Davies goes, Dyke stays. At least, that was the plan

The chairman was bound to go. Gilligan, too. But the resignation of Greg Dyke took everyone by surprise. Not least the man himself. Francis Elliott tells the inside story
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It was just the sort of visual metaphor television loves: Greg Dyke leaving Television Centre for the last time is hit from behind by the still-revolving door.

The former director general's resignation on Thursday was supposed to be the last high-profile sacrifice to the Government for its errors broadcasting and defending claims that Downing Street had exaggerated the case for war with Iraq.

But the exit door set in motion on Wednesday by Lord Hutton shows little sign of ceasing its destructive revolutions this weekend. The crisis at the corporation sees staff pitted against governors and managers fearful of another clear-out.

It is all a long way from the calm at Broadcasting House this time last weekend. A special "war room" had been prepared at the Portland Place building to co-ordinate its defence. Lawyers, policy experts and press officers were ready to help senior managers gut the Hutton report, decide the response and how best to present it.

Downstairs in the executive boardroom at 10am on Tuesday, the BBC's senior managers gathered to wait for the advance copies of the report.

Gavyn Davies, the chairman of governors, Greg Dyke, the director general, Richard Sambrook, the director of news, and Mark Damazer, his deputy, were joined by Lord Ryder and Dame Pauline Neville-Jones, two of the governors allowed to see the report ahead of its publication. Also in the room was the BBC's legal team led by Andrew Caldecott QC. Andrew Gilligan, the journalist whose report lay at the centre of the inquiry, was offered another room to read his copy. By 12.38pm the documents had been unpacked. Three-and-half hours later the meeting in the second-floor boardroom reconvened.

Although the BBC had been heavily attacked by Lord Hutton - far more heavily than anyone in the corporation had expected - it seemed at first that it would mount a trenchant defence. There would be no resignations, it was agreed, and the BBC would stand by the broad thrust of the story.

"The response at that stage was to be quite robust," said one figure at the meeting. A group, led by Dame Pauline, worked on the text of a statement to be delivered by Mr Davies as soon as Mr Blair had finished responding to Lord Hutton in the Commons the next day.

Eventually at 9.30pm - as news of the leak of the document to The Sun broke - it was decided nothing more could be done that day. A smaller group that included Mr Davies met at 9am the next day. Although many present believed that Mr Davies would stay and fight, it seems he was already preparing to go.

Mr Dyke and Mr Davies had had a series of private discussions in the weeks leading up the publication of the Hutton report. They discussed who should resign in the "worst case scenario" and agreed that Mr Dyke would be the greater loss. Senior BBC sources have told The Independent on Sunday that the two men had an "understanding" that Mr Dyke would also offer to resign but would be asked to stay on.

The plan depended on the governors agreeing that the scalp of the BBC's most senior figure was enough of a sacrifice to the Government. That strategy began to unravel almost the moment that Lord Hutton delivered his report on Wednesday. By the time Mr Dyke and his senior managers again gathered in the boardroom to watch the verdict, Mr Davies was preparing his resignation statement.

"He wanted to make sure that he went before the politicians started calling for him to go," said one friend last night.

He had already told Mr Dyke that it would fall to him to make the statement. When he did so, the director general accepted that "certain key allegations" in the Gilligan report had been wrong - but that was far from the fulsome apology sought by Mr Blair.

Mr Dyke added "the greater part" of the BBC's coverage of the dossier had been accurate in reporting issues of great public interested raised by a credible source, Dr Kelly. The BBC had never accused Mr Blair of lying, he said. It was fighting talk that cheered the newsrooms. Which made it all the more shocking for those watching BBC News 24 when the political editor, Andrew Marr, reported moments later that the chairman of the board had resigned. "I have been brought up to believe that you cannot choose your own referee and that the referee's decision is final," said the departing Mr Davies.

For Alastair Campbell, however, the final whistle had not blown. Mr Blair's former director of communications delivered a blistering attack on the BBC at a press conference in central London. "The Prime Minister told the truth, the Government told the truth, I told the truth. The BBC, from the chairman and director general down, did not," he said.

The inclusion of the director general in his list of wrongdoers was an implicit demand for Mr Dyke's resignation - and was recognised as such back at Broadcasting House, where the BBC's governors were beginning to gather for a two-day meeting.

With Mr Davies gone, the governors chose Lord Ryder of Wensum, former chief whip in John Major's government, as acting chairman. Lord Ryder had already questioned the "tabloid culture" of the Today programme and was determined to draw a line under the Gilligan affair.

The traditional dinner, served in the same boardroom where Mr Dyke had watched Lord Hutton at lunchtime, was a tense affair. Mr Dyke, according to allies, was convinced that the governors would reject out of hand his offer to resign. When they asked him to leave the room he believed it was so that they could agree how best to handle the news he was staying, according to one figure.

It was not that simple. The governors were angered by Mr Davies' failure to consult them before resigning. Some smelt a rat, believing that Mr Davies and Mr Dyke had cut a deal to leave the director general in place, and "felt bounced", said one figure. There were also concerns about where blame for Lord Hutton's damning conclusions really lay.

"If Greg was to stay, then someone further down the food chain was going to have to carry the can," said one senior figure involved. Mr Dyke is understood to have been furious with the Today programme editor, Kevin Marsh, whose email about Mr Gilligan's "loose language" was so damaging. Some BBC governors believed, however, that to blame Mr Marsh and not Mr Dyke would be grossly unfair.

As blizzards swept through London, the argument began to go against the director general. When, at last, Mr Dyke was recalled he was told that no firm assurances about his future could be made. The meeting broke up after midnight. The following day, Mr Blair's spokesman said Mr Dyke's statement of the previous day did "not amount to a considered statement from the BBC governors, and that's what we need".

Back at Broadcasting House it was clear that the governors were in favour of accepting Mr Dyke's resignation by a margin of two to one. According to one source, it was the newer governors who held out longest to keep Mr Dyke. Deborah Bull, Dame Ruth Deech and Angela Sarkis, were, however, in a small minority when the vote was cast.

Using the office from which he had expected to orchestrate the fight-back, Mr Dyke was, nevertheless, already working on an email to be sent to BBC staff. "I don't want to go and I'll miss everyone here hugely."

The feeling, it quickly became apparent, was mutual. More than 1,000 BBC employees walked out to demonstrate at his departure.

When Mr Dyke was a driven to Television Centre later to say goodbye to his staff, there were at least 700 of them waiting outside, some holding placards which read "Bring back Greg". Others crowded around his car to write messages including "Please reconsider". Standing on a desk in one of the news rooms, he told journalists: "Do not be cowed. Make sure we are right. Be fair. But don't let anyone pressurise you."

That rallying call was in stark contrast to the statement that had been made by Lord Ryder immediately after Mr Dyke's dramatic resignation at lunchtime. He paid tribute to the "strong, dynamic leadership" of Mr Davies and Mr Dyke but added: "On behalf of the BBC I have no hesitation in apologising unreservedly for our errors and to the individuals whose reputations were affected by them."

For Tony Blair the "unreserved apology" with its implicit withdrawal of the whole Gilligan story was enough. "I want to make it absolutely clear I fully respect the independence of the BBC. I have no doubt that the BBC will continue as it should do to probe and question the Government in every proper way. What this does now is to allow us to draw a line and move on."

There appeared little hope of that on Friday when Mr Dyke appeared on the Today programme. He said. "I will at some stage either write or broadcast a considered opinion on Hutton. It might take me a few days. It might take me two weeks."

It would seem that the BBC's exit door has not stopped spinning yet.