BBC sets out plans to deliver £150m savings

18 November 2015

: Below is the text of a press release from the BBC Press Office:

The BBC is today setting out details of how we plan to save £150 million to address a shortfall in funding identified earlier this year.

The shortfall has arisen because as more people use BBC iPlayer, mobiles and other online catch-up, the proportion of households owning a television is falling, while a loophole allows viewers to watch catch-up TV without a licence.

We have welcomed the Government’s firm commitment to close this loophole, and will continue to urge Ministers to legislate as swiftly as possible.

An independent study by PwC has already shown the BBC to be among the most efficient organisations in the public sector and regulated industries, and our record betters that of Government. However, in July we committed to doing everything possible to protect programmes and services by making further savings from back office functions, cutting management and management layers and reducing historic levels of BBC bureaucracy. This is part of delivering a simpler, leaner, BBC.

Despite this, we always said that cuts to programmes or services would be unavoidable. Even after today’s measures, the BBC faces a long-term challenge to identify a further £550m of savings by 2021/22 and we will set out broad plans for this in the spring. We will inevitably have to either close or reduce some services.

The £150 million of savings detailed today will be delivered in the following way:

• £50 million will be saved by creating a simpler, leaner BBC, with fewer divisions and senior managers, fewer layers between the top and bottom of the organisation and cutting 1,000 posts. Strong progress is already being made – the first phase of work is now complete and subject to staff consultation and further detailed work:
  • c£25m will come from reducing back office and professional support services
  • c£10m from reducing management layers in content areas. Discussions are now beginning with those affected
  • The remainder from the merger of technology and digital divisions, and changes to expenses, payroll management and other areas
• In total, we are on course to deliver the 1,000 reduction in jobs by 2017. Since July, we have already closed or are consulting on over 300 of these posts

• £35 million will be saved from the BBC’s TV sports rights budget. Meeting this savings target will be tough, particularly given the high levels of inflation in the market. We therefore anticipate this will lead to the loss of some existing rights and events. We have already made some tough choices which have contributed to the savings, for instance around the Open Golf. However, we have also recently secured a series of important rights – including Wimbledon, Premier League highlights, live coverage of Euro 2016 and 2020 football championships and Six Nations rugby shared with ITV

• Beyond Sport, a further £12 million will come from the BBC’s TV budget. Drama will be protected, including the prioritisation we have already announced, but a range of other genres will face cuts. This will mean some reductions to factual, comedy and entertainment, although we remain committed to making popular Saturday night shows and will use the savings from The Voice UK to develop new, home-grown formats

• £12 million will be cut from BBC Online. This will involve rationalising new features, innovation and development across the BBC’s digital services and focusing on those with greatest impact

• £5 million will come from News. This will include efficiency savings from a review of working practices, terms and conditions, and commercial income or cost reductions in BBC Monitoring (subject to approval from the BBC Trust)

• £20 million of savings will come from long-term contracts and other costs, due to the current lower levels of inflation

• The final c£16m will come from cross-cutting areas, including
  • Savings in distribution costs
  • Exploring a phased exit from the broadcast Red Button service and focusing our interactive TV offer on connected televisions and iPlayer
  • Exploring further savings from BBC Online.

Director-General, Tony Hall, said:

“The BBC has and is doing everything possible to make sure the impact on the public is minimised. Wherever possible we’re targeting savings by creating a simpler, leaner, BBC.

“But cuts to budgets for programmes and services are unavoidable. No Director-General wants to announce reduced spending on services that the public love. This is very tough, but the BBC’s financial position means there is no alternative.”

The £150 million set out today is part of the £700 million overall savings the BBC must find due to the flat licence fee agreed in the summer and the need to fund the transformation the BBC must undertake for the future.

We will announce how the remaining £550 million savings to be met by 2021/22 will be made in the spring. These are likely to include broad service and major structural changes to how the BBC works and fulfils its mission to inform, educate, and entertain.

Notes to Editors

1. In July, the BBC announced that the licence fee income in 2016/17 was now forecast to be £150m less than it was expected to be in 2011. This is because as more people rely on devices like BBC iPlayer, mobiles and online catch up, the percentage of households owning televisions is falling faster than predicted. This means they don’t always pay the television licence fee.
2. A loophole means households watching only catch-up TV are not subject to the licence fee. The Government has agreed this loophole should be closed and committed to legislate by July 2016. We will continue to urge them to do this as quickly as possible.
3. In July we announced £50 million savings – mainly through reductions in the scope and scale of back office functions. Details of the announcement are available here: http://www.bbc.co.uk/mediacentre/latestnews/2015/simpler-leaner-bbc
4. Today we are providing details of how we will meet the remaining £100m and updating on progress on the £50m we have already announced.
5. A report by PwC found that the BBC now spends under 8 per cent of total costs on general overheads in 2014/15. Completing the Delivering Quality First savings programmes will put the BBC into the current top tier of the public and regulated private sectors, cutting overhead costs to 7 per cent – well below the public sector average of 11.2 per cent. The BBC is also above average among a media and broadcasting peer group despite its public service remit and restrictions. The full PwC analysis is available here.