Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:
"The National Audit Office has a statutory right to examine the details of expenditure in any government department. It has no such right of audit access to the BBC, despite the fact that the Corporation is funded with over £3 billion of public money each year.
"One consequence of this highly unsatisfactory arrangement is that the BBC would not provide the head of the NAO, the Comptroller and Auditor General, with a breakdown of the presenter and staff elements of radio programme costs, unless the C&AG agreed to constrain his discretion to report to Parliament on what he saw. Quite rightly, the C&AG, who handles information of the highest sensitivity in his wider work, refused to accept such a constraint.
"Very few will find acceptable any such constraints on the National Audit Office’s ability to investigate how a publicly funded national institution spends our money. It is disgraceful that the NAO’s lack of statutory audit access to the BBC puts the Corporation in the position to dictate what the spending watchdog can and cannot see.
"What the NAO has been able to find out is that the costs of similar programmes on different BBC networks vary widely. And, for most breakfast and 'drive time' shows, the BBC’s costs per hour are much higher than those at commercial stations. This is primarily down to the size of contracts with top presenters which, the BBC has confirmed, absorb over three-quarters of staff costs on these shows. All of this places a big question mark over whether the BBC is achieving value for money for the licence payer."
Mr Leigh was speaking as the Committee published its 25th report of this Session which, on the basis of evidence from the BBC Trust and the BBC, examined the BBC’s management of radio production efficiency.
The BBC, in 2007–08, spent £462 million on ten radio stations that broadcast to the whole of the United Kingdom (Network Stations) and two stations each for Northern Ireland, Scotland and Wales (Nations Stations). The BBC has set these 16 stations a combined target of efficiency savings of £69 million over the five year period to March 2013, representing an annual saving of 3 per cent.
The BBC proposed unacceptable constraints on the Comptroller and Auditor General’s access to information and his discretion to report to his findings to Parliament. Had he agreed, the discretion as to the information to be provided to the National Audit Office, how it could be processed, and what could be reported to Parliament would have been retained by the BBC. The situation arose because the Comptroller and Auditor General does not have statutory unrestricted rights of access to the BBC. In contrast, the Comptroller and Auditor General has statutory and unconditional rights of access to the information he requires to complete his value for money examinations of other publicly funded bodies.
The BBC has wide ranges of costs for similar programmes within and between its radio stations. For example, at £1,486 the average cost for an hour of comparable music programmes on Radio 2 is more than 50 per cent higher than on Radio 1. For most breakfast and ‘drivetime’ slots, the BBC’s costs are significantly higher than commercial stations, largely because of payments to presenters. The Wake up to Wogan show is, for example, more than twice the cost per hour of the most expensive commercial competitor. The BBC has not, however, used cost comparisons across its own programmes, or against commercial radio, to identify scope for efficiencies. The BBC uses its principal value for money indicator - cost per listener hour - to justify the cost of presenters on the basis of audience size, but the indicator does not provide assurance that programme costs are the minimum necessary to reach the required quality and intended audience.
For most radio programmes, presenters’ salaries represent the majority of programming costs, but the BBC is paying more than the market price for its top radio presenters. The BBC has been increasing its hourly rates for top presenters when commercial radio has been reducing its hourly rates for presenters. The BBC has prevented full public scrutiny of the value for money of expenditure on presenters by agreeing confidentiality clauses with some presenters.