BBC 'Multiplying its Value'

[Teddy Bear]

Perhaps there is something far more profound being expressed in this article than I'm seeing. Or else it's the basis for business and just about every person who ever went out to work understood completely.

Here's the way the BBC put it:
"The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied'”

The report said: "The effect of initial BBC spending is 'multiplied' as it ripples through the economy from region to region and sector to sector (and to the employees of those sectors). This is known as the 'multiplier effect'."

The BBC's chief economic and policy adviser Najma Rajah explained: "The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied' as that pound spent by the BBC creates value elsewhere in the economy.

"So, for example, if the BBC were to buy a camera from a supplier in Manchester, the camera supplier would receive some money in return for the camera.

"The camera company would then use the income generated from the sale of the camera to pay their suppliers for the components that went into the camera and to also pay their employees and so on."



Now that is supposed to explain this claim The total expenditure over the two-year period came to £4.3bn, which led to a gross value-added (GVA) boost to the economy of £8.3bn.

Now I have to wonder what the GVA would be if all the householders spent £145 per year on something else besides the licence fee?

I also have to wonder that if the BBC didn't waste so much of their resources the way they do, how much they could really generate?

It also occurs to me, that if the BBC really understand the principles of the economics involved here, why are they so negative towards big business?

BBC 'boosts UK economy by £8bn'

The BBC generated more than £8bn for the UK economy in 2011-12, almost twice its licence fee spend.

A new report published by the corporation showed licence money spending had a positive knock-on effect for regional economies.

The total expenditure over the two-year period came to £4.3bn, which led to a gross value-added (GVA) boost to the economy of £8.3bn.

"The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied'”

The report said: "The effect of initial BBC spending is 'multiplied' as it ripples through the economy from region to region and sector to sector (and to the employees of those sectors). This is known as the 'multiplier effect'."

The BBC's chief economic and policy adviser Najma Rajah explained: "The basic premise is that when the BBC spends a pound, the impact of that pound is 'multiplied' as that pound spent by the BBC creates value elsewhere in the economy.

"So, for example, if the BBC were to buy a camera from a supplier in Manchester, the camera supplier would receive some money in return for the camera.

"The camera company would then use the income generated from the sale of the camera to pay their suppliers for the components that went into the camera and to also pay their employees and so on."

Rajah added: "A really good example of how this multiplier effect works is when the BBC commissions a programme that is made by an independent television production.

"The programme might be filmed in Scotland using local runners, electricians, make-up artists etc. who are paid and then will spend their wages in Scotland to the benefit of the Scottish economy."

The report revealed significant growth in the north of England following the opening of the new BBC North headquarters in Salford Quays, with GVA growing 19.7% to £391m.

But in the Midlands, it fell 21.7% to £199m, while the south was down 18.8% to £699m and Wales dropped 6.2% to £276m.

London saw the biggest expenditure of £2.98bn - nearly three times as much as the rest of the UK combined - which in turn generated £5.65bn GVA.

John Tate, the BBC's director of policy and strategy, used the findings of the report to call on Ofcom to reverse its plans for a spectrum tax on broadcasters next year.

In a blog post he wrote: "The wider benefit of the licence fee provides an extra reason for Ofcom to think again before it implements a spectrum tax next year: a levy on the spectrum broadcasters use to transmit their programmes.

"As well as hitting licence fee payers, such a tax would remove much-needed cash from the UK's creative sector."

[Teddy Bear]

Somebody at The Telegraph has also picked up on this BBC claim, and examines it a little more closely.

BBC: we make £2 for the economy for every £1 of licence fee
The BBC makes £2 for the British economy for every £1 it gets from licence fee payers, the broadcaster has claimed.

By Rowena Mason
A new study by the BBC argues it generates £8.3 billion a year for the country in “positive” benefits – around twice the amount it spends on television programming, radio stations and the website.

Some of this boost to the economy comes from sales of BBC programmes around the world. It makes income from selling successful series such as Top Gear and Sherlock Holmes to other countries to the value of around £1.3 billion a year.

However, almost £7 billion of its “economic impact” is calculated by seeing how the money it spends on wages and programming “ripples through” to private businesses. The report says there is a “multiplier effect” which means the wider British economy profits from its vast spending.

It concludes that value-for-money has improved overall at the BBC, even though total spending has risen by more than £100 million in the last year.
Licence fee payers are getting less value for money from their spending on both television programming and the website, but more from spending on radio.

The BBC report said the overall calculations are worked out using a business model devised by Deloitte, the accountancy firm.

However, Rob Wilson, a Conservative MP for Reading East, said such calculations can be used to justify big budgets in the public sector.
“Many public sector organisations and quangos make very similar claims about their economic impact based on multiplier effects, spending power and numbers they employ," he said.

"Despite the license fee settlement the BBC continues to be an organisation that contains plenty of inefficiency and waste. The BBC must not lose sight of the fact that the money it spends is not its own but the license fee payers'. The truth is still that the vast bulk of wealth in the UK economy is produced by the private sector.”

John Tate, director of policy and strategy at the BBC, used his report’s findings to argue in favour of the size of the broadcaster.
“While some argue that the BBC’s scale crowds out private sector activity, in fact scale can be beneficial,” he wrote on his blog.

“The BBC’s purchasing power increases demand within certain sectors, allowing firms to expand and benefit from economies of scale themselves."
The BBC has come under pressure to rein back spending during the economic downturn, amid criticism of its “bloated” spending.

It is under investigation by the National Audit Office for giving around 200 senior managers pay-offs of more than £100,000 in the last three years. One huge sum was given toGeorge Entwistle, the director general who resigned over a botched Newsnight report, with a £450,000 pay-off late last year.

The corporation has also spent £6 million in six months putting the finishing touches on its new £1 billion headquarters.