BBC director general Tony Hall announced changes to the structure and organisation of the BBC that will make it simpler, leaner and more effective for the future.
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Over recent years the BBC achieved a savings record that will deliver more than £1.5bn of savings a year by 2017. Much of this has been done through cutting administration and property costs, pay and headcount restraint, plus tough decisions like more daytime repeats and shared sports rights.
Overhead costs are approximately 8 percent of total costs and will fall to 7 percent, below both the public sector average of 11.2 percent and the regulated industry average of 8.8 percent.
Despite the progress already made, and the realities of the licence fee being frozen for seven years, a new financial challenge means additional savings must now be found.
The licence fee income in 2016/2017 is now forecast to be £150m less than it was expected to be in 2011. This is because as more people use iPlayer, mobiles and online catch-up, the number of households owning televisions is falling. It also provides further evidence of the need for the licence fee to be modernised to cover digital services.
The new measures being proposed will help bridge that gap by delivering £50m in savings from merging divisions, cutting down management layers, reducing managers and improving processes. More than 1,000 posts will be lost as a result.
BBC will reduce the number of divisions first by joining up technology teams across Digital, Engineering and Worldwide. Further changes are also possible.
The company reduce the number of layers from the top to the bottom of the organisation. In some places there are currently 10 layers of people and management and this will be cut to a maximum of seven in the future.
There will be a reduce in management roles in all areas of the BBC. A simpler organisation will inevitably require fewer managers, especially at senior levels. To simplify and standardise procedures across the BBC, particularly looking at how professional and support areas such as marketing and communications, finance, HR, IT support and legal are structured and can be simplified.
Throughout the summer, the BBC will be identifying where the specific savings opportunities are with final decisions expected to be taken in early autumn. ■