BBC did not lose plot over £1m pay-off, says Mark Thompson
- 9 September 2013
- From the section UK
Ex-BBC director general Mark Thompson has told MPs the corporation had not "lost the plot" when it agreed a pay-off of almost £1m to his former deputy.
He accused Lord Patten, chairman of the trust which oversees the BBC, of making "unfair and untrue" claims not to have known about Mark Byford's payment.
Lord Patten said he "couldn't have been expected to know" about the sum.
Mr Thompson told MPs the trust had put him under "ferocious pressure" to make senior redundancies like Mr Byford's.
The BBC has been criticised for paying £25m ($39m) to 150 outgoing executives - £2m ($3.1m) more than their contracts stipulated.
Mr Thompson - who is now chief executive of the New York Times newspaper - was one of seven senior BBC figures giving evidence to the Public Accounts Committee (PAC).
He was asked about a £949,000 pay-off package given to former deputy director general Mr Byford.
He said Mr Byford's redundancy had represented "value for money" as part of a wider effort to cut the number of highly-paid executives and save about £19m a year.
He said he had believed he had the "full support" of the BBC Trust in trying to do that within a very short time frame.
Committee chairman Margaret Hodge said under Mr Byford's contract he could have been paid off with £500,000.
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 and not "worried about his future and taking calls from head hunters".
He said the fact that he had known Mr Byford for more than three decades and socialised with him did not affect judgement about his severance package.
Asked by Mrs Hodge if the BBC had "lost the plot", Mr Thompson replied: "I do not think we lost the plot."
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 - and to do that, 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.
But he said the process of making "rapid reductions in senior management" was "very difficult", adding: "You think we should have done it for less....
"The price of that would have been that it would have taken longer and the savings would have been smaller."
BBC trustee Anthony Fry told the PAC there had been "months and months of arguments" between the trust and the BBC executive committee over financial issues such as pay, perks and bonuses - although he admitted that severance packages were not given much attention.
"It became a battleground. I got the distinct view... that our views were not being taken with what I believed was the seriousness they deserved," he said.
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.
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.
Then, in person, he told the 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.
Trust director Nicholas Kroll said the deputy director general's severance package was not part of the trust's remit.
But Mrs Hodge said the the job of the trust was "to protect the licence fee payers' interests", adding: "There is not one person around the table who can understand why there was no challenge from you."
Former chairman of the BBC executive board remuneration committee Marcus Agius said there had been "a great deal of concern" within his committee "about these redundancies and the amounts".
"We challenged and tested Mark Thompson and after sustained debate we were finally persuaded on value for money grounds," he said.
Ms Adams apologised to the committee for stating in the July hearing that she did not know of an email explaining the pay-offs when in fact, she had helped to compose it.
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".
Summing up the hearing, Mrs Hodge said it had been a "grossly unedifying occasion which can only damage the standing and the reputation of the BBC".
She said the committee believed the governance of the corporation was "broke".
Lord Patten told her 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 suggestions that responsibility for governance should be taken from the trust and handed to Ofcom, and said he hoped over the next couple of 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.