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How to fix the BBC’s governance problems

Making the BBC Trust a separate organisation was a recipe for confusion and conflict

The Public Accounts Committee meets tomorrow afternoon to discuss – again – the BBC’s severance payments. Like many Select Committees, its proceedings will resemble alternately the Theatre of Cruelty and the Theatre of the Absurd. Cruel, because those who appear before it are astonished at how nasty MPs can be when asking their “When did you stop beating your wife?” questions. Absurd, because their hunger for headlines makes it hard for members to stick to the brief or to the point; someone is sure to raise Jimmy Savile, although he is hard to fit under tomorrow’s agenda heading.

This is not to say that their work isn’t important, only that it could be carried out more effectively. They have already highlighted major flaws and excessive generosity in the BBC’s redundancy processes. Payments were made in excess of contractual requirements, and the paper trail and approval process fell below that expected in any well-run organisation.

How did this happen? There were real pressure to accelerate redundancies, and generous payments made them easier to achieve. For this Parliament must take some blame; they created the modern minefield of employment law. Large payments were unavoidable given the risks of being sued for wrongful dismissal and damages that, until recently, were uncapped. Yes, George Entwistle, the last Director-General, was pushed – but he would only go after agreeing appropriate terms, and a year’s salary in the circumstances was reasonable. The PAC, predictably, overstates the amount about which they are outraged, always quoting the total sum; in practise, extra-contractual payments were about 10 per cent of the total and annual savings of around £37m in executive pay.

It is, of course, easy to be generous with other people’s money. And there may have been a feeling amongst some involved in the process that “There, but for the grace of God, go I; perhaps I might be grateful for generosity in a year’s time”. That explains, but does not excuse. The BBC’s standards need to be higher than its commercial competitors; it is no defence to point out the huge settlement a previous ITV CEO  received when he was moved on.

The BBC’s stable door is now firmly closed, and for that the PAC deserves most of the credit. Tony Hall, encouraged by Chris Patten, has reduced the level of executive pay to more acceptable, if less competitive, levels, and redundancy payments have been capped at £150,000.

So what is left for the PAC to talk about tomorrow afternoon? Only a second order issue, the question of who told what, to whom and when. As the BBC Trust is only responsible for the DG’s terms and conditions, with everything else belonging to the Executive Board Remuneration Committee, why does this matter?

It matters only if the PAC and Parliament have been misled, which is not a second-order issue. The water has been muddied by an unedifying squabble between the BBC and the BBC Trust, characterised by language that both sides must now regret. The former Director General and the Chairman of the Trust are both honest men, and it is highly unlikely that either deliberately misled Parliament or each other. So for MPs to suggest that either Mark Thompson or Chris Patten should resign is premature, although it does underline their thirst for the tumbril.

What the row between the BBC and the Trust has exposed is the fault-line inherent in the present governance structure, which is Parliament’s fault. Establishing the BBC Trust as a separate organisation, in a separate building, chaired by someone called the Chairman of the BBC, while the BBC’s Executive Committee, chaired by the DG, remained the source of day-to-day power and responsibility, was always a recipe for confusion and conflict. The “clear blue water” that separates the Trust from the BBC is an admirable concept, but only as long as the water remains calm. And the water around the BBC is never calm for long.

There is no short term remedy for this structural defect until the Charter Review in 2016. Until then the Trust and the BBC have to make the best of a botched parliamentary job. When it  is reviewed, there will be an opportunity for significant change. This could involve a return to the old Board of Governors, which had the great virtue of unified responsibility and accountability. That seem unlikely, however strong the intellectual arguments. So the best change might be the creation of a BBC Board with a mixture of executive and non-executive members, responsible for the BBC’s Charter objectives, with second-guessing – all right, regulation – assigned to Ofcom.

In the meantime the PAC will generate a great deal of righteous indignation, and may even obtain a scalp. It might pause to remind itself that the BBC is under new management, that Tony Hall has put brought it to order, and that the BBC continues to produce, week in and week out, some of the best television, radio and online services in the world. In a few months’ time, if anyone remembers the PAC’s meeting tomorrow, they may wonder, “What was that all about?”

Sir Christopher Bland was chair of the BBC’s board of governors, 1996-2001