The Business Blog

At the BBC, a system of budgeting for accountability was introduced in the early 1990s, a necessary component of an internal market system which was intended to make staff of the Corporation aware of how much things cost, and thus show that they spent the licence income responsibly and efficiently. This was not the only imposed ‘market system’ to experience difficulty, for market systems tend to require regulation if they are to work for the benefit of the many and not the few.

At the BBC, it was determined that physical accommodation should be costed, and where the Corporation owned freehold buildings, the equivalent market rent should be used. This is potentially a nonsense, because one reason for owning property is that it is cheaper than renting it. Otherwise, how do property companies make profits? Some budget centres worked out that it would be cheaper to move out of BBC premises, but this route had to be denied to them, since a move to rented accommodation would obviously result in overall increased expenditure. So much for freedom of choice.

In the case of the Television Centre, there was no market rent, since there is no other organisation in the UK which would want such a building. Instead of realising that this gave the BBC a major scale advantage over other TV businesses (namely that it was big enough to afford its own TV centre which cost only maintenance) the powers-that-were insisted on allocating the TV centre a cost that would apply if it were an office building. The result was that budget holders shrank the space they used, and producers started hiring external studios, leaving their own empty. It is pretty fundamental to the market system that the achievement of economies of scale through investment in production facilities results in a lower overall cost position, an advantage actually denied to the BBC by its own ‘market system’.

It not known how the decision about the TV Centre was taken, whether by an individual or a committee, but whoever it was should realise that to play God requires not just omnipotence but also omniscience. A depressing aspect of this whole process is that the Corporation was advised throughout by the consultancy wings of two of the world’s largest accountancy firms, who should have cut their teeth on accounting for profits. Such nonsense is still about. A recent news item reported that the new system of internal charges for the BBC’s record library meant that any programme maker wanting to use the same CD twice would find it cheaper to buy from a shop, which was exactly what was happening ¡ª several times over!

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