The BBC has divulged details of how it plans to save £150 million (€214m) to address a shortfall in funding. It blames the shortfall largely on more people use BBC iPlayer catch-up TV without a licence. The Corporation says it has welcomed the Government’s firm commitment to close this loophole, and will continue to urge Ministers to legislate as swiftly as possible.

“In July we committed to doing everything possible to protect programmes and services by making further savings from back office functions, cutting management and management layers and reducing historic levels of BBC bureaucracy. This is part of delivering a simpler, leaner BBC,” it says.

“Despite this, we always said that cuts to programmes or services would be unavoidable. Even after today’s measures, the BBC faces a long-term challenge to identify a further £550m of savings by 2021/22 and we will set out broad plans for this in the spring. We will inevitably have to either close or reduce some services,” it admits.

The £150 million of savings detailed today will be delivered in the following way:

• £50 million will be saved by creating a simpler, leaner BBC, with fewer divisions and senior managers, fewer layers between the top and bottom of the organisation and cutting 1,000 posts. Strong progress is already being made – the first phase of work is now complete and subject to staff consultation and further detailed work:
  • c£25 million will come from reducing back office and professional support services
  • c£10 million from reducing management layers in content areas. Discussions are now beginning with those affected
  • The remainder from the merger of technology and digital divisions, and changes to expenses, payroll management and other areas
  • In total, the BBC says it is on course to deliver the 1,000 reduction in jobs by 2017. Since July, it has already closed or is consulting on over 300 of these posts

• A “significant chunk” of the savings to be announced this week, amounting to £35m, is expected to come out of sports rights, according to sources.  The Red Button services offer news and sport text services and are particularly popular during big live events such as Wimbledon.

• Beyond Sport, a further £12 million will come from the BBC’s TV budget. Drama will be protected, including the prioritisation we have already announced, but a range of other genres will face cuts. This will mean some reductions to factual, comedy and entertainment, although we remain committed to making popular Saturday night shows and will use the savings from The Voice UK to develop new, home-grown formats

• £12 million will be cut from BBC Online. This will involve rationalising new features, innovation and development across the BBC’s digital services, and focusing on those with greatest impact

• £5 million will come from News. This will include efficiency savings from a review of working practices, terms and conditions, and commercial income or cost reductions in BBC Monitoring (subject to approval from the BBC Trust)

• £20 million of savings will come from long-term contracts and other costs, due to the current lower levels of inflation

• The final c£16 million will come from cross-cutting areas, including
  • Savings in distribution costs
  • Exploring a phased exit from the broadcast Red Button service and focusing our interactive TV offer on connected televisions and iPlayer
  • Exploring further savings from BBC Online

Director-General Tony Hall said: “The BBC has and is doing everything possible to make sure the impact on the public is minimised. Wherever possible we’re targeting savings by creating a simpler, leaner BBC.

“But cuts to budgets for programmes and services are unavoidable. No Director-General wants to announce reduced spending on services that the public love. This is very tough, but the BBC’s financial position means there is no alternative,” he stated.

The £150 million set out is part of the £700 million overall savings the BBC must find resulting from the flat licence fee agreed in the summer and the need to fund the transformation the BBC must undertake for the future.

The BBC will announce how the remaining £550 million savings to be met by 2021/22 will be made in the spring. These are likely to include broad service and major structural changes to how the BBC works and fulfils its mission to inform, educate, and entertain.

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