Broadcaster told to boost income at a time of budget cuts, and to reveal how those cuts will affect services and quality
The BBC lacks ambition in its plans to boost commercial revenue, at a time when it is being forced to make substantial budget cuts, a committee of MPs say today.
A report by the public accounts committee, which scrutinises public expenditure, criticises the corporation for saying that it would only bring in an extra £40m a year from BBC Worldwide, its commercial arm. The BBC plans to raise commercial income from £280m to £320m a year by 2016-17.
"If the target remains unchanged, the [BBC] Trust should provide us with a clear explanation of why £40m is the tipping point, beyond which further rises would distort the market or be over ambitious," the report states. The MPs also call on BBC executives to be open about how planned cuts will impact on services and how it will affect quality.
"Those who watch and listen to the BBC's services will want to know that the savings the BBC has made have not affected the quality of its output. The BBC cannot give them that assurance," said Richard Bacon, a Conservative member of the committee. "As it moves from making efficiency savings to cutting services, the BBC needs to be open about how these cuts will impact on services and what it will do if quality suffers too much.
"The BBC must maximise its commercial income. But the BBC's plans for this are unambitious when placed in the context of the financial pressures on the broadcaster."
He added: "We expect a clear explanation of why a £40m-a-year increase in commercial income is the limit of what can be achieved."
BBC Worldwide reported record underlying profit up 10% year on year to £160m in the 12 months to the end of March 2011, on a 7.8% increase in revenue to £1.16bn – also a record figure. Bestselling shows overseas included Doctor Who, Sherlock and Top Gear.
The BBC has faced criticism in the past from rival media companies that it is abusing its position as a publicly funded broadcaster if it becomes too commercially aggressive. BBC Worldwide's acquisition of the travel guides firm Lonely Planet in 2007 proved particularly controversial.
Bacon also said that it had taken the pressure of the October 2010 BBC funding deal with the government to force the corporation into setting a more testing annual savings target of 3%. The controversial and hastily negotiated deal froze the licence fee at its current level until 2016-17 and also requires the BBC to take on extra funding responsibilities, including the World Service.
He said the BBC had earlier claimed that it could make no further efficiency savings beyond 2008. The committee said the BBC had managed the efficiency programme well and was currently forecasting that it would deliver £560m of annual savings by the end of 2012-13, comfortably exceeding its target.
In October 2011 the BBC published Delivering Quality First, which sets out its proposals to make £700m of annual savings by 2016-17 to cope with the 2010 licence fee settlement. These proposals involve cutting an estimated 2,000 jobs, almost 10% of the BBC's UK workforce.
A BBC spokesperson said that the report would be welcomed: "The NAO report acknowledges that the BBC is achieving a good balance between delivering value for money through the financial savings targets that the BBC Trust has set whilst at the same time ensuring that the quality of the output remains high.
"All indications are that we are delivering on both fronts but we will continue to monitor these targets closely."