Netflix could drive up BBC spending as the broadcaster attempts to tackle its pay bill, a report has found.
Drama is particularly under threat from the streaming giant and sports pundits could earn up to seven times as much with another broadcaster, the report claims.
The BBC has worked to cut its wage bill in the wake of controversy over gender pay and large sums paid to on-air figures such as Chris Evans and Gary Lineker, slashing spending on stars from £194 million to £148 million.
A report published today by the National Audit Office (NAO) has raised concerns that wage bill savings could be threatened by the vast budget of Netflix.
It claims the streaming service has had an “inflationary” impact on the skills market for broadcasting, and could lure workers away from the BBC, or force the broadcaster to pay more for talent.
Senior managers have been dropped by the BBC, and the gender pay gap has been closed following controversy surrounding former China editor Carrie Gracie.
The report has claimed that 10 unnamed on-air talents have agreed to take pay cuts as the BBC seeks to reduce spending. Roles have also been simplified from a situation where there were 5,000 different job titles.
Savings made by the corporation could be threatened by the budget of Netflix, reported at more then £10 billion – the BBC has total revenues at around half this figure.
The report states: “Inflationary market pressures created by new market entrants, such as Netflix, particularly in areas such as drama, may prevent the BBC from maintaining this trend.
“Freelancers, particularly the most well-known, are likely to earn significantly more working on commercial channels than the BBC, especially for television.
“Agents told us that the very best sports pundits working for commercial channels could earn four to seven times the amount the BBC can pay for television, depending on the sport and rights package, and presenters 15–25% more for radio, depending on the artist and project.”
According to the report, BBC staff costs have risen each year since 2014-15, but the broadcaster and its commercial arm have made progress in tackling spending, and the number and cost of managers has been brought down.
Since 2017, the BBC has been scrutinised over the pay packets of top talent earning more than £150,000 a year
Following the pay revelations of Gracie, the broadcaster came under parliamentary and public scrutiny over gender pay. Concerns were also raised over the tax arrears suffered by staff employed on a Personal Service Company basis.
In 2014 the BBC had 5,000 job titles between just 20,000 workers, and a discretionary system of pay which allowed managers to decide salaries. Pay was not linked to equivalent roles outside the BBC.
The BBC has moved to close the gender pay gap from 9.4% to 7.6%, reduced senior managers from 382 to 245, and slashed the number of job roles in an overall simplification of its pay practices.
However, unions speaking to the NAO have raised concerns that some managers are not on board with all reforms, and there needs to be central oversight to ensure value for money for licence fee payers.
MP Meg Hillier, Chairwoman of the Committee of Public Accounts, said: “It is only right that the BBC gets its house in order to ensure its employees are paid fairly and policies are applied consistently, especially given the mess it made of clarifying the employment status for tax purposes of freelancers.
“The BBC has made significant strides forward, including redefining roles.
“However, the BBC must not fall at the final hurdle.”
According to the audit, as of last year the BBC had 21,583 full-time equivalent staff – 18,210 within its PSB (Public Service Broadcasting) functions and a further 3,373 in its commercial arm. It employs around 60,000 freelancers each year.
Figures are drawn from data contained in the NAO report into the BBC pay bill.
A BBC spokesperson said: “We’re pleased the NAO recognises the significant reforms we’ve made to our pay practices and policies to improve consistency and fairness, and which put the BBC well ahead of other organisations with regards to pay transparency.
“The report also acknowledges that we have exercised restraint over senior manager pay since 2009, that the BBC manages to attract executives and senior leaders at a discount to the market rate, and we’ve improved strategic planning and control of on-air pay.
“These reforms will help us attract and retain the very best talent to ensure we’re continuing to deliver world class services, whilst balancing our responsibilities to licence fee payers.”