BBC bosses face showdown in Parliament after being recalled over ‘off payroll’ scandal
By Mark Conrad | 19 November 2012
“If he was paid twice what was on his contract, I would like to understand the value-for-money implications of that”
– Stephen Barclay, Conservative MP, public accounts committee
MPs are to grill BBC chiefs in Parliament this Thursday over the £450,000 pay-off agreed for former director general George Entwistle.
Members of the House of Commons public accounts committee will demand to know why the BBC Trust, which oversees the broadcaster, decided to give Entwistle double his entitlement to six months’ pay on quitting.
Entwistle resigned after 54 days as director general after BBC2’s Newsnight broadcast a report that wrongly accused a senior Conservative figure of child abuse.
The cross-party committee of MPs had recalled BBC chiefs to answer more questions over ‘off payroll’ arrangements and paying people through personal-service companies.
But MPs say that they will also raise questions about Entwistle’s deal. Maria Miller, culture secretary, described the pay-off as “hard to justify”.
Stephen Barclay, a Conservative MP on the committee, said: “It is a value-for-money issue, and if he was paid twice what was on his contract, I would like to understand the value-for-money implications of that.”
Lord Patten, chairman of the BBC Trust, described the pay-off as “justified” because it enabled the broadcaster “to conclude matters quickly”. The BBC also “required George’s ongoing co-operation in a number of very difficult and sensitive matters.”
He said that Entwistle would have been entitled to 12 months’ notice if he had been sacked. Entwistle’s “honourable offer to resign” meant that the trust members did not have to consider dismissal, he said.
MPs will question Zarin Patel, the BBC’s chief finance officer, Anthony Fry, a member of the trust, with responsibility for value for money and Bal Samra, director of BBC rights and business affairs.
Margaret Hodge, a Labour MP and chairwoman of the committee, told Exaro: “It is the issue of the moment, people feel very angry, and we shall question both the board member and the member of the executive who will appear before us.
“Of course, we shall listen to what they have got to say. We do not want to pre-judge. But it seems a heck of a lot of money for just 54 days in post and getting things so badly wrong.”
Her committee published a report last month condemning ‘off payroll’ arrangements at the BBC and across Whitehall, which was exposed by Exaro. The deals enable individuals, and employers, to pay less tax.
The arrangements have been exposed by Exaro since first revealing in February, with BBC2’s Newsnight, that the Student Loans Company (SLC) was paying its chief executive, Ed Lester, through a personal-service company without deducting tax or national insurance under concessions granted by HM Revenue & Customs (HMRC).
Exaro revealed in March that around 3,000 people working for the BBC are paid through personal-service companies, including five paid more than £150,000 a year.
Since the committee’s report, the BBC completed a review of ‘off payroll’ arrangements, and estimated that 131 people paid either as freelancers or through personal-service companies will be offered staff contracts.
Deloitte, the auditors, identified 804 people who should be subjected to a new BBC employment test.
The BBC is re-assessing the 804 contracts, covering 469 ‘on-air’ staff and 335 self-employed people paid more than £50,000 during the 2011-12 financial year.
The auditors found “no evidence” that the broadcaster had used personal-service companies to avoid tax.
Among those who may be offered a staff contract is Jeremy Paxman, Newsnight presenter. He claimed in March that the BBC had “required” him to set up a personal company to receive payments.
The BBC admitted in its report on the review that its policy for contracting staff was “inconsistent”. This has resulted in on-air ‘talent’ doing very similar work being classified in different ways: staff, self-employed or contracted through personal companies.
Barclay said that the main purpose for Thursday’s hearing was about why the BBC paid so many people through personal companies. He plans to ask why the BBC pays people ‘off payroll’ on the basis that they earn some secondary income from “the odd corporate gig” or book.
“BBC presenters would be very quick to criticise a member of parliament for suggesting that an outside interest meant they were freelance,” he added.