The BBC's White City 2 property development in West London comprises three new buildings which were built next to an existing BBC building known as White City 1. The construction of the new buildings forms part of the BBC's plans to rationalise and modernise its estate.
White City 2 was financed and developed by Land Securities Trillium under a 30 year partnership deal with the BBC, which also covered property services at 48 other BBC locations. The cost of constructing White City 2 in Land Securities Trillium's bid was £210 million, £31 million more than the cost in the other short listed bid. However, other benefits including savings across the wider BBC estate and price certainty led the BBC to select Land Securities Trillium. The BBC subsequently had to pay a further £60.9 million for additional requirements, such as furniture and the technical fit-out of the buildings.
Two of the new buildings in the White City 2 development were completed on time in October 2003 and the last was ready in January 2004, three months ahead of schedule. The BBC has used the buildings to accommodate staff vacating other sites in London. A year after White City 2 was completed, 22% of the office space was still unoccupied, although the proportion of unoccupied space has since fallen to 6.5%.
In March 2005 the BBC purchased Land Securities Trillium's interest in White City 2 to allow refinancing of the project. The original contract had included a provision to share in refinancing benefits, but the way the project was financed meant that the BBC was unlikely to secure a share of the benefits. The financing mechanism also meant the BBC was unable to calculate the return to shareholders, although the contract included a provision to cap the return at 30%, which was much higher than typical rates of return for deals of this type.
The Comptroller and Auditor General is carrying out six reviews of the BBC under an agreement between the BBC and the Secretary of State for Culture, Media and Sport. White City 2 is the third of those reviews and on the basis of the Comptroller and Auditor General's Report1 and a memorandum by the BBC on developments since the Report,2 the Committee examined the BBC on the cost of the White City 2 development and how it is being used. The Committee also considered the arrangements for the Comptroller and Auditor General's work on the BBC.
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1 The Comptroller and Auditor General's Report, The BBC's White City development: the second phase of the building project, presented to Parliament in accordance with the amendment to the agreement between the Secretary of State for Culture, Media and Sport and the BBC dated 4 December 2003.
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