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The BBC Trust has today sharply criticised BBC executives for poor management of online services after an investigation of the finances of bbc.co.uk revealed it was £36m over-budget.

The review by the Corporation's independent governing body, which represents licence fee payers, revealed the splurge on bbc.co.uk hit £110m in the year to March 2008. The agreed budget had been £81.6m.

BBC executives forecast in January they would exceed the budget by 5 per cent. The true figure was 48 per cent.

The Trust wrote in its report (pdf): "Management control of bbc.co.uk is not sufficiently strong at present. Our review has found that financial oversight has not been sufficiently effective, such that the true level of spending on the service has only become known as a result of this review."

It said that most of the missing millions was the result of "misallocation of general overheads and costs from other budgets". Actual overspend was £3.5m. The figures exclude spending on iPlayer. The Trust has ordered suits to come up with proposals to gain control of the budget within six months.

BBC management's arcane devolved structure also made it hard to discern the online strategy, the Trust said, and executives must be clearer in their dealings with industry and trustees. A reorganisation of bbc.co.uk management in 2007 "has resulted in bbc.co.uk being treated more as a platform than as a discreet [sic] service... we believe it right to highlight this finding given the great importance we attach to the question of accountability."

Reponsibility for bbc.co.uk falls on Ashley Highfield, the BBC's director of future media and technology. He is already on his way out, however, and is set to jump ship later this year to Project Kangaroo, a commercial version of the iPlayer.

The Trust set a £114.4m budget for bbc.co.uk, this time including £3.9m for iPlayer. It decided to withold approval for new online projects by the BBC, however, until management put their house in order.

In its response statement, BBC management said: "We accept the Trust's conclusions that our processes and management controls were not adequate for a pan-BBC service straddling multiple cost centres. This is regrettable and we recognise the need to address this.

"We are developing plans which we believe will fully meet the concerns raised in the report... we will do this while ensuring that bbc.co.uk continues to be a distinctive service delivering strong public value."

The Trust also called on executives to consider the impact that throwing TV licence cash online is having on commercial markets. It has asked them to respond to concerns that efforts such as online film reviews, health information and local news are redundant because they are well served by commercial providers. ®

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