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• Full Report - The efficiency of radio production at the BBC: review by the Comptroller & Auditor General presented to the BBC Trust's Finance and Strategy Committee

The BBC Trust last week (5 February 2009) published an independent report it had commissioned from the National Audit Office (NAO) on the efficiency of radio production at the BBC. 

Jeremy Peat, BBC Trustee, said:

“We welcome the NAO’s findings and recommendations. In 2007 the Trust set a demanding 3% net cash-releasing annual efficiency target for the BBC, and BBC network and nations radio has robust plans in place to meet this target over the coming years. However, we agree with the NAO that the BBC should adopt a more systematic approach to using comparative cost data and identifying potential savings. Any work on potential savings should take account of the possible impact on output. We have asked the BBC Executive to report back to us in 12 months’ time with progress on key findings from this report.”  
 

Tim Burr, Comptroller and Auditor General, said:

“The BBC has already achieved savings in radio production across its Network and Nations radio services and has plans in place to make further savings. But the BBC needs a better understanding of why the cost of producing similar programmes on its different radio stations varies so widely.” 

Efficiency of radio production at the BBC

The NAO review looked at what the BBC is doing to maximise the efficiency of radio production across its Network and Nations radio stations, focusing on the use of cost comparisons for similar programme types within the BBC stations and with commercial competitors, the BBC’s efficiency plans and the BBC’s assessment of the impact of efficiency initiatives on performance.

The BBC spent over £460 million on Network and Nations radio services in 2007-08, producing a diverse mix of programmes. In the three year period ending March 2008, BBC Network and Nations radio services delivered efficiency savings of £11.7m against a target of £11.6m and has targets in place to deliver further savings of £21.1m in the five years to April 2013. The NAO found that there was limited documentary evidence that the BBC has systematically assessed the potential impact of savings on its radio output and that it has done limited work to examine significant cost variations. As a result, the NAO concluded that the BBC is not making full use of opportunities to increase the value for money it is achieving in radio production.  It is likely that a systematic analysis of the costs and performance of the most expensive programmes would help the BBC to identify areas where it could make further efficiency savings. 

The Trust has asked the BBC Executive to report back in 12 months on the progress they have made in addressing the NAO’s conclusions.

The report has identified a series of recommendations to improve the efficiency of radio production at the BBC.

1. The NAO recommends that the BBC should make full use of its data on the costs of radio production to identify the scope for potential further efficiency savings across its Network and Nations stations

   The Trust believes that decisions over where to spend money - or cut costs- should be taken alongside consideration of the potential impact on services. The least expensive option is not necessarily the best outcome for audiences. Nevertheless the Trust believes that the BBC Executive could do more to demonstrate how they reach their assessments on what constitutes an appropriate cost for programmes. There is also more scope for careful use of comparative data. The Trust also notes as reasonable the BBC Executives’ comments on the need to balance the cost of detailed benchmarking against the benefits likely to accrue. 
   

2. The NAO recommends that the BBC should evaluate the effect of proposed savings initiatives using its performance measurement framework to demonstrate it is delivering efficiency gains without a decrease in the quality of the listener experience.
   

   The Trust supports this finding, and has been instrumental in ensuring that achievement of the savings targets it has set is measured not only in terms of cost but also in the quality, reach and impact of performance.
   

3. The NAO recommends that the BBC should share ideas and good practice in making efficiency savings more systematically.
   

   The Trust notes and welcomes the BBC Executive’s commitment to share good practice through the BBC’s Radio Network.
   

4. The NAO recommends that the BBC should explore with commercial radio stations how they might establish benchmarking arrangements to identify where and how savings can be made.
   

   The Trust recognises that there are difficulties with benchmarking with commercial companies. This is due to a lack of competition in some areas (e.g. drama), a limit on what information can be shared under competition law and a reluctance from other organisations to share commercially sensitive data. However, the Trust will engage with Radio Centre and ask them to participate in an ongoing scheme moderated by the Trust. The Trust also notes that the BBC Executive has commissioned a talent valuation review and the Trust has required an update on the actions arising from this review.

Notes for Editors

1. It is the responsibility of the BBC Trust, under the Royal Charter, to ensure that value for money is achieved by the BBC through its spending of the licence fee. In order to fulfill this responsibility, the Trust commissions and publishes a series of independent value for money reviews each year in consultation with the Comptroller and Auditor General – the head of the NAO. The reviews are undertaken by the NAO or other external agencies.
   

2. This review covers the ten BBC Network radio stations (BBC Radios 1-5, BBC 1Xtra, BBC Asian Network, BBC Radio 5 Live Sports Extra, 6 Music and BBC 7) and the six Nations stations (two each for Scotland, Northern Ireland and Wales). The NAO report does not evaluate matters relating to content and target audiences, which are matters of editorial judgment for the BBC.
   

3. The BBC’s efficiency target for the five years to April 2013 is to reduce spending on Network and Nations radio stations by £21.1 million, releasing £68.7 million in cumulative cash efficiency savings (£57.4 million from the Network stations and £11.3 million from the Nations stations).
   

4. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
   

5. The Comptroller and Auditor General, Tim Burr, is the head of the National Audit Office, which employs some 850 staff.  He and the NAO are totally independent of Government.  He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.