The BBC's redundancy payouts have been called "deeply worrying" after a Government watchdog found it spent £25 million on handouts to senior managers over the last three years.
A National Audit Office report into severance pay at the corporation found that it “breached its own policy… too often and without good reason” by offering packages that were in excess of contractual entitlement. It said the payouts had "put public trust at risk".
Recent high profile payouts at the BBC include £475,000 to former Director General George Entwistle after he resigned in November 2012 after 54 days in the job and £670,000 to former chief operating officer Caroline Thomson in September 2012. In 2010, Mark Byford pocketed £949,000 after standing down as deputy director general and head of news.
Current director general Tony Hall said today the BBC had “lost its way” over redundancy packages.
According to the NAO report: in the three years to December 2012, 228 senior managers left the BBC, with 150 receiving redundancy payments. In February 2013 there were said to be 436 senior managers at the BBC.
The NAO report accepted that the savings made by the BBC from cutting the number of senior positions were larger than the cost of redundancies but concluded that the severance payments “provided poor value for money”.
The spending watchdog found two cases in which the BBC offered severance pay to departing executives when it knew they had already found new jobs. It also said that in almost a quarter of cases, redundancy terms had exceeded the level provided for in the employees’ contracts, costing the taxpayer at least £1 million.
The report added that “decisions to award severance payments that exceed contractual entitlements have, until recently, been subject to insufficient challenge and oversight".
Amyas Morse, head of the NAO, 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.”
However, he welcomed the recent commitment to consult staff over a proposal to cap future redundancy payouts at either £150,000 or 12 months’ salary, pointing out that the limit was lower than that applied by the civil service.
Anthony Fry, chair of the BBC Trust’s finance committee, described the NAO’s conclusions as “deeply worrying” and called for a follow up review within the next two years.
He said: “We asked the NAO to carry out this review following public concern about the size and frequency of severance packages at the corporation, and this report shows that those concerns were justified.
"Although the BBC has achieved significant savings in its senior manager pay bill, some of the NAO's conclusions are deeply worrying, particularly the failure to follow agreed severance policies in a number of cases as a result of weak governance from the BBC executive in the past. Such practices are unacceptable, and I have no doubt that they will, quite rightly, be met with considerable dismay by licence fee payers and staff alike.
“The Trust is clear that there cannot be a repeat of such a fundamental failure of central oversight and control.”
Hall, who took over as Director General in April, said: “I accept in full the conclusions of the NAO report. The level of some of these payments was wrong – I said so in my first week in the job.
“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 £10m over the period studied in 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.”