BBC exceeded contractual pay-off terms for 22 senior managers

The BBC spent £1.4m more than it was contractually required to in making 22 severance payments to staff.

The National Audit Office examined 150 payouts between 2009-2012. In a report published in July, the government spending watchdog studied a sample of 60 severance packages and found 14 cases in which payouts exceeded the employee’s entitlemt.

In response to a request from the BBC Trust and the Commons Public Accounts Committee, the NAO examined the remaining 90 cases and found eight more instances in which the BBC had paid over the odds, bringing the total cost to £1.4m.

The report also found that in 18 of the 90 cases severance pay had been agreed before the supporting business case had been approved.

In its conclusion, the NAO said: “The results of our examination of a further 90 severance cases confirm the conclusion set out in our earlier report, namely that weak governance arrangements led to payments that exceeded contractual entitlements, provided poor value for money and put public trust at risk.”

The initial report found that £25m had been paid to executives in redundancy packages over three years.

The watchdog also said the BBC had informed it about a single redundancy payout of £687,333 made by BBC Worldwide to former BBC executive director Jana Bennett in 2012. The NAO report does not include this payment as it was made by a commercial subsidiary of the BBC and so does not relate to income from licence fee. The BBC also said it had reversed its decision and recovered the money.

BBC Trust’s finance committee chair Anthony Fry has sent the additional NAO report to PAC chair, Labour MP Margaret Hodge, ahead of its next evidence session on Monday 9 September. The session will see former BBC director general Mark Thompson quizzed by MPs on the payouts, alongside BBC Trust chairman Lord Patten and HR director Lucy Adams.

In a letter to Hodge, Fry said the BBC Trust “shares the dismay which licence fee payers and BBC staff will feel at the NAO’s findings”. He added that it regretted the “the failure to identify” the payment to Bennett.

Fry continued: “With the full support and co-operation of the director general and his executive board, including the non-executive directors, we are determined to ensure that the issues raised by the NAO report and supplementary note are tackled effectively.”

The BBC has brought in audit firm KPMG to carry out a further review of severance cases that may have breached the corporation’s guidelines.

BBC Director-General Tony Hall said: “Reforming severance pay arrangements and addressing these problems of the past have been a priority for me from day one as Director-General. I commissioned today's KPMG Report to ensure that we can get everything out in the open and help bring this difficult chapter to a close. 

“The Report underlines what we already knew. Approvals, record keeping and oversight were poor. Although the BBC delivered savings of £37m a year in management costs it did it in the wrong way. The measures I am announcing today further strengthen the new controls I have already put in place. I want to make sure that the BBC does everything it can to give the public confidence we are managing their money in the right way.”

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