Does the BBC provide value for money? It thinks it does and got Deloittes to provide an “impartial” report that proves this. However a Biased BBC reader who is a professional accountant take issue with what is claimed….
THE ECONOMIC IMPACTOF THE BBC
First I must emphasise that I have only read the executive summary, and brieflyat that, so my comments below may be flawed. I can not afford to spendmuch time reading this.
Good to see the Chief Operating Officer mention in her forward “theprivilege of licence fee funding” which allows the BBC to project itsinfluence widely. Deloitte explain in their report that they have taken information andexplanations from the BBC at face value, with no corroborative work or even areview of its reasonableness.
METHODOLOGY
Gross Value Added (GVA) is total value generated for the UK economy.
Direct Value Added (DVA) is the BBC’s wage bill plus any surplus.
Net Value Added (NVA) is the additional value added to the UK economy becauseof the licence fee funding method rather than the alternative of advertising.
Points about Value Added
A company’s value added is the total amount of value added by all a company’sactivities. It is:
sales – payments to suppliers
It’s use is dubious for an organisation which does not rely on willingcustomers with competitive alternatives to provide its income.
Traditionally it has been used by companies to show that it’s employees receivethe bulk of its wealth creation.
If the BBC wishes to test their Value Added in the marketplace, they shouldchange to a subscription only service.
Spillover effects are the positive effects of BBC spending on otherorganisations.
But we need to remember that anyone who is allowed to take other peoples moneyby force will have a positive value added and spillover effect by simplyspending this money. However the trade off is that those persons deprivedof their own money are denied the opportunity to spend and generate value addedand positive feedback.
The report states that a higher multiple is used to calculate the GVA of BBCspending than to calculate the GVA of alternative consumer spending. Inplain English it is simply assumed that the BBC generates more value addedwhen spending other people’s money than those people would generate by spendingit themselves. Possibly there is an attempt to justify this somewhere inthe full report. But in my experience, those who work hardest for theirmoney spend it more wisely than those simply presented with it, because theyvalue it more.
CONCLUSIONS?
The BBC seems to have chosen the assumptions underlying Deloitte’s report andDeloitte have not assessed their validity. The assumptions appear to havebeen chosen in order to achieve the desired results. Is it just me, ordoes this remind you of mainstream climate change models? Again, I am not sure of the validity of a value added analysis for anorganisation whose customers are compelled by force to pay up. Words such as “estimated” and “approximation” seem to cropup regularly. Not sure whether the word “arbitrary” may be moreappropriate?
