SHARP-SUITED television executives at the British Broadcasting Corporation (BBC) covet dramas riveting enough to stop viewers switching over to their commercial rivals. On September 9th an appearance by seven of the broadcasting world’s big beasts before the Commons Public Accounts Committee provided enough tension, vengeance and omens of further upheaval to fuel an entire series.
Severance payments for senior BBC executives started the spat, but the implications run far deeper for the national broadcaster. Faced with pressures to cull a sprawling headcount of managers the BBC’s solution to dealing with an excess of highly paid executives turned out to be to pay them an awful lot to go away.
The corporation spent nearly £370m ($585m) over eight years in staff redundancies and “sweeteners”, often beyond contractual requirements. The highest-paid fared best: 150 senior departing managers received £25m between 2000 and 2012. Mark Byford, the former deputy director-general who left his job in 2010, received over £1m as bosses sought to cut the management pay bill by a quarter. The cuts were triggered when the BBC’s licence fee was frozen in 2010. That put a dent in its real-terms income forcing the push to save cash. But the National Audit Office, which audits public-sector accounts, concluded that the BBC “breached its own already generous policies on severance payments” and blamed weak governance arrangements.
As the BBC is financed by a compulsory levy on all television-owning households, politicians and viewers have been angered by the misspent money. The push to discover how it happened has produced energetic blame-shifting between Mark Thompson, who was director-general until mid-2012, and Lord Patten, a Tory grandee who heads the BBC’s governing trust.
Mr Thompson says that he told Lord Patten and Sir Michael Lyons, his predecessor at the trust, about the pay-offs and had their “full support”. Further squabbling about who knew what led Margaret Hodge, the fiery Labour chair of the committee, to deride the “incompetence, lack of central control, [and] failure to communicate” of the BBC’s top brass. Under questioning, Lucy Adams, its head of human resources, appeared unable to remember the content of many of her own memos.
Students of the changing nature of Britain’s establishment have relished the meltdown of courtesies as the grandees exchanged poisonous glances and frosty put-downs. Mr Thompson, a self-confident sort, belongs to a globe-trotting circle of media CEOs and is currently chief executive of the New York Times. Lord Patten, who played a key role in the defenestration of Margaret Thatcher as prime minister, represents a more traditional brand of big-wiggery. He is also chancellor of Oxford University and organised the handover of Hong Kong to China in 1997.
Beyond the personal infighting, bigger questions loom. The BBC Trust now looks especially vulnerable. Its unwieldy governance structure, drawn up in 2006 in response to a clash with the then Labour government over coverage of the run-up to the war in Iraq, looks unequal to the task of financial oversight.
The BBC’s present director-general, Tony Hall, admits that the BBC “lost the plot” on the payments. He has announced that the trust and his executive management board will work more closely together. Few think that is an adequate answer. Alternatives to the trust are likely to be put forward ahead of the renewal, in 2016 of the Royal Charter which outlines the BBC’s constitutional status and funding.
One option supported by some ministers in the Tory-led coalition is to hand the BBC’s regulation to Ofcom, the regulator which already checks the BBC’s taste and decency standards and that it is adhering to quotas for programmes supplied by independent companies. Ofcom’s remit, some think, could easily be extended, in the same way that it regulates the advertising-financed, publicly-owned Channel 4.
That shift, says Colin Mayer, a corporate-governance expert at Oxford University, would risk granting a government-appointed regulator too much sway over what should be an independent media organisation. Although the reputation of Britain’s regulators in sectors such as the utilities has improved in the past decade, granting full regulatory power over the broadcaster to an external body remains controversial.
A better idea, Mr Mayer suggests, would be for the BBC to adopt the governance structure of companies ranging from IKEA and Bertelsmann to Tata and Bosch, under which a charitable foundation or trust checks that the activities of the company are in keeping with agreed values. Adopting a corporate structure more like mainstream commercial companies, with an executive chairman, responsible for leadership, clear management responsibilities and a stronger role for non-executive directors, might at least cure the BBC’s tendency to pass the buck when trouble strikes.
An alternative idea, floated by Tessa Jowell, a former Labour minister, is to make the BBC into a mutually owned company, with 27m licence-fee payers afforded a more robust say over what it does. Sceptics worry that this would end up creating thinly veiled political tribes, competing to act as tribunes of the public. Lord Hall meanwhile, claims hopefully that the row over pay-offs now belongs “to the past”. But an argument that started over how much people should be paid to leave the BBC looks like turning into an even bigger one about how to run it.