THE BBC must explain how it will “represent all audiences” while making cuts to its Nations and Regions budget, a watchdog says.

The National Audit Office (NAO) says this is one of the biggest priorities for the broadcaster as it prepares to make £43 million worth of cuts to its operations outwith London.

In March it paused plans for £800m cuts to both the Nations and Regions division and its news arm to ensure it could provide all necessary coverage during the initial lockdown.

Head count went up in Scotland – which comes under the Nations and Regions umbrella – with the launch of the dedicated BBC Scotland channel in 2019, taking the corporation’s headcount here to around 1100 in Aberdeen, Edinburgh, Glasgow and Inverness. But last June it emerged that around 60 Scottish jobs would go within a year, with those cuts blamed on “ongoing financial challenges compounded by the effects of Covid-19”.

Today’s NAO report says “falling audience share poses a financial risk” to the future of the BBC, creating “some uncertainty” over its future.

The watchdog says the BBC has been “slow to change” on issues such as the fall in viewing by younger audiences, with “still no central strategy for tackling” the problem.

The BBC’s licence fee income fell by £310m between 2017-18 and 2019-20 to £3.52 billion.

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A 450,000 fall in the number of non-over-75 households buying TV licences was put down to changes in audience viewing habits and more of these households qualifying for a free over-75 licence.

The broadcaster began negotiations with the UK Government in November last year about the future funding it will receive from the licence fee.

The NAO says the BBC should produce a long-term financial plan to set out the next stage of its savings programme, and how it will fund its new priorities.

Part of this must focus on “setting out a plan to fulfil its requirement to represent all audiences by reaching out to underserved audiences while also making significant changes to its operations in the UK’s nations and regions”, the report says.

Gareth Davies, the head of the NAO, said: “The BBC faces significant financial challenges as it embarks upon licence fee negotiations and its mid-term charter review. It has made significant cost savings and has identified the need for more with licence fee income under pressure. As decisions about the licence fee are made, the BBC needs to develop a clear financial plan for the future, setting out where it will invest and how it will continue to make savings.

“Without such a plan, it will be difficult for the BBC to effectively implement its new strategic priorities.”

The amount of time spent by adults watching broadcast BBC TV is found to have dropped by 30% from 80 minutes a day on average in 2010 to 56 minutes in 2019. BBC radio audience time has also declined among adults, falling by 15% between 2013-14 and 2019-20. At the same time, national commercial radio stations have maintained or increased their audience time.

A BBC spokeswoman said: “We have made significant savings and increased efficiencies, while maintaining our spending on content, and continuing to be the UK’s most-used media organisation. We have set out plans for urgent reforms focused on providing great value for all audiences and we will set out further detail on this in the coming months.

“The report also stresses the importance of stable funding for the future, which we welcome as we begin negotiations with Government over the licence fee.”