BBC claims £1.1BN yearly savings
Joseph O'Halloran
| 28 November 2014
After years of being on the back foot as criticism mounted of its perceived waste of Licence Fee-payers' money, the BBC has launched a counter offensive, claiming that it has saved £1.1 billion a year.

BBC savingsThis is the headline finding of a report ordered earlier in 2014 by Director General Tony Hall, demanding efficiency at the corporation and which concluded that the BBC's record on efficiency compared favourably with that of other organisations such as the government. Indeed it suggests that the BBC is on track to make a further £400 million in savings. Yet even though the report also shows that spending has increasingly been focused on programmes and services, the BBC warned that it would be increasingly difficult to protect these areas from future cuts.

Just like with the UK's public sector as a whole, the big BBC austerity drive began in 2010, just after the election of the new coalition government, one of their first actions being to freeze the BBC Licence Fee. The corporation says that since this time it has mostly used efficiency savings to meet inflationary costs and to pay around £500 million a year of obligations laid down by government. These commitments have included funding broadband roll-out, local TV and S4C and taking over financing the World Service from the Foreign and Commonwealth Office.

By April 2015, the BBC calculates that it will have delivered the equivalent to around 36% in cumulative annual net efficiencies of addressable baseline in the previous decade. This compares with 27% for central government. In addition, more than nine-tenths of core controllable spend is on content, distribution and their related support costs, leaving by BBC calculation 9% of spend on the professional support needed to run the corporation. This represents a 25% reduction in the proportion of the Licence Fee spent on such overheads in four years. From 2011/12, around 30% of the planned £800 million savings had already been made through reductions in content scope. This is expected to rise to around half of the savings in the final years of the programmes.

Yet this would mean, the BBC warned rather bluntly, more of what it called 'tough choices' such as the proposal to close down BBC Three as a broadcast channel and move it to be an online video only proposition.

The report acknowledged there is still more to do to improve efficiency even further. Lord Hall added that the corporation needs to maintain content quality whilst ensuring maximum value is delivered to licence fee-payers, saying the BBC "will have a fundamental look at every pound we spend". Part of this action will be the establishment of a 'compete or compare' culture through market testing or benchmarking of services and changes to how the BBC commissions and produces content.

Commenting on the report, BBC MD, finance and operations, Anne Bulford, said: "This report shows we've made great strides in becoming more efficient. We're doing far more for less. There's always more to do and we continue to make sure we get value for money for licence fee-payers. The BBC remains passionate about delivering the great public service TV, radio and online content that our audiences deserve, but after a long period of delivering annual savings the challenge is to avoid having to cut content is very real."