UK MPs urge BBC Worldwide to be more commercial

The Commons Public Accounts Committee report has lambasted the BBC for only looking to up income by £40m to £320m annually at a time when it is reducing its costs by nearly £700m a year. This was “unambitious in the context of the financial pressure it faces”, the report said.

The BBC has previously been criticised by MPs for over-extending BBC Worldwide’s reach into commercial activities as both egregious and arrogant.

Although it acknowledged that the Trust should ensure commercial activities “do not unduly distort the market”, the report called for the regulatory body to “formally revisit” the target to see if it could be increased.

“If the target remains unchanged, the Trust should provide us with a clear explanation of why £40m is the tipping point beyond which further rises would distort the market or be over ambitious,” it added.  

Conservative MP Richard Bacon, who led the report, said: “The BBC must maximise its commercial income. But the BBC’s plans for this are unambitious when placed in the context of the financial pressures on the broadcaster. We expect a clear explanation of why a £40m a year increase in commercial income is the limit of what can be achieved.”

A BBC Trust spokeswoman said: “The Trust’s target for the BBC’s commercial income was based on what the Corporation expected to be achievable without damaging either the wider market or the quality of services for UK audiences.  If it proves possible to generate more commercial income without any such damage we would of course welcome this.”

Efficiencies

The report was designed to review the BBC’s efficiency savings between 2007-2013 (ie prior to Delivering Quality First), and also slammed the corporation for underestimating how much money could be saved during that period.

The BBC had forecast a total saving of £487m by the end of 2013, equivalent to 3%. However it is now on track to deliver £560m, roughly 3.5%.

This off-the-mark estimate “risks undermining public trust in its financial management and openness”, as well as failing to deliver value for money, the report claimed.

“It also leaves itself in a weak position to argue that future cuts to its budget could damage services to the licence fee payer.”

Bacon said: “It took the pressure of a licence fee settlement to force the BBC into setting a target of 3% annual savings, which it is comfortably on track to achieve. The BBC’s assumptions about what it could deliver were unambitious.”

But the Trust spokeswoman defended the original estimate, saying it was “at the top end of a range suggested by the then government, on the advice of the NAO, and it is encouraging that the BBC is exceeding it”. 

She added: “In a very difficult economic climate, the Trust is now pushing for further savings, and we have set a target of 11% efficiency savings by 2017. This has been independently analysed by Ernst & Young. The Trust monitored the implementation of the 3% target, in particular to gauge whether they were true efficiencies and did not impact on the quality or scope of the BBC’s services. We will continue to do this for the new target.”

Impact

The report also took aim at the BBC’s limited understanding of the impact of its cuts so far, and warned that this should not be repeated with DQF.

It argued that the BBC did not carry out a proper analysis of the cost of services and how much they are value by licence fee payers in this earlier set of cost-cutting. It welcomed the interim report into DQF, which revealed the extent to which local radio was valued.

Bacon said: “Those who watch and listen to the BBC’s services will want to know that the savings the BBC has made have not affected the quality of its output. The BBC cannot give them that assurance. As it moves from making efficiency savings to cutting services, the BBC needs to be open about how these cuts will impact on services and what it will do if quality suffers too much.”

This story was originally published by Broadcast.