BBC Annual Report 2008-09 - Culture, Media and Sport Committee Contents

Conclusions and recommendations

1.  We are disappointed that the BBC Trust, having made a public statement rejecting some of the Committee's findings and undertaken to submit a full response to our conclusions and recommendations in respect of the 2007-08 Annual Report, did not provide that response for nearly a year. (Paragraph 7)

2.  We agree with the Government that the licence fee is not as of right the "BBC" licence fee. However, it is important that there is clarity about the pros and cons of licence fee being used exclusively for the BBC or shared with others, and the BBC Trust should be able to voice its views on the licence fee's allocation. (Paragraph 19)

3.  We are disappointed that the BBC Trust and the BBC Executive took so long to provide to us information on reach targets. We are further concerned that BBC services may be failing to fulfil the reach aims in some of their Service Licences, something that does not appear to have been addressed by either the Trust or the Executive in the Annual Report or in its oral or follow-up evidence to us. (Paragraph 24)

4.  We agree with Sir Michael Lyons that there is a direct obligation for the BBC to show that it demonstrates value to all licence fee payers and that measuring audience reach is a useful component of that. However, the proportion of those who do not use any BBC television or radio service for at least 15 minutes per week, and the figures for some services which are used only by a minority of their own target audiences, indicates to us that this value is not being delivered to enough people. (Paragraph 33)

5.  The BBC should be more transparent in setting out its reach targets, including the figures for minimum level of reach considered necessary to serve its target audiences. It should also consider publishing additional measures of reach likely to provide a better indicator of the proportion of the public watching entire BBC television programmes, and the time licence fee payers spend on individual services each week, rather than just 15-minute reach figures. (Paragraph 34)

6.  The BBC's figures seem to us to have been presented in a somewhat cavalier manner. Mark Thompson's description to us of "the story of share" as "one of a fairly high level of stability" does not seem an accurate assessment for television, when considered on a five-year rather than two-year basis. (Paragraph 40)

7.  We fully support the BBC's objective to increase the distinctiveness and quality of its output. However we are not convinced that the claim of statistically significant positive shifts in perceptions of the distinctiveness and quality of BBC output is supported by the information contained in the BBC's Annual Report. We agree with the Trust's assessment that there has been a slight improvement, although we note that changes in the measurement system may be responsible for some of this shift. Appropriate and reliable measurement is essential and we look forward to seeing continual improvement of this year-on-year. (Paragraph 45)

8.  We commend the BBC on its increased targets for the proportion of network output to be produced in Scotland, Wales and Northern Ireland, and note that the proportion of spend in television in the nations and regions has generally been rising. However, the fact remains that the BBC is spending less now than before. After rising by £100m to £984m in 2007/08, licence fee spend in the nations and regions decreased by £40m to £948m in 2008/09. (Paragraph 49)

9.  We were not convinced by the BBC's arguments on acquired programming. While there may be cases where the justification for acquiring high-quality programmes or series from overseas is strong, justification on bona fide public service content grounds is likely to prove relatively rare. Over the last three years the BBC has spent £279m on acquired programmes. Taking into account the Mark Thompson's estimate of £90m for the current year this will have risen to a total expenditure of nearly £370m for the period 2006-07 to 2009-10. We therefore welcome the commitment by the BBC, contained in its Strategy Review, that it will reduce spending on programming from abroad by 20%, to £80m by 2013, and thereafter cap spend to 2.5p in every licence fee pound. (Paragraph 54)

10.  We consider that some of the claims regarding BBC Three made by the BBC Trust and Executive are not fully supported by the evidence. The BBC has been more ready to highlight favourable over unfavourable information and its implications. In particular, we note that the Trust's claim of "BBC Three's effectiveness in reaching young people" is not supported by its audience reach. We are also surprised that the test of the value of BBC 6 Music and the Asian Network in the latest strategy review appears not to have been applied to BBC Three. (Paragraph 63)

11.  Instead of bringing a profit to the licence fee payer, Project Kangaroo has resulted in considerable cost. We note the potential return which Project Kangaroo, if it had been approved by the Competition Commission, might have offered. We also note the BBC Trust's suggestion to us in follow-up written evidence that the cost of the project will be mitigated to some extent by the subsequent sale of its technology assets, and that the additional write-off does not mean that no value can be secured by BBC Worldwide from these investments. (Paragraph 69)

12.  Nevertheless the level of expenditure on a project for which there would clearly be regulatory hurdles seems to us excessive. We are alarmed by the Trust's statement that it "did not set any specific limits on development costs" for Project Kangaroo, and that the Trust did not intervene to halt such excessive spend and development despite, by its own account, being involved in and updated on the project at regular intervals. (Paragraph 70)

13.  We welcome the BBC's move towards greater transparency regarding its staff and talent costs, including the disclosure of senior BBC managers' headcount and payments to talent in bands. However, the BBC's commitment to this level of transparency is long overdue. This Committee has been one of a number of voices pushing for some time for greater openness. We believe that the information released by the BBC should be expanded, at minimum, to include a breakdown of headcount by salary band not just for senior managers but all BBC employees, and the number of individuals in each payment band for talent. We further recommend that additional payment bands for talent should be introduced, disclosing the number of individuals and total payments for those earning £250,000 to £500,000; £500,000 to £750,000; £750,000 to £1m; £1m to £5m; and £5m plus. We do not expect to see any entries in the £5m plus category. (Paragraph 77)

14.  The reward packages of the Director General and senior management of the BBC are seen to be out of step with the current economic climate and the need for public sector pay restraint. The BBC must look to cutting its costs, and leadership on this should come from the top of the organisation. We therefore welcome the BBC's commitment to making a 25% cut in the BBC senior management pay bill by 31 July 2013. However we recommend that the BBC's remuneration policy should include benchmarks not only with the private sector but also with senior management pay scales in the public sector. (Paragraph 82)

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