MUMBAI: The BBC Trust has published the BBC's Annual Report and Accounts for 2006/2007 and highlighted demands from the UK public for more innovation as a priority for the BBC to address.

In line with the new Charter requirements, this year's Annual Report is in two parts with the Trust's commentary on the BBC's performance separate from the detailed analysis and financial accounts prepared by the BBC Executive Board.

In advance of implementing in full the new governance frameworks of Purpose Remits and Service Licences, the Trust limits its assessment this year to provisional conclusions, but these are based on evidence gathered during the Trust's first six months.

This evidence includes the findings of its first major audience research project on BBC priorities and performance, and responses from the public and the commercial sector to consultations about the draft Purpose Remits and the new Service Licences. All of these are published by the Trust today. The public ranks education and news as its top two BBC priorities and awards its highest performance scores to both genres. Entertaining programmes are the public's third priority and there is clear recognition for the wide range of programmes provided.

But both audience research and the majority of respondents to the Trust's Purpose Remit consultation highlighted the provision of innovative and distinctive content as the area they wished to see the greatest improvement from the BBC: 72 per cent of audiences rated innovation as important, but only 51 per cent agreed that the BBC is performing well in this area.

BBC chairman Sir Michael Lyons said, "The Trust works for the public which owns and pays for the BBC. We listen to a wide range of voices, seeking to understand all opinions and expectations to inform our judgements.

"The Trust's assessment of the BBC this year is necessarily provisional and incomplete, but some messages are already coming through strongly: the public trusts the BBC and values much of what it produces, but audiences want the BBC to be more innovative. Whilst public approval of the BBC remains stable, audiences have also told us that fresh and new programme ideas must be a high priority and more effort is needed.

"This message, alongside a desire for high quality – which need not necessarily mean high cost – is consistent across all groups who have participated in our consultations and it is one of the key factors we will consider when deciding the BBC's strategic priorities in the autumn.

"The BBC's unique system of funding provides the necessary security for creative risk-taking that few other broadcasters can afford. Essential to the BBC's success are the desire to be distinctive, bold ambition for trying new things, respect always for the public's money, and confidence amongst the creative teams. As Trustees we prize the professionalism and creativity of BBC staff and fully recognise that, in truly seeking to meet these aims, occasional failures will inevitably feature alongside great successes.

"One of our early priorities has been to focus on impartiality and we have published a number of studies. Accuracy and independence are essential to public confidence in the BBC and we will continue to promote active debate both within and without the corporation.

"Our objective as the BBC's sovereign body is to ensure that the BBC adds significantly to the creative and economic vigour of the UK. This requires a robust system of governance, a clear strategic framework with a focus on quality and value for money for all UK communities, and recognition that the BBC must be careful not to use its considerable economic power in ways that might stifle enterprise or innovation from elsewhere. The Trust looks forward to meeting this objective in the years ahead."

In the Annual Report, the Trust notes that the BBC is becoming more efficient and highlights the £228 million in savings achieved in the last two years as part of the three year plan. The efficiency drive continues, with a further target of £127 million for the current financial year (2007/2008) and a commitment by the Trust to set future efficiency targets for the BBC in discussion with the National Audit Office.

There is greater transparency of spend by BBC service in this year's document, with each service's proportion of spend on items such as rights and news gathering costs identified. Information on distribution and infrastructure costs such as marketing, on-air trails and market research is also allocated to each service. The report includes a new metric which helps inform assessments of value-for-money - Cost per User Hour (CPUH) which combines service spend and consumption of a service. BBC Parliament has the highest CPUH at 24 pence per user hour, and Radio 2 the lowest at 0.4 pence per user hour, and BBC One is 7 pence.

The Trust has also published its forward workplan for the remainder of 2007/2008. In addition to deciding the BBC's six year strategic plan and completing implementation of the new governance framework which will ensure the Trust is equipped to hold management to account for meeting the public's priorities, the workplan includes an external study into the BBC's major role in the talent market, and the Trust's first full service review, which will be on bbc.co.uk.

BBC DG Mark Thompson said, "This has been a momentous year. We secured a strong 10-year Charter and Agreement, a secure, but challenging, licence fee settlement, created a new Executive Board with five non-executive directors, and began working with the new BBC Trust. It has also been a year of continuing change to ensure the BBC is in strong creative shape to provide real value to audiences over the next 10 years.

"We launched Creative Future outlining our editorial blueprint for the on-demand world and continued to try and make the BBC a simpler, and more open organisation. Saturday nights on BBC One were completely revitalised thanks to Dr Who, Strictly Come Dancing and How Do You Solve A Problem Like Maria. Drama had a real injection of energy, Planet Earth continued to inspire awe, and factual content captured broad new audiences through programmes like Springwatch, The Apprentice and Dragon's Den. News 24 was put at the heart of our journalism and Panorama moved back to primetime on Monday nights. BBC Radio continued to grow while strengthening its reputation for excellence through initiatives like the Electric Proms and our online and interactive sites broke one record after another.

"There were bumps along the way. Editorial mistakes around phone lines, while unintentional, went to the heart of our contract of trust with audiences and we are taking steps to minimise the chance of it happening again."