COVENTRY MESSAGE BOARD

The BBC Trust, the governing body of the BBC, said today that it was “deeply concerned” by severance payments to the corporation’s executives of £25m in the past three years.

In an extraordinary rebuke, Anthony Fry, chair of the Trust’s Finance Committee, said the generosity of the payments would “quite rightly, be met with considerable dismay by licence fee payers and by BBC staff.” In a statement, he said: “There can be no repeat of such a fundamental failure of central oversight and control.”

The payments were uncovered by the National Audit Office (NAO) in a report which found that 367 of the BBC’s 436 senior managers remain on contracts that entitle them to two years’ salary as part of the corporation’s redundancy programme.

The report found that the average redundancy settlement for a BBC manager in the three years to December 2012 was £164,200. To the BBC Trust’s surprise, in some cases the payments exceeded the amounts permitted under the BBC’s own policies.

In 14 of the 60 cases reviewed by the NAO, the BBC paid senior managers more salary in lieu of notice than would be provided by their contractual entitlement, costing licence fee payers at least £1 million. The NAO identified two cases where the BBC knew that departing senior managers had secured future employment before they had left.

The report uncovered some extraordinary payments signed off by the BBC. In one case, a departing manager was given a package of £219,000 even though this was £141,000 more than he was entitled to. The payment included £49,000 to cover training and IT equipment in order to help the individual’s future career prospects. The BBC had originally offered £30,000 but was persuaded to give an additional £19,000 to cover tax and national insurance due on the payment.

In another example, the BBC agreed to hire a departing manager as a consultant on a daily rate of £1,000 and agreed to pay a minimum of £60,000 over two years. The individual also received £145,500 redundancy payment and a £66,000 contribution to their pension pot.

The Trust today criticised the BBC’s former leadership – essentially that of the former Director General Mark Thompson and his senior executives - for failing to exert “adequate governance” over the payments. “This has resulted in decisions being taken which were poor value for money, undermine the culture of accountability that should exist in any publicly funded organisation and put public trust in the BBC at risk,” it said.

The findings are especially damning in the wake of the revelation that the BBC wasted £100m of licence fee payers’ money on its disastrous digital archive project, the Digital Media Initiative (DMI), which was axed in May and is now the subject of an inquiry by accountancy firm PricewaterhouseCoopers.

The BBC has been under pressure to save money by reducing costs after the freezing of its income in the last licence fee settlement. But the NAO found that although the BBC had saved £35m by cutting the posts of 228 managers, it had spent £25m of that on redundancy packages.

News of the management severance packages comes as thousands of BBC staff are due to vote this week on taking industrial action over their pay and conditions.

The BBC Trust today called on the new BBC Director General Tony Hall to “implement rigorously” new restrictions on management severance packages which cap payments at £150,000.

Responding to the report, Culture Secretary Maria Miller said it “shines a light” on the culture at the top of the BBC. “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,” she said.

“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.”