Stars in his sights: Lyons warns of end to BBC fat-cat fees

At a party to celebrate 50 years of the Today programme held at the Skylon restaurant in London's newly revamped Royal Festival Hall on Tuesday night, the veteran presenter John Humphrys joked they had only been able to afford the bash because they put Jonathan Ross on the settee of their green room and when he stood up all the coins fell out of his pocket.

Last night, in his first speech since becoming chairman of the BBC, Sir Michael Lyons admitted that the corporation had responded too "meekly" to the pay demands of its on-screen stars.

The salaries paid to talent such as Ross, who is believed to have signed a three-year deal worth £18m with the BBC for his Friday night chat show on BBC 1 and his Radio 2 Saturday morning programme, have provoked considerable criticism.

In June the BBC Trust, which Sir Michael oversees, instigated its own review of the large pay-packets of the BBC's top television and radio presenters.

In his speech to the Royal Television Society, Sir Michael warned that the BBC should not use licence fee payers' money to bid inflated sums to stop talent defecting to rival broadcasters. Ross's bumper pay deal was struck after ITV and Channel 4 attempted to poach him.

Sir Michael told the audience of television executives: "It is important... that the BBC does not use the privilege of a guaranteed income to overbid for talent – thereby raising costs for the industry as a whole and reducing the value delivered to licence fee payers. This is an area where we know many members of the public have raised concerns."

He added: "There are tensions here, too, between the demand from the public for the BBC to bring them the best available talent, and a real concern that the BBC might contribute to inflated fees and salaries by responding too meekly to demands which reflect US realities rather than domestic values."

The BBC chairman also confessed that the corporation was widely perceived as being too "London-centric", and said that he hoped the balance would now be redressed with new developments in Manchester and at Pacific Quay, the new headquarters of BBC Scotland in Glasgow. He said: "Audiences are telling us that the BBC is still too London-centric – and that has to change. The BBC has to deliver value to all its licence fee payers, wherever they live.

"The truth is that everyone's perceptions are shaped by the place in which they live. That applies to BBC producers just as much as anyone else.

"One of the reasons why people who live outside London feel less loyal to the BBC is because they do not see the reality of their communities properly represented by the BBC."

Only 63 per cent of people in Scotland and 64 per cent of people in the north of England said they would miss the BBC if it did not exist, compared with 83 per cent of people in the South-east, he said.

The BBC is planning to move 1,500 jobs from London to Salford, a move which Sir Michael said he hoped would "strengthen the BBC's ability to reflect the realities of the communities of the north of England".

Sir Michael, who replaced Michael Grade as BBC chairman, praised shows including Life on Mars, Strictly Come Dancing, Who Do You Think You Are? and Tribe for bringing large groups of people together to share a common experience, "providing the currency of shared conversation at bus stops or in canteens or around the office coffee machine".

Referring to the recent phone-in competition scandals and the row over misleading footage of the Queen which have overshadowed the BBC, the chairman warned that the corporation must never take for granted the trust with which it is regarded.

Big earners: top deals with the BBC

Jonathan Ross: £18m over three years

David Walliams and Matt Lucas (Little Britain): £6m over three years

Graham Norton: £5m over three years

Jeremy Paxman (Newsnight and University Challenge): £1.04m a year

Terry Wogan (Radio 2 Breakfast): £800,000 a year

Chris Moyles (Radio 1 Breakfast): £630,000 a year

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