Downturn threatens BBC budget
- Published: 25 June 2008 18:05
- Author: Katherine Rushton
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- Last Updated: 26 June 2008 12:33
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Spiralling inflation and plummeting property prices mean the BBC could have to make more redundancies.
A hole has emerged in the corporation's six-year financial plan because last year's licence fee settlement was not pegged to inflation. The BBC had planned for an economic downturn but inflation is now rising faster than it had allowed for.
Government figures show inflation jumped from 3% in April to 3.3% in May, although other sources pin it far higher. The Bank of England has warned it could rise above 4% by Christmas.
At the same time, Television Centre, which the BBC hoped to sell for around £300m, is expected to lose up to a quarter of its value (£75m) before the end of the six-year period, in line with a wider fall in property prices.
A senior corporation insider said BBC management has raised the issue in meetings and is currently discussing contingency measures. "I don't know when, but they will have to make more cuts," the source said.
It is understood that overheads such as energy costs will be targeted first and that the BBC will resist trimming programming budgets.
A BBC spokesman said there was "no suggestion" at the moment that there will be a new set of redundancies.
The spokesman added that the BBC's finance team was looking at the situation "just as any organisation would, on an on-going basis"
