A BBC Trust review into the BBC’s online operations has found the corporation spent almost double its online budget in the last year and lacked accountability to licence fee payers and commercial competitors.
The service licence that governs the remit of the BBC’s online operations is to be restructured and new investment scrutinised as a result of the review by the Trust.
In its report, the Trust gives the go-ahead for further development of bbc.co.uk but said that future investment would be subject to a public value test. No further investment will be approved until the proposals for tighter management control go through.
The Trust was heavily critical of unchecked spending online by the BBC, which resulted in the corporation spending almost £36 million more than the limit specified in the service licence. The BBC spent £110 million on online operations in the 12 months to March 2008, 48 per cent above what was budgeted. This, the Trust said, was due to a misallocation of budgets within the BBC because of poor financial accountability.
The Trust said it was ‘a serious breach’of bbc.co.uk’s service licence. The Trust said the management control was ‘not sufficiently strong at present’and that spending on bbc.co.uk would have gone unchecked without the review.
The Trust is due to sign off a further £38 million increase in spending online for 2008/09 but said today it would only do so if executives showed ‘improved management controls’of the BBC’s finances by November.
The Trust urged ‘a cautious approach’to spending online. The Trust said in its report: ‘We are also aware that this review has highlighted weaknesses in management’s financial, strategic and editorial oversight of the service and believe we therefore need to proceed with caution in approving new investment.
‘For this reason, we will not approve the proposed new investment in bbc.co.uk until we are satisfied with management’s proposals for improved management and control of the service and have subjected them to greater scrutiny, taking into account questions of public value, distinctiveness and competitive impact.”
The BBC has been coming under increasing fire from commercial operators for its digital activities. The Trust will next review proposals for local video content across 60 regional websites, which the regional press fears will threaten its future.
In addition to increased scrutiny of spending, the Trust said the service licence which governs the remit of bbc.co.uk will be restructured to offer better accountability. The Trust said it would not create separate licences for different parts of the service but would create ‘separate annexes’to the service licence for each editorial area of news, sport, nations and local, formal learning, audio, music and vision to build in better scrutiny of the services.
The Trust also called on BBC management to develop a system to ‘more clearly’define how bbc.co.uk delivers public value while not adversely affecting the commercial market.
The Trust said the BBC executive should now seek Trust approval for a new management system for bbc.co.uk within six months of the review’s completion.
As well as the proposal for a new system of management control of bbc.co.uk, the Trust listed a number of actions are to be taken as a result of the review. Three specifically relate to commercial market impact including plans to provide better linking to external sites, investigating the possibility of the BBC facilitating an external web search and BBC management considering the responses of commercial operators in the public consultation.