Beeb sharpens axe at news unit

BBC Director-General Greg Dyke is preparing to make compulsory redundancies in the corporation's news division for the first time ahead of a critical report into News 24, its much-criticised digital channel.

Dyke was understood to be furious to discover that the division will go over budget by about £15m. News managers had assured him that potential savings had been identified and spending was under control.

He is keen to be seen to be making savings before the report into News 24 by former Financial Times editor Richard Lambert is published.

Lambert's report is likely to be highly critical of the lack of financial transparency at the channel, which has an annual budget of £50m , more than rivals Sky News and ITN combined. But News 24's audience last year was less than 0.1% of British households.

Making cuts in the news division will be a sensitive task for Dyke, who has faced criticism over his apparent lack of commitment to public service broadcasting. Voluntary redundancy has been offered to news staff for the first time for two years, but the corporation does not think that the resulting savings will be enough.

The news division has an annual budget of more than £300m and more than 3,000 staff. The budget cuts of about five% are fairly minor compared with other media organisations. These have suffered in the advertising downturn, from which the licence fee-funded BBC is immune. The BBC said it could not rule out compulsory redundancies, but denied there was such a 'master plan'.