BBC Annual Report and Accounts 2017-18: Equal pay at the BBC Contents

Conclusions and recommendations

Equal pay

1.We were highly concerned to hear allegations of equal pay discrimination at the BBC. The experience of former China Editor Carrie Gracie shone a light on this practice. Ms Gracie deserves great credit for using her protracted and distressing ordeal to make points of principle for other women. As a public sector broadcaster, the institution should be setting an example for other organisations, but its approach to pay has been extremely poor. The corporation was unable to give use a good reason for why or how pay discrimination has been left unchallenged for so long. (Paragraph 19)

2.The BBC did not help itself by declining to attend our second evidence session on BBC Pay in March of this year. The DCMS Committee is the corporation’s only line of accountability to licence fee payers. As a recipient of public money, the BBC should make itself available when requested, especially on a subject such as pay discrimination, a key issue for the nation. (Paragraph 20)

3.While the publication of the salaries of staff earning over £150,000 has gone some way towards improving pay transparency, it is regrettable that it took the forced publication of this list and the resultant publicity to push the BBC into action on a longstanding problem. The BBC’s reluctance to tackle this issue has resulted in a loss of trust between staff and management. Unless the BBC takes urgent action, many more women may be deterred from coming forward with equal pay complaints. (Paragraph 21)

4.The BBC must take urgent action to remove discriminatory pay practice and its legacy from the organisation. This is necessary to start to rebuild trust between staff and senior management. It should publicly acknowledge that it has a pay discrimination problem and set out a comprehensive series of steps, with dates by which those steps will be met, to resolve the pay discrimination. This should include a deadline by which all grievances will be dealt with. The BBC Board should require the Director General to report progress to them on those steps as discriminatory pay is a serious risk issue that the Board should be overseeing. (Paragraph 22)

5.The BBC must ensure that robust and transparent structures are put in place to prevent a recurrence of these issues. Management must work to create an environment where staff feel supported and empowered to come forward with equal pay complaints. Where staff come forward with complaints, management must refrain from using unhelpful terminology and talk about these cases in terms of ‘equal pay’, rather than using euphemisms such as ‘fair pay’, ‘oversights’ and pay ‘revisions’, in an attempt to avoid the issues at hand. The BBC must comply with its equal pay legal duties and ensure that all managers who make decisions on pay understand those legal duties. Training should be provided by BBC HR to ensure that they do. (Paragraph 23)

6.The BBC pay structure lacks central oversight and allows for too much managerial discretion over salaries. Pay decisions for senior positions appear to be made on an ad hoc basis: someone in the executive team agrees a pay settlement, without consideration of what the decision means for others that sit within that same band. The BBC’s insistence that Carrie Gracie’s underpayment was ‘inadvertent’ points towards a concerning lack of oversight from senior BBC officials, particularly as there were only four international news editors at the time. This culture of invidious, opaque decision-making must end. In order to prevent misuses of managerial discretion, the BBC must look at the system by which it makes pay decisions. It must ensure that sufficient oversight takes place, and that decisions are based on transparent, objective criteria rather than on the basis of individual personalities, and that managers making the decisions understand the equal pay legal framework within which they must operate. (Paragraph 33)

7.While slight differences in salaries may be warranted when individuals do similar jobs with different responsibility levels, the pay bands at the BBC have historically been too wide. Despite senior executives’ assurances to us, a lack of clear pay structures and guidelines has left individuals lacking clarity about why they earn what they do, and the ability to make comparisons with colleagues. The publication of salaries has gone a long way to improve equality for those earning over £150,000. While we recognise that it is not feasible to publish every individual salary at every level, we urge the BBC to introduce greater transparency across the board. In particular, staff at all levels should be able to see the numbers of men and women in each quartile so that women can compare their salaries to those of their male colleagues doing equal work, unless those numbers are so small that they would lead to the individual staff member being obviously identifiable. To satisfy staff concerns about equal pay, all of this information needs to be made available to everyone working at the BBC. (Paragraph 34)

8.The BBC has made some progress in improving the gender balance of this year’s high earners list. However, at the highest end of the list, there is still a very significant balance in favour of men, with all ten top earners being men. This is shocking. However, at the highest end of the list, there is still a very significant balance in favour of men, with all ten top earners being men. This is shocking. The BBC needs to commit to concrete targets to ensure that the pay of its high earners has absolutely no discriminatory element to it. We expect the BBC to set these targets by December 2018 so that next year’s annual report can set out measurable progress towards these targets. (Paragraph 38)

9.BBC Studios, as a commercial arm of the BBC, is not currently covered by transparency rules. This means that staff employed by BBC Studios do not appear on the high earners list, effectively creating a loophole that means the BBC need not disclose the salaries of its top earning talent. This has done little to improve confidence in the BBC’s commitment to non-discriminatory pay. In order to restore its credibility, the BBC must commit to publishing the salaries of BBC Studios staff in their 2018/19 Annual Report, and also those of high-earning presenters of other programmes made for the BBC by independent production companies. (Paragraph 39)

10.The grievance process—both formal and informal—at the BBC leaves much to be desired. Complaints are often subject to long delays and bureaucratic confusion. We understand the good reasons for resolving grievances informally where possible. However, informality is no excuse for a lack of rigour. Informal grievances must be an internally assured process involving individual managers, HR and, where appropriate, legal advice. We were surprised to hear that 70 informal cases are currently unresolved, with what the BBC called “the work” done, but with no result. In order to make the informal grievance process worthwhile, BBC women need to have confidence that it will produce similar results to those that could be achieved through formal grievance. Where women choose to progress with informal complaints, the BBC must commit to dealing with cases efficiently and thoroughly. (Paragraph 46)

11.Those grievances that do make it to formal processes also seem to become mired in delay. At the time of writing this report, just seven of 78 formal grievances received by the BBC had been resolved. Over 15% of formal grievances lodged have failed to meet the 90-day deadline. These rates are unacceptable. Staff going through these procedures are currently spending unnecessarily long periods enduring anxiety about outcomes. (Paragraph 47)

12.We heard about further shortcomings that must be urgently resolved, for example that the failure to acknowledge named comparators ignores employees’ legal rights. Managers must change their approach to this. (Paragraph 48)

13.Delays and confusion mean that BBC staff lack confidence in the process itself and in its outcomes. For women who are trying to secure redress for past inequities this is particularly damaging. Many women will continue to be deterred from bringing their complaints forward unless the grievance process is made less bureaucratic, more efficient and more independent. (Paragraph 49)

14.The BBC must act urgently to restore confidence in its grievance processes. In order to do this, the corporation must commit to upholding the independence of the process, by placing independent managers in charge of grievances. They should act swiftly to speed up the complaints process by appointing full-time hearing managers. The BBC should state publicly how many grievance cases are still awaiting resolution, and how many of these are claims regarding a lack of equal pay, rather than waiting for FOI requests or Committee inquiries. The BBC should also commit to have completed the grievance process for all existing cases, including making any financial settlements that may be owed, within the next six months. (Paragraph 50)

15.The BBC has failed to act on both equal pay and PSCs, launching remedial measures only after receiving both media and public pressure. The corporation has continually relied on individuals who work for them to come forward and bring these issues to their attention. In the future the BBC must operate proactively, rather than waiting for media pressure to push them into action. The BBC must improve internal communications and ensure that its HR service is sufficiently well-resourced that it is available to everyone, so that it can help presenters to raise these kinds of issues. (Paragraph 54)

16.The BBC has failed adequately to consult their staff during its reviews into both equal pay and Personal Service Companies. By failing to involve those individuals directly affected, the BBC’s reviews have also failed to gain the buy-in and confidence of staff. Reviews without staff engagement will not result in impactful conclusions. (Paragraph 59)

17.The individuals affected by these reviews need to be consulted from the outset and throughout. In order to gain the buy-in of staff, all reviews should be truly independent, with staff and recognised Trades Unions shaping their scope, terms of reference and methodology. (Paragraph 60)

Personal Service Companies

18.The imposition of personal service companies falls short of the standards that we expect from any responsible employer and especially from the BBC. The corporation should be held to high standards due to its prominence in public life and its public funding. Yet the BBC’s 2007–2012 policy of engaging presenters via PSCs has caused “life-altering” financial and emotional consequences for many presenters. The imposition was for purposes that suited the BBC, but not necessarily the interests of its employees. As a direct result of the corporation’s actions, many presenters are facing liabilities of hundreds of thousands of pounds in unpaid income tax and national insurance contributions. We have seen strong evidence that the BBC made presenters feel that a PSC was a mandatory condition of work. This is a disgrace. (Paragraph 77)

19.The BBC’s decision to launch a process under the supervision of the Centre for Effective Dispute Resolution (CEDR) marks a welcome step forward. However, it is regrettable that it took presenters coming forward to this Committee to force the BBC into action. Once again, the BBC seems content to ignore a problem until it is brought into the public eye. (Paragraph 78)

20.Many individuals who were previously employed via a PSC are now classed by the BBC as “employed for tax purposes”. The way that these contracts have been administered has left individuals with no certainty or consistency as to what their take home pay will be at the end of each month. This state of affairs cannot continue and the BBC must work with the presenters affected to find a satisfactory solution. Freelance presenters should be engaged as an employee if they are providing services to the BBC unless they are doing so genuinely as someone in business on their own account providing services to numbers of clients including the BBC. As an employee they must then be afforded the rights and protections, including tax rules, that follow. In cases where it is clear that people were coerced into setting up a PSC in order to carry on working for the BBC, and face substantial claims for outstanding tax as a result, then the BBC should offer those individuals compensation for their losses. (Paragraph 79)

BBC Annual Report 2017/18: Wider issues

21.The BBC has accomplished a great number of savings over the current and previous Charter periods. However, in order to meet its target, it must save another £800m by 2021/22. The BBC accepts that the easier savings have been made and believes that the organisation is now operating at, or near to, the frontier of efficiency. We are concerned that, in delivering the next tranche of savings, the BBC may have to compromise on the quality of services provided to the licence fee payer. (Paragraph 82)

22.The obligation to take over licence fee funding for over-75s is likely to cost the BBC over £725 million in revenue by 2020–21. At a time when the BBC’s finances are already constricted, this is likely to place a great deal of financial pressure on the organisation. We are concerned that, despite the BBC Board having had over a year to consult on this issue, they seem to have made very little progress. The BBC must start immediate consultation with those who will be affected by the change and must commit to including detailed plans of its proposed actions in next year’s annual report. (Paragraph 85)

23.The BBC and other broadcasters now face competition from large companies such as Netflix and Amazon which have substantial programme budgets and significant resources. The arrival of streaming sticks and set-top boxes have altered the television market, leaving a large section of the market unregulated with no proviso for the PSBs. In order to compete with the growing profiles of these global media companies, the BBC must focus on what it does best and deliver unique British content. To keep pace with global players, it must push forward with introducing improvements for iPlayer, enhancing its offerings, user experience, and personalisation levels. In order to ensure the continued survival of PSBs, the Government must to commit to introducing legislation that secures the prominence of public sector broadcasters on streaming sticks and set-top boxes. (Paragraph 89)

24.The BBC must lay out a new strategy for the BBC Parliament channel, developed in collaboration with both Houses, including via their domestic committees. The best mechanism towards achieving this would be the creation of a working group which could consult both Houses in order to develop a new vision of the service. (Paragraph 94)

25.We were concerned to hear about the possibility of BBC Parliament moving to an online only service. The channel remains the only UK television channel dedicated to the coverage of Parliament. It has a unique importance to Parliament as the only place where the proceedings of the House of Commons and House of Lords can be viewed as a conventional terrestrial television channel, free at the point of use. (Paragraph 96)

26.The BBC’s unwillingness to commit to safeguarding the broadcast channel beyond the coming year is troubling. More than 60% of BBC Parliament’s viewers are over 55, and we are deeply concerned that any move towards an online channel would cause a significant number of people to be disconnected from access to Parliament. Beyond this indication of demographics, we found that the BBC had little detailed information about the channel. The BBC must lay out a new strategy for the BBC Parliament channel. This will require careful thought about how this important service can continue to be delivered as a broadcast channel. This thinking should be done via collaboration between the BBC and both Houses, including their domestic committees. In order to do this, the corporation should commit to establishing a working group, aiming to report back to both Houses with a new vision of the service. This should be done swiftly, and certainly by the end of this calendar year. The group should supply more granular information on the viewing figures for the channel, and projected savings scenarios. (Paragraph 97)

27.Since we took evidence in Salford in September, we have had assurances that changes to BBC Parliament announced earlier this summer may be dropped or amended. The BBC had stated that daily and weekly summary programmes on BBC Parliament may be cut. In supplementary evidence to us the BBC states that it now believes that these programmes should continue as they provide ‘important reflection and clarity’ for audiences. We welcome this change of heart. We are also pleased that the Speaker’s lectures will continue to be broadcast by BBC Parliament. (Paragraph 98)

Published: 25 October 2018