Austerity for Auntie: how much does BBC relocation cost?
9 August, 2010 - 17:17 -- Full Fact team
When the BBC announced that it was moving parts of its business to Manchester, it was claimed that the relocation would be cost effective. But with the Beeb's books under scrutiny, this has been called into question in recent weeks. So is the Salford Quays relocation as 'wasteful' as some seem to think?
The BBC again found itself under fire today as The Daily Mail and The Express reported on the organisation’s ‘wasteful’ spending.
This comes as the Office for Budget Responsibility released estimates showing that the corporation’s budget is set to rise by £800 million over the next six years.
So is it time for austerity for Auntie?
The claim
The Mail’s Jason Groves seems to think so. He writes this morning that “The BBC has become a byword for waste, with… the controversial move to relocate hundreds of staff to Salford at a cost of £900 million.”
The BBC, meanwhile, maintains that “the project will save the BBC money over the course of its life.”
Should the MediaCity:UK development therefore be considered a burden or a bonus for the license fee-payer?
Analysis
The proposal to move elements of the BBC’s business outside of London was first mooted in its 2004 submission to a Department for Culture, Media and Sport consultation on Charter Renewal, entitled “Building Public Value”.
Alongside expanding the BBC’s relevance outside the South East, a key reason behind the policy was to “examine the potential for savings by moving some administrative and other operations out of London.”
When the Salford Quays project was approved in December 2006, it was initially given a budget of £953 million, covering the lease of the buildings, moving costs and the technological infrastructure.
Whilst this would suggest that significantly more was spent on the move than the £900 million identified by Mr Groves, the costs have actually been revised downwards since 2006, with the latest forecast projecting a £877 million spend on the project.
According to a February 2010 National Audit Office (NAO) report, these savings were principally achieved through a reduced demand for studio facilities. So does the move therefore represent better value-for-money than suggested by Mr Groves?
Not necessarily. Whilst demand has been revised down – as have the attendant costs – many of the core costs, such as the rent and out-fitting of the offices, have risen since 2006.
Nevertheless, the Public Accounts Committee (PAC) found in April this year that the development at Salford Quays was progressing well, and that the BBC had “applied lessons from phase 1 of the Broadcasting House project to phase 2, and to the Pacific Quay and Salford Quay projects.”
This was also the conclusion reached by the NAO in its report.
As an NAO spokesperson told us: “The Salford Quays project has actually shown better budget management than BBC developments at Broadcasting House and Salford Quays. We expect it to save money over the long run.”
This is also the position of the BBC. A spokesperson told Full Fact: “This is a long term commitment to audiences in the North and over a twenty year period it will cost no more than had we remained in London, and this includes relocation costs.”
“While there are some upfront investments costs - of about £150 million [once savings made from office closures in London are deducted] to set up and move people into our new base - over 20 years we will recoup this from significantly lower operating costs,” the spokesperson added.
Conclusion
So whilst the NAO and PAC have found that “the BBC is not well placed to demonstrate value for money”, both acknowledge that that the greatest mistakes were made over the earlier redevelopment of Broadcasting House – which incurred a four-year delay and a cost overrun of £100m.
Indeed the NAO report notes that since the Broadcasting House project “the BBC has since improved its approach to identifying lessons”, resulting in greater value achieved during the Salford Quays project.
The £900 million figure cited by Mr Groves, whilst broadly representative of the gross costs involved in the project, does not account for the savings enabled in London by the project, which the BBC claim make the net figure closer to £150 million.
Given that the BBC expect this investment to be recouped over the lifetime of the project – a view shared by the NAO and PAC - through lower operating costs, the Salford Quays project would seem to be a poor example of ‘waste’ at the BBC.
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