BBC faces era of cuts after reporting ‘substantial shortfall’

The BBC is facing a protracted period of cuts to staff and programme spending after it reported a “substantial shortfall” this year, which is set to deteriorate as government funding is withdrawn and commercial income dwindles.

Tim Davie, the BBC’s new director-general, warned of the “challenges ahead” for the public broadcaster, as it reported a £119m deficit in 2020 because of delays to cost cuts and the collection of licence fees from over-75s.

In the BBC’s report for the year to March 2020, the audit committee noted the corporation was entering a period of “elevated risk” from the financial hit of the coronavirus pandemic and withdrawal of government funding.

Licence fee revenues, which make up the bulk of BBC funding, fell 5 per cent to £3.5bn and will come under further pressure as the government stops the remaining £253m funding for over-75s licence fees.

Tim Davie, the BBC’s new director-general
Tim Davie, the BBC’s new director-general © BBC

The BBC’s Commercial Holdings group of subsidiaries also in effect suspended its dividend for the year to deal with “significant reductions” of production and advertising revenue since the lockdown in March.

Despite the stormy financial outlook and planned cuts last year, the BBC still ended the year with its headcount increased by more than 300 to 19,572 — a sign of the BBC’s cultural challenge in implementing savings.

“Not everything is moving in the right direction,” said David Clementi, the BBC chairman, who acknowledged the budget was under pressure from below-inflation settlements on the licence fee. “Now the severe impact of Covid-19 means that we have to save an extra £125m — on top of additional savings — in a tougher than ever marketplace.”

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Mr Davie accepted the BBC lacked the firepower of US streaming rivals such as Netflix and Disney, and argued it had to make the most of its resources by not “spreading itself too thin” and driving through cost savings.

“The simple fact is we have too much duplication, we can, we must and we will become more efficient,” he said. “Our public service headcount has to be smaller.” He pointedly remarked on the small rise in senior management — a trend he wanted to reverse.

Gary Lineker, the presenter of ‘Match of the Day’
Gary Lineker, the presenter of ‘Match of the Day’, has signed a new five-year contract at three-quarters of the cost © Ian Lawrence/GCI/Getty Images

In a sign of Mr Davie’s priorities, he announced on Tuesday that Gary Lineker, the presenter of Match of the Day, had signed a new five-year contract at three-quarters of the cost. Mr Lineker received £1.75m last year, the highest pay of any BBC presenter. He also pledged to temper his political views on social media, in line with Mr Davie’s drive to reinforce the BBC’s reputation for impartiality.

After taking over presenting the Radio 2 breakfast show, Zoe Ball received the biggest pay increase of all, jumping £1m to about £1.4m. This put her on a par with Mr Lineker as the BBC’s highest-paid presenter. 

BBC Studios, the commercial arm of the BBC run by Mr Davie before he became director-general, reported an increase in its dividend from £65m to £71m. But in order to “retain financial headroom”, the BBC’s holding group for subsidiaries only paid a dividend of £3m to the corporation, a sharp fall from the £73m paid last year.

The BBC did make some limited progress on its gender pay gap, an issue that the public broadcaster has struggled to address as it faced an uprising from senior female presenters such as Samira Ahmed, who successfully sued the corporation for underpayment.

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Lauren Laverne
Lauren Laverne received an almost £100,000 bump in pay © David Parry/Shutterstock

With pay rises given to almost 700 women last year, the gender pay gap fell from 6.7 per cent to 6.2 per cent — a figure the BBC said was the “lowest in the industry” and well below the national average of 17.3 per cent.

This included an almost £100,000 bump in pay for Lauren Laverne, the presenter of Desert Island Discs, to up to £400,000. The salary band for Emily Maitlis, the Newsnight presenter, rose from up to £220,000 to up to £265,000.

The BBC said there was now a 55:45 split between male and female “talent” paid more than £150,000, compared with a 75:25 split in 2016. While four years ago there were no women in the top 10 best-paid positions, the BBC said there were now four. This does not include salaries paid to actors, writers and directors hired by BBC Studios.


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