- National Audit Office reveals BBC broke its own rules with big payouts
- Warns public trust has been undermined by use of licence fee money
- George Entwistle received £475,000 after 54 days as Director General
- Culture Secretary Maria Miller condemns ‘culture of pay-offs’
The BBC’s cavalier attitude to spending licence fee payer’s money was laid bare today by a damning report into the vast pay-offs given to outgoing managers.
The National Audit Office condemned the Corporation for repeatedly breaking its own rules to splash out £25million on severance payments for just 150 high-ranking staff.
Culture Secretary Maria Miller said the BBC had a ‘a culture of pay-offs that simply cannot be justified’.
The BBC Trust said the NAO conclusions were ‘deeply worrying’ after an inquiry found outgoing staff were given more to leave their jobs than their contracts required in more than a quarter of cases.
The move cost licence-payers more than £1 million. In two cases the BBC knew that the outgoing staff had already found new employment before they had left.
It included George Entwistle who received £475,000 – twice the money to which he was entitled after resigning as BBC director-general over the Jimmy Savile scandal after only 54 days in the job.
Amyas Morse, head of the National Audit Office, said: ‘The BBC has too often breached its own already generous policies on severance payments.
‘Weak governance arrangements have led to payments that exceeded contractual requirements and put public trust at risk.
‘The BBC’s proposal to cap redundancy payments, announced in 2013 by the new Director General, is a signal of change for the better. It is well below the maximum that applies to civil servants.’
The BBC’s new director-general, Tony Hall, said said the BBC had ‘lost its way on payments in recent years’ and he has already announced moves to cap payments at £150,000 and improve the process.
He accepted the NAO’s conclusions and added: ‘The level of some of these payments was wrong.’
But he claimed the payouts were made in a rush to cut staffing numbers, which resulted in 445 well-paid mangers still on the payroll.
Mr Hall said: ‘It is important to understand what was happening here. The BBC was trying to get its senior management headcount down, and it succeeded, reducing it from 640 to 445.
‘As the NAO acknowledges, we have saved £10 million over the period studied by the report and will keep on making savings every year.
‘But we have to accept that we achieved our objectives in the wrong way. I believe the BBC lost its way on payments in recent years.
‘I have already said that we will be capping severance payments at £150,000 and we have now begun to improve our processes. These payments were from another era and we are putting a stop to them.’
The report revealed that Mr Entwistle’s final pay-off of £475,000 had also included a further three weeks’ salary after the date of his resignation. His payment had previously been reported to be £450,000.
Former chief operating officer Caroline Thomson last year who left with a £670,000 pay-off – more than twice her £330,000 salary.
The NAO said that the decisions to make payments higher than staff were entitled had until recently ‘been subject to insufficient challenge and oversight’.
In its conclusions, the NAO says: ‘The BBC has breached its own policies on severance too often without good reason.
‘This has resulted in payments that have not served the best interests of licence fee-payers. Weak governance arrangements have led to payments that exceeded contractual entitlements and put public trust at risk.
‘The severance payments for senior BBC managers have, therefore, provided poor value for money for licence fee-payers.’
Culture Secretary Maria Miller said the report had revealed ‘a culture of pay-offs that simply cannot be justified’.
She said: ‘Every publicly funded organisation must be able to justify every penny of taxpayers’ money they spend, and even more so in these tough economic times. There is huge public interest in the BBC, and the NAO has exposed a culture of pay-offs that simply cannot be justified.
‘The report shines a light on a culture at the BBC where individuals received payments that went beyond the already very generous terms of their contract. I welcome the fact that the BBC is looking at future payments – a move which this report suggests is long overdue.’
A total of 228 senior managers left the corporation in the three years up to December 2012.
Of those 150 of received severance payments, each receiving an average of £164,200.
And there were still 436 senior managers continuing to work at the BBC in February.
The BBC has estimated it has made £35 million in savings as a result of senior manager redundancies – £10 million more than the £25 million it has paid out – and these will increase over time.
Conservative MP Rob Wilson said: ‘This is an absolutely damning report.
‘The BBC has paid £60 million to departing executives in recent years, but remains chronically over-managed with an astonishing 436 ‘senior’ managers.
‘That’s too many to get on the same floor, let alone in the same room.
‘Lord Hall’s announcement of a cap on pay-offs was welcome, but the BBC says today, months later, that it is ‘consulting with staff’ on this.
‘He must realise that the public will demand nothing less than real action to stop these abuses, not headline-grabbing gimmicks.’
He added: ‘The BBC Trust’s handling of the Entwistle pay-off was secretive, evasive and looks increasingly incompetent.
‘Rather than standing up for licence fee payers and safeguarding the use of public money, the BBC Trust appears to want to keep the public in the dark and resist outside scrutiny.
‘Change will not happen at the BBC unless it comes from the very top. It is hard to have any confidence that the scandalous misuse of public money by the BBC will end when its governing body is so weak.’
Gerry Morrissey, general secretary of the broadcasting union Bectu, said: ‘It is quite clear that a number of senior managers were given excessive payments to leave the organisation, which cannot be justified.
‘However, this should not be seen as an opportunity to attack payments made to production staff and journalists who are leaving the BBC through no fault of their own.’
George Entwistle, the BBC executive who lasted just 54 days in his job as director-general, received more than £800,000 in ‘remuneration’ during his final year at the corporation.
Figures published today show that when his salary, ‘compensation’ pay-off and the costs to the BBC for his legal fees are totted up, the total sum comes to £802,000.
The costs include a six-figure sum related to his appearance as a witness before the Pollard Review, which looked into a shelved Newsnight investigation into the Jimmy Savile sex abuse scandal and its knock-on effect at the BBC.
Mr Entwistle’s legal fees and associated costs – including tax and VAT payments – for appearing before the Pollard inquiry came to £107,000.
He had been in charge of the BBC’s TV output at the time of the shelved report into Savile, and the erupting scandal went on to end his tenure as director-general after less than two months.
He was given £450,000 as a severance payment when he resigned and a further £20,000 for legal fees, private medical insurance and PR support.
And he collected £217,000 in salary for his time as boss of BBC Vision and as director-general during his final months at the corporation.
His predecessor in the top job, Mark Thompson, also ran up hefty legal costs for appearing before the Pollard Review, with the BBC paying £86,000 to cover them, the figures showed today.