BBC Boss 'Shocked' Over Bumper Pay-Offs

BBC bosses have been grilled by MPs over how senior staff were given hefty pay-offs that often breached the corporation's own guidelines.

Director-general Tony Hall and chairman of the BBC Trust Lord Patten appeared before the Public Accounts Committee, along with human resources director Lucy Adams and trust member Anthony Fry.

The session in the House of Commons came after a National Audit Office (NAO) report showed huge payments, of hundreds of thousands of pounds in some cases, were made even though executives were not always entitled to the money.

Lord Patten began by telling the group of cross-party MPs that it was "a question of shock and dismay for us" when it emerged that staff had been paid more than they were contractually owed in some cases.

George Entwistle was paid £450,000 for being in the top job for 54 days

Asked why he did not know some pay-offs had gone beyond what was contractually needed, Lord Patten appeared to suggest former director-general Mark Thompson should be called to give evidence.

He told the committee: "If you call a previous director general of the BBC I will be as interested as you are why we didn't know."

Speaking about Mr Thompson's eventual successor George Entwistle, who stood down after a few weeks in the job amid the Jimmy Savile sex scandal, Lord Patten said his pay-off of £450,000 was necessary to prevent a potentially larger bill if they had got bogged down in legal argument.

He said: "We would have fetched up paying more than we in fact had to pay him."

The pay-offs to Mark Byford and Caroline Thompson have been criticised

Lord Patten admitted Mr Entwistle was paid for an extra 20 days work for the BBC to help manage the transition to a new director-general but "as it happened he wasn't required to do anything".

Lord Patten also revealed that the BBC Trust has been pressing for an overall pay reduction since 2009.

He suggested to the MPs that some of the payments had been approved to "get people out of the door" after the BBC decided to cut the number of senior managers it employed.

He agreed with committee member Austin Mitchell MP that the size of some of the payments had discredited the licence fee and said: "It's not only the licence fee payer that has been shocked by what's happened, it's people who work for the BBC".

Roly Keating handed back his pay-off

According to the NAO in the three years up to last December, the BBC spent £25m on severance payments for 150 high-ranking staff.

And since 2005, the corporation has made payments totaling £60m to more than 400 senior managers.

Among the pay-offs criticised was one to former chief operating officer Caroline Thomson, who left last year with £670,000 - more than twice her salary.

And former deputy director-general Mark Byford was paid £949,000 when he left two years ago.

But the former BBC2 controller, Roly Keating, who was given a £375,000 pay-off, returned the money after learning it had not been properly authorised.

Lord Patten says he was shocked at the NAO's findings

Ms Adams, who is paid a salary of £320,000, said Mr Byford had an expectation of a payment in lieu of notice of 12 months because it had become "custom and practice" at the BBC.

She said she raised the possibility of a cap on redundancy payments in 2011, adding: "I was well aware this was unsustainable".

Mr Hall said the issue was not just with the human resources department, but a broader problem with the culture at the BBC and "the amount of control at the centre over what was going on was simply not good enough".

He added that he was working to make the BBC a "simpler" organisation and it was "over-complex, over-layered".

Mr Hall said: "Culturally I think we'd lost the plot, we lost the way", but added he had faith in Ms Adams to continue in her role.

Mr Fry told the committee that some BBC staff were "out to lunch" in regard to how much they expected senior executives to be paid, and some people had got "unreasonable" salaries and pay-offs.

He said members of the trust, which is the governing body of the BBC, were not always included in all decision making.

There were times when "people like me were asked in not particularly pleasant words to get back into our box," he added.

Lord Patten said the BBC would publish the full cost of the Pollard review into a dropped Newsnight investigation which featured allegations of sexual abuse by the late TV presenter Savile next Tuesday.

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IMF Upgrades UK Growth Forecast For 2013

The International Monetary Fund (IMF) has upgraded its 2013 growth forecast for Britain, reinforcing claims of green shoots of economic recovery.

The IMF is now predicting growth of 0.9% this year, up by 0.3% since its last report in April when it downgraded the UK's prospects.

The move will provide a boost for Chancellor George Osborne's deficit-busting plans as it almost entirely reverses the IMF's earlier growth forecast cuts, which came amid warnings over the impact of austerity.

It sparked a war of words with the Treasury in April when it slashed its growth outlook and said Mr Osborne should consider changing his plans in the light of "lacklustre" private demand.

But the IMF's latest World Economic Outlook reveals a brighter picture for the UK economy following a raft of recent encouraging reports, with growth of 1.5% also pencilled in for next year.

The Washington-based body said global growth would "remain subdued" as it cut its forecast for world output by 0.2% this year and next, to 3.1% and 3.8% respectively.

It said slower growth in countries such as China would drag on the global performance and cautioned authorities in the eurozone that they would have to continue 'doing what it takes' to keep the debt crisis at bay.

China's growth forecast for 2013 has been cut by 0.3% to 7.8% and by 0.6% to 7.7% for 2014.

The IMF also said the recession in the eurozone area will be deeper than initially feared this year, with activity contracting by 0.6%, although it is forecasting the recovery to start next year with growth of 0.9%.

Growth in the US will also be more muted, according to the IMF, which is predicting expansion of 1.7% in 2013, down 0.2% since its April report.

It said: "Downside risks to global growth prospects still dominate: while old risks remain, new risks have emerged, including the possibility of a longer growth slowdown in emerging market economies.

"Especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals."

The IMF said the massive money-printing drives worldwide "should continue until the recovery is well established".

Stock markets have been hammered in the past month after the US Federal Reserve said it planned to start tapering its asset-buying programme, as long as the economy continued to improve.

"Clear communication on the eventual exit from monetary stimulus will help reduce volatility in global financial markets," the IMF added.

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UK Coal Calls In Administrators Over Daw Mill

Britain's largest coal miner has gone into administration, with the loss of 350 mining jobs.

The move comes after an underground fire closed its most profitable mine at Daw Mill colliery in Warwickshire last March.

Management confirmed the decision and said it was a result of the problems that the fire created for UK Coal, both UK Coal Mine Holdings Ltd (UKCMHL) and UK Coal Operations Ltd (UKCOL) sought administrators.

UK Coal said in a statement: "Following the devastating fire that closed the Daw Mill deep mine in March 2013, it is announced today that a way forward has been found for the remaining mines and 2,000 employees."

Chief executive officer Kevin McCullough said: "Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve.

"Entering administration and the subsequent restructuring was the only way we could preserve any of the business and while I'm delighted we've saved 2,000 jobs, we've also had to make some very difficult decisions.

"I'm pleased that we managed to transfer 120 of our Daw Mill colleagues to our other mines following the fire. Our thoughts today also rest with the 350 colleagues who will now, regrettably, be made redundant as a result of Daw Mill closing."

Production of coal from Daw Mill represented around a third of UK Coal's revenue and the forced closure of the mine had threatened the ongoing viability of UK Coal Operations' remaining two deep mines and six surface mines.

David Kelly, Rob Hebenton and Ian Green from PwC have been appointed administrators of the companies by Birmingham High Court following an application by the directors.

The Coal Authority quango will take responsibility for Daw Mill while the Pension Protection Fund (PPF) will be responsible for the UK Coal pension scheme, which will hold asset on behalf of 7,000 members.

The PPF becomes a creditor to the firms and the pension fund deficit currently stands at £500m.

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Miliband Vows To Reform Labour's Union Ties

Ed Miliband has made one of the biggest gambles of his leadership by vowing to radically reform Labour's relationship with the unions.

In a move that could cost his party millions in funding and lost membership, Mr Miliband unveiled a series of steps to weaken union influence.

Under the plans, union members would no longer be automatically affiliated to Labour and candidates would have to obey a new code of conduct.

Spending caps for would-be candidates and any organisation backing them would apply in domestic and European parliamentary elections.

And standard constituency agreements with unions would aim to ensure no one involved in the selection process could be subjected to "undue local pressure".

A system of US-style primaries would also be used to pick Labour's next candidate for mayor of London and potentially future parliamentary candidates in certain constituencies.

In a bid to shift the pressure onto other party leaders, Mr Miliband also laid down a challenge by pledging to limit MPs' outside earnings if he wins power in 2015.

Unite boss Len McCluskey

And he called for the reopening of stalled talks on party funding, repeating his offer to cap donations from individuals, businesses and trade unions.

His speech in London was sparked by the Falkirk ballot-rigging scandal, which the party leader said was an example of the "death throes of the old politics".

Police are investigating after the Unite union was accused of trying to use its members to secure the selection of a particular candidate in the Scottish constituency.

"Every time something like Falkirk happens, it confirms people's worst suspicions," Mr Miliband said. "I want to build a better Labour Party - and build a better politics for Britain."

His reforms would see union members given the change to "opt in" to a £3 donation which currently goes straight to the party.

"I do not want any individual to be paying money to the Labour Party in affiliation fees unless they have deliberately chosen to do so," he said.

Officials acknowledge ending automatic affiliation will represent a financial "hit" for the party but Mr Miliband claimed it was also an opportunity to mobilise union members.

"It could grow our membership from 200,000 to a far higher number, genuinely rooting us in the life of more people of our country," he said.

In a surprise move, the Labour leader also attacked MPs who earn significant amounts from outside jobs and raised the wider issue of party funding.

He insisted being an MP was a "privilege and a duty" rather than a sideline and called for new rules to limit second jobs and avoid conflicts of interest.

Union affiliations of Labour Party members

Unite general secretary Len McCluskey described Mr Miliband's plans as "very brave" and suggested they could be historic if his vision is realised.

He made clear he too wanted the status quo to change and said he was "attracted" by the ideas set out because it would make trade unionists more active.

But he warned "dramatically" fewer union members would sign up to be affiliated to Labour if an opt-in was adopted.

"I think this is in a sense a dangerous road for him," he said on Sky's Boulton & Co show.

Conservative Party Chairman Grant Shapps claimed the "weak" plans were meaningless and pointed out that a code of conduct already exists.

"It would still be the same old Labour Party - bankrolled by the unions, policies rigged by the unions and candidates chosen by the unions," he said.

"The reality is Ed Miliband cannot change Labour because he cannot stand up to the union barons who elected him. That means he's too weak to stand up for hardworking people and too weak to run the country."

But former prime minister and Labour leader Tony Blair told Sky News he believed it was a defining moment for his successor.

"It is bold and strong. It is real leadership," he said. "He is carrying through a process of reform in the Labour Party that is long overdue and frankly probably I should have done it when I was leader.

"At the same time what he is doing is sending a very strong message to the country that in the end he will do what is right and that he will govern for all the country and not simply one section of it."

Party sources insist Mr Miliband had always intended to deliver reforms but did not deny that the timing was linked to the Falkirk scandal.

After his speech, the leader insisted: "We are going to make this change happen, let me make that clear", but admitted no timetable had yet been set out.

He has appointed former Labour general secretary and union official Lord Collins of Highbury to lead work on the introduction of the new system.

Deputy Prime Minister Nick Clegg said he was prepared to work with Labour to legislate for an opt-in using the Third Party Funding Bill and called on Mr Miliband to "turn words into actions".

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City Watchdog Boss Got £86,000 Bonus In 2012

By Mark Kleinman, City Editor

Martin Wheatley, the boss of the new City conduct regulator, received a near six-figure bonus last year despite criticism of its handling of a string of mis-selling scandals.

Sky News can reveal that Mr Wheatley, chief executive of the Financial Conduct Authority (FCA) was paid an annual bonus of £86,000 in 2012-13, part of a total package worth more than £650,000.

The pay deal, which will be disclosed in the FCA's annual report due to be published on Wednesday, made Mr Wheatley one of the UK's best-paid public servants.

He is understood to have been paid a base salary of about £430,000 and received pension contributions and other benefits of approximately £150,000 on top of his annual bonus.

It is unclear whether the FCA annual report will detail the precise performance criteria on which Mr Wheatley's bonus was decided. If it does not, it will provoke accusations of hypocrisy given the scrutiny to which the watchdog subjects the pay plans of the firms it supervises.

The former head of the markets regulator in Hong Kong, Mr Wheatley was recruited back to London in 2011 while the Financial Services Authority was still in existence.

In March, the FSA was abolished under George Osborne's plans to overhaul City regulation and was replaced by the FCA and Prudential Regulation Authority, which has responsibility for the safety of the financial system.

Mr Wheatley has played a key role in changes to the operation of the scandal-hit Libor interbank borrowing rate. Sky News revealed on Tuesday that Libor's administration would be taken on by NYSE Euronext, owner of the New York Stock Exchange.

However, the FCA has faced criticism for not moving swiftly enough to force banks to pay compensation to victims of the interest rate swaps mis-selling scandal.

The FCA chief's base salary in 2012-13 was similar to his pay the previous year, when he also received a £29,000 bonus for seven months' work. His total package that year amounted to £399,657.

A source pointed out that Mr Wheatley's remuneration was significantly lower than that of Sir Hector Sants, the former FSA chief executive who now works in a highly-paid job at Barclays.

In a speech in London on Tuesday, Mr Wheatley said the FSA had been guilty of "implausible economic assessments" and a "flawed approach" to regulation.

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Fukushima Nuclear Boss Dies Of Cancer

The nuclear power plant chief who led the life-risking battle to stabilise the crippled Fukushima reactors in Japan two years ago has died of oesophageal cancer.

Masao Yoshida, 58, died on Tuesday in a Tokyo hospital, a spokesman for the nuclear plant's owner, Tokyo Electric Power Company (Tepco) said.

Officials said his illness was not connected with radiation exposure.

Mr Yoshida, an engineer, was in charge of the Fukushima Daiichi plant in March 2011 when an earthquake and tsunami knocked out its power and cooling systems, causing reactor meltdowns and massive radiation leaks.

Debris in front of the crippled Daiichi plant

Recalling the first few days when three reactors suffered meltdowns in succession, Mr Yoshida later said: "There were several instances when I thought we were all going to die here. I feared the plant was getting out of control and we would be finished."

He has been described as a tall man with a loud voice who was liked by his staff and not afraid of standing his ground with his own bosses.

On March 12, after the Unit 1 reactor building had an explosion, the man in charge of the plant kept pumping sea water into the reactor to cool it, ignoring an order to stop from Tepco headquarters after the then-prime minister Naoto Kan had expressed fears that sea water risked triggering a fission chain reaction.

A radiation monitor indicates 131.00 microsieverts per hour

Mr Yoshida was initially reprimanded for disobeying but later praised for his judgement that eventually helped keep the reactor from turning worse.

"I bow deeply in respect to his leadership and decisiveness," the former PM said on Twitter.

Mr Yoshida was interviewed for 10 hours by a member of the government-commissioned panel examining the meltdown.

He stepped down in December 2011, citing his illness, after workers had begun to bring the plant under control.

View of the destroyed roof of No 3 reactor building

"He literally put his life at risk in dealing with the accident," Tepco president Naomi Hirose said in a statement. "We keep his wishes to our heart and do our utmost for the reconstruction of Fukushima, which he tried to save at all cost."

Former investigator Kunio Yanagida said Mr Yoshida's death was a major loss for future investigations into the disaster at the plant, where radiation levels are still too high to allow a full, on-site examination.

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Apple And Amazon End Legal Row Over Apps

Apple has abandoned its efforts to claim the term 'app store' as its own.

The tech firm confirmed it had dropped its two-year lawsuit against rival Amazon for using the term - two years after filing the case in California.

The suit had claimed that Amazon's use of Appstore - its online shop for mobile gadget applications - infringed Apple's rights for its App Store, where it sells products for iPads and iPhones.

The court order dismissing the case was signed in the federal court where Apple had launched the action in 2011.

Apple's App Store is celebrating its fifth anniversary

It had been scheduled to go to trial in August but was cancelled at the companies' request though Martin Glick, a lawyer for Amazon, who said: "This was a decision by Apple to unilaterally abandon the case, and leave Amazon free to use 'appstore.'"

An Amazon statement said: "We look forward to continuing our focus on delivering the best possible Appstore experience to customers and developers."

Apple responded: "With more than 900,000 apps and 50 billion downloads, customers know where they can purchase their favourite apps.

"We no longer see a need to pursue our case against Amazon."

Earlier this year, US District Judge Phyllis Hamilton ruled that Apple had failed to establish that Amazon made any false statement or had deceived customers.

Apple had launched its App Store in 2008 while Amazon opened its online marketplace in 2011 for its Android-powered Kindle tablets.

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Amazon Rapped Over Benefits Of Measles Claim

Amazon has got into trouble with the Advertising Standards Authority (ASA) after publishing misleading claims about a book promoting a vaccination-free childhood.

The ASA ruled the online retailer's portrayal of Melanie's Marvelous Measles could not be substantiated and broke advertising rules.

The book was described as being written to educate children on the benefits of having the illness, and how it was possible to heal naturally and successfully.

Melanie's Marvelous Measles claims one can heal naturally from the disease

"Often today, we are being bombarded with messages from vested interests to fear all diseases in order for someone to sell some potion or vaccine," it read.

"In fact, history shows that in industrialised countries, these diseases are quite benign and, according to natural health sources, beneficial to the body."

One reader complained the implications that measles was benign, and vaccination unnecessary and unsafe were misleading and unsubstantiated.

The complainant was also concerned the advertisement discouraged essential treatment for a condition for which medical supervision should be sought.

Amazon said the product page of its website was created automatically from a catalogue data feed supplied by a third-party provider, and argued the content fell outside advertising regulations.

It added the product description enabled customers to make an informed purchasing decision, and the views and opinions were those of the author and did not necessarily reflect Amazon's own perspective.

But the ASA did not consider this relieved Amazon of its responsibility to ensure the content - which the retailer was able to remove - complied with regulations.

Amazon claimed their authors' views do not always reflect their opinions

"Measles, as an infectious disease, is a serious medical condition which can lead to severe complications or even death," read the adjudication.

"Vaccination is recommended by the World Health Organisation and the NHS as an effective way of preventing measles.

"Consumers reading the ad and understanding it to present factual information about the disease would be less likely to have their children vaccinated as a result.

"We therefore concluded that the ad was irresponsible because it discouraged essential treatment for measles."

Amazon has since changed the ad.

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Cyberattack Risk Highest Ever, MPs Warn

By Alistair Bunkall, Defence Correspondent

The threat to the UK from cyberattacks is now at its highest-ever level and is "disturbing in its scale and complexity", according to MPs.

The assessment was made by the Intelligence and Security Committee (ISC) in its annual report on the UK's three security agencies, MI5, MI6 and GCHQ.

So-called "cyber-mercenaries" are being recruited by some countries to hack into the computer systems of foreign governments and companies, the ISC claimed.

It said it had been told "a number of countries are also using private groups to carry out state-sponsored attacks".

"These state-affiliated groups consist of skilled cyber professionals, undertaking attacks on diverse targets such as financial institutions and energy companies," the report said.

"These groups pose a threat in their own right, but it is the combination of their capability and the objectives of their state backers which makes them of particular concern."

The Chinese and Russian governments have both been accused of state-sponsored hacking but deny the claims.

A large attack on South Korea's banks and broadcasters in March has also been blamed on a group called DarkSeoul, suspected of working on behalf of North Korea.

GCHQ is the centre of the Government's signal intelligence services

MPs predicted the risk to the UK from a cyberattack would keep rising but noted GCHQ do not believe terrorist groups such as al Qaeda yet pose a credible cyber threat.

The ISC report highlighted a problem in the recruitment and retention of specialist staff to tackle the problem because the security services cannot compete with private sector pay.

In particular, the committee is worried that the support provided by the agencies to help military operations in Afghanistan could be "easy prey" for a department looking to make savings once the UK's role in the country comes to an end next year.

Despite the concerns, the committee notes the good work of the agencies in keeping Britain safe from terror attacks but does give a warning.

It said: "The Government must ensure that real progress is made as part of the wider National Cyber Security Strategy: the UK cannot afford not to keep pace with the cyber threat."

Last year's Olympics and Paralympics were the busiest period ever for the security services in peacetime. It was decided not to cut resources or capability during this time.

But all three agencies collectively need to find £220m of savings in the next few years as part of the 2010 Spending Review.

The agencies are confident that can be achieved without damaging operational capabilities but the ISC made clear it "does not share that confidence".

As part of the recent Spending Review, the intelligence agencies will receive a combined 3.4% increase to their budgets from 2015/16.

On other issues the report notes concern over the use of chemical weapons in Syria.

It lists mustard gas, sarin, ricin and the VX nerve agent as weapons reportedly in Syria's stockpile.

It cited evidence from the Foreign Secretary about "catastrophic" consequences if some of this stockpile were to fall into the hands of those with terrorist links in the region.

But the committee noted concerns that the security of Pakistan's nuclear arsenal could be compromised have decreased as the country has become more politically stable.

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Royal Mail Sale: Cable Outlines Flotation

Royal Mail staff will get free shares under the Government's plans for the privatisation of the service, despite strong opposition to the sell-off among the workforce.

The Business Secretary Vince Cable confirmed in a statement to MPs the intention to float a majority stake in Royal Mail initially, with the rest following depending on market conditions.

As he announced that staff would hold 10% of the business under proposals first revealed by Sky News, members of the Communication Workers Union (CWU) took to an open-top bus in the City to denounce the sell-off.

Royal Mail workers took to a 'protest' bus in London to make their point

Some of the protesters - most of them employees of the postal service - held placards reading: "Save our Royal Mail" or "You own it, don't buy it."

They argued that they cared more about the future of the service, their pensions, jobs and working conditions than the prospect of a windfall worth more than £2,000 each for the 150,000-strong workforce.

The union's deputy general secretary, Dave Ward, dismissed reassurances about future employment rules to warn of the prospect of strikes unless legally-binding agreements were put in place to guarantee his members' conditions.

Chuka Umunna questioned the Government's motives for the sale

Mr Cable had told the Commons: "These shares will be free to eligible employees, recognising that many of them would otherwise find them unaffordable."

He said the flotation, which was expected to value the business at £3bn, would begin over the next year and the shares would be listed on the London Stock Exchange. They will be available to the general public as well as institutional investors.

"This is logical, it is a commercial decision designed to put Royal Mail's future on to a long-term sustainable basis," he said.

"It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.

"Now the time has come for Government to step back from Royal Mail, allow its management to focus wholeheartedly on growing the business and planning for the future."

Labour said it would oppose the flotation.

Shadow business secretary Chuka Umunna said: "Having nationalised the organisation's debts by taking on its pension liabilities, they now want to privatise the profit at the very time it is making money.

"There is every sign this treasured national institution is being sold off on the cheap to get income quickly to a Treasury whose economic strategy has failed."

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