BBC dispenses with property to cut costs

London

The BBC has sold £87 million (Dh489 million) of property at its former television headquarters in an effort to demonstrate its financial leanness in advance of potentially bruising funding negotiations with the government.

John Whittingdale, UK culture secretary, raised the prospect on Thursday of an increased squeeze on the public broadcaster, telling MPs its licence fee was “regressive”. Efficiency is likely to be at the centre of negotiations over the BBC’s future funding, expected to take place in the coming months.

The National Audit Office has found the corporation is largely on track to reduce annual running costs by £700 million by 2017. BBC executives have argued further cuts will affect the quality and range of programmes.

However, Sajid Javid, business secretary, has said the corporation will have to “take a long, hard look at itself” as part of the renewal of its royal charter. Senior Conservatives are also unhappy with the way the BBC — which some see as left-leaning — covered the general elections, although other big parties complained, too.

The BBC’s property sales are part of a commitment to reduce operating costs. Under a deal with the property developers Stanhope and Mitsui Fudosan, the broadcaster will sell four acres of freehold land at London’s White City and the leases to six buildings on the land, three of which it will continue to occupy.

The corporation’s running costs will fall by £33 million as a result, it said. That is roughly half the budget of Radio 2, its most popular radio station.

Anne Bulford, the corporation’s managing director of finance, said the BBC had now found about £470 million of the targeted £700 million in annual savings. Staff costs have fallen 17 per cent in the past two years, with senior managers and several big stars leaving. However, overall headcount has fallen by only 1 per cent.

The broadcaster is also planning to make BBC Three, the youth-focused channel, online-only to help fund increased investment in drama.

Whittingdale told MPs that “elements of the licence fee are regressive because everyone has to pay it, so it falls as a greater percentage of the income on the poorest people”. But he said they would have to “await our conclusions” on what form it should take after March 2017.

Households that own a colour TV or watch TV live online currently have to pay £145.50 a year. There are exemptions for over-75s, whose fees are paid by the government, and for some other groups.

Alice Enders, a media expert at Enders Analysis, said that a progressive licence fee — graded by household income — would be “a nightmare to enforce”. An alternative option would be “to widen the categories of those that are exempt”, she said.

— Financial Times