BBC website '£36m over budget'
Thursday 29 May 2008
The BBC went almost £36m over the intended budget for bbc.co.uk in the past year, it was disclosed today.
The BBC Trust published its conclusions today after completing its extensive review of the website.
The Trust's work revealed that in 2007/08 the actual spend on bbc.co.uk was £110m, 48 per cent higher than the Service Licence baseline budget.
The baseline budget for 2007/08 was £74.2m, with an upper limit of permitted spend (baseline plus 10 per cent) of £81.6m.
Most of this increase was not overspend, but the misallocation of £24.9m in overheads and costs to other budgets within the BBC, representing poor financial accountability, the Trust found.
Liberal Democrat Shadow Culture, Media and Sport Secretary, Don Foster said: "This report is a damning indictment of the management of bbc.co.uk.
"A cocktail of overspending and budget mismanagement has led to this huge increase.
"Future investment will only take place if accountability is increased.
"Not only has the BBC lost track of a phenomenal sum of money, but this mismanagement will now directly impact on the future development of this popular service."
It is the first service review undertaken by the Trust as part of its ongoing programme of reviews of all BBC services under the terms of the new Charter and Agreement.
The main findings were that bbc.co.uk was an excellent service, highly valued by users, which made a strong contribution to delivering the BBC's public purposes.
The website is one of the UK's leading online media destinations and by late 2007, bbc.co.uk had an average of 16.5 million users a month, out of the total of 33 million internet users in the UK.
As the website develops and responds to the fast-changing online market and the demands of users, it is essential that the service remains distinctive and the boundaries in which it operates are strong enough to make this a reality, the Trust found.
It concluded that bbc.co.uk should continue to develop to meet changing customer needs.
But the Trust will not approve new investments without further scrutiny and until confident that improved management controls are in place to ensure better financial accountability and editorial and managerial oversight.
The Trust's report said that: "Management control of bbc.co.uk is not sufficiently strong at present.
"Our review has found that financial oversight has not been sufficiently effective, such that the true level of spending on the service has only become known as a result of this review and, at £110m, is much higher than the upper level of spend permitted in its Service Licence of £81.6m.
"We believe that this is partly due to the devolved management structure for online activities in the BBC.
"This lack of financial accountability is not acceptable, although we acknowledge that this is primarily a result of misallocation between cost centres."
Chairman of the BBC Trust, Sir Michael Lyons said: "In the past, these extensive reviews of BBC services were a job for the Secretary of State.
"Our review of bbc.co.uk is the first of its kind under the new Charter arrangements and a clear example of how robust scrutiny by the BBC's governing body works for the benefit of those who pay for and own the BBC."
The Trust's review began in July 2007 with a 12-week public consultation and independent audience research.
The public's response was found to be overwhelmingly positive.
In 2006/07 the BBC spent 3 per cent of the licence fee on bbc.co.uk compared with 70 per cent on television channels and 17 per cent on its radio services, yet it is now the BBC's fourth most widely used service.
Dame Patricia Hodgson, BBC Trustee, who led the review for the Trust said: "The purpose of this extensive review is to make sure the public receive the best quality and value for money from bbc.co.uk.
"It is clear that bbc.co.uk has become a central part of what the BBC offers licence fee payers and the evidence shows that the vast numbers who use it love it."
Looking to the future, Ms Hodgson added: "The Trust endorses the management's plans to develop the service further - particularly on areas like search and navigation, which audiences tell us could be improved.
"But we need to be sure that additional investment of licence fee payers' money will deliver their expectations and - in doing so - does not stifle enterprise from others who seek to offer excellent online services to the public.
"For the benefit of those who pay, the Trust wants evidence of stronger management controls to improve financial accountability and strategic and editorial oversight before we consider new investment in the service.
"We hope to receive this soon so that audiences can enjoy an even more distinctive and improved bbc.co.uk."
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