Front-loading frenzy

As well as taking BBC senior management through "turbulence training", the Thom(p)son Twins are adding to the eddying airpockets by looking for some serious "front-loading" in the savings that will have to be made over the next six years.

Turbulence for pilots is caused by "the erratic movement of air masses in the absence of any visual cues, such as clouds, caused when bodies of air moving at widely different speeds meet".

It's the absence of visual cues that's getting to the senior managers - how much financial trouble is the BBC really in ?   The BBC and the Government have talked about a "16% cut in real terms over six years".  However, BBC Director of Global, Peter Horrocks told a meeting in parliament this week that, for World Service, the deal means a 23% reduction in income over the next three years.

What the licence fee deal imposed was not necessarily a cut, but a fixed price per licence for the next six years. As our population grows, income might actually increase slightly. The BBC is going out to tender for a new contract to collect the dosh, and will be looking to reduce evasion even further, again increasing income.

Income has to be balanced against expenditure, and the big factor in BBC spend is wages - currently effectively frozen for everyone above £37k pa.  Talent and other suppliers are on the back foot.  The remaining large element of the equation is debt; the BBC has a borrowing limit of £200m (this is why its new buildings are funded by PFI-variants), and is supposed to balance the books at the end of every licence fee settlement.  

Most departmental heads have got used to targets of 3-5% "efficiencies" every year.  Looking, wrongly, at the "16%" reduction over six years, they'll have thought things might ease up in years ahead, at around 3% p.a.  But, no, the rumour is of cuts above 6% in the first couple of years, easing back at the end.  This is partially a disguised claw-back of debt - but it's also supposed to drive the managers into "radical options", of which there are very few left. CFO Zarin Patel and her team will soon be setting the cash limits by division for 2011/12; you can expecting squealing from managers and staff alike in the New Year.