BBC warned to ready itself for lower licence fee income by public spending watchdog
The BBC has been warned to match its priorities and future strategy with an assumption that licence fee income may fall further still.
Public spending watchdog the National Audit Office (NAO) this morning released a report on the public broadcaster, saying the BBC “faces significant financial challenges” even before any change is made to licence fee decriminalisation.
Negotiations between the media giant and the government over its funding model began in November, while Westminster is also mulling decriminalisation of not paying the licence fee.
The Beeb has said the latter would hit its finances by £1bn by 2027.
More savings needed
Fee income has already sunk eight per cent in two years to £3.5bn after some government funding was withdrawn.
The NAO said the BBC had already made signinficant cutbacks and, at around £618m already slashed from budgets, was on-track to meet a five-year goal to make savings of £800m by 2021/22.
However, it may not be enough.
The Covid-19 pandemic, but also a long-term change in viewing methods and habits threaten to hit the BBC’s finances further.
For three of the past five years, the BBC’s costs have outstripped its income, with it making a loss of £119m in 2019-20, which it plugged with a dwindling pot of cash reserves, the NAO report said.
New BBC director general Tim Davie set out four priorities upon joining the broadcaster last year: a renewed commitment to impartiality; a focus on unique, high-impact content; extracting more from online; and increasing commercial income.
However, the public spending watchdog wants Davie to spell out exactly how those goals will be funded as well as provide another savings target.
Details, please
Gareth Davies, the head of the NAO, said: “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.
“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.”
Last week the incoming chair of the BBC Richard Sharp hinted at a possible overhaul of the licence fee funding model as he vowed to shake up the culture of the public service broadcaster.
Appearing in front of MPs, Sharp said he believed the licence fee was the “least worst” option and insisted it was fit for purpose.
But he said it “may be worth reassessing” the £157.50 annual charge at the corporation’s next review.