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BBC plans £100m radical cost savings as web reined in

LONDON - The BBC is undergoing a radical cost-cutting overhaul that could involve redundancies across the corporation as it seeks the renewal of its 10-year Royal Charter.

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According to a report in the Financial Times today, executives say that overheads could be cut by a third from 12% to 8% of the corporation's £2.68bn annual income. Insiders claim that the cost cutting could save the public broadcaster £100m. Last week, the BBC's new director general Mark Thompson indicated that overheads could be cut by 10% in the next charter period, which begins in 2007.

The BBC management board is due to review the savings this week and discussions are expected to focus on the efficiency of programme spending for the first time. A source told the FT that redundancies could be substantial.

Yesterday former BBC chairman Gavyn Davies slammed the government for its "witch-hunt" against the corporation last year in the wake of the Hutton Report.

News of the job cuts came as culture secretary Tessa Jowell yesterday gave the BBC just under four months to draw up a clear definition for the remit of its online services following Philip Graf's review.

Graf, former chief executive of Trinity Mirror, has recommended that BBC Online's remit and objectives should be clearly defined around public purposes. He also says that the regulation of online services should be reinforced by the appointment of two governors, one of whom must have new-media expertise.

There is good news for digital agencies, with Graf recommending that by 2006 the amount of content supplied by external suppliers will be increased to 25%, up from the 13% it spent in 2003.

In the report, Graf criticised some sites such as fantasy football and local what's on listings, for being insufficiently distinctive from commercial alternatives. He also said that any proposed project that is a close call between the balance of public service versus cost, then that project should not be taken ahead.

Overall, Graf said that BBC Online delivered high-quality material and that there is a lot of public affection for the service.

"There are, however, a number of changes which could improve the experience for users, deliver efficiency and ensure that the site effectively reflects BBC Online's priorities."

In a statement today, the BBC said it welcomed the Graf review, with Ashley Highfield, director of new media and technology at the BBC, saying that it would be considered thoroughly.

"This is a solid foundation to build on, especially when taken together with the BBC's vision, as outlined in our recent Building Public Value document, to play a key role in the creation of a fully digital Britain," Highfield said.

The report was commissioned by the Department of Culture, Media and Sport as part of the wider process leading to the BBC Charter review. Culture secretary Tessa Jowell said she was waiting to see how the governors would respond and then she would consider what further action needed to be taken.

The report was also welcomed by the opposition. Julie Kirkbride MP, shadow secretary of state for culture. She said the Conservatives had long been concerned that some of the content on BBC Online has had an adverse effect on competition on the net.

"The way the BBC responds to this report will be the first test of how they apply the so-called 'public value' criteria which Michael Grade outlined last month. It is very important they show their aims for BBC online's content reflect their core public service remit," she said.

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