CHAPTER 4: Conditions of service
45. The Chairman of the BBC is not subject to
a formal contract and never has been (p 57). This is because members
of the BBC Trust, including the Chairman, are considered office
holders, not employees, and as such do not have employment contracts.
Trust appointments are made by Order in Council which make no
reference to notice periods or non-compete clauses. Therefore
the Chairman of the BBC Trust is not required to give any formal
notice of his intention to leave the BBC.
46. The fact that the Chairman of the BBC has
never been subject to a requirement to give notice can lead to
speedy departures from office, straight into the employment of
companies which have close links to, or are in competition with,
the BBC.
47. In 2001 Sir Christopher Bland jointly
held the positions of Chairman of the BBC and Chairman of BT for
four and a half months.[13]
It was claimed that there were possible conflicts of interest.
The BBC was covering BT related stories and the BBC was dealing
with BT as an important supplier of the technology that delivered
BBC programmes and online services to the public.
48. Six years later nothing had been done to
prevent this type of situation recurring. On 28 November 2006
Michael Grade resigned as Chairman of the BBC with immediate effect
because he had decided to take up the job of Executive Chairman
of ITV—the BBC's main and oldest competitor. Michael Grade
was under no restrictions when he left the BBC. He could have
taken up his post at ITV immediately but he chose to wait eight
weeks (QQ 95-99).
49. Michael Grade defended this position to the
Committee. He told us that if there had been a six month non-compete
clause in his contract then he "would not have accepted the
BBC job … because the BBC was not my main career" (Q 101).
He emphasised that "It is a part time public appointment
where you hope to make your contribution and one has a living
to earn as well" (Q 101). Michael Grade was bound by
a confidentiality agreement and he asserted that this was enough
to protect the BBC's interests (Q 100).
50. We question the idea that the Chairmanship
of the BBC is just a part-time post, through which one could not
"earn a living". The Chairman of the BBC Trust may be
a non-executive but he now earns a basic salary of around £140,000
(nearly double the salary of the Chairman of the governors—Q 25).
He clearly should devote a great part of his time to the BBC.
51. We believe the BBC needs a strong chairman
at all times. By resigning with immediate effect Michael Grade
left the BBC without a permanent chairman for six months. During
this period the final licence fee settlement had to be agreed,
the old governors were abolished and the Trust established. Luckily
the BBC did not run into any political crisis over this period
but it could have done and would have lacked the guidance of a
permanent chairman.
52. We therefore recommend that the Chairman
of the BBC Trust should be subject to a six month notice period.
This is a matter that should be dealt with by the Government and
not left to the BBC Trust to self-regulate. The terms and
conditions of the Trustees are a matter for the DCMS which has
chosen to follow the standard arrangements for trustees of public
bodies despite the unique position of the BBC Chairman. The Government
should do more to protect the interests of the BBC and the licence
fee payers. There may be occasions when it is in the interest
of licence fee payers for the Chairman to resign with immediate
effect so the Secretary of State should have the power to waive
this notice period if it is in the public interest. If this power
is used it should be justified to Parliament.
53. While we recommend that the Government should
act, we note that the BBC Trust has introduced a degree of self
regulation in this area. Since the inception of the BBC Trust
at the start of this year all Trustees have been asked to sign
a new Code of Practice. This Code of Practice includes the following
restrictive covenant:
"I agree that for a period of three months or
such lesser period as determined by the Chairman or the Vice Chairman
of the BBC following the termination of my appointment as a Trust
member of the BBC howsoever arising I shall not take up another
appointment with a broadcasting and/or media competitor or regulator
of the BBC within the UK unless the Chairman or the Vice Chairman
determines that there is no actual or perceived conflict arising
from such appointment" (Annex E).
54. A restrictive covenant is quite different
from a formal notice period but it does go some way to protecting
the Corporation should another Chairman choose to resign in order
to work for a competitor. We are therefore pleased that the BBC
Trust has included a restrictive covenant in its Code of Practice
but concerned that the three month period does not go far enough.
55. Three months is not a long enough restrictive
covenant to protect the BBC's interests. The Chairman of the BBC
is party to very sensitive information on the plans and finances
of the Corporation. He is in charge of negotiating the licence
fee settlement with the Government, a process that took nearly
a whole year last time. The BBC is financed by over £3 billion
of public money annually and it is vital that this money is protected.
We therefore recommend that, while we wait for the Government
to act on our recommendation in paragraph 52, the non-compete
clause in Annex E of the BBC Trust's Code of Practice should be
amended so that the Chairman of the BBC Trust cannot take up a
position with a competitor for a period of at least six months
(unless the Vice-Chairman determines that a lesser period is suitable).
It should be for the Trust as a body to determine which organisations
qualify as competitors.
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