A new National Audit Office report on the BBC's move to Salford reveals that the Corporation paid £500,000 to Peel Media - the Peel Holdings subsidiary which runs MediaCityUK – for studio space it didn't use.
In 2007 the BBC signed a contract with Peel to rent studios and production facilities at MediaCityUK which committed it to spend at least £5.7million a year. Three years later, however, it signed a different contract to guarantee Peel rents of £82.8 million over ten years, guaranteeing minimum annual payments on three different types of studio hire.
The BBC was warned against the contract by its legal team, which stated that if there was any underspend on one type of studio hire the Corporation would still have to pay the full cost. Which, is indeed, what happened last year – and the BBC had to cough up £500,000 for space it didn't use.
The Audit Office report states that the BBC went ahead with the dodgy contract to ensure that a full range of services were available but also "keeping it profitable for Peel Media Studios Ltd".
The BBC Trust now recommends "The BBC needs to better match its contract for studio space at Salford with the needs of the departments that relocated".
Altogether, the BBC is committed to paying Peel Media £253.8million for rents at MediaCityUK. This breaks down as £171million on a twenty year buildings lease to 2030, and £82.8million on a ten year studio and production lease to 2020. Annually this works out at almost £17million a year.
Peel is also cashing in on the BBC use of hotels, car parks, apartments, communications etc. Indeed, in January 2012, the Salford Star showed how MediaCityUK was virtually totally paid for with public money, despite being owned by the private conglomerate Peel Holdings (click here for full breakdown, although the studio rent was based on twenty years rather than ten).
Meanwhile, the National Audit Office report states that as of December 2012 there were 2,282 BBC staff working at MediaCityUK, of which only 39 were new recruits from Salford (or 34 according to latest figures – see here). These include just two jobs for young people from the BBC's `Young Ambassadors Project' out of nine who were taken onto the low paid scheme (see here).
The departments based at Salford spent £6.2 million on hotels, taxis, flights, rail and hire cars in 2011-12; while £24 million was spent to compensating BBC employees who relocated to Salford – with the Corporation criticised in the Audit Office report for "inadequate" control on the elaborate packages in some cases.
The whole move to Salford, mushroomed from an original estimate of £876million to £1,114million. And the jury is still out on whether the BBC has met its objectives, which were to "better serve audiences in the north of England, improve quality of content for all audiences, improve efficiency and provide economic and other benefits to the region."
Despite Salford Mayor, Ian Stewart, putting out a press statement expaining that "the National Audit Office's assessment that the BBC's move north has led to such a rapid economic growth in Salford is a vindication of the drive and vision that my predecessors had in bringing this revolution to bear" etc etc, the report actually concludes that "It is too early to judge the long-term impact of the move… There have been some early impacts, such as an increase in the gross value added by the BBC's spend in the region. However, in our view, it is too early to assess the full impact of the move as it will take at least two to three years for it to take effect."
Meanwhile, over the next few years, any benefits accrued so far could well go into reverse, as the BBC looks to cut £151million from its budget before 2030.
Peel Media, with its secure contracts for over £250million from the BBC, may well be the only ones laughing all the way to the bank by then…
To read the full National Audit Office report - click here