Grade orders audit on BBC licence fee

The BBC faces a major financial shake-up after its chairman Michael Grade today ordered an independent accountant to conduct an urgent investigation into how the licence fee is spent.

Mr Grade believes the biggest threat to the corporation's existence comes from critics who accuse it of wasting the £3billion annual revenue from public money.

From this week, Ernst & Young will review the BBC's financial control systems, focusing on unnecessary expenditure, he said.

His comments come weeks after a survey found two thirds of viewers thought the £121 licence fee should be scrapped. The BBC's royal charter, the legislation which allows it to claim the annual fee from all viewers, expires at the end of 2006 and there is growing pressure to revoke the agreement.

But in his first interview since taking over from Gavyn Davies, Mr Grade said: "If you are going to ask me what keeps me awake at night, it's not a Hitler's diary - because those things happen and editors make mistakes. I am more concerned about the stewardship of the public's money than some political row about a programme investigating the Olympic Committee." Mr Grade told The Independent: "I have, this week, commissioned Ernst & Young to ... have a look at our financial control systems generally. I want some outside comfort that our systems are fit for their purpose."

Meanwhile, some of the corporation's leading presenters are said to be considering strike action over pay contracts.

Stars including Jonathan Ross and Mark Lamarr have threatened to walk out over new contracts under which presenters receive only a flat fee instead of the traditional percentage of repeat fees.