TUESDAY 23 FEBRUARY 1999

BARONESS KENNEDY OF THE SHAWS, QC, MR TOM BUCHANAN, CBE and MR EDMUND MARSDEN

  140.  Is there any evidence that as a result of these cuts you are beginning to make a hash of it or not?
  (Mr Buchanan)  I mentioned the Welcome to the UK programme and we do measure customer awareness of and satisfaction with our programmes. There was a time immediately after the cuts when we had to reconcile and reorganise when there was some concern about the quality of services. The Welcome to the UK programme specifically targeted those problems and through changes we have had to make in the way we do things, radical changes in some ways, we have addressed those, and I think performance has gone up considerably and the last year's statistics following this change have been very encouraging.
  (Mr Marsden)  May I just say a word because I was responsible for carrying out the deed in 1995-96. To cut a long story short, we did a deal with Mr Rifkind that in exchange for remission of the cut, which was difficult for him to deliver after the row was over, we would not close any operations overseas, so we had to do it all at home. Some of what we did at home we would have done anyway in order to achieve further efficiency gains and it was in the plan. A lot of it we would not have done. I think we probably had to cut too far into our sector teams, our professional teams, and we are going to have to build back our teams in English language teaching, in education, in governance and rights in order to strength our capacity there and I also think that we are still a little exposed amongst the teams that manage and supervise and support country operations overseas, our regional teams, which have been very, very significantly reduced in size, have a very heavy workload and I do not think are really able to support our overseas operations in the way that they should.

Mr Rowlands:  I want to ask just one more question. Could you possibly give us a note on how you would like to repair or develop the domestic side because we spend so much time, rightly so, on overseas, that we actually ignore this and this has been a bad news story in the last year or two.

Chairman:  Basically you are asking if there were more money available what would be your priorities?

  141.  Can I turn finally turn to the question that I think you were leading us into about better resourcing and not seeing it as an FCO/British Council debate, but as a broad debate, in other words, this concept of joined-up government. Is it therefore the case from your answers that there is not joined-up government when it comes to assessing whether an extra contribution of the British Council could deliver better value for money than spending it in DTI or spending it in the Department of Culture or other Government Departments? Do you see any evidence in Whitehall of joined-up thinking on these issues?
  (Baroness Kennedy of the Shaws)  I think one of the problems goes back to this business about the invisibility of the British Council. Here, this Committee and the Foreign Office and DFID know well the work of the British Council but when it comes to those other Departments, apart from a few people, not enough people really know about the richness and diversity of the work of the Council. That is one of the problems about creating real joined-up government. We, I think, have a job of work to do about working closer with Whitehall and with Parliament and bringing people on board so that they know much more about the work of the Council. I think many people see it as purely being about bringing exhibitions and theatre abroad and English language teaching and I think perhaps we need to do better work on that. I think if we are going to talk about this business of joined-up government, the argument has to be made that public diplomacy is actually going to be crucial to our success nationally and to make the case for that to a much wider public and to a much wider group of politicians than we are currently reaching. To do that and to get more money to do that, we are going to need all the help we can get from all of you because you know better than anyone.

Chairman:  So long as you give us the ammunition. Sir John Stanley?

  142.  Lady Kennedy, as a long time strong supporter of the British Council, I do not in any way take the view that you are being alarmist in the description you have given of the implications for the British Council with the present funding situation you have. Indeed, I have to say that I am dismayed at how relatively low the figures are for the whole of the life of this Parliament. Can I put it to you that the reference in your paper to the two per cent uplift between the current financial year and the financial year 1999-2000 is really a red herring and what is of key and fundamental significance are the run of figures given in Annex K(ii) of the Foreign Office's own memorandum under the heading "British Council: Grant-in-Aid Funding from FCO and DFID". What that run of figures shows, does it not, is that throughout the whole of the five years of this Parliament from the 1997-98 financial year to financial year 2001-2002 the British Council in each and every one of those years is going to be receiving substantially less grant-in-aid in real terms than it did in any of the years of the preceding Parliament? Is that not the case?
  (Baroness Kennedy of the Shaws)  Can I just check on the figures. Is that right?
  (Mr Marsden)  I am not sure that what you are saying is right.

  143.  Would you care to look at the Foreign Office's own figures which I might say are exactly the same as your figures in Table 2, Annex C. I trust you do know your own figures.
  (Mr Marsden)  We do know our own figures but we are talking about an overall reduction in the grant——

  144.  I am saying, Lady Kennedy to you and your colleagues, that in every single year of this Parliament from 1997-98 to 2001-2002 the grant-in-aid funding from DFID and the FCO is significantly less in real terms than in any year of the previous Parliament.
  (Mr Marsden)  That is correct.
  (Baroness Kennedy of the Shaws)  That is correct.

  145.  Thank you. That is correct. Can I then ask you, Lady Kennedy, given the fact that at the end of this Parliament your real terms figure in the financial year 2001-2002 is going to be £129 million (that is expressed, as we know, in 1998-99 prices). That of course is going to be significantly less in real terms than the outturn for 1996-97 which was £136.8 million. What I would like to ask you, given the fact that in this period both Government expenditure will be rising in real terms and Foreign Office expenditure will be rising in real terms, and if you look at a comparable run of figures for the World Service you are actually doing worse than the World Service has done, is what you would like that £129 million figure to be? Is your objective to get back up to where it was at the end of the last Parliament, which is £136.8 million, or do you think it should go up to about £145 million to get to where you were in the early to mid part of the last Parliament, or do you think you should be shooting at something like £150 million to £155 million? What is your objective? You ask for support, what is your target please?
  (Baroness Kennedy of the Shaws)  £160 million.

  146.  In what terms?
  (Baroness Kennedy of the Shaws)  £160 million in current day prices.

  147.  1998-99. Thank you for being forthcoming on that question in conspicuous contrast to the Director-General of the World Service to whom I put the same question. That is very helpful. Can I follow that up with this question. Obviously you are going to try and mobilise support where you can, but how is the British Council going to be mobilising its case to the FCO for that significant increase in real terms expenditure on the British Council, which is quite a big increase in real terms but against the aggregation of FCO spending, let alone the British Government's spending, is a minute sum.
  (Baroness Kennedy of the Shaws)  I particularly felt that today listening to the sums that were about to be spent on, for example, the magistrates' courts and victim support of £5 million, and I suddenly thought that perhaps asking for £30 million was not as ambitious as I ought to have been. Given how important this is, I feel there has to be a campaign of education not just of the general public but of parliamentarians. We have a new Parliament with a lot of new people in it who perhaps have no or little experience of the British Council and its work. So I think it is very important that we create much stronger links with Parliament and parliamentarians. I also feel that we should be making the case in much clearer terms. For example, if we were to talk about what the British Council succeeds in doing, it is invisible. However, some if it can be measured and in export promotion the money that is brought into Britain through students coming in here and the money that is brought in through the creative industries, another area which is enormously valuable to Britain is significant. We could put sums against the achievements that are made there and I would seek to do that. I think that there is a very strong argument to be made around the way in which we can secure real value by the work that we can do with the accession states because of the benefits that will accrue to us in Britain in our role in Europe. I do think that if people come into Europe via their relationships with Britain that will strengthen our position in Europe. I believe that quite strongly and I think it is something we should be arguing for and I think others might be persuaded by that. I think there are real issues around perceptions of Britain around the world. We published a rather interesting report recently on this and I think those old perceptions have to be challenged and the work we have been doing with Panel 2000 and the Foreign Office could be helpful in that in identifying key markets and so forth. It was interesting being in China recently and seeing how interested they are in multi-media. I met the Secretary of State for Culture who is going out there soon with a team of people, who might look at how to advance Britain's interests industrially in that area. I think we also have a real challenge in relation to China where we would like to think of transferring the Know How Scheme, which was operated so successfully after the Cold War in the former Soviet Union. I think the argument for that is again very persuasive as are the benefits that will directly accrue to Britain through doing that. So there are those areas. There are also powerful arguments for the other work that the British Council does. I say this as a lawyer because my induction into the British Council was as a lawyer because I was on the Law Advisory Committee. Many of our areas of work are about strengthening judicial independence, about the work that is now being done around human rights, the work that is being done in helping to train lawyers, the way in which we helped in China in the development of their Criminal Procedure Act. We actually helped draft it. We also helped with the development of commercial law. If they want to be liberalised and part of the market, then many of the emerging democracies want to have a good commercial law base from which to do business and we have assisted in the creation of that. That sort of work is powerful in the kind of connections it helps Britain make in the rest of the world and the benefits to us are, as you can imagine, enormous. Those are areas where I think we can advocate very strongly for the role that is fulfilled by the British Council. Arguing for the significant, imaginative uplift that I think is needed, is an argument that I feel confident we can make and it is a question of how ready Government will be to listen. I rely on you all to be supportive.

Sir John Stanley:  I think that is an excellent answer. Thank you.

  148.  I too happen to believe that your Council is dismally underfunded. We have seen some of your projects at first hand. One that particularly caught my eye sought to bring together children from the West Bank of Israel and the two communities in Northern Ireland. I was promised that I would be kept abreast of this particular project but communications have slipped up somewhere.
  (Baroness Kennedy of the Shaws)  I will let you have the follow up because it is very exciting.

  149.  It is indeed, organised by a very young member of your staff in Jerusalem. Could I ask a couple of questions concerning paragraphs 51 and 52 in your memorandum. The British Council was closely involved in the management of projects on behalf of the Know How Fund and in fact in paragraph 50 you say that these projects were worth nearly £110 million. The British Council also managed EU-funded technical assistance projects, it says for example the PHARE programme. First of all, a lot of voluntary organisations have complained to me over the appalling bureaucracy of the management of these funds in Brussels. Was that your experience?
  (Baroness Kennedy of the Shaws)  Yes, I think we would agree that it is enormously complicated and very time-consuming making the applications and we would welcome any way in which that could be simplified.

  150.  Were you given a fairly widespread autonomy vis-a-vis Brussels in terms of the management of these projects in Central and Eastern Europe?
  (Baroness Kennedy of the Shaws)  I would have to look to Edmund who might know better the answer to that.
  (Mr Marsden)  The management projects that we do under contract with the European Commission I would say are not as tightly supervised in management terms as, for example, those we manage for the World Bank. That is mainly due to the relative shortage of staff in the Commission to undertake that kind of work.

  151.  So you were not constrained in the management of such projects by officials in Brussels?
  (Mr Marsden)  Not at all, no.

  152.  In paragraph 51 you said, as we all know, that this Know How funding is coming to an end and that EU funding is changing its focus and yet you say there is still amongst these states that wish to join the European Union a crucial lack of administrative competence and institutional capacity especially in the public sector and also there is little or no support for NGOs and voluntary organisations. If this money is slipping away how are these developments to be funded?
  (Mr Marsden)  I think you have put your finger on a very important point. First of all, the Know How Fund is a British Government funded programme and since 1996-97 our involvement in the Know How funding in the accession states, particularly in Poland, Hungary and the Czech Republic, has reduced from over £11 million to £6,000 worth of activity.

  153.  Over what period of time is that?
  (Mr Marsden)  That is from 1996-97 to the present day. So I think really the fact that the Know How Fund is in a sense moving east and perhaps might migrate to China does leave a gap in Poland, Hungary and the Czech Republic which we believe can be very effectively filled by our organisation. We have built up networks, we have engaged in issues to do with the reform programme and we are now ready to engage in the whole process of discussion about accession to the Community. We have the contacts ready and this is the argument we would put forward for greater investment in the British Council as the means to take this work forward.

  154.  I believe you have got experience in the field of training in terms of development of infrastructure in these countries, local government, local democracy and so on and so forth.
  (Mr Marsden)  That is correct.

  155.  Have you made an approach concerning the need for this funding? You talk about a drop from £11 million——
  (Mr Marsden)  The drop from the period 1996-97 to the present year is from £11 million to virtually nothing.

  156.  And given your expertise, especially in these three countries, and the need for fresh funds, what has been the response from the Government?
  (Mr Marsden)  I think the point to make is the settlement we have through to the year 2001 is the settlement that we have and we are cutting our coat accordingly. Our point is that beyond that point we would want now to start to make the case for additional funding to fill that gap.

  157.  Additional funding from what date? I would have thought you would need to start filling that gap today.
  (Mr Marsden)  Ideally as soon as possible, you are absolutely right.
  (Baroness Kennedy of the Shaws)  I was going to say to Mr Godman that it is again another of those areas where we are concerned that the Government has perhaps put a time limit on the Know How Fund when indeed we should be reviewing that and recognising that perhaps there should be a new horizon created because there is so much work still to be done on this.

  158.  You said we should review this. What you mean in fact is that the Government should be reassessing this timetable and that perhaps a mistake has been made?
  (Baroness Kennedy of the Shaws)  It may be that we should be making that argument, all of us who are concerned about this. It is certainly our intention to be making the argument based on our working on the front line. We are drawing the line here in the sand and saying it is too early.

  159.  The concerns you raise in those three or four paragraphs strike a particular chord amongst members of this Committee because we are at this very moment preparing a Report on the enlargement of the European Union. I have spoken to specialist advisers in this field and in fact a neighbour of mine is working in Riga at this very moment attempting to develop local government in that city and assisting voluntary organisations and others to work with local government. May I ask in the absence of this kind of funding are not the French and the Germans moving in with their own domestic funding? This is not me being hostile to the French or Germans but it seems that they have more money to fund such projects at a domestic level.
  (Mr Marsden)  I cannot, to be honest, give you details about the extent to which they are literally moving in on our patch but there is no doubt that the Germans are extremely active in this field through their aid organisations such as GTZ and so on. There is absolutely no doubt about that and they are better funded than we are to do so.