BBC admonished for website overspend

BBC admonished for website overspend

By Tim Bradshaw, Digital Media Correspondent

Published: May 29 2008 20:23 | Last updated: May 29 2008 20:23

The BBC’s governing body on Thursday threatened to hold back development of new online services unless the broadcaster proved it could improve financial management, following a big overspend last year.

In the first of its service reviews under the corporation’s new charter, the BBC Trust criticised the “poor financial accountability” of the BBC website as it revealed £24.9m – a third of its annual budget – had been wrongly attributed to other departments. That in turn led to it spending 48 per cent more than last year’s budget allocation.

In a statement, the BBC recognised the need to address these “regrettable” shortcomings: “We accept the trust’s conclusions that our processes and management controls were not adequate for a pan-BBC service straddling multiple cost centres.”

The trust said it would apply stronger scrutiny before allowing the BBC to spend the £39m it had earmarked for investment in bbc.co.uk this financial year. Proposed new “hyper-local” news coverage and educational services – which commercial rivals say could distort the market – are being put to a “public value test”.

Dame Patricia Hodgson, the BBC trustee leading the review, said: “We will not approve new investment until we are satisfied that management controls embed what we are doing. Obviously bbc.co.uk must develop to meet audience needs, but we must be careful to apply tests on its distinctiveness and impact on competitors.”

The BBC’s plans for online development included greater capabilities for online public feedback; personalisation of content, including ratings and recommendations; allowing the site to be accessible from mobiles, TV and wi-fi radio; and greater online support for current and archived TV programmes.

Dame Patricia said the trust wanted to apply clearer “distinctiveness criteria” to all parts of the BBC website to ensure new developments are suitable areas for the corporation. It hopes to move to a preventative stance by creating an “extra framework so developments are always considered with sensitivity” to the market, she said. The service licence is being “restructured” to reflect the criteria.

The total spend on bbc.co.uk last year reached £110m. The trust’s review revealed weak financial controls which led to £24.9m being wrongly attributed to other parts of the BBC.

The BBC said the 48 per cent overspend related to an internal reorganisation, where contributions to the site were “devolved” to other departments such as news and television, although it did not reveal where other budgets will be adjusted to compensate for the additional online costs.

Other media groups welcomed the recognition of the BBC’s potential commercial impact but said the trust could go further.

Mark Wood, ITN chief executive said: “We are alarmed at the extent of the BBC’s website funding and its ambition in the dotcom world. Commercial competitors thought the BBC website was already overfunded at a declared budget of £74.2m.”