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Jenni Russell: This is the BBC - ruled by greed at the top

Belt-tightening, cuts, insecurity, restraint. It’s the theme for every public service, and for a great many private companies too. But at the BBC the chasm between what’s being demanded of the vast majority of the staff and the cushion of privilege that protects its top executives has resulted in a level of rage that I have not seen since I joined the corporation as a trainee 25 years ago. “I’ve never
known anything like it,” one very senior producer said to me. “It’s outright fury. Every meeting is packed. Five hundred people turned up at one meeting at Bush House; you couldn’t get into the room.

We hate them, really hate them.” The staff I talked to are realists. They know that the BBC pension scheme has a hole in it and that salaries and jobs will all be badly
affected by the national squeeze on spending. They understand that the coalition government is planning to cut the licence fee. What incenses them is that their wages are being limited or frozen and their pensions slashed by a management elite whose own incomes and comfortable retirement arrangements leave them utterly detached from the lives and the fears of their employees.

It’s the Mark Byford pension that’s become the symbol of what’s gone so wrong. At 51 the deputy director-general not only earns almost £500,000 a year but — simply by staying in the same organisation all his working life — he has accumulated one of the largest pension pots ever seen in the public sector. It is currently worth £215,000 a year, which means that even if he left the BBC tomorrow, he would retire on an income that was almost 50% higher than the prime minister’s salary.

Buying that same pension on the open market would cost at least £3.6m. In the public sector it’s thought that only the governor of the Bank of England has accumulated more, and he has an entirely different order of responsibility.

What Byford and his colleagues have benefited from is a revolution in the ssumptions about what those who run the BBC should earn. When Michael Checkland became director-general 23 years ago, he earned around £200,000 a year. At that point a producer in the first year of their first job (me) earned £18,000.

In the intervening years top salaries have soared away from those of the rest of the staff. From the time that John Birt arrived as DG and was discovered to be contracting his services as a freelance in order to minimise his tax and maximise his income, the idea that running the BBC was a privilege deserving a healthy salary, but no more, was dead.

First the governors and then the BBC Trust bought into the argument that there was a worldwide shortage of talent and that the BBC had to compete for it in the marketplace. The corporation declared that executive pay was benchmarked against the private sector. The basic salaries of those on the executive board rocketed.
In 2006 the current director-general, Mark Thompson, had a pay rise of 9%, Byford got 15%, and the director of television’s pay went up by 25%. The staff got 2.6%. In 2008 the board got pay rises of up to £100,000, taking Thompson’s salary to £816,000. He remarked that the BBC’s wages were “in many cases a tiny patch on what other broadcasters pay” and that “when you get out into the external world,
some potential candidates almost roll on the floor laughing when you talk about potential levels of pay”.

That year the staff got 2%. Last year Thompson’s salary, including pension contributions, was £834,000. A journalist in my old job earns £30,000. Thompson and his colleagues have secured a remarkable deal: salaries approaching those in the harsh commercial world, but with public sector pensions and job security.

The staff have long been bewildered by the rewards at the top, while they deal with flat wages and incessant budget cuts.

The catalyst for the rage is the change to pensions announced in June. Most staff belong either to the final-salary or career-average scheme. In future the link between salaries and pensions is to be snapped.

Pensionable salaries will grow by a maximum of 1% a year, no matter what promotions or wage increases are earned. A typical 30-year-old producer on £25,000, who might have expected to retire on £27,000 after a couple of promotions in his working life, will now get about a third of that. Except for the lucky few who are towards the end of their employment, or who have already reached the peak of their earnings, everyone’s retirement income will be savagely reduced.

“It’s sheer betrayal,” one editor told me. “The whole country’s in a dire state and we know we have to make sacrifices; but the management have been so greedy they’ve surrendered their moral right to leadership. The executive board have each given up a month’s salary for two years, and we’re told this will hit them in the pocket, but for God’s sake, on their salaries how can that hurt? They’re on a different planet.”

That sense of different rules for the staff and the elite was reinforced last week when it turned out that the executives who have driven one of the BBC’s major projects, the moving of 1,500 staff from London to a Salford base next year, won’t actually be making the move out of London themselves. The director of BBC North, Peter Salmon, has decided to keep his family in London and rent a flat in Salford during the week at the BBC’s expense. He says his children are at a critical stage in their education.

The controller of 5 Live has made the same decision. The BBC says the strategist behind the Salford move, Richard Deverell, has not yet decided whether he will move. Meanwhile, the employees affected have been told that while there will be attempts to redeploy them if they don’t go, they may face redundancy if they refuse.
The BBC has never felt like a well-managed organisation. I worked there for 10 years, and its crassness in handling its staff was bewildering. But neither the executive board nor the trust seems to have grasped the hostility they now face. The unions will be balloting on strike action — and they say applications to
join them are running at an unprecedented level.

The BBC has to accept that it is not and cannot be compared to a commercial organisation. Commercial employees live or die by whether they can survive in the marketplace. Michael Grade left the BBC for a huge salary at ITV, only to be forced out when he didn’t deliver sufficient profits. The BBC is insulated from those pressures.

As one trust member told me, there is nothing like looking at projected income for the next five years and seeing those repeated, reassuring figures: £3.4 billion, every single year.

The era in which private-sector greed could be carried into the public sector is over. The governor of the Bank of England has just announced that when the Bank takes over regulation of the financial system, he won’t be offering high salaries. Instead, he’s looking for people who are motivated by public service.

That’s just what the BBC should be doing. It has to cut those stratospheric alaries and understand that executives who have won the lottery with their pensions should either surrender part of them or move on. They are in no position to lecture the staff on austerity and restraint. The DG’s salary could be set at the same level the coalition is proposing for the rest of the public sector: 20 times the lowest London wage, some £400,000. If current board members think they are worth more elsewhere, let them leave.

Nothing is more important than that the BBC, which is an essential part of our cultural and political life, should be led by people who care more for what they can achieve than what they can earn themselves.

jenni.russell@sunday-times.co.uk