The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"Public servants should not be rewarded for failure. But that was exactly what happened when the BBC Trust paid off the former Director General, George Entwistle.
In order to speed his departure, he was paid £450,000, twice what he was contractually entitled to, and then, if that were not bad enough, 12 months’ private medical cover and a contribution to the cost of his legal fees and public relations advice were added to the package.
This cavalier use of public money is out of line with public expectations and what is considered acceptable elsewhere in the public sector.
The Comptroller and Auditor General offered to carry out an immediate and independent audit examination of the package, in time to inform the deliberations of this Committee. The BBC Trust refused to take that offer up.
This inhibited Parliament’s ability to hold the Trust to account for its use of public money.
The BBC's generosity with severance packages goes beyond the one awarded to George Entwistle. Since 2010, over £4 million in total has been made in severance payments to 10 other departing senior managers. The BBC is also providing 422 senior managers with private medical cover as part of their remuneration packages.
We have asked the Comptroller and Auditor General to include in his 2013 programme of work on the BBC an examination of severance payments and benefits for senior managers.
We welcome the action taken by the BBC in response to previous findings by this Committee on off-payroll arrangements at the Corporation. We expect the BBC to be no less cooperative in its approach to severance packages and benefits."
Margaret Hodge was speaking as the Committee published its 22nd Report of this Session which examined the severance payment awarded to the BBC’s former Director General.
On Saturday 10 November 2012, the BBC Director General George Entwistle agreed to resign after just 54 days in the job. In order to secure his quick departure, the BBC Trust agreed to a pay-off that included 12 months’ salary of £450,000, twice what he was contractually entitled to. The BBC Trust also agreed to give the former Director General 12 months’ private medical cover and contribute to the cost of legal fees and public relations advice connected with his departure and his participation in the ongoing inquiries into Newsnight and Sir Jimmy Savile.
In the course of our inquiry we were shocked to discover that since November 2010 the BBC has made severance payments to 10 other senior managers at a total cost of more than £4 million. The largest payment was the £949,000 given to the BBC’s former Deputy Director General. The BBC’s former Chief Operating Officer received a severance payment of £670,000.We consider these payments to be excessive and completely out of keeping with public expectations about how their licence fee money is spent.
It also emerged that 422 senior BBC managers received private medical cover worth £667,489 as part of their remuneration packages in 2012. It is difficult to see how the use of public money to fund private healthcare for senior BBC managers can possibly be justified
We have asked the Comptroller and Auditor General to examine severance payments and benefits for senior managers as part of his future programme of work on the BBC.
However, we are extremely concerned that the BBC Trust rejected the Comptroller and Auditor General’s offer to carry out an immediate and independent audit of the Director General’s severance package. This inhibited Parliament’s ability to hold the Trust to account for its use of public money.
We had to consider the severance package offered to the departing Director General on the basis of the information publicly available and additional details disclosed by the BBC during the hearing.
The Committee also reviewed the BBC’s response to our previous findings on its off-payroll arrangements and we welcome the action the BBC has taken. We will expect a similar response on its approach to severance packages and benefits for senior managers.