20/12/2012 02:11 GMT | Updated 20/12/2012 06:46 GMT

BBC's George Entwistle Payoff Slammed As 'Unacceptable Use Of Public Money'

The BBC has been accused of a "cavalier" attitude towards licence fee money over a £450,000 payoff to director-general George Entwistle.

MPs have warned that public servants "should not be rewarded for failure", insisting that the size pf Entwistle's resignation package was an "unacceptable use of public money."

Mr Entwistle resigned after just 54 days in the job as a result of his handling of the fallout from the Jimmy Savile crisis, and was paid the money - twice the amount to which he was entitled - in order to speed up his departure.

A Public Accounts Committee report has said the payoff it was "out of line both with public expectations and what is considered acceptable elsewhere in the public sector".

MPs also criticised "excessive" severance payments to ten other senior managers, including former chief operating officer Caroline Thomson who received £670,000 when she left this year.

During the committee's hearing last month, MPs accused the BBC of offering her a large redundancy sum as "compensation" when she failed in her bid to become DG.

Today's report said the committee was "extremely concerned" that the BBC Trust - which agreed the payoff to Mr Entwistle - had rejected an offer for the National Audit Office to examine the package for the ex-DG, who stepped down on November 10.

"This inhibited Parliament's ability to hold the Trust to account for its use of public money," the report said.

Mr Entwistle would normally have been entitled to £225,000 - half his salary - if he had voluntarily resigned.

But the Trust agreed to the larger amount to allow a speedy clean break allowing them to draw a line under the episode and seek a new DG without lengthy legal negotiations.

The committee concluded: "By agreeing to this payment, the BBC Trust may have secured the director-general's quick departure but it did not act in the wider public interest. Public servants should not be rewarded for failure."

Mr Entwistle's other benefits under the deal drew further criticism. On top of his salary pay-off, he was given a years' private medical cover and contributions to his legal costs.

The committee said it considered the additional benefits to be "an unacceptable use of licence fee payers' money".

And it went on: "The BBC Trust should not have agreed to these terms and it should make it clear to all BBC managers that such payments will not be offered in the future."

Public Accounts Committee chairman Margaret Hodge said: "This cavalier use of public money is out of line with public expectations and what is considered acceptable elsewhere in the public sector."

MPs heard during their sitting last month that ten other leading figures at the BBC had received severance packages in the past two years which together amounted to £4 million. The largest was to former deputy director general Mark Byford who was given £949,000.

The committee said the payments were "excessively generous" and added that the BBC Trust should agree to a review by the Comptroller and Auditor General over the "scale and nature of severance payments made across the BBC, which should include any and all additional benefits".

And there was unease that 422 senior managers at the BBC received private medical cover worth £667,489 as part of their remuneration in the past year.

"It is difficult to see how the use of public money to fund private healthcare for senior BBC managers can possibly be justified," the report said.

Ms Hodge said: "The BBC's generosity with severance packages goes beyond the one awarded to George Entwistle. Since 2010, over £4 million in total has been made in severance payments to 10 other departing senior managers.

"The BBC is also providing 422 senior managers with private medical cover as part of their remuneration packages.

"We have asked the Comptroller and Auditor General to include in his 2013 programme of work on the BBC an examination of severance payments and benefits for senior managers.

A BBC Trust spokeswoman said: "Of course £450,000 is a very substantial sum, but the terms reached were the best available in the circumstances. As already explained to the PAC and the Culture, Media and Sport Select Committee it is simply wrong to suggest the BBC Trust had a choice between a severance payment of £450,000 or half that level.

"Indeed, if we had faced a constructive dismissal situation it would have cost us more and could have been a messy and long drawn out process. It is also not the case that the Trust refused to take up the offer to review the package - on the contrary, we suggested a wider study of severance payments at the BBC, which the NAO will now undertake."