BBC Annual Reportand Accounts 2013/14

The BBC’s mission is toinform, educate and entertain

BBC Annual Reportand Accounts 2013/14

Presented to Parliament by the Secretary of State forCulture, Media and Sport by command of Her Majesty
21 July 2014
Extended versions of the financial statements provided in Part Twoof this report were also laid before Parliament on 21 July 2014
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Contents

The BBC exists to serve the public,
and its mission is to inform, educate
and entertain

The BBC Trust’s
review and assessment
The Trust exists to get the best out of the BBC
for licence fee payers. It is the governing bodyof the BBC and sets the strategic direction,measures performance and holds the Executive
to account

The BBC Executive’s review
and assessment

Our role and purpose
Serving everybody
Better value for money

130 Additional information
130 Glossary
131 Index
IBC Contacts

08

Chairman’s foreword

09

Setting strategy andassessing performance

10
12
20
26
29

Setting strategy
Quality and distinctivenessValue for money
Serving all audiences
Openness and transparency

31

Understanding audiences
Inside the trust

35
36
38
42

46

BBC Trustees
Governance
Trust finances

Director-General’s introduction

Part Two

Part Two

The BBC at a glancePart One

Part One

02
02
04
05

Overview

Overview

Strategic report
49 Delivering our strategy
50
54

Our achievements
Our vision for the future

59
60
66
71

Performance

73
74
78
79
80
81

How we run the BBC

Performance by content area
Performance by service
Performance by genre
People (including headcount, severance pay and talent spend)
Diversity
Training and apprenticeships
Partnerships
Outreach and corporate responsibility including
charity appeals

Governance and finance report
85 Governance
86 Executive Board
88 Risks and opportunities
91 Governance report and Nominations Committee
93 Report of the Senior Independent Director
95 Remuneration report
108 Audit Committee report
112 Fair Trading report

The Executive is responsible for theoperational delivery of BBC services and the
direction of BBC editorial and creative output
in line with the framework set by the Trust
BBC Annual Report and Accounts 2013/14

115 Managing our finances
116 Review of the Managing Director, BBC Finance &Operations
118 How we use the licence fee
119 Commercial trading
127 Looking forward
128 Summary financial statement
129 Auditor’s report01The BBC at a glance

Our role and purpose
The BBC serves the public interest throughthe promotion of its six public purposes

Sustaining citizenshipand civil society
The BBC provides highquality news, current affairs
and factual programming
to engage its audiences inimportant current eventsand ideas.

Promoting educationand learning
Education and learning lie
at the heart of the BBC’s
mission and have a part toplay in the delivery of all its
public purposes.

Stimulating creativity
and cultural excellence
The BBC encourages
interest, engagement andparticipation in cultural,creative and sporting
activities across the UK.

nnThe BBC exists to serve the public, and its

mission is to inform, educate and entertain.
Within the overall public purposes, the Trustsets the strategic framework for the BBC, andthe Executive, led by the Director-General,delivers the BBC’s services and creative output.

02

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Representing the UK,
its nations, regions
and communities
The BBC reflects theUK’s many communities,
promoting awarenessof different cultures andviewpoints, but also brings
audiences together for
shared experiences.

Bringing the UK to
the world and theworld to the UK
The BBC supports a global
understanding ofinternational issues andbroadens UK audiences’
experience of different
cultures.

Delivering to the public
the benefit of emerging
communications,
technologies and services
In promoting its otherpurposes, the BBC helps
audiences to get the bestout of emerging media
technologies.

nnThe following pages outline the strategic

objectives agreed by the Trust and the Executive
and provide some highlights illustrating how theBBC has worked to achieve them.

BBC Annual Report and Accounts 2013/14

Overview

The BBC’s objectives
This year the BBC has aimed to deliver four strategic objectives

Quality anddistinctivenessValue for money

Openness andtransparency

Serving all audiences

All BBC services should
offer high-quality content
that is distinctive in termsof its creative ambition,high editorial standards
and its range and depth.

The BBC should improvevalue for money and open
itself to external scrutiny ofthis area. It should become
more efficient and increase
investment in content
whilst reducing overheads.

The BBC should enable
the public, and the market
in which it operates, tounderstand how it spends
its money, how it performs
and what it plans to do next.

The BBC should reflect
the diversity of its
audiences in both its
programmes and its
workforce. All audiences
should have access torelevant BBC services.

In light of a new strategy agreed during the year, the Trust andExecutive have agreed some changes to these objectives
Make the most creative anddistinctive output

Innovate online to create a more
personal BBC

nnCreate outstanding content to build

nnInnovate fast online and enhance

the BBC’s reputation in key genres
and make each service as distinctive as
it can bepeople’s personal connection
with the BBC

nnEnsure the BBC reflects the diversityof the UK

Serve all audiences
nnMaintain the mass appeal of channels
nnPursue universal access on new

platforms and keep pace with new
consumption behaviours

nnBetter reflect the different nations,regions and communities

BBC Annual Report and Accounts 2013/14

Improve value for money through asimpler, more efficient and more
open BBCnnCreate a simpler, more efficientand more open BBC

nnBuild new creative partnerships
nnEngage staff with the strategy

03

The BBC at a glance

Serving everybody with a range ofgreat content delivered in new ways

Reaching new audiences
Audience reach
Percentage of UK adults who
use BBC TV, radio or online
each week.

Total time spent
Length of time these audiences spend
with the BBC each week.

96%

18.5 hours
2012/13: 19.5 hours

2012/13: 96%

Highlights of the year

Leading the way with digital content

Doctor Who
The Doctor Who 50th Special was shown on TV in 98 countries;
was broadcast in 15 languages; and sold 649,138 cinema tickets
in 25 countries. In the UK it was watched by an average audienceof 12.8 million, plus an additional 3.2 million iPlayer requests.
Wimbledon
A peak audience of
17.0 million viewers
watched Andy Murray
win Wimbledon,the highest for a
Wimbledon final sinceat least 2002 (whencurrent measurement
began). 94% of theaudience felt theBBC’s coverage washigh quality.

Introducing iWonder
In March 2014, knowledge and learning sites on BBC Online(which includes iWonder) achieved record reach, visited by
5.6 million UK internet browsers on average per week.

BBC Weather app
The BBC Weather app, releasedin June 2013, has been downloaded
6.3 million times.

News
The day of the birth of HRH Prince
George was a record day for global
performance on BBC News Online– visited by 19.4 million browsers
from around the world.

04

CBeebies app
The CBeebies app, released inAugust 2013, has been downloaded
2.4 million times.

BBC Annual Report and Accounts 2013/14

Overview

Better value for money

Cost per household

Ongoing savings

Public support for the licence fee

A six-year licence fee settlement wasagreed in 2010 which has frozen thelicence fee at £145.50 until 2017.

We have saved £374million p.a. so far
through our Delivering Quality First
programme and are on track to achieve
the full £700million p.a. savings requiredby 2016/17.

53% of the public support the licence
fee as the means of funding the BBC,compared with 26% for advertising and
17% for subscription.

40p

£374m

Per day

2012/13: 40p

Monthly spend by licence fee£12.13 per household

Source: Ipsos Mori

BBC spend in the creative economy 2013/14
Total of £1.1bn
BBC performing groups £25m
(2012/13: £24m)

Radio £2.30(2012/13: £2.30)

Artists, contributors
and copyright £282m(2012/13: £282m)

Online £0.61(2012/13: £0.61)
Other services andproduction costs £0.73(2012/13: £0.49)

Acquired programmes
transmitted £59m
(2012/13: £70m)

Licence fee collection andpension deficit costs £0.49(2012/13: £0.49)

External programme facilities
and resources £257m(2012/13: £232m)

Television £8.00(2012/13: £8.24)

Independent programmes transmitted £484m(2012/13: £490m)
2013/14Spend
per year£m

Television
Ten channels
Radio
15 network stationsand Local Radio
OnlineBBC Online and BBC iPlayer
Other services andproduction costs
Licence fee collection
and pension deficit costs% oflicencefee

2012/13Spend
per year£m% oflicencefee

2,276 66 2,472 68
650 19 670 19
174
205
151

5
6
4

177
133
160

The cumulative impact and spending power of over
20 million television licences can deliver more than content
alone. As well as in-house staff, we are able to provide work
for many freelance individuals and thousands of large andsmall businesses across the UK – delivering sustainable
benefits to digital and creative industries, as well as thewider British economy.

5
44

The above analysis corresponds to UK PSB Group content expenditure on page 122, although thecosts incurred to generate other income are excluded as they are not funded from the licence fee.

BBC Annual Report and Accounts 2013/14

05

06

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BBC Annual Report and Accounts 2013/14

The BBC Trust’s
review and assessment
The Trust exists to get the best out of
the BBC for licence fee payers. It is thegoverning body of the BBC and sets thestrategic direction, measures performanceand holds the Executive to account

BBC Annual Report and Accounts 2013/14

08

Chairman’s foreword

09

Setting strategy andassessing performance

10
12
20
26
29

Setting strategy
Quality and distinctivenessValue for money
Serving all audiences
Openness and transparency

31

Understanding audiences
Inside the trust

35
36
38
42

Part One

Part One

BBC Trustees
Governance
Trust finances

07Chairman’s foreword

The BBC is part of the fabric of our everyday life in this country.
Practically everyone is touched by it – a huge achievement in a
multi-platform, multi-channel digital age.
But it needs to respond to an audience that is more diverse thanever in terms of background, interests and identity, and who areaccessing media in different ways.
How the BBC serves and reflects such a kaleidoscopic UK is apriority for the Trust and has been an important theme of ourwork during the past year.
People expect the BBC to be relevant to their lives. Our work
has underlined how important this is to the BBC’s continuing role
as a vital cultural and civic institution.
We have set the Director-General a priority for the coming yearof making measurable progress in reflecting the diversity of the
UK in the BBC’s workforce, including increasing the number ofwomen on air.
The BBC needs to keep pace with rapid changes in technology.
The Trust has reviewed BBC network news and current affairs
and we found that, although it retains unrivalled audience trust
thanks to consistently high standards, it needs to innovate in orderto draw in a younger audience. Similarly, our review of children’s
services found that CBBC and CBeebies are held in very highregard, but must adapt to children’s rapidly changing ways ofengaging with media.
Audiences must be able to rely on the BBC to offer programmes
not found in the commercial sector. So the Trust has continued topush for more distinctive programmes; and our review of thefour main television channels has put a particular emphasis on this
aspect of their performance. Our impartiality review on ruralaffairs concluded that the BBC needs to ensure a broader rangeof rural voices is heard on network news.
The BBC has had some notable successes during the year.
Everybody will have their own highlights, but mine have included
shows like Rev, Hinterland and Call The Midwife, the iWonder pages
on World War I online, waking up to Farming Today each morning,
and, of course, Strictly.

‘‘The BBC needs to respondto an audience that is morediverse than ever.’’Over the past year we have been working with the DirectorGeneral to overhaul how the BBC is run and how we work
together to ensure we are clear about our roles andresponsibilities and to prevent such issues recurring. We aredetermined to ensure the BBC is spending money effectively.
We have set ambitious efficiency targets each year – which the
Executive has been achieving. As part of expecting the Executive
to demonstrate good value for money we have also asked for thenumber of senior managers to be reduced and want to ensure
the BBC has firm control of its headcount.
Under the strong leadership of the Director-General Tony Halland his senior team, the BBC has made progress on many of theareas highlighted above.
Finally I should say that I myself didn’t expect to be writing thisintroduction. The former Trust Chairman, Lord Patten, stood
down from the role on health grounds at the start of May 2014.
I would like to pay tribute to his commitment to the BBC and its
audiences during often very difficult times.
I consider it a huge honour to be performing this role. With myother colleagues on the Trust, I will be doing everything I can tomake sure the BBC is as good as it can be, for all of us.

Diane Coyle
Acting Chairman
19 June 2014

There have also been some high-profile failures. The BBC’s DigitalMedia Initiative project was closed, at a cost of nearly £100million.
And there was the controversy surrounding past severance
payments above contractual entitlements to some senior staff.
Both of these episodes involved significant sums of public money
and saw the BBC falling well short of what licence fee payers expect.

08

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BBC Annual Report and Accounts 2013/14

Part One: Setting strategy and assessing performance

Setting strategy andassessing performance

Reporting on the BBC’s progress:
quality and distinctiveness; value
for money; serving all audiences;
openness and transparency

BBC Annual Report and Accounts 2013/14

09

Setting strategy and assessing performance

Setting strategy
The Trust set a number of priorities for the
Director‑General for 2013/14. We report on progress
below, as well as identifying our priorities for 2014/15.
Quality and distinctivenessValue for money

We highlighted for particular attention:

We highlighted the need for:

The quality, variety and originality of new drama on BBC One,especially in peakA clear and sustainable response to the National Audit
Office’s (NAO) review on severance payments to put a stop
to any future excessive payments

The quality and prominence of current affairs on BBC One
and BBC Two
The Executive has made a number of internal managementchanges that are designed to promote creativity and innovationin all genres. These include new development teams or ‘Creative
Labels’, an innovation unit, BBC Productions awards (to boost
creativity in in-house production) and a ‘Charter of Editorial
Commitments’ to improve the BBC’s relationship with, andspeed of response to, independent producers.
In October, the Director-General signalled that high-quality
British drama was a major editorial priority, and proposedchanges to BBC Three in part to redirect more funding into
BBC One drama.
The Trust welcomes this intention to further increase ambitionin drama and will look to see a positive outcome for audiences.
We reviewed the quality and prominence of current affairs
output as part of our service review of network news andcurrent affairs, published in April 2014.
We found that the BBC makes more current affairs programmes,
has larger audiences and is perceived as better than otherproviders for being high-quality and relevant, and for keeping
audiences informed of issues.
However, we also found that audiences expect more from theBBC’s current affairs and that there was a relatively low audienceawareness of much of the BBC’s current affairs output. They
want it to do more to cover stories and issues which stand out.
The challenge facing the BBC’s current affairs output is therefore
to make greater impact and increase audience awareness ofwhat it does.

10Sufficient rigour in the final years of the Delivering Quality
First (DQF) savings plans, in particular to make sure thatback-office functions can be pared back as promised
The BBC’s full response to the NAO’s review on severance
payments can be found on our website. At its heart is a newpolicy that caps any future pay-offs at £150,000, along withsignificant improvements to internal controls and processes.
Any future exceptions to the new policy need to be identified
and justified in the Annual Report.
On the DQF savings programme, significant progress has been
made in the course of the past year to remove three-quartersof the savings that had previously been considered ‘at risk’,largely through major savings in operational (non-content)
areas and contracts. The programme has so far saved£374million each year and is on track to release the planned£700million of annual savings.
The NAO is to conduct a progress report in this area later inthe year, and we hope they will be able to provide additional
assistance to the BBC in meeting its targets in the final years of
the plan.
In the meantime, the BBC will need to find additional savings tofund the new initiatives put forward by the Director-General.
The Trust will subject some of the resulting proposals to further
regulatory scrutiny where they affect services (for example
BBC Three). We welcome the Executive’s benchmarking
exercise aiming to identify potential further efficiency savings.

What’s next?

What’s next?

Our priority for the BBC in this area remains to improve
the quality, variety and originality of new drama on
BBC One, particularly in peak time.

We want to see a further reduction in senior manager
numbers and, while doing so, to establish what the
Executive thinks the BBC’s overall headcount ought
to be in future.

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BBC Annual Report and Accounts 2013/14

Openness and transparency

We highlighted in particular our desire for:We highlighted the particular importance of:A clear strategy for free-to-air platforms

The BBC’s response to the general issues revealed by the
Pollard report (which investigated whether there were any
failings in the BBC’s management of a dropped Newsnight
investigation into Jimmy Savile)

Improvements in the representation of women on air
Improvements to the quality and prominence of current
affairs output for each different part of the UK
The Executive has presented a strategy for its investment andinvolvement in different free-to-air platforms (Freeview, Freesat
and YouView) to the Trust. We captured the results of thatwork in our review of the BBC’s participation in YouView (seepage 28) as well as in the new distribution framework that will
be put out for public consultation later in the year. This framework
will establish the key principles and parameters for future BBC
management decision-making in a way that the rest of themarket can easily understand.
There have been notable individual examples of a newcommitment from the Executive to improve the representationof women on air, and some broader initiatives, such as thecommitment for 50% of local radio stations to have a female
breakfast presenter by the end of 2014. However, content analysis
suggests a continuing gender imbalance in BBC output and we
consider that there needs to be a co-ordinated plan from the
Executive to address this as part of a wider diversity strategy.
On current affairs, the Executive has done some work for eachpart of the UK to develop new formats and to promote local
journalism. In Scotland in particular, additional funding has been
put in place to cover the referendum campaign. The Trust’s
review of nations radio (to start in 2015) will include anassessment of news and current affairs provision in each nation.

The pursuit of new creative partnerships with other major
cultural organisations and institutions
We welcome the work that the Executive has done in responseto the Pollard report, including:Changes to the organisational structures in news
Bolstered management of major investigations
New appointments from outside the BBC
A redesign of the managed programmes risk list
The challenge will be to make sure these individual changes add
up to the broader change in culture that the Trust asked for in
response to Nick Pollard’s report. From that point of view, thewider management changes made by the Director-General – toreduce internal bureaucracy and require individual responsibility
from senior managers – are extremely welcome.
We also welcome the work that has been done to promote anddevelop new partnerships with institutions as diverse as Arts
Council England (the Space), Birmingham City Council, the BFI,PACT (BBC Store), and Spotify (BBC Playlister).
As these partnerships develop, we are looking to the Executive
to set out a clearer plan for an overall strategy to build on them,and on other successes, and make the BBC an even bigger
catalyst for the success of the UK’s cultural and creative sector.

What’s next?

What’s next?

We want the BBC to make measurable progress inreflecting better the diversity of the UK population in the
BBC’s workforce and its output, in particular increasing
the number of women on air.

We want the BBC to pursue more partnerships withother cultural and creative organisations across the UK.

BBC Annual Report and Accounts 2013/14

11

Part One: Setting strategy and assessing performance

Serving all audiences

Setting strategy and assessing performance

Quality and distinctivenessWe assess the performance of BBC services by looking
at how audiences use and appreciate them, and we ensure
BBC editorial standards remain high.
Overview
The public expects a different, higher standard of content fromthe BBC. So, increasing the distinctiveness and quality of all its
services is a particular priority for the Trust. Maintaining higheditorial standards is one key aspect of distinctiveness, and theTrust sets more detailed and demanding requirements for
impartiality, accuracy and fairness than Ofcom sets for all otherUK broadcasters.
Here we report on how BBC services performed in termsof audience numbers and appreciation, and then on how they
complied with the BBC’s editorial standards.

Service performance
Ninety-six per cent of UK adults used BBC services each week,
and overall they continued to rate the quality of content highly,
despite the continuing budget cuts. The time people spend with
the BBC – on both radio and TV – has declined, as it has for othermajor broadcasters, probably as a result of audiences having awider choice of entertainment of all types. Of greater concern isthat, while most people continue to trust the BBC far more thanother broadcasters, levels of trust have not fully recovered fromthe impact of the controversies regarding Jimmy Savile’s time at
the BBC. Regaining the full confidence of audiences is a key priority.

Elba during the filming of the third series of BBC One drama Luther12

BBC Annual Report and Accounts 2013/14

Performance summary

How the BBC measures up

Next steps
 Our service review found thataudiences’ demands for range andvariety are not entirely being met.
We have asked the Executive to
make a number of improvementsin this area and will monitor thechanges made.

Fresh and new
The number of people who believe theBBC offers something ‘fresh and new’has remained stable, but the public still
expect more from the BBC.

How the BBC measures up

Next steps
 The distinctiveness of the BBC’s
output remains a priority and ourreview of TV services has asked
for an improvement in this area.

70.4%

70.6%

70.5%

2011/122012/132013/14

Radio – audience appreciation
Audience appreciation of BBC radio remains
high, but has fallen slightly in the last two
years.

How the BBC measures up

Next steps
 We will consider how BBC radio
can maintain and increase its quality
in our speech and music radio
service reviews in the coming year.

BBC Online – audience appreciation
Audience appreciation of the BBC’s online
services increased slightly this year.

How the BBC measures up

Next steps
 Our review of BBC Online last year
highlighted a number of actions for
the Executive, including improving
the site’s linking to external sites.
This year the number of‘clickthroughs’ to other sites fellslightly, so we will continue tomonitor this area closely.

BBC Annual Report and Accounts 2013/14

Part One: Setting strategy and assessing performance

Television – audience appreciation
Audience appreciation of BBC television,
while remaining high, has fallen slightly forthe first time in a number of years.

13Setting strategy and assessing performance

Quality and distinctivenessTelevision
Even though increasing numbers of people own tablets and otherdevices, watching television is still enormously popular, with theaverage viewer watching 3 hours 47 minutes of TV each day.
While the amount of ‘timeshifted’ viewing continues to rise slowly,
by far the majority of TV is still watched live.

BBC Two
BBC Two’s average AI score was stable, whilst its scores for ‘freshand new’ increased. There were a number of very distinctive andpopular dramas including Line of Duty, The Fall and Peaky Blinders,
and the factual entertainment show The Great British Bake Off wasenormously popular.

The performance of BBC television remains strong, although thisyear ‘audience appreciation’ (AI) scores declined slightly, and thenumber of viewers fell. In total, 84% of people watched some
BBC TV each week in 2013/14, down from 86% in 2012/13.

BBC Two’s total audience numbers declined slightly this year,
partly due to changes in the daytime schedule. However, more
people watched the channel in peak time.

BBC OneBBC One remains the nation’s most widely viewed TV channel,
watched by 75% of UK adults this year, compared with 78% in
2012/13. BBC One produced some very high quality anddistinctive programmes, including Sherlock, Mrs Brown’s Boys, Last
Tango in Halifax, Britain’s Great War and Penguins – Spy in the Pod.
But BBC One’s average AI score fell and there was also a slightdecline in the audience’s perceptions of its programmes being
fresh and new.

Daytime on BBC One and Two
To make savings, children’s programmes were removed from
BBC One in January 2013 and it became the primary channel for
new daytime programming. As a result, the average audience fordaytime on BBC One programming increased this year, althoughquality scores went down slightly. BBC Two’s daytime audience
declined, following the decision to remove new programmingfrom the daytime schedule.

BBC Three
Slightly fewer people watched BBC Three this year, with 26% of
As BBC One is the BBC’s flagship TV channel, we are continuing
the target audience of 16 to 34-year-olds watching each week, down
to put pressure on the Executive to ensure it offers the distinctive, from 29% in 2012/13. There is some evidence to show younger
high-quality content audiences expect from the BBC, withpeople are increasingly watching content online and BBC data
improving the quality, variety and originality of peak-time drama
indicates iPlayer now accounts for 6% of all viewing of the channel.
a particular priority.
The Executive wants to make savings by closing BBC Three as a
TV channel and instead creating an online service. When we
consider these proposals, our priority will be to represent theinterests of licence fee payers. We will conduct a public value test,
including a public consultation, so that everyone will have theopportunity to have their say.

Sule Rimi as Henry Smart in CBBC series DNN

14

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BBC Annual Report and Accounts 2013/14

BBC Four
BBC Four bucked the trend of the rest of the BBC’s TV channels,
reaching the same number of people as last year – 14% of adults
each week – despite significant cuts in its budget.

Children’s – CBBC, CBeebies
In 2013 we published a review of the BBC’s children’s output,
which plays a vital role in fulfilling the BBC’s public service remit.
We found that CBBC and CBeebies perform very well but the
key challenge continues to be to maintain reach and impact in amedia environment in which older children have a lot morechoice. To achieve this, we expect regular promotion of children’s
output on mainstream BBC services as well as providing somecontent that will appeal to children on these services.
Since we published the review, the proportion of children aged
6-12 who watch CBBC each week fell, from 30% last year to 25%
this year. Even at this level, the channel remains highly popularamongst its target age group.
CBeebies’ reach amongst its target audience of children aged 0-6
also fell this year, down from 43% to 40%, although its Playtime
app for tablets and mobiles has been highly successful, and it stillreaches far more children than other pre-school channels.

We will review BBC music and speech radio services in 2014/15
as part of our rolling programme of service reviews.
BBC Radio 1 and 1Xtra
Radio 1’s remit is to serve younger audiences, and we havecontinued to press the Executive to ensure it does so. In 2012/13,
the station made a number of changes to its presenter line-up to
increase its appeal to younger age groups, and this year, while themedian age remained stable at 30, younger listeners now accountfor a slightly greater proportion of the total audience. The station
has been successful in reaching young audiences in new ways: theRadio 1 YouTube channel now has more than 1 million subscribers,
and the station has more than 1.7 million followers on Twitter.
Radio 1Xtra continued to reach an audience of more than 1 million
each week and, unlike many other stations, the amount of time
people spent listening to it was largely stable.

BBC ALBA
BBC ALBA performed strongly, and was watched by 18% of theScottish population each week, up from 16% last year. It did
extremely well with Gaelic speakers, with 72% watching thechannel each week, and audience approval remained high.

BBC Radio 3’s pop-up studio at Southbank Centre

BBC Annual Report and Accounts 2013/14

15

Part One: Setting strategy and assessing performance

Saturday night foreign drama continued to lead the way, with
programmes such as The Bridge recording an average AI score of
92 and the channel’s highest audience of the year at 1.6 million
viewers.

Radio
Listening to the radio remains very popular in the UK, with nineout of ten adults tuning in every week. However, the time they
spend listening to the radio continues to decline and this may be
a long-term trend. This is reflected in BBC Radio listening – 67%
of UK adults tuned in each week, but for less time, with listening
hours falling most among younger adults. Listeners’ perceptionsof the quality of BBC Radio remained very high, with an average
AI of 80.

Setting strategy and assessing performance

Quality and distinctiveness
BBC Radio 2
Radio 2 continued to perform very strongly indeed. It remains theUK’s most popular radio station, with 29% of UK adults listening
each week, up from 28% last year. In contrast to many otherstations, people are continuing to tune in for the same number ofhours each week and listeners also continued to rate the qualityof Radio 2 programmes very highly.
The station has an important responsibility to ensure that its
speech output and music mix is distinctive and focuses on
promoting the BBC’s public purposes. We will consider how well
it is achieving this in our forthcoming service review.
BBC Radio 3
Radio 3 continued to reach around 2 million people each week
and they rated it very highly. The station offers a large amount of
new music commissions, and a continuous and very highproportion of live and specially recorded performances, together
with drama and other output. An example of Radio 3’s output
was a collaboration with the South Bank Centre, with a pop-up
studio giving the public access to the station for a fortnight andincluding 15 live concerts and three world premieres.
Our service review will include an assessment of Radio 3’s
distinctiveness.
BBC Radio 4 and 4 extra
Radio 4 performed very well again this year. As well as increasing
its AI score, now at 81.3, it also increased its audience – a record
11 million people tuned in each week.
Our review of BBC network news and current affairs, publishedin April 2014, found that audience numbers for radio news
programmes remain very high, and the quality of Radio 4’s news
and current affairs output was very highly rated.
We are keen for Radio 4 to reach more people who would
appreciate its programmes but do not currently listen outside thesouth of England, including in the devolved nations. This year thestation increased its audience in some parts of the country, andwe expect it to continue to look for ways to broaden its appeal
across the UK without compromising its distinctiveness.
BBC Radio 5 live and 5 live sports extra
5 live continued to attract an audience of just over 6 million each
week, while 5 live sports extra attracted 1 million. Since ourservice review, published in 2012, 5 live has made progress inproviding more serious news coverage. Our review of networknews and current affairs highlighted its role in facilitating public
discussion and debate on topical issues.

BBC Asian Network
When we completed our service review of the Asian Network
in May 2012, we said that the challenge for the station would beto grow its audience while operating with a much lower budget.
The station’s audience increased from 528,000 in 2012/13 to
588,000 this year.
Nations and local services
Our service review of the BBC’s national radio stations in 2011
challenged the Executive to give each station a more distinct role.
Since then, several stations have significantly refreshed theirschedules and this has led to some positive results.
Radio Wales’ weekly reach was stable this year at 18%, whileaudience appreciation increased. Radio Cymru has just madechanges to its schedule and we will monitor the impact of thison listeners.
Radio Ulster/Foyle is also refreshing its schedule and developing
the breadth of the local news agenda. It continued to perform
very well, reaching 36% of the population of Northern Ireland,
up slightly on last year.
Radio Scotland reached fewer people this year, down to 20%
from 22% in 2012/13, although the time they spent listening to thestation remained fairly stable. Our Audience Council in Scotland
advised us that there had been positive developments following
our service review, including new weekend speech programmingand better coverage of cultural events.
The Gaelic station Radio nan Gàidheal’s audience fell to 64%
among Gaelic speakers this year, which may be linked to theuniversal availability of the Gaelic TV station, BBC ALBA, since2011. The station will review its schedule in the coming year,
including an increase in Gaelic-learning content.
As part of the BBC’s savings plan, in January 2013 BBC Local Radio
introduced a programme broadcast across all English regions on
weekday evenings and we have been monitoring its impact on
audiences. The number of people tuning in has fallen only slightly.
Our Audience Council in England told us that the new programmemaintains the spirit of BBC Local Radio. We also welcome Local
Radio’s introduction of political reporters to many of its stations
and an increased focus on holding local figures to account.

BBC 6 Music
6 Music’s audience continued to grow, and it is the UK’s mostpopular digital-only station, with almost 2 million listeners eachweek. The station has a very loyal audience – people are tuning
in for longer and its average AI is one of the highest of any BBC
radio station.

16



BBC Annual Report and Accounts 2013/14

BBC Online and Red Button
This year, 53 million unique browsers accessed BBC Online eachweek in the UK, with mobiles and tablets now accounting for
more than half of all usage.

In our recent service review, we asked BBC Online to enable
users to navigate more easily across the site, and to increase thenumber of ‘clickthroughs’ to external sites to allow users to findrelevant content beyond BBC Online. In fact, clickthroughs fellslightly this year, largely driven by a decline in clicks from Sport andlower clickthrough rates from the growing number of mobile andtablet users. We are encouraging the Executive to continue tolook for ways to increase the traffic it is driving to other sites.
News and current affairs
Nothing the BBC does is more important than its journalism: it isat the heart of the BBC’s public service mission and the Trust will
ensure it remains the core of the BBC’s principal services. This
year we published our first service review of network news andcurrent affairs. We found that four out of five adults get news
each week from the BBC and they rate it well ahead of othernews providers for its key characteristics of range, authority andexpertise. Young adults have always been difficult for news
broadcasters to reach but a proliferation of sources of ‘news’
online has made the challenge all the greater. We have asked the
BBC to ensure that its journalism is made available in forms thataudiences want, wherever they want it.

While audiences rate BBC News much more highly than othernews providers, perceptions of accuracy and impartiality fell alittle this year. These are important indicators which we willcontinue to monitor closely.
BBC World Service
The BBC World Service continued to reach 191 million adults
around the world this year. More people accessed the service on
television and online, while, as in previous years, the number oflisteners to its radio services declined.
Nonetheless, radio remains the single most popular way ofaccessing the World Service, with 128 million listeners, although
it lost 17 million listeners this year, mostly short-wave listeners
from India, Nigeria and Pakistan. World Service TV had 59 million
viewers each week, up from 42 million last year, with BBC Arabic
and BBC Persian channels and many other new services growing.
The World Service website was accessed by 18.8 million people,
4.8 million more than last year, with significant growth for the
Ukrainian and Russian sites due to the crisis in Ukraine and theSochi Olympics.
The Trust is responsible for setting the strategic direction of theWorld Service and for safeguarding its editorial independence.
In April 2014, the World Service became funded by the licence
fee and we have established an operating licence which sets out
its remit, scope, budget and main commitments. As with otherBBC services, we will review the performance of the World
Service regularly.

The new BBC newsroom studio at New Broadcasting HouseBBC Annual Report and Accounts 2013/14

17

Part One: Setting strategy and assessing performance

While the total number of people using BBC Online is still
growing, it is doing so quite slowly. It is now used by around 49%
of UK adults each week, which has increased only slightly on theprevious year. We expect the BBC’s development of its online
offer for younger audiences to broaden its appeal and will
monitor and report on this. BBC Red Button is used by 33% of
UK adults and this is fairly stable compared with last year.

Our review also confirmed that current affairs output on TV andradio covers an impressive range of domestic and foreign stories
and that the BBC is perceived as the best at producing high-quality,
relevant content, and keeping audiences informed. However, wefound relatively low recognition of much BBC programming andwe have asked the Executive to increase the impact of this output.
To help this, we will amend the BBC One service licence tosecure the presence and volume of high-quality current affairs
in the schedules.

Setting strategy and assessing performance

Quality and distinctivenessEditorial standards
The overwhelming majority of the BBC’s content
complies with the Editorial Guidelines, throughwhich we set demanding standards.
The public expects the highest editorial standards from the BBC
and people expect to be able to rely on its output to inform,
educate and entertain them. They also expect it to be accurate,
fair, independent of commercial or political pressures and, above
all, impartial. Upholding these standards is one of the Trust’s mostimportant roles, and where the BBC makes mistakes we expect
lessons to be learned.

The Trust found that there was a strong public interest in the
programme, that the BBC was not reckless and had spentconsiderable time evaluating the risks created by the trip, and thatthe correct referral procedures and processes had been followed.
However, the BBC had failed to consider a number of important
issues – or failed to deal with them appropriately – resulting in
unfairness to the student and to the LSE in the way the programme
was made. We were satisfied that the BBC staff had not set out toEditorial complaints
be deliberately misleading in their statements after the broadcast,Through our Editorial Standards Committee we uphold the BBC’s but it is best practice when the BBC becomes aware that it has
standards by considering editorial complaints and reports aboutpublicly presented incorrect facts for it to correct those facts.
serious editorial breaches. Below we report on two that were of
We concluded that the Guidelines relating to fairness,particular significance.
contributors and consent, and conflicts of interest had been
Panorama: North Korea Undercoverbreached. The BBC subsequently apologised to the complainants.
In the making of this programme, an undercover team fromThe Great Bear Stakeout
Panorama travelled to North Korea with a group of current andThis programme, transmitted on BBC One in April 2013,
former students from the London School of Economics. We
contained misleading footage, which was reported to us by thereceived two complaints about the programme on behalf of a
Executive. The programme showed accurate footage of a motherstudent and the LSE who questioned whether they were treatedbear and cubs, but it also showed a guide apparently watching andfairly by the BBC in the organisation of the trip and whether theircommenting on the scene. In fact the guide had not been present
privacy was infringed. They also questioned the accuracy and– his contribution was filmed later as if he had been. On becoming
impartiality of statements made by the BBC about theaware of this, the show’s Executive Producer posted an apology
programme after it aired.
on the programme’s web page. We commended the speed of this
response, as well as other actions the BBC had already taken.
Nevertheless, this was a serious breach of the Editorial Guidelines
relating to accuracy.

BBC editorial complaints
Number of complaints received by the BBC in 2013/14
Graphic shows
BBC editorial complaints
Numberof complaints
received by the BBC in 2013/14
Stage 3: Appeals
toStage
1: Editorial
and general complaints 94% answered on time
the Trust’s
Editorial
192,459
down
12%Standards
Committee
Stage
2: Editorial
to the Editorial Complaints Unit 84%
96% answeredon complaints
time277
answered on time
485 down 3%
3%Stage 3: Appeals to the Trust’s Editorial Standards CommitteeStage
2:
Editorial
96% answered on timecomplaints
to the277 down 3%
Editorial Complaints Unit
84% answered on time

485

Appeals received by the Editorial Standards Committee
Pie chart shows
Percentage breakdown of Appeals received by the Editorial Standards
Committee
14% – Complaints not upheld by the Editorial Standards Committee (onappeal from the Executive)
Complaints not upheld by the
19% – Complaints not upheld/partially upheldby the Standards
Editorial Standards
Editorial
Committee
Committee(on appeal from the Executive)
67% – Not considered by the Editorial Standards Committee because
there was no reasonable prospect of successComplaints upheld/partiallyupheld by the Editorial
Standards Committee

3%
Stage 1: Editorial
and general complaints
94% answered on time

192,459
12%18



Not considered by the Editorial
Standards Committee because
there was no reasonable
prospect of success

BBC Annual Report and Accounts 2013/14

The BBC remains the UK’s most popular source of impartial news
Public perceptions of the impartiality of news providers
Of all news sources, which one source are you most likely
to turn to if you want impartial news coverage?
Pie chart shows:Public perceptions of the impartiality of news providers
Of all news sources, which one source are you most likely to turn to if
you want impartial news coverage?
BBC News 50%
Other 21%
Don’t know 5%
Channel 4 4%
Sky News 7%
ITV 13%
Source: Ipsos Mori, 2014

ITV 13%
Source: Ipsos MORI, 2014
BBC Annual Report and Accounts 2013/14

19

Part One: Setting strategy and assessing performance

In June we published an impartiality review, ‘Rural Areas in theUK’, led by an independent author, Heather Hancock. Taken as awhole, it found the BBC’s coverage of rural issues in news, current
affairs and factual programming was impartial, with strong
specialist output on network TV and radio. It also found that
services in the devolved nations and those in Welsh and Gaelic
Each year, the BBC runs a survey of perceptions of the impartiality
featured a wide range of voices. However, it found that networkand trustworthiness of BBC News compared with other media.
output relied on too narrow a range of organisations and charities
In this year’s results, released in June, 50% of respondents said
and concluded that the range of rural voices used should bethat BBC News was the source they were most likely to turn tobroadened. It also found that many news stories tended not tofor impartial news coverage. This is a much higher figure than forbe considered from a rural perspective and that there was aany other broadcaster and remains at around the same level asparticular deficit in coverage of rural issues in England. We havelast year.
therefore asked the Executive to address this, including how it
The Trust held an impartiality seminar on Africa in November
will ensure staff are able to report on rural issues with knowledge
2013, with guests from inside and outside the BBC. The seminarand confidence.
highlighted some of the tensions felt by audiences about all media
reporting of Africa.
Impartiality
Impartiality is central to the BBC’s role as a public service
broadcaster, funded by the licence fee. It is one of our principal
concerns in terms of editorial standards, particularly in relation tonews and current affairs.

Setting strategy and assessing performance

Value for money
In this second year of the Delivering Quality First (DQF)
strategy, the BBC has continued to save money – amounting
to £374million of ongoing savings – without compromising
the overall popularity of its programmes and online content.
A more efficient BBC
The BBC has delivered more than half of DQF’s savings alreadyand has worked to fully plan savings that were previously
unidentified or considered difficult to achieve; these have now
been reduced by three-quarters.
From April 2014 the BBC assumed responsibility for funding
the World Service (£245million); this is on top of the extra
responsibilities taken on this year for S4C, BBC Monitoring,broadband rollout, and Local TV (amounting to £250million).
With a flat licence fee, the BBC needs to find further annual
savings and commercial income of £326million in the next three
years to meet these obligations and manage any inflationarypressures on the budget. And it needs to do this while continuing
to deliver excellent programmes and content.
To this end, we welcome the Director-General’s plans tobenchmark costs across the BBC and will be looking for further
progress in a range of other areas including headcount control
and estate management as the new property strategy isimplemented.

Our research shows that most people believe the BBC offers
good value for money – 58%, which is slightly higher than last year.
People’s perception of value for money is, unsurprisingly, strongly
influenced by the range of content they consume on TV, on radio
and online, with around 71% of those who use BBC services on
all three of these platforms concluding that the BBC is good value
for money.
Nevertheless, value for money continues to be a concern formany licence fee payers and we will continue to listen to ouraudiences to ensure that the annual savings the BBC needs toachieve do not have an unintended impact on the quality andrange of the BBC’s services. We will also maintain our focus on
improving how the BBC is run, through our programme of value
for money reviews which makes an important contribution toholding the Executive Board to account. Some of these reviews
are conducted by the National Audit Office (NAO) on our behalf;
to support their work, the NAO has unrestricted access to BBC
information.
In the following sections, we summarise our value for money
work over the past year and set out our plans for the year ahead.

BBC North at MediaCityUK, Salford

20

BBC Annual Report and Accounts 2013/14

Performance summary

How the BBC measures up£374m

Next steps
 From April 2014 the BBC took on£245million funding responsibility for
the World Service.

Part One: Setting strategy and assessing performance

Savings
2013/14 represents the second year of the BBC’s
DQF strategy and the BBC has already delivered
over half the savings and additional income
required.

 The BBC will continue the DQF
efficiency programme to deliver theremaining savings required to help
fund this and other additional
obligations.

ongoing savings

Perceptions of value for money
As last year, nearly six in ten people perceived
the BBC to represent good value for money,
although the affordability of the licence fee
remains a concern for some.

How the BBC measures up

58%

Next steps
 We will continue to ask the Executive
to make further savings and improve
the way the BBC is run.
 We will commission value for money
reviews into the BBC’s risk
management and talent pay.

Source: Purpose Remit Survey

Reducing the pay gap
The pay multiple shows the difference in medianearnings of BBC staff, and the Director-General.
The multiple has remained broadly level withlast year.

How the BBC measures up

Next steps
 The BBC will ensure that its staff are
fairly rewarded and motivated todeliver their best work for licence fee
payers.
 Our aim is to see the multiple fall overtime.
 As more public sector organisations
begin to publish their multiple, we will
be able to see how the BBC multiples
compare with the public sector trend.

BBC Annual Report and Accounts 2013/14

21

Setting strategy and assessing performance

Value for money
Financial strategy and annual budget
The Trust approves the BBC’s high-level strategy and budget,and we hold the Executive to account for the BBC’s financial
and service performance.
Cost savings
When the DQF plan was developed in 2012, the savings targetof £700million was based on the pre-DQF budget for 2012/13
rather than the 2011/12 outturn. This approach meant that the
impact of DQF cost savings could be tracked separately frominitiatives which were already planned for the year ahead.
We have also asked the Executive to report savings against abaseline of 2011/12 actual expenditure rather than the pre-DQF
2012/13 budget, to establish with clarity the extent to whichcosts have reduced. This year, the BBC has reported ongoing
annual savings of £374million. This is a significant achievement,
particularly as the savings come on top of the BBC’s previous
efficiency programme, which, by 2012/13 had delivered£580million of ongoing annual savings.
As well as being on track to deliver the agreed savings, the BBC
also plans to make further savings before the end of the licence fee
period in order to fund new editorial priorities.
The Trust has been tracking the impact of cost savings on the
BBC’s services by monitoring audience numbers and audience
perceptions of quality. As we move towards the final years of theplan we have also asked the Executive to assess the impact on
editorial and financial controls to check that the savings initiatives
are not having an unintended impact in these areas.
Property strategy
This year the BBC began the process of decommissioning
Television Centre following moves to MediaCityUK in Salford,
and New Broadcasting House in central London. These moves
are part of a plan to reduce significantly the BBC’s footprint in
London, and to help towards the target that, by 2016, half themoney spent on network TV programming should be spentoutside the capital.
We are expecting to see proposals for the BBC’s exit from muchof the remaining White City campus later this year. As part ofthese plans, we look to the Executive to ensure that all unused andunder-used office space in west London is sub-let or otherwise
disposed of as soon as possible. A prompt and orderly handoverto new tenants will help ensure that we get maximum value fromthe BBC’s White City campus for licence fee payers.

Pay
The amount the BBC pays senior executives and talent (on-screen
and on-air) plays an important part in people’s perceptions ofwhether or not the BBC delivers good value for money. This year
the pay multiple, which compares the pay of the Director-Generalwith the median pay of staff, was broadly stable, falling slightly from
11.0 to 10.9. This is down from 16.5 two years ago. The pay multiple
for the Executive Board as a whole was also broadly stable.
Senior executive pay
This year, we suggested that the NAO look at severance
arrangements for senior executives. They found that, although
the BBC exceeded its target of a 20% cut in the number of senior
managers it employs, the amount paid by the Executive in lieu of
notice exceeded contractual entitlement in 22 of the 150 cases
reviewed by the NAO. The total additional cost of these cases
was £1.4million in the three years to December 2012.
From September 2013, the Director-General – in agreement with
the Trust – introduced a cap of £150,000 on individual severance
payments for all staff, and for new starters, a cap equal to thelower of £150,000 or 12 months’ salary.
Employing freelancers
Last year, the BBC commissioned accountancy firm Deloitte tocarry out a review of the way freelancers are paid. The review
found that, although there was a high standard of compliance andno evidence of tax avoidance, an overarching policy in relation to
the engagement of freelancers should be established. In responseto that recommendation, the BBC worked with HMRC this year
to develop specific guidance on how to determine whether afreelance or a staff employment arrangement is appropriate foreach individual.
With this guidance in place, we will request a follow-up review in
2014/15 to ensure it is being applied consistently throughout theBBC, and that Deloitte’s remaining recommendations, forexample on increasing the disclosure of freelancer engagements
to HMRC, have been fully implemented.
Headcount
This year, headcount increased for the first time since the BBC
launched the DQF strategy. Given that, up until this year,£153.3million has been spent on restructuring, we have asked the
Executive to explain what progress has been made in reducing
headcount in previous years and identify the appropriate numberof staff required to deliver the BBC’s objectives.

We have asked the Executive to report key property benchmarks
to us as part of their regular performance reports to help us
monitor progress.

22

BBC Annual Report and Accounts 2013/14

Report on Executive Board remuneration
This is the report of the Trust Remuneration and Appointments
Committee on Executive Board remuneration in 2013/14.
The amount paid to members of the Executive Board for2013/14 is detailed in the Executive Board’s Remuneration
Committee report in Part Two of this Annual Report.

The Director-General’s remuneration is usually made up of abase salary and a pension. However, Tony Hall is currently inreceipt of a BBC pension from his previous employment with
the Corporation, and has not joined the BBC pension scheme.
The Director-General is provided with a car and driver forbusiness journeys.
Tony Hall’s base salary is £450,000 per annum, with no bonus
potential. The same salary (pro rata) was paid to Tim Davie
whilst he was acting Director-General.
We publish how much the Director-General gets paid
compared with the median salary of BBC employees toillustrate how top executives’ pay relates to the salaries of thosein the rest of the BBC. In 2013/14, this multiple remained
broadly steady at 10.9 (2012/13: 11.0).

The non-executive directors receive a fee determined by theTrust. Fee levels are set with reference to rates paid by otherUK corporations, but at a level such that the non-executive
directors are not financially dependent on the BBC.

Part One: Setting strategy and assessing performance

The Director-General
The Director-General of the BBC is the organisation’s chief
executive officer and editor-in-chief; he is also Chairman of
the BBC’s Executive Board. There were two people in thepost of Director-General during the 2013/14 reporting period.
Tim Davie was acting Director-General from 11 November
2012 to 1 April 2013. Tony Hall became Director-General on
2 April 2013.

Non-executive directors
In the 2013 Governance Review the Trust and the Executive
agreed to appoint an additional two non-executive directors
to the BBC, bringing the total number to six.

Each non-executive director receives a base fee. The chair ofeach committee receives an additional fee for undertaking thattask, and the senior non-executive director also receives anadditional fee. Non-executive directors are reimbursed for
expenses, and any tax arising on those expenses is settled
directly by the BBC.
In November 2012, non-executive directors proposed andthe Trust agreed that their fees should be reduced. Further
information about non-executive directors’ fees can be foundin Part Two.
Last year we stated that we would review non-executive
directors’ fees in December 2013; we decided to postpone thisreview, however, until after the appointment of the two new
non-executive directors. The final appointment is expected tohappen in the early summer of 2014.
Executive directors
The Executive Board’s Remuneration Committee sets the
remuneration for individual executive directors, within astrategy agreed by the Trust. Each year the Executive reports
formally to us, explaining how this strategy is being followed.
During 2013/14, there were a number of changes in the
Executive Board. We therefore considered the remuneration
both of existing Executive Board members, and members
appointed during the current reporting period. We are satisfied
that the Executive’s approach complied with the remuneration
strategy, including the commitment to pay no bonuses to
Executive Board members, and to gradually reduce the pay
multiple, which is calculated by comparing the median earnings
of BBC staff with the median earnings of executive directors.
Further information on the remuneration packages for
executive directors, including the current pay multiple, isprovided in Part Two.

BBC Annual Report and Accounts 2013/14

23

Setting strategy and assessing performance

Value for money
In-depth value for money reviews
Value for money reviews commissioned by the Trust will play a
key role in delivering the Governance Review’s ambition for the
Trust to focus on its oversight and regulatory functions by more
explicitly and openly holding the Executive Board to account.
Digital Media Initiative
This year we commissioned an independent review of the failureof the Digital Media Initiative (DMI).
The aim of DMI was to improve production efficiency by enabling
BBC staff to develop, create, share and manage video and audio
content and programming on their desktop. It was closed in May
2013 and its remaining assets were written down at a total costto the BBC of £98.4million. Following this costly failure, the Trust
commissioned PricewaterhouseCoopers (PwC) to undertakea comprehensive review of DMI’s management and reporting to
identify what lessons could be learned and applied to future projects.
PwC found that there was no single event or issue that caused
DMI to fail; rather, serious weaknesses in project management
and reporting, a lack of focus on business change, together withpiecemeal assurance arrangements, meant that it took the BBC
too long to realise that the project was in serious trouble andunlikely to deliver its objectives.
The NAO published a memorandum on DMI, following up its
original 2011 report on the project. It confirmed PwC’s findings,
concluding that the Executive did not have a sufficient grip of the
programme.

Future value for money reviews
Following a previous Trust review in 2008/09, we asked the
Executive to reduce the overall cost of talent, particularly at the
top end. Since then, the total amount paid to presenters andperformers on screen and on air fell for the fifth year in a row, to£194million, bringing the total annual saving to £35million (15%).
Having seen five years of reductions in this pay bill, now is the righttime to review the BBC’s position in the market, and to test the
Executive’s strategy for talent pay. We have begun the processof commissioning a review from independent specialists, and willreport our findings later on in 2014/15.
We also plan to commission a review of how the BBC manages
risk in order to ensure the Executive Board has put in place theright structures and processes to identify, assess, and mitigate
risks, and to deliver value for money to licence fee payers in doing
so. We intend to commence this review in the coming year.
In addition, the NAO will conduct two value for money
examinations at the BBC in 2014.
Managing the BBC’s estate: this study will provide a strategic
overview of the cost, management and performance of theBBC’s estate following a period of renewal and consolidation.
The BBC’s estate represents a significant cost and theconfiguration and effective utilisation of the estate is criticalto supporting new and more efficient ways of working.

Delivering Quality First: this review will examine the BBC’s
progress in reducing costs through DQF and how the BBC is
As a consequence, on all projects, reporting arrangements havemeasuring the impacts of cost reductions on service delivery
and quality.
been strengthened to include points of external challenge, project
management guidance has been updated, and project assurance
In each case, the NAO will provide reports to the Trust. We will
arrangements are routinely reviewed to ensure they are coherent.
arrange for them to be published and put before Parliament, andwill also consider what further work is required in response.
Distribution
Also this year we commissioned a review of distribution, which
Licence fee collection
was undertaken by media consultancy Mediatique. The review
In 2012/13 the BBC implemented the new licence fee collection
examined whether the BBC’s distribution of television, radio,
contract with Capita; the contract is forecast to deliver savingsand online services (such as iPlayer) are cost effective, whatto the BBC of £220million over its eight-year life. This year, thegovernance structures are in place, and how well prepared thecost of collecting the licence fee fell below 3% for the first time,
BBC is to respond to future challenges. It found that, overall,
to 2.7%; this contributed to a reduction in the combined cost of
expenditure on distribution represents good value for money
collection and evasion from 8.5% in 2012/13 to 8.2% in 2013/14.
but that the teams within the BBC responsible for different
We will continue to ensure that collection arrangements are
distribution contracts should work more efficiently together
efficient, appropriate and proportionate.
(see the ‘serving all audiences’ section for further details).

24



BBC Annual Report and Accounts 2013/14

This year, under the previous arrangements, we received andapproved four proposals from the Executive. In July, the Trust
approved the procurement, until 2020, of transmission services
for the BBC’s domestic analogue and digital radio networks; thiscontract also included the build-out of the DAB digital network
to cover 97% of the population.
The next significant proposal was a retendering of the BBC’s
UK-wide facilities management contract in October. This wasfollowed a month later with a proposal to replace one of theBBC’s core IT systems, underpinning finance, HR, training, andprocurement.
Finally, in December, we approved the extension of the existing
technology framework contract with service provider Atos; thisis to allow the Executive time to restructure the provision of IT
facilities into six different services, co-ordinated by a service
integration and management function. We expect proposals fora number of the individual IT services to come to the Trust for
approval as the Executive finalises their procurement during 2014/15.
Trading fairly
It is important that the BBC conducts its activities fairly and thatit takes proper account of its effect on others in the market.
The Trust sets the policy framework for fair trading, holds the
Executive to account for its compliance with those requirements,
and acts as final arbiter in the event of complaints.
We monitor the BBC’s adherence to the fair trading policy during
the year and approve the appointment of auditors who conduct
an annual audit of its fair trading systems and processes. Theirreport is published in Part Two.
We are required to review the BBC’s fair trading policy
framework every three years, and we are currently conducting
the second of these reviews. We will hold a public consultation
later in the year on our findings and on any changes we propose
as a result.
In August 2013, we considered a fair trading appeal concerning theBBC’s arrangements for studio supply in the London area. At therequest of the appellant, details of the appeal remain confidential
but an extensive Trust investigation resulted in a number offollow-up actions including a review by the Executive of its studiosupply arrangements in the London area and a clearer definitionof the test of commercial efficiency that we apply to the BBC’scommercial subsidiaries.

Overseeing the BBC’s commercial activities
The Trust oversees the BBC’s commercial strategy, sets
the framework for scrutinising new commercial service
proposals and monitors compliance with conditions set
out in the BBC Agreement.
BBC Store
In July 2013, the BBC submitted proposals to the Trust to
make available a broader range of BBC programmes, on acommercial basis, via a BBC-branded website, ‘BBC Store’.

Part One: Setting strategy and assessing performance

Significant financial proposals
Following the Governance Review this year, which concluded thatthe separate roles of the Trust and the Executive Board should bemade clearer, the threshold at which we review significant
financial proposals was raised. As such, the Trust no longer
expects to approve individual investment decisions except where
they are worth more than £100million and affect the overall
direction or reputation of the BBC.

In March 2014, having completed both the commercial andpublic service regulatory assessments, including taking advice
from Ofcom, we approved the proposals for BBC Store.
New framework for commercial services
One of the conclusions to emerge from the governancereview was that we should build on the existing service licencesystem by creating public documents that set the boundariesof the BBC’s commercial work and allow us to hold the BBC toaccount for its performance. We have begun developing aframework document for the BBC’s commercial services
and will consult publicly on it later in 2014, with a view toimplementing the new framework towards the end of the year.
Lonely Planet
In 2013, BBC Worldwide sold the Lonely Planet business thatit had acquired in 2007 (75% was acquired in 2007; the remaining
25% in 2011), making a significant loss on the transaction.
We commissioned and published an independent review
which found that, against the backdrop of a sustained strong
performance from BBC Worldwide, mistakes had been
made both in the acquisition and subsequent operation of
Lonely Planet. We identified a number of lessons to be
implemented and we will ensure that these are reflected in
the new commercial framework.
Overseeing other activities
In April 2013, S4C, the Welsh language broadcaster, became
funded substantially from the licence fee. We undertake anannual performance assessment of S4C as part of our overall
duty to oversee the licence fee. We publish our assessment
separately alongside the S4C Annual Report.
New funding arrangements also came into effect for BBC
Monitoring and we have been kept informed about its
performance against criteria agreed with users of the service
in government and the BBC.
£150million of licence fee funding was ring-fenced andprovided to government to spend on its programme toextend the coverage of super-fast broadband. DCMS is
responsible for the delivery of that programme. We are kept
informed of progress, and would only seek to intervene if
there were clear evidence of any value for money problem
or any inconsistency with the BBC’s public purposes.
In accordance with the licence fee settlement agreed in 2010,
the Trust has a funding agreement with Comux UK Ltd, thecompany that Ofcom has licensed as the multiplex operator
for local television services. £16.8million out of a maximum
budget of £25million was allocated to Comux during 2013/14.
In February 2014 we initiated an audit to assess compliancewith the funding agreement.

BBC Annual Report and Accounts 2013/14

25

Setting strategy and assessing performance

Serving all audiences
The BBC’s services reached 96% of the UK’s population
but could do more to reflect the diversity of its audiences.

The BBC should make its content widely available to all licencefee payers in ways that are convenient to them. It should also
ensure that its programmes, and the make-up of its workforce,reflect the diversity of the UK.
Delivering BBC content
The Trust oversees the ways in which the BBC distributes
its programmes and services and we must do everything
we reasonably can to ensure that audiences can access these
programmes and services in a range of convenient andcost‑effective ways (whether on TV, online or on the radio).

The central issue for the BBC is that it needs to balance theprinciple of universal access, free at the point of use – providing
the content people want in the way they prefer – with the costof providing all content on every platform.
This year we began to develop a framework to set out clearly
the BBC’s distribution activities and to become the basis onwhich we hold the BBC to account for its performance. We willhold a public consultation on the proposed framework once it isready later in the year, with a view to implementing it towards theend of 2014/15.

Diane Coyle and David Liddiment visiting the BBC Asian Network studio26



BBC Annual Report and Accounts 2013/14

Performance summary

The BBC maintains near universal reach,
despite audiences having a huge choice ofother channels and services.

How the BBC measures up

96%

Next steps
 The BBC’s ability to innovate andadapt its services, providing highquality content for everyone, willremain key to its success in the
coming years.

Part One: Setting strategy and assessing performance

Reach of BBC services
The BBC should make its content widely
available to all licence fee payers in waysthat are convenient to them.

2012/13: 96%

Source: BBC Cross Media Insight Survey

Out of London – % of network spend
The BBC is ahead of schedule in meetingits 2016 target to produce more
television outside London.

How the BBC measures up

Next steps
 This remains an important priority
in order to address the perception
amongst audiences outside London
that the BBC could represent thembetter.

Representing the nations and regions
The BBC has made progress in improving
audience perceptions in the nations andregions, but viewers and listeners aroundthe UK still want to be better
represented in programming.

How the BBC measures up
52% of UK adults
believe the BBC
performs well in
representing theirnation or region.

Next steps
 We will continue to monitor
through audience research how
BBC programming is reflecting
the UK as a whole.

Source: Purpose Remit Survey

BBC Annual Report and Accounts 2013/14

27

Setting strategy and assessing performance

Serving all audiences
YouView
In June 2010 we approved the BBC’s participation in YouView, ajoint venture to develop and promote a common standard forinternet-connected digital terrestrial television devices. YouView
offers the public subscription-free access to on-demand services
through a broadband connected digital box. Our approval was
given subject to various conditions to ensure YouView does not
distort the market, for example by crowding out other players,
and to protect free-to-air viewing of an increasing choice ofprogrammes. While certain principles (concerning free-to-air,and platform access) were enshrined in the objectives of the joint
venture and the shareholders’ agreement, others were subject
to a separate review, to be conducted a year after launch by theTrust. These were:
The implementation of accessibility and usability features
The effects, if any, on the incentives of joint-venture partners
to syndicate their content to other platforms
The steps taken by the joint venture to provide appropriate
information and signposting about the suitability of content
wherever possible
Cross-promotional activity, with reference to the Trust’s
Competitive Impact Code on Cross-Promotion.
YouView devices launched in July 2012 so we began our review
in July 2013, including discussions with industry stakeholders
and joint-venture partners. We concluded that the joint venture
was operating in accordance with the terms we approved andconsistently with the aims of the project. The findings from thereview were published in May 2014.
We also had to approve the terms of the new shareholder
agreement for YouView. In April 2014 we approved the headsof terms, and the final full agreement is due to be signed laterin 2014/15. Our main objective in all the discussions on the newagreement was to ensure that it upheld the original aims of theventure and reflected the principles behind our original approval.

Representing the whole of the UK
The BBC aims to produce more programming from across the
UK and less from London. This is to bring economic benefits to
the UK’s nations and regions as well as to represent the UK more
fully culturally.
We set the BBC a target of making 50% of network television
spend outside London by 2016, with 17% spent in Scotland,
Wales and Northern Ireland. We are pleased to see that, again,
the BBC is ahead of schedule with 53% of programming madeoutside London and 20% in the devolved nations. This remains
an important priority in order to address the perception
amongst audiences outside London that the BBC could represent
them better.
We recognise that building sustainable creative communities
is a long-term commitment, and we accept that there may befluctuations in levels of programming from each region or nation
as the BBC prioritises finding the best programming for its
audiences in the normal course of creating content.
Representing the diversity of the UK within the BBC
In July 2014 the Executive will publish a report accounting for
progress during 2013/14 against its diversity strategy: Everyone
Has a Story 2011-2015. We note that the Executive has madesome progress against its target of 12.5% for black, Asian andminority ethnic staff (BAME), with a 0.2% increase from lastyear in both leadership grades and other staff. To build upon thisthe Executive has established a mentoring scheme, Rise, for
BAME staff.
We are nonetheless concerned by the lack of progress in theemployment of disabled staff. The BBC continues to fall short ofits target of 5.5%. As at March 2014, 3.8% of staff were registeredas disabled and the number of disabled staff in senior grades has
disappointingly dropped this year. There has been some progressin terms of disabled staff retention and we have asked the
Executive to continue with these efforts. However, rates ofpromotion and transfer for disabled staff have decreased whilst
the rate of redundancy amongst disabled staff has increased.
We expect the Executive to prioritise this area.
In terms of recruitment, the Executive has focused on diversifying
its leadership grades and have identified new models of recruitment.
We also welcome the establishment of new partnerships with
Job Centres and the Stephen Lawrence Trust to recruit BAME
talent and help prepare young people to apply for BBC
Apprenticeship schemes.
Having a more diverse staff is desirable in itself. But the objective
is BBC programmes that, in terms of writers, producers, directors,
actors performers, reporters, presenters and contributors, lookand sound more like the people of an increasingly diverse UK.

28



BBC Annual Report and Accounts 2013/14

Openness and transparency
The Trust believes that the BBC has nothing to lose andeverything to gain by being open about what it does, how
it spends its money, how well it is performing and, whenthings sometimes go wrong, how it has learned from it.

A ‘mystery shopping’ exercise by the Trust in 2013 suggested
that the new system for handling audience complaints is an
improvement, while a Corrections and Clarifications webpage
means the BBC is now more open about any mistakes made.
We continue to promote increasing openness and transparency
in the Trust’s work. This included consulting publicly on the new
World Service operating licence before it was introduced forthe coming year.
We believe that an important part of openness and transparency
is to share insights and information with industry stakeholders
and other interested parties. We again held our annual discussion
session with senior industry figures on the future direction of
the BBC. Throughout the year, as well as consulting audiences
on reviews of major services – BBC Television and News – wemet regularly with industry stakeholders and other interested
parties across the UK.

The Trust also engaged with industry stakeholders more widelyon a range of other issues, including the additional guidelines forreporting on the Scottish independence referendum.
The Trust and Executive reviewed together the BBC’s
governance. We jointly recognised that the BBC needed to be
more open about the way in which it is run and held to account.
In December 2013, we committed to a series of measures tobring greater clarity to our respective roles: that the Executive
runs the BBC day-to-day and the Trust holds them to accounton behalf of licence fee payers.
The Trust committed to streaming live some of our sessions, and,for the first time, we published the annual objectives we set for
the Director-General, so that audiences can judge for themselves
how he is performing against these priorities, as well as against his
longer-term strategic objectives.
We also decided that in 2014/15, the principle of openness andtransparency should be embedded in a wider objective for the
BBC to improve value for money by being simpler, more efficientand more open. We will report on openness and transparency
as part of this new broader objective next year.

Richard Ayre’s discussion of the Trust’s service review was streamed live

BBC Annual Report and Accounts 2013/14

29

Part One: Setting strategy and assessing performance

In 2010, we gave the BBC the strategic objective of setting new
standards of openness and transparency. The BBC has begun tomake progress against this objective, for example in the amountof information routinely published about senior manager andtalent pay. The ‘About the BBC’ section of the BBC’s website wasrefreshed in January 2014, and now includes blogs from senior
managers and updates explaining how the BBC is making decisions.

30

BBC Annual Report and Accounts 2013/14

Part One: Understanding audiences

Understanding
audiences

Consultations, research andAudience Councils: those weheard from and what they said

BBC Annual Report and Accounts 2013/14

31

Understanding audiences

Enabling everyone to have their say
We heard from a range of audiences, in particularthrough our surveys and public consultations
linked to major pieces of work.
The Trust’s duty is to reflect the interests of all licence fee payers
and to make decisions that are in the public interest. We makesure we are well informed about audiences’ views through anumber of means, both direct and indirect. There are manyindustry as well as BBC surveys that measure audienceappreciation of programmes, such as the BBC Pulse Survey, andothers that look at consumer trends, such as Ofcom’s market
surveys. These tell us which BBC services people use, and throughwhich channels, and what people think about its and others’
programmes and services. The Trust also has direct ways ofhearing what the public thinks; these include public consultations,audience research, and feedback from our four national Audience
Councils (see page 34). The responses we get, alongside our otherevidence on audience perceptions and behaviour, help give us afully rounded picture of public opinion to inform the decisions wemake on licence fee payers’ behalf.
Public consultations
Public consultations enable anyone to have a say. We always
consult when we review a BBC service and also for some otherwork – this year, for example, we consulted on guidelines forcoverage of the Scottish independence referendum. In the lastyear we carried out seven public consultations, and heard from
more than 13,000 people across the UK about BBC Television and
BBC News and other matters. We also received consultation
responses from a range of organisations including industry bodies
and voluntary organisations.

Research
Our main piece of research is the annual Purpose Remit Survey
which measures the BBC’s performance in delivering its six public
purposes. We also commission a mix of quantitative andqualitative research which, together with our public consultations,gives us a detailed picture of what our audiences think about theBBC’s services. This year we commissioned specific research to
inform our service review of the BBC’s network news andcurrent affairs, and for our review of BBC Television.
Purpose Remit Survey
This survey asks licence fee payers for their views on how importanteach of the BBC’s six public purposes is to them, and how good theBBC’s performance is in each case. It also includes some generalquestions such as whether the BBC offers good value for money.
This year, more than 2,250 adults from across the UK were selectedto participate in the survey, enabling us to represent the views of
a diverse and fully representative group of licence fee payers.
As in previous years, about six in ten thought that the BBC offered
good value for money. Previously, black audiences have given
much lower ratings than the average, so we were pleased to seethat their perceptions of value for money rose considerably from
36% in the last survey to 50% today. Also in line with previous
years, 78% of people said that they would miss the BBC if it were
not there – a higher figure than for any other UK broadcaster.
Opposite is a summary of the results for each public purpose.

Sonita Alleyne at an Audience Council meeting32



BBC Annual Report and Accounts 2013/14

Sustaining citizenship and civil society
Public perceptions that the BBC offers high quality, independentjournalism dropped last year to 65%, and we said then that thiswas likely to have been because the high profile problems in the
BBC had affected audiences’ perceptions and trust. However,the score remained the same this year, and some supplementary
qualitative research we carried out suggests greater competition
in online news may also be affecting people’s overall opinions
about the BBC’s journalism.

Promoting education and learning
People score this, along with ‘bringing the UK to the world andthe world to the UK’, as the BBC’s most important public purpose,and the BBC received the second highest rating here, with anaverage performance score of 70%. ‘I have learned new thingsfrom the BBC’ again scored 74%, while ‘the BBC helps children/
teens perform with what they learn at school/college’ was slightly
lower at 67%.
Bringing the UK to the world and the world to the UK
The BBC received the highest rating for this purpose, with anaverage performance score of 73%. The statement ‘The BBC
helps me understand what is going on in the wider world’ scoredhighest of all statements in the survey, at 80%.
Delivering the benefit to the public of emerging communications,
technologies and services
Over the past three years there has been a steady improvementin perceptions that the BBC provides quality content on mobile
phones and tablets, such that most people today believe this to be
the case. Unsurprisingly, perhaps, younger people’s perceptions
have improved most, while people over 55, who tend to use theseplatforms less, are less positive.

Representing the UK, its nations, regions and communities
The extent to which audiences in the devolved nations perceivethat the BBC represents them well in network output remains
low, at about 50-55% of respondents on average. The score forrepresentation in network news coverage ranges from 47% in
Scotland to 57% in Northern Ireland, the latter being a significant
increase from last year.

Stimulating creativity
Though the gap has
reduced, there is stillroom for improvement in
the creation of fresh andnew content.

77% of audiences thought that
fresh and new ideas were important77%

But only 61% of audiences
thought that the BBC hadlots of fresh and new ideas

61%

-16%

Representing life
in Scotland, Wales,
Northern Irelandand England
The map shows the% of people in eachnation who think
the BBC is good atrepresenting their life
in news and current
affairs content.

47%

57%
53%

60%

2012/13: -23%
Fallen short

BBC Annual Report and Accounts 2013/14

33

Part One: Understanding audiences

Stimulating creativity and cultural excellence
An important part of creativity is having fresh and new ideas,
and this is something the BBC has been particularly focusing onin recent years. We were therefore pleased to see that this year,
for the first time since the survey has been running, theperception that the BBC has plenty of fresh and new ideas
increased, from 56% to 61%. However, the BBC’s performancestill does not match high audience expectations in this area so,while we welcome the improvement, we will continue to look formore progress. It is likely that some of the improvement is related
to the BBC’s newer digital services such as apps, since the main
improvement in this score came from 16 to 34-year-olds who
are most likely to use them.

Understanding audiences

Audience Councils
Audience Councils in England, Scotland, Wales and Northern
Ireland ensure that the interests of audiences across the UK are
at the heart of the Trust’s work through their regular input into
our discussions. They monitor audience views and assess BBC
performance in each nation, reporting monthly via their meetings
and annually to the whole Trust. Through their work, they help
to identify audience needs as a starting point for service reviews,
and each year they assess how the BBC is performing foraudiences in each part of the UK.

How the BBC performed
Members told us that audiences across the UK think the BBC’s
services are performing well. However, Councils suggested that
more television programmes made by BBC Scotland, Wales andNorthern Ireland should be broadcast on the national networks;that content for audiences in the devolved nations including local
news and factual content should better reflect changes in society;and that it would be desirable to extend political coverage on local
radio in England and to safeguard the relevance of regional
television current affairs in England.

Reflecting audiences’ views
Councils are recruited to reflect the diversity of the UK and arechaired by the Trustee for each nation. Some Councils hold public
meetings with licence fee payers and consider a range of otheraudience information in order to formulate their advice for the
Trust. This year the Councils focused their work on BBC Television
to provide input into our service review. They emphasised to
the Trust that audiences believed that BBC One should takemore creative risks and that BBC Two should be more innovativeand distinctive.

Audience Council priorities for the year ahead
The Councils use insights gathered from their meetings withaudience members and research to identify priorities which theypresent each year to the Trust.

Informing the work of the Trust
We use the advice from Councils in our regular discussions with
the Executive. This year, following the review of how the BBC
is governed, specific sessions were introduced on how well the
BBC performed for audiences in each of the nations based onreports from each Audience Council.

This year the Councils said that audiences wanted to see more
network programmes reflecting different areas of the UK and
more network news reflecting public policy issues in the devolved
nations. They noted a desire for news and discussion programmes
to contain a broader range of views and voices, to better reflect
the diversity of viewpoints. The Councils felt that Radio 4 inparticular could work harder to serve audiences outside theSouth East of England. They also said that when new technicaldevelopments like HD and the iPlayer Radio are introduced,
programmes and services for audiences in the nations and English
regions, and in indigenous minority languages, should be included
from the outset.
An annual review from each Audience Council is available on
their websites.

Audience Councils monitor audience views and assess BBC performance34



BBC Annual Report and Accounts 2013/14

Part One: Inside the Trust

Inside the Trust

Who we are, how we operate
and how much it costs

BBC Annual Report and Accounts 2013/14

35

Inside the Trust

BBC Trustees
Getting the best out of the BBC for licence fee payers
Trustees are part time and come from a variety of backgrounds,
bringing a wide range of experience to the BBC.

Lord Patten of Barnes CH, Chairman(stepped down on 6 May 2014)

Diane Coyle OBE, Vice Chairman(Acting Chairman from 6 May 2014)

Sonita Alleyne OBE

Other roles
Chancellor, University of Oxford; Co-Chair,
UK-India Round Table; non-executive
director, Russell Reynolds Associates;
International Advisory board member, BP;
Stakeholder Advisory Panel member, EDF.

Lead Trustee on commercial issues.

Lead Trustee on diversity and equality(with Richard Ayre).

Richard Ayre

Alison Hastings

David Liddiment

Lead Trustee on diversity and equality(with Sonita Alleyne), transparency issues,and the complaints framework.

Trustee for England

Other roles
Non-executive director, All3Media;
associate, Old Vic Theatre Company;
Chair, Hepworth Wakefield Gallery.

Other roles
Freedom of Information Adjudicator,
The Law Society.

36

Other roles
Director, Enlightenment Economics;
Stakeholder Advisory Panel member, EDF;
member of Governing Council, National
Institute of Economics and Social Research.

Other roles
Vice President, British Board of Film
Classification; non-executive director,
Clatterbridge Cancer Centre; consultant
and trainer, Press Complaints Commission.

Other roles
Founder, Yes Programme Ltd; nonexecutive director, Archant; member,
British Board of Film Classification;member, London Legacy Development
Corporation.

BBC Annual Report and Accounts 2013/14

Part One: Inside the Trust

Bill Matthews

Aideen McGinley OBE

Nick Prettejohn

Trustee for Scotland; Chairman,
BBC Pension Trust Ltd.

Trustee for Northern Ireland.

Trustee from 1 January 2014.

Other roles
Director, M2M2 Limited; non-executive
board member, Security Industry
Authority; member for Scotland,
British Transport Police Authority.

Other roles
Jury member, UK City of Culture 2017;
trustee, Fermanagh Trust; governor,
St Michael’s College, Enniskillen; co-chair,
Carnegie Trust Roundtable on Wellbeingin Northern Ireland.

Other roles
Independent director, Prudential
Regulation Authority (stepped down on
6 March 2014); chairman, Britten-Pears
Foundation; chairman, Royal NorthernCollege of Music; chairman, Scottish
Widows (from 23 June 2014); nonexecutive director, Lloyds Banking
Group plc (from 23 June 2014).

Elan Closs Stephens CBE

Suzanna Taverne

Lord Williams of Baglan

Trustee for Wales.

Other roles
Non-executive director, Ford Credit
Europe; trustee, StepChange Debt
Charity; trustee, Shakespeare Schools
Festival; advisory board member,
Manchester Business School.

Other roles
Distinguished Visiting Fellow, Chatham House;member of the international advisory board,
Toledo CITPAX, Toledo International Centre
for Peace; member of governing board,
School of Oriental and African Studies.

Other roles
Emeritus Professor, Aberystwyth
University; non-executive director
and chair, Corporate Governance,
Welsh Government; member, S4C
Authority; non-executive director,
IMAX Waterloo (BFI).

BBC Annual Report and Accounts 2013/14

37

Inside the Trust

Governance
The BBC Trust is the governing body of the BBC.
We are supported by the Trust Unit, a team ofprofessional BBC staff who report directly to us.
The Trust sets the strategic objectives for the BBC and issues aservice licence to every BBC service stating what we expect it
to deliver and how much it can spend. We uphold the BBC’s
editorial standards and protect the BBC’s independence. The
Trust is separate from the Executive which is led by the DirectorGeneral, providing the editorial and creative leadership of the
BBC and managing the operational delivery of its services.
The functions and duties of the Trust are outlined in the BBC’s
Royal Charter and the BBC’s Agreement with the Secretary ofState. The Trust operates in accordance with published protocols,
and the way we make decisions is governed by our Standing
Orders. As Trustees we commit to acting in accordance with
our Code of Practice.
Our regular business is undertaken in monthly meetings of thefull Trust and some sub-committees. At these meetings we makedecisions relating to our duties and responsibilities and consider
proposals from the Executive Board.
We publish the minutes of our monthly Trust meetings on our
website. We also publish the evidence and research on which ourdecisions are based, the findings of all editorial appeal decisions,and the outcomes of value for money and service licence reviews.
Trustee changes during the year
The Trustees listed on pages 36 and 37 reflect the membershipof the Trust at 31 March 2014. Anthony Fry stepped down on
30 October 2013. Nick Prettejohn’s term began on 1 January 2014.
Lord Patten stepped down as Chairman on 6 May 2014.
Trustees’ attendance at Trust meetings (1 April 2013 – 31 March 2014)

Chairman
Lord Patten

19/19

Vice Chairman
Diane Coyle

19/19

National Trustees
Alison Hastings
Bill Matthews
Aideen McGinley
Elan Closs Stephens

18/19
18/19
19/19
18/19

Trustees
Sonita Alleyne
Richard Ayre
Anthony Fry
David Liddiment
Nick Prettejohn
Suzanna Taverne
Lord Williams

17/19
19/19
8/10
19/19
6/6
18/19
16/19

38



Assessing our own performance
The Trust’s Standing Orders set out that each year the Trustshould evaluate its own performance and that of its committees,
and publish the results in the Annual Report.
In light of the 2013 governance review which recommended
further clarity between the roles of the Trust and the Executive,
we decided to use this year’s review process not only to assess lastyear’s performance, but also to consider how we can implement
these recommendations to achieve the best results for licencefee payers. We decided to use an external consultant to ensure
frankness and objectivity, and to help benchmark our performanceagainst that of other bodies. After a competitive process, weselected consultancy firm Egon Zehnder to run the evaluation.
The main conclusions of the review included steps to consolidate
the clarity of the Trustees’ role, to enhance collective working
within the Trust and to develop further effective interaction with
the Executive. The cost of the external board evaluation was£65,000 (+VAT).
The Trust Unit
We are supported in our work by the Trust Unit, which provides
independent and objective advice, calling on outside experts
when necessary. The Unit is made up of BBC staff who are
independent of the Executive and report directly to us. It includes
professional staff with expertise across a range of disciplines,
including corporate governance, policy development, audience
research, financial and performance analysis, economics and law.
The Unit advises us on our duties, manages the Trust’s supervisory
and regulatory functions, and provides us with independent
assessments of proposals from the Executive Board. Most Unit
staff are based in London; others are based in offices in Belfast,
Birmingham, Cardiff and Glasgow.
Register of interests
Our Code of Practice requires us to maintain and publish aregister of all external interests that might be seen to affect ourability to perform the duties of a BBC Trustee. This register includes
declarations of all positions of employment, directorships andvoluntary positions as well as interests of close family members, if
relevant. The Trust’s register of interests is published on our website.

BBC Annual Report and Accounts 2013/14

Complaints and Appeals Board
Chair: Richard Ayre

The Complaints and Appeals Board (CAB) deals with appeals andcomplaints to the BBC about everything except programme-making
and content. There are two CAB standing members who aresupplemented by one or more additional Trustees as needed.
In 2013/14, of the 239 TV Licensing, fair trading and general appeals
received, seven were heard in full by the CAB (four were upheld andthree were not). Overall 96% of complaints were dealt with in thetarget time (40 working days for admissibility decisions and 80
working days for CAB findings and decisions). The CAB is responsible
for reviewing the effectiveness of the BBC’s complaints framework,
Audience Councils Committee
which was relaunched in 2012/13. The CAB commissioned a ‘mystery
Chair: Diane Coyle
shopping’ exercise to test the way complaints were being handled at
Stage 1 of the BBC’s complaints procedure. Testing took place during
The Audience Councils Committee (ACC) brought together
the summer of 2013 with the results published in February 2014.
the Vice Chairman and the four National Trustees to oversee
The role and responsibilities of the CAB remain unchanged in theand co-ordinate the contributions of the BBC’s Audience Councils new committee structure.
as advisory bodies to the Trust. Its role was to ensure that issues
identified by the Audience Councils were dealt with appropriately Meeting attendance (1 April 2013 – 31 March 2014)
Trustee
Attendanceby the Trust and that the Councils worked within their remits.
The ACC also approved membership of the Audience Councils.
Richard Ayre (Chair)
13/14
In April 2014, the ACC’s functions were incorporated into those
Elan Closs Stephens (standing member)
14/14
of the full Trust.
Sonita Alleyne
1/1
Diane Coyle

3/3

Attendance

Alison Hastings

2/2

2/2

David Liddiment

0/1

2/2

Bill Matthews

1/1

Bill Matthews

2/2

Aideen McGinley

2/2

Aideen McGinley

2/2

Nick Prettejohn

1/1Elan Closs Stephens

2/2

Suzanna Taverne

2/3

Lord Williams

1/1

Meeting attendance (1 April 2013 – 31 March 2014)

TrusteeDiane Coyle (Chair)
Alison Hastings

Committee membership changes: there were no changes during this period.

Committee membership changes: there were no changes during this period.

Audiences and Performance Committee
Chair: David Liddiment
The Audiences and Performance Committee (APC) was
responsible for developing the strategy for, and assessing theperformance of, the BBC’s UK public services on behalf of theTrust. It monitored how the BBC delivers its public purposes.
The APC assessed the performance of the BBC’s services against
their service licences, including overseeing the Trust’s programmeof service reviews. The APC was also responsible for the Trust’s
programme of audience research and public consultation. In April
2014, the APC’s functions were incorporated into those of theServices Committee and the full Trust.

Editorial Standards Committee
Chair: Alison Hastings
The Editorial Standards Committee (ESC) is responsible, on behalfof the Trust, for establishing the BBC’s editorial standards andoverseeing the BBC’s services for compliance with these standards.
Editorial standards are enshrined in the BBC’s Editorial Guidelines,
which are approved by the Trust. The ESC is the final appeal bodywithin the BBC in determining whether the Editorial Guidelines
have been followed, and the final arbiter of complaints on appeal
to the Trust. The ESC also manages the Trust’s programme of
impartiality reviews and seminars. The role and responsibilitiesof the ESC remain unchanged in the new committee structure.

Meeting attendance (1 April 2013 – 31 March 2014)
Trustee

Attendance

Meeting attendance (1 April 2013 – 31 March 2014)

10/10

Trustee

Sonita Alleyne

8/10

Alison Hastings (Chair)

15/15

Alison Hastings

10/10

Sonita Alleyne

14/15

9/10

Richard Ayre

15/15

10/10

David Liddiment

13/15

Bill Matthews

12/13

David Liddiment (Chair)

Aideen McGinley
Suzanna Taverne
Committee membership changes: there were no changes during this period.

AttendanceCommittee membership changes: there were no changes during this period.

BBC Annual Report and Accounts 2013/14

39

Part One: Inside the Trust

Trust committees
We do much of our work through committees, which can makecertain decisions on behalf of the Trust as a whole. The membersof each committee and their attendance during 2013/14 areshown below. This is the last year the committees operated inthis form since the governance review recommended a newcommittee structure, with four committees plus a TrustManagement Group. Therefore from April 2014, the committees
have been: Services Committee, Value for Money Committee,
Editorial Standards Committee and the Complaints and Appeals
Board. The terms of reference for the new committees can befound on our website.

Inside the TrustInternational Services Committee
Chair: Lord Williams

Strategy and Approvals Committee
Chair: Diane CoyleThe International Services Committee (ISC) was responsible
for helping the Trust to develop the strategy for, and assess theperformance of the BBC World Service, BBC World News,
bbc.co.uk/news and BBC Monitoring. In April 2014, the ISC’s
functions were incorporated into those of the Services
Committee and the full Trust.

The Strategy and Approvals Committee (SAC) considered
proposals from the Executive Board, including for new services orchanges to existing services, except those proposed as part of aservice review (which were considered by the APC). The SAC
managed any Public Value Test or other consideration of a
proposal from the Executive and made recommendations to theTrust on possible outcomes. The SAC also oversaw the BBC’scommercial strategy and individual proposals, where these wereof strategic significance or of high value. In April 2014, the SAC’s
functions were incorporated into those of the Services
Committee and the full Trust.

Meeting attendance (1 April 2013 – 31 March 2014)
Trustee

Attendance

Lord Williams (Chair)

3/3

Diane Coyle

3/3

Richard Ayre

3/3

Aideen McGinley

3/3

Elan Closs Stephens

3/3

Committee membership changes: there were no changes during this period.

Remuneration and Appointments Committee
Chair: Lord Patten
The Remuneration and Appointments Committee (RAC)
managed the Trust’s responsibilities concerning Executive Board
remuneration and appointments. The RAC oversaw executive
remuneration strategy and made recommendations to the Truston the pay and benefits of the Director-General and the nonexecutive directors of the Executive Board. However, pay andbenefits of the executive directors are determined by the
Executive Board’s Remuneration Committee, which consists
entirely of non-executive directors. In April 2014, the RAC’s
functions were incorporated into those of the full Trust and theTrust Management Group.
Meeting attendance (1 April 2013 – 31 March 2014)
Trustee

Attendance

Lord Patten (Chair)

1/1

Diane Coyle

1/1

Anthony Fry

1/1

David Liddiment

0/1

Nick Prettejohn

0/0*Committee membership changes: Anthony Fry (until October 2013); Nick Prettejohn(from February 2014).
* There were no meetings during Nick Prettejohn’s membership period.

Meeting attendance (1 April 2013 – 31 March 2014)
Trustee

AttendanceDiane Coyle (Chair)

9/9

Anthony Fry

3/5

Bill Matthews

8/9

Suzanna Taverne

9/9

Lord Williams

7/9

Nick Prettejohn

2/2Committee membership changes: Anthony Fry (until October 2013); Nick Prettejohn(from February 2014).

Trust Finance Committee
Chair: Anthony Fry (until October 2013)
Acting Chair: Diane Coyle (from November 2013 until March 2014).
The Trust Finance Committee (TFC) helped the Trust to set thefinancial strategy for the BBC. It examined the BBC’s annual
budget and held the BBC to account for its financial performance.
It scrutinised significant financial proposals, and oversaw the
Executive’s internal control and risk management arrangements.
The TFC also managed the Trust’s programme of value-for-money
reviews, working with the Executive to ensure the BBC acts on
any recommendations made. In April 2014, the TFC’s functions
were incorporated into those of the Value for Money Committee
and the full Trust.
Meeting attendance (1 April 2013 – 31 March 2014)
Trustee

Attendance

Anthony Fry (Chair)

7/8

Diane Coyle (acting Chair from November 2013 until March 2014)

14/14

Richard Ayre

13/14

Nick Prettejohn

2/2Elan Closs Stephens

13/14

Suzanna Taverne

13/14

Committee membership changes: Anthony Fry (until October 2013); Nick Prettejohn(from February 2014).

40

BBC Annual Report and Accounts 2013/14

Trustees’ attendance at Audience Council meetings (1 April 2013 – 31 March 2014)
Trustee

Attendance

Alison Hastings

7/7

Bill Matthews

8/9

Aideen McGinley

9/9

Elan Closs Stephens

9/9Part One: Inside the Trust

Trustees’ remunerationFees
Our fees as Trustees are determined by the Secretary of State
for Culture, Media and Sport. In September 2010, Trustees took avoluntary 8.3% pay cut (equivalent to a month’s salary), in parallelwith the Director-General and other Executive Board members.
The reduced fees for Trustees will remain in effect until 31 August
2014 and are reflected in the table below. The one exception tothis is the Chairman, whose level of fees was reduced by 23%
when the post was advertised in 2010 and, therefore, a further
discount has not been applied. Trustees do not receive severance
pay or other compensation for loss of office.

Expenses
We are reimbursed for expenses incurred on BBC business,
which include travel, accommodation, work-related meals andhospitality. Trustees’ expenses are governed by the Trust’s Codeof Practice, which is published on our website. Every six months
we publish a full list of all expenses incurred by each Trustee, as
well as the services booked centrally for Trustees by the Trust
Unit. Some of our expenses and support services are classed as
taxable benefits by HMRC, and this figure is published in the
remuneration table; any tax arising on expenses incurred issettled by the BBC.
Chairman’s benefits
During his time as Chairman, Lord Patten was not eligible toreceive any benefits other than his fee, and he elected not tomake use of a BBC driver.

Trustees’ remuneration table
Fees1
£000

Taxablebenefits
£000

Total
2013/14£000

Total
2012/13£000

Appointment
term startdateAppointment
term end
date

Lord Patten

110

1

111

Diane Coyle*

71

–

71

111

1 May 1130 April 15

71

1 Nov 0630 April 15

Chairman and Vice Chairman

National Trustees
Alison Hastings

38

–

38

38

1 Nov 06

31 Oct 14

Rotha Johnston2

–

–

–

22

1 Nov 06

31 Oct 12

Bill Matthews3*

38

–

38

38

1 Jan 1131 Dec 14

Aideen McGinley4

38

–

38

16

1 Nov 12

31 Oct 16

Elan Closs Stephens

38

–

38

38

1 Nov 1031 Oct 14

Sonita Alleyne4

33

–

33

14

1 Nov 12

31 Oct 16

Richard Ayre

33

–

33

33

1 Aug 1031 Jul 14

Anthony Fry

30 Oct 13

Trustees

19

–

19

33

1 Nov 08

David Liddiment

33

–

33

33

1 Nov 06

31 Oct 14

Mehmuda Mian2

–

–

–

19

1 Nov 06

31 Oct 12

Nick Prettejohn6

8

–

8

–

1 Jan 1431 Dec 17

Suzanna Taverne

33

–

33

33

1 Jan 1231 Dec 15

Lord Williams*

33

–

33

33

1 Dec 1130 Nov 15

Total

525

1

526

532

5

Notes
1 Trustees took an 8.3% voluntary reduction in pay, in parallel with the Director-General and Executive Board, in September 2010. The Chairman’s fee was reduced by 23% from£142,800 to £110,000 at the start of Lord Patten’s term. Full details are available on our website.
2 Rotha Johnston and Mehmuda Mian ended their appointments part-way through the financial year 2012/13; accordingly their fees only relate to their time in office and do not cover
the full year.
3 Bill Matthews is the Chairman of the Board of the BBC Pension Trust Ltd, the corporate trustee of the BBC Pension Scheme. He is separately remunerated for this role. Further details
are available in the BBC Pension Scheme Annual Report and Accounts.
4 Aideen McGinley and Sonita Alleyne began their appointments part way through the financial year 2012/13; accordingly, their fees only relate to their time in office and do not cover
the full year.
5 Anthony Fry stepped down on 30 October 2013; accordingly his fees only relate to his time in office and do not cover the full year.
6 Nick Prettejohn began his appointment during the financial year 2013/14; accordingly his fees for 2013/14 only relate to his time in office and do not cover the full year.
* These Trustees all had taxable benefits less than £500 which have been rounded to nil. The total amount incurred by Trustees was £1,276.85.

BBC Annual Report and Accounts 2013/14

41

Inside the Trust

Trust finances
We aim to run our operations as efficiently as
possible. Our direct expenditure for 2013/14
was consistent with that for the previous year.
In line with the rest of the BBC, we are committed to making
savings. Specifically, we are committed to keeping our direct
expenditure below 0.31% of total licence fee income. This year,
direct expenditure represented 0.25% of total licence fee income(2012/13: 0.24%).
Director and senior management remuneration
Nicholas Kroll, Director, BBC Trust, is the Chief Officer of theTrust as specified by the Royal Charter. He is the principal adviser
to the Trust and Chief Executive of the Trust Unit. His base pay
for 2013/14 was £238,680 (2012/13: £238,680) and the aggregateof his emoluments to 31 March 2014 was £246,480 (£246,480
to 31 March 2013). Nicholas is a member of the BBC Pension
Scheme. Nicholas steps down from his role as Director, BBC
Trust on 20 June 2014.

Over 2013/14 the Trust Unit had six senior managers as wellas the Director, and our website provides an analysis of theirremuneration, split into £5,000 salary bands.
See page 41 for Trustees’ remuneration which is audited.
Reporting regulations
The Royal Charter requires the annual report and accounts tobe externally audited. We therefore asked KPMG LLP to confirm
that we have accurately presented the Trust’s expenditure,including Trustees’ remuneration, in Part One.
KPMG LLP’s report is included next to the statement ofTrust responsibilities on page 43. The BBC is exempt fromthe requirements of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 andthose of the Financial Conduct Authority but, where relevant,
we have prepared this report as if those requirements apply.
Trust people

Trust expenditure statementNote2013/14£000

2012/13£000

Trustee remuneration

1

583

589

Staff costs

2

4,203

4,496

Other operating costs

3

4,534

3,548

4, 5

9,320

8,633

6

2,666

3,276

Direct Trust expenditure
Ofcom regulatory fees
Total Ofcom fees payable by Trust

2,666

3,276

Total Trust expenditure

11,986

11,909Notes
1 The remuneration received by each Trustee is shown in the table on page 41. The figure in the table above includes social
security costs.
2 Staff costs include wages and salaries, social security costs and employer’s pension contributions.
3 Operating costs include direct expenditure on activities such as research, legal advice, other specialist advisory services and theTrust’s consultation activities and stakeholder events.
4 This represents direct external spend by the Trust. The Trust also made use of shared services, which included property
provision, finance, HR and information services that were provided by the BBC public services.
5 Of direct Trust expenditure, £952,153 relates to spend on Trust activities in the four nations (2012/13: £998,409).
6 Ofcom allocates its costs of television and radio regulation to the BBC and the other UK broadcasting channels. The Trust pays
the BBC’s share of that allocation.

42



Average for year

2013/142012/13

Trustees

11.8

12.0

Trust Unit staff (EFT)1

61.8

65.9

Note
1 Trust Unit staff are those employed directly by theTrust Unit. Of the 61.8 average equivalent full time(EFT) Trust Unit staff for 2013/14, 14 EFTs werebased outside London and supported the work theTrust undertakes in Wales, Scotland, Northern
Ireland and England (2012/13: 15). 12% come froma black, Asian or minority ethnic background(2012/13: 12.9%); 5.7% are disabled (2012/13: 3.9%);
and 65.9% are women (2012/13: 65.2%).

BBC Annual Report and Accounts 2013/14

Our responsibility, in accordance with the terms of ourengagement letter, is to form an independent opinion, on thebasis of the work performed, and to report our opinion to theTrust. Our examination was substantially less in scope than an
audit or a review.
We were not required to, nor have we, verified the completenessof the Trust expenditure statement.
Our report has been prepared for the Trust solely in connection
with its obligations under the Royal Charter. Our report was
designed to meet the agreed requirements of the Trust andparticular features of our engagement determined by theTrust’s needs at the time. Our report should not, therefore, beregarded as suitable to be used or relied on by any party wishingto acquire rights against us other than the Trust for any purpose
or in any context. Any party other than the Trust who obtains
access to our report (or any part of it) will do so at its own risk.
To the fullest extent permitted by law, KPMG LLP will accept no
responsibility or liability in respect of our report to any other party.
In our opinion, the expenditure as shown in the Trust expenditurestatement has been accurately extracted from the books andrecords of the Trust on the basis of the notes to the Trust
expenditure statement.

Jonathan Downer
For and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
19 June 2014

Statement of responsibilities in respect of the annual reportand accounts
The BBC’s Royal Charter requires that an annual report andstatement of accounts is prepared in two parts, Part One by
the Trust and Part Two by the Executive Board. The Executive
Board’s responsibilities are detailed in the Governance sectionof Part Two of this annual report. In summary, the Executive
Board is responsible for preparing the financial statements andstatements of compliance with applicable corporate governancecodes and remuneration regulations, and delivering these to
the Trust within Part Two of this annual report. The Executive
Board has prepared the financial statements in accordance with
International Financial Reporting Standards as adopted by the
EU (EU IFRS), reflecting the fact that EU IFRS are widely usedin the UK, are being adopted in the public sector, and that theiruse would be permitted under the Companies Act 2006.
These financial statements are audited by external auditors.
In preparing its associated corporate governance disclosures, theExecutive Board has elected to comply with the UK Corporate
Governance Code, and, where applicable, the Financial Conduct
Authority Listing Rules which apply to a company quoted on an
EU regulated market.
In order to comply with those requirements, the annual reportmust include disclosures on the governance arrangements of theTrust as well as those of the Executive Board. These disclosures,
which are audited, are the responsibility of the Trust, and areincluded in Part One of this annual report.
The Charter also requires the Trust to prepare a statement of
its expenditure and include it within Part One of the annual report.
Statement of disclosure of information to auditors
The Trustees who held office at the date of approval of thisannual report and accounts confirm that, so far as each is aware,
there is no relevant audit information of which the BBC’s
auditors are unaware; and each Trustee has taken all the steps
that he or she ought to have taken as a Trustee to make himself
or herself aware of any relevant audit information and toestablish that the BBC’s auditors are aware of that information.
This statement was approved by the Trust on 19 June 2014.

Diane Coyle
Acting Chairman
19 June 2014

BBC Annual Report and Accounts 2013/14

43

Part One: Inside the Trust

Report of KPMG LLP to the BBC TrustIn accordance with the terms of our engagement letter dated
13 May 2013, we have examined the expenditure statementon page 42 (the ‘Trust expenditure statement’) for the year
ended 31 March 2014 which has been prepared, further to therequirements of the BBC Royal Charter dated October 2006,
by the Trustees and is their sole responsibility.

44



BBC Annual Report and Accounts 2013/14

The BBC Executive’s review
and assessment

46

Director-General’s introduction

Part Two

Part Two

Strategic report
49 Delivering our strategy
50
54

Our achievements
Our vision for the future

59
60
66
71

Performance

73
74
78
79
80
81

How we run the BBC

Performance by content area
Performance by service
Performance by genre
People (including headcount, severance pay and talent spend)
Diversity
Training and apprenticeships
Partnerships
Outreach and corporate responsibility including
charity appeals

Governance and finance report
85 Governance
86 Executive Board
88 Risks and opportunities
91 Governance report and Nominations Committee
93 Report of the Senior Independent Director
95 Remuneration report
108 Audit Committee report
112 Fair Trading report

The Executive is responsible for theoperational delivery of BBC services and the
direction of BBC editorial and creative output
in line with the framework set by the Trust
BBC Annual Report and Accounts 2013/14

115 Managing our finances
116 Review of the Managing Director, BBC Finance &Operations
118 How we use the licence fee
119 Commercial trading
127 Looking forward
128 Summary financial statement
129 Auditor’s report45

Director-General’s introduction

Across the UK, virtually everyone gets something from the
BBC each and every week. This report sets out how we aredelivering our programmes and services to audiences, our vision
for the future, and how we spend the licence fee. It sets out ourachievements, and highlights some of the challenges we face incontinuing to deliver for everyone.
This year there is a lot to be proud of.
On BBC One, Britain’s favourite channel, we have brought thenation together to celebrate, to commemorate, and to shareamazing television moments. We saw history being made on
Centre Court last summer; Sherlock’s unforgettable return toour screens; and, more recently, Sarah Lancashire’s unmatchedperformance in Happy Valley.

At the core of the BBC’s role issomething very simple, very democratic
and very important – to bring the best
to everyone. Wherever you are –whoever you are – whether you arerich or poor, old or young, that’s what
we do… Everybody deserves the best.
Tony Hall, Director-General

With BBC News I believe that Britain has the best news
organisation in the world. It offers a unique service: a networkthat is local, regional, national and global. This year I havebeen particularly pleased at the way our local radio stations
responded to the terrible weather this winter; and our journalism
in Syria, and in covering the conflict in Ukraine has been first-rate.
The BBC is by far the most trusted news service in the UK, andthe most retweeted source of news the world over – these areachievements to be rightly proud of.
It has been a year in which we celebrated half a century of
BBC Two, with some great comedy and brilliant new dramain Line of Duty, The Fall and Golden Globe winning performancesin Dancing on the Edge and Top of the Lake.

Helena Bonham Carter and Dominic West in BBC Four’s Burton and Taylor

46

The crowd enjoying the Asian Network’s London Mela Event

BBC Annual Report and Accounts 2013/14

BBC Introducing brings together all of the BBC’s supporters of undiscovered and unsigned music

And, the BBC also has the power to present extraordinaryinternational events. Last November millions of people joined
together across six continents to mark 50 years of Doctor Who
in The Day of the Doctor.
But I want us to do even better.
The BBC has always been an innovator. We are the radio
company that pioneered television; the broadcaster thatembraced the internet. And, with expectations now changing
fast, I want us to innovate again; to bring the wonders of digitaltechnology to everyone. To inform, educate and entertain in
new and surprising ways.
That is why I set out some big creative ambitions for the BBC
last October – shaping new ideas, new partnerships, and a newkind of relationship with our audiences.
We are starting to see the results. This year has seen record
audiences for BBC News online. Our vision for the iPlayer isstarting to take shape, with a new version launched in March andmore to come. We also launched Playlister, a new digital service
BBC Annual Report and Accounts 2013/14

for music fans. And across the UK we are offering everyone new
ways to enjoy some of our country’s greatest events: Glastonbury,
Glyndebourne, Hay, the Edinburgh Festivals, the Proms,
Wimbledon, Glasgow 2014. All of these events, and more, arebeing brought to you live, wherever you are. In addition, we haveseen the launch of the BBC Weather app; a new app for CBeebies;
and new digital guides, bringing learning to internet connected
devices. In 2015, we plan a major series to inspire the nation withcoding and computing.
We have started along the road of changing the way we interact
with our audiences. We want not just to listen but to actively
engage with them. That relationship should no longer simply
be about the BBC, but my BBC – and work is underway foraudiences to become their own schedulers, our next creators,
our future innovators.
As we look to the future, I believe that the BBC should reflect
Britain’s strengths. As part of this, I want us to bring the best to
everyone in science, natural history, comedy and drama. I also
know from personal experience that the UK is world class inmusic and arts. That is why, last October, I announced that
we would be putting music and arts at the very heart of theschedules. I have appointed single Directors for BBC Music and
BBC Arts and I believe that we are already beginning to see a
difference. The BBC is working in partnership with some of
Britain’s great institutions and some of our finest creative talent;joining up across television, radio, iPlayer and online to showcase
Britain’s artists, performers, writers and composers. This issomething only the BBC can do, and we are proud to do it.

47

Part Two: Director-General’s introduction

I am also pleased that I can report another exceptional year
for BBC Radio. In this, the oldest part of the Corporation, weare seeing record-breaking audiences and distinctive talent –from Chris Evans, on Radio 2 every morning, to the Today teamon Radio 4. Highlights for me include Sir Kenneth Branagh’s
magnificent performance in Antony & Cleopatra and Grayson
Perry’s exuberant Reith Lectures. I have also been impressedby BBC Introducing – a scheme that gives talented musicians,
all across the country, a chance to shine, supported by BBC local
radio, and across the UK on Radio 1.

Director-General’s introduction

I also want us to do more to nurture and support new talent –from all backgrounds; all around the UK. Last year, I set new
targets for apprenticeships and we are meeting them two years
early. I also set new ambitions for women in local radio and wehave made significant progress on this objective. Diversity will
be a really important part of my agenda in the coming year.
As this report sets out, we face significant challenges ahead.
The BBC is operating with a flat licence fee settlement and new
financial responsibilities. As a result, the amount of funding we havefor public service in the UK will be 26% less in real terms by 2016/17.
At the same time, we are working in an increasingly competitivemarket. The revenues of other media organisations are much larger
than the BBC in the UK, and even they are dwarfed by some of the
global giants that operate in the same market as we do.

We are also looking hard at every aspect of what we do andat every pound we’re spending. We are benchmarking ourcosts against the rest of the industry and looking in detail at
our staff base.
The challenges are significant, but I am confident that we willmeet them.
The BBC is an organisation brimful of talent. Every week, I meetteams who share a passion for the BBC and what it stands for.
Very often, they are achieving above and beyond what you’d
expect: our local news teams producing a vital service duringmonths of flooding in places like Cornwall, Somerset and Sussex;
serious entertainment in the Strictly ballroom; or BBC Sciencelaunching a new Longitude prize that will change our world
fundamentally. I’d like to say thank you to all our teams and all
the people outside the BBC who work with us.

In response, we are making savings to live within our means.
We have now delivered £374million p.a. through our current
savings programme, and we are on course to deliver the£700million p.a. savings we said we would make by 2016/17.
I have also set the organisation a target to find an extra £100million
p.a. of savings to fund our new ambitions. We are achieving all thisby taking advantage of the latest technologies, introducing new
ways of working, getting the best value for money whenever werenew our contracts, increasing our commercial income, andaddressing talent costs and top management pay.

But most importantly I’d like to thank our audience. Throughout
this year – my first full year in post as Director-General – thestatistic that most impressed me was how much money the
BBC has helped raise through charity appeals supported acrossour services. Through our own charity Children in Need, or inpartnership with others like Comic Relief; through big televisionnights and via regular appeals on radio, this year we helped raiseover £84million for good causes. That’s broadcasting at its mostpowerful. The BBC at its best.

I believe the iPlayer is a key part of our future, and with our
proposal to the BBC Trust to move BBC Three fully online we
aim to keep the best from the linear world but also bring new
formats, different durations, and more individualised content toan audience most ready for an online world. At the same time,
we help meet the challenge of delivering high quality content for
all our audiences at a time of financial constraint.

Tony Hall
Director-General
19 June 2014

Last Night of the Proms 2013

48



BBC Annual Report and Accounts 2013/14

Part Two: Strategic report – Delivering our strategy

Delivering our strategy

Our achievements for the year
and our vision for the future
BBC Annual Report and Accounts 2013/14

49

Strategic report – Delivering our strategy

Our achievements
We brought stand-out content, big moments
and the benefit of new technologies to the public;
we began the journey of changing the BBC.

Sherlock
The third series launched on New Year’s Day 2014 withan average audience for the first episode of 12.7 million and3.6 million iPlayer requests, making it the most requested
drama on iPlayer to date.

The FallCommissioned by BBC Northern Ireland and set in Belfast,
it had an average series audience of 4.3 million, the largest fora BBC Two drama series in the last ten years.

Great British Bake Off
The final achieved thebiggest BBC Two audiencein over 10 years.

Winter Olympics
Our coverage of Sochi 2014 reached 33.7 million people, higher
than any of the previous three Winter Olympic Games.
New Year’s Eve
Fireworks
The highest television
audience of 2013.

Britten 100
Broadcast on BBC Radio 3 and reached an estimated
1.1 million listeners on radio and requested 97,957 times
via iPlayer in the UK.
50

BBC Annual Report and Accounts 2013/14

Part Two: Strategic report – Delivering our strategy

Radio Drama
Radio 4 aired over 600 hours of drama, including a Scottish
season featuring four original dramas about the Stuart dynasty
and dramatisations of three novels by Sir Walter Scott.
Whilst as part of Radio 3’s celebration of the 450th anniversaryof Shakespeare’s birth, we broadcast Anthony and Cleopatra
in full, starring Sir Kenneth Branagh and Alex Kingston.

Glastonbury
For the first time, there were live-streams from the six key
Glastonbury stages giving over 250 hours of coverage, reachinga total Television audience of 19 million and with 12.1 million
requests for live and catch-up content online.

Local RadioGreat dedication was shownin its reporting of the floods
and in its passion for local
sport. BBC Local radio also
rightly performed strongly
at the Radio Academy Awards
with Gold Award wins
for BBC Tees, BBC ThreeCounties, BBC Norfolk, BBC
Ulster, BBC Lincolnshire.

News reaching everyone
BBC TV News coverage on
the night of Nelson Mandela’s
death was watched by
13.38 million people on
BBC One and the BBC News
Channel.

BBC Annual Report and Accounts 2013/14

World War One
To coincide with the start of the BBC’s World War One
season we launched BBC iWonder – interactive guides
designed to unlock the learning potential of all BBC content.
Meanwhile, Jeremy Paxman’s programme, Britain’s Great War,was the BBC One factual series with the highest score of theyear for helping audiences learn something new.

51

Strategic report – Delivering our strategy

The Wrong Mans
The highest audience for a comedy launch on BBC Two inseven years, with an average of 4.5 million viewers for the
opening episode.

New iPlayer
Available on over 1,000 different devices and serves
10 million programme requests a day.

CBBCThe My Life documentary series continued to challenge andcelebrate our young audience with real children living
extraordinary lives.

Biggest Commitment to Arts in a generation
We committed extra funding for BBC Arts programming,
appointed strong leadership for the arts, and re-launched
BBC Arts Online as well as The Space, our pioneering online
partnership with Arts Council England.
52



Apps
BBC apps have been
downloaded over
57 million times.

BBC Annual Report and Accounts 2013/14

A year of change at the BBC
We are building on strong foundations to take the BBC throughto its centenary in 2022, putting the right policies in place to ensurethat we are more efficient, representative, fair and innovative.

A new top team
A new leadership team isin place at the BBC bringing
together the best of talentsfrom inside and outside– with new non-executive
directors bringing a hugebreadth of experience.

A new strategy
We set out a clear ambition
for the BBC to the end of thecurrent Charter with a focus
on quality, innovation andefficiency.

Respect at work
We want zero tolerance ofbullying and a culture where
people feel able to raise
concerns and have theconfidence that they will be
dealt with appropriately.
Part Two: Strategic report – Delivering our strategy

Women on air
We committed that by the end of 2014 half of BBC Local Radiostations will have a woman presenting the high-profile Breakfast
shows. Other prominent appointments include Mishal Husseinon Today, Ritula Shah on The World Tonight, Carrie Gracie as
the BBC’s first China Editor and Gemma Cairney on Radio 1.

Cap on severance pay
Severance pay has been
capped at £150,000 andwhere staff resign or are maderedundant they are expected
to work their notice in full.

Contributing to thecommunity
Through our own charities
and partnerships with others,
we have helped raise£84.5million across the year.
Birmingham
We are revitalising ourpresence in Birmingham
with a focus on digital skills
and talent development.
Apprenticeships
We are delivering on our commitment tohave 1% of the workforce as apprentices.

BBC Annual Report and Accounts 2013/14

53

Strategic report – Delivering our strategy

Our vision for
the future
James Purnell
Director, Strategy
and Digital‘‘Last year’s Annual Report was written in the shadowof a crisis. In the last twelve months, we have sought
to focus on what audiences need today, and how we
can best serve them in the future. We start from astrong place. The UK has a world-class media sector.
Thanks to everyone at the BBC over the last twenty
years, the BBC has remained a world-class broadcaster.
It hasn’t become the victim of technological change– instead, it has found new ways of informing,
educating and entertaining. People use the BBC
more every week than twenty years ago. We want
to reinvent ourselves again.’’Grayson Perry delivers Radio 4’s Reith Lectures54



We will be doing so in a market where digital technologies havebecome mainstream. For one part of our audience, they now
represent a big part of their media consumption – with young
people consuming close to a quarter of their television on-demandon other screens or via DVD, for example. We are no longer
experimenting with these technologies – they are a normal partof our lives. As an organisation, we’re looking forward to the next
wave of innovations.
But we don’t think these new ways of consuming will replacewhat’s gone before. Radio and television channels meet enduring
human needs – to have an expert find the best of their subject
and put it in front of us; to have commissioners showcase newcontent every week; to watch or listen at home at the same time
as millions of others.
When he arrived at the BBC, Tony Hall asked the management
team to agree a clear direction for the next three years, until theend of this Charter. The BBC has renewed its strategy regularly
over the last twenty years. But this time we faced the newchallenge of innovating in a period of declining income. In past
periods, the BBC has been able to fund innovation from efficiency.
At this time, we are using those savings to offset the fact thatlicence fee funding for our UK public services will be 26% lower
in real terms by 2016/17 owing to the flat licence fee settlement
and new financial responsibilities. To be able to keep on innovating,
we’ve had to find further savings.

An average audience of 12.7 million viewers
tuned in to see the return of Sherlock

BBC Annual Report and Accounts 2013/14

Rather than try and do everything a bit less well, we decided toprioritise three areas: innovating online, strengthening key
programme genres, and making our channels work even better.
Our proposal to the Trust to move BBC Three online is the best
illustration of what this means. We could have kept salami-slicing
television budgets, but we were worried that would mean fallingbehind in genres like drama, which were set to be cut by tens of
millions of pounds. Instead, we are proposing to close BBC Three
as a broadcast channel, so as to avoid having to make that cut, butalso to give ourselves a chance of going to where young audiences
will be in five years’ time based on a dialogue with them about
how their media needs and habits are changing.
We want iPlayer to be the best online video and audio player in the world

Innovating online
We have begun the building of a more personalised, social andmobile BBC, offering individual recommendations, participation
and a two-way relationship with our audiences.

We already have plans for a longer catch-up window of 30 days,
more archive material, iPlayer-specific commissions, and thelaunch of BBC Store – a way to buy a whole range of programmes
to watch and keep forever.

iPlayer is central to this. We want it to be the best online video
and audio player in the world and will achieve this by extending itin three ways. Firstly, by offering more content, secondly bydeveloping a truly online TV and radio experience and, finally, bymaking all of this content easier to browse, discover and enjoy.

But that is just the start. In particular, we expect iPlayer to bea key platform on which BBC Three launches as an online-only
television service from the autumn of 2015 – subject to BBC
Trust approval of our plans.

From new programming exclusive to
BBC iPlayer, to new online and pop-up
channels around special interests or
major events, BBC iPlayer will bebursting with more content than ever.

Part Two: Strategic report – Delivering our strategy

But the BBC Three decision is only one of the many ways in which
we are implementing this strategy.

BBC Four’s Inspector De Luca on BBC iPlayer

Danny Cohen, Director of BBC Television

BBC Annual Report and Accounts 2013/14

55

Strategic report – Delivering our strategy

Strengthening key genres
As part of the strategy, we agreed to find an extra £100million p.a.
in savings by 2016/17, so as to strengthen key parts of BBC output.
In some areas, this was because without the BBC there would bea clear market failure. In music, for example, key industry players
had been telling us that our role in breaking new music andexposing it beyond niche audiences was becoming indispensable,
as business models change and fragment. They wanted us to do
more. So we’re expanding BBC Introducing, providing theindustry with a pipeline of brilliant new British musical talent andoffering unrivalled opportunities for new artists. And we launched
Playlister, which lets audiences tag and remember any piece ofmusic they hear on the BBC across all programmes and genres,
get recommendations from their favourite DJs, and replay it on
their preferred streaming service.
The same was true of the arts, so in March 2013 we made theBBC’s greatest commitment to arts for a generation. Arts willtake centre-stage across the BBC with a new topical strand taking
audiences to music and arts events across the UK. There will be a
new online service, closer engagement with artists andinstitutions, more distinctive arts content across all the BBC’schannels, and stronger leadership for the arts.

We have also re-launched The Space, our pioneering online
partnership with Arts Council England, where we’ll work withartists and performers from all creative industries to commission
new kinds of digital art and digital performance, and to find thenext generation of talent. The arts are at the heart of the BBC
and our ambition is to be even better.
In other areas, we wanted to invest to make sure that we
remained world-class. That wasn’t just true of drama – it is also
the case in News, where we want to build on the inheritance ofthe World Service. Audiences tell us how well the BBC helps
them understand what is going on in the wider world and how
much they value the BBC’s global role. We are proud that wereach 265 million people per week through the BBC’s Global
News Services. It would be a terrible waste not to build on that,
so we have set ourselves the stretching ambition of doublingthat number by 2022. In the short term, thanks to these savings,
we expect the budget of the World Service to rise, and we will
strengthen original and investigative journalism both on theWorld Service and in the UK.

The Glastonbury Festival Pyramid Stage during the Rolling Stones’ headline performance56



BBC Annual Report and Accounts 2013/14

Making our channels even better
By strengthening those programme areas, we will strengthen ourchannels. The great drama series or world-class news that wehope they will produce will keep BBC One and BBC Two as mass
channels. By doing so, we will continue to be able to deliver therange of content that our public purposes require: challenging,
new, distinctive and different, from comedy to current affairs,
science to religion. Nearly 90% of viewing is still live; audiences are
telling us with their remote controls that they love channels; so wewill continue serving those needs.
That’s also why we want to launch a BBC One +1 service, if
approved by the BBC Trust. Our audiences love the convenienceof +1 channels. Indeed, they can’t quite understand why the BBC
doesn’t offer them one. Every other public service broadcasterdoes. Licence fee payers have funded these programmes – weshould make it convenient for them to watch them, so they get asmuch value as possible from their investment.

Technology can also help make channels work better. Audiences
will be able to go back in time – through the backwards
programme guide on YouView, for example, or into the future tocreate their own schedule from programmes we release early.
We will take this even further with channels that are more
personal and know more about what you like, what your friends
like, and what you might want to watch next.
And – to finish where this section started – we are also using the
new BBC Three to pioneer how channels will work in the future.
BBC Three online will continue to have the things we all cherish
most about the service – innovative comedy, unrivalled current
affairs for young people, incisive and entertaining factual, andoriginal entertainment. But it will also have the freedom to breaktraditional shackles – a wonderful creative opportunity to develop
new formats with new programme lengths and to reach young
audiences in an ever-growing number of ways.

Dame Judi Dench and Steve Coogan star in BBC Films
co-production Philomena

BBC Annual Report and Accounts 2013/14

Part Two: Strategic report – Delivering our strategy

As part of the strategy, we decided not to make BBC Four an artsand music channel. Not only did we believe that arts and musicshould be the responsibility of the whole BBC, we also listened tothose who told us they loved BBC Four as it was, a channel thataims to be the most innovative in British television.

Melvin O’Doom, Nick Grimshaw and Rochelle Humes
from BBC Three’s Sweat the Small Stuff

57

Strategic report – Delivering our strategy

The BBC and Charter review
This strategy is about what the BBC will do for the next three
years. The Government recently announced that Charter review
will not start until after the Election. We were happy to see theBBC being taken out of the electoral cycle in this way.
To prepare for that, we will now develop our proposals for that
Charter review, so that we can give audiences and decisionmakers an exciting set of options for the future.
We look forward to that debate. We believe that the BBC is oneof the reasons why Britain is one of the most competitive andsuccessful media markets in the world. After the US, the UK is
the largest exporter of TV programmes in the world1. The UK
is one of only three net exporters of music2. We recently
commissioned a study of how audiences around the world rate
their television services on quality. Out of 14 countries the UK
emerged as the leader with 72% of the British public rating
their television service as good quality – the highest out of all
the countries surveyed. Out of 66 major TV channels aroundthe world, BBC One received the highest score of all. BBC Newsis the most trusted in the world.

The BBC is also an indispensable part of everyday life. For 40p
a day, households consume on average six hours of information,
education and entertainment. That’s amazing value. And weare critical to the cultural health of the UK, finding, training,developing and supporting new talent: writers, actors, artists,musicians, journalists and technical staff.
So, as we approach Charter review, we’ll be on the lookout
for ways of improving what we do. It’s because we believe thatthe system works pretty well, that we’ll be very interested in
discussing alternatives. It would be a sign of lack of confidence
to want to close down debate. The BBC matters a lot – and thiswill be an important choice about the future of the BBC.

1 Communications Chamber, Creatve UK, The Audiovisual Sector and Economic success, 2011.
2 PRS for music economic research, 2012.

Gillian Anderson in BBC Northern Ireland’s crime drama The Fall

58



BBC Annual Report and Accounts 2013/14

Part Two: Strategic report – Performance

Performance

How we performed against ourobjectives by content area, genre
and channel or network
BBC Annual Report and Accounts 2013/14

59

Strategic report – Performance

Television

Danny Cohen
Director,
Television‘‘It was a strong year for BBC Television in an increasinglycompetitive landscape with changing audience viewing
habits putting our reach figures under some pressure.
Over the coming months we’re making programmes
even more distinctive with high impact drama, natural
history and major national events. And, as the media
world changes rapidly and audience expectations getever higher, we’re working hard to ensure quality,
distinctiveness and innovation across all our output.’’
Serving all audiences
Whilst BBC Television aims to stimulate and delight audiences
across the UK we recognise we still need to work harder to reacha young, more diverse audience. From the factual Wonders of Life
to distinctive drama Peaky Blinders, from comedy hit Mrs Brown’sBoys to entertainment in Strictly Come Dancing we look to offer
something for everyone. Millions came together to enjoy The Voiceand The Great British Bake Off and distinctive new programmes
included The Story of the Jews, Citizen Khan, The Call Centre, Stephen
Fry’s Out There, the live one-off musical from Bradford City
Centre – Bollywood Carmen – along with coverage of the WinterOlympics – all attracting diverse audiences.
Creative excellence
There were many standout programmes in 2013/14 reflected in
the number of awards won by BBC Television. However, audiences’
expectations continue to be very high and we are committed toraising the quality bar ever higher. Sherlock’s launch on New Year’s

Day was watched by 12.7 million viewers and audiences were
thrilled with James Corden’s The Wrong Mans, Jane Campion’s
Top of the Lake, and Burton and Taylor starring Dominic West andHelena Bonham Carter.
Distinctive thought-provoking content
We aim to provide educational and stimulating content for all
audiences. The very best blue chip factual of Brian Cox’s Wondersof Life sat alongside popular innovation like The Great British Sewing
Bee and It’s A Mad World – a powerful season looking at young
people and mental health on BBC Three. The best arts, music
and cultural programmes are increasingly delivered throughpartnership projects: Written on Skin with the Royal Opera House;
Handmade alongside the V&A; and a star-studded performancecelebrating the 50th birthday of the National Theatre.
Looking forward
Our commemoration of WW1 continues with David Olusoga’s
World’s War documentary series and major event coverage inAugust 2014. New drama includes adaptations by Hilary Mantel
and Susanna Clarke and there’ll be new comedy from Peter Kay
and Matt Lucas. Life Story is a major new natural history series for
BBC One. We’ll see more collaboration between BBC Four and
BBC Two, including a focus on the art and music of the 18th century.
BBC Four is taking a lead role in BBC Arts at… a major new
initiative to take our arts coverage across the UK, and as we look
to reinvent BBC Three as an online service, the channel remains
committed to factual and current affairs with a season on crimeand punishment as well as new comedy, Siblings.

Strategy in action

Serving all
audiences

Quality anddistinctiveness 99.6% of the UK population
watched BBC television for atleast 15 minutes during 2013 andon average people in the UK
watch for almost nine hours
a week.
 Doctor Who: The Day of theDoctor was the most viewed
drama with an average audienceof 12.8 million, while on iPlayer
it was the most requested drama
episode in 2013 with more than
3.2 million requests.

 The BBC won a total of 16 Baftas
over the last year (this includes Film,
Television & Craft)

12.8m

watchedDoctor Who:The Day of
the Doctor

60



16

BAFTA awards
this year

BBC Annual Report and Accounts 2013/14

RadioHelen Boaden
Director, Radio‘‘BBC Radio stations’ unique, high-quality offer has
helped to preserve radio listening in the UK in theface of ever-increasing competition. Our continuing
focus on distinctive content and digital innovation,such as the launch of our Playlister service, means
radio is well placed for future challenges.’’

An unrivalled breadth of music
The BBC’s national networks offered a unique range of music,from Radio 2’s Folk Awards at the Royal Albert Hall and theinaugural 6 Music Festival in Manchester to new urban music at
1Xtra Live and the 119th season of the BBC Proms, which had
more sell-out concerts than any previous year and included a lastnight led for the first time by a female conductor, Marin Alsop.

Ambitious content across all networks
BBC Radio continues to produce outstanding creative content
across all its networks daily and through single standout moments:

New British talent was showcased in the Sound of 2014 poll onRadio 1, Radio 3’s New Generation Artists and the Asian Network’s
New Music Day, whilst 120,000 unsigned acts have now uploaded
their music on to the ‘BBC Introducing’ website.
AudiencesWhilst time spent listening remains under pressure in the face ofdigital competition, BBC Radio has been highly resilient in termsof reach with record audiences for Radio 2, Radio 4, 6 Music and
the Asian Network. Hours continue to be under pressure though
they have stabilised in the last quarter. Over the year, 90% of the
population listened to the radio every week; 67% to BBC Radio.
Innovation
In October, as part of our move towards a more personalised
service for our listeners, we launched Playlister, a service whichallows users to tag tracks as they are played on BBC Radio andbuild up and export their personal playlists.

Part Two: Strategic report – PerformanceRadio 1’s Talk It Out encouraged listeners to share their problems
and receive expert advice, while the Teen Awards recognised
more young ‘heroes’; Radio 2 broadcast a live minute-by-minute,
three-hour documentary on the assassination of JFK and ran the
year-long People’s Songs, telling the story of modern Britain
through 50 records; Radio 3 celebrated anniversaries of Britten,
Verdi and Wagner with complete opera cycles for each, while its
Free Thinking festival of ideas returned to Gateshead to explore‘Who’s in Control?’; on Radio 4, Cultural Exchange invited 75 leading
creative minds to choose their favourite cultural work, while
Grayson Perry’s Reith Lectures gave a powerful and playful insight
into contemporary art.

Digital Radio listening continues to grow, with 37% now throughdigital devices. Radio 1 became the first radio station to attract amillion subscribers to its YouTube channel and the iPlayer Radioapp now reaches more than 6 million browsers every week.

Strategy in action

Serving all
audiences

Quality anddistinctiveness 6 Music reach is now nearly 2 million,
cementing its position as the UK’s
leading digital station.
 Radio iPlayer now reaches over 6 million
browsers every week, and launched an
app for Android devices in April 2013.

 In a year of outstanding creativity
and ambition we have seen BBC Radio
audiences grow across traditional
networks, digital stations and online.

6m

browsers
every week

BBC Annual Report and Accounts 2013/14

61

Strategic report – Performance

News

James Harding
Director, News‘‘The BBC is the best news organisation in the world.
Our job is to keep making it better – to deliver
more of our own original journalism, to get stories
and tell stories in the ways now made possible by newtechnologies, to ensure ever greater value for licencefee payers, to lead the social and mobile media
revolution so as to make the news available to everyone,
wherever they are, now. We must do all this, but,above all, we must safeguard the public’s trust.’’Reaching all audiences
82% of UK adults consumed BBC News each week across
television, radio and online. TV News reach was slightly down
but was still the main audience platform, reaching over 32 million
UK adults every week. Radio news and current affairs hit a newrecord of 29.2 million in the final quarter of 2013. Use of the
BBC News website rose to an average of 25 million UK weeklybrowsers in early 2014. There was record world traffic in March,with an average of 62.8 million unique browsers (UK andinternational) per week.

High-profile stories
The brutal murder of the soldier Lee Rigby in Woolwich shocked
people across the country and was our most followed story.
In Syria, more than 100,000 were killed, and millions displaced.
The bravery of our teams there was recognised with Royal
Television Society awards. We reported on how the election of
Iran’s President Rouhani is changing the dynamic in the Gulf; theassault on corruption by China’s president; how Pope Francis isreviving interest in the Roman Catholic church; and the passingof Nelson Mandela, who changed the course of history. At home,
we reported on the miserable weather and a gathering, but
uneven, economic recovery.
Working together
The BBC has a news network that reaches from local radio
stations to bureaux across the world. We hope to put all thoseresources to the service of the public. We strive to cover whatmatters from the communities where we live to the furthest
corners of the earth. Technology is transforming the news,
enabling the BBC to inform, educate and, more than ever, engage.
We want to help shape the future of news, using mobile and social
media to ensure the news gets to everyone, everywhere, now.

Trust
BBC News remains by far the most trusted source of news
in the UK, although we are slightly below the levels reached
before October 2012 when the crisis broke over coverage ofJimmy Savile and the separate Newsnight child abuse investigationin Wales. We will work hard to justify the audience’s continued
trust. We will be alive to our critics and take responsibility for
mistakes when we make them. We will uphold an uncompromisingcommitment to accuracy, impartiality, diversity of opinion and fairtreatment of people in the news.
Strategy in action

Serving all
audiences The @BBCBreaking
Twitter account has morethan 10 million followers

10m
62



Quality anddistinctiveness Every week, across all platforms,
82% of UK adults came to
BBC Network and Regional news

82%
2012/13: 82%

BBC Annual Report and Accounts 2013/14

Future media

Ralph Rivera
Director,
Future Media‘‘We’re committed to bringing the entire BBC toaudiences as a seamless online experience acrossall screens – mobile, tablet, desktop and TV.
As media consumption becomes increasingly
mobile, we’re adapting content in innovative ways
and using new formats to increase personalisation,interaction and choice.’’
Mobile and tablet growth
A striking feature of the past 12 months has been the risein mobile and tablet users, and we’re making sure we provide
content that is interactive, personal, social and easy to consume
on-the-go. The BBC Weather app provided localised, clear
content and was snapped up by audiences, downloaded 1 million
times within two weeks of launch. The CBeebies Playtime app,downloaded over 2 million times, prompted a surge in CBeebies’
weekly unique browsers.

Bringing the nation together
From Strictly to Sochi, 2013/14 saw BBC Online use digitaltechnology to engage the nation. In 2013, for the first time, weoffered Strictly audiences the opportunity to vote for free via ouronline voting system, contributing to an enormous 81% growth in
the number of votes for the final. The Winter Olympics provided
the first opportunity to use the new live proposition – combining
video, audio, text, data and social features across all screens tobring the biggest events alive. Similar digital power will be brought
to bear as we look forward to the World Cup, Glastonbury andthe Scottish Referendum.

Strategy in action

Serving all
audiences BBC iPlayer saw a record
three billion programme requests
in 2013 – up 33 per cent on 2012

3bn
BBC Annual Report and Accounts 2013/14

Quality anddistinctiveness The BBC Weather App is the fastest growing
BBC mobile app of all time – more than
6 million downloads since launch

6m
63Part Two: Strategic report – Performance

A more personal BBC
We’re aiming to deliver an increasingly relevant, interactive,
and social experience for our audiences. We’re investing morein data analytics so that we can better understand our audiences
and help them find and discover content that they’ll love andcome back for time and again.

BBC iPlayer goes from strength to strength
In 2014/15, BBC iPlayer will begin its transformation from a
broadcast TV catch-up service to the BBC’s primary digitalentertainment destination and complementary fifth channel.
The new iPlayer offers a beautiful user experience designed toappeal to our growing audiences. We’ll use the platform to offer
new forms of storytelling and collaboration, building upon the
success of iPlayer exclusives – such as Sherlock’s Many Happy
Returns which attracted over 7 million views – with stand-alone
comedy shorts and factual commissions that will complement andcontrast with linear programming. We’ll also develop exciting new
product features, such as subtitles on mobile and a child-safe area
for CBeebies and CBBC.

Strategic report – Performance

Nations and regions
It has been a strong year for network TV production in the Nations
and Regions, with more than 50% from outside London and morethan 17% from the Nations.

10.9%

12,256hrs

2.2%
225,267hrs

8,782hrs

Network TV programming spend
by region as a % of eligible spend
2013

2012

London

47.5%

54.2%

Scotland
Wales
Northern Ireland

10.9%
6.8%
2.2%

7.6%
6.8%
1.3%

Total nations

19.9%

15.7%

Midlands
North of EnglandSouth of EnglandMulti-region*

2.7%
17.3%
8.5%
4.1%

3.7%
16.7%
7.4%
2.3%

Total regions

32.6%

30.1%

Total nations and regions

52.5%

45.8%

Grand total

100%

100%

2014

2013**

LondonEngland (ex London)
Scotland
Wales
Northern Ireland

7,136
225,267
12,256
13,865
8,782

8,296
237,600
13,397
14,667
9,168

Total

267,306

283,128

6.8%

32.6%
47.5%

13,865hrs

BBC Local Radio andnations radio hours of output

7,136hrs

Network television spend based on Ofcom definitions
by calendar year
* Multi-region covers programmes made outside London
but which cannot be attributed to any one region or nation.
** The BBC Local Radio and nations radio hours of output
only includes BBC original programmes and excludes
any repeat programmes. The comparative hours havebeen restated to be on a consistent basis.
64

BBC Annual Report and Accounts 2013/14

Wales
It was a record year for BBC Wales with programming for
BBC One Wales/BBC Two Wales reaching their biggest
audiences in a decade. A more contemporary flavour to
output saw the drama Hinterland (co-produced with S4C)
winning international acclaim and a special season ofprogramming on lifestyle and obesity – Live Longer Wales– reaching almost 40% of adults in Wales. BBC Radio Wales
produced another strong performance and a public
consultation on the future of Radio Cymru resulted in majorschedule changes. BBC Wales produced arguably the biggest
programming moment of the year – Doctor Who’s 50th
anniversary (part of a slate of network drama made in Wales
spanning Casualty, Sherlock, Indian Doctor, Wizards vs Aliens,
Atlantis and Hinterland).

BBC Radio Bristol and BBC Somerset presenter Laura Rawlings

Hinterland delivered the best viewing figures for local drama for a decade

ScotlandIn a year in which network television spend in Scotland rose torecord levels, there was significant critical appreciation for therange and quality of BBC Scotland programmes. Hebrides –Islands on the Edge reached nearly one in three of the
population in Scotland. The darkly atmospheric drama Shetland
returned, achieving an average audience for the series of close
to 6 million. Mrs Brown’s Boys was the most viewed programme
across the UK on Christmas Day and our Investigations Team,for the second year in a row, collected a Scottish BAFTA and a
UK Royal Television Society Award for their work. Coverageof the Queen’s Baton Relay launched our 2014
Commonwealth Games programming and live debates anddocumentaries, across all of our television and radio services,
enabled a range of voices to be heard in the referendum
debate on Scotland’s future.

Northern Ireland
BBC NI delivered a rich mix of TV, radio and online coveringmajor anniversaries and events. Over 50 projects marked
Derry~Londonderry, UK City of Culture which included theSons and Daughters gala concert, the Radio One Big Weekend,Music City Day, the All-Ireland Fleadh and, from the Guildhall,a BBC Radio 4 Reith Lecture from artist Grayson Perry.
Bespoke documentaries and series also reflected cultural andcommunity life in the North West to wider audiences. Other
large scale events in partnership with the Ulster Orchestra
included Proms in the Park and a St Patrick’s Day concert.
We launched new documentary series True North, investigative
journalism series Spotlight reached 40 and we produced The
Disappeared about those killed and secretly buried during the
Troubles. Network television provision increased with successin returning crime drama series, The Fall and Line of Duty.

Actor Douglas Henshall in Shetland

Sons and Daughters gala concert opening Derry~Londonderry

BBC Annual Report and Accounts 2013/14

65

Part Two: Strategic report – Performance

EnglandTelevision, radio and online teams across English Regions
responded to the severe winter weather by providing an
unmatched service of local news updates, essential informationand special programming for local communities. We haveworked hard to develop our reputation for delivering andleading high-quality, locally rooted accountability basedjournalism and debate, and we launched one of our biggest
ever editorial projects – telling the stories of World War One
at Home across every part of the country. Complementing
our established output, we are developing exciting, fresh waysof bonding with existing and new audiences through our online
and social media presence.

Strategic report – Performance

Performance by service
Content (£m)
We spent a totalof £1,663.6million
on these services
last year

Reach (%)
UK population
who use theservice eachweekTime spent
watching achannel eachweek (h:m)
Length of time theaverage viewer
spent each weekwith the channel

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

74.9%(77.6%)

07:30(07:51)

81.5(82.6)

50.3%(50.9%)

03:13(03:15)83.9(84.2)

20.5%*(23.2%)

01:55(01:58)83.0(84.0)

14.0%(14.2%)

01:43(01:44)85.1(85.6)

5.7%†(6.6%)

02:54(02:53)

8.3%‡(8.7%)

03:59(04:00)17.6% §
(15.6%)

01:56(01:53)

Network television
BBC One is our flagshipservice and the UK’s mostpopular television channel. It
unites and inspires the nation
with high-quality programmes
across a range of genres which
includes news and current
affairs, drama, comedy,
entertainment and factual.

£1,023.7m

BBC Two is a mixed-genre
channel with programmesof depth and substance. It
includes the greatest amountand range of knowledgebuilding programming on
the BBC, complemented by
distinctive comedy, drama
and arts programming.

£400.0m

BBC Three is constantly
innovating to provoke
thought and to entertain
audiences from 16-year-olds
to 30-somethings withoriginal comedy, drama andfactual programming thatcelebrates new British talent.

£81.0mBBC Four aims to be British
television’s most intellectuallyand culturally enriching
channel, offering an ambitious
range of UK and internationalarts, music, culture andfactual programmes.
The CBBC channel offers
a distinctive mixed schedulefor 6- to 12-year-olds, withmainly UK programmes
served in a stimulating,creative and enjoyable
environment.
CBeebies provides a mixof high-quality, mostly
UK-produced, programmes
designed to encouragelearning through play in aconsistently safe environment
for children under six.
BBC ALBA offers, to Gaelic
speakers and learners, adistinctive range of originatedprogramming that reflects
and supports Gaelic culture,
identity and heritage.

(£1,129.2m)(£404.8m)(£89.7m)£48.9m(£50.0m)£76.1m(£81.6m)£28.7m(£28.9m)£5.2m(£4.9m)Costs peruser hour (p)How much it
costs to deliver
each service toindividual users

6.0p(6.2p)

8.2p(8.3p)

6.9p(6.6p)

6.7p(6.8p)

n/a

15.4p

(n/a)

(11.1p)

n/a

2.9p

(n/a)

(2.7p)

n/a

6.4p

(n/a)

(7.6p)

Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable); Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK.
Reach definition: 15+ minutes consecutive for all channels and services and audiences aged 4+ (TV).
n/a Data does not currently exist for this measure.
* BBC Three: among its target group of 16 to 34-year-olds reach was 26.4% and time spent was 2:26.
† CBBC: among its target audience of 6 to 12-year-olds reach was 25.1% and time spent was 3:17 (based on 15+ min reach). Based on 3+ minute reach, reach was 30.4% of 6 to 12-year-olds and timespent per viewer was 2:43.
‡ CBeebies: among its target audience of 0 to 6-year-olds (measured as children aged 4-6 and housewives with children aged 0-3) reach was 39.7% and time spent was 4:34 (based on 15+ min reach).
Based on 3+ minute reach, reach was 45.2% of 0 to 6-year-olds and time spent per viewer was 4:00.
§ Source: TNS Scottish Opinion Survey. Base: All aged 16+ in Scotland. Lèirsinn panel. Among the Gaelic-speaking community, reach was 72.4% and time spent was 04:30.
Arrows denote whether there has been a change of +/-2.5% from the previous year’s AI.
() Figures in brackets from 2012/13.

66

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BBC Annual Report and Accounts 2013/14

Content (£m)
We spent a totalof £296.4million
on these services
last year

Time spent
listening to aservice eachweek (h:m)
Length of time theaverage listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

20.3%*(20.9%)

06:23(07:14)75.2(77.0)

2.1%†(2.0%)

04:49(04:55)78.1(79.8)

28.9%‡(28.0%)

11:42(11:45)80.9(81.4)

3.8%(4.0%)

06:08(06:17)81.9(81.6)

20.8%(20.5%)

11:26(11:58)81.3(80.8)

3.1%(3.2%)

06:11(05:45)79.9(80.4)

11.6%(11.8%)

06:47(07:08)77.4(77.7)

1.9%(1.8%)

03:59(03:18)83.8(83.4)

Network radio
BBC Radio 1 broadcasts a
distinctive mix of new musicand entertainment for
15 to 29-year-olds as wellas providing tailored news,
documentaries and advice
campaigns for young adults.
BBC 1Xtra plays the best incontemporary black music,
with a strong emphasis ondelivering high-quality live
music and supporting newartists.

£40.2m(£40.7m)£5.6m(£7.5m)BBC Radio 2 broadcasts a
unique mix of music and speechprogrammes covering a diversemix of live pop and rock,comedy, documentaries andreligious output, as well as
running social action campaigns
to over 14 million listeners.

£47.8mBBC Radio 3 centres onclassical music, around which
it provides a broad spectrumof jazz, world music, arts
programmes, religion anddrama. There is a strongemphasis on musicalperformance across the UK.

£40.8mBBC Radio 4 is a mixedspeech radio station, offering
in-depth news and current
affairs and a wide range ofother speech programmes
including drama, readings,
comedy, factual and magazine
programmes.

£91.8mOriginally launched in 2002
as BBC 7, the station was
relaunched in April 2011
as BBC Radio 4 extra. The
digital-only network is theprincipal outlet for theBBC’s archive of speechentertainment, including
comedy, drama and readings.

£4.1m

BBC Radio 5 live broadcasts
continuous news and live
sports coverage, bringing
major news stories and sports
events to its listeners as they
happen, and providing
context through wide-ranging
analysis and discussion.

£49.2mBBC Radio 5 live sports extra
brings a greater choice of live
action to sports fans byextending live coverage ofvarious sporting events.

(£47.8m)(£38.3m)(£91.1m)(£4.0m)(£55.0m)£2.4m(£2.7m)BBC Annual Report and Accounts 2013/14

Costs peruser hour (p)How much it
costs to deliver
each service toindividual users

1.1p(1.0p)

2.0p(2.7p)

0.5p(0.5p)

6.3p

Part Two: Strategic report – Performance

Reach (%)
UK population
who use theservice eachweek

(5.6p)

1.4p(1.4p)

0.8p(0.8p)

2.3p(2.4p)

1.2p(1.7p)
67

Strategic report – Performance

Performance by service
continued

Content (£m)
We spent a totalof £296.4million
on these services
last year

Reach (%)
UK population
who use theservice eachweekTime spent
listening to aservice eachweek (h:m)
Length of time theaverage listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

3.5%(3.2%)

08:54(08:32)

82.3(83.6)

1.1%§(1.0%)

06:21(06:14)71.3(73.3)

Reach (%)
UK population
who use theservice eachweekTime spent
with each service
each week (h:m)
Length of time
the average user
spent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

48.6%(48.1%)

n/a
(n/a)

78.8
(77.5)

33.1%(34.0%)

n/a
(n/a)

76.0
(76.5)

Network Radio
continued
BBC 6 Music is a digital radio
station that entertains loversof popular music with aservice that celebrates thealternative spirit of popular
music from the 60s to thepresent day, complemented
by music news anddocumentaries.

£7.9m

BBC Asian Network offers
speech and music appealing
to British Asians, with a focus
on news and current affairs.
It broadcasts mainly inEnglish, but does offer some
programmes in otherlanguages.

£6.6m(£7.4m)(£8.3m)Costs peruser hour (p)How much it
costs to deliver
each service toindividual users

0.9p(1.0p)

3.4p(4.9p)

Sources: RAJAR (Radio reach and time spent). Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK.
Reach definition: 15+ minutes for all stations and audiences aged 15+.
Arrows denote whether there has been a change of +/-2.5% from the previous year’s AI.
* Radio 1: among its target group of 15 to 29-year-olds, reach was 39.7% and time spent was 06:25.
† 1Xtra: among 15 to 24-year-olds, reach was 7.6% and time spent was 04:27.
‡ Radio 2: among its target group of 35+ year-olds, reach was 35.3% and time spent was 12:40.
§ Asian Network: among its target group of British Asians under 35, reach was 16.2% and time spent was 05:13.
()Figures in brackets from 2012/13.

Content (£m)
We spent a totalof £120million oncontent for these
services last year

Future media
BBC Online comprises theBBC’s portfolio of online
products on desktop, TV,
mobile and tablet, including
news, sport and weather;
our children’s services CBBC
and CBeebies; and Knowledge
and Learning – as well as
IP-delivered TV and radio
services, with both live andon-demand programmes
available on BBC iPlayer.
BBC Red Button andConnected Red Buttondeliver interactive services
and content to digital
television viewers, including
up-to-the-minute content
and information across news,
sport, weather, entertainment,interactive programming andmajor events.

£106.5m(£103.0m)£13.5m(£15.6m)

Costs peruser (p)How much it
costs to deliver
each service toindividual users

8.6p(8.4p)

1.6p(1.8p)

Sources: Reach: CMI/GfK.
Reach definition: 3+ mins for both services, and adults aged 16+.
Sources: Appreciation Index: eDigital (Online); CMI/GfK (Red Button).
n/a Data does not currently exist for this measure.
Arrows denote whether there has been a change of +/-2.5% from the previous year’s AI.
() Figures in brackets from 2012/13.
(2012/13 Red Button reach source: Nunwood until Sept 2012 and CMI/GfK thereafter; 2012/13 Red Button Appreciation Index: for October 2012-March 2013 owing to measurement change)
68



BBC Annual Report and Accounts 2013/14

Content (£m)
We spent a totalof £234.7million
on content forthese services
last year

Time spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

11.2%*(11.7%)

02:33(02:33)0.5%(0.5%)

01:50(01:40)16.4%(16.4%)

09:14(09:26)

81.1(81.3)

20.4%(21.9%)

07:02(07:06)78.1(79.3)

64.2%(68.6%)

07:26(07:22)

18.1%(18.2%)

08:29(09:19)84.4(81.8)

5.6%(5.1%)

10:12(09:52)

80.6(77.2)

News, national and local radio services
The BBC News Channel
is a 24-hour impartial andindependent news service
offering breaking news,
analysis and insight.
It provides fast andcomprehensive coverage of
local, UK and international
events as they unfold.
BBC Parliament is the UK’s
only channel dedicated topolitics. It shows debates
and committees from
Westminster, Holyrood,
Stormont, Cardiff Bay andStrasbourg as well as politicalprogrammes from acrossthe UK.
BBC Local Radio is a primarily
speech-based service of news,
information and debate, witha strong emphasis on
interactivity.

£48.7m(£45.2m)£1.7m(£1.9m)£115.4m(£114.7m)

BBC Radio Scotland is a
speech-led service for adults.
Mixed genre programmingreflects the diversity of
Scottish culture and covers
national and international
issues and events relevant tolisteners across the country.
BBC Radio nan Gàidheal‡
offers a comprehensive
speech and music radio
service for Gaelic speakers.
Mixed genre programmingreflects the diversity of
Scottish culture and, froma Gaelic perspective andthrough the medium of the
Gaelic language, covers
national and international
issues and events relevant tolisteners across the country.
BBC Radio Wales is a
speech-led service for adults,
which offers a wide range ofgenres and reflects the issues,
events, culture and interestsof the people of Wales.
BBC Radio Cymru is a speech
and music radio service for
Welsh speakers, which offers
a wide range of genres andreflects the issues, events,
culture and interests of thepeople of Wales.

BBC Annual Report and Accounts 2013/14£22.6m(£23.2m)£3.8m(£3.8m)£13.4m(£13.9m)£11.7m(£12.5m)

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Costs peruser hour (p)How much it
costs to deliver
each service toindividual users

n/a

5.6p

(n/a)

(5.1p)

n/a

7.3p

(n/a)

(7.2p)

3.4p(3.4p)Part Two: Strategic report – Performance

Reach (%)
UK population
who use theservice each
week†

6.8p
(6.5p)

n/a

19.6p

(n/a)

(18.6p)

6.5p(6.2p)

15.3p(19.0p)69

Strategic report – Performance

Performance by service
continued

Content (£m)
We spent a totalof £234.7million
on content forthese services
last year

Reach (%)
UK population
who use theservice eachweek†Time spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the channel

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

36.0%(35.5%)

10:02(11:37)81.9(81.6)

News, national and local radio services
continued
BBC Radio Ulster is a
speech-led service, providing
a mix of programmes thatreflect news, events andcommunity life in all its
different aspects and diversity.
BBC Radio Foyle is a
speech-led service foraudiences in the North-Westof Northern Ireland. It
provides a mix of news andother programming which
complements, andcontributes to, BBC Radio
Ulster’s region-wide service.

£17.4m(£17.0m)

Costs peruser hour (p)How much it
costs to deliver
each service toindividual users

6.3p(5.4p)

Sources: Reach and time spent BARB (TV), radio (RAJAR); Appreciation Index: Pulse panel of 20,000 UK adults, 16+ by GfK.
Reach definition: 15+ minutes for all channels and services and audiences aged 4+ (TV) and 15+ (radio).
BBC Local Radio in England, BBC Radio Scotland, BBC Radio Wales, BBC Radio Cymru, BBC Radio Ulster/Foyle: data based on their Total Survey Area (TSA).
n/a Data does not currently exist for this measure.
* Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 16.8% and 1.1% respectively (18.6% and 1.3% among 16+ population).
† Based on % of UK population that is able to access these national and local radio services.
‡	Source: Lèirsinn for the BBC. Base: Gaelic-speaking 16+ population.
AI data for BBC Radio Cymru available from 27 June 2012.
()Figures in brackets from 2012/13.

Global performance
The BBC World Service Group is the global division of BBC News and includes the World Service, World News, bbc.com/news
and Media Action. BBC World Service is an international multimedia broadcaster, delivering a wide range of language and regional
services on radio, TV, online and via mobile. BBC World News and bbc.com/news, the BBC’s commercially funded international
24-hour news and information platforms, are owned and operated by BBC Global News Ltd, a member of the BBC’s commercialgroup of companies. BBC Media Action is the BBC’s international development charity. It uses media and communication to inform,
connect and empower people around the world.

2013/142012/13

Year on yearchangeWorld Service Group (Total Global News audience)

265.3

256.0

+9.3

World Service

191.4

192.2

–0.8

WS TV

58.7

41.5

+17.2

WS Radio

127.8

144.8

–17.0

WS Online

18.8

14.0

+4.8

World News

75.8

70.9

+4.9

bbc.com/news

27.7

24.8

+2.9

Audience by service (m)Source: BBC Global Audience Estimate (GAE). The GAE is a snapshot of the BBC’s global news weekly audience using the latest data available as of February 2014, covering
240 countries and territories. Data is compiled from a combination of market surveys, ratings data and web analytics. UK Domestic news is excluded from the calculation.

70



BBC Annual Report and Accounts 2013/14

Performance by genre

Network hoursof output by genreNews andWeatherCurrent
Affairs

FactualMusic
and Arts

Religion

DramaEntertainment

ComedySchools/
Formal Education

Sport

13/14

3,322 hrs

475 hrs

32 hrs

6 hrs

11,617 hrs

12/13(2,611 hrs)

(914 hrs)(34 hrs)(6 hrs)(11,317 hrs)

13/14

188 hrs

395 hrs

135 hrs

112 hrs

1,759 hrs

12/13

(241 hrs)(292 hrs)(195 hrs)(110 hrs)(1,885 hrs)

13/14

2,053 hrs

3,228 hrs

912 hrs

1,157 hrs

2,481 hrs

12/13

(2,222 hrs)

(2,396 hrs)

(1,153 hrs)

(1,207 hrs)

(2,543 hrs)

13/14

55 hrs281 hrs

54 hrs1,429 hrs

41,866 hrs

12/13(84 hrs)(333 hrs)(50 hrs)(1,354 hrs)

(41,812 hrs)

13/14

80 hrs69 hrsn/a

21 hrs611 hrs

12/13(99 hrs)(47 hrs)(n/a)(5 hrs)(975 hrs)

13/14

606 hrs

314 hrs

220 hrs

152 hrs

4,932 hrs

12/13(665 hrs)(129 hrs)(268 hrs)(232 hrs)(4,971 hrs)

13/14

443 hrs

753 hrs

221 hrs

94 hrsn/a

12/13(411 hrs)(745 hrs)(220 hrs)(119 hrs)

(n/a)

13/14

631 hrs

316 hrs

294 hrs

59 hrs7,654 hrs

12/13(457 hrs)(374 hrs)(214 hrs)(54 hrs)(7,796 hrs)

13/14

216 hrs

273 hrs

1,182 hrs

85 hrs

n/a*

12/13

(237 hrs)(196 hrs)(1,149 hrs)

(43 hrs)

(n/a)

13/14

n/a

335 hrsn/an/a

112 hrs

12/13

(n/a)

(339 hrs)

(n/a)

(n/a)

(108 hrs)

13/14

636 hrs

1,082 hrs

103 hrsn/a5,144 hrs

12/13(858 hrs)(783 hrs)(290 hrs)(n/a)(5,550 hrs)

Part Two: Strategic report – Performance

Film

Radio

* The radio comedy hours are disclosed within the Entertainment genre.

BBC Annual Report and Accounts 2013/14

71Strategic report – Performance

Performance by genre
continued
Network hoursof output by genreChildren’s

13/14

4 hrs

n/a hrs

6 hrs

4,360 hrs

4,490 hrs

12/13(319 hrs)(1,360 hrs)

(n/a)(4,366 hrs)

(4,492 hrs)

Schools/Formal Education includes Education for children, Open University and BBC Learning Zone.
CBBC & CBeebies programming moved from BBC One and BBC Two, to transmit only on its digital channels from Dec-12.

Average audiences
to news programmes
Breakfast
news

Lunchtimenews

Early evening
network news

Early evening
regional news

Late night news
(10pm)

13/14

1.5m

0.6m

n/a

n/a

12/13

(1.5m)(0.6m)

(n/a)

(n/a)

13/14

2.6m

0.8m

n/a

n/a

12/13

(2.7m)(0.9m)

(n/a)

(n/a)

13/14

4.5m

3.2m

0.6m

0.6m

12/13

(4.5m)(3.3m)(0.6m)(0.6m)

13/14

5.3m

3.3m

n/a

n/a

12/13

(5.5m)(3.4m)

(n/a)

(n/a)

13/14

4.3m

2.0m

n/a

n/a

12/13

(4.4m)(2.1m)

(n/a)

(n/a)

Source: BARB, adults 16+.

Weekly reach

All

All

All

television

television

television

television

All BBC
television

Total otherchannels

13/14

83.9%

87.2%*

72.3%

64.2%†

43.1%

43.9%

12/13

(85.6%)(88.2%)(73.0%)(65.5%)(44.0%)(45.0%)(BBC network television versus
main commercial groups)

TelevisionAll* Reach of all TV channels apart from BBC One, BBC Two, ITV, Channel 4, Channel 5 (their +1s and HD equivalents).
† Includes S4C.
Source: BARB, individuals 4+, 15+ minute consecutive reach. 2012/13 figures run for 2012/13 Annual Report so use TechEdge reach method that was current in 2012/13.

All BBC radio

All commercial
radio

All BBC
network radio

All nationalcommercial
radio

BBC local radio

All local
commercial
radio

13/14

67.1%

64.9%

61.2%

32.3%

17.6%

51.7%

12/13

(66.5%)(63.5%)(60.5%)(31.0%)(17.6%)(50.4%)

Weekly reach(BBC radio compared tocommercial stations)Radio

Source: RAJAR, 15+, 15-minute+ reach.

72



BBC Annual Report and Accounts 2013/14

Part Two: Strategic report – How we run the BBC

How we run the BBC

Management of the BBC’s relationships
with staff, organisations and partners
BBC Annual Report and Accounts 2013/14

73

Strategic report – How we run the BBC

How we run the BBC
Working together for a more efficient BBC

2013/14 has been a challenging year for the BBC and a periodof substantial change. Responding to public criticism of ourmanagement of the Digital Media Initiative and severance
payments, the BBC has put in place an improved approach toproject management and in September implemented reformed
severance and notice policies and practices. In May, the publicationof the ‘Respect at Work’ report heralded a new approach to
tackling bullying and harassment in the workplace and througha blend of training, engagement and policy and process
improvements, the BBC is creating a culture built on respect
between colleagues. Throughout the year, our people havedelivered outstanding content to our audiences whilst theorganisation continues to drive the organisational change
necessary to deliver efficiencies, a more effective operation
and a sustained change in the culture of the organisation.
1. Delivering change
Driving efficiencies within the divisions of the BBC has aninevitable impact on jobs and we continue to be fully committed
to managing job losses through redeployment and retraining
wherever possible. Since October 2011, when the DQF
programme began, we have closed 2192 posts, a total of 1000
voluntary redundancies have been accepted and we redeployed
458 people into continuing and fixed-term roles, resulting in just247 compulsory redundancies. Although consultation with our
Trade Unions has been constructive there were five days of
strike action taken by tour guides over the year.
To supplement the help we provide to staff at risk of redundancy
we increased the career support offered to staff to include aneasily accessible online toolkit and workshops to help individuals
identify development needs and suitable career options.
Filming BBC One courtroom drama Silk74



We take care to ensure that we balance the redeployment anddevelopment of our workforce with external recruitment of
talent, bringing greater diversity and fresh ideas into the BBC.
We continue to focus on developing our leaders, through a rangeof training and development programmes and workshops.
We regularly measure staff engagement, and the last staff survey
in 2012 reported high levels of commitment (90% of staff felt
proud to work for the BBC, and 97% were committed to playing
their part in delivering great quality and services). The survey
also reported a desire for improved communication and career
support, along with stronger leadership and performance
management. During 2013/14, we have taken action in each ofthese areas. Additionally, in summer 2014, we will run the firstquarterly survey enabling us to track progress as a result of action
taken to deliver recommendations from the 2013 ‘Respect atWork’ report.
2. New ways of working
This year we completed our move to New Broadcasting House
with over 6000 staff now working in central London. For the firsttime, the BBC’s national and global journalism teams are working
together on the same site, alongside Radio 1 and 1Xtra, thecommissioning and scheduling teams for BBC One, Two, Threeand Four, and all of the television factual teams based in London,including BBC One’s The One Show. The migration was completed
in April 2013 and on Friday 7 June the building was officiallyopened by Her Majesty The Queen.

Radio 5 live gallery at MediaCity UK, Salford

BBC Annual Report and Accounts 2013/14

Radio 1Xtra presenter Sarah-Jane chats to festival-goers at Radio 1’s Big Weekend in Derry~Londonderry

3. A fair deal
Since 2009, the BBC has implemented pay settlements thatare less than inflation and in 2013 working within our financial
constraints, we structured the pay deal to ensure that the lower
paid benefited with an increase close to CPI whilst limiting thepay increase to 1% for higher paid employees: for staff, other thansenior managers, we implemented an £800 flat rate increase,with a minimum increase of 1%.

4. Our people
The ‘Respect at Work’ report, published on 3 May 2013,
recommended 24 actions to build a more supportive culture at
the BBC. We have made progress in delivering these including:launching a bullying and harassment confidential help line;
reforming our bullying and harassment policy and process forhearing complaints; and implementing new training on managing
bullying and harassment, and we continue to review and makefurther improvements.

Part Two: Strategic report – How we run the BBC

The BBC is here to serve all audiences across the UK and spend
as much of the licence fee as possible on content across television,
radio and online. In November 2013, the BBC unveiled a new
creative vision for Birmingham and a commitment to making the
Mailbox the home of the teams who deliver entry level training
schemes, talent and skills development, BBC apprenticeships, andtraineeships. Further roles from central HR, the Academy andcentral Internal Communications were announced in May 2014,
resulting in the relocation of nearly 200 jobs to Birmingham by
mid-July 2015. The BBC’s relocation strategy, including rationalising
our property portfolio in London, means that further relocations
are anticipated.

We have published details of the number and outcome ofbullying and harrassment cases within our Equality reportand you can download this information at: bbc.co.uk/diversity/
strategy/equalityreport2013/
Over the last 12 months, headcount has increased from 16,534
to 16,672 largely due to additional staffing required to deliver key
programmes and events such as the Commonwealth Games andour coverage of the Scottish referendum. We have also provided
re-investment funding from our DQF savings to Future Media torecruit staff with the skills we need to deliver the BBC’s strategic
priorities; development of iPlayer and delivery of more
personalisation online.

In 2012, the BBC reviewed the use of Personal Service Companies
as a means of engaging presenters and contributors and this year
Table 1: Total average public service broadcasting headcountwe agreed a new test with HMRC to determine tax status for all(equivalent full time)
our on-air talent who work in news and television. As a result,Total
as contracts are due for renewal, we have applied the test and18,860those news and television presenters who are deemed employees Year end 2005/6
have transferred to employment status with PAYE deducted atYear end 2006/7
17,914source with more expected to follow in 2014. Details of the newYear end 2007/8
17,677
employment test can be found at: bbc.co.uk/partnersandsuppliers/
Year end 2008/9
17,078freelancers/onairtalent.html
We have also reformed our severance policies and practices,
introducing a cap on contractual redundancy pay, reducing notice
periods of Executive Directors, ceasing the practice of payment
in lieu of notice in addition to severance and introducing a new
and robust governance and approvals process.

BBC Annual Report and Accounts 2013/14

Year end 2009/10

17,238Year end 2010/11

17,242

Year end 2011/12

16,858Year end 2012/13

16,534

Year end 2013/14

16,67275

Strategic report – How we run the BBC

Table 2: UK PSB staff by nation (equivalent full time) %31 Mar2014

31 Mar2013

31 Mar2012

31 Mar2011

England (excl. London)

33

32

33

25

London

47

48

48

55

Scotland

8

7

7

8

Wales

8

8

8

8

Northern Ireland

4

4

4

4

2013/142012/13

Table 3: Senior manager headcount by salary band
BAND

Under £70,000

10

21£70,000-£99,999

161

171

£100,000-£129,999

93

111

£130,000-£159,999

73

67£160,000-£189,999

34

31£190,000-£219,999

17

22£220,000-£249,999

95£250,000-£279,999

1

3£280,000-£309,999

2

3£310,000-£339,999

22£340,000-£369,999

00£370,000-£399,999
Total*

1

1

403

437

* Total excludes Executive Board members.

Our workforce
Approximately 80% of our people work in roles directly related
to our content**. They work in the following areas:

27% in Content making
This involves areas such as editorial production, technical production
and commissioning. The most common roles are Producer,
technical operator, assistant producer and researcher. These roles
work on new programme ideas and the editorial and technicalproduction of television and radio programmes and online content.
11% in Technology
This includes areas such as systems and operations, strategy &delivery, research and development and user experience anddesign. The most common roles are engineers, broadcast
engineers (who provide the support for the technology used in
producing and broadcasting our output) and software engineers(who produce web tools for use by editorial staff to power
products such as iPlayer).
10% in Content management
This includes areas such as production management, information
management, staff and production scheduling and programmescheduling. The most common Content management roles areproduction coordinator, media manager and production manager(who help realise editorial plans within operational and financial
constraints by managing a production from the green lightthrough to delivery).
The other 20% fulfil a range of functions including corporate
governance and essential support to content making areas suchas communications, marketing & audiences, and legal, rights &business affairs. This group also includes assistants and roles suchas safety advisers who work directly with content makers to help
make our programmes. In 2014, we will complete an efficiency
review which will provide the opportunity to examine all of our
support functions and ensure they provide value for money.
**Information as at October 2013.

32% in Journalism
Within Journalism the three most common roles are broadcast
journalist, senior broadcast journalist and broadcast assistant.
These roles write and produce a wide variety of material in text,
audio and video format. They produce radio/television/online
bulletins and content.
David Beckham alongside Sir David Jason and Nicholas Lyndhurst in a special edition of Only Fools and Horses for Sport Relief76

BBC Annual Report and Accounts 2013/14

Severance pay
In 2013, the BBC implemented reforms to contractual severance terms, improved the governance of severance decisions andcommitted to publishing the number and levels of severance payments made in the financial year. In 2013/14, there has been asignificant reduction in the number and cost of severance payments and since September 2013 there have been no severance
payments over £150,000 and no payments in lieu of notice made in addition to severance. Dame Fiona Reynolds (Senior Independent
Director) undertook a full review of severance payments made in 2013/14 and the full report of that review can be downloaded from:bbc.co.uk/aboutthebbc/insidethebbc/howwework/reports/bbc_review_severance_payments_2013_14.html
Severance payments 2012/13 and 2013/14 (all staff, including senior managers*)
1 Apr 13-31 Aug 13
Payment band

Spend £000

1 Sep 13-31 Mar 14

Volumes

Spend £000

Total 2012/13

Total 2013/14

Volumes

Spend £000

Volumes

Spend £000

Volumes

Under £10,000

66

11

51

6

117

17

304

48

£10,000-£49,999

2,482

83

2,901

103

5,383

186

12,863443£50,000-£74,999

1,871

30

2,289

38

4,160

68

8,453

137

£75,000-£99,999

3,048

36

3,004

35

6,052

71

7,821

91

£100,000-£150,000

2,937

25

4,191

34

7,128

59

5,932

51

Over £150,000

2,762

12**

Total

13,166

197

–

–

2,762

12

4,825

23

12,436216

25,602413

40,198793

Payments in lieu of notice 2012/13 and 2013/14 (all staff, including senior managers*)
1 Apr 13-31 Aug 13

1 Sep 13-31 Mar 14

Total 2012/13

Total 2013/14

Spend £000

Volumes

Spend £000

Volumes

Spend £000

Volumes

Spend £000

Under £5,000

18

6

2

1

20

7

30

Volumes

11£5,000-£9,999

37

5

10

1

47

6

114

15

£10,000-£19,999

39

3

12

1

51

4

66

5

£20,000-£29,999

–

–

–

–

–

–

75

3

£30,000-£49,999

–

–

–

–

–

–

122

3

Over £50,000

–

–

–

–

–

–

533

3

Total

94

14

24

3

118

17

940

40

Severance payments 2012/13 and 2013/14 (senior management staff*)
1 Apr 13-31 Aug 13

1 Sep 13-31 Mar 14

Total 2012/13

Total 2013/14

Spend £000

Volumes

Spend £000

Volumes

Spend £000

Volumes

Spend £000

Volumes

Under £10,000

–

–

–

–

–

–

–

–

£10,000-£49,999

40

1

40

1

80

2

–

–

£50,000-£74,999

–

–

–

–

–

–

63

1

Payment band

£75,000-£99,999

176

2

189

2

365

4

176

2

£100,000-£150,000

130

1

954

7

1,084

8

920

7

Over £150,000

2,088

8

–

–

2,088

8

3,904

18

Total

2,434

12

1,183

10

3,617

22

5,063

28

* Excluding on-air talent.
** The 12 payments over £150,000 were cases which were in the pipeline before the new system came into effect, and were all made to individuals who left the BBC before 1 September 2013.

BBC Annual Report and Accounts 2013/14

77

Part Two: Strategic report – How we run the BBC

Payment bandStrategic report – How we run the BBC

Talent2012/132013/14
Spend
£000s

Volumes

Spend
£000s

Volumes

Variance£000s

Under £50k

93,20245,15497,35047,020(4,148)£50k-£100k

44,398662

43,177645

1,221£100k-£150k

14,578123

15,202126(624)£150k-£250k

15,50383

15,96683(463)£250k-£500k

8,237

25

9,366

27

(1,129)£500k-£750k

6,598£750k-£1m

787£1m-£5m

4,215

Organisations**
Total

5,076
14*

1,568

1,522
14*

5,633

(781)
(1,418)

6,716

2,229

6,980

2,019

(264)

194,234

48,290200,318

49,934(6,084)* The number of individuals in the £500,000+ categories has been aggregated in order toprotect the personal information of those individuals, in line with data protection bestpractice.
** Organisations are a group of individuals contracted as one – for example an external
orchestra – so it is not possible to list numbers of individuals against this spend.

In its dealings with talent the BBC strives to be the place where
the best artists want to work to deliver great programmes.
Our continuing challenge is to appropriately reward the talent
who make our programmes rich, distinct and diverse for theirefforts and creative input, while at the same time drive the bestvalue for licence fee payers. In 2008, the BBC made a commitment
to reduce the amount we spend on top talent, and to keep theoverall amount spent on talent flat, for the five years to 2013.
Over the period we have delivered spend against this commitment
with top talent (those earning over £100,000) reduced from
£71million in 2008/09 to £49million and over and above theoriginal commitment we have also reduced the overall spend on
talent from £229million to £194million. We continue to review
our approach to talent to take account of changes in the market,
and the BBC’s strategic priorities.

Going forward, the BBC is committed to maintaining its efforts toinvest in, nurture and develop new talent, and to keep total talent
spend proportionate to content spend. The BBC will keep total
talent spend to no more than 16% of overall internal spend oncontent. In 2013/14, the amount spent on talent represents 14.6%of the internal spend on content.
We will continue to publish the amount spent on talent in the fee
bandings, in order to maintain our commitment to transparency.
Diversity
Diversity enhances the BBC’s originality and distinctiveness.
We know that sharing diverse perspectives and ideas and listening
to our audiences, results in the very best creative and innovative
programming and technology.
This year, corporate activity has included using the data fromlast year’s research and analysis work to implement targetedinterventions where they can have the most impact. We haveused data to improve divisional understanding of diversity trends
and have implemented recommendations from last year’s
Disabled Staff Engagement Project, including launching the ‘Elev8’
mentoring scheme for disabled staff. Building on that success wehave now developed a similar scheme for Black and Minority
Ethnic (BME) staff called ‘Rise’, which launched in June 2014.
In 2013, we developed a new disability website which provides
information and advice for disabled staff and their managers andintroduced a system to ensure that all new and existing IT isassessed for accessibility. Additionally, we have continued to build
equality and diversity considerations into all our major contract
procurement processes.
Last year we reported that increasing staff understanding ofdiversity would be a priority in 2013. Face to face training for line
managers on supporting disabled staff is now being rolled out and‘Unconscious bias’ training is being delivered to BBC leadershipteams prior to wider rollout. We also reported on our intention
to increase female representation in our output. Television has
committed to increasing the proportion of women on panel shows
and in English Regions a programme of activity to help identify anddevelop talented female on-air presenters is well underway.

Radio 1 Academy in Derry~Londonderry78



BBC Annual Report and Accounts 2013/14

BBC School Report students in the BBC News studio

At divisional level, two major successes have been the expansionof Radio 1 and 1Xtra’s ‘Take it On’ scheme with its innovative
approach to attracting diverse applicants via new models of
recruitment and BBC North’s ‘Salford Ambassador’s Creative
Hub’ project which aims to increase social mobility and reachunder-served audiences by bringing editorial staff together withsocially diverse young people and communities. News is taking
the lead in actively creating movement across teams to provide
development opportunities for staff and at the same time allow
new and diverse staff to gain experience in various roles. TV
continues to work in partnership with the ‘Mama Youth Project’and in early 2014 we announced apprenticeships opportunities
in partnership with the Stephen Lawrence Trust.

Priority areas for 2014 are: targeted leadership development for
BME, disabled and female staff; further activity to increase access to
the BBC for those from socially and ethnically diverse backgrounds;
and measures to increase the retention and development of
disabled and BME staff. In addition, we will continue to findcreative and practical ways to increase diverse portrayal on-air/screen and will enhance processes to monitor diverse portrayal
in order to help inform editorial decision making.

We monitor the profile of our workforce to help ensure we
look and sound like our UK audiences and this year we havebegun to monitor the diversity of freelancers. Workforce targets
for BME and disabled staff (and women in future media andtechnology) help to focus our efforts on groups that are under
represented compared to the wider UK population. The tablebelow shows progress against targets agreed in January 2013.
Diversity: percentage of total staff
Employee group

Mar
2014

Mar
2013

BME – all staff

12.6%

12.4%

BME – senior managers

6.8%

6.6%

BME – wider leadership*

8.7%

8.7%

Disabled – all staff

3.8%

3.7%

Disabled – senior managers

2.6%

3.2%

Disabled – wider leadership*

3.1%

3.1%

Women – all staff

48.6%

48.6%

Women – senior managers

37.2%

37.4%

Women – wider leadership*

40.9%

41.4%

* Wider leadership includes grades 10, 11 and senior managers.

BBC Annual Report and Accounts 2013/14

More about the BBC’s diversity policy can be found at:bbc.co.uk/diversity
Training and apprenticeships
2013/14 has seen 98% of BBC staff receive a total of 46,000 daysof face to face training and a broad range of online learning,with 98% of line managers reporting that teams are more
effective as a result.
from supporting iPlayer ‘in the Cloud’ to developing new skills
in data journalism, training has helped transform the BBC froman analogue broadcaster into a cutting-edge digital innovator.
The BBC Academy’s ‘Fusion programme’ aims to break down
the boundaries between technical and creative skills, this year
reaching 4,400 delegates with 50+ events across the UK.
a strong focus on creativity saw our ‘Creative Leadership
Programme’ reach over 1,000 delegates. Key highlights
included supporting the launch of the creative vision for
BBC Four and working with BBC Drama and Worldwide ona creative strategy to expand Doctor Who into new markets.
the introduction of a single BBC Academy web presence
has led to an extraordinary increase in our reach online.
The number of people accessing our online learning(inside and outside the BBC) has risen to over 1.54 million.
This represents a 100% rise on last year’s figure and reflects
the huge scale and quality of the industry best practice that
we now curate and share across the wider industry.

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Part Two: Strategic report – How we run the BBC

Filming BBC Two’s Turks and Caicos

Strategic report – How we run the BBC

in October 2013, the Director-General pledged that 1% of theBBC’s workforce would be made up of apprentices by the endof the current Charter period. From a base of just 37 this time
last year, we are on target to reach our goal of 170 apprentices
during 2014/15 – two years ahead of schedule.
boosting the number of women on air has seen the BBC
Academy deliver a series of ‘Expert Women’ training events
focused on areas where women tend to be underrepresented. Of the 168 graduates of the ‘Expert Women’s
Day’ programme, over 70 have, so far, made more than 250
appearances on TV and Radio. This conversion rate of 42%
significantly exceeds our initial target of 20%. ‘Women In
Radio’ also saw the BBC Academy join forces with BBC English
Regions to deliver training events for 90 female would-bepresenters, selected from more than 1,000 applicants.

We have been proud to see ‘The Space’, our joint venture with
Arts Council England move from pilot phase to a three-year
digital project due to relaunch in the summer of 2014. In 2013,‘The Space’ yet again provided groundbreaking digital content
with a ten hour live stream of the Globe’s Henry VI from Monken
Hadley Common in Barnet and the world premiere of
Stockhausen’s Helicopter Quartet, performed in four helicoptersover the West Midlands.

In Television, a new partnership with the National Maritime
Museum in late 2013 led to a number of rare exhibits being filmed
for the David Dimbleby series Britain and the Sea, with themuseum also creating a free audio guide to paintings and objects
linked to the series, as well as hosting special events at themuseum. Our partnership with RIBA enabled users to vote on
their own favourite building and led to a partnership around
The Brits Who Built the Modern World. The BBC Four series wassound quality across televion and radio is a matter ofbroadcast in February 2014 and RIBA staged a complementary
passionate debate and, this year, the BBC Academy’s ‘Sound
exhibition telling the story of British architecture, including a panel
Matters’ programme has supported the industry to set
discussion with all the architects featured in the series. Similarly,
common standards. As well as hosting engineering events withthe collaboration with the National Theatre marking their 50th
the International Association of Broadcast Manufacturers
Anniversary in November led to a two-part Arena documentary(IABM), we’ve also toured the UK with events in London,on BBC Four and on BBC Two accompanied by a once in a lifetime
Bristol, Cardiff, Salford, Glasgow and Belfast, reaching
live performance of extracts from some of the National Theatre’s
600+ delegates.
greatest productions. The centenary of the First World War
has also led to a multi-faceted partnership with the Imperial War
Partnerships
Museums which covers a number of enterprises during the life
The last 12 months has seen a big rise in the number andof the anniversary. The projects that are under way so far are:complexity of partnerships across the BBC both in terms of aWorld War One at Home, led by the BBC’s English Regions andmaturing of established partnerships and the creation of highly
involving all the Nations; Voices of the First World War, a radio
innovative new initiatives. The BBC’s Television, Radio, Strategy
archive collaboration; and The Great War, an archive preservation& Digital, Technology and Research & Development divisions all
project to complement the documentaries being made. We havecreate and support a wide range of partnerships, a few of which
also entered into our first educational MOOC (Massive Openare highlighted here.
Online Course) around WW1 with Futurelearn, a subsidiary of
the Open University.

Production crew and cast filming BBC WW1 drama The Crimson Field

80

Lyse Doucet presenting World Have Your Say from the 100 Women conference

BBC Annual Report and Accounts 2013/14

Crowds watching the main stage at Radio 1’s Big Weekend in Derry~Londonderry

We continue to demonstrate our commitment to the open
internet and open data, signing memorandum of understanding
with leaders in the sector including the Open Data Institute,
Europeana and Mozilla. In collaboration with Jisc, we continue todevelop the ‘Research & Education Space’ project, building upon
the power of rich linked open data in order to make large
quantities of media and archive metadata accessible to learners
and teachers across the UK. The BBC, British Library and British
Film Institute continue to work closely together to archive Britain’s
audio-visual heritage, seeking to broaden access to radio andtelevision history for scholars, researchers and students.
Our commitment to extend our reach across digital platforms
has led to syndication of our products to media and technology
companies, such as our partnership with Freesat, which makesa bundle of BBC apps (iPlayer, News and Sport) available toaudiences. Following the successful launch of Connected Red
Button (CRB) on Virgin TiVo, we have been working alongside
TV and set-top box manufacturers of all sizes to enable CRB ona wide range of devices in 2014.
The BBC’s R&D division is a strategic partner in the Connected
Digital Economy Catapult (CDEC), part of the UK Government’s
initiative run by the Technology Strategy Board to establish a
network of seven ‘Catapults’ to support innovation by UKbusiness. In a similar vein, R&D has held a place on the Steering
Board of the Networked Electronic Media initiative since 2004,
which seeks to guide the development of electronic media

BBC Annual Report and Accounts 2013/14

for the benefit of European citizens and links the BBC withrepresentative partners from across the entire European creative
industries sector. The BBC is also a leading and proactive memberof the European Broadcasting Union, the EBU.
In the past year, we have again committed to two pan-industry
partnerships – the Digital Production Partnership which has
successfully promoted and underpinned a digital change initiative
bringing common file-sharing to the wider production community,and ‘Project Albert’, the sustainable production consortium led
by BAFTA which supports low carbon content creation.
We also have a number of vibrant city partnerships such as thosewith Birmingham and Bristol which cement our local relationshipthrough creative, cultural, business and educational initiatives.
Outreach and corporate responsibility
A responsible BBC
We aim to be an industry leader in responsible business
management.
Corporate responsibility
We run our business in a responsible manner, as expectedby the licence fee payer – that means the way we treat ouraudiences, our staff and everyone else. We demonstrate
this in a number of ways, including by sharing our skills andexperience to benefit the wider industry and by acting in afair and transparent way. The BBC Corporate Responsibility
Performance Review 2014, published alongside this document
and produced by BBC Outreach & Corporate Responsibility
can be found at: bbc.co.uk/outreach/reports

81

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As digital technology evolves we are increasingly finding new
ways to deliver content to our audiences. This year this has
included new forms of interactive entertainment such as eBooks
and interactive video. As part of the BBC’s Music strategy wehave partnered with Spotify, YouTube and Deezer to create
BBC Playlister enabling our audiences to discover new music
and have also worked with Everything Everywhere to help
audiences navigate Glastonbury live and on-demand content.

Strategic report – How we run the BBC

Outreach
Outreach at the BBC means reaching out to engage new or
harder to reach audiences using face-to-face activities. Last
summer, young people from Derry~Londonderry filled over
5,000 places on showcases, practical workshops, Q&A sessions
and masterclasses as part of the BBC Learning Radio 1 Academy
in the run-up to the Big Weekend. BBC News School Report isone of the projects which helps us reach a younger audienceby engaging 11-16 year olds in news reporting, and the BBC
Performing Groups, along with the ‘Proms Plus’ programme,
helps us engage new audiences with classical music.

Environmental sustainability
Our sustainability strategy, The Difference, focuses on targets
aimed at reducing the environmental impacts of our operations,on embedding sustainable practices in our core business ofmaking programmes – ‘sustainable production’ – and inspiring
BBC staff to take action in the workplace. This year we haveachieved strong reductions as expected in energy consumption,
reducing CO2 emission by over 20,000 tonnes as we exit older
properties such as Television Centre and Bush House and occupy
modern environmentally-rated buildings such as MediaCityUK in
Salford and New Broadcasting House in London, and we expect
this trend to continue. Emissions from travel have increased
BBC Outreach & Corporate Responsibility reaches out tohowever, as we travel more both internationally and between
audiences living in the communities where we have large numbers
our UK locations. Building on the success of albert, the carbon
of staff, using volunteering and face-to-face activities. A highlight
calculator, we have launched albert+, a new certification schemefrom this year is the ‘Talent Ticket’ project, a unique partnershipfor sustainable production which helps production teams work
between BBC Outreach Bristol, the University of the West of
in more sustainable ways and acknowledges their achievements.
England (UWE) and 12 of Bristol’s lowest attaining schools.
So far, five BBC productions, including one made for us by an
1,500 Year 9 pupils in ten Bristol schools took part in a number
independent production company, have achieved the certificate
of workshops designed to engage them in creative media skills
and we will be extending this initiative over the coming year.
and learn more about BBC careers in March 2014.
You can read more about this area of our work in the BBC
Human rights
Corporate Responsibility Performance Review, and other
The BBC takes human rights seriously, at home in the UK andsustainability publications at: bbc.co.uk/sustainability
across the globe. Every member of staff has the right to returnhome in the same state of health in which they left for work, andto form and join trade unions. Some staff are required to workin high-risk environments, such as those in hostile surroundings,
covert filming or covering events such as terrorist incidents.
Our High Risk Team advises and oversees training and provisionof equipment for staff to ensure they are appropriately prepared
to undertake their role. Our Terms of Trade requires any suppliers
we work with, and any sub-contractors they use, to adhere to
the codes of practice published by the Equality and Human Rights
Commission and the Equality Commission Northern Ireland.

Year 6: 2013/14
TargetPerformance
2015/16 against baseline

BBC environment targets

Absolute reduction in energy
consumption

-20%

-20%

Absolute reduction in CO2emissions from buildings

-20%

-19%

Reduction in water use(per person)

-25%

-21%

-25%

-85%

70%

64%

-20%

+11%

Greenhouse Gas emissions
Greenhouse Gas emissions (tonnes CO2 emissions, scopes 1 & 2):
Carbon intensity (tonnes CO2 emissions/Total Group Income £m):

119,517
23.6

Reduction in waste (tonnes)
to landfill (per person)% of waste recycled
Reduction in transport CO2
emissions (per BBC user)

Notes on table
Greenhouse Gas data is for UK-based operations; detailed information and explanatory
notes can be found in the BBC Annual Corporate Responsibility Performance report 2014.
82



BBC Annual Report and Accounts 2013/14

Charity appeals
The BBC has broadcast appeals for individual charities since 1923.
These appeals form an important part of our remit as a public
service broadcaster forming part of our broader involvement
in social action broadcasting and highlighting the work of the
UK’s voluntary sector.
We help a broad range of charities to raise funds and awarenessand our audiences are incredibly supportive of these causes.
On appeal nights, BBC Children in Need 2013 had an ‘on the night’
total of £31.1million, which has now risen to nearly £47million andSport Relief 2014 raised £51.2million with donations still comingin. BBC audiences helped raise more than £84.5million during
the 2013/14 financial year.
In addition, BBC Media Action – the BBC’s international
development charity – continues to use media to transform
lives around the world, whilst the BBC Performing Arts Fundcontinues to award grants to performers and arts organisations
across the UK to help them realise their creative potential andreach new audiences.
Broadcast appeals
We broadcast a Disaster Emergency Committee appeal for thePhilippines, helping to raise £90million for those affected by thetyphoon. We also broadcast 49 Radio 4 appeals and a Christmas
appeal for St Martin-in-the-Fields that raised £1.9million.

For more information about BBC charity appeals and how to apply
visit the BBC charity appeals website: bbc.co.uk/charityappeals

BBC Annual Report and Accounts 2013/14

BBC Children in Need
BBC Children in Need 2013 raised the highest total since thetelethon began in 1980.
People from across the UK came together once again raising
an amazing £31,124,896 on the night – an increase of £4.37million
on the 2012 appeal. Every penny goes towards projects helping
disadvantaged children and young people across the UK.
Throughout the Appeal Night on BBC One on November 15 –and as part of hundreds of hours of associated programming
across BBC services – we provided BBC Children in Need witha platform to both fundraise and to showcase the enormous
difference its work makes to individuals, communities andorganisations all over the country.
BBC Children in Need currently supports more than 2,600
projects that help children facing a range of disadvantages suchas poverty and deprivation as well as those who have been thevictims of abuse or neglect and disabled young people.
Fundraising for BBC Children in Need is a year-round activity
with the centrepiece being the star-studded annual telethon
each November – now an important occasion in the UK calendar
and one that brings together the UK’s communities, regions
and nations.
For more information about BBC Children in Need, please visit:bbc.co.uk/Pudsey

83

Part Two: Strategic report – How we run the BBC

There were 11 BBC One Lifeline appeals, 12 Northern Ireland
appeals, as well as charity partnerships on Radio Devon, Radio
Manchester, Radio Suffolk, Radio York, Radio Cumbria andRadio Cambridgeshire.

BBC Corporate charities
Alongside these broadcast appeals, support for our three
corporate charities – BBC Children in Need, BBC Media Action
and the BBC Performing Arts Fund – and our partnership with
Comic Relief also helps us deliver fundraising activities that benefit
individuals, communities and organisations across the UK andaround the world.

Strategic report – How we run the BBC

BBC Media Action
BBC Media Action is the BBC’s international development charity.
It uses media to transform lives around the world and works
closely with governments, non-governmental organisations andbroadcasters to ensure efforts are co-ordinated to bring lastingchange in developing countries.
It operates through 17 country offices in Africa, Asia, the Middle
East and Eastern Europe working in partnership and delivering
programmes through radio, TV, social media, mobile phones andface-to-face dialogue. The work takes the form of debate shows,
dramas, radio and TV magazine programmes, public service
announcements, village level or national mobile phone initiatives
and street theatre.
It is supported by a range of funders, including the UK’s
Department for International Development, the Foreign andCommonwealth Office and the Bill and Melinda Gates
Foundation. It also receives investment from companies throughits Corporate Leaders Group programme, support fromindividuals through payroll giving, major gifts and community
fundraising activities. Its total income for 2013/14: £40million.
During this reporting period, the charity delivered 52 projects
on multiple platforms in partnership with local broadcasters
and BBC channels and language services. They include:

BBC Performing Arts FundSet up in 2003 following the success of the BBC One series
Fame Academy, the BBC Performing Arts Fund (PAF) has so
far awarded £4.5million of grants to more than 1,400 people
and organisations.
It successfully delivers on our Public Purposes to stimulate
creativity, promote education and learning, and to cater for
diverse, UK-wide audiences.
The BBC Performing Arts Fund is not licence fee-funded.
Instead it receives income from the voting lines used in BBC One
entertainment programmes. In 2012, the Fund became the official
charity for the BBC One’s The Voice with downloads from theshow raising money for the charity.
Over the past three years the Fund has had a rotating grants
portfolio and each year a different art form as the focus forfunding. In 2013 it was theatre, with funding offered to individuals,
community theatre groups and projects, and theatricalorganisations and companies.
In December 2013, the BBC Performing Arts Fund announced
19 winners of its Theatre Fellowship scheme as well as confirming
58 community theatre projects across the UK that would benefit
from funding.

Previous recipients have gone on to produce a Mercury Prize‘Connections’, using video at registration centres to help Syrian winning album, perform at the Glastonbury Festival, appear on
refugees in Lebanon and Jordan cope and access services.
Later with Jools Holland, compose for the BBC Proms and land
starring roles in both the West End and in Hollywood films.
presidential debates in Afghanistan featured all 11 candidates
and the election-focused series helped marginalised groups
Comic Relief and Sport Relief 2014
air their concerns on issues from security to the right of
The BBC has held a partnership with Comic Relief since its creation
women to vote.
in 1985. Each year we broadcast one of its two alternating appeals,
Red Nose Day and Sport Relief.
an online drama series supported by the charity in theWestern Balkans, SamoKazem (‘Just Saying’), is produced
Sport Relief 2014 produced the highest ever pre-news ratings –by, for and about young people in Bosnia, Serbia, Kosovo,
averaging 8 million and peaking at over 11 million during an
Macedonia and Montenegro.
Only Fools and Horses special featuring David Beckham.
For more information about BBC Media Action please visit:
It also raised more money on the night and across the weekend
bbc.co.uk/mediaaction/
than any previous Sport Relief. The evening ended with a record
breaking £51.2million and by the end of the weekend that hadrisen to £53.3million.
The show was reinvented and given a new scale and excitementby coming live from iconic venues at the Queen Elizabeth Olympic
Park. Approximately 140,000 people took part in the Sport Relief
Games across the country and around 50,000 were at Queen
Elizabeth Olympic Park on the Sunday.
Since the last Sport Relief in 2012, projects have been funded acrossthe whole of the UK that will help an estimated 2.5 million people.
in the UK, over 17,000 projects in the UK have received
money from Sport Relief so far, with over 2,000 projects
currently in funding.
internationally, over 2,000 projects have been funded to date,with over 300 currently in funding across 40 countries aroundthe world.

84

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Part Two: Governance and finance report – Governance

Governance

Governance is the way we guarantee
independence, deliver our mission
and account for our actions
BBC Annual Report and Accounts 2013/14

85

Governance and finance report – Governance

Executive Board
The Executive Board, chaired by the Director-General, and consistingof executive and non-executive directors, is responsible for the deliveryof BBC services and day-to-day operations across the organisation.
Executive directors at April 2014

Tony Hall, Lord Hall of Birkenhead, CBE
Director‑General since April 2013.

Helen Boaden
Director of Radio since April 2013.

Anne Bulford OBE
Managing Director, Finance and Operations
since June 2013.

Danny Cohen
Director of Television since May 2013.

Tim Davie
CEO, BBC Worldwide and Director,
Global since April 2013. Appointed to
Executive Board 1 April 2014.

James Harding
Director of News and Current Affairs
since August 2013.

James Purnell
Director, Strategy and Digital since
March 2013.

86

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BBC Annual Report and Accounts 2013/14

Non-executive directors
The Executive Board delegatessome of its responsibilities tofour sub‑committees:
In general, the committees meet four times
a year, although this can vary dependingon the business to be considered.

Dame Fiona Reynolds DBE
Senior Independent Director.
Appointed January 2012. Chairman of theRemuneration Committee, Fair Trading
Committee, and Nominations Committee
for non-executive appointments. Master of
Emmanuel College, Cambridge.

Simon Burke
Appointed January 2011. Chairman of
the Audit Committee. Chairman ofBathstore.com

Alice Perkins CB
Appointed April 2014. Chairman of
Post Office Ltd and Coaching Partner
at JCA Group.

Sir Howard Stringer
Appointed January 2014. Non-executive
director of Talk Talk Group.

This is the membership of the Executive
Board as at April 2014. Throughout thereporting year membership has changed.
Please refer to p102 for further details.

BBC Annual Report and Accounts 2013/14

Fair Trading Committee
The Fair Trading Committee ensuresthat the BBC complies with its fairtrading obligations. It is made up of three
non-executive directors, one of whom
is nominated as chairperson. Other
individuals may be invited to attend allor part of any meeting as and whenappropriate. This may include (but not
be limited to) the Managing Director,
Finance & Operations, BBC Group
General Counsel, Head of Fair Trading& Competition Law, external advisersand other relevant BBC members of staff.

Part Two: Governance and finance report – Governance

Sir Nicholas Hytner
Appointed April 2014. Director of the
National Theatre and Trustee of theRoyal Opera House.

Audit Committee
The Audit Committee oversees financial
reporting, internal control and risk
management. The committee is made upof three non-executive directors. The
Director-General, Managing Director,
Finance & Operations, Director of Risk
and Assurance, and external audit
representatives also attend.

Nominations Committee
The Nominations Committee oversees
the process of proposing, appointing anddismissing members of the Board, except
the Chairman, who is appointed by the
BBC Trust. Membership of the committee
depends on whether non-executive or
executive appointments are being made.
Remuneration Committee
The Remuneration Committee decides
the remuneration of executive membersof the Board. It is made up of at least
three non-executive directors and the
Director-General, Managing Director,
Finance & Operations, Director of HR and
Director of Employment may also attend.

87Governance and finance report – Governance

Risks and opportunities
Risks and opportunities affect the ability of the BBC to fulfil its Charter
obligations and public purposes. The Executive Board prioritises the BBC’srisks and monitors whether we are taking too much or too little risk.
As we approach the start of negotiations on licence fee funding
and Charter review, the BBC must put forward a compelling
vision for the Corporation for the next ten years. At the heartof this vision will be our audiences and we will rest our case on
the quality of our programmes and the excellence of the service
we provide. If we fail to make a compelling case we run the riskof not serving our audiences by bringing the best programmes
and services to everyone.
The main risks to properly serving our audiences are set
out in three categories below, but it is clear that they are
all interdependent.

Audiences88

Failure to continue to improve the quality,
distinctiveness and innovation of our output
in all genres whilst delivering a streamlined
BBC could limit our ability to meet audienceneeds and expectations in an ever morecompetitive marketplace.

detailed monitoring of audience performance and reaction
strategy review focusing on creative ambition and with targeted
reinvestment in key genresdevelopment of new online products responding to creative and audience
opportunities
responding to audience demand for more live and interactive experiencesstrategies to build long-term value with under-served audiencesto work with a broader range of media and cultural partners

Failure to uphold our editorial values andstandards in all our content could impact onmaintaining high levels of audience trust anddamage our brand.

effective editorial compliance processes, further strengthened
following publication of reviews
wide-reaching training
serious consideration of complaints and their implications

Inability to build an ever more creative, dynamic
and cohesive organisation could limit our ability
to attract, develop and retain the best creative
talent and our contribution to creative anddigital economies.

proactive articulation of what we offer as an employer to thewidest population and most diverse talent in the marketplacedeveloping our leadership population to continue building a creative,
innovative and collaborative environmentenable managers to recognise and reward significant additional
contribution, growth in skill, capability and experience throughout
the yearactively review and monitor strategies to attract, develop and retain
on-air talent, reflecting the different market conditions within each genre
and service area

Failure to deliver content when and how it isdemanded, or to anticipate the next big trends
in technology and content consumption, could
threaten our connection with audiences.

regular evaluation of our product portfolio to ensure it best reflects
audience demandimmersive experience across devices, tailored to different audience needs
anticipating long-term trends in audience preferences and industry
developments
renewed engagement with key industry partners

A lack of transparency or the inability torespond swiftly, reasonably and proportionately
to significant events or criticisms could impact
on our brand reputation and our efficientdelivery to audiences.

response to major incidents under continual review to ensure alignment
with best practiceregular rehearsals of response procedures
ability to get immediate advice to the Director-General to ensure
effectiveness, speed and proportionality of response

BBC Annual Report and Accounts 2013/14

Deliverypan-BBC review of management structures completed, focusing on single
points of accountability and clear decision-making routes
greater clarity on relationship between Executive Board and BBC Trust
following the completion of governance review
strengthened Executive secretariat function following appointment ofCompany Secretary

Delayed and ineffective implementation ofmajor projects could compromise the deliveryof the BBC’s overall ambitions.

Corporate Project Management Office overseeing delivery of major projects
independent assurance over portfolio of projects
act on lessons learnt from previous projects

Technical failure, infrastructureinterdependencies, industrial action or theactions of third parties, including suppliers,
could lead to interruption of broadcast services.

strong business continuity policies and practices, regularly assessed
and rehearsed
good union relationships with regular dialogue
focus on resilience in key procurements and major projects
exit plans and contingency plans for key suppliers

Failure to keep pace with changes to theinformation security threat could increase our
exposure to vulnerabilities, especially in light ofadvances in technology and content delivery.

continuous security improvement programmes established both in-houseand in third-party IT support company
global staff awareness and education campaigns carrying key security
messagesdevelopment of effective monitoring and forensic capabilities

Inadequate controls could endanger thehealth and safety of individuals, the naturalenvironment and our reputation.

well developed safety procedures with comprehensive written guidance,
supported by expert advisers
robust health and safety training in the UK and overseas, including for staff
operating in inhospitable locations
with other broadcasters, working to inform the consultation on key
proposed safety legislation changes affecting production and to clarify the
impact on the media industryimplementing environmental sustainability strategy to reduce impacts
from BBC operations
working with other broadcasters to raise standards in the industry as a whole

Failure to comply with the broad range of legal
and other regulatory requirements, or to keep
pace with changes, may result in penalties.

training plans regularly refreshed to ensure compliance with newly
introduced legislation
continuing to study and plan for impacts of new legislation, including
working with the industry to monitor and develop best practice solutions
for achieving effective compliancePart Two: Governance and finance report – GovernanceFailure to deliver a flexible, agile and strong
governance structure with clear accountability
will hinder us in making the organisation simpler,
more creative and better able to take focused,value for money decisions.

Financial
Developments in the UK and global economic
situation impact us and all our stakeholders,and could lead to reduced financial flexibility,
potentially impacting on our ability to meetall our ambitions within our means.

contingency planning and business modelling, incorporating potential
variations in funding and inflation
tight management of the implementation of phased savings targets,to enable delivery of strategic vision within available fundingplanning for new funding responsibilities (e.g. World Service)

As competitors achieve scale and consolidate,there is risk of revenue falling and existing
businesses being disrupted, routes to market
being diminished and access to potential
partners being reduced.

mature commercial subsidiary with significant global experience and aregionally focused structure to drive strong, sustainable financial returns,
support the BBC and promote UK creativity and innovation
new global brands and globally branded channels strategy implemented
with key partners to showcase BBC production and commissions
develop services to enhance content availability to UK audiences

Inability or failure to adequately plan for therange of potential changes to our funding model
could limit our capability to deliver distinctive
content to future audiences.

engagement with the Government’s Charter and licence fee
review processparticipation in the Government review of options regarding licence
fee enforcement

BBC Annual Report and Accounts 2013/14

89Governance and finance report – Governance

The BBC’s accountability and internal control processes
The Executive Board is responsible for the operational
management of the BBC (excluding the Trust Unit). This
includes safeguarding its assets and achieving value for moneyby ensuring there is a process in place for managing significant risk
issues to the BBC.
The Executive Board is responsible for establishing, maintaining
and reviewing the effectiveness of the BBC’s system of internal
control and for ensuring that necessary actions are taken to
remedy any significant failings or weaknesses identified. Suchsystems can only provide reasonable and not absolute assurance
against material misstatement or loss. Our system of control isdesigned to manage (rather than eliminate) the risk of failure toachieve business objectives and to provide reasonable assurance
that assets are safeguarded, transactions are appropriately
authorised and material errors or irregularities are either
prevented or detected on a timely basis.
Key elements of our system of internal control include:
Risk identification and management: The Executive Board
co‑ordinates and monitors risk management activity within theBBC. Our process for identifying, evaluating and managing
significant risks to the BBC, which accords with the Turnbull
guidance (Internal Control: Guidance to Directors), has been inplace for the year ended 31 March 2014 and up to the date of
approval of this BBC Annual Report and Accounts. The key
elements of risk management and oversight activity within the
BBC are shown on pages 88-90. These include considerationof a wide range of risks including editorial, operational andfinancial risks.

Project governance: The importance of assurance in supporting
project governance and, ultimately, successful project delivery is
recognised. It is now a requirement of all major projects in the
BBC to put in place a robust set of checkpoints and reviews withthe aim of providing senior stakeholders with assurance that the
project is on track to deliver, and to identify appropriate actions to
be taken if the project is off course. The roles and expectedinterventions of assurance providers, (e.g. Internal Audit orindependent technical experts), are defined within the overall
project plan. The Project Sponsor is responsible for ensuring thatthe programme of assurance is sufficient for the projectthroughout its lifecycle, with independent review and challenge
provided by Internal Audit and the BBC Programme Management
Office.
Staff capability: Processes are in place to ensure that our staff areprofessional and competent. These include recruitment policies,
performance appraisals and development programmes.
The BBC’s internal audit process
Internal audit, Risk management and Investigation Services
combine to form our Business Assurance function, which is led by
the Director of Risk and Assurance. Internal Audit’s authority andindependence is assured by the Director of Risk and Assurance’s
independent and direct access to the Director-General and to the
Executive Audit Committee (EAC).

Internal audit regularly tests the BBC’s control systems and corebusiness processes to ensure they are fit for purpose andconsistently applied. The work plan, which is based on a continuing
assessment of key risks, is agreed annually with the EAC andcovers financial, operational and compliance controls, including
Strategy and financial reporting: The Executive Board approve a
the exercise of the BBC’s right of audit over external suppliers
business plan that aims to deliver the Trust-approved BBCsuch as the independent production companies and service
strategy. Comprehensive monthly, quarterly and annual reporting providers. Any significant control failings or weaknesses identified
processes, both within business groups and up to the Executive
are reported to appropriate levels of management. The status ofBoard, include financial monitoring against plan, regularcorrective actions is reported back to EAC.
reforecasting, analysis of variances and performance reviews
tracking achievements against business plan and strategy.
Whistle-blowing arrangements
We have a ‘whistle-blowing’ (protected disclosure) policy toBusiness policies: Formal policies and procedures are in place forfacilitate the confidential communication via a number of routes
all material business processes to ensure compliance with allof any incident in which there is a suspicion that the BBC’s codes
applicable laws and regulations, that risks are managed andhave been breached. We recognise that there could bethat timely, relevant and reliable information is available acrosssensitivities regarding actual or suspected incidents and so wethe business.
provide a ‘whistle-blowing’ hotline administered by an
Cash management: The BBC undertakes regular treasury and cash independent external company to ensure anonymity.
reporting, which analyses funding requirements and liquidity.
Each incident or suspicion reported is independently investigatedAuthorisation procedures: Clearly stated formal authorisation limits in a confidential manner, a response is communicated and action
and processes cover all financial transactions.
taken as appropriate. The EAC is responsible for ensuring that
there are appropriate arrangements in place for the
proportionate investigation of matters reported and forappropriate follow-up action.

90

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BBC Annual Report and Accounts 2013/14

Governance report
Good governance is about leadership, accountability and openness
BBC Governance review
A major change this year has been the implementation of thereview of BBC Governance, making clearer the respective rolesof the Trust and the Executive. We are also working to make theoperations of the BBC simpler, with proper individual accountability
for decisions and the scrapping of some 60 BBC boards.

opted to adopt best practice and follow the provisions of the
Financial Conduct Authority’s Listing Rules (in accordance withthe 2010 Corporate Governance Code) and the Financial Reporting
Council’s 2012 UK Corporate Governance Code in order to beconsistent with companies quoted on an EU regulated market.

Areas of the UK Corporate Governance Code not
relevant to the BBC
Make up of remuneration (UK Corporate Governance
Code principle D.1.1): The BBC sets levels for executive
remuneration that should be sufficient to attract, retain
and motivate directors of the quality required to run theorganisation successfully, in line with this principle. However,this principle also requires aligning executive remuneration
to the notion of enhancing shareholder value by making
performance-related elements of remuneration a significant
proportion of total remuneration. By virtue of the BBC’s licencefee funding and its public purposes, the amount of variable(or performance-related) remuneration that may be earned
should be limited. Variable pay in the form of bonuses for BBC
executive directors have been suspended indefinitely, with the
exception of Tim Davie (appointed on 1 April 2014) in his
capacity as the Chief Executive Officer of BBC Worldwide.

Areas where compliance with the Charter
overrides the UK Corporate Governance CodeDivision of responsibilities between Chairman andChief Executive (UK Corporate Governance Codeprinciple A.2.1 and A.3.1): As permitted by the Charter, theChairman of the Executive Board is the Director-General, thechief executive officer of the BBC. This does not comply with
the UK Corporate Governance Code which requires a clear
division of responsibilities at the head of the company between
the running of the board and the executive responsible for therunning of the company’s business. Whilst the Director-Generalacts as both Chairman and Chief Executive, the strategic
oversight by the BBC Trust ensures that no single individual has
unfettered powers.

The Executive Board has complied with the requirements of theCharter which has also secured substantial compliance with the
BBC corporate governance framework
UK Corporate Governance Code. The last external evaluation
The BBC’s corporate governance framework is defined in theof the Board was completed in 2009; therefore, provision B.6.2
Royal Charter (the Charter). You can see the Charter on the BBCof the UK Corporate Governance Code has not been complied
Trust’s website at: bbc.co.uk/bbctrust/about/how_we_govern/
with. The BBC, jointly with the BBC Trust, did conduct an internal
charter_and_agreement/
review of governance during the year. The Executive Board
The Charter requires the Executive Board to have regard tobelieves that this does not compromise the quality of the governancegenerally accepted principles of good corporate governance.
arrangements in place during 2013/14 or the execution of the
And whilst the BBC is not a listed company, it has nonetheless
Executive Board’s responsibilities.

Part Two: Governance and finance report – GovernanceInteraction with shareholders (UK Corporate Governance
Code principles B.7.1, B.7.2, D.2.4 and section E): The BBC
is not a profit-oriented company with shareholders and so
provisions relating to interaction with shareholders clearly do
not apply. In some circumstances, however, it is possible toconsider, by analogy, the way in which the BBC Trust engages
with licence fee payers. This is set out in the Trust’s review andassessment in Part One of the Annual Report and Accounts.

Board balance and independence (UK Corporate
Governance Code principle B.1.2): At 31 March 2014 theExecutive Board comprised 11 directors, of whom seven were
executive directors and four non-executive directors providing
a balance of executive and non-executive directors so that noindividual or small group of individuals can dominate decision
taking. This complies with the Charter which specifies that
non-executive directors must not be less than one third andnot equal to or more than one half of the members of the
Executive Board. However, this does not comply with the UK
Corporate Governance Code which requires that at least half
the board, excluding the Chairman, should be independent
non-executive directors. All non-executive directors are
considered independent for the purposes of the UK Corporate
Governance Code.
Evaluation of the Chairman (UK Corporate Governance
Code principle B6.3): The Director-General of the BBC, being
the Chairman of the Board, has his performance evaluated by
the Trust. This is performed by the Chairman of the Trust as
opposed to the Senior Independent Director, as stated in the
UK Corporate Governance Code.

BBC Annual Report and Accounts 2013/14

91Governance and finance report – GovernanceNominations
Committee
For the final quarter of the year the Remuneration Committee
only comprised of two members which, despite being a quorate,
is non-compliant with principle D.2.1 of the UK Corporate
Governance Code. Two new non-executive directors wereappointed as members of the Remuneration Committee in early
2014/15, therefore the BBC are now compliant with this principle.

Board appointments
The Nominations Committee oversees the process of proposing
members of the Board. Appointments are made by the Executive
Board, with non-executive appointments requiring the approvalof the Trust. The only exception is the Chairman, who isappointed by the BBC Trust. Membership of the Nominations
Committee is dependent on whether it is dealing with executive
or non-executive appointments.

There are also a few areas of the UK Corporate Governance
Code that are either not appropriate to the circumstances of the
BBC or where compliance with the Charter overrides compliance The Nominations Committee oversaw a number of
appointments during the year. Two executive appointments werewith the UK Corporate Governance Code.
made: Danny Cohen, Director, Television (effective 7 May 2013)
and James Harding, Director of News and Current Affairs
Cost of compliance(effective 12 August 2013). Helen Boaden, Director, RadioIn 2013/14, the BBC incurred compliance costs estimated at£16.2million (2013: £14.9million) to ensure that we complied with (effective 15 April 2013) and Anne Bulford, Managing Director,
BBC Finance and Operations (effective 21 June 2013) were
all relevant legislation. This includes the BBC’s annual £2.9million
appointed during 2012/13.
subscription to Ofcom. During the year a number of enquiries
continued, the costs incurred to 31 March 2014 on these enquiries
Following approval from the BBC Trust, the Board appointed
was £2.0million (2013: £4.9million).
three new non-executive directors during the year: Sir Howard
Stringer from 1 January 2014, and Nicholas Hytner and Alice
Executive Board
Perkins from 1 April 2014. The term of office for non-executive
The Executive Board meets monthly (except for August),
directors Sally Davis and Brian McBride were concluded during
although additional Board meetings are convened during the year
the year (as planned).
as and when required. Summary minutes of the monthly meetings
are available online at: bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement/
In practice, the Executive Board delegates some of its
responsibility to other managerial groups and, in accordance withthe requirements and provisions of the Charter, the following
Committees continued to operate last year:
Audit Committee
Fair Trading Committee
Nominations Committee
Remuneration Committee
Any delegation from the Executive Board is stated in the relevant
standing orders for each group and a framework for reporting
and review is established. See: bbc.co.uk/aboutthebbc/
insidethebbc/managementstructure/seniormanagement/subcom.
html
The Executive Board, its sub-committees and other boards towhich it delegates responsibility are responsible for the delivery of
BBC services and day-to-day operations across the organisation.
Induction, performance and development
All new directors receive an induction programme including
Board procedures and directors’ responsibilities. All directors
have access to external independent advice if they wish.
The BBC Trust assesses the performance of the BBC’s
management and its services including an ongoing review ofprogress and an annual performance day. The BBC Trust’s review
and assessment for 2013/14 can be found in Part One.
All the executive directors have their own personal and divisional
objectives, and their performance against them is reviewed by the
Director-General each year.

92

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BBC Annual Report and Accounts 2013/14

Report of the Senior Independent Director‘‘We are filled with a renewed
sense of determinationand optimism.’’
Dame Fiona Reynolds

2013 was a year of looking forward and looking back. The BBC
Trust appointed Tony Hall as the 16th Director-General of the
BBC and Chairman of the BBC’s Executive Board. Arriving back at
the Corporation on 2 April 2013, Tony brought with him a surgeof optimism. He took over from Tim Davie, who had achievedmuch in a five-month stint as Acting Director-General. The Board
set about moving forward under Tony’s leadership and initiated a
new strategy with a clear and uniting vision for the BBC, focusedon making us accessible, inspiring and invaluable for all ouraudiences.
The early months of this year, however, were marked by a focus
on the past. Investigations into past decisions on severance
payments to departing staff and the failed Digital Media Initiative(DMI) project consumed much of the Board’s time. These
investigations were painful but only added impetus to theinternal energy that was already being applied to remedying
these difficulties. During the year we held a major review of
remuneration policy and practice, led by Sally Davis, the then chairof the Executive Remuneration Committee. I report separately
on the details of this review and the issue of severance pay on
page 77. We also strengthened project management andoverhauled the way we oversee complex major projects, learningfrom the lessons of DMI. We have drawn greater assurance fromthe evidence of tighter management and more open reporting of
projects that is already resulting.

Following the review of BBC governance conducted jointly with
the BBC Trust, we also made significant changes to the nonexecutive membership of the Board. Sally Davis’s term of office
ended in December 2013 and Brian McBride’s in March 2014: wewarmly thank them both. Replacing them are Sir Howard Stringer,
former CEO and Chair of Sony; Alice Perkins, Chair of the Post
Office; and Nick Hytner, Director of the National Theatre. These
new non-executive directors join Simon Burke and me in an
expanded non-executive group on the Board. We plan to appoint
a further non-executive to help us with the digital challenge in the
coming year.

BBC Annual Report and Accounts 2013/14

93Part Two: Governance and finance report – GovernanceThe composition of the Executive Board has changed significantly
this year. Five out of seven executive directors were newly
appointed to the Board in 2013. From outside the BBC wewelcomed Anne Bulford (Managing Director, Finance andOperations), James Harding (News and Current Affairs) andJames Purnell (Strategy and Digital). Danny Cohen (Television)joined the Board from his role as Controller of BBC One, andHelen Boaden (Radio) and Tim Davie (BBC Worldwide andGlobal) took on new roles.

Governance and finance report – Governance

Executive Board and Committee attendance
Executive Board
Ordinary Extraordinary
Number of meetings for the period

11

1

11

1

Lucy Adams

80

Helen Boaden

101Anne Bulford

8/9

1

Danny Cohen

100James Harding

6/7

1

Roger Mosey

1/2

0/0

Zarin Patel

3/3

0/0

James Purnell

111Fran Unsworth

4/4

0/0

11
11
11
8/8
2/2

1
1
0
1
0/0

Audit Committee
MemberAttendeeFair Trading Committee
MemberAttendee53Nominations
Committee
MemberRemuneration Committee
MemberAttendee49Executives
Tony Hall

3

5

2/2

1/2

0/1

4

9

2

8
5/7

Non-executives
Brian McBride
Simon Burke
Dame Fiona Reynolds
Sally Davis
Sir Howard Stringer

3
5
5

3
3

3
3
3

9
1/1
9
8/8

This table does not include business conducted offline and update meetings where no formal business was considered.

Together, the new Executive Board is committed to working
as a team to bring energy, leadership and direction to the BBC.
We are determined to create the conditions that will guarantee
the highest quality of distinctive broadcasting, easily accessible toeveryone who enjoys BBC programmes and products. We want
to inspire our audiences and engage our staff in the new,
purposeful direction for the BBC.
In the coming year we will face further challenges, not least thefact that our new strategy will place significant demands on us
culturally, organisationally and financially. But we are filled witha renewed sense of determination and optimism: the BBC
continues to inform, educate and entertain, and at our best weare sensational. Delivering more, better and more personally are
our watchwords for the future.
Dame Fiona Reynolds
Senior Independent Director
19 June 201494



BBC Annual Report and Accounts 2013/14

Remuneration report‘‘We have appointed the very
best people on salaries that are
significantly discounted against
the commercial sector.’’Dame Fiona Reynolds

Annual statement of the Chair of the
Executive Remuneration Committee
2013/14 was a challenging year for the BBC. We came underintense scrutiny over the payment of substantial severance
payments to senior managers. It was also a year of senior
management change with a number of new Executive Board
appointments in which we were determined to attract the mosttalented leaders on salaries that demonstrated value to thelicence fee payer.
We accepted the findings of the NAO review of senior manager
severance payments. This added to the existing internal impetus
to intensify the challenge and scrutiny of senior manager pay,
benefits and contractual terms. As a result the Executive
Remuneration Committee (ERC) expanded its scope to include
responsibility for the BBC’s subsidiaries; introduced new policies
and practices for senior salaries including severance; improved thegovernance of severance and pay; and introduced greater
challenge and scrutiny of salaries and severance at a greater depth
within the organisation.

We have continued with our policy of discounting senior manager
and executive salaries by between 20% and 80% against thecommercial sector, aligning ourselves more closely with thecommercial public sector. We no longer provide a car allowanceor funded private medical insurance to executive directors andsenior managers joining the BBC. The majority of Executive Board
members are not entitled to receive either benefit and all of our
executive directors have accepted contractual terms that cap
severance at £150,000 and reduce the employer notice period
to six months.

BBC Annual Report and Accounts 2013/14

95

Part Two: Governance and finance report – GovernanceIn line with the new policies agreed, the BBC implemented a capof £150,000 on severance payments in September 2013, ceased
the practice of making payments-in-lieu-of-notice (PILON) in
addition to severance and extended the scope of the newly
established Senior Manager Remuneration Committee (SMRC)
to include responsibility for approving all pay increases above£75,000, all discretionary severance payments and contractual
severance payments above £75,000. The SMRC provides regular
updates to the Executive Remuneration Committee and since
the increased governance was introduced in September 2013
there has been a modest reduction in the headcount and pay billof those earning £75,000 or more. Since September 2013, there
have been no cases of severance paid above £150,000 and nocases where payment-in-lieu-of-notice (PILON) has been paidin addition to severance.

Governance and finance report – Governance2013/14 saw significant change for the BBC’s Executive Board;
six of the seven BBC directors were newly appointed to theirrole in the 2013 calendar year. Throughout the year the ERC hasreviewed the BBC’s progress towards senior manager reductions
against targets set by the 2011 BBC Executive and Senior
Management Pay Strategy to be met by 31 December 2015.
Since 2009, the BBC has reduced senior manager headcount andthe senior manager pay bill by more than a third. Since January
2012, we have continued to make steady progress towards ourtargets, reducing by a further 74 heads (15.3%) against a targetof c70 heads and reducing the pay bill by £6.6million (11.5%)
against a target of c£9million.

Key decisions 2013/14

We have appointed the very best people on salaries that are
significantly discounted against the commercial sector; reflecting
our ability to attract talented leaders motivated by the creative
challenge and public responsibility of leading the BBC.

Strategy for 2014/15

There is more to do. We have an ambition to further reduce
the percentage of employees at senior management gradesfrom 410 (down from 640 in August 2009) and the numbersof senior managers earning more than £150,000. To achievethese ambitions the Committee will continue to challenge theBBC’s senior management to deliver value and transparency
to licence fee payers. We believe we can attract the very bestleaders and highly talented staff through a combination of our
extraordinary output, compelling creative position and strong
public service ethos.
Dame Fiona Reynolds
Senior Independent Director
19 June 201496No salary increase for Executive Board members
Reduction of Executive Board employer notice period
from 12 months to 6 months
Implementation of a £150,000 redundancy payment cap
Introduction of enhanced governance of all salary
proposals over £75,000 per annum
Introduction of enhanced governance for redundancy
payments over £75,000

Removal of the Director, HR role from the Executive
Board
Appointment of the CEO, BBC Worldwide and Director,
Global role to the Executive Board
Continuation of the Executive and Senior Manager
Remuneration Strategy 2011-2015
This report sets out the BBC’s remuneration policy and details
the annual remuneration received by the staff members of the
Executive Board (the executive directors) for the financial year
2013/14. It has been prepared on the basis that the requirementsof the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 and Listing Rules apply to the BBC
wherever these disclosure provisions are relevant. The sections
on pensions and remuneration received by the Executive Board
members have been audited by KPMG LLP.

BBC Annual Report and Accounts 2013/14

The remuneration policy for executive directors

1. Remuneration Committees: constitution and operation
The BBC Trust is responsible for setting the remuneration
strategy for the Executive Board and for all aspects of the
remuneration of the Director-General and the non-executive
directors.

2. Executive Board membership and structure
In 2013/14, the BBC made the last of the current round of
appointments to the new Executive Board under Tony Hall’s
leadership. This was the role of Director, News and Current
Affairs. The Committee approved the salary for this appointment.

The Executive Remuneration Committee (ERC) is responsiblefor implementing the agreed strategy for all executive membersof the Executive Board, with the exception of the DirectorGeneral. Its members are non-executive directors: Sally Davis(Chairman until 31 December 2013), Dame Fiona Reynolds andBrian McBride (until 31 March 2014). Dame Fiona Reynolds took
over the chairmanship of ERC from Sally Davis on 1 January 2014.

As at 31 March 2014, the Executive Board comprised sevenexecutive directors and four non-executive directors – detailsof the Executive Board membership and full remuneration isprovided in Table 1 below.

Complying with the UK Corporate Governance Code 2010 and2012, the ERC takes specialist advice from external professional
advisers on some matters, particularly those relating to market
practice. During the year, independent advice was received fromTowers Watson on matters related to market comparability of
executive remuneration.

SMRC members during 2013/14 were: Tony Hall, DirectorGeneral (Chair); Anne Bulford, Managing Director, Finance &Operations; Lucy Adams, Director, HR; and non-executive
directors Sally Davis1, Dame Fiona Reynolds and Brian McBride2.

3. Executive director pay components
The ERC is committed to striking the balance between setting
appropriate levels of pay for Executive directors that attracts,
motivates and retains the best people to lead the BBC andproviding value for the licence fee payer. The BBC’s executive pay
strategy should be fair, transparent and broadly consistent withthe approach to pay for all employees at the BBC. Progresscontinues to be made towards these goals, including the phased
diminution of historic differences in approaches to pay andbenefits between senior and other staff.
The BBC receives regular feedback regarding senior pay from
employees during annual pay negotiations through the tradeunions and via the annual staff engagement survey. This feedback
is taken into account when setting the pay strategy for the
executive directors.
When reviewing the pay for the executive directors, theCommittee considers each component of the total remuneration
package broken down as follows:

1 Sally Davis was the non-executive director on the SMRC until 31 December 2013 when
her term expired. Fiona Reynolds and Brian McBride replaced Sally Davis on SMRC
between 1 January and 31 March 2014.
2 Brian McBride’s term as non-executive director ended on 31 March 2014.
BBC Annual Report and Accounts 2013/14

97

Part Two: Governance and finance report – Governance

The ERC established the Senior Manager Remuneration
Committee (SMRC) in September 2012, giving it responsibility
for aligning the operational needs of the BBC within the strategic
framework set by the Trust and implemented by the ERC.
Since 1 July 2013, the SMRC has been required to approve all
redundancies of £75,000 or more and any severance paymentthat is not contractual or that includes a payment that is outsideof policy. The SMRC is also responsible for approving all salaryadjustments or new salaries for any employee earning a full-timesalary of £75,000 or more since 1 September 2013.

The Director, HR role is no longer a member of the Executive
Board after 31 March 2014. The CEO, BBC Worldwide & Director,
Global role was appointed to the Executive Board with effectfrom 1 April 2014.

Governance and finance report – Governance

Component

Purpose and link to strategy

Operation

Maximum opportunity

Base pay

Base pay is aligned to the market
median for total direct remuneration(salary, annual bonus and annualised
long-term incentive).

Three factors are used todetermine the level of base pay
set for an executive director orsenior manager:

There is no prescribedmaximum salary or
maximum increase.

A discount of 50-80% against total
direct remuneration in thecommercial sector is applied to
executive director roles.

would the rate be consistent
with the discounted market
rate for the job?
does the personal
performance of the executive
justify the level of base pay?
is the level affordable to the
BBC and not deemedexcessive?

Discretionary performancebonuses to a maximum of 10%
of base pay were historically paid
to executive directors.

Executive directors with rolesin the public service part of thebusiness are no longer entitled
to receive a performance bonus.

Executive directors employed in
the BBC’s commercial businesses
are contractually entitled to a
performance related annual bonus
funded by the commercial businessand not the licence fee. It is reward
for the achievement of short-term
strategic goals and profit growtheach year.

Payment of contractual bonus in
the BBC’s commercial businesses
is subject to an agreed level of
performance linked to financial
metrics. The levels of profit
performance attracting threshold,target and maximum bonus are
set by the BBC ERC. No payment
is made for performance below
the threshold. Payment of 0-100%of the maximum opportunity ismade between the threshold andthe maximum targets.

Variable pay98

No executive director in the
public service has received abonus since 2008.
The maximum bonus
payable to an executive
director employed in a BBC
commercial business is 70%
of salary where target
bonus is 50% of salary.

BBC Annual Report and Accounts 2013/14

Component

Purpose and link to strategy

Operation

Maximum opportunity

Benefits

Pensions are offered in accordancewith the all employee pension
arrangements.

Executive directors who werealready in receipt of a car
allowance have retained it.

Current policy provides
a defined contribution
scheme with no salary cap.

In addition to pensions, the othermain contractual benefit is life
assurance.

Executive directors who received
a car allowance payment in2013/14 were: Lucy Adams, Helen
Boaden and Danny Cohen.

Existing members of adefined benefit pension
scheme are capped at the
maximum salary for theirpension scheme or are
subject to a cap in
pensionable salary growth.
The Scheme is closed for
new joiners.

In April 2012, the BBC removed the
car allowance benefit for all new
executive directors and senior
managers to ensure that future
policy aligns with arrangements for
all BBC employees. Entitlement to
private health care was also
removed for all executive directors
with effect from April 2011 for thesame purpose.

Danny Cohen had his car
allowance frozen on promotion
to the Executive Board
The Director-General is entitledto a car and driver under earlier
arrangements but has noentitlement to a personal car
allowance or fuel allowance.
During 2013/14 all other executive
directors have had shared accessto a car and driver.

The maximum car
allowance benefit received
by any executive director is£12,900 per annum. This isa historical benefit.

Employment contracts of executive
directors have a maximum notice
period of six months, but are
subject to earlier termination
for cause.

There is no contractual
entitlement to any additional
remuneration in the event of earlytermination other than in the caseof termination for reason of
redundancy.

In the event of redundancy,
all executive directors areentitled to payments equal
to one month per year
served up to a maximum
payment of £150,000.

Other
remuneration

There is no entitlement to any
other remuneration.

Consideration is given to thereputational risks to the BBC
and the level of payment isagreed by the Executive
Remuneration Committee
on a case-by-case basis.

There is no prescribedmaximum.

BBC Annual Report and Accounts 2013/14

Part Two: Governance and finance report – Governance

Employment
contracts andseverance99

Governance and finance report – GovernancePensionExecutive directors who joined the BBC before 1 December
2010 are eligible to participate in the BBC Pension Scheme(the Scheme), which provides for pension benefits on a defined
benefit basis. Executive directors who joined the BBC on or after
1 December 2010 are eligible to join LifePlan which is the BBC’s
defined contribution arrangement. The BBC pays matching
contributions to LifePlan for employee contributions between
4% and 5%. Employee contributions between 6% and 7% arematched plus an additional 1%. Employee contributions of 8%
or more receive the maximum employer contribution of 10%.
There is no maximum pensionable salary for contributions
to LifePlan.

SchemeDate closed
AccrualExecutive directors who decide not to join LifePlan or are notalready an existing member of the Scheme are, subject to meeting
the relevant criteria, automatically enrolled into the National
Employment Savings Trust (NEST). The BBC and employees
currently pay 1% of qualifying earnings to NEST. Individuals canchoose to opt out of this.
Executive directors’ pension arrangements may be reviewed
and amended in response to changes in legislation or similar
developments.
Features of the BBC’s pension arrangements, including normal
pension age, are provided in the table below.
Details of the BBC Pension Scheme are available atbbc.co.uk/mypension/ and details of LifePlan can be found atfriendslife.co.uk/microsite/bbc/‘Old’ benefits
defined benefit‘New’ benefits
defined benefit

CAB 2006
defined benefit

CAB 2011
defined benefit

LifePlandefined contribution

National Employment
Savings Trust (NEST)
defined contribution(auto enrolment
arrangement)

30 September 1996

31 October 2006

30 November 2010

1 January 2012

Open to all eligible
employees

Open to all eligible
employees

60ths accrual

60ths accrual

1.67% accrualadjusted in linewith inflation

1.67% accrualadjusted in linewith CPI

BBC will contribute
1% of qualifying
earnings

Final pensionable

Final pensionable

Career averagerevalued earnings

Career averagerevalued earnings

BBC will contributea maximum of 10%
of salary if employee
contributes 8% withlower sliding scale

60

60

65

65

N/A

N/A

Earnings cap

DOJ before Capped at £141,000
1 June 1989
uncapped, capped
otherwise

Capped at £141,000

Capped at £138,000

Uncapped

Minimum earnings£5,668pa
Maximum earnings£41,450pa

Pensionable salary
growth before theEarnings cap is applied

Limited at 1% p.a.

Limited at 1% p.a.

Limited at 1% p.a.

No restriction

N/A

N/A

7.5%

7.5%

4%

6%

Minimum employee
contribution is 4%

1% of qualifying
earnings

SalaryNormal pensionable age

Employee contribution(% of pensionable salary)

Severance pay
A detailed report on severance pay by the Senior Independent
Director is available online: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/reports/bbc_review_severance_payments_
2013_14.html

Total annual remuneration £000s

Variable remuneration in 2014/15 for BBC Worldwide
The chart represents the potential earnings of the CEO, BBC
Worldwide & Director, Global for the year.
Minimum: a base salary of £400,000, pension related single
figure of £37,000 and taxable benefits of £2,000
Target: the minimum payment plus a bonus of 50% of basesalary (£200,000)

Bar chart shows
Total annual remuneration

Maximum: the minimum payment plus a bonus of 70% ofbase salary (£280,000)

Minimum - £439,000 of which 100% was paid in salary, pension
and benefits
Target - £639,000 of which 69% was paid in salary, pension andbenefits and 31% was paid in bonuses
Maximum - £719,000 of which 61% was paid in salary, pension
and benefits and 39% was paid in bonuses

100 

BBC Annual Report and Accounts 2013/14

4. How does the executive pay policy in the public service
differ from that for all other BBC employees?
The ERC has ceased the payment of bonuses to all executive
directors in the public service and is moving away from theprevious two-tier benefit structure by phasing out private medical
insurance and car allowances, with no new executive director
or senior manager receiving these benefits since August 2011
and April 2012 respectively. These changes have simplified andequalised pay arrangements across our employee population.
A full range of benefits can now be purchased by all staff at alllevels of the organisation under our flexible benefits arrangements.
BBC graded staff are entitled to an annual pay review which isnegotiated and agreed with the National Joint Council of Trade
Unions. These people may also be entitled to a progression
payment, depending on their salary position within range after
three years and six years in post, assuming a satisfactory levelof performance during this period.
Executive directors and senior managers are not automaticallyentitled to any form of annual increment nor are they entitledto any form of progression payment. All senior salaries are
discounted against those of equivalent commercial organisations
and the BBC is increasingly aligning senior pay to the commercial
public sector.

Further to the National Audit Office review ‘Severance payments
and wider benefits for senior BBC managers’ published in June
2013, the ERC commissioned a full review of executive directors’
severance terms and practices in 2013 and expanded the remitof the SMRC to include responsibility for the BBC’s approach toseverance arrangements for senior managers.
As a result of this review, the ERC has changed the employer
notice period for all executive directors from 12 months
to six months, aligning it with senior manager notice periods,
implemented a cap on redundancy payments of £150,000, ceased
the practice of making payments-in-lieu-of-notice (PILON) in
addition to severance and capped outplacement support andlegal fees for compromise agreements at £5,000 and £2,000
respectively. The SMRC are also required to provide regular
reports on senior severance cases to the ERC. A full report on
the implementation of the NAO recommendations can be found
at: bbc.co.uk/aboutthebbc/insidethebbc/howwework/reports/
bbc_review_severance_payments_2013_14.html
6. Consideration of BBC Trust views
The ERC consults with the Trust on all matters relating to the
executive director pay strategy to ensure alignment with thelicence fee payers’ expectations. The ERC provides regular
reports to the Trust outlining progress against senior manager
reduction targets, and seeks feedback from the Trust.

The BBC continues the practice of discounting BBC executive
directors’ pay against the commercial sector and has maintained
the freeze in pay of executive directors. The agreed discountremains at between 50% and 80% below commercial sector
comparisons. In order to ensure that levels of pay are consistent
with the agreed strategy the committee obtains and reviews
external market pay data via an independent advisor. This
information was reported to the Trust and provided assuranceof our continued delivery against the policy: we maintained a
discount against commercial sector executive roles of 72% for thelast two years. This discount also reflects the substantial additionalamounts of variable pay (including bonus and long-term incentives)
provided in the commercial sector that are not available toexecutive directors working for the public service BBC.

BBC Annual Report and Accounts 2013/14

101

Part Two: Governance and finance report – Governance

The ERC uses the BBC pay multiples, ratios of the DG andexecutive directors’ median earnings to the BBC median earnings,
The committee provides an annual assurance report to the Trust
as a cap to ensure that the BBC continues to reduce the levelfor consideration and feedback.
of remuneration for executive directors relative to othermembers of staff.
Members discussed the report, which covered executive director
pay, benefits and terms and conditions. It was noted there had
5. The executive pay strategy and policy for 2013/14 –been no ‘in role’ salary increases for executive directors and that
progressing towards greater consistency and transparency
the discount factor against remuneration of commercial sector
Continued reduction of executive and senior manager pay
competitors was within the range agreed by the Trust.
and salary discounts
Throughout 2013/14, the ERC worked to manage and reduce
both senior managers’ pay and numbers by ensuring compliancewith the BBC Executive and Senior Management Pay Strategy.
This was agreed with the Trust in July 2011 with targets to bedelivered by the end of 2015. Since January 2012, the BBC has
reduced by 74 senior managers against a target of c70 and by£6.6million against a target of c£9million.

Governance and finance report – Governance

Executive Board annual remuneration report
1. Annual remuneration of the Executive Board – detail of remuneration received (audited)
Table 1 provides full details of the remuneration received by all Executive Board members and the total remuneration for Trustees
for 2013/14 compared to previous year. Table 2 details pension benefits for those members of the Executive Board who are membersof a defined benefit scheme.
Table 1: Executive Board remuneration
2013/14

Other Compensation
PensionFee/
Taxable remunerfor loss related single
base pay benefits
ation
of officefigure
£000
£000
£000
£000
£000
(Note 14) (Note 15)(Note 17)

Total
remuneration
includingpensionrelated single
figure£000

Executive directors
Executive directors as at 31 March 2014
Tony Hall (Note 1)

449

18

–

–

–

467

Lucy Adams (Note 2)

320

16

–

–

42

378

Helen Boaden

340

15

–

–

59

414

Anne Bulford (Note 3)

304

–

–

–

–

304

Danny Cohen (Note 4)

287

9

–

–

31

327

James Harding (Note 5)

217

–

–

–

–

217

James Purnell (Note 6)

295

–

–

–

22

317

2,212

58

–

–

154

2,424

Total executive directors as at 31 March 2014
Former executive directors serving on the Executive Board in 2013/14
Tim Davie (Note 7)

1

–

–

–

–

1

Graham Ellis (Note 8)

8

2

–

–

–

10

Roger Mosey (Note 9)

25

2

–

–

–

27

Zarin Patel (Note 10)

81

3

–

–

–

84

Fran Unsworth (Note 11)

66

5

–

–

–

71

Total former executive directors serving on the Executive Board in 2013/14

181

12

–

–

–

193

Total former executive directors on the Executive Board prior to 2013/14

–

–

–

–

–

–

2,393

70

–

–

154

2,617

Total executive directors
Non-executive directors
Non-executive directors as at 31 March 2014
Simon Burke

37

–

–

–

–

37

Brian McBride

33

–

–

–

–

33

Dame Fiona Reynolds (Note 12)

47

–

–

–

–

47

Howard Stringer (Note 13)

8

–

–

–

–

8

125

–

–

–

–

125

Total non-executive directors as at 31 March 2014
Former non-executive directors serving on the Executive Board in 2013/14
Sally Davis

28

–

–

–

–

28

Total former non-executive directors serving on the Executive Board in 2013/14

28

–

–

–

–

28

Total former non-executive directors on the Executive Board prior to 2013/14

–

–

–

–

–

–

Total non-executive directors
Total Executive Board
Total Trustees
Total

102 

153

–

–

–

–

153

2,546

70

–

–

154

2,770

525

1

–

–

–

526

3,071

71

–

–

154

3,296

BBC Annual Report and Accounts 2013/14

2012/13Fee/base pay£000

TaxableOther
benefits remuneration
£000
£000
(Note 16)

Compensation
Pensionfor loss
Total related single
of office remuneration
figure
£000
£000
£000
(Note 17)

Total
remuneration
includingpensionrelated single
figure
£000

–

–

–

–

–

–

9

–

–

181

12

193

340

14

81

–

435

61

496

–

–

–

–

–

–

–

Appointed to Executive Board 21 June 2013

–

–

–

–

–

–

–

Appointed to Executive Board 7 May 2013

–

–

–

–

–

–

–

Appointed to Executive Board 12 August 2013

10

–

–

–

10

–

10

Appointed to Executive Board 19 March 2013

522

23

81

–

626

73

699

397

11

–

–

408

41

449

Stepped down from Executive Board 1 April 2013

74

4

–

–

78

9

87

Stepped down from Executive Board 14 April 2013

166

6

–

–

172

–

172

Stepped down from Executive Board 6 May 2013

352

14

–

–

366

40

406

Stepped down from Executive Board 21 June 2013

–

–

–

–

–

–

–

Appointed to Executive Board 1 April 2013.
Stepped down from Executive Board 11 August 2013

1,114

989

35

–

–

1,024

90

1,081

38

154

1,153

2,426

58

2,484

2,592

96

235

1,153

4,076

221

4,297

40

–

–

–

40

–

40

35

–

–

–

35

–

35

43

–

–

–

43

–

43

–

–

–

–

–

–

–

118

–

–

–

118

–

118

36

–

–

–

36

–

36

36

–

–

–

36

–

36

61

–

–

–

61

–

61

215

–

–

–

215

–

215

2,807

96

235

1,153

4,291

221

4,512

531

1

–

–

532

–

532

3,338

97

235

1,153

4,823

221

5,044

BBC Annual Report and Accounts 2013/14

Appointed to Executive Board 2 April 2013

Part Two: Governance and finance report – Governance–
172

Left 31 March 2014
Joined 1 January 2014

Joined 1 January 2012. Left 31 December 2013103

Governance and finance report – GovernanceNotes to Table 1: Executive Board remuneration
Note 1: Tony Hall
Tony Hall joined the BBC on 2 April 2013 as Director-General.
Note 2: Lucy Adams
Lucy Adams resigned from her role as Director, HR. Lucy cameoff the Executive Board with effect from 31 March 2014 and leftthe BBC on 4 April 2014. The Director, HR role is no longer on
the Executive Board.
Note 3: Anne Bulford
Anne Bulford joined the BBC on 1 June 2013 as Managing
Director, Finance & Operations. This was a new executive
director role encompassing Finance, Legal, Human Resources
and Operations that was appointed to the Executive Board
on 21 June 2013. The remuneration reflects her earnings from21 June 2013.
Note 4: Danny Cohen
Danny Cohen was promoted to the role of Director, Television,joining the Executive Board with effect from 7 May 2013. His
remuneration reflects his earnings as Director, Television.
Note 5: James Harding
James Harding joined the BBC on 12 August 2013 as Director,
News and Current Affairs.
Note 6: James Purnell
James Purnell joined the BBC on 19 March 2013 as Director,
Strategy & Digital in a new executive director role.
Note 7: Tim Davie
Tim Davie was Acting Director-General from 11 November 2012
until Tony Hall assumed the role on a permanent basis on 2 April
2013. Base pay includes a temporary acting allowance equivalentto £50,000 per annum received whilst Acting Director-General.

Note 11: Fran Unsworth
Fran Unsworth was Acting Director, News between 11 November
2012 and 20 December 2012 and also covered this role whilst
Helen Boaden was on leave between 19 March 2013 and 31 March
2013. On both occasions, Fran did not join the Executive Board or
receive any additional remuneration and was therefore excluded
from the table previously. Fran was appointed Acting Director,
News and Current Affairs, joining the Executive Board, with effectfrom 1 April 2013. Fran stepped down from the Executive Board
when James Harding assumed the role of Director, News andCurrent Affairs on 12 August 2013. The remuneration reflects her
earnings from 1 April 2013 to 11 August 2013.
Note 12: Dame Fiona Reynolds
Dame Fiona Reynolds joined the Board on 1 January 2012 as a
non-executive director and assumed the role of Senior Independent
Director on 1 December 2012
Note 13: Howard Stringer
Howard Stringer joined the BBC on 1 January 2014 as a nonexecutive director.
Note 14: Pension
Employee pension contributions are ordinarily made via a salarysacrifice arrangement as an employer contribution, with acorresponding reduction in salary. Base salaries for executive
directors have not been adjusted to reflect the impact of salarysacrifice to enable like-for-like comparison with prior years before
salary sacrifice was introduced.
Note 15: Taxable benefits
Taxable benefits are: car allowance/benefit, private medical
insurance and taxable expenses.

Note 16: Other remuneration 2012/13
In 2012/13, the BBC published the legal and related costs borneby the BBC in respect of those directors that gave evidence toNote 8: Graham Ellis
the Pollard Review. These figures were published inclusive ofGraham Ellis was appointed Acting Director, Audio & Music withincome tax and National Insurance due, pending agreement ofeffect from 1 December 2012. Base pay includes temporary actingthat figure with HMRC. Agreement has now been reached withallowance. Graham stepped down from the Executive Board on
HMRC regarding the associated tax and National Insurance due
14 April 2013. The remuneration reflects earnings from 1 April
and the costs of the fees paid on behalf of executive directors in2013 up to 14 April 2013.
2012/13 has changed. The total cost has reduced from £294,000
Note 9: Roger Mosey
to £235,000.
Roger Mosey was appointed Acting Director, Vision with effectNote 17: Pension related single figure
from 20 August 2012. Base pay includes temporary acting
The pension related single figure represents the value of pension
allowance. Roger stepped down from the Executive Board andsavings made during the year on behalf of directors. It is a new
became Director, Editorial Standards when Danny Cohen assumed
reporting requirement. The valuation is based on the calculation
the role of Director, Television on 7 May 2013. The remuneration
which tests pension savings against the annual allowance (AA),reflects his earnings from 1 April 2013 to 6 May 2013. Roger has
in line with HMRC regulations. The director’s own contributions
since left the BBC.
are deducted and for defined benefits the figure is calculated as
Note 10: Zarin Patel
20 times (rather than 16 as applies for AA purposes) the increase
Zarin Patel resigned from the Executive Board with effectin the accrued pension over the year after adjusting for inflation.
from 21 June 2013 and left the BBC on 31 October 2013.
In some cases this may result in a zero value.
The remuneration reflects her earnings from 1 April 2013
to 21 June 2013.

104 

BBC Annual Report and Accounts 2013/14

Defined benefit schemes
Details of defined benefit entitlements are shown below.
Table 2

Executive Directors

Age as at
31 March 2014

Accrued pension
31 March 2014 Accrued pension
Director(or retirement/
1 April 2013
defined benefit
leaving the BBC(or joining the contributions (via
if earlier)
Board if after)
salary sacrifice)Section
£000
£000
£000
(Note 7)Pension-related
single figure£000(Note 8)

Lucy Adams
Helen Boaden

49
58

CAB 2006
Old benefits

11
74

8
69

6
16

42
59

Danny Cohen1
Tim Davie2
Graham Ellis3
Roger Mosey4
Zarin Patel5
Fran Unsworth6

40
46
60
56
53
56

CAB 2006
CAB 2011
Old benefits
Old benefits
New benefits
Old benefits

15
3
10
133
34
95

13
3
10
137
33
94

6
–
1
9
3
6

31
–
–
–
–
–

BBC Annual Report and Accounts 2013/14

105Part Two: Governance and finance report – Governance

Notes
1 Danny Cohen was appointed as a director on 7 May 2013. The pension shown includes the period before he was appointed as a director.
2 Tim Davie became an active member of the CAB 2011 section as at 1 January 2012 and retains a deferred pension in the new benefits section for service up to that date. The accrued
pension shown relates to CAB 2011 only.
3 Graham Ellis came off the Board on 14 April 2013. The accrued pension shown includes the period of Scheme membership before he was appointed as a director where he continues
to build up benefits.
4 Roger Mosey came off the Board on 6 May 2013 and left the BBC on 30 September 2013. The accrued pension shown includes the period after he came off the Board.
5 Zarin Patel stepped down from the Executive Board on 21 June 2013 and left the Scheme on 31 October 2013.
6 Fran Unsworth was temporarily appointed as a director from 1 April 2013 to 11 August 2013. The accrued pension shown includes the period before she was a director.
7 Directors’ defined benefit contributions are made via salary sacrifice arrangement as an employer contribution, with corresponding reduction in salary. Base salaries for executive
directors have not been adjusted to reflect the impact of salary sacrifice to enable like-for-like comparison with prior years before salary sacrifice was introduced. To avoid doublecounting, the salary sacrifice contribution is treated as a contribution from the director for the purpose of calculating the pension-related single figure.
8 The pension-related single figure has been calculated on a pro rata basis to reflect the period each director served as a member of the Board.
9 Tony Hall and Anne Bulford are not currently contributing to a BBC pension arrangement and do not receive any payments in lieu of pension related benefits in respect to their current
period of employment.
10 James Harding was appointed to the Board on 12 August 2013 and was subsequently automatically enrolled into the National Employment Savings Trust. The BBC matches 1% of James’
qualifying earnings. The employer contribution for 2013/14 was £149.05.
11 James Purnell is an active member of LifePlan. In 2013/14 the employer contribution to this scheme was £22k.

Governance and finance report – Governance2. Comparative pay across the BBC public service:
how does executive director pay compare to thatof other BBC employees?
In 2011, the BBC voluntarily agreed to report the top to medianearnings multiple as proposed in the Hutton report ‘Fair Pay
in the Public Sector’. Since 2011, the BBC has published thesefigures on an annual basis.
The table below provides a summary of the Director-General to
BBC median earnings and executive directors’ to median earnings
figures since 2011. The Director-General multiple has reduced
again from 11.0 to 10.9.
2014

2013

2012

2011

Director-General earnings

10.9

11.0

16.5

16.8

Executive directors’
median earnings

8.2

8.1

8.7

8.9

The following tables provide a summary of the changes tothe Director-General’s cash earnings for 2013/14 versus
the change in pan BBC median earnings over the same period.
This demonstrates a positive increase in median earnings acrossthe BBC whilst there has been no change in the earnings of the
Director-General. In addition, through the BBC Executive andsenior manager reduction programme, the BBC has achieved a
reduction in total cash earnings and earnings as a proportion of
total salary costs for BBC executive directors and senior managers.
2014
£000

Changefrom 2013

Director-General cash earnings

450

0.0%

Pan BBC median earnings

41

1.0%

Percentageof paybill

Salary andallowance
costs£mPercentageof paybill

2.49

0.3%

2.30

0.3%

Senior manager cash
earnings

50.73

6.0%

54.25

6.6%

All other BBC staff cash
earnings

786.0993.7%

759.90

93.1%

Total

839.32

Executive director cash
earnings

Earnings calculation includes: basic pay, bonus, continuing allowances, overtime, and other.

Over the past two years there have been a number of changes
in membership of the Executive Board which has impacted on
the published multiples. On 31 March 2013, three of the sevenexecutive director roles were filled on a temporary basis.
Although these interim appointments attracted a temporary
acting allowance, the acting executive directors were paid lessthan the permanent members of the Executive Board. As a resultof these acting arrangements, the multiple was temporarily
reduced to 8.1 in March 2013.
By August 2013, all of the permanent appointments were in place
and the new Executive Board was complete. The multiple ofmedian earnings within the BBC to the median earnings of theexecutive directors for 2014 is 8.2.
Over the past five years, the Director-General’s earnings, in realterms, have been reduced as illustrated in the following chart,
and earnings growth at the most senior levels of the BBC has
been minimised.

106 

2013

2014
Salary andallowancecosts£m816.45

These tables refer to the BBC public service and are exclusiveof employees in the BBC’s commercial business. For the purposesof the calculations, annualised values have been used. Employer
pension costs, employer national insurance contributions andrestructuring costs are not included in these values.

BBC Annual Report and Accounts 2013/14

Delivering the strategy in 2014/15
During 2014/15, the ERC will continue to review, challenge andassess senior pay strategy and practice at the BBC in line withthe agreed executive and senior manager strategy 2011-2015
to ensure that the number and paybill of the most senior
managers at the BBC continues to reduce. The committee willconsider all potential executive director appointments andseverance cases to ensure alignment with BBC policy and thecurrent remuneration strategy.

Changes to Director-General remuneration £000s

Outside interests
In 2013/14, with the prior agreement of the Director-Generaland the Nominations Committee, executive members of the
Executive Board were permitted to hold one remunerated
external directorship with up to 15 days per year permitted
to fulfil these duties.
Remuneration which arises from directorships may beretained by the individual. Executive directors may also hold
non-remunerated posts outside the BBC.
These arrangements are currently under review.
During the year no executive director held any other
remunerated external directorship. To see the Executive Board’s
register of interests visit: bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement/
The BBC’s commercial businesses
The BBC has staff employed with three commercial subsidiaries:
BBC Studios and Post Production
BBC Global NewsThe remuneration policy for the subsidiaries includes thecontractual provision of an annual bonus available to eligible staff,
including directors. The full cost of base pay and incentive plans
are self-funded by the commercial revenues of each subsidiarycompany and are not subsidised by the licence fee.
Remuneration within the commercial subsidiaries is not governedby the BBC’s remuneration policy and governance arrangements.
The BBC’s SMRC approves all remuneration for the most seniorstaff in the commercial businesses with the exception of theexecutives for BBC Worldwide for whom the BBC’s ERC
approves all remuneration.

BBC Annual Report and Accounts 2013/14

Changes to Director-General remuneration
31st March 2010: Mark Thompson’s total was £870,000 of which £668,000
was Salary £163,00 was pension supplement £7,000 was benefits and£32,000 was pension
31st March 2011: Mark Thompson’s total was £808,000 of which £613,000
was Salary £163,00 was pension supplement £3,000 was benefits and£29,000 was pension
31st March 2012: Mark Thompson’s total was £661,000 of which £613,000
was Salary £9,000 was benefits and £39,000 was pension
31st March 2013: Tim Davie’s total was £502,000 of which £450,000 was
Salary including temporary acting allowance £11,000 was benefits and£41,000 was pension
31st March 2014: Tony Hall’s total was £468,000 of which £450,000 was
Salary and £18,000 was benefits
Tony Hall’s total remuneration was a reduction of 46% compared to MarkThompson’s 31st March 2010 total

107

Part Two: Governance and finance report – GovernanceBBC Worldwide

Bar chart showsGovernance and finance report – Governance

Audit Committee report‘‘Our activities continue to befocused on ensuring the BBC has
effective controls – and applies
those controls – to protect anduse wisely its licence fee money.’’
Simon Burke

Report of the Chairman of the Executive Audit Committee
Overview
The BBC has faced a number of challenges in recent years and thisyear has seen the settling in of a new management team and arenewed focus on the future. Alongside this I have maintained the
Audit Committee’s focus on ensuring the integrity of the BBC’s
financial reporting and the appropriateness of its system ofinternal control.
We have sought to learn from previous incidents, such as failureof the DMI project, by looking specifically this year at projectassurance processes across the BBC. We are satisfied that actions
are being taken to strengthen project management capability andto build in independent project assurance – both technical andgovernance – at key stages in the life of BBC projects. This is anarea to which we will continue to pay close attention.
We are also working to refine risk assessment and mapping acrossthe BBC and to integrate this better with the various assurance
activities undertaken not just by Internal Audit but other specialist
assurance providers and management functions. For example, aspart of our review and approval of the Internal Audit plan we
discussed how well it addressed key strategic risks and whether
there were any assurance gaps which we needed to address.
The BBC is facing a challenging time financially and we have madesure that sufficient Internal Audit effort is also directed at corefinancial and operational processes providing us with assurance
that these are working as intended.
We endeavour at all times to keep the interests of our audienceand the licence fee payers at the forefront of our thinking.
Role
The main purpose of the Executive Audit Committee (EAC) is to
examine, on behalf of the Board, whether the financial statementsof the BBC have been prepared with integrity and if the BBC ismaintaining and operating a sound system of internal control andrisk management. In order to gain assurance on these matters, theEAC has responsibility for:monitoring and reviewing the integrity of the financial
statements of the BBC and the significant reporting judgments
contained within themreviewing the effectiveness of the BBC’s system of internal
control
reviewing the process for the management of risk
reviewing the assurance processes in place to test and monitor
the operation of controls designed to manage key risks
reviewing the appropriateness of the BBC’s relationship withthe external auditor, including auditor independence, fees andthe provision of non-audit services
making recommendations regarding the appointment of theexternal auditor
The EAC’s Standing Orders set out in more detail our
responsibilities. These are reviewed annually and were last
updated in March 2014: downloads.bbc.co.uk/aboutthebbc/
insidethebbc/managementstructure/seniormanagement/
subcommittee/pdf/executive_audit_committee_standing_orders_2013.pdf

108 

BBC Annual Report and Accounts 2013/14

Membership
The EAC comprises three non-executive directors, of whom one
must have recent and relevant financial experience. The members
who served during the financial year are:Simon Burke
Fiona Reynolds
Brian McBride
The committee considers that Simon Burke has significant,recent and relevant financial experience. When appropriate,
we augment the skills and experiences of our members withadvice from internal and external audit professionals – forexample, on matters such as developments in financial reporting.
Our meetings are also attended by the Director-General, theManaging Director, Finance and Operations, the BBC’s LegalCounsel, the Director of Risk and Assurance and representatives
from internal audit, risk management and the external auditors.
We also meet privately, without any member of management
present, with both Internal Audit and the external auditors ona regular basis.
Meetings
We held five meetings during 2013/14, at key times in thereporting and audit calendar.

Key areas of focus for EAC in the past year
We spent our time on the following areas:
Internal controls
We reviewed the effectiveness of the system of internal controls,
taking account of the findings from internal and external audit
reports. Our work in this area was influenced by the Directorof Risk and Assurance’s reports on the effectiveness of internal
control, identified frauds and losses and assurance mapping.
We considered a number of specific areas during the year:we sought assurance from management that control issues
identified by Internal Audit are being addressed. This is anarea we follow up at every meeting to ensure that agreed
actions in respect of any weaknesses found are being properly
addressed. We would like to see these dealt with more
speedily and are working with management to achieve thiswe focused in particular on controls relating to payroll andemployee access, including the development of systems for
ensuring that access to buildings and confidential material is
granted and removed on a timely basis when employees join,move or leave roles
how the BBC is progressing the delivery of its DQF savings
programme and the assurance activities, connected withthis programme

Financial reporting
We reviewed the Group financial statements and how these arepositioned within the wider Annual Report. To assist this review
we considered reports from management and from the internaland external auditors to assist our consideration of:
the quality and acceptability of accounting policies, including
their compliance with accounting standards
key judgements made in preparation of the financial statements
compliance with legal and regulatory requirements
the clarity of disclosures and their compliance with relevant
reporting requirements
whether the Annual Report as a whole is fair, balanced andunderstandable and provides the information necessary toassess the BBC’s performance and strategy
Risk management
We considered the processes for managing significant risks within
the BBC. This work is influenced by the assessment of the BBC’s
principal risks set out on pages 88-90. During the year we had
detailed presentations from management on:how the BBC is managing its information security risks
how the BBC is managing its key strategic projects
We continue to have an interest in project assurance so that we
can ensure that the lessons learned from DMI are taken forward.
Our review of the Internal Audit plan considered how audit workon project assurance was integrated with management’s own
project assurance activities. We satisfied ourselves that projectassurance activity covers both governance and technicalassurances.
Fraud detection processes and whistle-blowing arrangements
We reviewed the levels of fraud and theft reported and detected
and the arrangements in place to prevent, minimise and detectfraud and bribery. We are pleased to note that no significant
frauds were uncovered in the past year.
Internal audit
We continued to oversee the work of Internal Audit. This is aregular item at each of our meetings. During the year we have:approved the plan of work for the coming year, ensuring thatit strikes a balance between providing assurance over corebusiness processes and assurance over key projects and areasof significant corporate risk
considered the trends and themes emerging from theoutcomes of audits, focusing on any unsatisfactory results
and management’s plans to address theseconsidered the resource requirements for Internal Auditheld regular private discussions with the Director of Risk
and Assurance

BBC Annual Report and Accounts 2013/14

109

Part Two: Governance and finance report – Governance

Minutes from our meetings are made available to the Executive
Board and to the BBC Trust. Additionally, the Chairman of our
Committee reports back to the Board after each meeting on
any issues where action or improvement is required. We also
produce a formal report to the Board each year and provide
our views on the integrity of the financial statements before
the Annual Report is approved by the Board as a whole.

Major reviews
We reviewed implementation of the actions recommended byexternal and internal reviews in respect of child protection, andthe use of freelance and personal service company arrangements
by the BBC. We received regular reports on progress and asked
for internal audits to be carried out where appropriate.

Governance and finance report – Governance

Relationship with external auditors
We oversaw the relationship with the external auditors,
including the scope and approach to their work, their fees, theirperformance and independence (including the approval andcompliance with policy on non-audit work). Specific areas offocus this year have included:

Significant financial judgements and reporting for 2014
We considered a number of areas where significant financial
judgements were taken which have influenced the financial
statements:

We identified through discussion with both management and theexternal auditor the key risks of misstatement within the BBC’s
audit risk identification and alignment of this with management financial statements. We discussed these risks with management
risk assessment
during the year, and with the auditor at the time we reviewed andagreed the external auditors’ audit plan during the year and also atour challenge to the auditors on how they addressed these
the conclusion of the audit. We set out in the box below how we
audit risks
satisfied ourselves that these risks of misstatement had been
appropriately addressed.
our private discussions with the auditors without
management presentour review of the effectiveness of the external audit process
which we carried out through a survey of key stakeholders
formal tender for the provision of external audit services,
subsequently won by Ernst & Young (more detail on this isprovided later in this report)
Level of provisions
The financial statements include provisions in relation to
restructuring of £53.7million as part of the BBC’s DQF
programme. Judgements in this area are largely related tothe timing of recognition of these provisions, the quantum
recognised and the amount which has been utilised inprevious years. Other provisions totalling £56.4million require
judgements regarding the assumptions used in quantifying
the BBC’s exposure to claims from various parties, and thelikelihood of success of those claims.
Pension scheme deficit valuation
The financial statements include a significant liability for the
deficit of £1,508.5million in the BBC’s defined benefit pension
scheme. Judgements are required regarding the underlying
assumptions used by the actuaries in calculating the pension
deficit, combined with a change in accounting standard whichleads to a prior year adjustment. Changes in these assumptions
can result in large swings in the final numbers disclosed.

Treatment of property assets
The BBC holds a significant property portfolio which combines
properties held under freehold with those held under financeand operating leases. Within this it is also holding some vacantbuildings as it rationalises its property estate. Judgements relate
to the future intentions for those vacant buildings and related
timescales, which can change the appropriate accounting
treatment and affect the carrying value on the balance sheet.

Other areas of financial statement risk
Other areas where an inappropriate decision could lead tosignificant error include:the recognition of commercial revenue on new contracts
andthe treatment of expenditure related to capital contracts

110 

We reviewed and discussed the level of provisions withmanagement. This included consideration of new provisions andany release and utilisation of existing provisions. Management
confirmed to us that they have applied a consistent approach to
the recognition and release of provisions across the BBC Group.
We also considered the views of the external auditors in respectof the provisions and associated disclosures in the accounts.
We concluded that we were satisfied with the level of provisions
carried and the disclosure in respect of those provisions.
We took advice from independent actuaries and the external
auditor on the appropriateness of the assumptions used,
including how these compare with those used by otherorganisations. We focused in particular on the assumptions
used regarding discount rates, inflation rates and mortality/life
expectancy and obtained an understanding of how changes
in these assumptions would affect the financial statements.
We also considered any movements in these from prior years.
We are satisfied that the assumptions used in the financial
statements are reasonable, appropriate to the BBC andsupported by independent actuarial specialists.
We reviewed the overall BBC property strategy, along withdetailed reports from management which explained thetreatment for the most significant buildings, including the
projected timescales for future activity and rationale fortreatment. We also considered the auditors’ views on theaccounting treatment for these buildings. We are satisfied
that the treatment of these properties within the financial
statements is consistent with management intention and isin line with accepted accounting standards.
We consider that the BBC’s existing financial control systems
should ensure that such items are properly treated in thefinancial statements. We have discussed the external auditors’
findings in these areas and also drawn on relevant Internal Audit
work. There were no issues of concern reported to us in theseareas and consequently we are satisfied that the systems areworking as intended.
BBC Annual Report and Accounts 2013/14

Management confirmed to us that they were not aware of any
material misstatements or immaterial misstatements madeintentionally to achieve a particular presentation. The external
auditors reported to us the misstatements that they had foundin the course of their work and we are satisfied that no material
amounts remain unadjusted. We confirm that we are satisfied
that the auditors have fulfilled their responsibilities with diligence.
After reviewing the presentations and reports from management
and consulting where necessary with the auditors, we are satisfied
that the financial statements appropriately address the criticaljudgements and key estimates (both in respect to the amounts
reported and the disclosures). We are also satisfied that thesignificant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised and challenged,
and are sufficiently robust.
Appointment of our external auditors
The EAC periodically considers the reappointment of theexternal auditor and the rotation of the Group Audit Partner
in order to ensure that the external audit remains effective
and independent.

organisation and capability
audit approach and delivery
audit quality
resourcing and engagement teamfees and value for money
The selection process comprised three stages:
interviews with key stakeholders in the BBCwritten proposals
presentation to a selection committee comprising the Audit
Committee chairman, the Managing Director, Finance andOperations and five others.
We concluded that Ernst & Young best met the criteria
for appointment, including independence. Accordingly, we
recommended them for appointment as the BBC’s external
auditors for a period of three years with the option to extend
this for a further two years. The Trust, and subsequently the
Secretary of State for Culture, Media and Sport, have approved
this appointment which takes effect for the financial year 2014/15.

Independence of our external auditors
The EAC has set, and regularly reviews, a policy to safeguard andsupport the external auditors’ ability to remain impartial andobjective. This policy defines the types of services which theexternal auditors can and cannot provide. Additionally, it includes
fee thresholds above which any proposed non-audit work to be
carried out by the external auditors must be approved in advanceAs anticipated in last year’s report, we have, during the year underby the EAC. It also defines when work must be submitted forreview, carried out an external audit tender process. This wascompetitive tender.
managed by a team including the Chairman of our Committee
Our external auditor, KPMG, was not considered for work which
and the Managing Director, Finance and Operations. We sought
might have compromised its ability to give independent opinion oninterest from established audit providers on our supplier
the BBC’s financial statements. Recruitment from KPMG into any
framework including all the ‘Big Four’ audit firms as well as othersenior management position in the BBC required the prior approvalsmaller and more specialist providers. Due to the BBC’s
complexity, geographical spread and size, we took forward those of the EAC. These arrangements will apply to Ernst & Young for
expressions of interest from firms we judged able to provide the the duration of their team as our external auditor.
necessary audit resources to audit the BBC effectively.
Simon Burke
Chairman of the Executive Audit Committee
19 June 2014

BBC Annual Report and Accounts 2013/14

111

Part Two: Governance and finance report – Governance

KPMG LLP has been the BBC’s auditor since 1995. Theirappointment as external auditor to the BBC was subject toprevious testing by the EAC through a formal tender process in2008. Subsequent internal reviews extended the appointment
to the current year. The Corporate Code requires a rotation of
the Group Audit Partner every five years. In view of recent changes
in the BBC management team and ongoing system developments,
the mandate of the audit partner had been extended by two
years to maintain continuity and enhance audit quality. A new
partner from KPMG was appointed for the 2013/14 audit.

Those firms participating in the process were required to submit
their audit proposals against the following criteria:

Governance and finance report – GovernanceFair Trading report
Membership and remit of the Executive Fair Trading Committee
The key function of the Executive Fair Trading Committee (EFTC)
is to oversee the BBC Executive’s compliance with our Fair
Trading obligations. The EFTC comprises three non-executive
directors: although during 2013/14, up to 31 December 2013,
there were only two non-executive directors sitting on thecommittee, these being Dame Fiona Reynolds (Chair), and Sally
Davis (until December 2013) and one vacancy. Alice Perkins
replaced Sally Davies on the EFTC in April 2014. The EFTC
meetings are also attended by the Managing Director, Finance &Operations, Group General Counsel, Assistant General Counsel,
Head of Fair Trading & Competition Law and the Director of
Risk and Assurance. See page 94 for the Executive Board andCommittee attendance table.
Responsibilities of the EFTC include:keeping under review the BBC’s Fair Trading Guidelinesdealing with Fair Trading complaints against the BBC throughthe appointment of a Fair Trading Complaints Panel which ischaired by and includes a majority of non-executive directorsreviewing ongoing compliance with the BBC’s Four
Commercial Criteria

Having received reports from relevant senior management, theBBC Executive is satisfied that BBC Worldwide and BBC Global
News have met the above criteria for the period 1 April 2013 to
31 March 2014. In the case of BBC Studios and Post Production,
the BBC Executive considers it appropriate to await the outcomeof additional work reviewing the operations of BBC Studios andPost Production (which is currently being undertaken at thedirection of the BBC Trust) which will help inform the Executive’sview of BBC Studios and Post Production’s compliance with theabove criteria.
The BBC has a published Fair Trading complaints and appeals
process, which can be found at: bbc.co.uk/bbctrust/governance/complaints_framework/fair_trading.html
The BBC received one Fair Trading complaint during the year.
Details of this complaint, and of previous Fair Trading complaints
and those that went to appeal to the BBC Trust can be found in
our Fair Trading Bulletin at: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/fairtrading/complaints_bulletins.html and on the BBC Trust’s Complaints and Appeals
Board page: bbc.co.uk/bbctrust/our_work/complaints_and_appeals/cab.html

commissioning the annual Fair Trading audit by independent
auditors
The BBC has a detailed operational Fair Trading framework whichapplies to all our activities and is outlined in our Fair Trading
Guidelines, found at: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/fairtrading.html
These arrangements are subject to annual audit by independent
auditors and separately have been accredited with the ISO
9001:2008 quality standard. The auditor’s report is set out on
page 114.
The BBC Agreement requires the BBC Executive to ensure that
all our commercial services meet the following criteria.
Commercial services must:
fit with public purposes
show commercial efficiency
not jeopardise the good reputation of the BBC or the valueof the BBC brandcomply with the BBC’s Fair Trading Guidelines, and in particular
avoid distorting the market

112 

BBC Annual Report and Accounts 2013/14

‘‘The BBC has a responsibility toensure that we trade fairly andpay regard to the impact of ouractivities on the wider market.’’Dame Fiona Reynolds

Report of the Chairman of the Executive Fair
Trading Committee
As a public service broadcaster, funded by the licence fee, theBBC has a responsibility to ensure that we trade fairly and pay
regard to the impact of our activities on the wider market.
The BBC has a well-established Fair Trading regime which is
subject to both internal and external scrutiny.
At a time of change, the Fair Trading team has worked closely withstaff throughout the BBC to ensure that new internal processes
and initiatives comply with Fair Trading requirements. In particular,
the Fair Trading team was involved in the development of the
BBC Store project in the lead up to gaining regulatory approval
from the Trust in March.
This year there was one Fair Trading complaint. Following a
response from the Executive Fair Trading Committee, thecomplainant appealed to the BBC Trust. The BBC Trust did not
uphold the appeal but did direct the BBC Executive to re-examine
its arrangements in the relevant business area and to reportback to the Trust within six months. This is being taken forward
by the Executive. It also tasked the Trust Unit with developing
a plan with the Executive to improve processes as part of theTrust’s forthcoming triennial review of its Fair Trading Policies
and Framework.
In anticipation of this review, the Executive Fair Trading Committee
has done some preparatory work to ensure that the Fair Trading
regime remains up to date in the fast moving external
environment, and that its processes are efficient and effective.

Dame Fiona Reynolds
Chairman of the Executive Fair Trading Committee
19 June 2014

BBC Annual Report and Accounts 2013/14

113

Part Two: Governance and finance report – Governance

The Fair Trading regime continues to operate effectively with an
unqualified audit opinion. The Committee will continue to ensurethat the BBC’s regulatory requirements are adhered to throughan approach to compliance which is robust, efficient andproportionate. Fair Trading will also be kept high on the Executive
Board’s agenda. All stakeholders, including licence fee payers andthose who might be affected by the BBC’s activities, can be
confident that the BBC remains committed to, and compliant
with, our Fair Trading obligations.

Governance and finance report – GovernanceIndependent Fair Trading Auditors’ reportto the BBC for the year ended 31 March 2014
We have audited, in our role as the BBC’s Fair Trading auditors,
the system of internal controls established within the BBC toprovide the BBC with reasonable assurance that the BBC
Executive (‘the Executive’) has complied with the requirementof the BBC Trust’s Fair Trading Policies & Framework and the
Fair Trading Guidelines for the year ended 31 March 2014(‘the Fair Trading Arrangements’).
Our instructions for this engagement, including the scope ofwork to be undertaken, were agreed with the BBC’s Executive
Fair Trading Committee (the ‘EFTC’). These instructions include
agreement that our audit should be conducted in accordancewith International Standard on Assurance Engagements (‘ISAE’)
3000, agreement on the limit of our liability in respect of thiswork and agreement that our duty of care in respect of thiswork is solely to the BBC. We are satisfied that the agreed
scope of our audit was sufficient to enable us to express theopinion set out below.

Our approach
We have performed a reasonable assurance engagement as
defined in ISAE 3000. The objective of a reasonable assurance
engagement is to perform such procedures as to obtain
information and explanations which we consider necessary
in order to provide us with sufficient appropriate evidence
to express a conclusion on the BBC’s compliance with its
Fair Trading Arrangements for the year ended 31 March 2014.
Our work consisted of enquiry and testing to enable us to forma view as to whether an appropriate system of internal controls
was in place. We also reviewed the processing of a sample ofmaterial transactions to provide us with reasonable assurance
that the system of internal control had been applied.

Respective responsibilities of BBC Trust, BBC Executive
and Fair Trading auditors
The Trust is responsible for ensuring that the Executive trades
fairly. It is also responsible for preparing the section within the
BBC’s Annual Report entitled ‘Trading Fairly’ which includes astatement on Fair Trading.

Inherent limitations
As with any system of control, it is not practicable to ensure thatno errors or irregularities have occurred without being detected.
Our audit work was designed to give the Executive reasonableassurance as to the adequacy of the system of internal controls
which was in place and being applied to deliver compliance withthe requirements of its Fair Trading Arrangements for the year
ended 31 March 2014. Further, because Fair Trading issues require
judgements which ultimately might be tested in a court of law,competition authority or elsewhere, there is always a risk ofchallenge even where the system of internal controls has been
followed and decisions have been taken with the greatest care.

The Executive is charged by the Trust with establishing andoperating a system of internal controls designed to ensurecompliance with the BBC’s Fair Trading Arrangements for theyear ended 31 March 2014, including identifying and assessing
risks that could threaten Fair Trading and designing andimplementing responses to such risks.

OpinionBased on the results of our procedures, in our opinion the BBC
has established and has applied a system of internal controls thatprovide reasonable assurance that it has complied with therequirements of the Fair Trading Arrangements for the year
ended 31 March 2014.

As the BBC’s Fair Trading auditors, it is our responsibility to form
an independent view, based on our audit work, as to the extent
to which the BBC has established, and applied, a system ofinternal controls which provide reasonable assurance that it hascomplied with the requirements of its Fair Trading Arrangements
for the year ended 31 March 2014. We have reviewed specificdecisions reached by the BBC on Fair Trading issues only in so
far as this is necessary to form an opinion on the application of
the system of internal controls. We have also reviewed whether
the Trust’s statement on Fair Trading reflects our findings of theBBC’s compliance with its system of internal controls and wereport if it does not.

Deloitte LLP
Chartered Accountants
London19 June 2014

Our opinion has been prepared for and only for the BBC inaccordance with our instructions which were agreed with the
EFTC on behalf of the BBC. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any
person other than the Trust or the Executive to whom thisreport is shown or in to whose hands it may come, and no otherperson shall be entitled to rely on our opinion, save where
expressly agreed by our prior consent in writing.

114 

BBC Annual Report and Accounts 2013/14

Part Two: Governance and finance report – Managing our finances

Managing our finances

The BBC must account for how
it responsibly uses the licence fee
and other income
BBC Annual Report and Accounts 2013/14

115

Governance and finance report – Managing our finances

Review of the Managing Director,
BBC Finance & Operations‘‘This year we have built on
our impressive track recordof delivering efficiencies whilst
maintaining the production ofoutstanding programmes andservices. The BBC is currently
well placed to meet its targets
as well as to continue to invest
in its future.’’Anne Bulford

Delivering efficiencies whilst prioritising our most valued output
The BBC has just completed its fourth year with the colour
licence fee at £145.50 and is in the middle of delivering a major
efficiency project, Delivering Quality First (DQF), which is on
track to deliver an annual total of £700million in annual recurrent
savings. Staff across the BBC continue to work hard to deliver
these efficiencies, which allows the BBC to fund a range of new
obligations. This year has been one of a continued focus on
successfully delivering efficiencies whilst ensuring our mostcreative outputs are prioritised.
In 2013/14, the BBC started to fund a number of new obligations
from the licence fee, specifically Broadband rollout, S4C, Local
TV and BBC Monitoring, at a combined cost of £250million.
The delivery of the first £374million of the £700million DQF
savings target has meant that these costs have been absorbed
without the need to utilise the BBC’s cash balances. As a result
we start 2014/15 in a strong position with sufficient cash reserves
to fund the World Service (at an annual incremental funding
requirement of £245million from 1 April 2014) withoutcompromising the quality or range of our output.
The delivery of these savings has also given the BBC the foundationfrom which to make a number of key strategic decisions this year
for our licence fee funded activities, targeting increased investmentin the strategic priorities announced by the Director-General in
October 2014.
A track record of delivering efficiencies
DQF builds on the BBC’s long track record of successfully deliveringsavings and meeting efficiency targets. Across our Value For Money(2005-2008) and Continuous Improvement (CI) (2008-2013)
programmes, we delivered nearly £1billion of real terms recurringsavings, and these have already been reinvested in our content andessential infrastructure. This has been achieved whilst maintaining
focus on the quality of services provided, optimising value formoney rather than simply maximising savings in order to become
the cheapest provider.

CBeebies presenter Cat Carey

116 

Cast of Ambassadors

BBC Annual Report and Accounts 2013/14

2012/13 was the first year of our DQF programme, which has anannual savings target of £700million by 2016/17. We planned toachieve a significant proportion of the savings by this year andprogress has been made with audited savings of £374million
delivered. We are on track to achieve the full £700million
by 2016/17.

Breakdown of UK PSB Group expenditure 2013/14

Other direct content spend

91

3

87

2

We are doing this by taking advantage of new technologies andways of working to reduce costs, increasing commercial income,and addressing concerns around talent costs and top management
pay and expenses.

Property and technology

271

7

357

9

Distribution

217

6

222

6

In delivering our savings we have sought to protect our
production activities as much as we can. We have foundproductivity savings through the reprocurement of key supplierdeals, by improving our asset utilisation and by controlling talent
spend. We have exited both Television Centre and our WhiteCity building. We have streamlined our facilities management
workflows and invested in new systems and processes to deliver
savings in our Finance division.
Enhancing and simplifying our governance structure
As an organisation, we have demonstrated that we are able tooptimise our cost base and deliver against efficiency targets set,
however, we need to go further in order to be confident that the
BBC is a well-run organisation. We recognise that there havebeen failures in the past, such as the Digital Media Initiative (DMI)
and in the level of some individual severance payments made toformer executives and senior managers.

In addition, we have simplified our meeting structures tostreamline decision making and reduce bureaucracy. As anorganisation, we will be much clearer on how decisions are
made and who in the organisation is accountable for them.
We now have in place a cap of £150,000 on all severance
payments and have also removed pay in lieu of notice in all but
the most exceptional of circumstances. Dame Fiona Reynolds,
our Senior Independent Director, has reviewed our severance
deals and her findings have been published online: bbc.co.uk/
aboutthebbc/insidethebbc/howwework/reports/bbc_review_
severance_payments_2013_14.html.

BBC Annual Report and Accounts 2013/14%

2012/13
£m

%

2,315

61

2,443

64

Other infrastructureand support

325

9

318

9

LF collection costs

102

3

111

3

Digital Switchover

7

–

57

1

Broadband rollout / S4C /Local TV

242

6

–

–

Costs to fund other income

230

6

232

6

Lease cost reclassified

(81)

(2)

(82)

(2)

Restructuring costs

10

–

23

1

Pension deficit payments
Total

49

1

49

1

3,778

100

3,817

100

Future challenges
The delivery of efficiencies, both through the ongoing DQF
programme and the historical CI programme, means we start
2014/15 in a strong position with sufficient cash reserves to meet
our immediate obligations. As an organisation however, we face
new competitive pressures in an evolving media landscape andstructural change in audience behaviour, and this means the BBC’s
strategic context is changing. We have set ourselves three overall
goals to address these challenges and stay ahead of the trend:innovating online
making the most creative content andserving all our audience
This will enable us to continue to build on our track record ofdelivering savings pushing both efficiency and creativity as hard as
we can. We must, however, be mindful that given our constraints
and financial risks, these savings alone cannot fully fund theinvestments needed and consequently, difficult decisions inrelation to scope reductions have to be made. The mostsignificant of these is the proposed move of the BBC Three linear
channel to an online platform only, which will be subject to a
public consultation in 2014, as part of a public value test
undertaken by the BBC Trust.

117

Part Two: Governance and finance report – Managing our finances

We have learned lessons from these and made changes to ourgovernance structures and processes to deliver a simpler, morecreative BBC. Since April, we have implemented a new way ofworking with the BBC Trust with a clearer definition of individual
responsibilities. The Trust is now focussed on challenging thestrategy for the BBC and making sure we are answerable tolicence fee payers whilst the Executive takes full responsibility
for the running of the BBC. This means a reduction in meetings
with fewer, but more effective updates to the Trust and ensuring
the Executive Board are the key decision makers.

Service licences –direct content spend

2013/14£mGovernance and finance report – Managing our finances

Financial overview
How we use the licence fee

The way in which the BBC is funded places significant responsibilities
on the BBC as an organisation. Specifically, it has to:provide value for money by focusing expenditure on
the programmes and services the public most wants fromthe BBC;
ensure that its output is then delivered as cost efficiently
as possible;
ensure effective and efficient collection of the licence fee;andmaximise funding from other sources, most significantly
BBC Worldwide, the BBC’s commercial trading operation,
in a manner consistent with the terms of its Charter andother obligations.

Adjustment to last years published results
Changes in accounting standards for pension costs mean ourcomparative figures have been restated this year. The change
predominantly impacts the interest calculation on our plan assets
and means that our previously reported surplus before taxationof £367million has reduced to £196million and the previously
reported net liabilities position of £60million has improved toa net assets position of £40million.
Results for the year
Our results this year once again show that we have successfully
managed the financial challenges facing us so as to ensure a soundbase for meeting our future commitments and delivering ourstrategic ambitions. Disposal of commercial businesses including
Lonely Planet mean total income for the year has fallen from
£5,102million to £5,066million, but this was offset by lower overall
operating costs resulting in group surplus of £154million for theyear (2012/13 restated: £157million). Through our efficiency
programmes and a step-down in activity following the London
Olympics last year, our operating costs have fallen from
£4,808million to £4,722million.

Summary consolidated income statement
For the year ended 31 March 2014
Restated2013£m

Income statement classification

What is it?

2014
£m

Licence fee income

The total of licence fees collected

3,726

3,656

Reduced Digital Switchover funding and limitedhousehold growth

Other income and revenue

Commercial (mainly BBC Worldwide) income
and Grant-in-Aid for World Service

1,340

1,446

Fall in sales in Worldwide partially offset by
Global News

5,066

5,102

Operating costs

The cost of producing all content and of running
the BBC(4,722)(4,808)

Exceptional impairment oftangible and intangible assets

One-off significant item

–

(52)

Prior year write off of DMI

Restructuring costs

Sums provided to fund future efficiency initiatives

(16)

(44)

Release of accounting provision in 2013/14 as aresult of lower actual restructuring costs thanoriginally budgeted for completed moves

Total income

What has happened this year?

Fall reflecting additional cost of Olympics last year

(4,738)(4,904)

Share of results of associates
and joint ventures

Our share of the profit of the businesses where
we control less than 50%

23

23

Gain on sale of operations anddisposal of fixed assets

Profit on asset disposals

4111

Other gains and losses

Share of net liabilities of joint ventures

(17)

–

The BBC’s accounting share of the net liabilitiesof UKTV not previously recognised

Net financing costs

The net interest on the BBC’s pension assets andliabilities, interest on loans and fair value
movements on derivatives

(149)

(136)

Higher accounting charge for the BBC pension
plan liabilities

Tax

The net tax liability of the BBC on its taxable
profits

(35)

(39)

154

157

Total operating costs

Group surplus for the year

Profit last year principally from the sale of
Television Centre and Lonely Planet

Due to the adoption of IAS 19 (revised) during 2014, the 2013 comparatives have been restated. Further information is available in the financial statements.
118 

BBC Annual Report and Accounts 2013/14

Income
Total licence fee income collected increased by £16million
from £3,706million to £3,722million as a result of modest
household growth.
Licence fee income is adjusted for the costs of the Digital
Switchover (DSO) initiative to give net licence fee income.
In the year, net licence fee income increased by £70million to£3,726million. 2012/13 was the final year of DSO, although there
was some limited ongoing activity this year where none wasoriginally scheduled. Savings against DSO funding are paid overto the Government, and deducted from our income. In 2012/13
the savings amounted to £50million with a £4million carry overof cost into 2013/14.

Licence fee collected
DSO overspend/(savings)
Net licence fee

Licence fee statement
As in previous years, we also prepare a licence fee revenue
statement audited by the National Audit Office (NAO). Thisaccount sets out the amounts we collected in the year and paid
over to HM Government. Alongside their audit work, the NAO
examines our collection arrangements and reports on them to
Parliament. More on the licence fee revenue statement can befound on our website: bbc.co.uk/aboutthebbc.
Commercial trading
The licence fee is supplemented by income from the commercial
exploitation of licence fee funded content and infrastructure
through three commercial subsidiaries – BBC Worldwide,
BBC Global News and BBC Studios and Post Production (S&PP).

2013/14£m

2012/13£m

Headline income

3,722

3,706

2013/14
£m

4

(50)

3,726

3,656

Licence fee collection
Effective financial management is a key part of the BBC’s uniquerelationship with its audiences. This includes spending the licence
fee efficiently and collecting a television licence fee from everyone
who is required to buy one.

Headline result

2012/13£m

2013/14£m

2012/13£m

UK PSB Group

269

277

n/a

n/a

BBC Worldwide

1,042

1,116

157

156

BBC Global News

101

92

(7)

(1)

S&PP

29

38

(3)

(1)

CBBC’s My Life Race for Rio featuring Reece, Hattie and Julia who are alltrying to win a place in the Paralympics

BBC Annual Report and Accounts 2013/14

Part Two: Governance and finance report – Managing our finances

Collection costs have reduced as the new contract with Capita
continues to deliver savings – costs were £102million this year,
down from £111million last year, falling below 3% of licence feecollected for the first time. Total cost savings of £220million will
be delivered over the eight years of the contract, which started in2012, releasing funding to be spent on our programmes and services.

Cast of W1A inside New Broadcasting House119

Governance and finance report – Managing our finances

BBC Worldwide
BBC Worldwide exists to support the BBC public service mission
and to maximise income to the Group on its behalf. It returned£174million to the BBC in 2013/14, up from £156million in 2012/13.
This was primarily through investment in BBC commissioned
content and dividends. Returns from BBC Worldwide to the BBC
support an ongoing commitment to manage financial performancesustainably, protecting the interests of licence fee payers.
Despite mixed market conditions and a significant adverse
impact from foreign exchange, BBC Worldwide’s overall
financial performance was good. Headline sales of £1,042million(2012/13: £1,116million) declined by 7% (or 5% after adjustingfor exchange rate movements), principally due to disposals
and a new intra-BBC revenue share arrangement for BBC.com.
Headline profit of £157million (2012/13: £156million) was up
1% (or 12% if exchange rate movements are discounted), withheadline operating margin improving to 15% (2012/13: 14%).
Revenue growth was strongest across sales to digital clients,
advertising sales and in emerging markets. BBC Worldwide’s best
performing programme in the year was Sherlock Series 3. The
Doctor Who 50th anniversary episode was also a global highlight,
transmitting in 15 languages in 98 countries, with 3D screenings in
23 countries, and generating unprecedented interest amongst
fans across the world.
BBC Worldwide entered a new phase this year, with a neworganisational structure and a new strategy. BBC Worldwide’s
ambition is to grow the BBC brand around the world, increasing
its global presence and future profitability, resulting in sustainable
and rising returns to the BBC and the UK creative industry.
BBC Worldwide announced that it will concentrate on threecore areas: increasing spend on and delivering value from content,
developing and rolling out a focused portfolio of new global BBC
genre brands and consolidating global digital services.

In its first year, the new BBC Worldwide strategy showed goodsigns of progress:
content investment was £201million (2012/13: £176million),reaching BBC Worldwide’s target of £200million one year
early. It continued to invest in the core BBC genres of drama,
natural history and factual entertainment. Major investments
included Atlantis, Doctor Who, Orphan Black, The Musketeers and
Hidden Kingdoms.
three new global genre brands were announced by BBC
Worldwide: BBC First, BBC Earth and BBC Brit. Each will
showcase premium content from the three core genres of,respectively, drama, premium factual and factual entertainment.
Plans for a mix of linear and over the top launches in lead markets
in the new financial year, prior to wider roll out, are underway.
in digital, regulatory approval was received for the launch of
BBC Store, to be funded and operated by BBC Worldwide.
BBC Store will launch in the UK next year. Meanwhile, BBC
Worldwide announced plans for a series of investments in
BBC.com, and the end of the pilot of its Global BBC iPlayer app,
as it focuses on the BBC.com site. This will help support the
BBC in achieving a global reach of 500 million per week by 2022.
The business moved to regional operation at the start of the year,
further increasing its focus on international markets. Successfulinternational expansion included the launch of new channels,
with BBC Knowledge marking a debut in Vietnam, as well as
a Memorandum of Understanding signed with China’s statebroadcaster CCTV for the development of natural history titles.
BBC Worldwide is also an important source of revenue for UK
independents, and in the year paid £116million (2012/13: £91million)
to independent rightsholders in upfront rights investment, profit
share and royalties – the vast majority of which was in the UK.

The Queen behind the screen of the BBC newsroom at the Royal opening of New Broadcasting House

120 

BBC Annual Report and Accounts 2013/14

BBC Global NewsBBC Global News operates two commercially fundedinternational news services, BBC World News and bbc.com,
and saw a strong increase in use of its services during 2013/14.
Digital reach for News content was up 25%, with bbc.com
achieving a record 1.3 billion page views in March from 96 million
unique browsers, whilst TV distribution increased to 388 million
households. BBC Global News services were the main driverof increased audiences to the BBC’s World Service Group: thetotal weekly audience grew from 256 million to 265 million. The
business has continued to nurture key on-screen talent, and seen
great success in the social media arena as BBC World News has
welcomed its five millionth Facebook fan and been identified
as the most shared news brand on Twitter. As a result of thebusiness’ continued planned investment programme, building on
the relaunch of the BBC World News Channel in January 2013,
the business returned an operating loss close to plan of £7million
in 2013/14 (2012/13: loss of £1million).

Studios and Post Production
It has been a transformational year for Studios and Post
Production (S&PP), moving from its historic home at Television
Centre and successfully establishing operations at new core
locations – Elstree Studios and South Ruislip – whilst new studios
are being built at Television Centre.
The company delivered an impressive range of creative projects
for numerous broadcasters, media companies and content
owners – including full studios and post production services on
Strictly Come Dancing, EastEnders, Children in Need and Channel 4’s
Winter Paralympics. It hosted a variety of independent productions
including Sky’s A League of Their Own and ITV’s The Chase and built
new production facilities for Channel 4’s Deal or No Deal in Bristol.
In addition, BBC S&PP’s award winning Digital Media Services
team digitally restored the original black and white televised film
footage of the Queen’s Coronation and cult classic The
Professionals, as well as completing many other media handling
projects.
Whilst the company has achieved £29million in sales from its new
locations and smaller studio footprint, it has delivered an operating
loss of £3million for the year against a £1million operating loss theprevious year (after accounting for BBC pension deficit contributions
but before exceptional items). A level of loss was always budgeted
for this year of relocation and changing operations and is being
funded through S&PP cash reserves which were retained in
anticipation.

BBC Annual Report and Accounts 2013/14

Part Two: Governance and finance report – Managing our financesRadio 5 live commentators Jonathan Agnew and Geoffrey Boycott
at the Old Trafford Ashes Test, July 2013

BBC Two drama Line of Duty

121

Governance and finance report – Managing our finances

Expenditure
UK Public Services Broadcasting (UK PSB) Group expenditure2014 Service

Content£m

Distribution£m

Infrastructure/
support£m

Other items
£m

Total
£m

2013
Total
£m

BBC One

1,023.7

51.0

236.4

–

1,311.1

1,463.2

BBC Two

400.0

28.8

93.0

–

521.8

543.1

BBC Three

81.0

5.9

22.4

–

109.3

121.7

BBC Four

48.9

4.3

12.7

–

65.9

70.2

CBBC

76.1

5.5

19.3

–

100.9

108.7

CBeebies

28.7

4.6

9.3

–

42.6

43.0

BBC ALBA

5.2

1.3

1.5

–

8.0

7.8

BBC News Channel*

48.7

8.0

9.5

–

66.2

61.5

BBC Parliament

1.7

7.2

1.5

–

10.4

10.5

BBC Red Button

13.5

21.9

4.1

–

39.5

41.8

Television

1,727.5

138.5

409.7

–

2,275.7

2,471.5

BBC Radio 1

40.2

5.8

6.8

–

52.8

54.2

BBC Radio 2

47.8

5.7

7.3

–

60.8

62.1

BBC Radio 3

40.8

5.8

10.1

–

56.7

54.3

BBC Radio 4

91.8

9.0

19.8

–

120.6

122.1

BBC Radio 5 live

49.2

5.7

11.6

–

66.5

76.0

BBC Radio 5 live sports extra

2.4

1.4

1.4

–

5.2

5.6

BBC Radio 1Xtra

5.6

1.6

2.6

–

9.8

11.8

BBC Radio 6 Music

7.9

1.6

2.5

–

12.0

11.5

BBC Radio 4 extra

4.1

1.6

1.7

–

7.4

7.2

BBC Asian Network

6.6

1.8

2.4

–

10.8

13.0

BBC Local Radio

115.4

10.8

23.4

–

149.6

152.5

BBC Radio Scotland

22.6

3.2

6.4

–

32.2

32.7

Radio nan Gàidhael

3.8

1.4

1.0

–

6.2

6.3

BBC Radio Wales

13.4

1.4

3.8

–

18.6

18.8

BBC Radio Cymru

11.7

1.6

3.5

–

16.8

17.6

BBC Radio Ulster/BBC Radio Foyle

17.4

1.3

4.9

–

23.6

23.8

Radio

480.7

59.7

109.2

–

649.6

669.5

BBC Online**
Spend regulated by service licence

122 

106.5

18.8

49.1

–

174.4

176.6

2,314.7

217.0

568.0

–

3,099.7

3,317.6

BBC Annual Report and Accounts 2013/14

Total UK PSB Group expenditure2014 Service

Content£m

Distribution£m

Infrastructure/
support£m

Other items
£m

Total
£m

2013
Total
£m

Spend regulated by service licence

2,314.7

217.0

–

–

568.0

–

3,099.7

3,317.6

–

102.1

102.1

Orchestras and performing groups

22.8

–

111.1

5.1

–

27.9

29.2

S4C

23.4

Development spend

45.2

–

5.7

76.3

105.4

30.0

–

10.0

–

55.2

BBC Monitoring

50.5

–

–

–

7.2

7.2

–

UK PSB Group pension deficit reduction payment

–

–

–

48.6

48.6

48.6

Costs incurred to generate intra-group income

–

–

–

169.3

169.3

164.8

Costs incurred to generate third-party income

–

–

–

60.6

60.6

67.4

91.4

–

20.8

464.1

576.3

501.6

Licence fee collection costs

Other content related spent
Restructuring costs

–

–

–

9.6

9.6

23.1

2,406.1

217.0

588.8

473.7

3,685.6

3,842.3

Digital Switchover (Digital UK Limited)

–

–

–

–

–

12.5

Digital Switchover (DSHS Limited)

–

–

–

7.2

7.2

44.4

Local TV ***

–

–

–

16.0

16.0

–

Broadband rollout***

–

–

–

150.0

150.0

–

2,406.1

217.0

588.8

646.9

3,858.8

3,899.2

Total UK PSB Group content expenditure

Total UK PSB Group expenditure
Lease reclassification****UK PSB Group expenditure

–

–

–

(81.0)(81.0)(81.9)

2,406.1

217.0

588.8

565.9

3,777.8

3,817.3*

Infrastructure and support costs are made up of:
2014
£m

2013
£m

Property

141.2

181.6

HR and training

38.6

45.4

Policy and strategy

9.1

12.0
67.7

Finance and operations

70.3

Marketing, audiences and communication

71.9

68.7

Total central costs

331.1

375.4

Technology

130.3

175.1

Libraries, learning support and community events

32.0

33.6

Divisional running costs

62.7

64.5

BBC Trust Unit

12.0

11.9

Other

20.7

14.9

Total infrastructure/support costs

588.8

675.4

BBC Annual Report and Accounts 2013/14

123

Part Two: Governance and finance report – Managing our finances

Included within BBC News channel are production costs of £26.8million, Newsgathering costs of £21.2million and other costs of £0.7million (2013: production costs of £27.2million,
Newsgathering costs of £17.8million and other costs of £0.2million).
** BBC Online spend is monitored by annexe (relating to editorial areas of the service). Non-annexe spend covers costs relating to central editorial activities such as the BBC Homepage,technologies which operate across the service and overheads. The spend for each annexe was: News, Sport & Weather £47.8million (2013: £43.8million), Childrens £9.3million(2013: £8.5million), Knowledge & Learning £15.7million (2013: £18.7million), TV & iPlayer £11.1million (2013: £12.2million) and Audio & Music £11.7million (2013: £13.3million), giving a
total annexe spend of £95.6million (2013: £96.5million). Non-annexe spend was £10.9million (2013: £6.5million).
*** Under the terms of the latest licence fee agreement, The BBC has committed to contribute funding toward broadband rollout across the UK and funding for the development ofLocal TV channels.
**** In order to reflect the full cost of UK PSB Group expenditure by service, finance lease interest is included, although it is not included in the Group operating expenditure.

Governance and finance report – Managing our financesWorld Service
2013/14 was the final year of Foreign & Commonwealth Office(FCO) funding for the World Service prior to becoming licencefee funded. As well as delivering planned savings of £12million in
the year a further reduction in Grant-in-Aid income of £2million
on £240million from the FCO was mitigated by savings in
restructuring costs and accommodation spend.
After its move to New Broadcasting House last year and its
co-location with BBC News teams, the organisation willcontinue to pursue building synergies and therefore savings
with the wider BBC.
Focusing spend
The BBC concentrates its expenditure on the production ofprogrammes and other content and its delivery to audiences
and users, and the essential infrastructure to support this.
Year-to-year spend can vary significantly because of the cycleof major sports events, and total content spend reduced by
4.9% to £2,406million (2012/13: £2,530million) this year which
was largely due to additional investment in our coverage of the
London Olympics last year.
No service licences spent above the regulated baseline
threshold during 2013/14. BBC Parliament service licence was
the only service to underspend by more than 10% as it delivered
additional efficiency savings, especially in its overheads, withoutcompromising editorial performance.
The BBC must invest in technology and property infrastructure
to enable new ways of working which will deliver both enhanced
content and financial efficiency savings to fund the BBC’s DQF
strategy. Last year the write down of DMI increased our
expenditure for these two areas to £357million, and expenditure
this year is lower at £271million. This is to be expected given thehistorical spend on technical infrastructure in MediaCity UK andin New Broadcasting House, the financial benefits of which
continue to be seen. Our expenditure on all infrastructure andsupport costs reduced by nearly 13% this year, as it fell from£675million to £589million. An analysis of these costs are set out
in the table on page 123.

124 

Delivering efficiencies
Halfway through the DQF programme, more than half of thesavings target of £700million has been delivered with savings todate of £374million, higher than our targeted figure for this pointof £367million.
Our annual savings achievement is reviewed by our auditors,
KPMG LLP. It will also be examined by the NAO in 2014/15
following up on their report, of November 2011, which
commended the way the BBC manages the delivery of efficiencies.
We are doing this by taking advantage of new technologies andways of working to reduce costs, reprocuring key contracts,
increasing commercial income, and addressing concerns aroundtalent costs and top management pay and expenses. Throughout
our efficiency programmes, there has been particular focus onrationalising and modernising our operating estate which willcontinue as part of DQF.
We have sought to protect our production activities as much as
we can, but we have found productivity savings in Television byreviewing procurement deals, by improving our asset utilisation
and by controlling talent spend. We have also mitigated the impact
of inflationary increases in our long-term sports rights deals.
We have placed particular emphasis on finding savings in thoseof our activities that do not directly face our audiences. We havere-procured our security contracts, and exited both Television
Centre and our White City building. We have also put new
rosters and supplier management arrangements in place tostreamline our Facilities Management workflows and eliminate
duplication, and we have reviewed our Marketing and Audience
activities. We have invested in new systems and processes toreduce headcount in our Finance division.
The speed of delivery of our plans for West London, as well as
the redevelopment of Television Centre, both carry a level of risk.
However, we are still on track to deliver the remaining savingsby 2016/17.
All these savings are essential to generate the cash required tocontinue to develop the BBC’s content and distribution, and thus
ensure we are able to continue to provide licence fee payers with
the quality and range of services they are entitled to expect fromthe BBC into the foreseeable future.

BBC Annual Report and Accounts 2013/14

Balance sheet
Prudent financial management means we have ended the yearwith £526million of cash and cash equivalents. This provides asound base as we absorb World Service’s running costs in 2014/15
and deliver on our other strategic ambitions. The provisions wehold for restructuring costs have fallen to £54million (2012/13:£81million) as provisions raised predominantly in 2012/13 were
utilised in 2013/14.

Future pension costs
The accounting pension deficit (as defined by IAS 19) has reduced
to £1,516million compared to £1,617million a year ago. The major
reasons for the reduction is the payment of additional amounts
under the agreed pension deficit recovery arrangement as well
as changes in the valuation assumptions. The accounting valuationis only a ‘snapshot’ at a particular date in time, and is therefore
sensitive to short-term market fluctuations.

The rationalisation of our estate has continued this year, and willcontinue in future years as we exit White City and refurbish
Television Centre. This is reflected in lower plant, property andequipment values and higher depreciation charges outweighing
additions in the year.

The most recent actuarial valuation was completed in 2013 andshowed a funding shortfall of £2,054million and a plan has been
agreed between the BBC and the pension scheme Trustees
detailing the contribution amounts to be paid by the BBC overa 12-year period commencing in 2014. The next formal actuarial
valuation of the Scheme is expected to be performed as at 1 April
2016. We are continuing to look at ways to reduce the volatility
in the Scheme to provide greater stability for long-term financial
planning. We believe the agreed funding plan represents a sensible
and affordable plan to address the deficit, without adversleyaffecting programmes or pension scheme members. We willcontinue working with the Trustees to ensure the Scheme
delivers best value to members and licence fee payers.

Summary consolidated balance sheet
For the year ended 31 March 20142014£m

Restated
2013£mWhat is it?

Non-current assets

Mainly the BBC’s property, plant, equipment andinvestments

1,702

1,783

Increased depreciation on new
infrastructure offset by additions in the year

Current assets

Programme and other stocks and amounts to bereceived in the next 12 months

2,258

2,166

Increase in prepayments to acquire future
programme-related rights

Current liabilities

Amounts to be paid in the next 12 months(1,038)(1,149)Reduction in provisions through utilisation
and releases

Non-current liabilities(excluding pension liabilities)

Amounts to be paid after the next 12 months(1,098)(1,144)

Reduced borrowings and long-term
provisions

1,824

1,656

(1,516)(1,616)

308

40

308

40

Net assets (excluding
pension liabilities)
Net pension liabilities

The net deficit of the BBC Pension Scheme

Net assets

What has happened this year?
Part Two: Governance and finance report – Managing our finances

Balance sheet classification

Decrease to reflect changes in assumptions
and contributions paid during the year

Represented by:
BBC reserves

The net resources available to the BBC for future use

BBC Annual Report and Accounts 2013/14

125Governance and finance report – Managing our finances

Cash
The BBC’s cash balance of £526million at the end of the year will
be used to help fund a number of imminent financial pressuresand, together with future efficiency savings, deliver our Strategic
Initiatives. These include:

Tax
The BBC is a committed and prudent tax payer in all the countries
in which it operates. Its commercial operations undertake
appropriate and legitimate tax planning measures in accordancewith the spirit and intention of all laws and regulations.

the new obligations for World Service in 2014/15 of£245million;
the continuing obligations for S4C, Local TV and Broadband,budgeted in aggregate at £230million in 2014/15;
circa £103million of spending on our Strategic Initiatives
including iPlayer+, myBBC, increased investment in the artsand our television drama portfolio; andthe next annual pension deficit recovery payment(£100million).

Summary consolidated cashflow statement
For the year ended 31 March 2014
Cash flow classification

What is it?

2014
£m

2013
£m

Net cash inflow fromoperating activities

Surplus of the BBC’s income over its operating costs

336

338

Net cash used in investing
activities

Cash invested in intangible assets and property, plant andequipment (PPE)

(243)

(40)

Net cash used in financing
activities

Net interest paid on the BBC’s borrowings

(136)

(129)

(43)

169

Net (decrease)/increase in
cash and cash equivalents
Cash and cash equivalents
at the beginning of the year

The BBC’s cash balance at the beginning of the year

575

407

Effect of foreign exchange
rate changes on cash andcash equivalents

The impact of foreign exchange rates on the BBC’s cash

(6)

1

Movement in cash held as
restricted funds

DSO savings to be paid over to DCMS or received
for Licence Fee stamps–(2)

Cash and cash equivalents
at the end of the year

The BBC’s cash at the end of the year

526

575

126 

What has happened this year?

Higher intangible asset purchases in thecurrent year exacerbated by higher
proceeds from property, plant andequipment disposals last year

Adverse movements in exchange rates
impacting the sterling value of our cash

BBC Annual Report and Accounts 2013/14

Looking forward
As we head into the Charter Review process we face a challenging
three years. In addition to delivering our DQF strategy, ourstrategic context is changing as we respond to pressures fromnew competitors and structural changes in audience behaviour.
Although there are signs of recovery in the UK economy, we
continue to see ongoing challenges in licence fee collection andstrong commercial pressures from global competitors.
Our financial management has provided us with a solid base withwhich to face these future challenges which will be further
boosted as we build on our track record of delivering efficiencies.
We must, however, be mindful that given our constraints andfinancial risks, we cannot deliver these ambitions throughefficiencies alone and we will have to make scope reductions.
This is my first review as Managing Director of Finance andOperations and I look back on my first year as one where we havecontinued to produce outstanding programmes and services
whilst building on our impressive track record of delivering
efficiencies. Delivery of all our savings targets by 2016/17, to enable
us to deal effectively with 26% lower funding in real terms for our
UK public services caused by the freeze in the licence fee and all
the new obligations, whilst continuing to invest in the future of
the BBC, is a very tough challenge requiring difficult choices.
We have made good progress to date and remain on track tomeet our targets.

Part Two: Governance and finance report – Managing our finances

Anne Bulford
Managing Director, BBC Finance and Operations
19 June 2014

BBC Two’s Peaky Blinders won the BAFTA Television Craft award
for Director – Fiction

BBC Annual Report and Accounts 2013/14

BBC Natural History Unit production Beyond Human

127

Governance and finance report – Managing our finances

Summary financial statement
The summary financial information comprises the BBC’ssummary income statement on page 118, summary balance sheet
on page 125 and summary cash flow statement on page 126.
These include the key headline data from the full annual financial
statements which are available online in the download centre at:bbc.co.uk/annualreport
The summary financial information presented within Part Twoof the BBC’s Annual Report does not constitute the full financial
statements of the BBC for the financial years ended 31 March2014 and 2013 but represents extracts from them. These
extracts do not provide as full an understanding of the financial
performance and position, or financial and investing activities,of the BBC as the full annual financial statements.

In considering the consistency of the summary financial information
with the full annual financial statements, the Executive Board has
elected to:use headings and sub-totals in the summary income statement,summary balance sheet and summary cash flow statementthat include, as a minimum, the headings and sub-totals shownin bold type in the corresponding primary statements in thefull annual financial statements;
include a brief description of the respective headings;
ensure that the amounts reported in the summary financial
information agree with the corresponding amounts reported
in the full annual financial statements;

The independent auditor of the BBC, KPMG LLP, has issued an
unqualified audit opinion on the full financial statements for theyears ended 31 March 2014 and 2013.

include the comparative amount for the immediately
preceding financial year for all amounts reported in thesummary financial information;

Statement of the Executive Board’s responsibilities in respectof Part Two of the BBC’s Annual Report and summary
financial information
The Executive Board has accepted responsibility for preparing
Part Two of the BBC’s Annual Report and the summary financial
information included therein. The summary financial information
is intended by the Board to be consistent with the full annual
financial statements of the Corporation.

include an explanation of “what has happened in the year”
reflecting the main transactions and events reported in thefull annual financial statements as they affect the respective
heading; andinclude any other information necessary to ensure that thesummary financial information is consistent with the full annual
financial statements for the financial year in question.
The summary financial information, the Strategic report andGovernance and finance report (including Executive
remuneration report) was approved by the Executive Boardand signed on its behalf on 19 June 2014 by:Tony Hall
Director-General

Anne Bulford
Managing Director, BBC Finance and Operations

128 

BBC Annual Report and Accounts 2013/14

Auditor’s report
Independent statement of KPMG LLP to the
British Broadcasting Corporation
We have examined the summary financial information of the
British Broadcasting Corporation (‘the BBC’ or ‘the Corporation’)for the year ended 31 March 2014 which comprises theConsolidated income statement on page 118, the Consolidatedbalance sheet on page 125 and the Consolidated cash flow
statement on page 126 of Part Two of the BBC’s Annual Report.
This statement is made solely to the Corporation on terms thathave been agreed with the Corporation. Our work has been
undertaken so that we might state to the Corporation thosematters we have agreed to state to it in such a statement andfor no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other thanthe Corporation for our work, for this statement, or for theopinions we have formed.
Respective responsibilities of directors and KPMG LLP
As explained more fully in the Statement of Executive Board
Responsibilities on page 128, the Executive Board have accepted
responsibility for preparing the summary financial information
within Part Two of the BBC’s Annual Report which are intended
by them to be consistent with the full annual financial statementsof the Corporation.
Our responsibility is to report to the Corporation our opinion
on the consistency of the summary financial information withinPart Two of the BBC’s Annual Report with the full annual
financial statements of the Corporation.

Basis of opinion
Our examination of the summary financial information consisted
primarily of:agreeing the amounts and disclosures included in the summary
financial information to the corresponding items within the fullannual financial statements of the Corporation for the year
ended 31 March 2014, including consideration of whether, in
our opinion, the information in the summary financial
information has been summarised in a manner which is notconsistent with the full annual financial statements of the
Corporation for that year; andconsidering whether, in our opinion, information has been
omitted that it is necessary to include to achieve consistency
with the full annual financial statements of the Corporation
for the year ended 31 March 2014.
We also read the other information contained in Part Two of
the BBC’s Annual Report and consider the implications for ourstatement if we become aware of any apparent misstatements ormaterial inconsistencies with the summary financial information.
This engagement is separate from the audit of the annual financial
statements of the Corporation and the report here relates only
to the consistency of the summary financial information with theannual financial statements and does not extend to the annual
financial statements taken as a whole.

Opinion on summary financial information
On the basis of the work performed, in our opinion the summary
financial information is consistent with the full annual financial
statements of the Corporation for the year ended 31 March 2014.

Jonathan Downer
For and on behalf of KPMG LLP, Chartered Accountants
15 Canada Square, London E14 5GL
19 June 2014

BBC Annual Report and Accounts 2013/14

129Part Two: Governance and finance report – Managing our finances

As set out in our Audit report on those financial statements, that
Audit report is made solely to the BBC’s Trustees on terms thathave been agreed. Our audit work has been undertaken so that
we might state to the BBC’s Trustees those matters we are
required to state to them in an auditor’s report and, in respect of
the separate opinions in relation to the Remuneration reports
and reporting on Corporate Governance, those matters that
we have agreed to state to them in our report, and for no otherpurpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the BBC and theBBC’s Trustees as a body, for that audit work, for the Audit
report, or for the opinions we have formed in respect of that
audit.

Glossary
We have used some terms in this report to explain how we run ourbusiness, but which might be unfamiliar to our readers. The following
list gives definitions for some of the more frequently used terms.
Acquired programmes
Acquired programmes are bought in a finished state fromanother supplier.
Appreciation Index or AI
Appreciation Index or AI is the aggregate of how much people
say they enjoyed individual programmes, expressed as a number
out of 100.
Creative economy
The UK’s creative economy includes the organisations and people
who work in design and media industries, including independent
production companies, actors and writers.
BARB
BARB (Broadcasters Audience Research Board) is theindependent organisation responsible for providing the official
measurement of UK television audiences.
Cost per user hour
Cost per user hour or Cost per listener hour combines service
spend and consumption to help inform an assessment of value
for money.
Digital switchover
The process of digital switchover involved turning off the UK’s
analogue television broadcasting system which completed in 2012.
FreesatFreesat is a free-to-air satellite TV service provided by the BBC
and ITV, where users pay for the equipment but do not pay amonthly subscription. Visit freesat.co.uk/. Freesat from Sky is alsoavailable for a one-off payment: freesatfromsky.co.uk
Freeview
Freeview is the main UK digital terrestrial television service
transmitted through an aerial and using a set-top box. No
subscription is required. Freeview is the most widely used digital
television platform. It has been available in HD since April 2010.
See freeview.co.uk
HDTV
HDTV – or high-definition television – is available via either a
set-top box or an integrated digital television, and gives viewers
better quality, high-resolution pictures.

ImpactImpact shows how memorable or acclaimed a programme orservice is, and can be measured by the number of awards won
by a service, or comments (positive and negative) generated in
the press.
Peak time
Peak-time hours for the BBC’s TV services are 6pm-10.30pm.
Radio consumption is very different, and peak time for radiois usually defined as the breakfast and drive-time slots.
PSB
The UK’s Public Service Broadcasters (PSBs) are the BBC, ITV,
Channel 4, Channel 5 and S4C.
Rajar
Rajar (Radio Joint Audience Research) is the official body in chargeof measuring radio audiences in the UK. It is jointly owned by the
BBC and the RadioCentre on behalf of the commercial sector.
Reach
Reach on television is the number or percentage of an audiencegroup who watch a programme or channel (15 consecutive
minutes each week is the usual BBC measure, versus threeminutes on commercial TV); and on radio is the number orpercentage of people aged 15+ who listen to at least five minutesof radio in a 15-minute period during an average week.
Share
The share of total viewing or listening to a particular programmeor service over a set time, expressed as a percentage of total
hours of viewing/listening.
Unique users
Unique users or unique browsers is a measure for website traffic.
It is not a traditional survey of ‘people’, but is measured automaticallyusing either server logs or by a tag embedded within the web pages.
WoCC
The Window of Creative Competition (WoCC) opens up 25%of eligible TV hours and 10% of eligible radio hours to freecompetition between BBC in-house production and external
producers. WoCCs are on top of pre-existing Ofcom andvoluntary minimums.
If you want more information or to know more about how the
BBC is run, please visit: bbc.co.uk/aboutthebbc

130 

BBC Annual Report and Accounts 2013/14

IndexSubject Index

Overview

Part One

Audit Committee report

108

BBC Worldwide

25

Bullying and harassment cases

120
75

Charities

83

Commercial strategy

25

Complaints

119

18, 39Content spend by service

66

Delivering Quality First

20

Editorial standards
Efficiency savings

Part Two

116

18
5

20

Environmental sustainability

124
82

Equality and diversity

28

Executive directors

23

86

Global News

17

121

Human rights

82

Impartiality – public perception of news providers
Licence fee – income and expenditure

78

19
5

National Audit Office

24

118

24

Nations and regions2

28, 33Public purposes

2

32

64

Public trust in the BBC

19

Reach by service

1266

Remuneration – BBC Executive Board

23

102

Remuneration – BBC senior managers

23

76

Remuneration – BBC Trust

41

Risks and opportunities

88

Service performance

12

66

Severance pay

22

77

Spend by service

66

Staff – headcount, location and diversity

22, 28Strategic objectives – value for money

3

10Strategic objectives – distinctiveness and quality

3

10Strategic objectives – openness and transparency

3

11Strategic objectives – serve all audiences

311Studios and Post Production
Talent costs

75

121
24

78

Trading fairly

25

112

Trust expenditure

42

Trustees

36

Time spent with each service

BBC Annual Report and Accounts 2013/14

66

131

Notes132 

BBC Annual Report and Accounts 2013/14

Contacts

More information
If you wish to find out more about the BBC’s full-year
performance to March 2014 – including full financial statements
and each service’s performance against its Statement of
Programme Policy, as well as other public commitments, please
visit: bbc.co.uk/annualreport. The Annual Report is also publishedin Welsh. An audio version is available on request.
Contact us
If you have a comment, appreciation or complaint about
BBC programmes and services, contact: bbc.co.uk/feedback
or write to:
BBC Audience services, PO Box 1922, Darlington DL3 0UR
Comment line telephone: 03700 100 222
Other queries telephone: 03700 100 123
Textphone: 03700 100 212
BBC Trust
1st floor, 180 Great Portland Street, London W1W 5QZ
Email: trust.enquiries@bbc.co.uk
Website: bbctrust.co.uk
BBC information line: 03700 103 100
Textphone: 03700 100 212

Copyright credits

Divider images

Front cover/Back cover
Last Tango in Halifax –BBC/Red Production Company

Page 57
Sweat the Small Stuff – BBC/Talkback/Dave King

Front cover
Filming the BAFTA award winning BBC One drama‘Last Tango in Halifax’

Page 14
DNN – BBC/Rachel Joseph

Page 58
The Fall – BBC/The Fall 2 Limited/Helen Sloan

Inside front cover‘Today’ presenter Mishal Husain

Page 15
Radio 3 at the Southbank – BBC/Ellis O’Brien

Page 59
Blue Peter (at Wimbledon) – Steve Wyatt

Part One cover
6 Music Festival in Manchester

Page 34
Audience Council Scotland – BBC/Mark Mainz

Page 76
Only Fools and Horses (special edition
for Sport Relief) – Comic Relief

Setting Strategy
Inside New Broadcasting House

Executive contents page
Andy Murray at Wimbledon – Getty Images
The Fall – BBC/The Fall 2 Limited/Helen Sloan
Page 50
Sherlock – BBC/Hartswood Films
Page 50
The Fall (NI) Ltd/Steffan Hill
Page 51
The Wipers Times – BBC/Trademark Films/
Helen Sloan
Page 52
The Wrong Mans – BBC/Des Willie
Page 52
My Life – BBC/Alleycats TV/Andy Kirkpatrick
Page 54
Sherlock – BBC/Hartswood Films
Page 57
Philomena – BBC Films

Page 79
Turks and Caicos – BBC/Carnival Film &Television Ltd/David Appleby
Page 79
BBC School Report – BBC School Report
Page 115
Death Comes To Pemberley –BBC/Origin Pictures
Page 116
Ambassadors – BBC/Big Talk
Page 119My Life: Race for Rio – BBC/CTVC/Asim Ali
Page 121
Line of Duty – BBC/World Productions
Page 121
Radio 5 live Sport – Graham McMillan
Page 127
Peaky Blinders – BAFTA/Richard Kendal

Understanding Audiences
6 Music Festival in Manchester
Inside the Trust
Trust Boardroom at 180 Great Portland Street
Part Two cover
Andy Murray holds the trophy aloft after winning
Wimbledon 2013
Delivering Our Strategy
BBC World Service Freedom Live Day. 1 April 2014
Performance‘Blue Peter’ at Wimbledon
How We Run the BBC
Old Broadcasting House and
New Broadcasting House
GovernanceMarin Alsop becomes the first woman to conduct
the Last Night of the Proms. 7 September 2013
Managing Our Finances
Matthew Rhys and Anna Maxwell Martin starred in
the BBC One drama ‘Death Comes To Pemberley’

British Broadcasting Corporation
Broadcasting House
London W1A 1AA
bbc.co.uk© BBC 2014