Marcus Agius, former chairman of the BBC Executive Board Remuneration Committee, speaking to the Commons Public Accounts Committee at Portcullis House in London yesterday. Photo: AP

The confusion at the heart of the BBC’s decision-making was laid bare yesterday as its executives – past and present – argued over who knew what and when about massive pay-offs to senior staff.

Former director-general Mark Thompson, one of seven witnesses called by the Public Accounts Committee, was forced to deny a charge that the BBC had “lost the plot” when it agreed a pay-off of almost £1 million to his former deputy, Mark Byford.

Margaret Hodge MP, who chairs the committee, asked Thompson why Byford needed an extra payment when he was contractually due around half a million pounds, saying: “Why was £500,000, which is for most people mega bucks, not enough?”

Mr Thompson, who said he did not believe there was any “favouritism” in deciding pay-offs, said the pay-off to Mr Byford was needed so he would remain “focused” on his job and not be distracted.

The pay-off was needed so he would remain focused on his job

He told the committee that in his view Byford’s severance package represented “value for money” and he explained that he had been under “ferocious pressure” from the BBC Trust to make savings by cutting senior staff.

Marcus Agius, former chairman of the BBC executive board remuneration committee, also described the pay-off to Byford as “value for money”.

Hodge told the former banker that the committee “were astound­ed you took that view”, saying: “The shareholders of the BBC are the licence fee-payers and I cannot for the life of me see how you can justify these levels of redundancy payments.”

Thompson said the decision for Byford to leave the BBC with a total payout of £949,000 was part of a move to axe senior executives, which would give the BBC “£19 million of savings for every year into the future” and he believed he “had the full support of the BBC Trust” to order it.

Hodge said people were looking at BBC management in “dismay” and asked Thompson if the BBC had, under his management, lost the plot. He said: “I do not think we lost the plot.”

MP Stephen Barclay told Thompson he had been “lax” in delegating authority and asked why more pay-offs had not been recommended to the executive board remuneration committee.

The former director-general said the term “lax” was “too strong” and added that a “rapid aggressive change” which had seen large numbers of senior managers leave presented the BBC with the “prize” of extra funding for programming.