This is taken from The Guardian:

BBC wasted millions at White City, say MPs

· 'Excessive returns' for property consortium
· Buildings commissioned before staff cuts and move
by David Hencke, Westminster correspondent
Tuesday February 14, 2006

The BBC is attacked by MPs today for wasting tens of millions of pounds of licence payers' money on a new complex at its White City headquarters in London. The buildings are not fully occupied because of staff cuts and plans to move broadcasters from London to Manchester.

A report from the Commons public accounts committee accuses the corporation of giving "excessive returns" to the private property consortium Land Securities Trillium for three new buildings, a broadcast centre, media centre and an energy centre - using waste energy to heat the entire complex - under a 30-year private partnership deal.

The report reveals that the BBC paid out an extra £31m to accept the £210m Land Securities tender over the nearest shortlisted bidder, then spent another £60.9m fitting out the building with state-of-the-art technology and furniture. The buildings were commissioned before the BBC decided to cut staff by 4,000 and move 1,500 to Manchester.

The committee says that a year after the buildings were completed in 2004, 22.5% of the offices were empty, though this has recently fallen to 6.5%. The energy centre - with office space worth £1m - has been left as a shell. It may still be used as offices, pending a decision on whether the BBC will construct another building to house its orchestras.

Plans for the green combined heat and power scheme have not been commissioned two years after the building was completed.

The corporation is also accused by MPs of letting some space at subsidised rents to a commercial subsidiary, BBC Broadcast Ltd, which breaks the rules of the BBC charter. The BBC denied this yesterday.

A spokesman said: "The BBC Broadcast contract was based across a 30-year term to recover all of the BBC's costs. There was and can be no question of the BBC not securing full cost recovery from its commercial subsidiaries."

Edward Leigh, Conservative chairman of the committee, says today: "The cost of the development turned out to be over £60m more than the amount originally approved by the governors."

The BBC said yesterday that it planned to respond fully to the MPs' criticisms.

MPs are now pressing for Sir John Bourn, the comptroller and auditor general, to have unfettered access to the BBC's accounts. The BBC is resisting this.

Jeremy Dear, general secretary of the National Union of Journalists, which represents staff at the BBC, said: "One set of managers are working on expansion plans, another set are planning cuts. This is an expensive mess and staff are now paying with their jobs over a colossal management failure over this project."

These are the main findings of the Committee, taken from the report on their own Website:

CONCLUSIONS AND RECOMMENDATIONS

The BBC's White City 2 development was completed on time and is supporting the BBC's plan to rationalise other parts of its estate. But several aspects of the project constitute risks to the value for money from the BBC's considerable investment. The BBC entered a deal where the potential return to the private sector was excessive, where it could not be sure of sharing in any refinancing gains, and where it ended up buying out its partner less than five years into the 30 year deal. The cost of the development exceeded the amount originally approved by the Governors and there were significant variations to the scheme as the project progressed. Furthermore the buildings are not currently being used to their full potential.

Our specific conclusions and recommendations are as follows.

1.      During the course of the White City 2 project additional costs were identified which added over £60 million to the total cost, an increase of 29%. The whole life costs of projects should be assessed, and made available to BBC Governors, before projects proceed.
       
2.      Even after signing the contract with Land Securities Trillium, the BBC made 300 variations to the White City 2 scheme. The BBC should better integrate design and construction, as recommended by the Office of Government Commerce, to reduce the risk of design changes after contracts have been let. Introducing variations after deals have been signed inevitably heightens the risk of cost increases.
       
3.      The BBC sublet space to BBC Broadcast Limited, a commercial subsidiary, for rent lower than the cost to the BBC. Licence fee money should not be used to subsidise the BBC's commercial subsidiaries. The rent charged for sublet buildings should meet the BBC's costs or match the market rate if this is higher. As well as recovering its current costs, the BBC should also recoup previous undercharging from individual subsidiaries.
       
4.      Because of the way the project was financed, the BBC did not know whether the return to the private sector shareholders was within the limit specified in the contract, and the BBC was unlikely to secure a share of any refinancing benefits. The principle has been accepted that the public sector should share in gains that arise when projects are refinanced. Public bodies should recognise that obtaining refinancing benefits, and identifying returns to the private sector, is more straightforward where financing is linked directly to the project in question.
       
5.      The BBC's plans to cut staff and move others to Manchester increase the risk of space and technical capacity at White City 2 being under-utilised. While the BBC expects the new buildings to be fully used, its focus should not be exclusively on White City 2 but on achieving the most cost-effective solution to its accommodation needs, taking account of the whole of its estate. The BBC should not hold on to property which it does not need or which cannot be used cost-effectively.
       
6.      More than two years after the Energy Centre was completed, the space for a combined heat and power installation is not being used, and the BBC is paying for the empty space. This space, together with vacant office space in the Energy Centre, has cost around £1 million a year, and the BBC should put the unused space to productive use as soon as possible.
       
7.      The BBC did not follow public sector good practice in several important respects on this project. There is guidance from the Treasury and the Office of Government Commerce on estimating whole life costs, monitoring returns to the private sector, obtaining refinancing benefits, and integrating design and construction. The BBC would benefit from drawing on this guidance.
       
8.      The Comptroller and Auditor General's work is providing fresh insights about the BBC's use of public money, but is being done under arrangements which end in 2006. The Comptroller and Auditor General should have a continuing role beyond 2006, which should include full access rights enabling him to identify and select subjects for examination.