Mind you, some of the savings could be due to Putin rather than the Council itself.

All hotly contentious stuff, Ron   As a BC funds recipient, I shouldn't say much.  However, the reporting of this subject has been very different at the Russian end!   The BC has two sides to it - the part which deals with support for culture and the arts, and the other half that handles EFL teaching, accreditation of Language Schools, and support for studying English at UK-based language schools.  It's the EFL side which is in hot water with the Kremlin.

In 2006, for "rationalisation" reasons, the BC ceased doing any language teaching in Russia directly, and subcontracted all its teaching programmes to Russian commercial language schools.  However, it continued to collect the tuition fees from pupils, and apportioned an amount per pupil to the language-school which had undertaken the Fulfilment Contract.   The Russian Tax Inspectorate (Nalogovaya Inspektskiya) judged that the BC had crossed the fine line from providing UK-Govt-"Sponsored" Language Study, and was now simply offering English Lessons on a commercial basis like any other Language School...  and therefore ought to make Tax Submissions like any other Language School, even if those Submissions were a Nil Return on which no tax was payable.

The British Council, however, has entirely refused to submit to any inspection of its financial affairs by the Russian Tax Inspectorate, and will not even sign-off a Nil Return assessment.

One can easily imagine what the reaction of the equivalent British Tax Inspectorate would be in such a situation?  And it's from this instransigent refusal from the Language Schools side of the BC that the whole thing has arisen.  The Russians have no wish to stop the Language Tuition going ahead,  nor yet to place a brake on the cultural activities of the British Council.   If they're not making any money on the Language Tuition and simply charging-out the costs as a disbursement,  all they have to do is to sign a Nil Return and the situation would be solved in an instant. 

Of course, it can't be said that the clod-hopping "diplomacy" of Mr Miliband has helped smooth the waters here