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BBC seeks extra £400m in savings
James Robinson Media Guardian
DATELINE: 13/1/11
The BBC will seek additional cost savings of 20% – about £400m – by the end of the recently negotiated licence fee settlement in April 2017. The BBC is making the cuts in order to fund the cost of taking on the additional responsibilities handed to it in the licence fee settlement negotiated with the government in October, including funding the World Service.
Mark Thompson, BBC director general, told staff today he is setting a stiffer savings target than the 16% cuts originally anticipated in order to meet those commitments. The director general told staff that he wanted to make deeper savings to free up cash for investment in new technology or content at a future date.
Under the new funding deal agreed with the government, the licence fee will be frozen at £145.50 until 2017, a 16% reduction in real terms, following frantic negotiations in the runup to chancellor George Osborne's comprehensive spending review announcement in late October.
Thompson said finding the money needed to fund the World Service and other commitments, including providing most of Welsh language broadcaster S4C's budget, cannot be done through efficiency savings alone.
The BBC has said it will reduce overheads, which have already fallen from 24% of its income to 12%, to 10% or below so that 90% of licence fee money is spent on making content and delivering it to viewers.
Further savings will be made by cutting the senior management pay bill by 25% by December 2011 and reducing the amount spent on online services by 25%.
In addition to that, back office functions, including HR and finance, will be expected to find savings of 25% and "output areas" – programming and content – will have to slash budgets by 20%.
Half of those budget cuts will come from efficiency savings but half would have to come from "doing less", Thompson said.
He is launching a consultation with staff and asking them for ideas on how this can be achieved.
Thompson also ruled out closing any services or channels, despite an apparent suggestion from the BBC Trust yesterday that this might be the best way of achieving the necessary cuts.
The savings outlined today are in addition to the £140m of cuts being pushed through this year and next to meet the cost of freezing the licence fee in 2010/11 and 2011/12, when the current settlement ends.
Caroline Thomson, the BBC's chief operating officer, will hold a series of "town hall meetings" with staff in an effort to build a consensus about where the cuts should fall.
BBC managers will then make a series of recommendations to the BBC Trust in the summer.
Last modified: Thursday, January 13, 2011
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Previous stories
Public Service Broadcasting
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Cameron's 'pro-BBC' claim fails to stand up to scrutiny
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