Recommendations & Conclusions
24 items
2
Recommendation
Second Report - BBC strategic financial…
The BBC’s plans for an increased presence in the nations and regions seem unclear and disjointed. In March 2021, the BBC announced that it would increase programming spending outside of London by £700 million by 2027–28. However, the BBC is also planning a number of efficiency measures around the UK, …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
3
Recommendation
Second Report - BBC strategic financial…
There is considerable uncertainty over the BBC’s financial future, which its financial plans do not appear to address adequately. The BBC Director-General has four new strategic priorities for the organisation—delivering high-quality 6 BBC strategic financial management content, developing the online presence further, growing commercial income, and a renewed commitment to …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
4
Conclusion
Second Report - BBC strategic financial…
At times, the BBC has deferred difficult measures and ducked the hard choices necessary over cuts to frontline content. The BBC is candid about its view that, having driven down costs in back-office functions, it now sees no scenario in which it can avoid making tough choices about frontline services …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
5
Conclusion
Second Report - BBC strategic financial…
The BBC appears unambitious about setting targets for the financial returns generated by its commercial subsidiaries. The BBC’s net returns from its commercial activities, at under 6% of licence fee income, are not at a level to make a significant contribution to its overall income position. The BBC has recently …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
1
Conclusion
Second Report - BBC strategic financial…
On the basis of a report by the Comptroller and Auditor General, we took evidence from the BBC about its strategic financial management.1
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
6
Conclusion
Second Report - BBC strategic financial…
The growth of streaming has given people greater viewing and listening choices. According to the BBC, this change in behaviour has been reinforced by the pandemic as it has given people more opportunity to discover choice elsewhere.8 We asked the BBC what new plans it has to respond to the …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
7
Conclusion
Second Report - BBC strategic financial…
The BBC also plans to reintroduce BBC Three to terrestrial TV, five years after making it an online-only service.10 We questioned why BBC Three is the answer to falling audience share among young people when it did not work last time. According to the BBC, ‘linear viewing’ proved to be …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
8
Conclusion
Second Report - BBC strategic financial…
The BBC has recently announced that it plans to reach out to audiences across the UK by increasing its spending on programming outside of London by £700 million by 2027–28.13 We asked the BBC how this ties in with the ongoing need to make significant financial savings, such as the …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
9
Conclusion
Second Report - BBC strategic financial…
The BBC told us that the move out of London has been designed to improve its representation in and portrayal of the regions, which will have a direct impact on audiences’ appreciation scores for the BBC. We queried whether the viewing public will notice any difference from the plans to …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
10
Conclusion
Second Report - BBC strategic financial…
In recent years, the BBC has entered into complex ‘sale and leaseback’ arrangements to develop and finance its estate.19 To determine whether the new regional plans are joined up with these existing arrangements, we asked the BBC whether it could find itself in a position where it has sold off …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
11
Conclusion
Second Report - BBC strategic financial…
As part of its new regional plans, the BBC is intending to hire new staff. At the same time, the BBC is making hundreds of staff redundant across the UK. We challenged the BBC on how exactly the two align and whether the BBC risks offering voluntary redundancy packages to …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
12
Conclusion
Second Report - BBC strategic financial…
The BBC faces a number of emerging financial challenges. These include:22 • A significant change in policy for over-75s TV licences which the BBC estimates will leave it £200 million a year worse off. Under the 2015 licence fee settlement, the government gradually withdrew its funding for free TV licences …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
13
Conclusion
Second Report - BBC strategic financial…
The BBC is currently approaching the end of a five-year savings programme, which targeted £1 billion annual savings by the end of 2021–22 to address the shortfall in its finances created by these challenges. The BBC’s net commercial income is not at a level to make a significant contribution to …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
14
Conclusion
Second Report - BBC strategic financial…
On taking up his new role in September 2020, the BBC Director-General outlined four new strategic priorities for the organisation—delivering high-quality content, developing the BBC’s online presence further, growing commercial income, and a renewed commitment to impartiality.25 We considered that these priorities will require investment and we pressed the BBC …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
15
Conclusion
Second Report - BBC strategic financial…
In February 2017 the BBC introduced a programme to deliver £800 million savings annually by 2021–22, in order to help address the estimated shortfall in its finances resulting from the 2015 licence fee settlement and trends in inflation and licence fee payments. In 2020 it increased this annual savings target …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
16
Conclusion
Second Report - BBC strategic financial…
By the end of March 2021, the BBC expects to be more than £800 million through its savings programme, leaving around £200 million of savings to be achieved in 2021–22. However, it now appears that the BBC will only deliver around £950 million of its savings by the end of …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
17
Conclusion
Second Report - BBC strategic financial…
The settlements that emerge from licence fee negotiations typically result in the BBC making some financial gains and some losses.30 We asked the BBC why, going into its latest negotiation, it was not better prepared, for example, by modelling potential fundamental changes to the TV licence such as a licence …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
18
Conclusion
Second Report - BBC strategic financial…
The BBC told us that its savings programme to date has focused primarily on support and back-office functions, with its indirect costs now among the lowest of comparable media companies. It said that, because those functions have now been cut to the bone, it is increasingly having to look at …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
19
Conclusion
Second Report - BBC strategic financial…
The BBC indicated that, in general, it will also need to make tough choices on programming, making less content but ensuring that the impact is high.34 The BBC has 27 C&AG’s report, para 12 28 Qq 32, 68, 71, 73, 74 29 Qq 72 to 74 30 C&AG’s report, para …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
20
Conclusion
Second Report - BBC strategic financial…
In addition to this uncertainty surrounding future frontline cuts, the BBC has delayed more than once planned changes to its News and Nations & Regions divisions which involve significant post closures. The BBC had identified early on in its efficiency programme the need for change in these divisions. However, it …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
21
Conclusion
Second Report - BBC strategic financial…
Staff pay is another high-profile area where the BBC has recently attempted reform. In 2018–19, the BBC introduced new terms and conditions for staff. The BBC calculated these changes would result in a net saving of £4.9 million in its pay bill over the seven years from 2017 to 2023, …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
22
Conclusion
Second Report - BBC strategic financial…
In 2019–20, the returns paid by commercial businesses for the BBC to use on its programme-making were £208 million, equivalent to under 6% of licence fee income.41 The BBC Director-General has identified increasing commercial income as one of the organisation’s four strategic priorities.42 In March 2021 the BBC’s main commercial …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
23
Conclusion
Second Report - BBC strategic financial…
We asked the BBC if it had explored how it could increase income from BritBox, the streaming service it runs overseas and in the UK in partnership with ITV, and expanding its use of the BBC archive. The BBC responded that the number of subscribers to the overseas BritBox service …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury
24
Conclusion
Second Report - BBC strategic financial…
DCMS restricts the BBC’s total borrowing limit for commercial activities to £350 million, a level set in 2003.47 We asked the BBC if this limit holds it back from increasing commercial revenues and to what extent it is exploring this in current negotiations with DCMS. The BBC considers the current …
Government response. The BBC will respond directly to the Committee to the recommendations in the Committee’s report.
HM Treasury