The BBC’s cost reduction programme has so far delivered value for money. However, the need to make further savings from productivity improvements will involve more challenging and potentially disruptive changes to structures and ways of working.

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The BBC’s ongoing cost reduction programme ‘Delivering Quality First’ has so far delivered value for money, according to a report by the National Audit Office. Reported savings of £374 million have exceeded implementation costs and have had a limited impact on audience perceptions.

The report finds, however, that the BBC plans to make around 85% of remaining savings from productivity improvements that will involve more challenging and potentially disruptive changes to structures and ways of working.

The findings from the report include the following:

  • The overall savings of £374 million reported by the BBC up to the end of 2013-14 exceeded its milestone target of £367 million, although annual sustainable savings were 4% less than planned. The BBC has slipped against its interim milestones for making sustainable savings because it made fewer productivity savings and earned less commercial income than it planned.
  • The BBC established a well-designed reporting system with clear accountabilities, supported by external review, to provide assurance that reported savings are genuine.
  • 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.
  • To inform its savings plans, the BBC could make more use of data held by individual divisions about how they have cut costs.
  • The Programme has so far had a limited impact on audiences according to the BBC’s performance measures.
  • Although the BBC has developed plans for most of its remaining savings, these plans involve significantly greater challenges compared to the initial years of the Programme. If the BBC is not able to make the planned productivity savings, it risks having to make further reductions to scope.
  • Some cost reductions secured up to the end of the Programme in March 2017, when the current licence fee settlement ends, might not be sustainable in later years.

“The Delivering Quality First programme has secured
significant savings with minimum impact on audiences and today’s report
recognises the good progress the BBC has 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. 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.”

Nick Prettejohn, BBC Trust Chair
of the VFM committee, 10 March 2015

 “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.  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.”

Amyas Morse, head of the National Audit Office


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