A simpler and leaner BBC

We’ve already significantly cut the costs of running the BBC, but in times of very tough choices we need to focus on what really matters - delivering outstanding programmes and content for all our audiences.Tony Hall, BBC Director-General
Date: 02.07.2015     Last updated: 07.07.2015 at 12.18
Category: Corporate
Tony Hall is today announcing changes to the structure and organisation of the BBC that will make it simpler, leaner and more effective for the future.

Over recent years the BBC has built an impressive savings record that will deliver over £1.5bn of savings a year by 2017. Much of this has been done through cutting administration and property costs, pay and headcount restraint, plus tough decisions like more daytime repeats and shared sports rights.

A new independent study by PwC being published today ranks the BBC amongst the most efficient organisations in the public sector and regulated industries in terms of managing overheads. Overhead costs are approximately 8 per cent of total costs and are expected to fall to 7 per cent - well below, both, the public sector average, 11.2 per cent and regulated industry average, 8.8 per cent.

Despite the progress already made, and the realities of the licence fee being frozen for seven years, a new financial challenge means additional savings must now be found.

The licence fee income in 2016/17 is now forecast to be £150m less than it was expected to be in 2011. This is because as more people use iPlayer, mobiles and online catch-up, the number of households owning televisions is falling. It also provides further evidence of the need for the licence fee to be modernised to cover digital services.

The new measures being proposed will help bridge that gap by delivering £50m in savings from merging divisions, cutting down management layers, reducing managers and improving processes. More than 1,000 posts will be lost as a result.

The proposed steps that will be taken to make the BBC simpler and leaner are:

  • To reduce the number of divisions. First by joining up technology teams across Digital, Engineering and Worldwide. Further changes are also possible.
  • To reduce the number of layers from the top to the bottom of the organisation. In some places there are currently 10 layers of people and management and this will be cut to a maximum of seven in the future.
  • To reduce management roles in all areas of the BBC. A simpler organisation will inevitably require fewer managers, especially at senior levels.
  • To simplify and standardise procedures across the BBC, particularly looking at how professional and support areas such as marketing and communications, finance, HR, IT support and legal are structured and can be simplified.

Throughout the summer, the BBC will be identifying where the specific savings opportunities are with final decisions expected to be taken in early autumn.

Director-General Tony Hall said:

“A simpler, leaner, BBC is the right thing to do and it can also help us meet the financial challenges we face.

“We’ve already significantly cut the costs of running the BBC, but in times of very tough choices we need to focus on what really matters - delivering outstanding programmes and content for all our audiences.”

Notes to Editors

In February 2014, Tony Hall said that “the BBC has done much to make itself more efficient. But it must never – and will never – cease looking for more efficiencies, and demonstrating that to our owners, the British public.”

Today marks the next stages in Tony Hall’s plan to remodel the BBC after introducing 'compete or compare', capping pay-offs, and introducing pay restraint.

In the last year, the BBC has made £110m more savings so that £1.25bn per year is now already delivered. These savings have come from measures to reduce senior managers, combined with wage and headcount restraint (saving £150m a year), better property management (£75m a year), and tougher procurement deals with contractors (£70 million last year).

As more people rely on devices like iPlayer, mobiles and online catch up, the percentage of households owning televisions is falling faster than predicted. This means they don’t always pay the television licence fee. This decline in the proportion of households with a television means the BBC's income in the final year of 2016/17 is now projected to be more than £150m less than was predicted in 2011.

The PwC report finds that the BBC now spends under 8 per cent of total costs on general overheads in 2014/15. Completing the Delivering Quality First savings programmes will put the BBC into the current top tier of the public and regulated private sectors, cutting overhead costs to 7 per cent - well below the public sector average of 11.2 per cent (see chart below). The BBC is also above average among a media and broadcasting peer group despite its public service remit and restrictions.

The full PwC analysis published today is available here.

BBC Press Office