BBC Trust publishes NAO report on managing the BBC’s estate

Date: 21.01.2015     Last updated: 21.01.2015 at 12.42

The BBC has made good progress in rationalising and upgrading its estate, according to a report by the National Audit Office, which is published today. The BBC has improved its use of available space and the cost of running much of the estate compares well with external cost benchmarks. However, the overall cost is distorted by the high cost of running Broadcasting House, which accounts for a third (£89 million) of the total annual cost of running the BBC estate (£273 million) in 2013-14.

The BBC has replaced many ageing buildings with a smaller number of modern facilities that are better suited to its needs and more accessible to audiences. The BBC set an overall target cost for its estate but there is little evidence that it was sufficiently mindful of the target when taking decisions on individual estate projects.

The NAO concludes that value for money in the short to medium term will depend crucially on the BBC’s making better use of space across the estate. The BBC has set ambitious targets to do this but it will need better information on usage to succeed.

The findings from the report include the following.

  • The BBC has reduced the size of its estate, which has helped improve efficiency.
  • Some buildings that the BBC had earmarked for improvement, because they are outdated and inefficient, have still to be upgraded.
  • The BBC did not meet the target it set in 2008 to cap estate costs at 6% of licence fee income by 2013.
  • The BBC did not appear to use the 6% target to manage its overall estate costs and it has since adopted a revised target: to keep any increases in estate costs below increases in the retail price index.
  • The BBC has improved its use of available space.
  • The BBC has identified that it could use its estate more efficiently and has set ambitious targets.
  • Within the past 15 years, the BBC took out long leases, which it cannot surrender until the 2020s or 2030s, on properties that it no longer needs, although it could potentially sublet them.

Nick Prettejohn, BBC Trust Chair of the VFM committee, said:

"The BBC has reduced the size of the estate by almost a third while at the same time adding new TV channels and radio stations, and modernising its buildings. These are significant achievements and I am pleased that the NAO have recognised the good progress made. Today's report also gives a clear steer on where further improvements can be made and the Trust will continue to track progress to make sure the NAO’s recommendations are implemented in full."

Amyas Morse, head of the National Audit Office, said today:

"The BBC has made good progress in upgrading its estate but it will need to press ahead with its plans to make better use of space to achieve value for money. The BBC will also need to maintain enough flexibility in its leasehold and freehold portfolio to allow its estate to adapt quickly to the changing needs of an organization operating in a fast-changing sector."

Key facts

£273 million

Annual running cost of the BBC’s UK estate in 2013-14, net of income from commercial subsidiaries and third parties

7.3%

Percentage of licence fee income spent on running the BBC’s UK estate in 2013-14.

This includes transitional costs associated with updating the estate, but is net of income from commercial subsidiaries and third parties

154

Number of buildings in the BBC’s UK estate in September 2014

457,500m2

Net internal area of the BBC’s UK estate in square metres in September 2014

62%

Percentage of the BBC’s estate by floor area that was less than 15 years old in September 2014

5%

Percentage of the BBC’s estate by floor area that was less than 15 years old in 1998

50%

The BBC’s target for increasing the percentage of its staff based outside London, which it met one year early

32%

Percentage above external benchmark of the cost per square metre of the BBC’s estate in 2012-13

12m2

Area occupied per person in March 2013, excluding specialist space

14.8m2

Area occupied per person in April 2008, excluding specialist space

12%

BBC’s estimate of surplus estate capacity in September 2014

Notes for Editors

  1. The BBC has a large and diverse portfolio of properties in the UK. Property is a significant area of spend for the BBC. In 2013-14, the BBC spent £273 million on running its estate. This included transitional costs but excluded capital projects and was net of rental income from commercial subsidiaries and third party tenants. It was equivalent to 7.3% of its annual licence fee income.  The value of the estate on the BBC's balance sheet at 31 March 2014 was £839 million of which £712 million related to properties leased by the BBC.  
  2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.
  3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 820 employees. This report was prepared under Clause 79, as amended, of the Broadcasting Agreement between the Secretary of State for Culture, Media and Sport and the BBC dated July 2006. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.1 billion in 2013.