BBC will have to open its books to public scrutiny

The BBC is to be forced to open its books to public scrutiny for the first time in a drive to make it more accountable to licence-payers.

Ministers are preparing to allow Parliament to amend the Communications Bill so the corporation has to grant full access to its accounts to auditors, who will reveal exactly how it spends public funds.

Sources close to the Cabinet indicated yesterday that they "could no longer defend" the historic exemption under which the National Audit Office (NAO), responsible for scrutinising all other publicly funded bodies and government departments, cannot legally examine the BBC's accounts. The exemption has been defended by governments for years. But ministers now say they will not oppose a change to the Bill, to be tabled in the House of Lords within weeks.

The removal of the BBC's exemption from scrutiny will delight MPs such as Edward Leigh, the chairman of the Commons Public Accounts Committee, who have called for the BBC to show how it manages its £2.5bn budget. But the change is expected to be fiercely resisted by the corporation's governors and may be interpreted as a "betrayal" of Labour-supporting BBC executives, including the director general, Greg Dyke, and the chairman of the governors, Gavyn Davies.

Yesterday, the BBC said a change in the law could compromise its independence and harm public sector programming. "Successive governments have declined to grant the NAO access to the BBC because it is inevitable that this would lead to our independence and impartiality being compromised and to the politicisation of the BBC," a spokes-man said. "The BBC has been excluded from the scope of the NAO when it was set up for very good reasons and those reasons have not changed."

An amendment to the Communications Bill being drafted by the Labour peer Lord Lipsey will be put forward when the Bill gets its second reading. "This is £2.5bn of public money a year collected via the licence fee on a poll-tax basis," he said. "It is absolutely vital that Parliament can be assured it is properly spent."

Tories, Liberal Democrats and some Labour peers indicated they would back the proposal. A Tory spokesman said that since viewers were "paying £116 a year for a colour TV licence it is absolutely essential for the BBC to be subject to maximum public scrutiny".

The amendment would have enough votes to push it through the Lords to the Commons, where the BBC may have more support. But sources close to the Cabinet say ministers will not "fight it out" with the Lords because they do not accept that giving the NAO access would compromise the BBC's creative freedom. "We are not going to lose the Bill over this," one government source said.

The NAO would have the power to ask how much the BBC spends on consultants, administration and even buildings, as well as programming.