The National Audit Office (NAO) says the BBC is on track to deliver its current savings targets, but will need to make further cuts over the next five years.
The BBC is forecast to exceed its original savings target of £800 million a year by 2021-22 and is largely on track to meet its increased target of £1 billion a year. It increased this target due to the estimated financial impact of the COVID-19 pandemic and its decision to continue to offer free licences to some over-75s. In September 2021, the BBC forecast that it would deliver savings of £971 million a year by March 2022, only 4% (£41 million) below its target.
Initially, most savings were made by making changes behind the scenes. Following those cuts, most of the current round of savings are being made from audience-facing parts of the business. In September, the BBC estimated that 41% of its annual savings would come from cuts to content and scope of services and 11% from “changes to the scheduling mix.”
To fill the gap in its finances resulting from the 2015 licence fee settlement, the BBC is undertaking a five-year programme to deliver targeted savings of just over £1 billion a year by 2021-22. The BBC is currently negotiating with government on the level of the licence fee from 2022-23 – once this is agreed, the BBC will embark on a new five-year savings programme. The BBC has had to make additional savings so it can continue to pay for free TV licences to those over 75 and on Pension Credit.
According to the NAO, the BBC has reduced the amount of broadcast television it offers licence fee payers, while also increasing options for accessing this content.
Increase in the proportion of repeats on BBC One
It found that the volume of repeats shown across the BBC’s three main television channels has increased. This was partly due to the pandemic, but also part of the BBC’s strategy for addressing a change in audience viewing habits while working within a finite budget. At the same time, the BBC has increased accessibility to content by extending the time that programmes are available on iPlayer and launching BBC Sounds.
The previous round of cuts saw the BBC shed some of its sports rights, including F1. Coverage of the Olympics and Six Nations Rugby were reduced and shared with other broadcasters.
English region cuts
The NAO has found that some divisions of the BBC are implementing measures without using complete data. This includes staffing reductions in the English regions, which may have contributed to the temporary suspension of local breakfast news bulletins during summer 2021 when a high number of staff were absent. It says the BBC is also not consistently applying lessons from implementing savings across the organisation. Staff cuts in some areas were uneven. As a result, the BBC says it will now be reviewing staffing levels in the regions.
The BBC plans to embark on a new savings programme in 2022-23. It projects that the gap between its income and its spending by 2027-28 would require it to make savings of at least a roughly similar magnitude as those it has delivered in previous savings programmes. However, the outcome of the licence fee negotiations could significantly increase the savings it will need to deliver.
To achieve these savings, the BBC expects it will need to make further reductions to content and services across its television, radio, and news operations. The BBC expects that increased commercial returns will make a relatively small contribution to its future savings. For example, it only plans to make £50 million a year in extra income from its main commercial subsidiary, BBC Studios.
Changes to how BBC News looks and feels on-screen are due to be implemented during 2022. As part of cost-cutting measures, BBC News is being reconfigured so that more content can be shared across outlets.
Gareth Davies, the head of the NAO said:
“Over the past decade the BBC has consistently made savings and is largely on course to achieve its £1 billion annual savings target by 2021-22. However, over the coming years it will need to make significant further savings at the same time as addressing a range of other challenges, not least its declining audience share. The BBC must ensure its savings plans do not further erode its position with audiences.”