The BBC is yet to tackle the most difficult aspects of its savings programme and is facing “significant challenges” to its income, according to a report from the National Audit Office (NAO).
It says for three of the past five years, the BBC’s costs have outstripped its income, with it making a loss of £119 million in 2019-20.
Part of the reason for the losses is that between 2017-18 and 2019-20 almost 450,000 fewer non-over-75 households bought TV licences due to changes in viewing habits brought about by the continued growth of streaming services.
The BBC has expanded its own online TV services, making content available on iPlayer for 12 months instead of 30 days, and is collaborating with ITV on the Britbox service in the UK, the United States and Australia, amongst other territories.
But the NAO still wants the BBC to set out a clear strategy for its aspirations for technology and personalisation of its services, with a focus on timing and how this will be funded. The BBC says it will do this in its Annual Plan for 2021/22 in March 2021.
“The BBC faces significant financial challenges as it embarks upon licence fee negotiations and its mid-term charter review. It has made significant cost savings and has identified the need for more with licence fee income under pressure,” said Gareth Davies, the head of the NAO. “As decisions about the licence fee are made, the BBC needs to develop a clear financial plan for the future setting out where it will invest and how it will continue to make savings. Without such a plan, it will be difficult for the BBC to effectively implement its new strategic priorities.”
In response the BBC said: “Since 2010/11, to the end of the previous financial year, we have calculated that the BBC has seen a real-term reduction in licence fee revenue of around 31%, initially largely through the freezing of the licence fee for six years and significant new obligations being placed on the BBC then, more recently as the NAO highlight, due to the gradual withdrawal of government funding for free licences for the over 75s.
“During this time, again as the NAO have reported, there have been high levels of cost inflation within the entertainment industry, not least the result of the spending power of new market entrants. The impacts of Covid-19 have also contributed to the BBC internal savings target across this period being increased from £800 million to close to £1 billion per year.”
