QUALITY FIRST
Annual Report and Accounts
2010/11

BBC ANNUAL REPORT AND ACCOUNTS 2010/11

Presented to Parliament by the Secretary of State
for Culture, Olympics, Media and Sportby command of Her Majesty
July 2011

Extended versions of the financial statements provided in Part Two of this report were also laid before
Parliament on 12 July 2011 and are available online at www.bbc.co.uk/annualreportSubject index
Appreciation index by service
Audience approval – KPI
Board remuneration from 2011/12
Board remuneration 2010/11
Commercial companies
Content spend by service
Delivering Quality First
Digital switchover
Distinctiveness – KPI
Efficiencies
Innovation
Licence fee
Licence fee spend
News audiences
Public purposes
Quality – KPI
Radio from Nations & Regions
Reach – KPI
Reach by service
Reach (BBC News channel versus Sky)
Reach (BBC radio versus main commercial groups)
Reach (BBC network TV versus main commercial groups)
Service performance
Staff management and remuneration
Talent costs
Time spent with service
Trust expenditure
Trust – KPI
Trustee remuneration
Trust work plan 2011/12
TV programming spend by Region
VfM: Cost per User by service

Part 1
1-6
1-20
1-19
1-19
1-7
1-9
1-6/1-25
1-7
1-24
1-17
1-8/1-13
1-8
1-6
1-12
1-6
1-10

1-10
1-37
1-18
1-37
1-6
1-35
1-42

Part 22-4 to 2-7
2-23
2-61
2-60
2-46/2-69
2-4 to 2-7
2-36
2-40
2-31
2-69/2-71
2-45
2-3
2-69/2-73
2-19
2-14
2-27
2-12
2-35
2-4 to 2-7
2-10
2-9
2-8
2-4 to 2-7
2-41
2-44
2-4 to 2-7
2-19
2-12
2-12
2-4 to 2-7

Copyright
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Presented to Parliament in accordance with the BBC Royal Charter 2006 (sec. 45).

PART 1
THE BBC TRUST’SREVIEW AND ASSESSMENT

Overview

BBC performance

Part 1
BBC Trust
Overview

1-1 Chairman’s foreword
1-2 Year in brief
1-4	Chairman’s thoughts after
a month in office
BBC performance

1-6	Strategic objectives
1-8 Purposes
1-10 Service performance
1-15	Securing editorial standards
1-17 Financial performance
1-18	Delivering value for money
1-21 Trading fairly

Trust performance

Inside the Trust

Taking part

Inside the Trust

1-30
1-32

BBC Trustees
Governance

1-40
1-41
1-42
1-43

Audience engagement
Audience Councils
The Trust’s plans for 2011/12
Contact the Trust

Taking part

Trust performance

1-24 The licence fee settlement
1-25	Improving quality anddistinctiveness
1-26 Improving value for money
1-27	Promoting openness andtransparency
1-28 Serving all audiences

Subject index
Appreciation index by service
Audience approval – KPI
Board remuneration from 2011/12
Board remuneration 2010/11
Commercial companies
Content spend by service
Delivering Quality First
Digital switchover
Distinctiveness – KPI
Efficiencies
Innovation
Licence fee
Licence fee spend
News audiences
Public purposes
Quality – KPI
Radio from Nations & Regions
Reach – KPI
Reach by service
Reach (BBC News channel versus Sky)
Reach (BBC radio versus main commercial groups)
Reach (BBC network TV versus main commercial groups)
Service performance
Staff management and remuneration
Talent costs
Time spent with service
Trust expenditure
Trust – KPI
Trustee remuneration
Trust work plan 2011/12
TV programming spend by Region
VfM: Cost per User by service

Part 1
1-6
1-20
1-19
1-19
1-7
1-9
1-6/1-25
1-7
1-24
1-17
1-8/1-13
1-8
1-6
1-12
1-6
1-10

1-10
1-37
1-18
1-37
1-6
1-35
1-42

Part 22-4 to 2-7
2-23
2-61
2-60
2-46/2-69
2-4 to 2-7
2-36
2-40
2-31
2-69/2-71
2-45
2-3
2-69/2-73
2-19
2-14
2-27
2-12
2-35
2-4 to 2-7
2-10
2-9
2-8
2-4 to 2-7
2-41
2-44
2-4 to 2-7
2-19
2-12
2-12
2-4 to 2-7

Presented to Parliament in accordance with the BBC Royal Charter 2006 (sec. 45).
Cover picture shows new comedy for 2010, Grandma’s House, starring Simon Amstell and co-written by him and Dan Swimer.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Chairman’s foreword
The licence fee settlement saw theBBC achieving certainty for licencefee payers through a deal lasting
until 2017.

I joined as Chairman on 1 May 2011; my report here covers ayear in which the Trust was led by my predecessor, Sir Michael
Lyons. On page 1-4 I give my reflections on the BBC and its
future after a month in office.
I arrived at the end of a big year for the BBC. The licencefee settlement, negotiated in October 2010, was unexpected,
but saw the BBC achieving certainty for licence fee payers
through a deal lasting until 2017. In December 2010 the Trust
concluded a review of the BBC’s strategy which set out aroadmap for how we will implement the settlement.
High levels of satisfaction with the BBC
We know that people value the BBC’s content. This year 80%
of people said that they would miss the BBC if it wasn’t there,
while our programmes and services continued to reach 97%
of UK adults. This is a tribute to the skills of those involved.
Getting value for money
But despite this popularity, we know the institution itself
commands less affection. One concern is value for money.
Under the Trust’s leadership, the BBC has made good
progress on savings this year, for example in reducing senior
managers’ pay, although I believe there is more to do here.
And it was good to see a Trust review showing the work
done in previous years on getting value from continuing
drama bearing fruit.
Distinctive, high quality content
Savings aside, what does value for money really mean?
Principally people want to see their money spent on good
programmes. For the BBC this means offering both thehighest quality and something that is different. With apopulation of over 60 million in the UK there is inevitably awide variety of tastes and expectations; the BBC’s services
must cater for everyone yet be distinctive.

The Trust’s TV service reviews this year (BBC One,
BBC Two and BBC Four) showed good progress in thedrive to make schedules more distinctive. Highlights for me
include BBC Two’s The Crimson Petal and the White and the
Horizon programme on the Japanese earthquake, and BBC
One’s Sherlock.
The Trust’s reviews of BBC Radio 3 and BBC Radio 4 showedthat these stations offer something truly different – for me
this includes BBC Radio 3’s nightly concert and BBC Radio 4’s
Today programme, which manages to sound fresh every day.
The Trust’s challenge to the Executive here is to reach morelisteners without sacrificing any of the distinctiveness whichmakes these stations BBC flagships.
Access in the digital age
The BBC has a duty to bring the advantages of the digital age
to all licence fee payers and, with so many more platforms
available, it must remain at the cutting edge of technology
while doing so within its budget. This year the Trust approved
BBC One HD, involvement in YouView (internet-enabled
television), and mobile Apps for news and sport.
Finally, I would like to pay tribute to Sir Michael. As the Trust’s
first Chairman, he had the challenging job of ushering in a newera of BBC governance. On behalf of the BBC I would liketo thank him for setting us on a sound footing to tackle thechallenges ahead.

Lord Patten of Barnes
Chairman

Annual Report and Accounts 2010/11 1-1

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Year in brief: making the licence fee work harder

2010/11

The BBC Trust exists to get the best out of the BBC for licence fee
payers. This means setting a clear vision for the BBC and ensuring thatit delivers what the public wants. Here is how the Trust has worked
in licence fee payers’ interests during the year.

May 2010
Growing high definition
Trust approves launch of highdefinition version of BBC One.
Allows daily broadcasting on
dedicated BBC HD channel toincrease from nine to 12 hours.

June 2010
Internet TV given the green light
Following extensive consultation,
Trust approves BBC’s participation
in internet-enabled TV (YouView),
which will allow viewers to watch
on-demand programmes on their
television sets.

1

2

3

July 2010
Putting Quality First
Trust sets out initial conclusions
on Executive’s strategy for future
direction of the BBC, which include
finding that case had not been madefor closure of BBC 6Music.
Mobile Apps get the go-ahead
Trust concludes that plans to launch
BBC smartphone applications (Apps)
can go ahead. Trust notes thataudiences will increasingly expect
to be able to access BBC content
in this way.

August 2010
Boosting opportunities
for radio indies
Trust asks the Executive effectively
to double the amount of BBC
commissions open to the
independent radio sector, following
a review of supply in the market.

September 2010
Greater transparency
for BBC finances
Trust agrees to extend relationshipwith National Audit Office, so the
NAO can decide which areas of
BBC operations to review.

1-2 Annual Report and Accounts 2010/11

1 Smartphone Apps – a new way to access
BBC content.
2 Children’s favourite Horrible Histories
is produced in HD.
3 Chair of the Trust’s Finance and Compliance
Committee, Rotha Johnston.
4A n Education, from BBC Films, was available
on demand from BBC iPlayer.
5 Tosca on Live from the Met on BBC Radio 3.
6 Live audience for Young Person’s Question Time.

Overview

BBC performance

October 2010
Licence fee settlement
provides stability
Following Trust’s proposal toGovernment to freeze licence fee
until 2013, Trust agrees new licencefee settlement for six years, taking
responsibility for funding the World
Service from 2014, and making acontribution to funding S4C.

Trust performance

Inside the Trust

Taking part

November 2010
More distinctive programming
Trust asks BBC One to makedaytime and peaktime schedules
more distinctive, following service
reviews of BBC One, BBC Two and
BBC Four which highlighted how
important this is to audiences.

December 2010
Putting Quality First
Trust publishes new strategy to
guide BBC as it plans for life under
new licence fee settlement.
Serving all audiences
Trust approves Executive’s
proposal to make BBC’s Gaelic
language service, BBC ALBA,
available on Freeview.

5

6

February 2011
Excellent services deserve
broader audiences
Trust’s service review concludes thataudiences greatly value BBC Radio 3’s
and BBC Radio 4’s distinctive andhigh quality content and endorses
Executive’s plans to enable both
stations to extend core appeal.

March 2011
Better processes for acquiring
sports rights
An independent reportcommissioned by Trust following
fair trading appeal and ruling on
sports rights in 2009 finds that BBC
processes for managing sports rights
have improved and are serving licencefee payers well.

January 2011
Making on-demand content more
widely available
Trust publishes provisional conclusionsof syndication review, looking at
how BBC programmes can best be
made widely available on different
platforms. Trust provisionallyconcludes that BBC on-demandcontent should be syndicated toother operators via BBC iPlayer,
not on a programme-byprogramme basis, and consultson this. Review continues.

Defining the BBC’s global role
Trust publishes a new global strategy
for the BBC, setting out how it should
bring the UK to the world and theworld to the UK, alongside generating
financial value from programmes
sold overseas.

Throughout year
Reducing senior management pay bill
Following Trust challenge, Executive has continued to cut senior management pay
bill, and is on target to reach 25% reduction by December 2011. Trust expects
BBC Executive proposals to drive down senior management pay further.
Full BBC Trust workplan for year ahead can be found atwww.bbc.co.uk/bbctrust/about/how_we_operate/workplan/index.shtml

2011/12

4

Annual Report and Accounts 2010/11 1-3

Overview

BBC performance

Trust performance

Inside the Trust

Taking partThoughts after a month in office“It is an honour to be associated with what is simply the best
broadcasting organisation in the world. If the BBC didn’t exist
already I think it is unlikely that anyone would have the wisdom
to create it. But the case for public service broadcasting is stronger
than ever in the digital age, given the plethora of distribution
channels available today.”
Lord Patten of Barnes, Chairman

A service for citizens
The BBC not only produces great programmes but also
performs a primary function of providing accurate andcomprehensive, independent and impartial news. It produceshigh quality services in some sectors – children’s broadcasting,for example – that wouldn’t otherwise be made. And it not
only has its roots in our national culture, but also contributes
to our sense of values and civic humanism. It’s worth notingthat more people by far watched the Royal Wedding on the
BBC than on other channels – a gap that has increased, in fact,
since the wedding of the groom’s parents 30 years ago. The
decision to turn first to the BBC for a great national occasion
has become even more clear cut.
This says to me that people identify with the BBC and holdits programmes in great esteem, but we know that theywant more assurance about where it is heading and how
it is governed. The fact that the BBC is a great organisation
does not mean that it is perfect, and it faces today bothtechnological and financial challenges.
On the first point, none of us quite know what the impact
of technology will be on listening and viewing habits in thenext few years, but the BBC is as well placed to cope asanyone, a remarkable thing to be able to say about a public
service body. It is a tribute to its investment in the cuttingedge of technology.
Maintaining quality
On the second, like every other institution in the country,
the BBC has to live within its means. At present it is bigger
than the budget that can sustain it. Given the new licencefee settlement, the BBC is going to have to do less, but I
am determined that programme quality will not suffer asa result. Very often when dealing with limited resources,
organisations talk about priorities, but in practice ‘salami
slice’ and try to make everything a priority. We cannot‘salami slice’ in the BBC without risking quality in areasthat matter to us.

1-4 Annual Report and Accounts 2010/11

The challenge for us in the next year is to set out and makeprogress towards a vision for an organisation which wants
to retain quality on a fixed budget, with new demands
being made on that budget. So collectively we will have to
make some difficult choices and stand by them, with theoverriding objectives of continuing to make the highest quality
programmes and ensuring that the BBC reflects and serves
audiences across the whole of the UK.
Enhancing the Trust’s strategic role
And what of the Trust’s role? Thus far I think it has done adifficult job extremely well. The Trust has a strong relationshipwith licence fee payers and has established itself as thestrategic governing body of the BBC. In future I think wemust enhance this strategic role. We must ensure we do not
overburden the BBC with compliance; we must simplify andmake more open the way we deal with complaints; and wemust ensure that our relationships with the Executive, Ofcomand the wider broadcasting sector are as effective as possible.
By making these changes we will help the BBC live up to thehigh expectations licence fee payers have of it.

BBC
PERFORMANCE
Monitoring the BBC’s performance is a key role of the Trust.
We do this in several ways. We assess how well it is delivering
the public purposes set out in the Royal Charter and how it isperforming against strategic objectives. We monitor performanceof the 28 services – TV, radio and online – and the BBC’s editorial
standards. We scrutinise finance and value for money and fairtrading compliance.
Baking Made Easy, presented by Lorraine Pascale on BBC Two.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Performance against strategic objectives
The Trust sets the strategy for the BBC. Performance this year
has been very good. We have seen progress in increasing thedistinctiveness of BBC programmes but believe there is more
to be done in some key parts of the TV schedules.

1. T he BBC should increase the distinctiveness and qualityof its output.
Much BBC output is very high quality but we still believethat the BBC can do more to make its most popular
services more distinctive.
(Figures in brackets are for 2009/10)• average score out of 10 for the BBC being ‘high quality’rose to 6.8 (6.4)1• proportion of those agreeing strongly that the BBCis high quality rose to 42% (36%)1• average appreciation index (AI) for BBC television
programmes remained at 82 (82)2• average appreciation index (AI) for BBC radio
programmes increased slightly to 80 (79)2• average appreciation index (AI) for BBC Online
sites was 80 (81)2• proportion agreeing strongly that BBC television
programmes are ‘original and different’ was stable
at 36% (37%)2
Quality perceptions and appreciation of BBC output
continued to be high, and we commend the Executive forthis. We also saw some encouraging progress in the BBC
becoming more creatively ambitious and distinctive in radio
and television, but believe more can be done on the major
television and radio services.
Distinctiveness is evidence of the BBC using the privilege oflicence fee funding to take creative risks and demonstrate
editorial ambition across the whole range of its output.
Distinctiveness remains a major focus for the Trust this year.
2. The BBC should maintain the maximum reach consistent
with its purposes and values.
BBC maintains reach at 97%, well in excess of the
90% target.

(Figures in brackets are for 2009/10)• weekly reach across all BBC services in 2009/10
was 97% (97%)3
1-6 Annual Report and Accounts 2010/11

The BBC continued to perform very strongly in reachingpeople with its TV, radio and online services. This is impressive,given the number of alternative media available in the UK, andis a testament to the BBC’s ability to create valued output for
all audiences.
3. T he BBC should maintain perceived value among highapprovers and should increase perceived value among
middle and low approvers.
We see some further improvement in audience approval.
(Figures in brackets are for 2009/10)• proportion of those who are ‘high approvers’of the BBC rose to 42% (38%)1• proportion of those who are ‘low approvers’of the BBC fell to 10% (12%)1
Audiences continue to vary in terms of their level of approvalof the BBC with a minority demonstrating lower approval,
despite the fact that they regularly consume BBC output.
In future, we will focus on how the BBC can serve allaudiences in a variety of ways.
4. The BBC should restore trust in its output.
Further growth in levels of trust this year.
(Figures in brackets are for 2009/10)• average score out of 10 for ‘I trust the BBC’ increased
to 6.4 (6.0)1• proportion of those agreeing strongly that ‘I trust theBBC’ rose to 37% (31%)1
This objective was set in 2007 in response to a series ofincidents relating to programme competitions and some
editorial lapses. We continue to treat breaches of the BBC’s
editorial guidelines very seriously, but we are encouraged by
the current level of trust in the organisation. We report on
our work to uphold editorial standards on pages 1-15 to 1-16.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

1

2

5. The BBC should increase the delivery of its public purposes.

A new strategic framework for Putting Quality First.
When we approved the Putting Quality First strategy inDecember, we set four objectives for the BBC. These replace
the six objectives reported above. We will report on progressagainst the new objectives in future Annual Reports.

We believe that pursuing greater creative and editorial
ambition and giving all audiences across the UK somethingof value should be the Executive’s main strategic aims; they
are therefore central to the BBC’s new strategy.
The BBC is required to promote a wide range of priorities
across six public purposes. Its performance is strong overall,although audience expectations of the BBC are always very
high and it does not always meet them.
We assess how the BBC has delivered its six public purposeson pages 1-8 to 1-9. Addressing the areas where performancedoes not meet expectations remains a focus for the Trust.
6. T he BBC should deliver 3% cumulative efficiencies over
five years.
New efficiency savings of £434million have been madethis year. The BBC appears to be on track to deliver thistarget, with a cumulative £903million savings (net of costs)
from the first three years of the five-year period.
Three years ago we set the BBC an efficiency challenge todeliver almost £2billion of savings, without impacting onservice quality, over the five year period to March 2013.
The BBC’s external auditors, KPMG, provide assurance eachyear on the value of the financial savings declared. We also
assess whether the BBC has maintained quality of services
whilst driving efficiency. Our service reviews and performancemeasures give us no cause for concern in this respect.
We have asked the National Audit Office to review theefficiency programme to see how well it is being managed andhighlight any lessons as we consider future efficiency targets.

Objective

How we will measure progress

1. Increase thedistinctivenessand qualityof its output• average AI scores• audience perceptions of ‘original
and different’

2. Improve thevalue formoney itprovides tolicence fee
payers• forecast annualised efficiency (%)• change in number of senior
managers (%)• change in senior manager pay bill (%)• overheads as a % of expenditure• audience perceptions of value
for money

3. Set new
standards ofopenness andtransparency• publish an annual workplan andbudget; annual senior manager pay bill;
annual talent costs in agreed bands;
quarterly expenses reports• hold industry briefings twice a year
We aim to track audience perceptionsof the BBC’s openness and transparency.

4. Do more
to serve allaudiences• audience reach to BBC• access to BBC services• network TV output (% producedout of London)• audience perceptions ofrepresentation of the nations
and regions

Source: Pan BBC Tracking Study (PBTS) April-October 2010 combined with
Brand and Reputation Tracker (BaRT) November 2010 to March 2011. The
PBTS survey was relaunched as the BaRT survey in November 2010 using thesame methodology but updated questionnaire and weighting scheme.
2
Source: BBC Pulse survey.
3
Source: BBC Cross Media Insight survey.
1

1 In-depth local, national and international news and analysis are all partof the BBC’s offer.
2 Junior Doctors followed newly-qualified medics as they started
working on hospital wards.

Annual Report and Accounts 2010/11 1-7

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Purposes
People have very high expectations of the BBC. Overall this year,
the BBC continued to deliver most of its public purposes well, andin line with or above audiences’ expectations. However, there remainsome areas for improvement, particularly concerning the culture
and creativity, and the nations, regions and communities purposes.
The BBC’s mission is to inform, educate and entertain.
Under the terms of the Royal Charter and Agreement,
through its output, the BBC must promote the six public
purposes described on these two pages.
The Trust measures the BBC’s performance against eachof the purposes using a number of sources of information.
We carry out an audience survey each year, in which we

ask how important the BBC’s public purposes are, and how
well audiences think the BBC is doing on each purpose. By
comparing these scores we can see where the BBC is meeting
audiences’ expectations and where there are gaps. We also
use the findings from our other activities such as service
reviews, and other relevant research carried out by the Trust
Unit, the Executive and our Audience Councils.

Sustaining citizenship and civil society
This purpose is of central importance. Audiences’ highexpectations of news and current affairs are largely being
met. Our reviews this year showed that BBC One and
BBC Two make very important contributions to audiences’views of news and current affairs, while BBC Radio 4’s news
output lives up to and sometimes surpasses expectations.
However, despite the good progress made by the Executive
in reporting the issues and policies of devolved government
and institutions which we noted last year, our survey showedthat audiences still think the BBC could do more, particularly
in Scotland. We have had constructive discussions with the
Executive about addressing this challenge.
The BBC provides a broad news, politics and current affairs agenda.

Promoting education and learning

Coverage of the 70th anniversary of the Battle of Britain included Dig 1940
with archaeologist Jules Hudson.
1-8 Annual Report and Accounts 2010/11

Audiences’ expectations are higher relative to the otherpurposes, and were largely met this year. However, as inprevious years, parents with children under 18 felt that the
BBC could do more. The BBC’s formal learning provision is
now primarily online, and both its usage and quality ratings
remained high. The BBC also has a commitment to engage
audiences with specific campaigns or charitable appeals
designed to benefit society, and runs a wide range of theseeach year. Our BBC Radio 4 service review, which covered
these areas, found that the station was supporting socialand educational campaigns effectively, using partnerships
to enhance the impact of educational output.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Stimulating creativity and cultural
excellence

BBC Two’s award-winning comedy Miranda.

The BBC needs to provide more distinctive and creative
programmes, since audience expectations are still not
being met. Our work shows that the biggest gap between
audiences’ expectations of the BBC and its performance liesin the distinctiveness of programmes, and that this is driven
largely by perceptions of BBC One and BBC Two. In someareas the BBC is performing well, however. For instance,
viewers believe that BBC Four often provides somethingoriginal and different from other channels, while our review
of BBC Radio 3 showed that the station makes an important
contribution to the BBC’s cultural and creative purpose.

Representing the UK, its nations,regions and communities
Audiences continued to feel there are weaknesses in how
the BBC represents the different nations, regions andcommunities across its output. This was particularly true
for Scotland and Northern Ireland, despite the good progress
made in some areas such as reporting news. This year we
will conclude our review of the BBC’s nations radio services,in which we are exploring how they serve audiences in the
devolved nations. The BBC has major initiatives designed toaddress issues of national and local representation. We areconfident that these will show a positive outcome over time.
Oyster Cafe in Shieldinch – the fictional home to BBC Scotland’s soap River City.

Bringing the UK to the world
and the world to the UK

BBC Two’s This World sensitively worked with the saved Chilean miners
and their families to bring a fresh dimension to that story.

Audiences rated the BBC highly for bringing the world
to the UK, and the BBC’s global reach remained high.
BBC One and BBC Two are particularly important toaudiences’ views in this respect; following our review of
BBC Two, the channel reinforced its commitment to highquality international current affairs. The BBC provides
international news services to audiences globally throughthe BBC World Service, as well as through the commerciallyfunded English language channel, BBC World News.
The estimated collective reach of these in 2010/11 wasaround 225 million.

Helping to deliver the benefitsof emerging communications
technologies and services
The BBC met expectations for its commitment to makeengaging digital content available to audiences. This year
the BBC launched BBC One HD and was a partner in the
launch of Radioplayer. Targets for digital switchover were
met. The national DAB radio network continued to expand,with coverage forecast to reach 92% by mid 2011.

Radioplayer brings BBC and commercial radio together into one place.
Annual Report and Accounts 2010/11 1-9

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Service performance
One of our main duties is assessing the performance of the BBC’s
services. This year, the BBC performed strongly in reaching almost
all licence fee payers with high quality content. The television channels
made progress in becoming more distinctive and portraying all
audiences more effectively. We will continue to focus on areas
where we believe there is still more scope for improvement.

The Trust holds the Executive to account for the BBC’s
performance through reviews of services. Here we reporton the BBC’s performance this year in the areas of:• television• radio• online• news• sport• the BBC World Service
Television
We were pleased that average quality scores (‘AIs’) haveincreased this year, but AIs for most non-BBC channels havealso risen. This suggests that the improvement, like last year,
continues to be driven by a range of factors other than justthe programmes themselves, including greater choice ofprogrammes and more use of high quality TV equipment
including recording and time-shifting devices.
This year we completed our reviews of BBC One, BBC Two
and BBC Four.
BBC OneBBC One remains by far the BBC’s most popular channel,
in terms of both audience numbers and approval scores. In
2010/11 average weekly viewing grew to nearly 7 hours 30
minutes per person, while the channel’s average AI remained
steady at 81.
Our service review concluded that BBC One could harness
its size and popularity to be more ambitious and take morecreative risks. In particular, it found that BBC One should seek
to increase the range and variety of programming in peaktime before the watershed, and show more ambition at 9pm,
particularly by broadening the range and creative ambition ofits drama. We will be looking at progress in these areas with
the new Controller of BBC One during 2011/12.

1-10 Annual Report and Accounts 2010/11

BBC Two
BBC Two performed strongly in terms of showing ambition
and taking creative risks, particularly in factual programming,
comedy and new drama. We are encouraged by the channel’s
performance in ambitious drama and support its aspirations.
We believe that BBC Two is not yet getting full credit fromaudiences for its more ambitious content, but think this will
come in time if it consistently provides a distinctive offering.
As noted in our service review, we believe that BBC Two hasa key role to play in audience perceptions of the distinctivenessof BBC television. We will also track the impact of BBC
current affairs to be assured that the BBC is delivering on
its public service remit in this area.
Daytime on BBC One and BBC Two
Our service review found that the quality and ambition ofparts of the daytime schedule on BBC One and BBC Two
were not meeting audience expectations and we believeboth channels could do more to deliver the public purposes.
Progress in addressing this challenge is encouraging; forexample both channels are beginning to show new typesof programming such as social history.
BBC Three
BBC Three now reaches nearly 30% of its target audience of
16-34 year olds each week and quality measures are positive.
Audiences showed particular appreciation for some factual
programming covering challenging social and international
current affairs. BBC Three’s role is to take creative risks andinnovate across all genres.
BBC FourThis channel performed well this year. Reach has continued
to grow and now stands at over 10% each week; Cost per
User Hour has decreased; and BBC Four has the highest
average AI score of any BBC channel. Its key challenge is toachieve greater impact, not only among its viewers but also
the general public, for the high quality and distinctive output
it provides.

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Children’s (CBBC, CBeebies)
The BBC has a particular responsibility to offer originatedprogramming for UK children, since the investment in
UK programming by the many other children’s channels’is very low.
CBeebies continued to perform exceptionally strongly, both interms of reach and perceptions of quality. It remains the mostwatched children’s channel among children aged six and under
and is highly trusted by their parents.
CBBC also had a strong year. In cable and satellite homes,
where CBBC competes with a very wide range of channels,
the channel performed very strongly and increased its reachfrom 21% to 28% amongst children aged six to 12, although
it remains well behind the Disney Channel.
Reach of children’s content on BBC One and BBC Twocontinued to decline this year. By the end of the digital
switchover, there will be universal access to the BBC’schildren’s channels and in preparation for this, it will be
important to assess the role of children’s programming on
BBC One and BBC Two. We will discuss with the Executive
how to ensure that children’s best interests are served.
BBC ALBAIn December we published our findings on the BBC’s Gaeliclanguage television channel, BBC ALBA. We found that
BBC ALBA is performing well and is appreciated by both
fluent Gaelic speakers and Gaelic learners. We also considered
how to make BBC ALBA more widely available. Following
a public consultation which attracted over 5,000 responses,
we concluded that the service should be broadcast on
Freeview, although it means displacing some BBC network
radio stations in the evenings. The Trust took into accounta range of strong and sometimes conflicting views, and thiswas a finely balanced decision.

Radio
Radio listening is strong in the UK, with 90% of adults listening
every week. Following some years of decline, average listening
hours increased slightly this year amongst all adults. However,young people are listening less and less, and it is clear thatengaging with younger listeners represents a significant
challenge for the BBC’s radio stations aimed at this audience.
We will consider the BBC’s response to this challenge carefully
over the coming year.
BBC Radio 1 and BBC 1Xtra
BBC Radio 1’s remit is to engage a young audience with public
service programming. It has grown reach to its distinctive
output amongst its target audience and amongst younger
teens this year which is a positive achievement given thechallenge of reaching these audiences. However, we continue
to challenge the Executive to ensure that BBC Radio 1 focuses
more clearly on younger listeners, in line with the conclusionsof our 2009 service review. Changes made to the service since
the review have not resulted in a younger average audience so
we have asked for further action to address this challenge.
BBC 1Xtra grew listening to record levels of over 800,000.
Awareness of the station has also grown significantly on theback of closer links to BBC Radio 1.
BBC Radio 2
Following our review of BBC Radio 2 in 2010, we made anumber of recommendations to make the station more
distinctive, particularly during the day. We are pleased to seethat the station has implemented these recommendations bystrengthening its documentary, comedy and arts programmes,
as well as showing greater editorial ambition in its popular
daytime output. We expect to see more developments inthese areas.

1 The Sinking of the Laconia told the story of the Allied ship, sunk by a U-Boatwhich then rescued the civilian crew.
2 The story of 16-year-old Jasmine Burkitt was told in Small Teen Big World.
Annual Report and Accounts 2010/11 1-11

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Service performance continued/...

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BBC Radio 3 and BBC Radio 4
Our review of BBC Radio 3 and BBC Radio 4 found that thesestations were performing very well. They are extremely highquality and broadcast distinctive programming. Both stations
face the challenge of appealing to a range of audiences without
in any way jeopardising their distinctiveness.
BBC Radio 5 LiveBBC Radio 5 Live had a record year attracting over sevenmillion listeners a week for the first time. We will look at theperformance of BBC Radio 5 Live and its digital sister station
BBC Radio 5 Live Sports Extra in more depth in the service
review launched in April 2011.
BBC 6Music
Since the Executive proposed closing BBC 6Music last year,
weekly reach has nearly doubled to over one million adults.
Audience approval scores also increased. We support
BBC 6Music’s distinctive role in the BBC music radio
portfolio and hope it can sustain this level of performance.
BBC Radio 7
Our review of BBC Radio 7 found that it is one of the best
performing digital radio stations and is much loved by its
listeners. We endorsed the Executive’s proposals to rebrand
BBC Radio 7 as BBC Radio 4 Extra as this may encourage
more listeners to sample the station. However, in order topreserve the elements that audiences most value, the Trust
amended BBC Radio 7’s service licence so that commitments
to comedy and drama were strengthened and the amountof BBC Radio 4 catch-up programming was limited.
BBC Asian Network
During 2010/11, the BBC Asian Network increased its reach to
16% of young British Asians. In 2010, the Executive suggested
closing the service but has now withdrawn this idea and isconsidering the BBC Asian Network’s future along with otherBBC services as part of the wider BBC strategy review. BBCradio should seek to serve Asian listeners as well as it does
other audience groups.

Nations and English regions radio
The BBC’s national radio stations are BBC Radio Scotland,
BBC Radio Wales, BBC Radio Ulster/Foyle, the Welsh
language station BBC Radio Cymru, and the Gaelic language
station BBC Radio nan Gàidheal. These, together with BBC
Local Radio in England, make an important contribution to theBBC’s remit to serve the different communities across the UK.
BBC Radio Ulster/Foyle continued to be the most popularstation in Northern Ireland, while the other national stations
and BBC Local Radio in England also had a strong year,
boosting their reach and in many cases the average lengthof time listeners stayed tuned in.
We are in the process of reviewing the performance andstrategy of the nations’ radio stations and will publish ourfindings later this year. We will be launching a review of BBC
Local Radio in England later this year and it will consider the
impact of the Executive’s content-sharing strategy which has
been piloted this year.

1-12 Annual Report and Accounts 2010/11

Overview

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4

OnlineBBC Online
BBC Online came third only to BBC One and BBC Two
in terms of reach, being used by 19.5 million adults each
week, up from 17 million in 2009/10. This represents 57% of
adults online. This growth was driven by particularly strong
performances for news, with BBC Online playing an importantrole in engaging audiences with major news stories such as
the severe weather, the Japanese earthquake and the General
Election. In addition, the increasing use of smartphones andtablet devices helped to extend reach and usage, with around
2.6 million adults using them to access the BBC each week.
There is still some inconsistency in perceptions of quality
across BBC Online, and overall quality scores fell slightly. This
was an initial reaction to some major site re-launches, including
the homepage, News and BBC iPlayer. We will continue tomonitor quality perceptions of BBC Online closely.
In January 2011 we approved the BBC’s new online strategy.
It involves a budget reduction of 25%, clearer editorialboundaries around more distinctive content areas, andbetter navigation and linking. With this strategy, the Executive
projects that reach will grow to 65% of online adults by
2013/14, and user appreciation from an average of 79 toover 80 in 2012/13, with fewer sites and products recording
low appreciation scores. We will monitor progress against
these objectives.
BBC Red Button
Reach to the BBC Red Button grew strongly in 2010/11.
Quality scores improved and reach grew slightly. Major events,
such as the World Cup, Wimbledon and Glastonbury, drew
large audiences in the summer.

News
BBC News continues to be very highly regarded by audiences
and recorded slight increases in audience perceptions ofimpartiality, trustworthiness and accuracy this year. Across all
platforms, 81% of adults consumed BBC News each week.
The past year’s strong news agenda helped the BBC’s major
news programmes and offerings increase audience size.
Notably, the BBC News channel and BBC Parliament reachedmore viewers, with weekly reach doubling during the General
Election. They also increased their approval scores. We arelooking more closely at the performance and strategy of
BBC News and BBC Parliament in our review of these
services which is now underway.
Audiences have a high regard for the BBC’s regional news
in England, Wales and Northern Ireland and perceptionsin Scotland are improving although they remain at a lower
level. We are very aware of the challenges for BBC News inserving a UK-wide audience with network output, while also
responding to the growing appetite for news of devolved
matters in the nations.
Over recent years, we have seen a gradual decline in
the reach of current affairs on television. We concluded
in our review of television services that the BBC should
aim to increase the impact of current affairs programming,
particularly on BBC Two. We will look for evidence of thisincrease in impact in the coming year.

1 The BBC 6Music OB van was at Glastonbury.
2 Just a Minute. Comedy is important for bringing new audiences to BBC Radio 4.
3 The BBC News website has up-to-the-minute news, plus analysis and commenton the issues of the day.
4 BBC Spotlight presenters, David Braine, Victoria Graham and Justin Leigh.
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Sport
BBC Sport performed well across all platforms with strongaudience perceptions of quality. BBC Sport continued to
attract big audiences on television, radio and online, particularly
to major events like the World Cup, Wimbledon and
Formula 1, while average audiences continued to growfor Match of the Day, BBC Sports Personality of the Year and
Six Nations Rugby. Broadcast coverage of the major sporting
events across the year was also well supported by BBC Online
and BBC Red Button.
The challenges for BBC Sport in the coming year will be firstto maintain this strong performance when there are fewer
major sporting events, and second to begin the build-up to
the London Olympics in 2012.

BBC World Service
The BBC World Service is highly rated by its audience forthe quality of its output. It continues to play a vital role inbringing impartial news and information to audiences aroundthe globe. In 2010/11 it reached around 166 million people
each week. This is lower than last year, due to the closureand reduction of some language services, following the cut
in Government funding.
In adjusting to the reduction in funding we aim to ensure the
BBC World Service maintains its quality, standards and impact.
One of the ways we do this is through reviewing parts of the
BBC World Service’s activity each year. This year our researchlooked at the BBC’s Persian television service, finding that theservice is successfully reaching millions of Farsi speakers with
an impartial and authoritative news service.

1 BBC Sports Personality of the Year, champion jump jockey AP McCoy.
2 BBC Persian television broadcasts in Farsi to Iran, Afghanistan and Tajikistan.
1-14 Annual Report and Accounts 2010/11

Overview

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Inside the Trust

Taking partSecuring editorial standards
The public expects the highest standards from the BBC, and upholding
these standards is one of the Trust’s most important responsibilities.
Since October 2010, the BBC has been working to new Editorial
Guidelines, approved by the Trust, which were designed to help ensure
BBC content meets these expectations.

Handling complaints
Stage one: Most complaints are handled by BBC Audience
Services, with some also being dealt with directly by the
programme makers or independent production companies
to which they are sent. BBC Audience Services answered justunder 240,000 complaints last year, an increase of 20,000
from 2009/10. It is normal to see a fluctuation between years.
In 2010 BBC Audience Services installed a new complaints
database. A number of issues then affected complaints
handling at stage one, resulting in only 81% of complaints
answered within the target ten day timeframe at this stage,compared with 94% the year before.
The Trust was concerned and disappointed with theexperience of some complainants during this time. The
Executive has since reported back to the Trust on its actions
to resume normal service and on lessons learnt.
The Trust also undertook a mystery shopping exercise
in 2011 to test the initial handling of complaints across theBBC. The phone service was satisfactory. Written responses
were affected by some known performance issues. We
were disappointed that only 64% of letters and 56% ofemails received a reply within the timeframe set out in the
Complaints Framework. This level of service for written
complaints is not satisfactory. We are pleased to note the
Executive has taken steps to improve turnaround times atstage one.
Stage two: 257 complaints were answered, 17 of whichwere upheld or partially upheld. 84% were answered within
the target timeframe.

Hearing appeals (Stage three)
The Trust, through the Editorial Standards Committee (ESC),
acts as final arbiter in the BBC’s complaints process. In 2010,
the ESC received 111 appeals, 84% of which were handledwithin the target timeframe (16 weeks from acceptance of theappeal), up from 48% last year. Of these, 40 were heard by
the ESC, of which two were upheld, six were partially upheldand 32 were not upheld. The ESC also considered breaches
reported by the Executive. The following were particularly
significant:• BBC One – Panorama – Primark: On the Rack:
the ESC upheld an appeal about a Panorama programme
entitled Primark: On the Rack which was broadcast on
BBC One in 2008. The programme included footage ofthree boys in Bangalore apparently ‘testing the stitching’on Primark garments. Having carefully scrutinised all of therelevant evidence, the ESC concluded that, on the balanceof probabilities, it was more likely than not that the
Bangalore footage was not authentic and that there had
been a serious breach of the accuracy and fairness editorial
guidelines. The Trust required an on-air and on-line apology.
The appeal highlighted serious failings in the making of thisprogramme. The BBC Executive has been asked to consider
what changes ought to be made to the BBC’s editorial
policies following this appeal.
• BBC Radio 1 – Harry Potter themed day: the ESC
concluded that there had been a breach of the Editorial
Guidelines on undue prominence, taking all output together
in the context of the launch of a Harry Potter film on thesame day as this themed day on BBC Radio 1. Consequently,
a new guideline about cumulative undue prominence wasintroduced and there was a re-emphasis within the BBCof the need for referral of all such themed output to theBBC’s Editorial Policy team.

Annual Report and Accounts 2010/11 1-15

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Taking partSecuring editorial standards continued/...

1• BBC One – Panorama – Death in the Med: morethan 2,000 complaints were made about the accuracy
and impartiality of this programme. In the ESC’s view, theprogramme was original, illuminating and well-researched,
and they remarked it was unlikely that a programme
covering such a contentious issue would be found to be
entirely flawless if subjected to such a level of deconstruction
and analysis. The appeal raised 51 points; the ESC upheld
three of those points (two in relation to accuracy and one
in relation to impartiality) and did not uphold the remaining
48. The Committee considered the programme achieved
due impartiality and due accuracy.
• The Curse of Steptoe: in May 2009 the Trust upheld
a complaint of inaccuracy and unfairness in this BBC drama.
A re-edited version was shown later that year on BBC
HD and released on DVD in June 2010. The complainant
alleged the programme was still unfair. The ESC agreed andrequired the Executive not to re-broadcast the programme
in its current form and to immediately withdraw from sale
all copies of the programme.
• Band Aid: the ESC was informed that the Executive
upheld in part a complaint by the Band Aid Trust of
inaccuracy and unfairness regarding reports on the BBC
in March 2010. An apology was broadcast.
The General Appeals Panel, a committee of the Trust whichhandles complaints which do not fall under the other complaints
procedures of the BBC, received 24 appeals, of which nine
were accepted. Seven of these were completed within 60
days, significant progress from last year. None were upheld.

2

Equality and diversity
To represent the diversity of licence fee payers effectively,
the BBC itself should reflect the diversity of the UK
population. The Trust receives an update annually from the
Executive on progress in implementing its diversity strategy
across the BBC. It focuses particularly on diversity amongst
BBC employees.
Results for 2010/11
As noted in our report, Observations on the Promotion of
Equal Opportunities in Employment, progress in some areas
has been slow including diversifying the senior manager
population and progress against the diversity targets forblack and minority ethnic (BME) and disabled staff remains
a concern. However, the Executive sets out activities which,over the next year, aim to work towards meeting thesechallenges and the targets which are in place until 2012.
New diversity strategy
This year the Executive developed a new diversity strategy,
effective to 2014, which was approved by the Trust in
March 2011. This was in response to the new Equality
Act 2010 which extended the scope of previous legislation
to include age, gender reassignment, pregnancy andmaternity, religion and belief, and sexual orientation, as
well as race, gender and disability. The new strategy will
replace the BBC’s existing equality schemes which werein place to cover race, disability and gender. The Executive
is responsible for implementing the new strategy and, as
before, will report on it annually to the Trust. Publishedalongside the strategy are the divisional diversity actionplans which detail how the Executive will implement it.

1 The BBC editorial guidelines are available at www.bbc.co.uk/editorialguidelines/.
2 Mehmuda Mian is lead Trustee on equality and diversity.
1-16 Annual Report and Accounts 2010/11

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Financial performance
The BBC is not a profit-making organisation and so is not focusedon the bottom line. Instead, we measure financial performanceagainst a series of financial objectives which provide a measure of theBBC’s progress in creating and delivering value to licence fee payers.
The BBC has met, or is on track to meet, the financial objectives
we have previously set.

Outturn for 2010/11 against those core objectives:• Maximising the BBC’s income by collecting
the licence fee as efficiently as possible: despitedifficult economic conditions the BBC has again reduced
the proportion of the licence fee that is spent on collection
activities – down 0.1% to 3.4%. The combined cost ofevasion and collection has remained stable year-on-yearat 8.6% of licence fees collected.
• Making the BBC as efficient as possible, andproviding good value for money: the BBC remains
on target to meet the challenge we set the Executive ofdelivering £1.9billion of efficiency savings by 2013. A further£434million of efficiency savings were achieved in the year
taking the cumulative savings over the past three years to£903million.
• Maximising the returns the BBC makes on
programmes paid for by the licence fee: thecontribution from BBC Worldwide to the money available
for spending on UK public services, provided through a
mixture of dividends and direct investment in programmes,
has again increased – up 9% on the previous year to£182million.
• Spreading the benefit of the licence fee acrossthe whole of the UK: the BBC continues to makeprogress towards the target we set of making 50% of
network television (by spend) outside London by 2016
with 12% spent in the nations by 2012 and 16% by 2016.
• Ensuring the licence fee supports the wider
economy: the BBC has spent £1.1billion in the UK’s creative
economy during 2010/11. The BBC has commissioned 36%
and 13% of eligible television and radio content respectively
from independent producers.
The BBC’s performance against these objectives is set out
in more detail within the Chief Financial Officer’s review inPart Two of this Annual Report.

Below we comment specifically on two areas where we havetaken a close interest in the past year. You can also read more
about the activities we have undertaken to ensure the licence
fee is spent wisely in the next section.
Financial stability for the BBC
We agreed a new licence fee settlement with theGovernment which provides financial stability and security for
the BBC for the period to 2017. It is a tough settlement withthe licence fee frozen for the next six years while the BBC also
will be funding new obligations from that money – a decline
in real terms. This means we will need to make some harddecisions about how the BBC spends its money. However thesettlement brings some stability, giving us the space to makethe necessary future decisions on the size and shape of BBC
services and to set new challenging financial targets for the
next few years.
Pension scheme
The BBC has a significant pension deficit and it was importantthat a funding plan for this was agreed with the Pension
Scheme Trustees which was not only fair to pension scheme
members and the BBC but, importantly, was also fair to thelicence fee payers who fund the BBC. We have taken a closeinterest in the Executive’s reforms of the pension scheme suchthat the ongoing scheme remains affordable and its funding
sustainable in the longer term. We are satisfied that the deficit
reduction plan and other reforms agreed with the Pension
Scheme Trustees will ensure that the BBC can continue tomeet its obligations as an employer whilst also ensuring thatthe funding of pensions does not take up a disproportionate
amount of each licence fee.

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Delivering value for money
As Trustees of the BBC, we are responsible for ensuring that thelicence fee is spent wisely, with licence fee payers receiving maximum
value for every pound spent. This was central to 2010’s strategic
review, while the licence fee settlement we secured in October 2010means the BBC will have to work even harder to improve quality as
it works to reduce overheads.

Our role is to ensure that the licence fee is spent in ways thatmeet audiences’ expectations and delivers value for money.
We focus on five areas:• setting budgets and objectives• monitoring operations• specific reviews, some of which are chosen in discussion
with the National Audit Office (NAO)• contribution from commercial operations (BBC Worldwide)• setting out a framework and strategy for executive pay
We are currently working through the implications of thelicence fee settlement, but the impact on services can be
reduced through more efficient ways of working. With
tighter budgets, it is more important than ever that the BBC
continues to focus on reducing overheads while investing in
the high quality content we know licence fee payers want.
Setting budgets and objectives
Each year we review thoroughly and question the BBC’s
finances and budgetary plans. When our questions havebeen answered and changes we require have been made, we
approve the BBC’s annual budget and its longer term financial
plans. As part of this we review and, if necessary, change
individual service budgets as set out in their service licences.
The current service budgets are on our website.
When appropriate, we also set financial objectives to guide theway the Executive manages operations. In 2007 we set targets
for efficiency savings at a pan-BBC level, and subsequently set
targets for talent fees and senior management pay. During
2010, as part of the strategic review, we set further savings
objectives, requiring the BBC to find additional savings to offset
the freeze in the licence fee over the next six years. We also
accelerated the timeline for achieving our required 25% cut
in the senior manager pay bill.
Because of the new licence fee settlement the budget we haveapproved for 2011/12 is an interim budget that will enable the
BBC to continue its operations while the Executive develops
more detailed plans for the coming years that reflect the
reduced level of funding.
1-18 Annual Report and Accounts 2010/11

Monitoring operations
We monitor the ongoing financial position of the BBC and its
risk management processes through regular reports from the
Executive. We question the external auditors, internal audit
and the Audit Committee Chairman as to their views on the
BBC’s control environment. We also request information on
specific areas in which we have an interest and on those areas
where we have previously set specific efficiency targets.
Highlights from 2010/11• 3% efficiency target: the BBC generated a further£434million in efficiency savings during 2010/11 taking
the cumulative net savings over the past three years to£903million. We asked the NAO to give us an independentview on the Executive’s management of the efficiency
programme, and will hear back later in 2011.
• Talent costs: in 2009 we asked the Executive to reduce
spend on talent, particularly at the top end. This year the
BBC spent £9million less on talent, of which £2.9million
related to those people earning over £100,000.
• Senior management pay: the Executive is making progressagainst the agreed target of reducing the senior manager
pay bill by 25% before the end of 2011; as at March this had
reduced by over 18%. The Trust is monitoring achievement
against this target closely.
• Project health checks: following the NAO report on
the BBC’s major estates projects last year, we asked the
Executive to carry out a series of independent healthchecks on all the BBC’s major strategic projects. We havemonitored the outcome of these reviews through the past
year and are satisfied with the governance of these projects.

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The National Audit Office study into BBC continuing drama – including EastEnders,
shown here – concluded that production costs were tightly controlled.

• Compliance with service licence budgets: all but one of
the services complied with their budgets. BBC Radio 1Xtra
underspent its budget by 13% exceeding the permitted
10% tolerance. We were satisfied, however, because theunderlying performance data show that this underspend
was delivered without compromising quality.
• Licence fee collection: we heard one appeal relating tocomplaints about licence fee collection which was notupheld. A further appeal, heard since the year end, waspartially upheld and as a result we asked the Executive toreview its processes to reduce further the risk that somelicensed households may be chased unnecessarily.
Specific value for money reviews
We undertake a rolling programme of value for money
studies, mainly commissioned from the NAO, which act
as an independent check on the Executive’s activities.
This year we commissioned two studies from the NAO anda third from consultancy MTM London. You can find the threereports on our website, including the recommendations madeand what actions the Executive has carried out as a result.
DMI programme (NAO study)
The digital media initiative (DMI) is a technology
transformation project designed to allow BBC staff to develop,
create, share and manage video and audio content andprogramming on their desktop. The project, which began in
January 2008 with costs of £133.6million to the end of March
2017, aims to improve production efficiency across the BBC.
The Executive appointed the BBC’s existing IT contractor,
Siemens, to develop the programme. The contract with
Siemens was terminated by mutual agreement in July 2009,
and the Executive brought delivery of the project in-house,
offsetting its increased costs by a £27.5million financial
agreement with Siemens. The NAO concluded that the earlystages of the programme did not give good value for money,
mainly as a result of a 21-month delay leading to £26million of
benefits not being achieved in the period 2009/10 to 2010/11.
However it noted that in-house delivery of the system has

started well and, while there is a considerable way to go, users
have been positive about the elements delivered thus far.
Producing continuing drama (NAO study)
The study looked at production costs on six long-runningshows. The NAO found that all were tightly controlled, andthat the average cost of producing an hour of continuing
drama had fallen by 20% in real terms over the last eight
years, with the programmes being delivered on time andlargely within budget. However it recommended that the
BBC strengthens its approach to achieving value for money
in continuing drama by being more systematic in comparing
and challenging production costs and processes.
Managing sports rights (MTM London study)
The Executive revised the process for the acquisition ofsports rights following a Trust fair trading finding relating to
the acquisition of FA Cup rights in 2009. The study concluded
that the BBC has improved its processes for the acquisitionof sports rights, and that overall these are working effectively
and serving licence fee payers well. Nonetheless it made aseries of recommendations around strengthening existing
acquisition processes.
Contribution from commercial activities (BBC Worldwide)
During the past year we approved a new commercial strategy
for BBC Worldwide. BBC Worldwide exploits the value
in the BBC’s intellectual property on the licence fee payer’s
behalf and from these activities is able to make a significant
contribution, through dividends and direct investment inprogrammes, to the funding of the public services. It has
returned £486million over the past three years.
We take care, through our approval of the commercial
strategy, to give BBC Worldwide clear parameters within
which to operate which ensure that its activities are fullyaligned with the BBC’s public service interest. In particular weseek to ensure that no commercial activity damages the core
BBC brand and the reputation of the BBC, either at home orabroad. The parameters include a focus on BBC intellectual
property and international growth. They balance the needfor growth with acceptable levels of risk.
Annual Report and Accounts 2010/11 1-19

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Delivering value for money continued/...

The new strategy for BBC Worldwide aims to ensure that itdelivers growing sustainable dividends (within the parameters
set by the BBC Executive and the Trust) in support of theBBC’s overall funding model.
Setting out a framework and strategy for executive pay
We recognise that how much the BBC pays its people plays a
big part in delivering value for money. The Trust has a specificresponsibility for determining the pay of the Director-Generaland the non-executive directors. It sets the strategy forexecutive pay, within which the Executive Board’s Remuneration
Committee sets the remuneration of executive directors.
Our approach to executive pay is to strike a balance between
ensuring that the BBC pays enough to attract the rightpeople to deliver the distinctive, high quality service thatlicence fee payers expect, and meeting licence fee payers’
expectations that the BBC will offer value for money. Thislatter consideration is of particular importance at a time offinancial constraint. Executive remuneration at the BBC mustalso reflect the fact that the BBC is a publicly funded institution
with public service values. This will naturally be taken into
account as the current strategy is reviewed.
Bringing forward our target for reducing executive pay
Our review in 2009 set the current framework for executive
remuneration at the BBC. Among other things, this review
required a 25% reduction in the senior manager pay bill.
During 2010/11 we agreed with the Director-General that
achievement of this target should be brought forward to
December 2011, and the Executive Board is on track todeliver this.
This year the Director-General has overseen significant
changes to the Executive Board that will help achieve thetarget, and we welcome this response. In addition to
structural changes, all members of the Executive Board
have agreed to a voluntary reduction in their remuneration,equivalent to one month of their base salary or fees; thisreduction is for two years.

Executive Board remuneration report 2010/11
The amount paid to members of the Executive Board for2010/11 is detailed in the Executive Board’s Remuneration
Committee report in Part Two of this Annual Report.
a) Director-General
The Director-General, Mark Thompson, is the BBC’s
chief executive officer, editor-in-chief and Chairman of the
Executive Board. Our approach to the Director-General’s
remuneration is to provide a package that attracts andretains a person of the calibre required to undertake thisdemanding role and provide effective leadership.
The Director-General’s remuneration consists of a basesalary, a pension and the right to be considered for a
performance-related bonus. The bonus element is currently
suspended. The Director-General has been entitled
to receive a ‘pension supplement’ in the form of a cash
contribution equivalent to his pension on the portion of hissalary that was over the pensions earning cap. During theyear the Director-General agreed that, in line with otherexecutive directors, he would give up this entitlement.
This change came into effect from 1 April 2011.
The Director-General is provided with a chauffeur-driven
car which he uses principally for business journeys in London;
he is not entitled to a personal car or fuel allowance.
On behalf of the Trust, the Chairman undertakes an annual
performance assessment of the Director-General. He
continues to meet his objectives and we believe that heprovides strong and effective leadership of the BBC. The
next possible date for a pay review for the Director-Generalis August 2013.

b) Non-executive directors
The non-executive directors receive a fee determined by
the Trust, which reflects the role and the time required. Feelevels were originally 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.
Each non-executive director receives a base fee; the chairof each committee receives an additional fee for chairing
a committee; and the senior non-executive director also
receives an additional fee. Directors are reimbursed for
expenses and any tax arising on those expenses is settled
directly by the BBC.
In December 2010 we reviewed the level of fees paid to
the non-executive directors and agreed that there would
be no change in the level; the next review will take place inDecember 2013. The non-executive directors are currently
taking a voluntary reduction in their fees equivalent to one
month’s pay.
c) Executive directors
Each year the Executive Board’s Remuneration Committee
provides the Trust with a formal report assuring us that
the Trust’s strategy for executive remuneration has been
followed. We have considered the report for 2010/11 andhave concluded that the current strategy is being followed.

1-20 Annual Report and Accounts 2010/11

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Trading fairly
We have a duty to ensure that the BBC conducts its commercial
trading activities fairly and minimises as far as possible its competitive
impact on others. This year we conducted a review of the fair trading
policy which governs the BBC’s trading behaviour, and will publish theresults in the summer of 2011.

The Trust sets the high level fair trading policies which
determine what the BBC, as a public service broadcaster,should do to minimise its impact on others in the markets inwhich it operates (see www.bbc.co.uk/bbctrust/our_work).
Although the Trust is responsible for approving new BBC
services or significant service changes via a public value test,
we also scrutinise certain other planned activities to ensure
the BBC complies with its fair trading obligations.
Responsibility for day-to-day fair trading compliance and forhandling fair trading complaints lies with the Executive throughits Fair Trading Committee.
The Trust also considers appeals on Fair Trading matters.
Last year the Finance and Compliance Committee (FCC)
considered a fair trading appeal from Virgin Media concerning
BBC iPlayer.

• launched our first review of the Trust’s fair trading policies,
including a public consultation, due to be published during
2011. This review is examining how well current policy is
working and whether any improvements can be made.
It is drawing on views from the public consultation, from
BBC staff, from appeals heard by the Trust over the past
few years and also from insights from the external fairtrading auditors• commissioned external auditors to report to us on the
BBC’s compliance with its own fair trading policy• the Trust also oversees the BBC’s commercial services
which are not funded from the licence fee. These services
are subject to different requirements, but they must comply
with the BBC’s fair trading regime and they must not distort
the market

Highlights from 2010/11
During 2010/11, we:• approved the Executive’s plans to launch News and Sports
Apps for mobile devices following independent research into
the Apps market which it published. The Trust’s assessment
was prompted by representations from industry. The Trust
decided that a public value test was not required to approve
this proposal• launched a major public consultation and review of BBC
syndication policy, due to be published in 2011. The policy
sets out how the BBC reaches wider audiences by making
its content available on third-party platforms• published a study into how the BBC ensures value formoney when it acquires sports rights for broadcast on
radio and TV, following a fair trading appeal we partiallyupheld last year. The review concluded that the BBC’s
management of sports rights acquisitions is working welloverall but made some recommendations to strengthen
further acquisition processes

Annual Report and Accounts 2010/11 1-21

Overview

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Inside the Trust

Taking part

Trading fairly continued/...

Independent fair trading auditors’ report to the
BBC Trust for the year ended 31 March 2011
We have audited, in our role as the BBC’s fair trading
auditors, the system of internal controls established within
the BBC to provide the BBC with reasonable assurance
that the BBC Executive (the Executive) has complied withthe requirements of its Fair Trading Policy, Competitive
Impact Codes and the Fair Trading Guidelines (‘the Fair
Trading Arrangements’) for the year ended 31 March 2011.
Our instructions for this engagement, including the scopeof work to be undertaken, were agreed with the BBC
Trust’s Public Value and Fair Trading Committee andsubsequently the BBC Trust’s Finance and Compliance
Committee (FCC). These instructions include agreementthat our audit should be conducted in accordance with theInternational Standard on Assurance Engagements (ISAE)
3000, agreement on the limit of our liability in respect of
this work, and agreement that our duty of care in respectof this work is solely to the BBC Trust (the Trust), as a body.
We are satisfied that the agreed scope of our audit was
sufficient to enable us to express the opinion set out below.
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’.
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 forthe year ended 31 March 2011, including identifying andassessing risks that could threaten fair trading, and designingand implementing responses to such risks.
As the BBC’s fair trading auditors, it is our responsibility toform an independent view, based on our audit work, as tothe extent to which the BBC has established, and applied,a system of internal controls which provide reasonableassurance that it has complied with the requirements of its
Fair Trading Arrangements for the year ended 31 March
2011. We have reviewed specific decisions 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 ofinternal 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
we report if it does not.

1-22 Annual Report and Accounts 2010/11

Our opinion has been prepared for, and only for, the Trust
as a body, in accordance with our instructions which wereagreed with the Trust Unit of the BBC on behalf of the
FCC. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any person otherthan the Trust or the Executive to whom this report isshown, or into 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.
Our approach
We have performed a reasonable assurance engagement
as defined in ISAE 3000. The objective of a reasonableassurance 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 compliancewith its Fair Trading Arrangements for the year ended
31 March 2011. Our work consisted of enquiry and testing
to enable us to form a view as to whether an appropriate
system of internal controls was in place. We also reviewed
the processing of a sample of material transactions toprovide us with reasonable assurance that the system
of internal control had been applied.
Inherent limitations
As with any system of control, it is not practicable to ensurethat no errors or irregularities have occurred without being
detected. Our audit work was designed to give the Trust
reasonable assurance as to the adequacy of the system
of internal controls which were in place and being applied
to deliver compliance with the requirements of its Fair
Trading Arrangements for the year ended 31 March 2011.
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 riskof challenge even where the system of internal controls
has been followed and decisions have been taken with thegreatest care.
OpinionBased on the results of our procedures, in our opinion
the BBC has established and has applied a system ofinternal controls that provides reasonable assurance thatit has complied with the requirements of the Fair Trading
Arrangements for the year ended 31 March 2011.
Deloitte LLP
Chartered Accountants
London23 June 2011

TRUSTPERFORMANCE
Trust performance is about getting the best out of the BBC forlicence fee payers. This includes championing the distinctive, highquality programmes and services we know audiences want; getting
more value from the licence fee; and ensuring that the BBC is run
efficiently, openly and fairly in the interests of all audiences. This
year also saw the Trust getting a fair deal for audiences and a stable
future for the BBC by negotiating a new licence fee settlement.
Live Arts and performance, as well as commentary and discussion on them, are distinctive elements across
BBC services. Picture shows Mark Kermode, BBC Radio 5 Live film critic and co-presenter of BBC Two’s
The Culture Show.

Overview

BBC performance

Trust performance

Inside the Trust

Taking partA stable future for the BBC
The licence fee settlement
The BBC reached a new licence fee settlement withthe government in autumn 2010. The settlement was
not expected at this time but was prompted by thegovernment’s spending review which had included
consideration of the BBC taking over the fundingof free television licences for over-75s and the BBC
World Service.
The Trust felt that any questions of such major financial
significance could not be discussed without a reviewof the licence fee, since the BBC could not take on
additional financial obligations without the securityof a long-term settlement.
Safeguarding the BBC’s independence
Working alongside the Executive, we were therefore only
willing to negotiate on the basis of a full licence fee settlement
to 2017, the end of the current Royal Charter period.
Our central objective during negotiations was to safeguard
the editorial and operational independence of the BBC.
We also wanted to ensure the BBC would have the securityof funding needed to deliver the high quality programmes
and services that licence fee payers expect. Our principles
were that:• the licence fee must be fixed to the end of the Royal
Charter period and not tied to the Government’s
spending period• no further demands should be made on the BBC’s finances
during that time
• decisions about the future scale and scope of BBC services
must remain with the Trust as set out in the Royal Charter,
and any new efficiency targets must allow the Trust toreconsider the scope of services if necessary• any use of licence fee money must contribute to the BBC’s
public purposes as required by the Royal Charter, and theTrust should remain responsible and accountable to licencefee payers for how all that money is spent
A fair deal for licence fee payers
In negotiations with the Government, we secured what
we believe to be a fair deal for licence fee payers, given
the tough economic climate. The level of the licence fee
is to be frozen for the duration of the settlement, whichmeans a decline in real terms each year.
There are new obligations for the BBC. We have agreed totake on funding the BBC World Service and BBC Monitoring,from 2014 and 2013 respectively, core to our public purposeof bringing the UK to the world and the world to the UK.
We will help create a new partnership and funding modelfor S4C. We will also provide some funding for new local
television services. Part of the licence fee will be reserved
for spending on broadband roll-out, in view of our purpose
to help deliver the benefits of new technology to the public.
We rejected the Government proposal that the BBC shouldfund free television licences for the over-75s. They willcontinue to be funded by the Government.
It is a tough settlement, but it provides stability and security,and it ensures that the Trust will continue to make decisions
on the size and shape of BBC services that are aligned with
our public purposes and in the interests of licence fee payers.
Due to the speed of settlement negotiations, we were notable to involve licence fee payers, but we will consult them on
the decisions needed to implement the settlement and makethe necessary savings.
A tough licence fee settlement challenges the BBC to continue to deliver distinctive
content in line with its core public purposes.

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Inside the Trust

Taking part

Ensuring the licence fee is worth it
Improving quality and distinctivenessWe have been consistent in our challenge to the
Executive to raise standards of quality and distinctiveness.
Being licence fee funded, the BBC is uniquely placed tocare about more than just ratings. The BBC is here todeliver public service ambitions. The BBC’s contribution
to British culture and society is enormous; we believe it
can be greater still through the creative ambition ofprogramme makers and commissioners.
This point is not lost on the BBC’s audiences. As we know
from our research, great content is their single mostimportant priority. Distinctiveness is therefore central toeach of our service reviews. These reviews do not confine
themselves to results; they set out recommendations toimprove the service which we follow up later. Here aresome of this year’s highlights.

BBC Two – regaining creative ambition
Over the last few years audiences had become less clear
about the role of BBC Two, which can be overshadowedby the flagship television channel BBC One. During thecourse of our service review discussions of this matter with
the Executive, we saw real progress in BBC Two achieving
higher creative ambition across a range of programming,from drama and comedy to lifestyle and specialist factual.
We think BBC Two’s role is now becoming much clearer.
An ongoing priority
Of course, notions of quality and distinctiveness are always
changing; a programme that appeared distinctive one year
may not be the next. So quality and distinctiveness willremain a focus of our service reviews, and continue asa strategic priority for the BBC.

BBC Radio 2 – championing daytime distinctiveness
BBC Radio 2 is a hugely popular station and highly rated
by its many listeners. Our service review asked the station
to harness its popularity to take greater creative risks anddemonstrate greater distinctiveness in daytime output.
Some examples of BBC Radio 2 rising to this challenge
during the year included Chris Evans’ short story writing
competition for children aged 13 and under; drive-time
support for poetry week to coincide with National Poetry
day; a social action campaign to promote internet takeup amongst BBC Radio 2’s older listeners; and moving
coverage of the Folk Awards to peaktime.
BBC Radio 2’s Graham Norton offers his listeners a vibrant mixture of music,
celebrity chat, sport and travel.
Annual Report and Accounts 2010/11 1-25

Overview

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Making every penny countImproving value for money
Improving value for money is about getting more fromthe licence fee. It is not code for cost cutting, although
there is always an element of this. Rather it is about
setting clear priorities for the BBC based on what
audiences want, and making sure that the money isspent wisely on these priorities. Currently only around
58% of audiences consider the licence fee to be goodvalue for money. We therefore need to improve, andto explain better how the money is being spent.
Focusing on what audiences want
We know that audiences want the BBC to spendmoney on programmes, so we support the Executive’scommitment to increase the share of investment in content
while reducing overheads.
In January we initiated significant savings by requiring the
Executive to cut the online budget by 25% by 2013, focusing
on areas that are not very well used or valued by audiences.
And we began a review of the BBC’s syndication policy,
the basis on which the BBC makes content available onother platforms, to make sure that audiences have accessto content, but that this is done in an efficient manner.
Last year we agreed a 25% reduction in the senior
management pay bill by the end of 2011. There has been
substantial progress during the year towards the target,
through a mix of reductions in the number of senior posts
and in the pay for specific posts.

1-26 Annual Report and Accounts 2010/11

Checking progress
Each year we commission externally, particularly fromthe National Audit Office, some specific value for money
studies. One showed that the Executive has madesignificant efficiency savings in recent years through reducing
production costs on continuing dramas while maintaining
their quality. Our work also confirmed that the Executive’s
new processes for acquiring sports rights work effectively.
However the study of the digital media initiative –a technology project designed to make production more
efficient – showed that the early stages of this seven-year
project were not good value for money. Steps have alreadybeen made to rectify this and the project should still deliver
the efficiency targets set for it on completion in 2017.
Maintaining a value for money culture is only going tobecome more important in the years ahead, given the freeze
in the licence fee agreed this year until 2017. Our job will beto support and challenge the Executive to make sure the
BBC continues to deliver the high quality that audiences
want as efficiently as possible.

A National Audit Office study into BBC continuing drama like Holby City
concluded that production costs had fallen by around 20% in real terms
over the last eight years.

Overview

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Inside the Trust

Taking part

Knowing what you are paying for
Promoting openness and transparency
We know our audiences want the BBC to spend theirmoney on content, and on delivering that content in
a convenient way. But of course there is far more todelivering great quality content than simply investingin programmes, services and platforms; there are manyother costs associated with running an organisation likethe BBC. For licence fee payers to trust that the BBC
is spending their money wisely in this respect – on thethings that they don’t see or hear – we have to be open
about where the money’s going and what the BBC’splans are for the future.
This year we have opened up the BBC to more scrutiny
than ever by licence fee payers, supported by our close
relationship with the NAO which conducts value for money
studies on our behalf. We are also continuing to encourage
the Executive to be more open to sharing information
while, of course, observing necessary confidentiality.
Salaries
People’s pay is always a subject of great interest to the
public, never more so than when money is tight. The public
can assess for themselves whether or not they are getting
value from BBC spending on on-air and on-screen talent;even so, this year we required the Executive to report infar more detail on the talent pay.

Senior management pay is a more controversial issue.
Again we asked the Executive to be more transparent
this year by publishing all senior managers’ pay, along witha clear explanation of how the BBC is organised, so thatpeople can judge for themselves how the BBC’s managers
are delivering value. The structure of the BBC will remain
a focus for our attention in the new licence fee settlement.
Understanding the BBC’s future
All public companies are expected to explain how theyplan to deliver returns to their shareholders. In the sameway, we believe that the BBC should explain its strategy fordelivering programmes and services to licence fee payers.
So this year, for the first time, we required the Executive to
publish a business plan. As well as being clearer for licencefee payers, it will also give more clarity to others in the
media industry about the BBC’s plans.
Openness and transparency are not goals that can simply
be ticked off a list, however. They should be part ofaccepted behaviour and attitudes at the BBC, which is why
we have set improving openness and transparency as oneof the four strategic objectives for the BBC’s future.

Over each year we consult a broad range of stakeholders to ensure that we
can consider the spectrum of opinions, especially among licence fee payers.
Annual Report and Accounts 2010/11 1-27

Overview

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Inside the Trust

Taking part

What licence fee payers want
Serving all audiences
The licence fee is designed to ensure high-quality output,
free at the point of delivery, available to all. This means
the BBC must provide some content that all audiences
value and that can be accessed conveniently.
Portraying our audiences
We know that, while in general the BBC is highly rated byaudiences across the UK, it gets less popular further awayfrom London. We would like to tackle this imbalance.
There are two aspects to our work on this front: making
programmes outside London, where the BBC is on track
to meet the targets we’ve set; and reflecting the variedcharacter of the UK within the programmes themselves,
which we know is very important to audiences.
We think there has been good progress on this question of
portrayal this year, with programmes like Being Human andExile showing a real sense of place intrinsic to their strong
storylines. Audience Council feedback suggests that this isappreciated by licence fee payers.

This year, following our review of the Gaelic-language
service in Scotland, BBC ALBA, we approved the
Executive’s plan to put it on Freeview. This will give
many more people access to the service. This required
the removal of some of the BBC’s radio services from
Freeview, in Scotland only, while the television channel is
on-air. This was not an easy decision but is an example ofthe tough choices the BBC faces in terms of audience access.
Also this year the Trust approved the BBC’s participationin YouView, an open standard internet-connected TV offer,
which will give people access to all on-demand content
through a set-top box. We also reviewed the Executive’splans to launch mobile Apps for news, sports and the
BBC iPlayer. We determined that whilst offering licencefee payers a new way to access the BBC’s existing services,the proposals did not represent a significant change to aservice and therefore that it was not necessary for the
Trust to conduct a public value test.

Accessing content
All licence fee payers, wherever they are, expect to be able
to get the programmes they want, when they want them.
And there is an ever-increasing number of platforms anddevices on which people expect to be able to access BBC
content. The Trust has set the BBC the aim of ensuringthat every household has convenient access to all relevant
BBC services, free at the point of use. This means the BBC
must invest in new technology as platforms develop and yet
make careful choices to ensure that audiences are served
fairly and that the BBC keeps its primary focus on investingin high-quality content.
BBC ALBA documentary Ciobairean Mara (Sea Shepherds) visited the rugged
and isolated Eilean Garbh, the highest of the Shiant Islands, off the west coastof Scotland.
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INSIDE THE
TRUSTThe BBC Trust, as the governing body of the BBC, is separate
from the Executive which manages the BBC’s day-to-day
operations. Our job is to represent licence fee payers andmake sure the Executive delivers the high quality programmes
and services the public wants, while ensuring that the BBC
is accountable and open. We also protect the independenceof the BBC from commercial or political influence.
Here you can find details of the Trustees and their remuneration
and an explanation of how we run the Trust in the interests of all
licence fee payers.
BBC Trust Chairman Lord Patten of Barnes in conversation with Vice Chairman Diane Coyle.

Overview

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Inside the Trust

Taking part

BBC Trustees
Trustees are part-time and come from a variety of backgrounds,
bringing a wide range of experience to the BBC.
Trustees are appointed by the Queen on advice from ministers,
following an open appointments procedure. Amongst the Trustees
we have a Chairman, a Vice Chairman, and a National Trustee foreach of England, Scotland, Wales and Northern Ireland.

Lord Patten of Barnes, Chairman
Appointed Chairman from 1 May 2011.
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 Energy; European
Advisory Board member, Bridgepoint.
Diane Coyle OBE, Vice Chairman
Appointed Vice Chairman from 1 May 2011.
Chairs Strategic Approvals Committee; led reviews of
BBC One, Two and Four, and BBC Red Button. Other roles:
Director, Enlightenment Economics; Stakeholder Advisory
Panel member, EDF Energy.
Richard Ayre
Joined the Trust on 1 August 2010.
Other roles: Freedom of Information Adjudicator, The
Law Society; member of the Advisory Committee, Sense
About Science.
Anthony Fry
Lead Trustee for fair trading and value for money reviews.
Other roles: Chairman, Espirito Santo UK, Dairy Crest, andCALA; non-executive director, Control Risks, Twig Rights Ltd.
Alison Hastings
Trustee for England (chairs Audience Council England);chairs Editorial Standards Committee and Audience Councils
Committee. Other roles: Vice president, British Board ofFilm Classification; retained consultant and trainer, Press
Complaints Commission.

Rotha Johnston CBETrustee for Northern Ireland (chairs Audience Council
Northern Ireland); chairs Finance and Compliance Committee;
lead Trustee on property issues. Other roles: partner,
Johnston Partnership; non-executive director, Allied Irish
Bank (UK) plc; pro-chancellor, Queen’s University, Belfast.
David Liddiment
Chairs Audiences and Performance Committee; led Trust’s
review of BBC Radio 3, BBC Radio 4 and BBC Radio 7. Other
roles: non-executive director, All3Media; associate, Old Vic
Theatre Company; chair, Hepworth Wakefield Gallery.
Bill Matthews
Joined the Trust on 1 January 2011.
Trustee for Scotland (chairs Audience Council Scotland).
Other roles: Director, M2M2 Limited; chairman, NHS
National Services Scotland; non-executive director, Security
Industry Authority, Scottish Police Services Authority.
Mehmuda Mian
Chairs General Appeals Panel; lead Trustee for equalityand diversity issues. Other roles: non-executive director,
Independent Safeguarding Authority; associate director,
Lokahi Foundation.
Elan Closs Stephens CBE
Joined the Trust on 1 November 2010.
Trustee for Wales (chairs Audience Council Wales). Other
roles: Professor, Aberystwyth University; non-executive
director, Strategic Delivery and Performance Board andchair, Corporate Governance, Welsh Assembly Government;
non-executive director, Imax Waterloo for BFI.

This reflects the membership of the Trust at 23 June 2011. There were twovacancies on the Trust at this time.
The terms of office of Sir Michael Lyons (Chairman), Chitra Bharucha MBE (ViceChairman) and Trustees Janet Lewis-Jones, Jeremy Peat and Richard Tait CBE haveconcluded since we published our last Annual Review. Dame Patricia Hodgson DBE
stood down from the Trust on 6 June 2011.
1-30 Annual Report and Accounts 2010/11

Overview

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Inside the Trust

Taking part

Lord Patten of Barnes
Chairman

Diane Coyle OBE
Vice Chairman

Richard Ayre

Anthony Fry

Alison Hastings
EnglandRotha Johnston CBE
Northern IrelandDavid LiddimentBill Matthews
ScotlandMehmuda Mian

Elan Closs Stephens CBE
WalesAnnual Report and Accounts 2010/11 1-31

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Taking part

Governance
As important as what we do is how we do it. Our processes are as
open and transparent as possible. As well as this Report, we publish
reports and findings in full on our website. We are supported in ourwork by the Trust Unit, professional staff who give us independent
advice on our duties and responsibilities.

How we operate
The duties and responsibilities of the Trust are outlinedin the BBC’s Royal Charter and accompanying Framework
Agreement. Supporting these documents we haveestablished a series of protocols. These provide moredetail on how we carry out these duties and responsibilities
and, where necessary, explain the duties and responsibilitiesof the Executive Board. You can find all of these documentson our website.
Our regular business is undertaken in monthly meetings ofthe full Trust. At these meetings we make decisions related
to our duties and responsibilities and consider proposals fromthe Executive Board. We publish the minutes of our monthly
Trust meetings on our website.
Our work plan
Each year we publish an annual work plan. We get input
from the Audience Councils about the issues that matter toaudiences to help us determine what the priorities in our planshould be. You can find a summary of our 2011/12 work planon page 1-42, and the full plan on our website.
Openness and transparency
We take particularly seriously our Royal Charter requirement
to operate openly and with transparency – we see this as partof our commitment to licence fee payers. On major pieces ofwork we consult publicly and expressly ask for the views oflicence fee payers, the industry and those who will be affectedby a proposal. We use our website as well as other means
to encourage people to respond, making sure that there
are plenty of opportunities for people to make us awareof their views.
After we make a decision we publish our conclusions clearly
along with the evidence that has been used to reach them.
We explain our decisions to licence fee payers, the industry
and to those within the BBC who may be affected. We also
publish the costs of our major pieces of work.

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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 tous. 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
the Trust 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.
Trust committees
We do much of our work through committees, which canmake certain decisions on behalf of the Trust as a whole.
The members of each Committee and their attendance
during 2010/11 are shown in the table on page 1-34. You canfind the terms of reference for each of the Trust’s committees
on our website.
Audiences and Performance Committee
Chair: David Liddiment
The Audiences and Performance Committee (APC) oversees
the performance of all of the BBC’s public services on behalfof the Trust and monitors how the BBC (services in the UK
and the BBC World Service) is delivering its public purposes
as outlined in the Royal Charter.
The APC assesses the performance of the BBC’s services
against the criteria set out in the service licences, using data
provided by the Executive Board and independent analysis
undertaken by the Trust Unit.
A key responsibility of the APC is to oversee the Trust’s
programme of service reviews. The Trust undertakes aservice review of each of the BBC’s UK public services once
every five years. We report separately on this year’s service
reviews on pages 1-10 to 1-14.

Overview

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Trust performance

Editorial Standards Committee
Chair (from August 2010): Alison Hastings
Chair (until July 2010): Richard Tait
The Editorial Standards Committee (ESC) is responsible,
on behalf of the Trust, for establishing the BBC’s editorial
standards and assessing all the BBC’s services for compliancewith these standards.
Editorial standards are enshrined in the BBC’s Editorial
Guidelines which the ESC commissions from the Executive
Board. The ESC is the final appeal body within the BBC indetermining whether these Guidelines have been followed.
The ESC also manages the Trust’s programme of impartiality
reviews.
Finance and Compliance Committee
Chair: Rotha Johnston
The Finance and Compliance Committee (FCC) undertakes
the Trust’s responsibilities on matters of finance, value formoney and compliance.
The FCC scrutinises the BBC’s annual budget from the
Executive Board before it goes to the Trust; approval
from this committee is required for any significant financial
investment. The FCC also manages the Trust’s programmeof value for money studies and is responsible for ensuring thatrecommendations from the reviews are implemented by the
Executive Board.
The FCC oversees the Executive Board’s compliancefunction (with the exception of editorial compliance, which isoverseen by the ESC) and monitors internal controls and risk
management. It also considers appeals regarding fair trading,
TV Licensing and the Digital Switchover Help Scheme.
Strategic Approvals Committee
Chair: Diane CoyleThe Strategic Approvals Committee (SAC) considers
proposals from the Executive Board, including for new services
or changes to existing services, except those proposed as partof a service review (which are considered by the APC). The
SAC determines whether a public value test (PVT) is required
and advises the Trust accordingly.
The SAC manages any PVT or other consideration of a
proposal from the Executive and makes recommendations
to the Trust on possible outcomes.
The SAC also oversees the BBC’s commercial strategy andany detailed commercial business plans being proposed to theTrust for approval.

Inside the Trust

Taking part

Remuneration and Appointments Committee
Chair (from May 2011): Lord Patten
Chair (from November 2010 until April 2011):
Sir Michael Lyons
Chair (until October 2010): Chitra Bharucha
The Remuneration and Appointments Committee(RAC) manages the Trust’s responsibilities concerning
Executive Board remuneration and appointments. The
RAC oversees executive remuneration strategy and makes
recommendations to the Trust on the pay and benefitsof the Director-General and the non-executive directorsof the Executive Board. However, pay and benefits of theexecutive directors are determined by the Executive Board’s
Remuneration Committee, which consists entirely of nonexecutive directors.
Audience Councils Committee
Chair (from January 2011): Alison Hastings
Interim Chair (from November to December 2010):
Jeremy Peat
Chair (until October 2010): Chitra Bharucha
The Audience Councils Committee (ACC) brings together
the four national Trustees to oversee and co-ordinate thecontributions of the BBC’s Audience Councils as advisory
bodies to the Trust. Its role is to ensure that issues identified
by the Audience Councils are dealt with appropriately by theTrust and that the Councils work within their remit. The ACC
also approves membership of the Audience Councils.
General Appeals Panel
Membership is not fixed. The panel usually consists of two
Trustees and was chaired by the Vice Chairman (Chitra
Bharucha) until October 2010 and by Mehmuda Mianfrom November 2010.
The General Appeals Panel is also a committee of the Trust,
although it meets only when required to hear complaints andappeals on behalf of the Trust that do not fall into one of theBBC’s specific procedures. You can find more information
about the BBC’s complaints procedures on our website.

Annual Report and Accounts 2010/11 1-33

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Governance continued/...

Trustees’ attendance at meetings
Trustees’ attendance at Trust and committee meetings for the period 1 April 2010 to 31 March 2011 is shown below. A calendarof full Trust meetings and their minutes, and the terms of reference for each committee, are published on our website.

Number of meetings
Chairman
Sir Michael Lyons
Vice Chairman
Chitra Bharucha
National Trustees
Alison Hastings(England)Rotha Johnston(Northern Ireland)
Janet Lewis-Jones(Wales)Bill Matthews(Scotland)
Jeremy Peat
(Scotland)
Elan Closs Stephens(Wales)Trustees
Richard Ayre
Diane Coyle
Anthony Fry
Dame Patricia Hodgson
David Liddiment
Mehmuda Mian
Richard Tait

Trust

Audiences andPerformance
Committee(APC)

Editorial
Standards
Committee(ESC)

Finance andCompliance
Committee(FCC)

Strategic
Approvals
Committee(SAC)

Remuneration
andAppointments
Committee(RAC)

Audience
Councils
Committee(ACC)

GeneralAppeals
Panel1

19

11

15

15

10

4

5

5

18/19

±

±

±

±

4/4*

±

±

12/13

±

7/8

±

±

2/2*

3/3*

4/4*

18/19

11/11

15/15*

±

±

±

5/5*

±

17/19

±

±

15/15*

10/10

2/2

5/5

±

13/13

±

±

7/7

±

2/2

3/3

1/1

3/3

±

±

4/5

3/3

±

1/1

±

15/162

±

±

8/103

7/7

±

4/4*

±

6/6

±

6/7

8/8

±

±

2/2

1/1

12/12
17/194
17/19
19/19
17/19
17/19
6/7

±
11/11
±
11/11
11/11*
8/11
±

9/9
±
9/15
±
15/15
11/15
6/6*

±
±
12/15
13/155±±±

7/7
10/10*
–
10/10
±
±
±

±
±
4/4
±
±
±
±

±
±
±
±
±
±
±

±
2/2
±
±
1/1
2/2*
±

The General Appeals Panel does not have a constant membership.
Jeremy Peat did not attend one Trust meeting due to a potential conflict of interest.
Jeremy Peat did not attend two FCC meetings due to a potential conflict of interest.
4
Diane Coyle did not attend one Trust meeting due to a potential conflict of interest.
5
Dame Patricia Hodgson did not attend two FCC meetings due to a potential conflict of interest.
* Denotes committee Chairman during 2010/11.
± Denotes Trustee is not a member of Committee listed.
1
2
3

Committee membership changes during 2010/11
Editorial Standards Committee (ESC): Alison
Hastings (Chair from August 2010); Richard Tait (Chair
until July 2010); Elan Closs Stephens (from November 2010);
Chitra Bharucha (until October 2010).
Finance and Compliance Committee (FCC): Bill
Matthews (from January 2011); Elan Closs Stephens (fromNovember 2010); Janet Lewis-Jones (until October 2010);
Jeremy Peat (until December 2010).
Strategic Approvals Committee (SAC): Richard Ayre
(from August 2010); Bill Matthews (from January 2011); Jeremy
Peat (until December 2010); David Liddiment (attending in his
capacity as Chair of the APC, and only for matters relating toservice approvals).
1-34 Annual Report and Accounts 2010/11

Remuneration and Appointments Committee(RAC): Lord Patten (Chair from May 2011); Sir Michael Lyons(Chair from November 2010 until April 2011); Chitra Bharucha(Chair until October 2010); Diane Coyle (from May 2011);
Janet Lewis-Jones (until October 2010).
Audience Councils Committee (ACC): Alison
Hastings (Trustee for England; Chair from January 2011);
Bill Matthews (Trustee for Scotland, from January 2011);
Elan Closs Stephens (Trustee for Wales, from November2010); Chitra Bharucha (Chair until October 2010); Jeremy
Peat (Trustee for Scotland, until December 2010; interim
Chair from November to December 2010).

Overview

BBC performance

Trust performance

Attendance at Audience Council meetingsand other committees
The Royal Charter establishes Audience Councils in each of
the nations to advise the Trust on delivering its public purposes
and how well the BBC is serving licence fee payers in different
parts of the UK.
The Audience Councils are chaired by the respective National
Trustee. National Trustees’ attendance at Audience Council
meetings for 2010/11 was:Trustee

Alison Hastings
Rotha Johnston
Janet Lewis-JonesBill Matthews
Jeremy PeatElan Closs Stephens

Attendance

7/7
9/9
5/5
2/2
7/7
5/5

Jeremy Peat remains chairman of the Board of the BBC
Pension Trust Ltd, the corporate trustee of the BBC Pension
Scheme. He also chairs the Committee of Directors, which
discusses funding issues, and the Governance sub-committee.
He is separately remunerated for this role. Further details
are available in the BBC Pension Scheme Annual Reportand Accounts.
The Trust set up an ad hoc appeals panel once between
1 April 2010 and 31 March 2011. For this meeting, committee
members were: Alison Hastings, Janet Lewis-Jones, David
Liddiment, Jeremy Peat and Richard Tait.
Trustee changes during the year
Richard Tait’s term as Trustee ended on 31 July 2010.
Richard Ayre’s term as Trustee began on 1 August 2010.
Chitra Bharucha’s term as Vice Chairman ended on
31 October 2010.
Janet Lewis-Jones’s term as National Trustee for Wales
ended on 31 October 2010.
Elan Closs Stephens’ term as National Trustee for Walesbegan on 1 November 2010.
Jeremy Peat’s term as National Trustee for Scotland
ended on 31 December 2010.
Bill Matthews’ term as National Trustee for Scotland began
on 1 January 2011.
Assessing our own performance
We have a commitment to review our performance, includingthat of each committee, annually, and to summarise ourfindings in the Annual Report. This year we carried out
this review internally, supported by the Trust Unit. We
considered the outcomes at the full Trust meeting, as well
as at each committee.
Our focus this year has been on the development of theBBC’s new strategy, Putting Quality First, and our continuing
programme of service reviews. We believe that, as part ofthe strategy review and through our reviews of specific BBC
services, we have progressed some major issues of concern
to licence fee payers. We have held the Executive to accountInside the Trust

Taking partand based our decisions on what audiences have told us, while
taking into account the views of industry representatives andBBC staff. We will continue to set the strategy for the BBC,based on our understanding of audiences’ priorities.
We believe that we carry out decision-making effectively
through our full Trust meetings and committee structure
and that we deal with the flow of business efficiently.
We have identified a number of areas to focus on further
in the year ahead. These include even greater oversight ofstrategic and budgetary issues, ensuring that the BBC delivers
value for money; and effectively communicating the outcomesof our work within the BBC and externally.
Trustees’ remunerationFees
Our fees as Trustees are determined by the Secretary of State
for Culture, Olympics, Media and Sport, and are reviewed
annually by his department. In September 2010, Trustees took
a voluntary 8.3% pay cut (equivalent to a month’s salary), in
parallel with the Director-General and other Executive Board
members. The reduced rates will be in effect until 31 August2012 and are reflected in the table overleaf. Trustees do notreceive 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
and hospitality. The expenses we are entitled to claim aregoverned by the Trust’s Code of Practice, which is publishedon 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 HM Revenue & Customs, and this figure
is published in the remuneration table; any tax arising on
expenses incurred is settled by the BBC.
Chairman’s benefits
Under the terms of his appointment, Sir Michael Lyons(Chairman until 30 April 2011) was eligible to participate in a
pension scheme with benefits that mirror those of the BBC
Pension Scheme. Sir Michael elected not to participate in thisscheme, hence the BBC made no pension contributions forhim. Instead, he received life assurance at a similar level ofcover to that of pension scheme members. He also received
private medical insurance cover at the same level as BBC
senior managers. Other than the Chairman, Trustees are noteligible to participate in the BBC Pension Scheme or receive
private medical insurance. Sir Michael Lyons had part-timeaccess to a BBC driver and car when working in London
on BBC business.
Lord Patten is not eligible to receive any benefits other thanhis fee, and has elected not to make use of a BBC driver.

Annual Report and Accounts 2010/11 1-35

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Governance continued/...

Trustees’ remuneration
The remuneration of the members of the Trust during the year is shown below.

Chairman and Vice Chairman
Sir Michael Lyons2
Chitra Bharucha3*

Fees
£000

Taxablebenefits
£000

Total
2010/11
£0001

Total
2009/10£000

Start dateEnd date

136
44

48
–

184
44

204
78

1 May 07
1 Nov 0630 April 11
31 Oct 10

Appointment term

National Trustees
Alison Hastings*
Rotha Johnston
Janet Lewis-Jones3
Bill Matthews4
Jeremy Peat3
Elan Closs Stephens4
Trustees
Diane Coyle5*
Richard Ayre4
Anthony Fry
Dame Patricia Hodgson
David Liddiment
Mehmuda Mian
Richard Tait3

39
39
23
9
30
16

–
–
–
–
–
–

39
39
23
9
30
16

41
41
41
–
41
–

1 Nov 06
1 Nov 06
1 Nov 06
1 Jan 11
1 Jan 06
1 Nov 1031 Oct 14
31 Oct 12
31 Oct 10
31 Dec 14
31 Dec 10
31 Oct 14

34
22
34
34
34
34
12

–
–
–
–
–
–
–

34
22
34
34
34
34
12

36
–
36
36
36
36
36

1 Nov 06
1 Aug 10
1 Nov 08
1 Nov 06
1 Nov 06
1 Nov 06
1 Aug 0430 Apr 15
31 Jul 14
31 Oct 12
31 Oct 14
31 Oct 14
31 Oct 12
31 Jul 10

Total

540

48

588

662

As noted above, Trustees took a voluntary 8.3% pay cut, in parallel with the Director-General and Executive Board, in September 2010. Fees for 2010/11 are therefore lower thanin 2009/10.
The higher taxable benefits figure for Sir Michael Lyons reflects the fact that his office was located in London and he lived in Birmingham, therefore his travel to London andaccommodation when in London for BBC business was classed as a taxable benefit. Sir Michael Lyons also received life assurance and private medical insurance costing £5,466 and £1,339
respectively for 2010/11 (2009/10: £4,817 and £2,398).
3
Chitra Bharucha, Janet Lewis-Jones, Jeremy Peat and Richard Tait all ended their appointments part way through the financial year; accordingly their fees only relate to their time in officeand do not cover the full year.
4
Bill Matthews, Elan Closs Stephens and Richard Ayre began their appointments part way through the financial year; accordingly, their fees only relate to their time in office and do not cover
the full year.
5
Diane Coyle was appointed as Vice Chairman on 1 May 2011 and her term will now run until 30 April 2015.
1

2* These Trustees all had taxable benefits less than £500 and consequently these have been rounded to nil. The total amounts claimed by these Trustees amounted to £522.36.

Register of interests
Our Code of Practice requires us to maintain and publish aregister of all external interests that might be seen to affectour ability to perform the duties of a BBC Trustee. This
register includes declarations of all positions of employment,
directorships and voluntary positions as well as interests ofclose family members, if relevant. The Trust’s register ofinterests is published on our website.

1-36 Annual Report and Accounts 2010/11

Overview

BBC performance

Trust performance

Costs of running the TrustThree years ago we committed to keeping the Trust’s direct
expenditure to not more than 0.35% of the BBC’s UK public
service spend. We are pleased to report that we haveagain met this commitment, with Trust direct expenditure
representing 0.31% of the BBC’s UK public service spend –(2009/10: 0.30%).
In absolute terms our total expenditure, including the fees
payable to Ofcom, remains stable year-on-year. The fall in
Ofcom regulatory fees has been a welcome contribution tocontrolling the Trust’s costs. However we have also taken ourown steps in restructuring the teams within the Trust Unit
to improve efficiency and better focus our activity. This has
resulted in some immediate restructuring costs but we will
see a reduced pay bill going forward.

Inside the Trust

Taking part

Trust relative spend
Trust spend(excluding Ofcom spend)
as % of UK PSB spend

Financial year

2007/08
2008/09
2009/102010/11

0.34%
0.31%
0.30%
0.31%** 0.30% excluding the exceptional restructuring costs.

Statement of Trust expenditure

Trustee remuneration costs
Staff costs
Other operating costsNote2010/11£000

2009/10
£000

1
2
3

651
4,586
5,097

730
4,749
5,023

10,334

10,502Trust expenditure before restructuring costs
Restructuring costs
Direct Trust expenditure

Ofcom regulatory fees
Ofcom MIA fees
Total Ofcom fees payable by Trust

4

461

–

5, 6

10,795

10,502

2010/11£000

2009/10
£000

3,187
4
3,191

3,521
(117)
3,404

13,986

13,906

7
8

Total Trust expenditure

1. The remuneration received by each Trustee is shown in the table opposite. The figures in the table above include the Trustees’ fees, taxable benefits and 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 the Trust’s consultation activities and stakeholder events.
4. The restructuring spend in 2010/11 resulted from a reorganisation of the Trust Unit staff aimed at better serving the Trust’s objectives while also increasing the efficiency of Trust Unit operations.
5. This represents direct external spend by the Trust. The Trust also made use of shared services provided by the BBC public services. These included property provision, finance, HR andinformation services.
6. Of direct Trust expenditure, £1,192,000 relates to spend on our activities in the four nations which primarily covers support for the four national Audience Councils and the 12 regional
Audience Councils (2009/10: £1,320,000).
7. Ofcom allocates its costs of television and radio regulation to the BBC and the other UK commercial and public service broadcasting channels. The Trust pays the BBC’s share of that allocation.
8. Ofcom Market Impact Assessment (MIA) fees cover Ofcom’s direct and indirect costs in undertaking the MIA for the public value tests undertaken in the period. No MIA work wasundertaken in 2009/10 or 2010/11. During 2009/10 Ofcom reviewed its costs and refunded the BBC for some past fees charged on MIA work.

Trust people

Trustees (number)
Trust Unit staff (EFT1,2)
1
2

Average foryear 2010/11

Average foryear 2009/10

11.6
68.6

12.0
68.1

EFT means equivalent full-time number.
Trust Unit staff are those employed directly by the Trust Unit. Of these, 18.3 arebased outside London providing support to the work the Trust undertakes in thefour nations, Wales, Scotland, Northern Ireland and England (2009/10: 18.7).

Within the Trust Unit staff population, 13% come from blackand minority ethnic backgrounds, 7% are disabled and 67%
are women (2009/10: 14%, 7% and 68% respectively).

Director and senior manager remuneration
Nicholas Kroll, the Director, BBC Trust, is the chief officer of
the Trust as specified in the Royal Charter. He is the principal
adviser to the Trust and chief executive of the Trust Unit.
His base pay for 2010/11 was £238,680 (2009/10: £238,680)
and the aggregate of his emoluments to 31 March 2011 was£281,004 (2009/10: £282,609). He is a member of the BBC
Pension Scheme.
The Trust Unit has ten senior managers in addition to the
Director, a reduction from 13 in 2009/10 as the Trust has
also sought to reduce its senior manager numbers and pay
bill in line with the rest of the BBC.
The Trust’s website provides an analysis of Trust Unit senior
manager headcount split into £5,000 salary bands.
Annual Report and Accounts 2010/11 1-37

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Governance continued/...

Reporting regulations
The BBC is exempt from the requirements of the Directors’
Remuneration Report Regulations 2002 and those of the
Financial Services Authority but, where relevant, we have
prepared this report as if those requirements apply. The
section on remuneration received by Trustees is audited.
On page 1-33 you will find information about the
Remuneration and Appointments Committee andon page 1-20 our strategy for the remuneration of
the BBC’s Executive Board.

Report of KPMG LLP to the BBC TrustIn accordance with the terms of our engagement letter dated
3 June 2008, we have examined the above expenditure statement(the ‘Trust expenditure statement’) for the year ended 31 March2011 which has been prepared, further to the requirements of
the BBC Royal Charter dated October 2006, by the Trustees
and is their sole responsibility. The Trust expenditure statement
has been prepared by the Trustees applying the recognition
and measurement requirements of International Financial
Reporting Standards.
Our responsibility, in accordance with the terms of ourengagement letter, is to form an independent opinion, on the basisof the work performed, and to report our opinion to the Trust.
Our examination was substantially less in scope than an audit.
Our report has been prepared for the Trust solely in connection
with the Royal Charter. Our report was designed to meet theagreed requirements of the Trust and particular features of ourengagement determined by the Trust’s needs at the time. Our
report should not therefore be regarded as suitable to be usedor relied on by any party wishing to acquire rights against us otherthan the Trust for any purpose or in any context. Any party otherthan the Trust who obtains access to our report (or any part ofit) 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 ourreport to any other party.
In our opinion, the expenditure as shown in the Trust statement
has been accurately extracted from the books and records of theTrust on the basis of the stated assumptions included within theNotes to the Trust expenditure statement.

Scott Cormack
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
23 June 2011

Statement of Trust responsibilities in respect of
the Annual Report and Accounts

The BBC’s Charter requires that an annual report and statementof accounts is prepared in two parts, Part One by the Trustand Part Two by the Executive Board. The Executive Board’s
responsibilities are detailed in the Governance section of Part
Two of this Annual Report. In summary, the Executive Board is
responsible for preparing the financial statements and statementsof compliance with applicable corporate governance codes
and remuneration regulations, and delivering these to the Trust
within Part Two of this Annual Report. The Executive Board has
prepared the accounts in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU. These financial
statements are audited by external auditors.
In preparing its associated corporate governance disclosures,the Executive Board has elected to comply with the Financial
Reporting Council’s June 2008 Combined Code, and, whereapplicable, the Financial Services 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 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 they are eachaware, there is no relevant audit information of which the BBC’s
auditors are unaware; and each Trustee has taken all the steps thatthey ought to have taken as a Trustee to make themselves awareof any relevant audit information and to establish that the BBC’s
auditors are aware of that information.
This statement was approved by the Trust on 23 June 2011.

Lord Patten of Barnes
Chairman
23 June 2011

1-38 Annual Report and Accounts 2010/11

TAKING PARTThe BBC Trust’s duty is to represent all licence fee payers. To doso we must engage with all audiences to understand their views
and thus take them into account in making our decisions. We do
this through our national Audience Councils as well as engaging
directly through public consultations and many other mechanisms.
Here we look at how we’ve worked with audiences over the year,
give an overview of the work of the Audience Councils, and lookahead to work planned for 2011/12.
Local author Lynn Shepherd met BBC Radio Oxford’s Joel Hammer in February. The Trust is reviewing
BBC Local Radio in 2011/12.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Audience engagement
The Trust exists to get the best out of the BBC for licence fee payers.
To do so, we must hear what they think and understand their views
and priorities. This year, discussions with audiences focused on the
BBC’s strategic direction, and on BBC Radios 3, 4 and 7 and thenational radio stations in Northern Ireland, Scotland and Wales
which we were reviewing.

The licence fee places a duty on the BBC to serve allaudiences. To guide the BBC in doing this, we carry out arange of audience research and public consultation to provide
us with insight into audiences’ views and attitudes.
Inviting opinions
Our Audience Councils advise us on perspectives from thenations and regions of the UK.
We also ensure that any members of the public can havetheir say about the BBC by running public consultations linked
to our major pieces of work. For example, we consult whenreviewing a BBC service or when developing BBC policies
such as Editorial Guidelines. Licence fee payers can take partin a variety of ways including online consultation forms andconsultation leaflets, by post or by email.
This year an unprecedented number of people – over 113,000– contacted us as part of our public consultations. These
responses have helped shape the decisions we’ve made during
the year. For example, over 85,000 people told us why they
were concerned about the potential closure of BBC 6Music.
We considered these views alongside other evidence and, as aresult, rejected the Executive’s proposals to close the station.
Getting a wider range of views
We need to make sure we represent the views of all
audiences, not just those who choose to give us their opinions
and take part in our consultations. So we commission researchamongst a wider range of licence fee payers. This includes
nationally representative surveys to enable us to understand

The BBC 6Music signing wall at last year’s Glastonbury festival.
1-40 Annual Report and Accounts 2010/11

the strength of views across the whole UK population as well
as allowing us to appreciate any differences between diverse
groups of people.
This year we again tracked audience perceptions of the BBC’sdelivery of its public purposes through a survey of over 2,500
adults. To inform our review of the BBC’s radio stations in the
devolved nations, we commissioned surveys amongst listeners,
including bilingual surveys in Wales and Scotland for BBC Radio
Cymru and BBC Radio nan Gàidheal respectively.
We also use qualitative research techniques such as oneto-one interviews, focus groups or workshops to get morein-depth feedback on particular issues. This year, to informour decision on the future strategy of the BBC, we ran focus
groups across the UK.
To complement this research and consultation we also talkdirectly to audiences of particular channels or stations. This
year, as part of our review of BBC Radio 3, BBC Radio 4
and BBC Radio 7, we talked to audiences attending studiorecordings to find out what they thought about the stations.
We were particularly keen to explore the broader cultural
impact of BBC Radio 3 and the role of drama on BBC Radio 4
during these reviews, so we ran discussion groups involving
industry bodies, producers, writers and artists to give us abetter understanding of the views of these interested parties.

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Audience Councils
Audience Councils in England, Scotland, Wales and Northern Ireland,
chaired by the Trustee for that nation, ensure that the views of licencefee payers across the UK play a central role in the work of the Trustand the future of the BBC. This year, Councils welcomed the BBC’s
focus on distinctiveness in its new strategy.

Councils are recruited to reflect the diversity of the UK, andmembers are volunteers. They listen to licence fee payers’
views, and advise the Trust on matters of topical concern.
They are consulted on proposals for new services and on
how well the BBC is delivering its public purposes. Each year
they suggest ways of improving BBC services, based on what
audiences have told them.
Listening to audiences
Councils held more than 70 meetings with licence fee payers
across the UK, from Kent to the Isle of Lewis. Members heard
the views of specific groups such as students, older people andparents of younger children, as well as wider audience viewson the BBC’s strategy and the performance of services.
Performance against 2010/11 audience priorities
Last year Councils noted that audiences wanted to see
more fresh ideas, and members welcomed the focus on
distinctiveness in the BBC’s new strategy. They also welcomed
its commitment to improving access to BBC services. Councils
perceived improvements in arts coverage, in political reportingon English Local Radio, and in network television production
from the nations. Following advice from Councils, the Trust
asked the Executive to undertake research on portrayal
on network services of the diverse communities across thenations and regions. The outcomes are now being used to
inform programme commissioning.
Advising the Trust
The Councils advised the Trust on audiences’ views of key
items of business such as the strategy review and service
reviews (BBC television; BBC Radios 3, 4 and 7; BBC radioin Scotland, Wales and Northern Ireland; BBC ALBA).
Audience Council England stressed the value placed byaudiences on local and regional services and seeing theircommunities reflected. Councils warned that the lack of ‘opt
out’ programming on BBC One HD across the UK could
affect delivery of the public purposes.
Delivering the public purposes
Audience Council England reported widespread appreciationof the BBC, with an appetite for more European news andmore comparisons of differences in public policy between
the nations. Audience Council Scotland advised that abetter balance of Scottish news and news on public policy
developments in England would improve delivery of the
purposes. Audience Council Wales said that, in seeking
efficiency savings, the BBC should not reduce further its
provision of English language television. Audience Council
Northern Ireland said audiences wanted better explanationof public policy issues, especially if different from elsewherein the UK.
Priorities for 2011/12
Councils raised concerns about audiences’ access to services,
particularly on some digital platforms. They said the BBC
should play a stronger role in facilitating public debate, and thatinternational reporting should have greater breadth and depth.
The Trust was asked to continue to challenge the Executive toenhance portrayal of different communities and identities.
In light of financial constraints following the licence fee
settlement, Councils want to ensure that value for money ispursued fairly for all audiences. Councils noted that audienceswish to see consistent standards of quality across all services,and they raised concerns about how well the needs of older
audiences were being met.
Further details of the Councils’ advice can be found in theCouncils’ own annual reviews.

The four national Audience Councils ensure we represent the views and opinionsof licence fee payers across the whole UK.
Annual Report and Accounts 2010/11 1-41

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

The Trust’s plans for 2011/12
Our focus in 2011/12 will be to ensure the BBC delivers the Putting
Quality First strategy against a demanding new licence fee settlement.
With fewer resources available, this will require difficult choices inthe year ahead. We remain committed to ensuring licence fee payers
continue to get high quality and distinctive services from the BBC.
We will continue to consult widely with audiences and stakeholders,
including our Audience Councils, to help us get this right. This tablesummarises the main work planned for this year. Full details are available
on our website.
Implementing the BBC’s strategy
We will monitor and measureprogress to ensure the BBC,regardless of financial pressures,is becoming more distinctive, more
efficient, more transparent andmore sensitive to its potential
market impact.
This year the BBC should• increase the distinctiveness andquality of its output• improve the value for money it
provides to licence fee payers• set new standards of openness
and transparency• do more to serve all audiences
We will continue to track audience
perceptions and other quality
measures for signs of improvement.

1-42 Annual Report and Accounts 2010/11

Implementing the licencefee settlement
We will assess the Executive’s
proposals for delivering the newlicence fee settlement against theyardstick of the four priorities set
out in the Putting Quality First strategy.
• we have asked the Executive toundertake a fundamental review
of its cost-base and shape ofservices and activities and propose
cost-based savings• we intend to appoint independent
advisers to test the proposals andensure their robustness• we will continue to consult widelywith the public to test the likely
impact of the proposals• we aim to finalise our conclusions
by the end of 2011

Reviews
Service reviews
We review each BBC service atleast once every five years against its
service licence to assess performance.
In 2011/12 the services up for
review are:
• BBC Radio 5 Live• BBC Radio 5 Live Sports Extra• BBC News channel• BBC Parliament• BBC Local Radio in England• BBC Asian Network
Value for money reviews
We have asked the National Audit
Office to undertake the following
value for money studies:• continuous improvement
programme• management of overheads

Overview

BBC performance

Trust performance

Inside the Trust

Taking part

Contact the Trust
The Trust is keen to hear your views during consultations and service
reviews. You may also contact the Trust to comment on matters ofTrust business, to appeal against a complaint finding by the Executive,
or to complain about the Trust or the Trust Unit. You can contact
the Trust by post, email or telephone.

BBC Trust
1st Floor
180 Great Portland Street
London W1W 5QZ
Email: trust.enquiries@bbc.co.uk
Telephone: BBC Information Line on 03700 103 1001 or text
phone on 03700 100 2122.
Lines are open from Monday to Friday, between 9.30am
and 5.30pm.
Many issues are best dealt with by contacting the relevant
part of the BBC directly, rather than the Trust. These include
programme complaints, queries about paying your TV licence,questions about how to get tickets for BBC shows or how towork for the BBC, and suggestions for programme ideas. For
further information on how to contact the BBC over thesequestions see www.bbc.co.uk/aboutthebbc.
Complaints
The Trust ensures that the BBC has in place an effective, fairand clear framework to respond to complaints. You can findfull details about the complaints process on the BBC website
at www.bbc.co.uk/complaints.
BBC Audience Councils
The Councils advise the Trust how well the BBC is serving
licence fee payers across the UK. The Councils also haveformal rights to be consulted on issues such as service
licence reviews.
To contact the Audience Councils:
Audience Council England
Email: audiencecouncil.england@bbc.co.uk
Or write to:
BBC Audience Council England
The Mailbox
Birmingham B11RF

1
2

Audience Council Scotland
Email: acs@bbc.co.uk
Or write to:
BBC Audience Council Scotland
Zone G.11
40 Pacific Quay
Glasgow G51 1DA
Audience Council Wales
Email: acw@bbc.co.uk
Or write to:
BBC Audience Council Wales
Broadcasting House
Llandaff
Cardiff CF5 2YQ
Audience Council Northern Ireland
Email: audiencecouncil.ni@bbc.co.uk
Or write to:
BBC Audience Council Northern Ireland
BBC Broadcasting House
Room G08
Ormeau Avenue
Belfast BT2 8HQ
Photography credits
Photographs used are © BBC or used under the termsof the PACT agreement, except for page 1-3 Tosca,© Metropolitan Opera. Permission from the copyright holders
must be sought before any photographs are reproduced.
The text of this document may be reproduced free ofcharge in any format or medium providing that it is doneso accurately and not in a misleading context. It must be
accredited to the BBC.

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Annual Report and Accounts 2010/11 1-43

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