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Warning as BBC saves £1.1bn a year

The BBC's efficiency drive is saving £1.1 billion a year compared to six years ago - but it has warned that further cuts could affect programme content.

A new report being published today has also identified that the corporation's annual "talent" spend has been reduced by £35 million from the £229 million five years ago.

The report into savings was ordered earlier this year by director-general Tony Hall, to look at how the licence fee is spent as the BBC sought to "improve value for money" for this financial year.

It found that by 2016/17, the savings will amount to £1.5 billion each year. It also suggested that its savings are outstripping those of central government, whose budgets have been undergoing a major belt-tightening under the coalition to balance the economy.

Anne Bulford, the BBC's managing director for finance and operations, said today: "It's vital that as much of the licence fee as possible goes straight to the programmes and services audiences love, and this report shows we've made great strides in becoming more efficient. We're doing far more for less.

"The BBC remains passionate about delivering the great public service TV, radio and online content that our audiences deserve, but after a long period of delivering annual savings the challenge to avoid having to cut content is very real."

The report says that since the licence fee was frozen in 2010, savings have mostly been used to meet inflationary costs and to pay roughly £500 million on obligations such as funding broadband roll-out, local TV and S4C, as well as its take-over of the World Service from the Foreign and Commonwealth Office.

Lord Hall has said the BBC "will have a fundamental look at every pound we spend". Changes to the way programmes are commissioned are also on the cards.

James Purnell, the corporation's director of strategy and digital, sidestepped questions about whether BBC4 could be axed as part of the efficiency drive.

He told BBC Radio 4's Today programme: "We are not announcing anything about BBC4 today."

Pressed on the issue, he added: "We don't want to close BBC4. What we are doing is making efficiency savings and what we have published today is a document that shows that over the last few years we have saved about £1.1 billion of our costs. By the end of the charter period in two years' time, that will be £1.5 billion - that's nearly half of the cost that we control at the BBC, so we are saving as much money as we possibly can."

Asked if closing the channel was possible in the future, he said: " We have already announced that we are planning to close BBC3, as the Trust allows us to do so. We would not be doing that now if it weren't for the savings we are having to make and they are very significant savings."

He said that commissioners would be given greater freedom to decide whether to take on programmes made in-house or by independent producers.

"We are not saying we want more of our programmes being made by independents, we are saying that we want schedulers and channel controllers to have free choice."

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