BBC to save £20 million from long-term deals due to 'lower inflation'

18 November 2015

Fewer divisions and management layers and a reduction in back office and professional support services will contribute to £150 million of cuts made by the BBC to address its funding shortfall.

About £25 million of cuts are expected to come from reduced spend on these services, and £50 million of savings will come from creating a “simpler and leaner” corporation, which includes the loss of 1,000 jobs, announced in July.

A total of £20 million savings is expected to come from long-term contracts and other costs, due to the lower levels of inflation, and savings are also expected to be made in distribution costs.

The BBC is also expected to lose some existing sports rights and events, with the announcement that it will spend £35 million less on its TV sports rights budgets. Already the corporation has lost the rights to broadcast the Open golf but retains Wimbledon, Premier League football highlights and Euro 2016 and 2020 football championships and Six Nations rugby.

The budget for TV will be cut by £12 million, with reduced spending on factual, comedy and entertainment, and the same amount will be cut from BBC online services. The shortfall has arisen due to the falling proportion of households owning a television licence, caused by a loophole which allows views to watch catch-up TV online without a licence.

A PwC study found the BBC is among the most efficient organisations in the public sector and regulated industries, spending less than 8 per cent of total costs on general overheads in 2014-15. The average public sector spend on overhead costs is 11.2 per cent.

However, the corporation must identify a further £550 million of savings by 2021-22 as a result of the agreement made with the government that it will fund TV licences for the over-75s. The corporation’s director general said cuts to programmes or services would be unavoidable.

“The BBC has and is doing everything possible to make sure the impact on the public is minimised. Wherever possible we’re targeting savings by creating a simpler, leaner BBC,” said BBC director-general Tony Hall. “This is very tough, but the BBC’s financial position means there is no alternative.”

The corporation will announce how it will make the remaining £550 million of savings next spring.

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