There was an almost audible sigh of relief around the world earlier this year when Foreign Secretary Malcolm Rifkind announced he had changed his mind. Following an unprecedented campaign, he had decided against the Pounds 21.5 million cuts to the British Council, officially the United Kingdom’s “principal agency for cultural relations abroad”, which would have meant operations, largely teaching, being halted in 14 countries and 25 to 30 cities in another 18 countries.

“It is ridiculously short-sighted and will cause huge damage to British interests abroad” Sir John Hanson, director general of the council, said at the time. No area of the world would be exempt, and operations in Western Europe would have to suffer to protect activities in the newly opened-up Eastern European states.

A shadow would have fallen over the new Terry Farrell-designed BC headquarters in Hong Kong, due to open in January, which is to be a base for penetrating the Chinese markets which the council’s teaching operations are already opening up.

The British Council’s grant for 1995-96 had been Pounds 131.9 million, half its income, and it was proposed that this should be reduced to Pounds 119. 1 million by 1999, a cut of 16 per cent which, at Treasury forecast inflation rates, would mean Pounds 21.5 million in real terms.

Mr Rifkind not only restored about Pounds 10 million in his speech to the House of Commons in May, he consolidated those restorations so that they cannot be altered in this year’s Budget, as it looks forward three years, or in next year’s.

But, Sir John Hanson said this week that the battle is still on. There is still a substantial cut to be managed right now, and although the overseas operations have all been saved for the time being, 280 jobs are being lost from UK operations and the arts departments are suffering a 25 per cent loss. By 1999 the settlement will be for only Pounds 128 million, a real term cut of Pounds 11.6 million over last year.

Furthermore, Sir John warned, the arguments of six months ago are all having to be brought again in these last weeks before the Budget on November 26 to make sure that the threat to overseas operations made by the last Budget are not made again for the year 1999-2000.

Funded by the Foreign and Commonwealth Office and the Overseas Development Agency, the Council had a bitter fight to get an amelioration of the proposed cuts.

Sir John and the British Council’s chairman, Sir Martin Jacomb, laid out the stark options for the House of Commons Foreign Affairs Committee in April, adding that the organisation had already just completed a three year reduction programme in which half the British Council’s London headquarters was sold and the home staff was cut by 25 per cent to bring annual cost savings of Pounds 2 million.

Between 700 and 800 of the 6,000 staff abroad would have to go, many of them teachers, and another third from the home establishment. “To avoid the wholesale closures we will have to make we need to have the reduction at least halved to Pounds 10 million,” Sir John said then. “It is ludicrous arithmetic. The figures have been introduced without any regard to the consequences. Apart from our cultural activities, it is a truth that where English is taught trade will follow.” Well, those stark options are still on the table as Mr Rifkind now goes in to bat against the Treasury, with one added element. To prepare for his May reassessment, the Foreign Secretary sent in the Prime Minister’s Efficiency Unit, led by Sir Peter Levene.

The unit’s report is confidential, but Sir John says: “I am perfectly confident that it concurs with us that we have stripped the operation down to the bone, and we can go no further.”

What is causing serious concern internally, however, is the effects already being felt by the BC arts programme, masterminded from London and one of the most successful of the Council’s operations, but currently undergoing a 25 per cent staff cut. The music, dance and drama departments have also been combined.

Set up more than 60 years ago as a propaganda agency, the British Council seldom pays for tours by drama and dance companies or exhibitions, but has constructed a world-wide network in 109 countries without which many major tours could not happen. The British Council’s artistic judgment also carries weight. Last year a proposed eastern European tour of the Royal Shakespeare Company’s Bingo and The Tempest was cut short on the advice of the council which considered the productions of a standard not high enough to represent Britain.

This summer its influences made possible a major retrospective of the work of Francis Bacon in Paris and Munich selected by Bacon’s friend, the art critic David Sylvester, the largest and most significant Bacon exhibition since the Tate’s retrospective in 1985. During the Cannes Film Festival in May there was a BC-run British pavilion which Virginia Bottomley visited, and Sofia in Bulgaria was treated to a Monty Python season of films as part of British Days, followed by the National Theatre’s Rosencrantz and Guildernstern are Dead.

And the first major exhibition of British sculpture ever mounted in Paris, including the work of Epstein, Hepworth, Moore, Paolozzi, Long, Cragg, Kapoor, Hirst and Whiteread, was at the Jeu de Paume, while jazz musicians from the Bath Festival have been touring South Africa.

There has been a Royal Ballet tour to Scandinavia and one by the Royal Shakespeare Company to Mexico, of Rambert to Thailand and China while the National Theatre was in Atlanta for the Olympics with Dealer’s Choice. The operations which set these tours up are under threat. Although John Tod, head of arts, said the cuts would mainly come in support staff and that the effective operations would remain largely intact, one member of the visual arts advisory board, who asked not to be named, said there was strong feeling that the arts were being made to suffer to save operations which brought more immediate cash returns and impressed the most influential ally of the BC, the Department of Trade and Industry.

“We’re very concerned that the council is not aware of the gravity of the situation. The whole world wants the Brit Pack of contemporary artists. They want Moore, Turner, Stanley Spencer, and we might not be able to offer them any more”, said the member.

Sir John Hanson conceded that a vital area of study tours - in which producers, venue managers and administrators from abroad are brought to Britain to see what is on offer - was being curtailed, despite the lasting proven effects they have had. An important study tour of Americans planned for next year, coinciding with the first Stanley Spencer exhibition to tour the United States, has already had to be cancelled.

The BC’s principal operation has been teaching, Sir John insists, and that operation must not be eroded. The role as the world’s teacher has, in fact, been combined with that of Britain’s tradesman as well in recent years, and the value of this to the British economy has been immense. This year there have been ground-breaking promotional exhibitions for British teaching in Shenzhen and Guangzhou (formerly Canton), key centres in the most promising market in the world where Britain is competing with France, Germany and the United States for influence. That process which has begun so well, Sir John says, cannot be compromised.

The global demand for education and training is expanding rapidly, he says, and Britain’s share is large - the Department of Trade and Industry believes it is worth at least Pounds 7 billion a year, much of it from students brought to study in Britain through the British Council, and from the sale of education services and books. A programme is underway to create education and training market plans for 15 key world regions in which the British Council operates - Argentina, Bangladesh, Brazil, Colombia, India, Malaysia, Nigeria, Pakistan, Singapore, Turkey, United Arab Emirates, South Africa, Korea and Saudi Arabia as well as China.

There are 18 further priority regions for next year, covering every continent and countries from Taiwan to Poland, and under the present programme the projection is that by the year 2000 there would be one billion people speaking English in the world; as it is, English is taught in 98 British Council centres in 43 countries and the expanded education counselling service has increased the flow of Asian students to Britain, students for whom the United States would be the natural Western base. “Our education operation pays for half of everything we do, and we have to go for growth” Sir John says. “We cannot allow it to go to the brink as happened this year, and we have made that point to the Secretary of State as strongly as we can. It’s up to him now”