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BBC cleared of overpaying stars

A review of how much the BBC pays stars such as Jonathan Ross has cleared the corporation of distorting the market for talent.

The chairman of the BBC Trust, Sir Michael Lyons, said the report by independent economic consultants Oliver and Ohlbaum found that multimillion-pound packages for personalities like Ross and Graham Norton were not above the market rate.

But he said that, despite evidence that pay inflation has been cut in recent years, there was still "more to be done" to ensure viewers receive value for money for their licence fee.

BBC managers must be ready to "walk away" from deals with performers who are too expensive, said Sir Michael.

The review also highlighted the areas of network radio and news journalism as special cases, because the BBC effectively faces no direct competition from the commercial sector.

Sir Michael said on the BBC Radio 4 Today programme: "We commissioned this piece of work as part of our general work to make sure that the BBC is doing what licence fee-payers want, delivering value for money, and in part in response to the controversy which had gone on for a year about the salaries of top talent.

"Their conclusions are that the BBC is not generally paying above the market rate, is not distorting the market, although the situation is more complex in some of these areas where there is less market competition - that is journalism and radio.

"There's a very clear message from the Trust that there is more to be done. There is evidence of the inflation in top talent salaries coming down in recent years as a result of actions by BBC management.

"But we are saying that, because the BBC is paid for by the licence fee, it doesn't have to follow the market, can afford to be distinctive, has got the scope to bring on new talent and must walk away from those which are too expensive."

Sir Michael refused to comment on individual deals with performers like Ross, whose pay deal is reportedly worth £18 million over three years. Little Britain stars David Walliams and Matt Lucas are said to be picking up £6 million and Graham Norton £5 million over a similar period.

Documents leaked in 2006 claimed Jeremy Paxman was paid £940,000 a year, Radio 2's Sir Terry Wogan got £800,000 a year and Radio 1 breakfast host Chris Moyles pocketed an annual £630,000.

Sir Michael said: "Talent is a very important part of what the BBC does. People turn on their televisions and radios to hear personalities. They are highly valued by the audience, but we have to be sure we are not paying more than we have to.

"Big salaries always excite concern, whether we are talking about the business world, sport or entertainment. I absolutely understand that, but there is a danger that if we talk in terms of one salary or one pay package, we miss the much bigger issue about what is being done across the board.

"This report looks systematically across the salaries the BBC pays for top talent, rather than just one contract."

He added: "What the evidence shows is that it is a much more complex picture in the case of both network radio and journalism. It is not just a question of less direct competition there, but actually a different job being done by the BBC than is being done by others.

"That's why we are saying this needs to be looked at in more detail. We are charging the director general with that job and we will be keeping a close eye on it."