1 BBC severance policy and practice
1. The creative talents of the many thousands of
people who work for the BBC have helped maintain its reputation
as the world's leading public service broadcaster. However, during
our examination of the severance package awarded to the BBC's
former Director General, George Entwistle, we became increasingly
concerned about the scale of severance pay for other senior managers
and the impact of this on public trust in the BBC.
We therefore recommended that the National Audit Office carry
out a review. The National Audit Office examined an initial sample
of 60 severance payments in the three years to December 2012,
before extending its review to include all severance payments
to senior BBC managers during this period.
2. In the three years to December 2012, the BBC spent
£25 million on severance pay for 150 departing senior managers.
The BBC told us that the significant number of severance payments
during this period reflected the steps it took to reduce senior
manager numbers, from 624 in March 2010 to 445 in March 2013.
The BBC estimates that reducing senior manager numbers resulted
in a cumulative saving of £35 million in the three years
to December 2012.
3. In 22 of the 150 severance cases in the three
years to December 2012, the BBC paid more salary in lieu of notice
than it needed to, at a cost to licence fee payers of £1.4
million. For example,
the BBC paid its former Deputy Director General, Mark Byford,
around £500,000 more salary in lieu of notice than it needed
to. The BBC announced
in October 2010 that it would make Mr Byford redundant. However,
it chose to delay giving Mr Byford his formal notice until he
left in June 2011, so that he could receive his maximum entitlement
of 12 months' salary in lieu of notice. In practice, Mr Byford
was given eight months' notice and the BBC need only have paid
him the shortfall of four months' pay in lieu of notice.
The BBC's former Director General, Mark Thompson, told us that
the BBC agreed to pay Mr Byford the extra eight months' pay in
lieu of notice, worth around £500,000, to keep him "fully
focused" instead of "taking calls from head-hunters".
Mr Byford received more than £1 million when he left the
4. The BBC claimed that it had been 'custom and practice',
but not a legal requirement, to add salary in lieu of notice to
departing managers' standard redundancy entitlement, regardless
of whether they worked their notice.
However, this was not applied consistently. Of the 150 senior
managers who received severance pay in the three years to December
2012, 62 received payments equivalent to the BBC's standard redundancy
policy and 17 received less.
5. The BBC included other types of non-contractual
payments in some severance packages. For example, it included
£49,000 for training and equipment in a severance package
to improve a departing manager's career prospects; in another
case it committed to purchasing at least £60,000 of consultancy
services from a departing manager.
One senior manager who was working on a part-time basis had their
severance payment calculated on a full-time basis.
6. The BBC's severance arrangements allowed departing
managers to receive large payouts even if they had had secured
job offers before leaving the BBC.
For example, the BBC agreed to pay severance to a senior manager
who had a job offer, on the basis that if it did not do so it
would cost more to remove him if his post was subsequently made
redundant. This individual subsequently elected to repay his severance
payment on learning of deficiencies in the way the payment had
The BBC has not asked any senior managers to return non-contractual
payments on the grounds that it has no legal grounds to do so.
- The BBC attributed the payment of non-contractual
'sweeteners' to a prevailing culture where offering generous payouts
was considered to be a good way of managing severance cases.
Lord Hall, who took up post as Director General of the BBC in
April 2013, concluded that the BBC had 'lost the plot'.
He announced on his second day in post that he would tackle the
issue of severance pay and subsequently announced that he would
cap individual severance payments at £150,000. Severance
payments in excess of £75,000 must now be approved by the
BBC's Senior Management Remuneration Committee. The BBC is also
removing the use of payment in lieu of notice on the grounds that
senior managers should work their notice and then leave.
1 Committee of Public Accounts, British Broadcasting
Corporation: Off-payroll contracting and severance package for
the Director General, Twenty-second Report of Session 2012-13,
HC 774, December 2012. Back
C&AG's report, Severance payments and wider benefits for senior
BBC managers: Report by the Comptroller and Auditor General presented
to theBBC Trust Finance Committee, July 2013 Back
C&AG , Severance payments for senior BBC managers: supplementary
note September 2013 Back
Q 96 Back
Qq 203, 233, C&AG's report July 2013 Figure 6 Back
Qq 95, 168, 210 Back
C&AG report, Severance payments for senior BBC managers: supplementary
note September 2013 Back
Q 215 Back
Qq 8, 17, 22, 65, 249, 313, 318 Back
Qq 216, 220 Back
Q 65 Back
Qq 80-83, 241-251 Back
Q 126 Back
Q 95 Back
Q 136-7 Back
Q 129-33 Back
Qq 107-110, 147, 374 Back
Qq 134-135, 149 Back
Qq 81-82, 383, 389 Back
Qq 196-8 Back
Qq 170-1, 183, 206 Back