BBC bosses incompetent on pay-offs, says Margaret Hodge

Margaret Hodge: Executive pay-offs were "on another planet"

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There was "gross incompetence" in the way the BBC handled large pay-offs to outgoing executives, the chairwoman of the Commons spending watchdog has said.

Margaret Hodge, who had earlier questioned senior BBC figures, said it was an "unedifying experience" watching them "try to avoid responsibility".

During questioning, former BBC director general Mark Thompson defended the severance payments, denying that the corporation had "lost the plot".

He said the payouts had saved money.

Mr Thompson - who is now chief executive of the New York Times newspaper - was one of seven past and present BBC bosses giving evidence to the Public Accounts Committee (PAC).

It comes after criticism that the corporation paid £25m ($39m) to 150 outgoing executives - £2m ($3.1m) more than their contracts stipulated.

'On another planet'

Speaking to BBC News after the hearing, Labour MP Mrs Hodge said: "It was a very unedifying experience watching seven people at the top of the BBC dancing on the head of a pin to try and avoid responsibility for the decisions taken.

Analysis

A "grossly unedifying occasion" which has damaged the reputation of the BBC - that was Margaret Hodge's verdict. But have we learnt anything?

MPs seemed to accept Lord Patten's argument that he really could not be expected to have questioned deals such as Mark Byford's £1m pay-off given it was done before he arrived and was said to be within contract. Mark Thompson appeared to convince the committee when he said he had tried to keep the trust informed.

The question about why the trust had not done more hung in the air. The answer that it was not their job did not go down well with some of the MPs. The former chairman Sir Michael Lyons accepted that perhaps they should have taken more of an interest.

The government has been watching with interest; the question of how the BBC is governed is being discussed. The debate over the renewal of the charter for the BBC is about to begin and today will only add weight to a growing debate about the future of the trust.

"To put these decisions into context, Mark Byford, the former deputy director of the BBC, walked away with £1m when he was made redundant, much more than the minimum contractual entitlement.

"For the ordinary person - the licence fee payer - average wages these days are £25,000, so it would have taken the average worker in Britain 40 years - a lifetime - to get the money that Mark Byford got in a day.

"That just seems they were on another planet and didn't understand how people perceive these sort of redundancy settlements at the top of the BBC."

Summing up at the hearing, Mrs Hodge said the committee believed the governance of the corporation was "broke".

The committee will produce a report, said Mrs Hodge, adding: "We will have to see whether we conclude it's incompetence or it's a deliberate misleading of the committee which is at the heart of this matter."

Mr Thompson had earlier defended a pay-off package of almost £1m to Mr Byford as "value for money", saying he had been under "ferocious pressure" from governing body the BBC Trust to make savings by cutting senior staff.

He accused Lord Patten, its chairman, of making "unfair and untrue" claims not to have known about Mr Byford's payment, saying he believed he had the trust's "full support".

Lord Patten said he "couldn't have been expected to know" about the sum.

Mrs Hodge said that under Mr Byford's contract he could have been paid off with £500,000.

Former BBC chairman Lord Grade: BBC needs "to learn the value of money"

But Mr Thompson said he was paid almost twice that because the corporation wanted him to be "fully focused" on his job in the final months of his tenure.

Asked by Mrs Hodge if the BBC had "lost the plot", Mr Thompson replied: "I do not think we lost the plot."

Following the hearing, former BBC chairman Lord Grade said the corporation "suffers more and more from a lack of understanding the value of money".

"The cheque comes in every April, £3.5 billion, and if you don't have to earn the money and you've got that quantity of money it's very hard to keep a grip on the reality of the value of money," he told BBC Newsnight.

'Eye-watering'

BBC Trust

  • meant to act as the "guardian" of licence payers' money and ensure the BBC fulfils its remit to inform, educate and entertain
  • sets the BBC's strategy, approves how and where money is spent, sets editorial guidelines and reviews the performance of all BBC services
  • its chairman, Lord Patten, and 12 trustees are separate from the BBC's executive board, which is led by the director general and controls the day-to-day running of the corporation - in line with a framework set by the trust
  • also responsible for protecting the BBC's independence

BBC HR director Lucy Adams told the committee the corporation was trying to "get people out of the door" with minimal disruption and no risk of legal action so it was "occasionally" necessary to pay more than was contractually required.

Former trust chairman Sir Michael Lyons agreed with the MPs that payments like Mr Byford's "look eye-watering", adding that "clearly the trust is damaged" by the whole affair.

In July, Lord Patten told the PAC he was "shocked and dismayed" by the scale of pay-offs and said that should Mr Thompson be called before MPs he would be as interested as they were to hear why the trust had not known about them.

But ahead of his appearance before the committee, Mr Thompson sent a letter to the PAC saying he had emails which showed trust members had approved the payments.

Lord Patten tells the committee that he "cannot accept" that he misled them over payments

Earlier, Mr Thompson told MPs that Lord Patten's claims not to have known about them were "damaging, unfair and misleading statements".

In reply, Lord Patten said he took the charge of misleading the committee "very strongly" and insisted he had been told settlements for Mr Byford and former marketing boss Sharon Baylay were "contractual payments" agreed before his appointment.

"I'm in the position in which I'm accused of having misled the committee on something I didn't know and couldn't have been expected to know," he added.

'Uphill struggle'

The BBC has recently introduced a £150,000 cap on severance pay.

Ms Adams said she suggested a cap to the executive board before Mr Byford's package was agreed, but it had decided it would be "inappropriate to introduce the cap at that time".

The BBC's head of HR said she made a mistake in her earlier evidence to MPs

Lord Patten told the hearing he accepted there was "a cultural issue" around pay at the BBC "that we really do have to recognise and apologise for and deal with very robustly" - but that "trying to get people to face up to lowering salaries and reducing the number of managers is an uphill struggle".

He rejected recent suggestions that responsibility for governance should be taken from the trust and handed to Ofcom, and said he hoped over the next few years the corporation could demonstrate that the existing system could work.

The biggest severance payments included:

  • Mark Byford, deputy director general, 31 years of service - £949,000
  • Jana Bennett, executive director, 33 years - £687,333
  • Departmental director, 25 years - £866,300
  • Caroline Thomson, chief operating officer, 17 years - £680,400
  • Controller, 31 years - £476,700
  • George Entwistle, director general, 23 years - £470,300
  • Departmental director, 2 years - £394,500
  • Controller, 26 years - £381,600
  • Roly Keating, departmental director, 29 years - £376,000 (money returned minus tax)
  • Project director, 19 years - £356,200
  • Head of department, 33 years - £347,900

The PAC meeting in July followed the publication of a report in which the National Audit Office criticised the corporation, saying the scale of the payments put public trust at risk.

A spokesman for the prime minister said earlier that "legitimate questions" had been raised about the use of licence payers' money and should be answered.

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