Even at the BBC, with its licence fee income guaranteed by the Coalition for the next five years, £500m is still a lot of money. And that is the amount of BBC cash that could be at stake in a little-known legal case which came to trial yesterday.
John Bradbury, a clarinettist in one of the BBC's orchestras, has (with the backing of the NUJ and the Musicians' Union) sued the BBC over the changes that it made late in 2010 to its pension scheme. Actually, to be completely accurate, he complained to the pensions ombudsman, who found against him, and has now appealed to the Chancery Division of the High Court.
Which is where I was yesterday morning, at court 31 of the Rolls Building, a brand spanking new outhouse just up the road from the historic Royal Courts of Justice. I attended for the first hour or so of argument before Mr Justice Warren - NUJ general secretary Michelle Stanistreet was there too, so the union is clearly taking the case very seriously.
The fact that the unions are taking legal action at all is slightly curious, given that the changes to the BBC pension scheme were agreed by all the main BBC unions late in 2010, after they were massively watered down by director-general Mark Thompson in response to industrial action, including strikes.
More to the point, the deal was a pretty good one for the workers. For Thompson, something had to give: the BBC pension scheme was facing a deficit of £1.6bn (enough to pay for all of BBC One and BBC Two for a whole year). There were only two groups of people to whom Thompson could send the bill: BBC employees, in the form of higher pension contributions and lower benefits in retirement, or licence fee payers.
The deal which Thompson and the unions agreed - without, to the best of my knowledge, a single licence-fee payer ever being consulted - left those licence-fee payers with two-thirds of the bill, requiring up to £110m a year to be skimmed off the licence fee for no fewer than 11 years.
BBC employees were to make up the remaining £500million or so. As a licence-fee payer, that doesn't strike me as a split that particularly victimises BBC staff. But where the unions have a good point, it seems to me, is in complaining about the way the BBC tried to implement its changes.
Indeed, the legal arguments that I heard yesterday bore a reassuring resemblance to a blog that I wrote on the topic about 18 months ago. The basic thrust of the arguments put forward by Andrew Stafford QC, acting for Mr Bradbury, is that the BBC has unilaterally tried to change the definition of "basic salary" in order to lower its pension contributions - but that the BBC wasn't entitled to do that under constitutional documents of the pension fund.
Arguments on both sides (including from the BBC's counsel, Robert Ham QC) apparently took most of the rest of the day, and a result is expected in the next few days.
Stafford contended yesterday that the BBC has "illegitimately sought to use a combination of limited pay rises and limited pension accruals to persuade or coerce Mr Bradbury" to leave the original BBC pension scheme and join a new, much less generous scheme. (Coercion, apparently, is bad, despite its evident effectiveness when used by private sector employers in a similar position.)
If Bradbury wins, a lot of that £500m settlement with the BBC unions could be unravelled, potentially leaving the poor old licence fee payer with a much bigger bill. There will also potentially be administrative chaos: over 8,000 BBC employees (more than 50% of pension scheme members) changed their pension arrangements as a result of the deal, and will no doubt contend that "coercion" means they have the right to change their minds.
It's the kind of case that doesn't get much coverage in the press, because both sides are too sheepish to publicise their involvement, and because the legal issues involved are so complex. It's also the kind of case that former BBC chairman Sir Michael Lyons - who should have been holding Thompson to account on behalf of licence-fee payers - steered well clear of. (Licence fee payers must hope - though his time in office so far since his appointment in May gives them little ground for optimism - that new BBC chairman Lord (Chris) Patten shows more of a spine.)
Some BBC staff, by the way, are hoping for good luck to be on their side, as well as the letter of the law. I saw an email from one BBC wag about the case, and about Mr Justice Warren in particular. "As for our judge, he's reputed to be evenhanded," said the email. "Apparently his ‘recreations’ include music. Since John Bradbury, whose case we're appealing, is Principal Clarinettist of the BBC Philharmonic Orchestra, let’s hope the judge isn’t into drum 'n' bass."
Great article. You noted that "a result is expected in the next few days". Do you know what is was?
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