01/11/2011 11:20 GMT | Updated 01/01/2012 05:12 GMT

BBC Cuts Were Not 'Sufficiently Stretching' Says Report

A BBC efficiency drive that saved hundred of millions of pounds could potentially have saved even more money, according to a National Audit Office report.

The findings show the corporation cut its annual expenditure by £396 million by the end of 2010-11 as part of its Continuous Improvement Programme and is expected to save another £164 million by 2013.

It was set a target to save 3% a year for five years by the BBC Trust following the 2007 licence fee settlement, but the report states: "It is hard to say whether the target set by the Trust was sufficiently stretching".

And the head of the NAO warned the BBC it would have to "strengthen its approach" if it is to hit the new savings targets imposed by the most recent licence fee settlement.

Last month, the BBC unveiled a blueprint which includes selling off buildings, showing more repeats and shedding around 2,000 jobs by 2016 as part of its Delivering Quality First (DQF) programme that includes savings of £670 million a year by 2016/17.

Head of the National Audit Office Amyas Morse said: "The BBC's efficiency programme is on track while its overall performance measured in terms of audience has not declined. The efficiency programme is therefore proving a clear success in the terms set for it. However, it is hard to say whether the target set was stretching enough and the BBC cannot say whether all the savings made amount to real gains in efficiency.

"To manage within its 2010 licence fee settlement, the BBC must strengthen its approach to targeting savings and create a culture of continually challenging how services are delivered."

The report found the BBC had "broadly maintaining its overall level of performance" while making the savings, but criticised three areas within the corporation for being behind schedule including BBC North - the BBC's controversial move of thousands of jobs to Salford's Media City.

BBC trustee Anthony Fry said: "It is clear from this report that under the Trust's stewardship the BBC has made great strides in continuing to improve its efficiency and this should be commended.

"When targets are achieved, of course people can question whether they are too low; just as, when savings fall short, it is rarely suggested that targets were too high. What is most important is that the lessons learned to date, along with the NAO's suggestions for further improvement, will be invaluable as we implement the challenging programme of efficiencies proposed as part of the Delivering Quality First process."