Salford move derails BBC’s drive to lower costs

Savings in the cost of backroom functions at the BBC over the past five years have been outweighed by an increase in spending on buildings, largely due to the move of many programmes and staff to Salford, according to a report.

A drive to cut spending on support functions had been successful in many areas but there was scope for more savings as the corporation did not have a “co-ordinated and consistent approach” to driving costs down, the National Audit Office (NAO) found.

Spending on BBC Workplace, which manages the corporation’s property estate, rose by 39 per cent from £205 million in 2006-07 to £284m in 2010-11, at a time when the BBC was trying to save money behind the scenes.

The report said this was because the BBC was in the middle of a 20-year strategy to rationalise its properties.

Spending rose in 2010 because new buildings came into operation at MediaCity in Salford and London’s redeveloped Broadcasting House, leaving the BBC with a larger estate than it needs until the planned disposal of properties such as Television Centre.

Auditors found a 4 per cent increase in total spending on support functions, from £473.7m million to £491m between 2006-07 and 2010-11. But if the cost of property was removed, the overall bill showed a reduction of almost a quarter (23 per cent) in spending on areas like procurement, finance, personnel and marketing.

The BBC plans to make 25 per cent cuts in spending on support services by 2016-17 to help it cope with the six-year freeze in the level of the licence fee, and has pledged to reduce overhead costs to 10 per cent of its £3.6 billion licence fee income, down from 12 per cent in 2010

The report, commissioned by the BBC Trust, found that the overhead target was “of limited practical use” because the BBC did not know whether 10 per cent was the right level to aim for or not.