BBC Facing Further Cost Reductions to Hit Long-Term Savings Targets

LONDON: A new report by the U.K.'s National Audit Office (NAO) has found that the BBC exceeded its savings target for 2013-14, but cautions that "more significant and potentially riskier changes" may be needed for the long term.

The report found that overall savings of £374 million ($564 million) reported by the BBC up to the end of 2013-14 exceeded its target. These savings are "broadly in line with forecasts, exceed implementations costs and appear to have had a limited impact on performance. The BBC has made savings from sources such as renegotiating existing contracts, limiting salary increases and reducing the number of more expensive senior staff.”

The NAO also reported that the BBC is on track to meet its 2014-15 target and that it had developed plans for most of its remaining savings.

Anne Bulford, the managing director of finance and operations at the BBC, said: "For just £2.80 a week ($4.22), the BBC provides great value to license-fee payers, and, as this report makes clear, the BBC has exceeded its efficiency targets. We’re on track to save £1.5 billion ($2.26 billion) a year by 2016-17 despite the license fee being frozen and some of it being used by the government for other projects such as broadband rollout and local television.

"We have a good track record in delivering value for money, and won’t stop searching for ways to become more efficient so even more of the license fee goes into the programs and services that people love."

In looking ahead at future plans, the NOA report said there are "significantly greater challenges" coming down the road compared to the initial years of the program. "The BBC made most of its planned scope savings during the initial years of the program. It is therefore now relying on improved productivity for 85 percent of future savings. It has made significant progress in reducing the value of future savings that it has categorized as ‘difficult to achieve’ or ‘unsupported,’ from £191 million ($288 million) to £10.2 million ($15.4 million) as of September 2014. Sources of productivity savings to date, which totaled £188.3 million ($283.9 million) in 2013-14, include renegotiating contracts and limiting pay increases. The BBC’s plans for future productivity savings involve more significant and potentially riskier changes to organizational structures and ways of working. If the BBC is not able to make planned productivity savings, it risks having to make further reductions to scope."