The Implications of Cuts to the BBC World Service - Foreign Affairs Committee Contents

Written evidence from the BBC World Service



The BBC welcomes the Foreign Affairs Committee's Inquiry into The Implications of the World Service Cuts.

In its previous submission to the Committee in November 2010, the BBC set out its initial response to the 16% real terms cut in World Service revenue funding announced in Spending Review 2010. While we were unable at that early stage to provide firm details of what changes would be made in response to the settlement, we informed the Committee that the like-for-like saving required in existing and ongoing services would be significantly greater once unavoidable cost increases are taken into account. On 26 January, we announced plans to deliver most of the savings required within the first two years of the Spending Review period.

The purpose of this evidence is to explain the process through which the World Service discussed with the Foreign & Commonwealth Office the likely impact of different funding scenarios, and the options the BBC thought through in considering different possible outcomes. A number of different potential financial frameworks were put to the World Service during the Spending Review preparations in what was a fluid and changing process. As requested by the Committee, this submission also addresses the suggestion that has been voiced both in Parliament and in the media that additional funding might be found for the World Service from the increasing budget for Official Development Assistance.

The Committee also provided the BBC with a series of questions arising from the World Service's announcement. These are answered point by point, following this summary.

The Spending Review process

Over the course of the Spending Review process, the World Service was asked, like other publicly-funded bodies, to respond to hypothetical levels of funding by indicating how it would cut its cloth accordingly. Throughout, we recognised the severe pressures public spending would face over the Spending Review period. We acknowledged that the World Service would need to prioritise. But we also argued that the World Service - the most trusted and influential news provider in the world—delivers a unique value to Britain. The imperative to deliver savings was clear but it needed to be balanced by continued innovation to ensure that the World Service remains competitive, maintains a strong and global impact, and continues to lead the world - a view shared by the Foreign Secretary when he said that "it is absolutely right for the World Service to move more of its services to online and mobile services; that is the way the world is going."

HM Treasury's initial guidance for the Spending Review required us to consider the impact of a 25% direct cut in Grant-in-Aid funding. We explained that because of cuts made last year in the World Service baseline following the June 2010 "Emergency Budget"and increases in pensions costs, a 25% headline cut would have a much greater impact in practice. If this scenario was enacted, eighteen language services would need to be closed to deliver savings, even without any investment in new services on growing platforms.

We argued strongly instead for an alternative proposal, that savings should be balanced by regenerative investment in new, high-impact services such as Urdu television for Pakistan, television partnerships with Indian and African broadcasters, and increased radio broadcasting for Afghanistan. This new investment would cost up to £25m per annum. Our analysis suggested that many of these activities would help to meet development objectives and could be counted as Official Development Assistance (ODA). Importantly, this alternative proposal assumed that, as in previous Spending Reviews, government money would be available to assist with restructuring and redundancy costs.

Subsequently, we discussed a number of scenarios with the Government, some that may involve a larger number of service closures, some fewer. In those discussions, our assessments involved trade-offs between three factors which lie at the heart of the decisions we have taken: the number of language services closed entirely; the extent of cuts to the quality and distribution of continuing services; and the level of investment in new services to maintain the World Service's long-term competitiveness. We had regular discussions with FCO officials about the appropriate balance. In our view, the most important variable was not singularly the number of language services; just as important was the quality, impact and competitiveness of the services that continued. It is not a sensible strategy to retain a greater number of language services if in doing so they are stretched so thinly that they are unable to deliver a service of the quality and relevance audiences expect of the BBC.

Following the publication of the Spending Review on 20 October 2010, we had further detailed discussions both with the FCO and the BBC Trust. It was recognised that the new funding framework would mean the World Service remaining Grant-in-Aid funded until 2014 and then being licence fee funded. It was agreed in these discussions that up to £20 million of licence fee funds should be made available to the World Service over the next three years to help meet redundancy and restructuring costs, as allowed for in the licence fee settlement. The FCO also offered an additional £3 million Grant-in-Aid in the current year for this restructuring purpose, although this is not yet confirmed. Following these discussions, the BBC Trust proposed to the Foreign Secretary five language service closures, which he approved.

Despite the unavoidable impact of the reduced funding, it is our ambition that the BBC remains the world's leading international broadcaster. China's expenditure on international broadcasting is now over £2,000 million per annum, eight times the UK's declining spend, and the United States spends twice as much as the UK (and this budget is proposed to increase by 2.5% over the next financial year). Yet both currently achieve a smaller audience and lower reputational scores.

The BBC has explained that anticipated audience loss from the announced changes to the World Service will be around 30 million weekly radio listeners, from a current audience of 180 million, within the first year. It is our intention that further reductions in subsequent years are offset by new activities to be launched over the next three years, intended to maintain the World Service's relevance and impact even with constrained resources.

Plans for future investment

Innovation has been key to the World Service's sustained success over almost 80 years. Refreshed services and new editorial offers will be essential to ensure continued success and mitigate the closure of services and decline in shortwave audiences.

The FCO has indicated that the settlement provided for £10m per annum for investment in new services. However, it is important to be clear that this £10 million is not "new" or additional money; it is part of the reduced budget announced in the Spending Review, and were it factored out—together with a further £13 million per annum allocated by the FCO to help address the BBC pension deficit—the real cut to World Service current activities would be over half as big again as the 16% headline cut.

Initially, therefore, investments will be limited by the funds available. At this stage we can only guarantee to spend £2 million annually on new services; if we were to spend more than this immediately we would need to make even more significant further cuts elsewhere. However, we do aspire to increase investment over the Spending Review period, subject to delivering savings and increasing commercial revenue.

Specific possible activities include partnerships with broadcasters in priority markets - India, Pakistan and sub-Saharan Africa - to allow World Service to launch new cost-effective television programming, and enhanced online services in vernacular languages, with more and better video news content. However, new channel launches funded from Grant-in-Aid will not be possible in the Spending Review period.

BBC World Service and Official Development Assistance

The Committee asked us to whether there have been indications that DfID will be providing funding to maintain World Service programming and coverage.

At the time of writing, the situation is that the FCO has asked World Service to make a £25m minimum annual commitment from its Grant-in-Aid allocation to support Official Development Assistance. No dedicated funding has been provided for this by the FCO or DfID.

Our analysis, carried out for the Spending Review, shows that by virtue of providing free, accurate and impartial news and information to many of the world's poorest countries, the World Service could play an important role in international development. Free and independent media are essential to effective governance, economic development and welfare, promoting accountability and helping bolster fragile states. This is recognised by DfID, which supports the development of media via partners including the BBC World Service Trust.

If the Government wished to pursue the possibility of limited additional funding for the World Service, for dedicated services that met development purposes such as those described in our proposals to the Spending Review, these could be targeted to fully qualify towards the Government's ODA commitment. This would appear to be similar to the approach taken in the current financial year in which £40 million of DfID's budget was transferred to the FCO to support the British Council.[1]

If the Government decided that it was appropriate to provide ODA funding to match its ODA commitment, the World Service would be able both to avoid some planned cuts to services, and invest in new services, which meet development purposes.

For instance, retaining BBC Hindi on shortwave, while investing in content partnerships in television, online or mobile services, would maintain the BBC's presence in rural India. Creating BBC Urdu television content would help counter the increasingly politicised news disseminated by local providers and contribute to the stabilisation of Pakistan and Afghanistan. Retaining the current breadth, quality and shortwave distribution of World Service English, would enable the World Service to continue to serve those listeners in Africa and South Asia with no alternative source of impartial news. And retaining current levels of shortwave and medium wave transmission of BBC Arabic radio would enable the World Service to continue to serve audiences in countries where instability and biased local media are increasing concerns. The recent unrest in Tunisia and Egypt has demonstrated the importance of ensuring that these audiences have access to impartial, high quality news, on platforms that cannot easily be censored or switched off.


The plans announced by the World Service on 26 January, in order to deliver the required savings, reflect the BBC's strategic judgement about the best ways to prioritise within the limited resources available, in the context of the agreement with the FCO about the language service closures. The World Service continues to have a vital role to play, and could - should the Government wish to explore it - make a greater contribution to the UK's international development strategy.

16 February 2011



All figures below for the years 2010-11 to 2013-14 refer to Grant-in-Aid funding from Government, to be drawn down from the FCO. Figures for 2014-15 are those intended by Government to apply in the last year of the Spending Review period. However, the World Service will transfer to Licence Fee funding in that year and the BBC Trust will set the budget.


World Service revenue funding over the Spending Review 2010 period is detailed in the following table, which was presented to the World Service by the FCO.

2010-112010-12 2012-132013-14 2014-15
BBC World Service Baseline (and inflated equivalent in brackets) 229(234)(239) (245)(252)
Adjusted Grant-in-Aid Baseline 206203199 189
Plus funds for new services 101010 10
Plus contributions to BBC Pensions 131313 13
Total Grant in Aid Resource Allocation for BBC World Service 231226 222212

The table shows a reduction of £63 million from the inflation-adjusted baseline of £252 million down to £189 million—a 25% real terms cut. However, this include nominal allocations of funds to new services (£10 million) and pensions costs (£13 million). We were advised by FCO officials that these funds were not hypothecated to those purposes and could be used flexibly to maintain existing services if needed. Once these two sums are added to the baseline funding, the real terms cut falls to 16%. However, if those sums were to be spent as the table suggests, current services would face the full effect of the 25% baseline reduction. This would require significantly greater cuts than have been announced to date.

The effective cut increases further when the effects of the 22 June 2010 "Emergency Budget" are taken into consideration. The World Service's share of the budgetary cuts announced then was £7.6 million. Of this, £1.6 million per annum was applied in 2010-11. Although the remaining £6 million per annum will not be applied until 2011-12, the Government subtracted the full £7.6 million from the World Service's formal baseline for the purposes of the Spending Review.

Because World Service's actual allocation for 2010-11 is £6 million higher than the baseline used for the Spending Review, this adds £6 million to the savings the World Service has been required to make, increasing the real terms cut to the baseline to 27%.

These considerations are summarised in the following table:

2010-11 2011-122012-13 2013-142014-15
2010-11 baseline in March 2010 236.7
June 2010 Baseline cutApplied from 2010-11 -1.6
To be applied from 2011-12 -6.0
Total baseline cut -7.6
2010-11 revenue allocation (£m) 235.1
2010-11 baseline used for SR2010 229.1
2010-11 baseline + inflation (£m) 229.1234239 245252
Adjusted baseline 206203199 189
Nominal allocation for 101010 10
2010Nominal allocation for 1313 1313
Total revenue grant 231226222 212
Real terms reduction in total revenue grant (£m) 31323 40
Real terms reduction in total revenue grant (%) 1%5%9% 16%
Real terms reduction in baseline from official SR2010 baseline (£229.1m) 25%
Real terms reduction in baseline from actual 2010-11 revenue grant (£255.1m) 27%


2010-112011-12 2012-132013-14 2014-15
Capital funding (£m)31 221616 15

1   House of Commons International Development Committee, Department for International Development Annual Report & Resource Accounts 2009-10. Back

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Prepared 13 April 2011