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BBC management has been accused of losing 'effective control' of its website budgets by the BBC Trust after it emerged that it had overspent by £36m on the site in a single year.

A damning report into the activities of BBC.co.uk published today by the Trust said management showed 'poor financial accountability' and that there was a need for 'remedial action' to correct matters.

The review published details that showed the £110 million spent on the site in 2007/8 constituted a 48 per cent overspend on the budget of £74.2 million set by the Trust for the period.

The Trust said the site's current management structure was the main reason for exceeding the budget so heavily.

“We acknowledge that, given the fast-changing nature of online activities, some blurring of boundaries is inevitable and that this presents a challenge to financial accountability. However, we believe that this problem should have been identified sooner and appropriate action taken," stated the review.

The vast overspend came from costs of £13.8 million attributed by management to publishing online content, site maintenance and new technology coupled with a 'misallocation' of overheads.

The reorganisation of the corporation's New Media division into Vision, Journalism, Audio and Music, and Future Media and Technology departments also had a 'negative impact' on tracking spending across the site, the review found.

"[T]he devolved management structure of BBC.co.uk, while clearly offering many advantages in terms of integrating online with the BBC’s other activities, meant that BBC management no longer had effective control of BBC.co.uk as a single service and was not able to set a realistic budget for the service in the first place or make sure that spending against the agreed budget was controlled," the review said.

Today's review added that improved management controls that meet standards set by the Trust will need to be in place before further proposed investment in the website is approved.

The Trust also asked the BBC Executive to submit a new management system for BBC.co.uk within six months, noting that the last restructuring in 2007 had 'an adverse effect' on the site's accountability.

The new management structure will then be reviewed a year after it is implemented.

The Trust also announced a restructuring of the Service Licence - the agreement which sets out the baseline budget and objectives of a BBC service - in order to offer more transparency about the BBC's online activities.

In addition, a new baseline budget for BBC.co.uk, incorporating £3.9 million for the iPlayer, was set by the review at £114.4 million, an increase of more than £40 million over its previous budget and a figure that dwarfs even last year's budget and its large overspend.

The Trust also said the site required stronger editorial control to ensure that the service is 'distinctive' from other online media and recommended that it follow a range of 'distinctiveness criteria'.

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