Closed MPs question BBC pay offs

(c) PA Mr Thompson giving evidence

Senior BBC figures are appearing before MPs on the Public Accounts Select Committee facing questions about pay offs given to departing executives. Former director general Mark Thompson has accused the trust which oversees the BBC of “fundamentally misleading” Parliament over severance payments at an earlier hearing.

Also set to appear are Marcus Agius, former chairman of the BBC Executive Board Remuneration Committee, Lord Patten, chairman, BBC Trust, Anthony Fry, BBC Trustee, Sir Michael Lyons, former trust chairman, Lucy Adams, BBC HR director, and Nicholas Kroll, a director of the BBC Trust

By Lina Saigol and Emily Cadman

You can get all the background to the row in this piece from FT media correspondent Rob Budden BBC Trust faces question time in pay-off quarrel

Hodge: “colossal waste” at the BBC if the corporation is managed better without some of its top staff.

Hodge persistent about the £1m payout to Mark Byford, former deputy, paid in 2010
She asks if Thompson would sanction the same payout today

Thompson says the BBC would have spent £1.3m on salary for Byford by now if he had not been made redundant.

Thompson says Byford payout was “Value for Money.”

Hodge: “Why is half a million, which for most people is mega bucks, not enough?”

Stewart Jackson, Conservative MP for Peterborough: Mr Thompson created a culture of “my way or the highway” while he was director general.

Thompson says problems existed before he joined the BBC and he made large severance payments because he was cutting senior staff to reduce costs.

Robust exchange between Lucy Adams – BBC HR director – and Hodge who challenges Adams on her previous evidence.

Adams says suggestion she misled committee is “grossly unfair”

Just a reminder of the background. Earlier this week the National Audit Office found that received almost £2m more than they were contractually entitled to.

The report, which covered a three-year period to the end of December last year, looked at 150 severance payments to senior managers. It identified 22 cases where the public service broadcaster had paid more salary in lieu of notice than it was obliged to at a total cost to licence fee payers of £1.4m. More here: Departing BBC managers received £2m extra severance payouts

Emily Bell, Director of Tow Centre for Digital Journalism at Columbia J School tweets:

MP Stephen Barclay asks Thompson why he paid Byford on terms that the National Audit Office indicated were in breach of BBC policy.

Thompson: “We took a decision not to issue formal notice until June 2011 and from that moment we absolutely followed the contract strictly.”

Barclay asks: Byford could not have sued the BBC over a severance arrangement based strictly on his entitlement, could he?

Thompson says:

No, but I was advised that the risk was one of constructive dismissal. This wasn’t a time in my view for a complete restructuring of the BBC’s approach to severance because we were in the middle of [a number of senior redundancies].

Mr Byford, former former deputy director-general, received a pay off of £949,000

Thompson: I was under ferocious pressure from the BBC Trust to do something big and quick to cut senior staff to reduce costs.

Thompson: “My intention is to set the record straight” he adds he thinks there were “damaging and misleading statements” made on the subject of payoffs

Hodge asks if anyone threatened to take legal action on size of their payouts.

There is an uncomfortable silence before Thompson says he can think of one example which ended in compromise.

Tension between trustee Anthony Fry who says he was told to get back in his box and Thompson who denis that he spoke disrespectfully

Chris Patten is now in the hot seat

Patten: says there weren’t any reference to severance payments in his induction meetings and trust chairman Sir Michael Lyons never mentioned them.

Lord Patten quotes from a briefing he received which specifically said the payments were contractual

Patten: I was not party to any conversations about Byford

More insistence on lack of knowledge from Patten:

“I am 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.”

Patten arriving at the PAC earlier (c) Reuters

Nicholas Kroll, director general of BBC Trust, says he was not closely involved in the preparation of a note on 7 October 2010 about the Byford payment

Kroll says deciding on the figure is “not a matter for the Trust” but is an issue for the Remuneration Committee.

Hodge asks Kroll how much he is paid.

“£238,000 a year,” Kroll says.

“You seem to have a very short memory,” Hodge quips back.

Jackie Doyle-Pric, Conservative MP, on Kroll’s testimony:

There is not one person around the table who can understand why you did not challenge the payments.

Marcus Agius, former chairman of the Executive Board and Remuneration Committee is asked how much discussion there was about the Byford payout

Agius says there was no discussions with the Trust on this subject but there was an “intense” meeting of his committee on the issue and that we were satisfied that the payment was on justified on value-for-money terms.

Hodge replies: “I think we’re astounded that you took that view.”

Ouch. Anthony Fry says Byford was told about his redundancy package before the BBC Trust or the remuneration committee had considered the matter.

Thompson: The date on an email about Byford’s redundancy was inaccurate due to an error – giving the false impression the decision was taken before the trust and remuneration committee considered it.

Former chairman of the Financial Services Authority, Howard Davis says: Abolish the BBC Trust before it does more damage

Sir Michael Lyons, former BBC Trust chairman says he inherited a culture of “very generous terms of payment for the most senior leaders and managers of the BBC” when he joined.

“The sums for the ordinary person in the street look eye-watering, of course they do. But that goes for many other places, whether in civil service or private industry”

Former head of the BBC Richard Sambrook tweets:

Lyons explains that the process of rapidly reducing senior management headcount is ” very difficult”

MPs are focusing on who knew what and when in relation to document silver – which detailed options Mr Byford’s severance pay

Mr Kroll is pushed hard on why he was unable to find the document earlier – he says the code name meant it wasn’t found with normal searches. It was eventually found in Sir Michael’s personal email

Chris Heaton-Harris MP has summarised the payout debate nicely:

The most bizarre game of whack-a-mole I’ve every seen in my life where you hit something down and it throws up another load of questions

Thompson interrupts MP Chris Heaton-Harris claim that none of the senior BBC figures has been willing to take responsibility for the severance payments to say that he has for his part in the situation.

Sir Michael Lyons admits the Trust is “damaged” as a result of this dispute:

I am absolutely clear that in the actions I took in seeking to make big reductions in senior management I was focused on the interests of licence fee papers.


“A lot of people listening to this discussion will have lost the will to live”


The evidence suggests the governance of the BBC was broke

Patten says the “bigger and more difficult issue” than a few large severance payments is a longer-term “cultural” problem over overpaying executives.

Richard Bacon, Conservative MP: the case for changing the BBC management structure has been overwhelmingly proven.

The bicycle is not working properly and it needs fixing now


The fact that you all seem to be squabbling on the head of a pin indicates to me that the governance is broke

Was it all the fault of an increasing reliance on email? That’s what Jackie Doyle-Price, Conservative MP, thinks.

Thompson says records available to the committee are mostly emails – but there were also many conversations.

The MPs are now focusing on the payoff for Roly Keating – who returned his payment after it was criticized by the NAO. Lucy Adams is being asked whether she viewed such payments as “sweetners”

She replies: “Sweetners is a strange term. I don’t see those as sweeteners I see those as sensible business decisions.”

Hodge is now urging MPs to wrap up their questions

We are back to the question of “sweetners” for Ms Adams after she says she doesn’t remember using the word, MPs quote a leaked email in which she is alleged to do so

Hodge says that Adams is developing the habit of changing her evidence – a charge she denies


We should take account of the fact that then BBC is a great organisation and as a public organisation, we cannot behave like a bank.

Margaret Hodge is closing the session, thanks for being with us.