Saturday, June 30, 2007

Money Comes From Daddy

You can say that again

I'm afraid I can't remember exactly which blogger came up with the expression "Money? Oh that comes from Daddy, doesn't it?" But it's a wonderful encapsulation of the BBC's approach to the whole grubby subject.

BBC broadcasters routinely display both extreme distaste for, and woeful ignorance of, anything to do with making money. They seem to believe it's just there, to be spent on whatever enthusiasm they deem worthy.

And their big bosses- the ones who supposedly have direct responsibility for stewarding £3bn pa of taxpayers' funds- are no better.

This week the Public Accounts Committee reported on the outsourcing contract between the BBC and Siemens Business Service. That's a ten-year deal, signed in 2004, for the provision of a range of technology services provided previously by the BBC’s commercial subsidiary BBC Technology.

What the PAC discovered (original NAO Report here) was an approach towards securing value for money that is at best shambolic, and at worst, downright dishonest.

In particular, the deal was originally sold to BBC governors on the basis "that savings were guaranteed at £35.2 million a year". Persuaded by such a large number, the governors agreed it.

But actual savings have turned out to be much less: in the first year they were a mere £22m pa, and it's by no means clear all of them are attributable to the deal itself.

The explanation from BBC executives?

The BBC Group Finance Director said:

"The use of the word “guaranteed” relating to the savings in the documentation put to the governors was inappropriate."



Sorry. Not good enough.

It was either intentionally misleading (ie A LIE), or grossly incompetent.

This is by no means the first instance of BBC execs getting the governors to make major financial decisions on the basis of grossly misleading information. When they approved the White City property deal in 2001, costs totalling £60 million were excluded from the approval submissions.

To make one inappropriate submission is unfortunate. To make two, sounds like A Very Big Pork Pie Indeed.

PAC found a raft of other failures with the Siemens deal:
  • The contract with Siemens does not provide for the BBC to share profits if Siemens’s return exceeds a specified level- contrary to normal outsourcing practice

  • The BBC has chosen not to exercise its rights of open book access to check how profitable the contract is for Siemens- even though they could have, they haven't bothered

  • The BBC has been slow to introduce effective management of the contract- they just sort of muddled along

  • 60% of the key technology projects commissioned directly from Siemens in the first year of the contract suffered delays or went over budget- Siemens picked up the cost, but the BBC suffered the delays

The BBC- like many other state bodies- simply does not take the stewardship of public money seriously. And the fundamental reason is that unlike commercial businesses, they don't have to earn it from customers.

It just comes from Daddy.

Who confiscates it from taxpayers.

Roll on privatisation (and before that, regular value audits of the BBC by the NAO).

(htp Keith at Telebusillis)


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