"It is clear from this report that under the Trust’s
stewardship the BBC has made great strides in continuing to improve
its efficiency and this should be commended. When targets are
achieved, of course people can question whether they are too low;
just as, when savings fall short, it is rarely suggested that
targets were too high. What is most important is that the lessons
learned to date, along with the NAO’s suggestions for further
improvement, will be invaluable as we implement the challenging
programme of efficiencies proposed as part of the Delivering
Quality First process."
Anthony Fry, BBC Trustee with lead responsibility for value for
money, 1 November 2011
"The BBC’s efficiency programme is on track while its
overall performance measured in terms of audience has not declined.
The efficiency programme is therefore proving a clear success in
the terms set for it. However, it is hard to say whether the target
set was stretching enough and the BBC cannot say whether all the
savings made amount to real gains in efficiency.
"To manage within its 2010 licence fee settlement, the
BBC must strengthen its approach to targeting savings and create a
culture of continually challenging how services are
delivered."
Amyas Morse, head of the National Audit Office, 1 November
2011
The BBC Trust today (1 November 2011) published an independent
report commissioned from the National Audit Office on the BBC’s
progress to date in delivering the efficiency savings required
under the target set by the BBC Trust following the licence fee
settlement in 2007.
The BBC Trust set the BBC the target of finding three per cent
cash releasing efficiency savings annually over a five year period.
The NAO has concluded that the BBC is delivering value for money
from its efficiency programme, called the Continuous Improvement
Programme, in that it is on track to deliver these savings and is
doing this whilst broadly maintaining its overall performance
levels.
The NAO has also drawn out lessons for the BBC that will help
strengthen its approach to identifying and delivering the future
savings which will be necessary under the new licence fee
settlement for the period 2013-2017.
Key points from the report include:
- As at March 2011, the BBC is on track to exceed its target of
delivering three per cent sustainable, cash releasing savings each
year – equivalent to finding £487 million annual qualifying
savings, net of implementation costs by March 2013. To date it has
delivered £396 million and is forecasting it will deliver a further
£164 million over the final two years of the programme. Of the
future savings, the BBC has classified £64 million as at risk,
meaning that there is some uncertainty that the planned savings
will be made, or performance maintained. However, the BBC is
forecasting that it will achieve its target even if all of this
risk materialises.
- The BBC has delivered the required savings whilst broadly
maintaining its overall level of performance. However, the BBC
cannot demonstrate with certainty that all the savings represent
true efficiencies. This is because measuring the impact of the
savings on performance is complicated by external factors which
also impact on service performance and because there may be a time
lag between savings being delivered and their impact on performance
being seen.
- The BBC set devolved savings targets to different areas based
on a high level assessment of the potential for savings within
those areas, but the NAO did not see a detailed analysis of the
costs and benefits of the outputs produced by each area. Cutting
spending effectively requires an informed strategic overview. By
having a clear understanding of what activities should cost and the
value that they contribute, organisations can better target cost
savings and avoid making cuts to low cost activities that
contribute relatively greater value.
- The need to build a culture of continually challenging costs is
underlined by the BBC’s 2010 television licence fee settlement.
Under the settlement the BBC will need to deliver further savings
of at least 16 per cent over the period 2012-13 to 2016-17 to fund
the new responsibilities transferred to it such as the World
Service and S4C. This will create a different financial context and
the BBC considers that it will not be able to manage within its new
licence fee settlement through delivering efficiencies alone.
The BBC Trust responded to the report’s findings with a
set of immediate actions agreed with the Executive. The BBC
will:
- Take a more strategic approach to the process of allocating and
measuring the impact of efficiency savings across the BBC’s
divisions considering not only the impact on performance, but also
the value provided to the BBC’s core objectives by the activities
affected;
- Apply the best practice and lessons learned from the Continuous
Improvement Programme to the forthcoming programme of efficiencies
identified as part of the Delivering Quality First proposals,
including the sharing of good practice from individual divisions
across the BBC; and
- Continue to look at the approaches taken by other industry
organisations in order to challenge current ways of working and
identify other opportunities for savings.
Notes for Editors
- It is the responsibility of the BBC Trust, under the Royal
Charter, to ensure that value for money is achieved by the BBC
through its spending of the licence fee. In order to fulfil this
responsibility, the Trust commissions and publishes a series of
independent value for money reviews each year in consultation with
the Comptroller and Auditor General – the head of the NAO. The
reviews are undertaken by the NAO or other external agencies.
- On 15 September 2011 the Secretary of State for Culture,
Olympics, Media and Sport and the BBC agreed revised arrangements
for the NAO’s work at the BBC. The Comptroller and Auditor General
will now have discretion over the subject matter of the reviews the
NAO undertakes. These reviews will continue to be reported to the
BBC Trust, which is responsible for the BBC’s accountability to
licence fee payers.
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk or the
BBC Trust’s website www.bbc.co.uk/bbctrust. Hard copies can be
obtained from The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Amyas Morse, is the head
of the National Audit Office which employs some 880 staff. He and
the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
All enquiries to Phil Groves, NAO Press Office: Tel: 020
7798 5339 Mobile: 07770 678477
Hannah Bailey, BBC Trust Press Office: Tel: 020 3214
4944