Maria Miller: BBC has had 'annus horribilis'

Culture Secretary describes squabbling between senior figures over who knew what about £3 million of excess pay-outs as a 'grim day for senior management'

The BBC has announced a comprehensive review of its governance structures after Maria Miller, the Culture Secretary, said the scandal-hit corporation had suffered an “annus horribilis” and described the squabbling between senior figures over who knew what about £3 million of excess pay-outs as a “grim day for its senior management.”

The corporation has promised a new structure which will end the confusion over the role and responsibilities of its Executive, headed by the corporation's Director-General and the BBC Trust, led by Lord Patten.

The pledge follows a stormy session in front of the Commons public accounts committee this week over which BBC body was ultimately responsible for signing off controversial severance payments.

Addressing the Royal Television Society in Cambridge, Mrs Miller said there was there was “ongoing confusion” over “where the roles and responsibilities of the BBC Executive stop and those of the BBC Trust, start.”

The BBC tonight announced an internal review designed to “provide clarity about the responsibilities between each body”, “avoid duplication” and “ensure effective decision making, accountability and focus on the licence fee payer”.

In a joint letter sent to Mrs Miller, Lord Hall, the Director General and Lord Patten, said: “We are confident that there is space within the current Charter to make an improvement in the way that the BBC is run and managed, and to ensure a primary focus on what audiences want and need and how we spend their money.”

However an internal review may not satisfy MPs who called the split governance structure itself “broken” and Mrs Miller, who said the National Audit Office should be given a quasi-regulatory power over the BBC, including the ability to step in and investigate excessive executive pay-outs.

Although the BBC agreed to open up its accounts to the NAO, the watchdog was unable to launch an investigation into the £450,000 pay-off awarded to George Entwistle, the former Director General who resigned after 54 days during the Jimmy Savile scandal. The figure was twice what he was entitled to.

“We now need to ask if more should be done,” Mrs Miller said. “The NAO's work has been pivotal in bringing issues to light so I want us to strengthen its role further. It simply wasn't right that the NAO was prevented from immediately looking at the details of George Entwistle's severance package.”

Under current rules, the NAO must wait until the BBC Trust refers itself to the watchdog. The watchdog has traditionally enjoyed limited powers to scrutinise the BBC under an agreement intended to protect the corporation from political interference.

Whitehall sources indicated that the NAO could be given the power to scrutinise executive salaries and possibly publish the individual sums paid to the BBC's on-screen talent. The BBC Trust is likely to resist an extension of the NAO role if it believes the corporation's independence is threatened.

In their letter to Mrs Miller, the BBC bosses said: “We believe we have done a great deal in the last two years to strengthen our relationship with the NAO and to make the current arrangements work to the benefit of licence-fee payers. However, we would be interested in discussing further any proposals you have in this area.”

In her speech, Mrs Miller gave the BBC what appeared to be a final chance to “remove the confusion” over the roles and responsibilities of the Trust. There was a tension implicit in the Trust being “both regulator and cheerleader”, she said, which could not wait for the renewal of the BBC's Royal Charter in 2017 to be resolved.

She said individuals, not just structures were to blame for the latest BBC embarrassment and implicitly criticised Mark Thompson, the former Director General, who defended a £1 million pay-off for Mark Byford, his deputy.

“Ultimately, licence fee payers rely not only upon the right structures and governance being in place but also upon the BBC's executive management using their good judgement,” she said. “And I think serious questions were raised about that judgement by the scale of the severance payments made. Licence fee payers expect their money to be spent properly.”

Whitehall sources said that if the BBC solution to the Trust-Executive confusion was acceptable, it could be written into a side-agreement to the Royal Charter, without amending the document.

But Mrs Miller could scrap the Trust entirely if she was not satisfied with the BBC's reformed alternative. “I will continue to keep the BBC's structures and effectiveness under review,” she told her audience of television industry delegates in Cambridge. “It is no good waiting until a new Charter in 2017 to act.”

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