An efficiency review published today finds the BBC has delivered a third of the £800 million of savings needed by 2021/22, but warns it has become increasingly difficult to make more savings without further impacting services.
The report shows how cutting property and senior manager costs, renegotiating major contracts and simplifying the BBC have helped ensure that 94% of the BBC’s controllable budget was on content and delivery this year - with just 5.7% going on general support activities.
A separate, independent, report by Ernst & Young also finds that the BBC is among the most efficient 25% regulated and non-profit organisations in the UK, as well as the most efficient 25% international telecommunications and media companies.
Over the last Charter, the BBC made £1.6billion in annual savings. Most savings came from improving efficiency, and spending on content has been protected wherever possible. This focus on creativity meant that in 2017/18, 65% of UK adults think the BBC is effective at providing content/services that demonstrate a high standard of creativity.
However, there has already had to be some compromises including the loss of sports rights and cuts to daytime programming, and with hundreds of millions of pounds of savings still required over the coming years the report warns that tough decisions will have to be made.
Anne Bulford, Deputy Director-General, says: “This report demonstrates the hard work that has gone into achieving our financial goals. Since my last report on BBC efficiency, in November 2014, we have continued to deliver on our savings programme, bringing overheads down further to industry-leading levels - just 5.7% of our total costs.
“While we have sought to protect spending on content wherever we can, savings cannot simply come from overheads. It’s not possible to make savings on this scale without also making changes to services, which some audiences will notice. Simply put, we cannot reduce our cost base by a fifth and not see impact in our content.
“As this new Charter began the Director-General set out a creative vision to mobilise the BBC behind an ambitious goal - to reinvent public service broadcasting for a new generation. At the same time, the BBC faces significant financial challenges; from competition for talent and rights, and from rising audience expectations. Reinventing the BBC at a time of unprecedented pressure will require difficult choices to be made. We have made a strong start but there is still much to do.”
The BBC’s report reveals:
More than 94% of the BBCs controllable spend this year was on content and delivery, with just 5.7% on running the organisation
The annual property bill has been brought down by around £90 million since 2011/12. This is £35 million more than the target across this period. By 2020 the BBC is expected to have reduced its UK property estate by more than 20% since 2014
The cost of the BBC’s workforce fell by 6% in real terms from 2010-11 to 2015-16, saving £59m in real terms
The number of senior managers has been cut in half since 2009/10, with the cost reduced by £38 million. The BBC is also on target for 2.3% of employees to be apprentices or trainees by the end of 2019
Ernst & Young have benchmarked the BBC’s overheads and concluded that the BBC is within the most efficient 25% of both regulated and non-profit organisations in the UK as well as the most efficient 25% of international telecommunications and media companies. This makes the BBC better than most of government and media companies.
Property is a key strand of the BBC’s efficiency plan, and over 2017/18 the BBC moved out of several London buildings including Grafton House, Brock House, Great Portland Street and Euston Square, while BBC Monitoring also relocated from Caversham to London’s Broadcasting House.
During 2017/18, the number of senior managers has also reduced by a further 39 from the prior year bringing the total down to 270 - a reduction of 56% compared to March 2010.
The Compete or Compare strategy, which was launched in July 2014, has now tested 94% of the BBC cost base by means of competition or cost comparison/benchmarking. Under the new Charter virtually all drama, comedy, entertainment and factual programmes are to be put out to competition by 2027. In the past year Sports Personality of the Year, Bargain Hunt and the Proms coverage have all been put out to tender.
The BBC must also secure competition for at least 60% of relevant radio programming by the end of 2022. The BBC is making good progress in reaching this milestone, involving significant organisational change to deliver. Plans to compete titles such as Radio 1’s Annie Mac and Dance Anthems, Radio 2’s Vanessa Feltz, and 5live’s The Danny Baker Show have also been announced.