BBC raises budgets to cover £23m extra rent costs

The BBC Trust has raised the annual budgets of its TV and radio services to include £23m of rent the broadcaster will have to pay as a result of selling off its freehold properties. Details emerged today as the BBC Trust published new service licences for each of the 28 BBC TV, radio and online services for the year to the end of March 2011. Service licences lay out the remit, strategy, budget and target for all the corporation's main activities – from BBC online to BBC1 and from Radio 1 to its red button activities on television. However, this year the BBC Trust has decided to change how it apportions budgets – spreading the £23m-a-year rise in property costs to house its staff across all its services. Other changes to the service licences include increasing the budget for children's services by £8.5m, in line with a trust review carried out last year . In addition, the BBC Trust has reallocated some of the costs for the CBeebies and CBBC that were previously apportioned to BBC1 and BBC2, back to the two digital channels – massively increasing its headline spend on children's output. This means the figure for CBBC rockets from £36.3m to £82.1m and CBeebies from £17.7m to £30.9m – an overall rise of £59m compared with 2009/10. Part of the BBC's overall property strategy has been to slim down its portfolio of buildings its owns. The BBC recently sold Woodlands in west London – former home of the corporation's commercial arm, BBC Worldwide – and Kingswood Warren in Surrey, where the research and development operation used to be based. In a huge relocation exercise, five BBC departments are also moving from BBC Television Centre in west London to the corporation's new northern base at MediaCity in Salford. The MediaCity base is not owned by the BBC, but by a development company called Peel. The BBC Trust said today it wanted to raise "the overall service licence baseline budgets by an aggregate £23m to reflect the planning and foreseen rise in property costs as a result of the modernisation of the BBC estate and the planned transition from a freehold to a leasehold estate". "This means rent is payable on the new leaseholds, while the BBC has freed up capital previously tied up in buildings it owned. This is a much more cost-effective approach overall, giving the BBC cash to invest and greater flexibility in its commitment to the amount and type of facilities it occupies," the trust added. "These operating costs are separate from the planned capital expenditure on new BBC buildings – they are allocated out to the individual services on an averaged basis according to the space occupied and this has been reflected into service licence budgets." The BBC Trust also announced today that it is planning to review how it monitors service licences in future to make sure services are keeping to their targets and remits. Rotha Johnston, a BBC trustee and chair of the finance and compliance committee, said: "Following careful scrutiny, the Trust has approved these new service licences on the basis that these are, in the main, accountancy changes to more accurately reflect the costs that services incur, along with some targeted increases in investment in children's and local programming identified as part of recent reviews. "We are clear that service licences must be as transparent as possible; our forthcoming scheduled review will tell us if this is the case." • To contact the MediaGuardian news desk email [email protected] or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. • If you are writing a comment for publication, please mark clearly "for publication".