HC 774 Public Accounts Committee

Written evidence from the BBC Trust

Q14–16 & Q17–20: The categories of staff that receive private medical insurance and the cost of this to the BBC

I understand the BBC Executive provided this information to your Committee on Thursday 22 November. For completeness, I have attached the Executive’s note at Appendix 1 to this letter.

Q29: Information on the previous Director-General’s severance package

I have attached the following information relating to the previous Director-General’s severance package:

¾ a summary of the events on Saturday 10 November-Appendix 2 [not printed];

¾ a letter from the BBC Trust’s legal advisers, Baker & McKenzie, confirming the advice they provided between Saturday 10 November and Monday 12 November-Appendix 3 [not printed]; and

¾ the Compromise Agreement reached between the previous Director-General and the BBC-Appendix 4. [not printed]

The letter from Baker & McKenzie is provided to you in confidence and on the basis that the BBC Trust’s legal privilege in the advice is not waived. You will appreciate that it is only in exceptional circumstances that we would share such advice, and that it would normally remain private. While we recognise that ultimately it is up to the Committee to decide whether it wishes to publish this advice, we would ask you to respect the confidential nature of the letter and not to place it in the public domain.

As suggested during last week’s hearing, we will also make all the above information available to the National Audit Office (NAO).

Q84: Details of the negotiation that took place with Caroline Thomson

The BBC Executive has provided this information, which can be found at Appendix 5.

Q170: Details on taxpayer confidentiality in light of the questioning by Stephen Barclay MP (with reference to Q128 and Q129)

The BBC Executive has provided background information relating to the above questions, which can be found at Appendix 6.

To assist the Committee’s work in this area, the BBC Executive has indicated that if HM Revenue & Customs requires the BBC’s permission before it can inform the NAO about the number of cases it is reviewing it would give that permission if HMRC requests it. However, as set out in Appendix 6, the BBC Executive does not believe such permission is required.

I hope this letter and the attached provides you with all the information you requested. I am, as ever, happy to discuss any concerns you may have at any time.

Anthony Fry
Trustee

30 November 2012

APPENDIX 1

BBC’S PRIVATE MEDICAL INSURANCE PROVISIONS

The BBC provides Private Medical Insurance via BUPA. BUPA provide corporate private medical insurance cover to BBC staff on a fully insured basis with a 50% profit share arrangement in place should actual claims be less than 94% of the claims fund. Use of BUPA on a fully insured profit share basis is a fairly typical method of providing and funding a corporate healthcare benefit. 

422 members of staff are currently in receipt of BBC funded Private Medical Cover as part of their terms and conditions of employment. The cost of this for the calendar year 2012 is £667,489. BBC funded Private Medical Cover was withdrawn as a benefit for new Senior Managers in August 2011.

The BBC operates a number of Private Medical Insurance affinity schemes (offering various levels and types of cover to reflect differing staff needs in this area), which are available on a voluntary self-paid basis to all staff. These schemes offer a discount on standard BUPA rates of between 5 and 52%, with the level of discount reflecting the size of the scheme and its membership profile. 3,000 staff currently make use of such schemes.

APPENDIX 5

CAROLINE THOMSON-SEVERANCE ARRANGEMENTS

Below are the details of Caroline Thomson’s severance arrangements payable as a result of the closure of her position and redundancy from the BBC. The redundancy and notice payments were in line with her contractual entitlements. The arrangements were approved by the BBC Executive Remuneration Committee including the payment of notice in lieu, in order to allow the immediate implementation of George Entwistle’s restructure of the Executive and Management Boards of the BBC.

Contractual Entitlement

Received

1

Redundancy

£335,000

£331,400
(first £30k tax free, remainder subject to deductions at the rate directed by HMRC)
Reduced by agreement in exchange for additional £3,600 (inclusive of VAT) towards legal fees.

2

Notice

12 months’ notice

Paid £335,000 in lieu of 12 months’ notice.

There were a number of options re notice:

-

Remain on 12 months’ gardening leave (with full salary and benefits) during her notice ie to September 2013; or

-

Continue to work during her notice; or

-

Leave immediately and be paid in lieu of 12 months’ notice (basic salary only).

3

Outplacement Support

Not a contractual entitlement-subject to individual agreement

Up to £10,000 plus VAT.

4

Contribution to legal fees

Not a contractual entitlement-subject to individual agreement

Up to £4,000 plus VAT (inclusive of £3,600 mentioned in 1 above)
Caroline’s redundancy was agreed under a compromise agreement. It is our normal practice to contribute towards legal fees in order to secure a compromise agreement as the requirement to seek legal advice is not optional for the employee-the law requires them to do so in order to protect the BBC. Most employers make a contribution to legal fees in these circumstances.

APPENDIX 6

INFORMATION ON TAXPAYER CONFIDENTIALITY

The confidentiality referred to is not the BBC’s taxpayer confidentiality, but confidentiality of individuals concerned and of HM Revenue & Customs (HMRC) not the BBC.

When HMRC reviews an individual’s tax affairs, it will question the engager (ie the BBC), but it will not supply any further information to the engager about the reason for the review. The BBC will, therefore, know if an individual is under HMRC review because it will have been questioned by HMRC, but we would not know the purpose of, or any further details about, the review (which would be a matter of confidentiality between the individual and HMRC). This is not a matter of BBC confidentiality because, other than the name of the individual, we do not have any information about the HMRC reviews.

In respect of supplying information to PAC about the reviews HMRC is undertaking-we are aware of five such reviews during the last year. The names of the individuals that we are aware have been subject to review in this way are protected by the Data Protection Act, so we would not disclose these names (subject to any exemptions under that Act).

We are not aware of the content of the note from Lin Homer referred to by Stephen Barclay MP, but the BBC Executive does not believe that HMRC needs the BBC’s permission to disclose the number of those engaged by the BBC who HMRC are reviewing. If such permission is however required, then we would be happy to grant permission as to the total number but not, as addressed above, the specific names.

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Prepared 19th December 2012