"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