BBC payoff executives have saved taxpayers millions

Whac-a-mole: current and former BBC grandees at the Public Accounts Committee yesterday. PA Wire

“Unedifying” was the label the chairman of the Public Accounts Committee gave to the spectacle of some of the BBC’s most senior figures - past and present - squabbling over who knew what about big redundancy payments. Others have found sharper descriptions for their collective performance in parliament this week.

It is a situation rich in paradox.

First, Mark Thompson, the former director general and now chief executive of the New York Times, seems likely to have to carry the executive pay scandal as the legacy of his BBC tenure. Yet he has done more to deal with the issue than most.

When he took the job in 2004 he inherited 17 executive directors, all highly paid and enjoying a 30% bonus scheme. He cut the bonuses to the same level as other staff, forced executive directors to forfeit a month’s salary a year and greatly reduced the number of senior managers and the salary bill in the organisation.

The contentious payoffs for which he has been criticised will save the BBC and the licence fee payer many millions a year more than they have cost. But this is not how he’s likely to be remembered.

Then there’s Mark Byford, the former deputy director general whose redundancy payment of nearly a million pounds has crystalised the debate about excessive BBC payoffs. A man who has devoted his life to the BBC, he agreed to go early to symbolise how seriously the BBC was taking the task of reducing senior management and costs. It’s a gesture which seems to have had the opposite effect.

Mark Byford: big payout for long service. PA

Finally, the BBC Trust which was introduced in the wake of the Hutton crisis and resignation of the BBC chairman and director general (full disclosure: I was director of news at that time). The argument for the new governance arrangements was to put clear water between the executive and the trustees and to prevent the chairman and his board having to manage the conflict of being both regulators and cheerleaders. It hasn’t worked. As the Select Committee hearing showed, any water between the Trust and the Executive is distinctly muddy and the conflict of role remains.

What happened?

There is more agreement between the arguing factions than may appear. What’s not in dispute is that the BBC Trust set the management an aggressive target to reduce the number of managers in the organisation and, consequently, the salary bill. An original three-year plan was later reduced to 18 months, placing more pressure on the executive team to make the savings swiftly.

As a consequence, more than 300 “senior managers” left the organisation on redundancy terms – most of them on minimal contractual terms, but some of long-standing service being paid so-called “sweeteners” to leave early and quietly. And this was the point of contention.

All agree the trust’s targets were met and the money saved – some £19m a year ongoing. It seems clear that management prioritised speed of exit over short-term cost – an approach which achieved the objectives set but which, in hindsight, is open to question. The challenge, however, should be over managerial judgement – and the economic balance of interest - rather than casual accusations of impropriety, cronyism or cover-up which have been too freely bandied about.

One of the weaknesses of Britain’s select committee system is it encourages MPs to play to the gallery rather than focus on forensic analysis. Soundbites ready-baked for the next day’s headlines are never far from committee members lips. So when Thompson explained the mathematics of the redundancy scheme, (delay would have cost an extra £1m a month) the chairman could only answer: “We’ll have to agree to differ”. The finances of the scheme did not fit the story she wanted told.

Margaret Hodge: playing to the gallery. PA

At one point she declared she wanted “no more lies” – although it’s far from clear there had been any. Parliamentary privilege permits language which in public might be litigious. All good fun for the crowds watching, but not the best way of pursuing the truth.

However what became very clear from the hearing was the complexity of responsibilities and process between the executive team and the BBC Trust as regulators. As a consequence it was hard to pin full responsibility on anyone. This goes to the heart of the real problem.

As we saw in last year’s self-inflicted BBC crisis over Jimmy Savile, internal communication and clear accountability is now a major problem for the organisation. Yes. It is a big, complex matrix of responsibilities – that is tough to manage at the best of times (and these certainly aren’t the best of times). But in such places and at such times clarity and simplicity are at a premium and too easily lost in a fog of emails, advisors, phone calls and loose consultation.

Where does this leave the Beeb?

This spectacle has left the door open for those who argue the BBC should be regulated by Ofcom and managed by a single board with a majority of non-executive directors. That would be simpler, but Ofcom could not have intervened over this issue and, to date, the non-executive directors have been largely invisible, with the exception of former Barclays boss, Marcus Agius.

If the current oversight arrangements are to be made to work they will need a thorough overhaul – something which it’s not clear that chairman Chris Patten has the appetite to do. And at some stage the tension between expecting the BBC to compete against global commercial media giants but be run like a Whitehall department must be resolved.

In the meantime, the new director general Tony Hall is acting swiftly but has a huge task. He has already put in place measures to prevent any repeat of over-generous payoffs. He has identified the need for a simpler management with clear accountability. And he has recognised there needs to be a culture change throughout the organisation which bridges the gulf between management and programme making.

Then, before Charter Renewal in three years time, his team must offer a vision of the BBC which can inspire support from public and politicians alike and lay to rest these ghosts from the past. He deserves the space and time to do it. And we should all wish him luck. He needs it.

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