BBC 'boosts UK economy by £8bn'

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The BBC generated more than £8bn for the UK economy in 2011-12, almost twice its licence fee spend.

A new report published by the corporation showed licence money spending had a positive knock-on effect for regional economies.

The total expenditure over the two-year period came to £4.3bn, which led to a gross value-added (GVA) boost to the economy of £8.3bn.

Start Quote

"The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied'”

End Quote Najma Rajah BBC Chief Economic & Policy Adviser

However, spending in London was three times the rest of the UK combined.

The report said: "The effect of initial BBC spending is 'multiplied' as it ripples through the economy from region to region and sector to sector (and to the employees of those sectors). This is known as the 'multiplier effect'."

The BBC's chief economic and policy adviser Najma Rajah explained: "The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied' as that pound spent by the BBC creates value elsewhere in the economy.

"So, for example, if the BBC were to buy a camera from a supplier in Manchester, the camera supplier would receive some money in return for the camera.

"The camera company would then use the income generated from the sale of the camera to pay their suppliers for the components that went into the camera and to also pay their employees and so on."

Rajah added: "A really good example of how this multiplier effect works is when the BBC commissions a programme that is made by an independent television production.

"The programme might be filmed in Scotland using local runners, electricians, make-up artists etc. who are paid and then will spend their wages in Scotland to the benefit of the Scottish economy."

The report revealed significant growth in the north of England following the opening of the new BBC North headquarters in Salford Quays, with GVA growing 19.7% to £391m.

But in the Midlands, it fell 21.7% to £199m, while the south was down 18.8% to £699m and Wales dropped 6.2% to £276m.

London saw the biggest expenditure of £2.98bn - nearly three times as much as the rest of the UK combined - which in turn generated £5.65bn GVA.

John Tate, the BBC's director of policy and strategy, used the findings of the report to call on Ofcom to reverse its plans for a spectrum tax on broadcasters next year.

In a blog post he wrote: "The wider benefit of the licence fee provides an extra reason for Ofcom to think again before it implements a spectrum tax next year: a levy on the spectrum broadcasters use to transmit their programmes.

"As well as hitting licence fee payers, such a tax would remove much-needed cash from the UK's creative sector."

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