Â鶹ԼÅÄ

Transforming the Â鶹ԼÅÄ - given to Â鶹ԼÅÄ staff

Check against delivery

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Good afternoon everyone.

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Last Thursday we took the Â鶹ԼÅÄ's Governors through our plans for value-for-money savings in all the Â鶹ԼÅÄ's Content and Output divisions. They approved them and now I can take all of you through them as well.

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We also showed the Governors a long-term plan to re-invest those savings – and the savings in Professional Services we announced earlier this month.

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This is all money we plan to spend on programmes and content, both to improve the service we deliver to our audiences now and to build really strong Â鶹ԼÅÄ services in the future.

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Now there are factors that could affect this re-investment plan. We've just launched Creative Future – a nine month project which will involve people all over the Â鶹ԼÅÄ exploring how our output should adapt and develop to meet the needs of new audiences and new technologies.

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The conclusions of that project could well influence the final shape of our investment plan.

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Then there's the level of the licence fee. The current settlement comes to an end at Easter 2007: we don't yet know what it will be after that.

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So the re-investment plan isn't definitive. But I and the Â鶹ԼÅÄ's other directors believe it's a good picture of our likely spend in the coming years, and on that basis the Governors have endorsed its headlines.

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So I'll take you through them this afternoon as well. A nd I'll try to put both the savings – and their impact on jobs – and the investment – in a wider context.

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When you put the likely job losses in content and output divisions together with those in professional services, what does the total look like?

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On the investment side, what happens, say, to the total budget of Â鶹ԼÅÄ News over the next few years: does it go up or, as I know some people suspect, go down?

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Then I'll turn to the risks, because I believe there are very big risks associated with all of this. Risks if we do nothing – you'd probably expect me to say that. But also, risks in trying to implement change on this scale.

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So I'll talk about the risks and how we hope we can reduce or eliminate them.

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A key idea here, for all of us – managers like me just as much as everyone else – is that the difference between success and failure probably depends more than anything else on the ability of all of us in the Â鶹ԼÅÄ to work constructively and creatively together.

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A difficult, painful process

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But I want to begin with a different point.

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None of this is easy. Every single job loss represents – at best – an abrupt and probably unwelcome change in somebody's life. At worst, it is something much more painful and difficult than that.

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The whole senior team are fighting for this organisation's future. We're making some progress, – the Green Paper on the Â鶹ԼÅÄ's future, published by the Government three weeks ago, doesn't give us everything we want or believe we need but it does feel like a major advance on where we were nine months ago.

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But it will be some time before we have absolute certainty, either about the Charter or about the level of the licence fee.

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So inevitably I and my colleagues do all spend a lot of time talking about the future – not just about the challenges but about how exciting it is, about the scale of the digital opportunity, about what wonderful new services we can launch, and so on.

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Now all of that is true and it's the best way of convincing everyone outside the Â鶹ԼÅÄ â€“ the Government, the public, everyone – that there really is a place for a strong Â鶹ԼÅÄ five, ten, 15 years from now.

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But I know that if you're inside the Â鶹ԼÅÄ, all this talk about the wonderful future can grate if what you face right now is uncertainty, frustration and in some cases redundancy or the outsourcing or transferring of your job.

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So what I want to emphasise is this. The promise of the future is real and is an important part of the story.

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And it's clear we have to change to make sure the Â鶹ԼÅÄ remains relevant to its audiences in the future – that's the only way we can guarantee its survival.

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But I and the whole executive team also recognise that this is a traumatic period for everyone in the Â鶹ԼÅÄ. It's hard for you as you wait for news. And it's hard if you're a manager who will have to lead and implement the changes – and whose own future may be unsure.

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Please don't think that, in our eagerness to get on with the future, we will forget the human consequences of what's happening right now.

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The Value For Money Savings

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With that in mind, let's move to the savings plans. You'll remember that in December I talked about the three reasons why I believed the plans were necessary.

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The first was to free up some of the licence fee to start investing in that digital future and in all those plans we laid out in Building Public Value.

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The second was to meet the commitments we made to Chris Smith at the time of the last licence fee settlement in 1999.

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That settlement was very good for the Â鶹ԼÅÄ, but it was made on condition that tough self-help targets were met.

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Greg's long-term financial plan always called for the final instalment of value-for-money savings to be delivered in the last two years of this Charter, building up to £155m of savings in the financial year 2006/7.

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So we were always going to have to make deep savings this year and next just to hit that target.

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The third reason was that, as part of Charter renewal and the negotiation of a new licence fee settlement, the Government were bound to look very closely at value-for-money in the Â鶹ԼÅÄ.

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In fact we expect them to send in auditors of their own in the next few months. If we can't convince them and the outside world that we're taking value-for-money seriously ourselves, our chances of getting a strong licence fee settlement are zero.

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Indeed, there would be a real risk of the Government imposing their own targets on us from the outside. This way is a lot better than that.

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On December 7th, I said that we were setting ourselves an overall target of building up to £320m of savings a year.

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Our assessment was that £141m of that would come from savings in professional services including savings in procurement and major contracts, the rest - £179m – from savings in the content and service divisions including divisional support and procurement.

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I also talked about the likely impact on jobs at the Â鶹ԼÅÄ. I should add that this afternoon I'm talking about the main UK public service Â鶹ԼÅÄ.

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As you know, in December we also announced plans for Â鶹ԼÅÄ Broadcast, Â鶹ԼÅÄ Resources and some changes to our strategy for Â鶹ԼÅÄ Worldwide.

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Divisional directors and managers have been discussing the plans, including the likely impact on jobs and status, with staff in these parts of the Â鶹ԼÅÄ over the past few weeks and months.

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The same is true in the World Service and Global News division.

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This afternoon I'm going to focus not on these divisions but on the changes in the rest of the Â鶹ԼÅÄ â€“ though it's important that everyone is aware of the overall picture.

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Among professional services and support areas in other divisions, I said in December that we estimated that posts would reduce by 2,500, through post closures and through outsourcing.

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I also said we expected to reduce posts in Factual & Learning by just over 400 both to achieve value-for-money savings and to help create headroom for the Window of Creative Competition which we believe is the best way of balancing our need for strong in-house production with the need to increase opportunities for indies.

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I did not give an overall figure for job losses in the main content and output areas, but instead I gave a broad target of 15% of costs to be saved.

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Now a lot of people have done a lot of work since December 7th and since then two important developments have taken place.

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First, we haven't applied a crude 15% savings level across every area. We never intended to.

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We needed a clear, overall target but we also knew we needed to understand the particular conditions in each different programme and content-creating area.

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As a result, each division has arrived at a whole range of targets which stretch from more than 15% (in a very few cases) down in some areas to zero.

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In fact, there are some content areas – local TV output in Hull and some parts of children's production are examples – where, having listened to people in those areas, we've concluded that we need to put extra money in rather than taking savings out.

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And we've decided to ring-fence the sports rights budget, recognising the importance of sport to our audiences.

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So the savings picture is much more sophisticated now and has been built up in each division by people who really know the output: they'll be giving more details today and tomorrow.

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And remember that these are savings we are phasing over three years: we want to give divisions and programme teams the time to deliver them through genuine improvements rather than through crude cuts.

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The second development is that the content and output divisions have come back with rather bigger savings than we anticipated in December.

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I mentioned our December target of £141m savings in professional services. Ten days ago we announced that detailed savings plans for these parts of the Â鶹ԼÅÄ amounted to £139m – pretty much on target.

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As you heard a moment ago, our December target for the content and output divisions was £179m.

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These divisions now believe they can actually achieve savings of £221m by the end of the three year process, which, when you subtract a small contingency, brings the overall total available for re-investment to £355m.

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But that higher total has not been achieved by increasing the number of likely job losses.

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It's the result of bigger-than-expected savings in procurement and other areas that do not impact on headcount.

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The picture now looks like this:

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as we announced the week before last, we expect posts in the professional service divisions to be reduced by 1,730. Of those, we expect 980 to be posts closed, the remaining 750 to be posts outsourced;

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then add those posts in F & L we announced last December – the precise number is now 424;

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we then expect – and this is the core of today's announcement – that an additional 1,626 posts will be lost across the rest of the content and output divisions, including support posts, by the end of the three year period.

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In total in the UK public service Â鶹ԼÅÄ, in other words, we expect at the end of the three year period that a total of 3,780 posts will be lost, some 3,030 through turnover and redundancy, the balance through outsourcing.

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I appreciate that this is a very high number of job losses.

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I'll now go through the content and output division job reductions division by division.

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In the Nations & Regions, we expect 735 posts to go by the end of three years. That's 13% of staff in Nations and Regions.

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In Factual & Learning, as I said, 424 or 21% of staff. That's the highest percentage, by the way, because F&L is hit both by the VFM savings and by the impact of the WOCC.

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In Â鶹ԼÅÄ News, 420 posts: 12% of staff.

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In Radio & Music, 150 posts: 15% of staff.

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In Drama, Entertainment and Children's, 150 posts: 10% of staff.

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In Sport, 66 posts: 13% of the staff.

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In New Media Central 58 posts: 19% of the staff.

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And in TV, 47 posts: 18% of the staff.

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Overall, the plans average out at a reduction of 13% in the posts across the content and output divisions by the end of the three year period.

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When you add the significantly higher figures in the professional services, the overall percentage for the whole of the UK public service Â鶹ԼÅÄ is 19% - though that includes some outsourcing as well as job losses through turnover and redundancy.

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It’s true that once the longer-term reinvestment plans are confirmed there will be new posts opening where we require new skills.

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Nonetheless 19% is a daunting figure and, as I said at the start, represents an enormous cost to the people involved.

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When you add it to the plans we have for Broadcast and Resources, and the testing efficiency targets which the World Service and Global News division are already committed to, we're looking at a period of very great challenge for everyone at the Â鶹ԼÅÄ.

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There will be more detailed briefings in each of the content and output divisions later today and tomorrow.

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I want to emphasise that we are committed to honouring all of our obligations as an employer as we carry out this difficult process.

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Our commitment to the Â鶹ԼÅÄ's redundancy terms. To our agreements with our trade unions. And more broadly our commitment to handle each case as sensitively and reasonably as we can.

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We can't make this an easy process. But we do want to work with everyone to make it as fair and smooth and quick as it can be, and to get the best possible outcome for every individual involved, whether they ultimately stay with the Â鶹ԼÅÄ or whether they leave.

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Re-investing the money

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I want to turn now to the question of where the money we save is going to go.

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Now you'll understand that we won't have a pot of £355m to spend right away: we've got those savings in the existing Charter period to meet first, and of course the redundancy programme will itself have to be paid for.

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Nonetheless, we plan to deliver a growing fund of money for fresh investment in each of the coming years - £25m of what is in effect new money in 2005/6, £100m in 2006/7, £225m in 2007/8 and £355m in 2008/9 and for each year thereafter.

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So where should the money go?

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Well there are many pressing claims on this investment – indeed to really live up to its potential and that purpose set out for us in the Green Paper to be a leader in the building of digital Britain, the Â鶹ԼÅÄ needs much more than £355m.

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But we've tried to strike the right balance between investment to boost the quality of today's services and investment in the services of the future.

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In the first category, we plan a big injection of money in new television drama, building to an extra £47m a year by 2008 across Â鶹ԼÅÄ ONE and Â鶹ԼÅÄ TWO.

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Comedy gets new money across Radio and Television.

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Music gets a boost too, particularly on radio, with investment earmarked for the Alternative Proms and Music for All among other new initiatives.

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There's more money for knowledge-building programmes on all our TV channels, £9m on Â鶹ԼÅÄ ONE alone.

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That's part of a total package of £23m on factual programmes across all of Â鶹ԼÅÄ TV, and there's new money too for landmark factual on Radio 4.

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We're supporting a package of £30m of investment into Â鶹ԼÅÄ News paying for that new higher-profile role for current affairs and original journalism on Â鶹ԼÅÄ ONE, for other landmark news projects, and for boosting foreign coverage in, for example, the Middle East and Europe.

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In addition to an increased share of network TV spend, Nations and Regions also sees a big package of new investment, £52m in total, some focused on the future but some devoted to enriching existing services whether it's adding a regional dimension to network landmarks like the Natural History of the British Isles or enhancements to our commitment to the UK's indigenous languages.

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But in addition to improving the service we offer to licence-payers now, we also want to start delivering on the promises we made in our charter manifesto, Building Public Value, and to build some of the services which our audiences will use and enjoy in the future.

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We expect to devote around half the total to investments of this kind.

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So we've allocated money to support new forms of digital television: the first tranche of money to support the process of terrestrial digital switchover; money for a new free digital satellite proposition; money for high definition television.

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We plan £32m of new money to help New Media develop platforms and navigation to support not just existing digital streams but new on demand and two-way applications: new ways for the public to enjoy, interact with and contribute to Â鶹ԼÅÄ content.

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There's fresh money - £16m a year by 2008 – for on demand television as well as more money for interactive TV. £13m for My Â鶹ԼÅÄ Radio. £15m for My News Now - that's in addition to the £30m in News I mentioned earlier.

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£9m of initial investment in the Creative Archive, our plan to open up the Â鶹ԼÅÄ's memory-bank of programmes for audiences to use when they want and how they want.

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And as I've already mentioned, there's a large allocation of funds to support our vision of new services in the nations and regions: local TV, the local dimension to My News Now, more of the open centres and buses which provide information and access to some of Britain's digital 'have-nots' as well as some of the other building blocks of our Out of London vision.

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That's not a complete list, but it is representative.

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The idea is that, as soon as we make the savings, we put them straight into content and the infrastructure that delivers content, balancing the investment between what audiences are telling us they want right now and the services we believe they will increasingly want in the years to come.

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Some of the investment in existing services we can make without further ado.

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We know the public want more high quality drama on Â鶹ԼÅÄ ONE and fewer repeats.

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We – and more importantly the Governors – have already decided we need to put more money into primetime current affairs on Â鶹ԼÅÄ ONE as well.

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Some of the new services, on the other hand, need to be piloted and tested.

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At that point, the Governors need to apply their own public value test, to ensure that the public benefits of each proposed service outweigh any disbenefits.

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Now I can't know today what the outcome will be for any given service and of course all our plans are dependent on the licence fee settlement and on final approval by Governors.

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But I am sure that we are right to be planning now for the services we will need to launch three or five years from now.

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And we're right to be making sure that we've identified the money we will need.

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The net impact on budgets

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But I know that some people listening to this will say: that's all very well but none of this is really new money, is it? Aren't you just robbing Peter to pay Paul?

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I also know, because they've said it to me as well as everyone else, that throughout the Â鶹ԼÅÄ people worry that the budget of their division will go down to pay for somebody else's future.

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Some people in News, for instance, heard me waxing lyrical about comedy and have concluded that we're going to take a large slice of the Â鶹ԼÅÄ News budget and give it to Â鶹ԼÅÄ Comedy.

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Knowing the Â鶹ԼÅÄ, I'm sure there are also people in Comedy who think precisely the opposite is about to happen.

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Now for a period the total budget for each of the output divisions will fall a little. That's because of the savings, building up to £155m, which we have to take out of budgets to bring the present Charter in on track.

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Once that's done though, all of each year's savings, in other words the full £355m can be invested.

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As a result, all of the main commissioning budgets will go up, as I said they would on December 7th.

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In 2008 therefore, we expect the total budget for Â鶹ԼÅÄ News to be £11m higher than it is today;

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The Nations & Regions budget, £13m higher;

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Â鶹ԼÅÄ Television, £11m higher;

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Â鶹ԼÅÄ Radio & Music, £10m higher;

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New Media, £16m higher ;

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Children's, £14m higher;

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Learning, £12m higher.

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Because the plans call for a transfer of money from spend on support to spend on output, investment in our key content and output areas can grow in real terms.

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This is a process of putting money into programmes and services for our audiences, not taking it out.

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The risks

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So what are the risks associated with all of this?

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Well, if we don't make the first tranche of savings, we would fail to meet the value-for-money targets we agreed with the Government in the present licence fee settlement.

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We'd also crash through our budgets for 2005/6 and 2006/7.

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In the run-up to a discussion about a new licence-fee settlement, any of these things would be disastrous.

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The danger of not investing in new platforms or services doesn't feel quite so immediate, but it's just as great.

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In the 1990s, I was in Current Affairs, then in Features, then I was Controller of Â鶹ԼÅÄ TWO.

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Somehow I always seemed to be in a part of the Â鶹ԼÅÄ where budgets had to be reduced each year to pay for something else.

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So where did all this money go? It went to Five Live; the Â鶹ԼÅÄ website; the TV channels that became Â鶹ԼÅÄ THREE and Â鶹ԼÅÄ FOUR; News 24.

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In each case, I can remember questioning at the time whether the investment was a waste of money or too soon, and whether the balance between existing and new services was right.

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Now I look at those new services and think: Thank God the Â鶹ԼÅÄ had the foresight to invest in them when it did.

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We could decide today, for instance, not to invest for in HDTV.

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Finding the money is going to be hard; as we've heard, it's going to lead to redundancies and to real pain for a lot of people.

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But HD is crucial to the future of television: for the Â鶹ԼÅÄ not to invest in it would be as if in the 1960s, the Â鶹ԼÅÄ had decided not to invest in 625 lines or colour.

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We don't really have a choice. So there are very big risks if we don't go down this path.

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But I'd be the first to admit there are very big risks if we do as well. Risks to programme quality if the savings translate into mindless or arbitrary cuts. Risks too to the quality of life of everyone who works in the Â鶹ԼÅÄ.

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But in many ways the risk that I think Â鶹ԼÅÄ people worry most about – and I think it's one of the biggest anxieties for our unions as well – is that the Â鶹ԼÅÄ won't really change.

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In other words, despite all the talk about transformation and all the ideas you came up with in Just Imagine and Shape Our Future, that it'll be business as usual, just as much bureaucracy and layers, just as much work to do, only fewer people to do it.

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Is that possible? Definitely. We've often talked about changing the Â鶹ԼÅÄ in the past and then failed to deliver.

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Why should it be any different this time? I know for instance that many people in the content and output areas are convinced that the job losses in the professional services will simply mean more work for them.

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Now I recognise that the only thing that's really going to convince everyone is actual, tangible change – change that makes an immediate, positive difference to you.

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Not me or anyone else talking about change – but you actually seeing it happen.

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Well, over the coming months you're going to see a lot of hard-edged activity across the Â鶹ԼÅÄ to make the changes real.

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We know we need a new technology strategy – using technology more imaginatively and systematically than we do to support both programme-making and business processes.

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We know we need to look at the way money and decisions flow through the Â鶹ԼÅÄ â€“ it's often maddeningly complicated at the moment.

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We know we need to prioritise better, focus on the things that really add value to audiences, not try to do everything.

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There are still lots of unnecessary tasks, processes and paperwork at the Â鶹ԼÅÄ â€“ we know we need to eliminate them and free people up to concentrate on the things that do matter.

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We need clear and strong systems of editorial and financial control, but we also need less second-guessing and double- and treble-checking.

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So we know we need to look at layers and structures and meetings.

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And as well as taking a hard look at systems and processes, we need to think about what the Â鶹ԼÅÄ should feel like to work in.

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We also need to look again at leadership in the Â鶹ԼÅÄ, to be clear what we expect of our managers, to reward people for excellent leadership and sound management – to build on the work begun by Making it Happen.

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Over the past decade we've learned a lot about how to manage change in the Â鶹ԼÅÄ â€“ and we've learned also from the mistakes we've made.

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For instance, any change programme needs to be fully integrated into the business. If you try to do it in isolation, it just doesn't take.

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The senior team has a responsibility to find solutions, but we also want to involve you in solving the questions that lie at the heart of this phase of change.

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Over the next few weeks, the change team led by Katharine Everett is going to work closely with people in every division to ensure that this time the change actually happens.

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We'll come back to you with concrete plans later in the year.

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Conclusion

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As I said at the beginning, we're embarked on a really hard period of change at the Â鶹ԼÅÄ.

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Today's announcements are about trying to secure a firm foundation for the future but we should recognise that this is a very difficult day for everyone who works for the Â鶹ԼÅÄ.

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Later this afternoon and tomorrow, each of the content and output divisions will be sharing more details with their teams.

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I've already held a national level briefing with our unions and I and my colleagues will go on discussing the plans with unions and staff over the coming weeks.

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On Wednesday four of us will be doing a webchat with any of you who'd like to take part. And I'll be answering some questions from staff in a minute.

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But for the moment, thank you all for your patience, not just this afternoon but over the past few months. Thank you.

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