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Ministers have asked the British Council to draw up spending plans that would force it to close in as many as 60 countries, sources have told the Guardian, in the latest sign of the impact of Keir Starmer’s decision to slash the aid budget.
The council has been asked to draw up two sets of spending plans as part of Wednesday’s spending review: one in which its funding would remain the same in cash terms and one in which it would be cut by 2% in cash terms each year.
The scenarios are the same as those that have been demanded of the BBC World Service, and would mean the council having to shut completely in large parts of the world. The plans are likely to add to warnings that the government’s cuts to overseas aid are at risk of damaging its soft power just as Russia and China are putting more resources into strengthening theirs.
Scott McDonald, the council’s chief executive, would not comment on the Treasury’s demands, but said: “The British Council plays a vital role in delivering UK soft power around the globe.
“Investment in soft power is imperative to any nation that wishes to be instrumental on the world stage. Over the last three years we have taken £180m of costs out of the organisation through a substantial transformation plan, but the amount of funding we receive from the UK government will have an impact on country closures.”
McDonald has previously warned that financial pressures on the council could make it “disappear” within a decade.
The council receives £1bn in revenue each year, but 85% of that comes from selling its English-language services around the world. In 2024-25, it received £163m in a government grant, most of which came from the international aid budget.
Earlier this year, the prime minister announced he would slash the aid budget from 0.5% of gross domestic product to 0.3%, freeing up about £6bn in extra spending for defence.
The reductions to the aid budget are now being felt in Whitehall, with the chancellor, Rachel Reeves, having imposed what insiders say are swingeing cuts on the Foreign Office. As a result, institutions such as the British Council and BBC World Service are being asked to model major spending reductions.
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Those close to the negotiations with the government say the council had asked for an additional £20m in funding per year, not least to help repay a £197m loan to keep it running during the pandemic.
That loan, which was made on commercial terms, has now been rolled over for another 18 months, but insiders say the repayments are costing it £14m a year.
If it receives no extra cash in the next few years, those close to the talks say, it will have to close in 40 countries. Cuts of 2% in cash terms would require 60 closures. Both of these would be on top of the 20 office closures that it announced in 2021, when it was told to reduce its budget by £185m over five years.
The council’s financial crisis is causing alarm among politicians and military chiefs, who say its activities boost Britain’s national security.
Dozens of high-profile figures recently wrote to the prime minister urging him not to cut the council’s funding.
They included the former home secretary James Cleverly, the former defence secretaries Grant Shapps, Ben Wallace and Michael Fallon, the former foreign secretary David Miliband, and the former military chiefs Richard Dannatt and David Richards.
The letter warned: “As we compete harder for global influence, the need for the British Council’s unique contribution to our security is greater than ever. We call upon you to invest in this great national asset and force-multiplier, before it is too late.”
Peter Ricketts, the former national security adviser who organised the letter, told the Guardian: “A lot of defence people will tell you that a small investment in soft power such as the British Council is worth a lot of money on the military side.”
A Foreign Office spokesperson said: “Despite the tough fiscal situation, we continue to back the British Council with over £160m in 2025-26.”
The spokesperson added that no decisions had yet been taken over its funding for the next few years.
