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BBC Trust admits failings on payouts BBC Trust admits failings on payouts
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The BBC Trust has conceded a "fundamental failure of central oversight and control" at the corporation after a report concluded that it frequently breached its own guidelines on payoffs to staff totalling millions of pounds.The BBC Trust has conceded a "fundamental failure of central oversight and control" at the corporation after a report concluded that it frequently breached its own guidelines on payoffs to staff totalling millions of pounds.
The investigation by the National Audit Office, published on Monday, said the BBC had "breached its own policies on severance too often without good reason".The investigation by the National Audit Office, published on Monday, said the BBC had "breached its own policies on severance too often without good reason".
In nearly a quarter of 60 cases it reviewed, the NAO found that the BBC had paid departing senior managers more salary in lieu of notice than they were contractually entitled to, costing licence-fee payers at least £1m.In nearly a quarter of 60 cases it reviewed, the NAO found that the BBC had paid departing senior managers more salary in lieu of notice than they were contractually entitled to, costing licence-fee payers at least £1m.
It found instances in which former senior managers were given big payoffs even after they had found work elsewhere, and examples of executives who were given guaranteed consultancy and other work at the time of their departure.It found instances in which former senior managers were given big payoffs even after they had found work elsewhere, and examples of executives who were given guaranteed consultancy and other work at the time of their departure.
The NAO concluded that the BBC's "weak governance have led to payments that exceeded contractual entitlements and put public trust at risk … This has resulted in payments that have not served the best interests of licence-fee payers".The NAO concluded that the BBC's "weak governance have led to payments that exceeded contractual entitlements and put public trust at risk … This has resulted in payments that have not served the best interests of licence-fee payers".
The BBC paid out a total of £60m (adjusted for inflation) to two-thirds of its senior staff who left between 2005 and March this year. The BBC concluded that it had saved £188m from all of its senior management redundancies over the same period.The BBC paid out a total of £60m (adjusted for inflation) to two-thirds of its senior staff who left between 2005 and March this year. The BBC concluded that it had saved £188m from all of its senior management redundancies over the same period.
High-profile departures included former director general George Entwistle, who resigned in November last year after just 54 days in the job.High-profile departures included former director general George Entwistle, who resigned in November last year after just 54 days in the job.
The NAO found that on top of the £450,000 payoff, Entwistle received £36,500 in various fees, including legal and PR costs, and a further £25,000, made up of another three weeks' salary.The NAO found that on top of the £450,000 payoff, Entwistle received £36,500 in various fees, including legal and PR costs, and a further £25,000, made up of another three weeks' salary.
Other high-profile payoffs have included the £949,000 paid out to former deputy director general Mark Byford, and the £670,000 received by former chief operating officer, Caroline Thomson.Other high-profile payoffs have included the £949,000 paid out to former deputy director general Mark Byford, and the £670,000 received by former chief operating officer, Caroline Thomson.
The NAO said decisions to award severance payments had until recently been subject to insufficient challenge and oversight with "little central assessment of the potential risks".The NAO said decisions to award severance payments had until recently been subject to insufficient challenge and oversight with "little central assessment of the potential risks".
The BBC Trust said some of the NAO's conclusions were "deeply worrying" and said its recommendations would be implemented in full.The BBC Trust said some of the NAO's conclusions were "deeply worrying" and said its recommendations would be implemented in full.
It said the failure of the BBC executive and the remuneration committee to always follow agreed policy and entitlement was "entirely unacceptable".It said the failure of the BBC executive and the remuneration committee to always follow agreed policy and entitlement was "entirely unacceptable".
Anthony Fry, BBC Trustee and chair of the trust's finance committee, said: "Although the BBC has achieved significant savings in its senior manager pay bill, some of the NAO's conclusions are deeply worrying, particularly the failure to follow agreed severance policies in a number of cases as a result of weak governance from the BBC executive in the past.Anthony Fry, BBC Trustee and chair of the trust's finance committee, said: "Although the BBC has achieved significant savings in its senior manager pay bill, some of the NAO's conclusions are deeply worrying, particularly the failure to follow agreed severance policies in a number of cases as a result of weak governance from the BBC executive in the past.
"Such practices are unacceptable, and I have no doubt that they will, quite rightly, be met with considerable dismay by licence-fee payers and staff alike."Such practices are unacceptable, and I have no doubt that they will, quite rightly, be met with considerable dismay by licence-fee payers and staff alike.
"The trust is clear that there cannot be a repeat of such a fundamental failure of central oversight and control. We welcome the director general's plans to introduce a cap on severance payments to £150,000, bringing it well under that operated by the civil service, and we have asked the [executive] to increase the transparency of the BBC's severance payments by disclosing more information in the annual report and accounts."The trust is clear that there cannot be a repeat of such a fundamental failure of central oversight and control. We welcome the director general's plans to introduce a cap on severance payments to £150,000, bringing it well under that operated by the civil service, and we have asked the [executive] to increase the transparency of the BBC's severance payments by disclosing more information in the annual report and accounts.
"We will also expect a follow-up review to be carried out within two years.""We will also expect a follow-up review to be carried out within two years."
Amyas Morse, head of the NAO, said: "The BBC has too often breached its own already generous policies on severance payments. Weak governance arrangements have led to payments that exceeded contractual requirements and put public trust at risk.Amyas Morse, head of the NAO, said: "The BBC has too often breached its own already generous policies on severance payments. Weak governance arrangements have led to payments that exceeded contractual requirements and put public trust at risk.
"The BBC's proposal to cap redundancy payments, announced in 2013 by the new director general, is a signal of change for the better. It is well below the maximum that applies to civil servants.""The BBC's proposal to cap redundancy payments, announced in 2013 by the new director general, is a signal of change for the better. It is well below the maximum that applies to civil servants."
A total of 150 senior managers have received severance payments totalling £25m in the past three years. They received an average severance payment of £164,200.A total of 150 senior managers have received severance payments totalling £25m in the past three years. They received an average severance payment of £164,200.
BBC director general Tony Hall, who recently announced a £150,000 cap on redundancy payments, said: "I accept in full the conclusions of the NAO report. The level of some of these payments was wrong – I said so in my first week in the job.
"It is important to understand what was happening here. The BBC was trying to get its senior management headcount down – and it succeeded, reducing it from 640 to 445. As the NAO acknowledges, we have saved £10m over the period studied in the report and will keep on making savings every year.
"But we have to accept that we achieved our objectives in the wrong way.
"I believe the BBC lost its way on payments in recent years. I have already said that we will be capping severance payments at £150,000 and we have now begun to improve our processes. These payments were from another era and we are putting a stop to them."
Culture secretary Maria Miller said: "Every publicly-funded organisation must be able to justify every penny of taxpayers' money they spend, and even more so in these tough economic times.
"There is huge public interest in the BBC, and the NAO has exposed a culture of payoffs that simply cannot be justified. The report shines a light on a culture at the BBC where individuals received payments that went beyond the already very generous terms of their contract.
"I welcome the fact that the BBC is looking at future payments – a move which this report suggests is long overdue."
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