BBC strategic financial management
Closed
What the inquiry looked at
“The BBC is independent of government but is a public corporation, sponsored by the Department for Digital, Culture, Media & Sport (DCMS) and regulated by Ofcom. It is primarily funded by households paying the television licence fee - amounting to £3.52 billion in 2019-20 – and is also permitted by the Royal Charter that regulates it to generate income from commercial activities, such as creating and selling television programmes. The BBC began negotiations with government about the future funding it will receive from the licence fee in November 2020. It enters these negotiations and the subsequent mid-term Charter review facing significant strategic financial challenges. Despite being a universal broadcaster and still the most used media brand in the UK, the BBC has seen a notable drop in audience. The BBC’s principal source of income, the licence fee, has declined while its commercial income is not yet at a level to make a significant contribution. The BBC believes its ability to overcome these financial pressures through its savings programme will be challenging. In recent years, many of the BBC’s competitors have swiftly moved ahead in the global marketplace in terms of size and scale of services offered, gaining audiences and investing in technology. In a recent report the NAO found that the BBC will need to continue to make savings while investing in new technology, and address an underlying lack of pace in implementing change, in order to make progress in this marketplace while continuing to meet its obligations as a universal public service broadcaster. The Committee will question the Director General and chief operating officer at the BBC on the licence fee and Charter reviews. If you have evidence on the questions raised in this inquiry, please submit it here by 6:00 pm on Monday 15 March 2021.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
The BBC stands at a critical juncture. The internet has changed dramatically the way that people consume media, putting pressure on the BBC’s audiences: the BBC has recently lost its place as the media provider that young people spend most time with. The BBC also faces several emerging financial challenges. Licence fee sales have fallen by nearly half a million in the past two years, shrinking the BBC’s main source of income. There is also considerable uncertainty about the eventual impact of the removal of government funding for free TV licences for the over-75s, and the long-term consequences of the COVID-19 pandemic. The BBC is also currently in negotiations with the government about the future level of the licence fee.
Despite these challenges, when giving evidence to us the BBC appeared complacent and unconcerned by the declining time that people spend using its services, or the fact that around 200,000 new households each year choose to opt out of paying for the TV licence. The BBC also appears to have put off the hard choices that its financial position means that it will have to make. Little detail is available, for example, about the cuts to its frontline staff and content that it concedes it will be forced to make. Its ambition to increase its commercial returns by 30% over five years appears somewhat unambitious given that returns in 2019–20 represented less than 6% of the income the BBC raised from the licence fee, and its plans for an increased presence in the nations and regions are unconvincing. While we understand that the BBC may be reticent to share detailed plans given that it is in the middle of licence fee negotiations, we would expect it to be able to share a clearer vision of how it will address the decline in its audiences while also investing it its transition from traditional TV viewing to online.
What the government said
The government responded on 2 September 2021. The deadline was 21 July 2021.
Treasury minutes: Government response to the Committee of Public Accounts on the Second report from Session 2021-22
Treasury minutes: Government response to the Committee of Public Accounts on the Second report from Session 2021-22, 8 November 2021.
Treasury minutes: Government response to the Committee of Public Accounts on the Second report from Session 2021-22
Treasury minutes: Government response to the Committee of Public Accounts on the Second report from Session 2021-22, 2 September 2021.
Summary written by Accountability Index from the government's response.The document states that the BBC, not the government, will respond directly to the Committee on the recommendations in its report.
- The response does not set out the government's position on individual recommendations; it states that "The BBC will respond directly to the Committee".
- The introduction describes the BBC as "independent of government" but a public corporation, sponsored by DCMS and regulated by Ofcom.
- It notes that the BBC is "currently negotiating with government" about its future licence fee funding. No commitment or timetable is stated.
Read the government's response: Treasury minutes: Government response t… ↗Read the government's response: Treasury minutes: Government response t… ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 8 February 2021 to 16 November 2021. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 22 Mar 2021
- Report 21 May 2021
- Government response 2 responses
- Correspondence 2 letters
What it recommended 4 recommendations · 20 conclusions
2The BBC’s plans for an increased presence in the nations and regions seem unclear and...
3There is considerable uncertainty over the BBC’s financial future, which its financial plans do not...
4At times, the BBC has deferred difficult measures and ducked the hard choices necessary over...
5The BBC appears unambitious about setting targets for the financial returns generated by its commercial...
1On the basis of a report by the Comptroller and Auditor General, we took evidence...
6The growth of streaming has given people greater viewing and listening choices.
7The BBC also plans to reintroduce BBC Three to terrestrial TV, five years after making...
8The BBC has recently announced that it plans to reach out to audiences across the...
9The BBC told us that the move out of London has been designed to improve...
10In recent years, the BBC has entered into complex ‘sale and leaseback’ arrangements to develop...
11As part of its new regional plans, the BBC is intending to hire new staff.
12The BBC faces a number of emerging financial challenges.
13The BBC is currently approaching the end of a five-year savings programme, which targeted £1...
14On taking up his new role in September 2020, the BBC Director-General outlined four new...
15In February 2017 the BBC introduced a programme to deliver £800 million savings annually by...
16By the end of March 2021, the BBC expects to be more than £800 million...
17The settlements that emerge from licence fee negotiations typically result in the BBC making some...
18The BBC told us that its savings programme to date has focused primarily on support...
19The BBC indicated that, in general, it will also need to make tough choices on...
20In addition to this uncertainty surrounding future frontline cuts, the BBC has delayed more than...
21Staff pay is another high-profile area where the BBC has recently attempted reform.
22In 2019–20, the returns paid by commercial businesses for the BBC to use on its...
23We asked the BBC if it had explored how it could increase income from BritBox,...
24DCMS restricts the BBC’s total borrowing limit for commercial activities to £350 million, a level...
Evidence
Oral evidence sessions 1
- 22 Mar 2021BBC strategic financial management3 witnesses, listed belowparliament.uk ↗
Who gave evidence 3 witnesses
- Charlotte MooreChief Content Officer, BBC
- Glyn IsherwoodChief Operating Officer, BBC
- Tim Davie CBEDirector General, BBC