Entertainment & Arts

'One-off savings' helped BBC hit cost-cutting targets

BBC logo Image copyright Jonathan Brady
Image caption The BBC has pledged to save £700m a year by 2017

The BBC's cost-cutting programme exceeded targets by making savings of £374m in 2013-14, according to the National Audit Office (NAO).

However, the public spending watchdog's report said annual long-term savings were 4% less than planned.

It said the initiative only exceeded targets through one-off savings, such as reducing Formula One coverage.

The NAO also warned of "more challenging" changes in the future, and said more services may be at risk.

The BBC began its Delivering Quality First (DQF) initiative in 2012-13, after the licence fee was frozen at £145.50 during negotiations with the government in 2010.

The NAO report, published by the BBC Trust, examined its progress.

It said the BBC had "so far delivered value for money" with overall savings in line with forecasts, "without significantly impacting on performance".

However, it said that plans to make around 85% of remaining savings from productivity improvement meant "greater challenges" lay ahead, with more changes to structures and ways of working than in the first few years of the programme.

Reducing staff

The report found the BBC, which plans to cut annual costs by £700m by the end of 2016-17 compared to 2011-12, made "fewer productivity savings and earned less from commercial income than planned".

"The BBC has made reported annual savings of £374 million by such means as renegotiating existing contracts, limiting salary increases and reducing the number of more expensive senior staff," said Amyas Morse, head of the National Audit Office.

"The BBC has taken a systematic approach to how it can achieve future savings, but it needs to keep the implementation of its plans under review.

"This will lessen the risk of the BBC's having to make further reductions to scope by, for example, cutting the number of new programmes it commissions or acquires."

One controversial proposal by director General Tony Hall is to axe digital channel BBC Three from the TV schedules, moving it online. This would save around £50m a year, £30m of which could be ploughed into BBC Drama.

Image copyright PA
Image caption The BBC has halved its live coverage of Formula One, although World Champion Lewis Hamilton will write an exclusive column for the BBC Sport website this year

Nick Prettejohn, chair of the BBC Trust's Value for Money committee, said the report recognised that "good progress" was being made.

"The NAO has suggested that the final years will present greater challenges and we agree that there is a limit to the extent costs can be reduced before quality begins to suffer," said Prettejohn.

"We believe the remaining targets should be met and will continue to track progress to ensure that savings do not have an unintended impact on the programmes and content which audiences love."

'Great value'

The NAO report also said the BBC cut public service broadcasting staff costs by 17% during the first two years of the programme, despite staff numbers falling by only 1% overall.

In a statement, Anne Bulford, the BBC's managing director of finance and operations, said: "For just £2.80 a week, the BBC provides great value to licence fee payers, and, as this report makes clear, the BBC has exceeded its efficiency targets."

She added: "We're on track to save £1.5 billion a year by 2016-17 despite the licence fee being frozen and some of it being used by the government for other projects such as broadband roll-out and local television.

"We have a good track record in delivering value for money, and won't stop searching for ways to become more efficient so even more of the licence fee goes into the programmes and services that people love."

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