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Managing the BBC’s pay-bill

The BBC has taken significant steps to improve the consistency, transparency and fairness of its staff pay and working practices, and is well ahead of other organisations on pay transparency and the gender pay gap. It now needs to ensure it has stronger oversight of its costs at the top of the organisation according to today’s report by the National Audit Office (NAO).

In recent years there has been a lack of confidence in BBC pay policies and the fairness of its practices and in 2017, the NAO reported on workforce management.1 The BBC undertook a series of wide-ranging reforms between 2015 and 2018 to standardise and simplify its workforce management for public service broadcasting (PSB) employees. This has improved consistency in job structures and pay, and terms of employment.

From 2016, the BBC has developed a new job framework for staff, including senior managers. 5,000 job titles were grouped into 600 jobs across six pay bands. This was a considerable achievement to move away from managers having discretion over pay and allowances, to establishing a centrally controlled, benchmarked and market-informed approach. 

The framework has resulted in 9% of public service broadcasting staff being in jobs with pay ranges higher than the market median, which the BBC believes is important to attract ‘in-demand’ skills that command high salaries, for example in digital roles. For remaining staff, 87% are in jobs with pay ranges in line with the market median and 4% have pay ranges lower than the market median.

While reducing costs was not a driving factor for the BBC’s reforms it does expect to see a net saving of £4.9 million over seven years. This equates to less than 0.1% of the total staff pay-bill over that period. While the BBC had a detailed cost model and the Board had high-level oversight of progress, there was no evidence that the BBC had put in place sufficient arrangements for detailed oversight and challenge of the costs and savings involved while completing its terms and conditions review. The BBC is yet to estimate the financial savings associated with the wider benefits of its changes.

Work to apply these reforms in the BBC’s commercial subsidiaries is less advanced than in PSB. It has already removed eligibility for bonuses from 870 staff in BBC Studios whose performance does not have a direct impact on profits, consolidating these bonus payments into their salaries, while a remaining 575 staff continue to receive a bonus. The BBC needs to implement changes carefully to ensure it achieves its aim of allowing people to move between PSB and commercial subsidiaries, while also keeping its commercial pay competitive.

Implementing reforms to scheduling and working patterns is a significant challenge for the BBC that will require considerable culture change. For example, the reforms include replacing complex rules on flexible working, with a simpler, consistent approach. Unions expressed concerns to the NAO that not all managers had bought into the reforms yet and some members were nervous about the changes. 

The BBC has set itself a challenging gender pay gap of plus or minus 3% by 2020. Staff have been given the opportunity to raise concerns about past pay and the BBC has concluded the majority of queries. The BBC has narrowed its gender pay gap from a median of 9.3% in 2017 to 7.6% in 2018, which compares favourably to other media organisations.  

The BBC has improved its transparency in relation to pay, both internally and externally and has been noted in two independent reviews as among the UK leaders in pay transparency. Since 2017, it has published the salaries of all senior managers and on-air staff and freelancers earning over £150,000 in PSB in £10,000 bands and, from the next annual report, in £5,000 bands. The BBC also publishes the ratio of both the Director General’s and executive directors’ earnings to BBC staff median earnings and its pay gaps for other characteristics, including race, disability and part/full-time staff.

The NAO found the number of senior managers in PSB reduced from 382 to 245 between 2014-15 and 2018, 1.3% of the workforce. This includes a reduction of 21 senior managers when BBC Studios, previously part of PSB, became a commercial subsidiary in 2017-18. A more fundamental review of BBC senior leadership was carried out in 2018. This led to new job descriptions and market-informed pay ranges for senior managers, with the size of the annual pay increase received by an individual senior manager being partly dependent on performance.

The BBC reduced spending by PSB on those in on-air roles from £194.2 million to £147.6 million between 2013-14 and 2017-18, and kept overall spending on those roles below its target of no more than 15% of expenditure on original in-house content. However, inflationary market pressures created by new market entrants, such as Netflix, may affect the BBC from maintaining this trend. Since 2017-18 the BBC has focused on individuals, within cohorts of people that perform similar roles such as sports pundits, to track and manage inflationary pressures.

The BBC has reformed pay for its approximately 850 on-air staff. The BBC has implemented a new framework for determining their pay, which includes a new, bespoke pay band for its most senior 100 to 150 on-air presenters. Eight men and two women in this band who were significantly above the maximum for their new pay range agreed to pay reductions.

Amongst the NAO’s recommendations is that the BBC should ensure it has full central oversight and challenge of key data, including the costs and benefits of its terms and conditions reforms, to track the ongoing value for money of its staff pay-bill.

The BBC has made some extensive reforms to its staff pay-bill and is now well ahead of other organisations with regards to pay transparency and the gender pay gap. However, these positive developments would be reinforced by a visible cycle of oversight and challenge by the Board, which we did not find to be clearly evidenced”.

Amyas Morse, the head of the NAO

Notes for Editors

£1,092 million
BBC Group’s total spend on staff salaries in 2017-18   

£147.6 million
BBC’s total spend on on-air roles in public service broadcasting in 2017-18

21,583
average number of full-time equivalent staff employed by the BBC Group in 2017-18

18,210 
average number of full-time equivalent staff employed by the BBC in public service broadcasting in 2017-18

3,373 
average number of full-time equivalent staff employed by the BBC in its commercial subsidiaries in 2017-18

600
number of job titles in the BBC following the introduction of its new staff job framework in 2017, a reduction from 5,000

5
number of pay principles - 'fair', 'consistent', 'transparent', 'competitive' and 'clear' - that the BBC introduced in 2017 to underpin its pay reforms

£4.9 million 
BBC’s estimate of the net savings it will make between 2017 and 2023 because of its terms and conditions reforms. This represents less than 0.1% of the total staff-pay-bill over that period

7.6%
BBC’s median gender pay gap in 2018, down from 9.3% in 2017

 

  1. In April 2017 the National Audit Office reported on how the BBC was managing its workforce.
  2. The BBC, in 2018, received £3.8 billion of public funding from television licence fees to enable it to meet its public service broadcasting (PSB) commitments. The BBC also undertakes commercial activities, such as creating and selling television programmes and providing English-language news overseas. These activities are not funded by the licence fee and generated approximately £1 billion of income in 2017-18. The BBC’s largest commercial subsidiary is BBC Studios, following the merger of the former BBC Studios and BBC Worldwide (the BBC’s production and distribution businesses respectively) in April 2018.
  3. In 2017-18 the BBC directly employed, on average, 21,583 full-time equivalent staff: 18,210 within its PSB functions and a further 3,373 in its commercial subsidiaries. The BBC also contracts with some 60,000 freelancers a year, including actors, entertainers and off-air individuals such as camera operators. Around 29,000 of these freelancers work on-air. Around 800-850 individuals working in news and current affairs on-air are directly employed by the BBC. The BBC’s total salary costs for staff in 2017-18 were £1,092 million.
  4. In March 2019, the Equalities and Human Rights Commission launched an investigation into equal pay at the BBC, focusing on historical cases raised by staff and whether their cases had been adequately resolved.
  5. Press notices and reports are available from the date of publication on the. Hard copies can be obtained by using the relevant links on our website.
  6. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 785 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £741 million in 2017.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.org.uk

PN: 27/19