for a diverse, democratic and accountable media
BBC Trust today (Thursday 29 May 2008) published its conclusions after completing its extensive review of bbc.co.uk. This 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 Trust's main conclusions are:
# bbc.co.uk is an excellent service that is highly valued by users and makes a strong contribution to delivering the BBC's public purposes
# As bbc.co.uk 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. We are restructuring the Service Licence and distinctiveness criteria will be applied to all parts of bbc.co.uk
# 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.
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."
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."
The Trust's review began on 26 July 2007 with a 12 week public consultation and independent audience research, all of which we are publishing today. The public's response was overwhelmingly positive. The evidence suggests that the service is providing good value for money. In 2006/7 the BBC spent 3% of the licence fee on bbc.co.uk compared to 70% on television channels and 17% on its radio services, yet it is now the BBC's fourth most widely used service.
The Trust's review also sought to establish the service's performance within the context of the wider market and considered bbc.co.uk's performance against the terms of its Service Licence. The Trust's work revealed that in 2007/8 the actual spend on bbc.co.uk was £110m, 48% higher than the Service Licence baseline budget. 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 has concluded that tighter management controls are necessary for bbc.co.uk and has requested these be implemented to the Trust's satisfaction before it will consider approval of the additional investment for the service as proposed by BBC management.
The Trust approved the BBC's high-level six year creative future strategy in October 2007 which signalled a significant increase to bbc.co.uk of licence fee investment. BBC management has proposed to front-load £39m of this investment in 2008/09. The Trust will not approve this investment without greater scrutiny and in doing so will take account of public value, distinctiveness and competitive impact. The BBC's proposals for local video and a new skills-based formal learning proposition will be subject to full Public Value Tests.
Looking to the future, Patricia 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."
A copy of the Trust's full service review document is available by following the link below.
In the course of the review the Trust undertook a public consultation, commissioned its own research and received a submission from the BBC Executive. These documents have been published today as supporting evidence and can be found by following the link below.
Service licence budget information
The true costs of bbc.co.uk have been established as a result of this review. The service licence budget for 2007/8 was set at £74.2m. Firstly, an overspend was identified of £3.5m above the upper limit of permitted spend. This arose primarily from the creation of additional content for bbc.co.uk. Secondly, £24.9m of general overheads and other costs were identified that should have been allocated against the service. This brought the final budget outturn to £110m, or 48% above the service licence baseline.
Service Licence baseline budget 2007/8 £74.2m
Upper limit of permitted spend (baseline + 10%) £81.6m
Misallocation of general overheads and costs from other budgets £24.9m
Final outturn and revised service licence budget £110m
29 May 2008 - BBC Trust publishes service review findings Service Licence budget revised to £114.4m whilst management work up new system of management controls. Trust to review new investment plans in detail taking into account questions of public value and competitive impact.
By 28 Nov 2008 (or within 6 months) BBC management to return to the Trust with proposals for approval of new system of management controls.
To follow BBC management to submit plans for:
# Improving effectiveness of linking
# BBC role (if any) in external web search
BBC Trust to reissue the revised Service Licence
One year after implementation, Trust to review the effectiveness of new management controls.