• Since the start of the pandemic the British Council has made net losses of £184 million, requiring FCDO support currently in the form of a £197 million loan, agreed on commercial terms.
  • The British Council’s turnaround plan includes office closures in 11 countries and redundancies across around a quarter of the business, but key decisions still require agreement from ministers and FCDO, and the organisation is not expected to return to profit until 2029-30.
  • The NAO says both organisations now need to settle the British Council’s future role and agree a sustainable plan for recovering the money originally lent.

The British Council suffered major commercial losses during the COVID-19 pandemic, requiring financial support from the Foreign, Commonwealth and Development Office (FCDO) and HM Treasury. A new National Audit Office (NAO) report finds that the British Council remains loss-making and has been unable to afford any repayments since April 2024, other than interest payments.

The pandemic cut the British Council’s income by 28% in 2020-21, forcing it to scale back operations worldwide and sharply reducing income from teaching English and administering exams.

To deal with the financial shock of the pandemic, HM Treasury and FCDO provided the British Council with a £60 million loan in July 2020. The loan was agreed on commercial terms and has been amended several times and is currently worth £197 million.

The British Council has not made any repayments on the current £197 million loan since April 2024. It was able to meet interest payments of £42 million on the loan between 2020-21 and 2025-26.

Alongside the loan, the British Council developed a five-year business plan in 2020 to address the impact of the pandemic – the plan forecast it would achieve £289 million from higher revenues, and a further £160 million in cost efficiency savings through restructuring.

The British Council has cut 2,110 full-time staff since April 2021 and forecast it would make £179 million in savings, but its income has not recovered and it is still making a loss.

The loan was due to expire in September 2026. In February 2026, FCDO and HM Treasury agreed to a further one-year extension, and both organisations committed to reaching a longer-term restructuring deal by July 2026.

The British Council has produced a ‘turnaround’ plan, which was a condition of the 2025 loan extension, which aims to deliver £306 million in net benefits by 2029–30. Most of these savings are expected to come from £172 million of restructuring and efficiency measures, including further redundancies of around a quarter of its workforce.

The turnaround plan now proposes closing British Council offices in 11 countries, but the proposals still need ministerial and FCDO agreement.

However, even if it delivers on the improvements in its current turnaround plan, the British Council is expected to spend more money than it earns from its day-to-day activities until 2029-30. The British Council forecasts that it will generate a profit after tax and investment in growth of £9 million in 2029-30.

As of June 2026, the NAO understands that the negotiations are in their final stages with FCDO and the British Council looking at an agreement that will lead to full repayment of the loan within 15 years, alongside other measures to help ensure that the British Council can successfully implement its turnaround plan.

The NAO’s report recommends that any agreement between the British Council and FCDO needs to provide parliament with clarity on a pathway to recover the initial money loaned and the future of the British Council.

“Across Government there is recognition that the British Council plays a valuable role in promoting Britain’s soft power influence across the globe.

“Our regular audits of the British Council have highlighted the uncertainty caused by the loan arrangements and whether the organisation can be financially sustainable in the long term. The revised loan agreement currently being negotiated needs to provide clarity on the future of the Council and the eventual settlement of the loan.”

Gareth Davies, head of the NAO

Read the full report

Investigation into the financial sustainability of the British Council

Notes for editors

  1. Through the NAO’s regular financial audit of the British Council, we have been closely monitoring the impact of the uncertainty over the loan position. The head of the NAO signed off the 2024-25 accounts in March 2026, stating that there remains uncertainty over the organisation’s ability to continue in the longer term.