BBC Television told to save pounds 20m in six months

BBC TELEVISION has been told to cut its spending by pounds 20m over the next six months by the director general, Sir Michael Checkland. Flaws in the accounting process in the first half of the corporation's financial year, which runs from 1 April, have led to an overspend that has to be clawed back by cutting programmes and overheads.

Will Wyatt, managing director of BBC Television, also confirmed yesterday that he was strengthening the organisation's financial structure by creating a post of financial controller. Yesterday's announcement comes after mounting speculation about problems with BBC programme accounts, and a swift investigatory audit.

The BBC says it represents a cut of 3 per cent on spending of pounds 700m on BBC1 and BBC2. A spokesman added that it hoped to protect programmes as far as possible. Senior BBC Television staff said that the overspend was linked to complex new costing changes being introduced, which lumped all elements of programme costs, by department, into one consolidated figure for the first time.

The systems had changed, but the accounting methods, which had been in force for 20 years, had not. These had proved inadequate. The BBC had installed a computer system to cope with the new budget arrangements, but had not brought it into effect. The overspend, while not related to the controversial policy of producer choice - allowing programme producers to buy in outside resources - was being seized upon yesterday as an early warning of how the new system could blow up in the BBC's face.

The great danger is that the BBC could end up paying for resources twice, by buying in outside services while also paying for its own.

Many senior managers at the BBC believe that the incoming director general, John Birt, is trying to introduce the radical disciplines of producer choice far too swiftly, by next April. 'It should be introduced piecemeal and slowly, we should have evidence of how it is working. Instead there is a great shake-up, with terrible risks,' one said.

Critics also point out that the BBC, despite extensive training schemes, lacks the necessary managers and accountants to cope with the change.

The BBC could shave pounds 170m off the pounds 1.4bn it receives from the licence fee if it took advertising, cutting pounds 9 off the licence fee of pounds 80, according to Datamonitor, the management consultancy.

The Channel 4 chief executive, Michael Grade, said television drama was pricing itself out of existence. He urged scriptwriters to become more business minded in an increasingly competitive market and said it was better to work in bigger teams and produce 26-episode series than expensive six-episode shows.

'I fear drama is in danger of pricing itself out of existence,' he told the Writers' Guild of Great Britain awards ceremony at the Dorchester Hotel, London. 'If it can cost up to pounds 800,000 to produce one hour of drama then that is not something we can sustain.'

But he ran into immediate opposition from sections of his audience. Julian Mitchell, one of the writers of the Inspector Morse series, said: 'I am prepared to believe we have to make sacrifices, along with television executives, but not like this.'