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July 12, 2022updated 07 Oct 2022 7:09am

BBC annual report: £1bn savings made in five years as more cuts needed

By Bron Maher

The BBC says it has saved more than £1bn over the past five years, according to its latest annual report.

Total BBC public service expenditure in 2021/2022 stood at just over £4bn — the same as the 2017/18 figure. The savings have been needed to account for inflation and increasing BBC financial commitments.

BBC Studios, the corporation’s commercial arm, hit a record profit in the 2021/22 period, but use of the BBC’s news services dropped among British adults from its 2020/21 highs.

The BBC has been on a savings drive for years: the broadcaster set out plans in 2015 to make £150m in savings a year, which would have added up to £550m saved by 2021/22.

Tuesday's annual report, covering the year to 31 March 2022, showed the corporation has saved £1.029bn in the past five years, reflecting subsequent hikes to the earlier savings goal. 

It listed as the source of those savings:

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  • "Production efficiencies, remixing and reprioritisation of programmes
  • Better cash flow terms with producers
  • Flat pricing and third-party investment
  • Headcount savings and staff efficiencies
  • Operational efficiencies
  • Renegotiation of contracts."

The cuts are not done, however. BBC chief operating officer Leigh Tavaziva wrote in the report that, because of the frozen licence fee and rising inflation, “we anticipate annual savings of £285m will be required by 2027/28”.

[Read more: Warning of 'end of the BBC as we know it' after Culture Secretary freezes licence fee]

At the press conference launching this year’s report, Tavaziva reiterated the May announcement that there will be a “further reduction in the public service workforce by 1,000”.

Those cuts will be the latest step in what the BBC described on Tuesday as "our journey to be a simpler and leaner BBC".

The 2017/18 annual report recorded an average of 18,210 full-time equivalent staff at the BBC compared to the current tally of 17,781.

The National Audit Office reported in December that 385 of the 1,800 BBC redundancies made between 2017/18 and 2020/21  were frontline journalist roles. A BBC News restructure announced in 2020 cut 520 jobs, while in the same year 450 jobs went in BBC England and 150 across Wales, Scotland and Northern Ireland, many of which were journalist roles.

Another upcoming restructure centred around a "digital-first" strategy will affect some news divisions, including by merging the BBC News and BBC World News channels.

Tavaziva wrote in the report: “We are in a financially strong position to withstand continued financial pressures and mitigations are in place to manage the first year of the licence fee settlement and increasing inflation in the market.”

In light of forthcoming government changes that could affect the licence fee, BBC director-general Tim Davie and chairman Richard Sharp were asked at a press conference on Tuesday whether they had been in touch with the Department for Culture, Media and Sport.

Davie (pictured) said: "We've talked to DCMS civil servants about day-to-day, normal business. I think it's too early for us to speculate on exactly what would happen in terms of the leadership election and the consequences...

"But what you've heard from the BBC is very clear, which is we absolutely want to keep reforming the BBC, and we're open minded as to what is the best system to ensure that we preserve public service broadcasting."

The report points to a drop in trust in and appreciation of the BBC in the past year on multiple indicators.

The percentage of respondents polled by Ipsos Mori who said they thought the BBC “is effective at providing news and current affairs that is impartial” fell from 56% in 2020/21 to 51% in 2021/22. However, the percentage saying it was ineffective at that also fell, from 29% to 25%.

The proportion of people who felt the BBC was effective at helping them understand what was happening in the world dropped from 75% to 70%. The proportion that said it was trustworthy dropped from 68% to 63%.

The report said the two sets of results “are not directly comparable” because surveys for the 2021/22 report were conducted face-to-face, whereas the previous year’s was done over the phone.

Asked about the apparent drop, Sharp said trust was “a strategic priority” for the BBC Board.

“And as a result, we've made a considerable number of changes, as I said, arising from the Serota review, but also one that touches all the people at the BBC in terms of training, in terms of whistleblowing capacity, in terms of how they get reviewed, as well as the capacity for people to join the subcommittee of the board that evaluates this.

[Read more: Serota Review of BBC criticises 'ad-hoc' investigations into editorial failings after Bashir scandal]

“And the reason we have to do that is because the context where trust is considered has to address and deal with confirmation bias, where even in the context of trusted news being delivered, individual consumers of the content may react differently as a result of polarisation in society or other things going on.

“So it is in that sense a moving target where we as a board, and particularly with the majority of the non-execs, do scrutinise the data properly. And we're content, very content, with progress being made.”

Nonetheless, the corporation remains ahead of the competition on numerous trust indicators. Some 48% of adults who follow the news that were surveyed by Ipsos Mori said that, of all news sources, the BBC was the outlet they trusted the most. The next most trusted, Sky News, came in at 8%.

[Read more: Five-year decline in UK news media trust sees BBC, Times and Telegraph have biggest drops]

The report noted that whereas 90% of the general British public use BBC services weekly, that figure drops to 81% among 16 to 34-year-olds. Asked whether the BBC was "at risk of permanently losing younger audiences in a bid to please a hostile government" with an "anti-woke agenda", Davie disputed the framing.

"I think what we are trying to do, in a world in which there's a lot of debate, polarisation - we've made a choice as an organisation which many organisations in the media landscape across the world have struggled with," he said. "Which is we want to deliver impartiality and facilitate debate, be fair across the board and be a guardian of truth, frankly.

"Now, that does involve sometimes some tough conversations within the organisation. It requires some real thinking around how you navigate some of the territory you've just described. But I don't think it's an anti-woke agenda. I think absolutely not.

"I think it's an agenda to try and find the truth. Now, my personal view, is that that is something that at the end of the day puts us in a stronger position, rather than a weaker position, with young audiences.

"They are surrounded by things that are full of opinion, partial. And I think we've got a very strong case with young audiences. What we need to do is make sure we're giving them the right content in the right format."

[Read more: More than 800 sign open letter accusing BBC of failures in reporting of LGBT issues]

The report noted that “BBC News Online reached 34% of UK adults on average per week - that is 18 million people weekly and ahead of our target”.

However, it was also two percentage points down on the previous year, in line with a broader trend that saw fewer people tuning and logging in to BBC News services in 2021/22.

The number of unique UK browsers accessing BBC News Online on average per week dropped 24% between the two reports - possibly correcting for the sharp increase in news interest that characterised the year from 1 April 2020. But the 2021/22 figure, 38 million, was also down on the 2019/20 period.

Internationally, however, the BBC's reach increased. BBC News' total international weekly audience and BBC World Service's weekly reach both rose 0.3%, to 458 million and 365 million respectively. The World Service's total digital reach rose 4%, to 148 million.

The World Service is the beneficiary of Foreign Office funding that has been extended twice since beginning in 2016/17 and has seen the BBC's international operations be an unusual area of staff growth. The most recent funding extension runs to March 2025.

[Read more: BBC director-general warns licence fee freeze means World Service and local democracy reporter investment not guaranteed]

In tandem with its cuts, the BBC has seen its income grow. Licence fee income grew to £3.8bn in 2021/22, and commercial revenue from BBC Studios leapt up 24% year-on-year to £1.72bn.

BBC Studios recorded a 50% increase in profit (EBITDA) to £226m in the year, the first time it grew above £200m.

Picture: Reuters/Hannah McKay/Pool

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