At the end of a year which the BBC admitted had been characterised by its “chaotic handling” of “some of the darkest days in our recent history,” the organisation revealed that it had actually increased its expenditure on senior staff by 60 per cent.

The embarrassing admission was the largely result of vast payouts made to departing BBC executives, leaving the new Director-General, Tony Hall, with a difficult presentational task at the launch of his first annual report.

As he also expressed regret over the waste of £100m on the bungled Digital Media Initiative (DMI), Lord Hall said: “From redundancy payments through to the failed DMI project, the BBC has not always been the steward of public money that it should have been.”

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The amount spent on senior staff rose to £4.13m from £2.56m the previous year. Much of the costs were incurred in settlement packages for retiring executives including the former Chief Operating Officer Caroline Thomson who, according to notes in the annual report, received a tax-free cash lump sum of £251,770 in addition to the £683,000 she received as “compensation for loss of office” when she stepped down in September 2012.

Ms Thomson’s large pay-off was widely seen as being related to her being narrowly passed over for the Director- General’s role in favour of George Entwistle, who resigned 54 days later, following the Savile and Lord McAlpine scandals. He left with £470,000 compensation and a £1m pension pot. The BBC said that when “one-off” payments to departing executives were stripped out, the cost of senior staff had fallen by 8 per cent from the previous year.

Lord Hall was not at the BBC during the Savile crisis but Lord Patten was. In his foreword to the annual report, the chairman of the BBC Trust said the broadcaster had “seriously let down both itself and licence fee payers” by its “chaotic handling” of the Savile scandal and the “unforgivably poor journalism” by the BBC2 Newsnight programme during what he described as “some of the darkest days in our recent history”.

But also citing the excellence of the BBC’s Olympics coverage last summer, he used the opening words of Charles Dickens’s A Tale of Two Cities – “It was the best of times, it was the worst of times” – to describe one of the most turbulent years the BBC has seen. Asked at a press conference if he had considered resigning, the peer said he would continue until the end of his four-year term and then stand down.

“I was appointed for four years and I think it would be pretty wretched of me, in any of those rows or difficulties, to have stepped down halfway through unless I’m told by my colleagues here that I have got it wrong and I think I owe it to the organisation and to them to see this through.”

The annual report identifies many areas in which the BBC is facing significant challenges, including concerns over the lack of public interest in current affairs output. “We are concerned about the gradual decline in audience numbers for current affairs programmes on television in recent years and about the degree of ambition and quality of current affairs programming.”

The report showed that the BBC website still has not fully recovered from falling public appreciation levels after significant changes were introduced to its format.

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The broadcaster has made inroads in reducing expenditure on star presenters since the days when the salaries of big names such as Jonathan Ross prompted claims that it was being irresponsible with licence fee money.

The report revealed that spending on “top talent” has fallen by £4.2m in the last year to £12.3m, which represents 6 per cent of the broadcaster’s expenditure on all talent.

The cost of the BBC’s flawed purchase of the Lonely Planet franchise was also revealed. The travel guide business was sold by the BBC for £51.5m in March this year, representing an £80m loss on the BBC’s original 2007 purchase.

The BBC Trust found that “the original purchase and subsequent management of the business merit further scrutiny”, and it has told the executive to conduct a “review of lessons learnt” and report back.

BBC to launch five new HD channels

The BBC is to launch five further high definition channels to accompany its digital stations next year. The opportunity arises following digital switchover, which has freed up airwaves for further provision of HD.

The services will bring higher quality pictures for BBC News, BBC3, BBC4, Cbeebies and CBBC, adding about 250 hours of HD shows each week.

The announcement comes as Ofcom today said it would use spare capacity to create 10 HD channels for digital terrestrial viewers who used Freeview. Most of the HD programmes from the new channels will also be available on the BBC’s on-demand iPlayer service.

The BBC said more than half of UK homes were able to receive HD pictures, and this was expected to rise to 80 per cent by 2016.

In addition to the five new services, the corporation hopes to launch regional variations of BBC1 in HD for England and BBC2 versions for Wales, Scotland and Northern Ireland.