334

59,275

288

468

268

636

Other debtors

10,252

4,876

10,073

4,531

Balances resulting from activity under contracts and agreements

36,669

39,357

36,669

39,357

Prepayments

15,910

12,033

15,910

12,033

2009–10

2008– 09

2009–10

2008–09

–

444

1,349

£’000

111,453

116,009

111,698

117,181

Trade creditors

20,156

16,110

20,156

16,110

Balances resulting from activity under contracts and agreements

Trade debtors VAT debtor

Amounts due from subsidiary undertakings total

Accounting treatment adjustments related to specific projects within activities under contracts and agreements have resulted in an overall decrease in creditor balances of £7.3 million and decrease in debtor balances of £5.2 million.

15 Creditors (amounts falling due within one year) (a) Analysis by type Group

british Council

70,777

77,267

70,777

77,267

Other creditors

6,327

7,438

6,317

7,411

Taxation and social security

2,546

1,666

2,546

1,666

Accruals

39,365

37,487

39,365

37,487

Deferred income

78,020

66,914

78,020

66,914

217,191

206,882

217,181

206,855

total

17 Movements on funds and reserves

(b) Intra-government creditors Group

General account

retirement benefits scheme reserve

Capital account

revaluation account

total

£’000

Balance as at 1 April 2009

45,820

4,819

104,990

75,768

231,397

Net outgoing resources for the year after reversal of notional costs

(1,521)

–

(1,521)

Nominal transfer to capital and valuation account

1,891

–

(1,784)

(107)

–

206,435

Transfer of net pension costs

(182)

182

–

206,882

Actuarial loss recognised in the retirement benefits scheme

–

(2,798)

–

(2,798)

Valuation account movement: on general fixed assets

–

(278)

46,008

2,203

103,206

75,383

226,800

2009–10

2008 –09

£’000

3,374

360

–

307

–

3,707

447

Balances with bodies external to government

213,484

total

217,191

Balances with central government bodies Balances with local authorities Balances with NHS trusts Balances with public corporations and trading funds Total intra-government creditors

16 provisions for liabilities and charges

balance as at 31 March 2010

(a) Amounts falling due within one year terminal gratuities

early retirement

other staff

legal cases

other

total costs

£’000

18 Commitments

At 1 April 2009

–

851

203

875

314

2,243

(a) Capital commitments

Unrealised gain on exchange

–

Net amounts paid or utilised in year

–

(1,016)

(71)

(781)

(311)

(2,179)

Charged to expenditure

–

19,585

162

4,128

23,889

2010 Contracted expenditure

–

350

–

388

At 31 March 2010

–

19,770

294

146

4,131

24,341 To be undertaken in the following year

(b) Amounts falling due after more than one year

Unrealised gain on exchange Net amounts paid or utilised in year Charged to expenditure Movement between short and long term At 31 March 2010

£’000

4,530

5,445

2010

2009

£’000

(b) specific charitable projects (grants)

Movement between short and long term

At 1 April 2009

2009

terminal gratuities

early retirement

other staff

legal cases

other

total costs

£’000

14,770

1,331

–

305

16,486

(566)

–

(566)

(1,838)

(354)

–

(42)

(305)

(2,539)

3,798

4,157

–

7,955

–

(350)

–

(38)

–

(388)

16,164

4,784

–

20,948

Commitments under operating leases to pay rentals during future years are analysed according to the period in which each lease expires. These all relate to land and buildings. 2010

2009

£’000

In one year or less

7,172

6,702

Between one and five years

7,842

11,949

In five years or more

5,148

3,958

20,162

22,609

total

19 losses and special payments During the year there were 214 cases where a loss, as defined in Managing Public Money, was recognised totalling £202,460. This includes fraud and non-fraudulent business write-offs. No individual case was greater than £250,000. During the year the British Council made payments totalling £573,755, of which £504,214 falls within the category of special payments as defined in Managing Public Money. These special payments consist of: n £360,048 in relation to non-statutory and non-contractual

voluntary early retirement/redundancy payments to staff as part of the British Council’s Business Transformation programme, a component of which is a reduction of 500 UK posts predominantly in Finance, Information Services and Contracts and Projects delivery. A voluntary early retirement/ redundancy programme was run in 2009. There was a small number of staff who were employed in the UK but had British Council service outside of the Principal Civil Service Pension Scheme (PCSPS) who would have been eligible for either no compensation or a smaller statutory redundancy payment for that period of service. After consultation with the Public and Commercial Services Union, the Foreign and Commonwealth Office (FCO) and the Cabinet Office, the British Council agreed that additional payments should be offered to these staff in order to maximise volunteers, ensure fair treatment of staff and to avoid compulsory redundancy where possible. Payments to these staff were substantially below voluntary early retirement/ redundancy terms offered to staff within the PCSPS. n Three separate compromise agreements for individuals totalling

£213,707, of which £144,166 were non-contractual ex-gratia payments and therefore defined as special payments. These individuals were considered to be at risk of redundancy as they were from specialist areas of the business affected by restructuring for whom no future alternative roles were available. One of the three compromise agreements included consideration of an employment tribunal claim. The British Council had relied upon its Financial Memorandum with the FCO and had not understood that it required formal advance approval from HM Treasury for these payments but subsequently sought retrospective approval. HM Treasury

provided approval for the Business Transformation related payments and for two of the three compromise agreements on the basis that they offered value for money. The third compromise agreement had a total value of £108,559, consisting of a contractual payment in lieu of notice of £50,235 and an ex-gratia element of £58,324. The payment in lieu of notice was in line with the terms of the individual’s contract and so did not require approval from HM Treasury. However, the ex-gratia payment of £58,324 required specific HM Treasury approval. Whilst acknowledging that it represented from the British Council’s perspective an appropriate management decision, HM Treasury has declined to provide retrospective approval for this ex-gratia payment, having concluded that the British Council ought to have pursued other avenues with the individual concerned.

20 related party transactions

organisation

Grants provided and funds disbursed under contracts/ agreements

trustee

relationship

£’000 Glasgow Caledonian University

225

Clore Leadership Programme

Pamela Gillies

Principal and Vice-Chancellor

Sue Hoyle Lord Hall of Birkenhead CBE

Director and Trustee Member of Strategic Advisory Committee

Queen’s University Belfast

810

Brian Hanna CBE

Former member of the Senate

King’s College London

942

Sue Hoyle

Research associate

Sue Hoyle

Husband is a Board member

Claire Ighodaro CBE

Council member and Audit Committee Chair

Steve Jones

Professor

Tipping Point The Open University University College London

388 1,576

The British Council is a non-departmental public body sponsored by the Foreign and Commonwealth Office (FCO). The FCO is regarded as a related party. During the year the British Council has had various material transactions with the FCO. The British Council has had a number of material transactions with other government departments and other central government bodies. The most significant have been with: n the Department for International Development n the Department for Business, Innovation and Skills n the Department for Children, Schools and Families.

In addition, the British Council has a number of transactions with the British Council Benevolent Fund which provides financial assistance to staff in need in the UK and overseas via charitable donations from current and ex-employees. The British Council has no control over the fund; however, the Trustees of the fund are appointed by the British Council Board of Trustees. None of the Trustees, Board members, key managerial staff or other related parties has undertaken any material transactions with the British Council during the year other than as disclosed below.

In addition to the grants totalling £54,000 provided to the Clore Leadership Programme, as set out in the table above, the British Council also paid a fee of £19,947 to the Clore Leadership Programme to run a short residential course as part of the British Council’s Cultural Leadership International programme. Alan Buckle is a Trustee of the British Council, and for part of the 2009–10 financial year, he acted as Chair of the Audit Committee. He is also a member of the Remuneration Committee and the Nominations Committee. Alan Buckle is global head of KPMG Advisory. KPMG is a provider of professional services to the British Council. During the financial year KPMG provided tax advisory, consultancy and internal audit services to the British Council, for which the British Council incurred costs of £455,364. Of this amount £32,893 relates to the cost of internal audit services provided by KPMG under an internal audit services agreement. Alan Buckle played no part in the procurement of the internal audit services agreement or any other service from KPMG.

21 Contingent liabilities The British Council announced a voluntary early retirement (VER) programme to staff on 10 June 2009 in order to achieve UK post reductions to support its Scale of Ambition programme. The announcement stated that it was hoped that the voluntary programme would mean that compulsory redundancy could be avoided, but that it could not be ruled out. As at 31 March 2010, following the VER programme and main phases of deployment, there remains a small number of staff not yet deployed into roles. During June 2010, relevant staff were notified that they are at risk of redundancy but that the British Council will continue to try to identify measures in which redundancy can be avoided and that any formal notification of redundancy would follow consultation with the Trade Union. While every effort continues to place these staff and avoid compulsory redundancy, it cannot yet be ruled out. As such a contingent liability exists for redundancy costs associated with these staff, but this cannot be quantified at the balance sheet date.

the united Kingdom’s international organisation for cultural relations and educational opportunities. A registered charity: 209131 (England and Wales) SC037733 (Scotland).

GlobAl netWorK

Details were correct as at 31 March 2010.

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