BBC responds to NAO reports as value of licence fee revenue drops 31% in a decade

The BBC has responded to the UK National Audit Office’s recent report on its financial plight and other challenges facing it by pointing to initiatives currently underway, including its intention to address the next phase of savings in its forthcoming annual plan.

In its response the BBC noted that the value of revenue from the licence fee, its principal means of financing what it does, has fallen by 31% in real terms over the last decade as a result of the six-year freeze implemented by the government as well as additional financial burdens placed on it such as responsibility for funding a replacement for free licence fees for the over 75s.

The BBC said it was on track to make annual savings of £800 million, having achieved savings of £618 million three years into the cost-cutting programme. However, it said that the upping of this target to £1 billion a year as a result of the COVID-19 crisis was “a significant challenge” and that “opportunities to make further savings without significant audience impact are limited, especially should the pressures on licence fee income or the level of funding commitments placed on the BBC grow further”.

Responding to the NAO’s call for monitoring of the wider economic value it generates, the BBC said it had commissioned a new pan-UK assessment in November 2020

The BBC also plans to implement some new processes to monitor savings in line with NAO recommendations.

The broadcaster also pointed to measures it had taken to strengthen the governance of projects of high strategic importance and high level of complexity or risk, with greater oversight to those charged with governance, such as the BBC Board and Audit and Risk Committee; the publication of new investment guidelines enhancing the controls around the approval of major business cases; and ensuring early involvement of the corporate project management office in critical projects.