Address to BBC staff following Licence Fee settlement
Thursday 8 February 2007
Check against delivery
Good afternoon everyone. Thanks for joining me here in the Media Centre in
London. I want to cover a few things today:
First I want to spend a few minutes on the past year. What went well.
What didn't. What kind of shape we're in as we start the new Charter period.
Second I want to look in a bit of detail at the licence fee settlement
and what it means for the BBC – and for all of us.
Third, I want to look ahead to the year to come.
We'll leave plenty of time for questions. In fact we've got quite a few
already – questions we didn't have time for when Jeremy Vine interviewed me the
other day and ones that have come in since then. I'm joined today by Anne
Marie Bell, Head of Internal Communications, so if you want to ask me a
question, you can email me and Anne Marie will fire them at
Review of the year
Let's begin by looking back at 2006. I'm incredibly proud of what the BBC has
achieved over the past 12 months. Plenty of distractions – the whole value-for-money programme, the Charter, the licence fee debate – but honestly it's
been one of the best creative years I can remember.
At the News and Sport Festival a couple of weeks ago, Peter Allan was
interviewing Helen Boaden, the boss of BBC News, and at one point he turned to
the audience and asked, in the context of cuts and whatever, how many people
thought that the quality of news had fallen in the previous years. Not one
hand went up.
And that's where much of our audience seems to be too. [slide] This chart
shows the number of people who give the BBC eight, nine or ten out of ten for
quality – it's just one of the measures of quality we track month in and month
out. As you can see, back in 2004 it was falling. By the end of last year it
was up to 36%.
So it was a year of plenty of highs – as well as the odd low. Let's remind
ourselves of a few of them.
Now of course a short film like that can only scratch the surface of what the
BBC achieved last year. It was a great year for the World Service – I was at
their awards last night - and for BBC World which like News 24 is getting more
and more confident. World broke all records for advertising and traded
profitably in November and December.
It was a really strong year for Nations and Regions. Great audience figures –
I was in Stoke and Liverpool last week both of whom were celebrating great
Rajars, like so many people across radio. Great content too. The BBC Wales
drama story rolled on with Life On Mars and Torchwood, part of a wider picture
of network success across the nations. A few brave souls in London still tell
me that the trouble with the Salford vision is that you just won't find the
talent in the North and you certainly won't persuade anyone to move there.
Well I all I can tell them is that I go all over, from Stornoway to Plymouth,
and wherever I go I see talent and confidence and an openness to doing things
in new ways. That's why I believe Pacific Quay, the new BBC Scotland HQ, will
be a great success. That's why I'm certain Salford will work.
You heard about Worldwide's profits in the film, but it's more than that –
they've got the most joined up and exciting commercial strategy we've ever had.
We've got some important decisions to make this year about Resources - all I
can say is that their performance last year was really strong and, not for the
first time, exceeded expectations.
It was a breakthrough year for MC&A – tight budgets, a punishing
reorganisation, but real delivery across all their disciplines, and real
leadership in audience insight: the Audience Festival – some of which you can
still see around us here in the Media Centre - was just one of their
achievements and is still touring the UK today. The same with Finance, the
same with BBC People, the same with BBC Workplace and other central
departments. They've been wrestling with daunting change themselves but still
supporting the rest of the organisation with their change plans. And, as I
mentioned in the video, an incredible joint effort by all the teams led by
Caroline Thomson: the right Charter, a Charter for an independent, strong BBC
over the next ten years – and a licence fee which may not be everything we
wanted but which most of our commercial rivals would bite your hand off for.
Of course what the public see and listen to, what they pay the licence fee for,
are our services. bbc.co.uk hit it's highest ever reach, and it's still
growing quickly. Interactive growing fast. Radio – variations of course, but
really don't believe everything you read in the papers – radio is rock steady.
And television – well, that portfolio is really beginning to sing. The texture
and richness, the big ideas and the splashes of drama and comedy Janice Hadlow
and her team are bringing to BBC Four. BBC Three – full of experiment but
finding a new consistency and new impact. A stunning creative revival,
particularly in the autumn, on BBC Two – which, by the way, overtook Channel 4
in peak in 2006.
Then there's BBC One. BBC One is one of those services like Radio 1 which is
in a pressure-cooker of competition. It's so tempting to play safe, to copy
the other guys. I think that Peter Fincham, our brilliant commissioners and
producers, our partners in the indie sector are doing an incredible job for us,
sticking their necks out. Look at the drama they've backed, and the
entertainment. The One show. Daytime. The decision to put Panorama back in
I want to thank them, but actually I want to thank everyone. People sometimes
tell me that everyone in the BBC is very
cynical. Well, there may be a very occasional moment of cynicism about one or
two things - I'll leave you to make your own list - but I can tell you that
they are the least cynical people in the world when it comes to what they do or
the teams they work in. Passion. Conviction. Perfectionism. Thank you for
all of that.
Transforming the BBC
Over the year we used four words to describe the ways in which the BBC needs to
transform itself: creative, digital, simple, open. Again in 2006 I believe we
saw progress on all four.
Last April we launched Creative Future, a creative blueprint for the new
Charter. In a way, everything we do from now on – including how we react to
the licence fee settlement – is about how we implement Creative Future.
In July we announced a new structure for the BBC, a structure aimed at the
future, bringing different parts of the BBC together to create value across
platforms and media – and also trying to bridge that damaging and sometimes
hostile gulf between producers and commissioners. BBC Vision, Journalism,
Audio & Music and Future Media and Technology are all taking shape now. We've
got some great leadership in the key jobs – Peter Salmon for instance returning
to the BBC to lead what is and should remain the world's best production powerhouse within Vision.
We've also tried to move people round within the BBC,
both to develop them and to bring fresh minds to bear on some of the issues.
This April it all starts. Thanks to Creative Future, with a really simple,
clear roadmap of what we can achieve in each key area. In journalism, drama,
music, sport, knowledge and so on. With the right shape. And with the right
Simple and open are always going to be harder for the BBC than creative and
digital, but again I believe we're beginning to see progress.
Look at the College of Journalism website. It's not bosses telling the troops
what to do – it's a conversation about values and journalistic approaches which
anyone can join. The same with the editors' blog.
Look at that audience festival or the storytelling day. We plan a couple more
of these big days this year, by the way: a day for all of us to explore what
360 degree content really means, and a day open to the whole BBC looking at
climate change and what we as an organisation should do about it. The reason
we're doing that, by the way, is because of the emails I've had from some of
Simple and open are also the themes in projects like Future Finance and some of
the tougher changes we're going through. I want to make a few points about
First, the current three-year programme is on track.
Second, the savings are flowing back in the form of investment. By the end of
the three year value-for-money programme, we plan to be saving £355million per
year. We're now coming up to the end of the second year and we're well on the way
to that target - saving £220million so far. Of that, £140million has come
from the content divisions.
We've already put some of the money back – it paid, for example, for the
Electric Proms. Next year, despite the tight settlement, we are drawing up a
budget which, if approved by the Trust would put
just over £162million back into the content divisions. Some of that would go
into things like increased pension costs, but more than a hundred million
pounds would effectively be a new fund for content and services.
Amongst other things, that will help pay for [slide]:
the iPlayer, our new on-demand service, which the BBC Trust
provisionally approved last week;
the launch of a high definition TV service, again subject to Trust
investment in new drama for BBC One;
investment in new children's content on TV and the web;
as well as other projects in Journalism, Audio & Music and Future Media
and Technology – not least the development of Web 2.0.
In the following year, the pot for reinvestment from the current VFM plans
should increase, by another 50 million or more.
We live in a world of ever-more demanding audiences and ever-greater
competition. We can only succeed in this world if we can free up the resources
to make the investments we need – investment in great content and programmes,
investment in great new services. I don't think it's easy. I do think we can
begin to see it work.
The licence fee settlement
But let's look at the new settlement itself in a bit of detail. As I said on
the day, this is a tight settlement. The headline numbers, particularly for
the first couple of years – 3% and 3% – don't sound too bad. And indeed,
compared to commercial media or to most of the public sector, they're not.
ITV1 lost 12% last year, for instance, and may lose almost as much again this
But remember that under the settlement, the BBC has to pay not just its own
costs but also some of the wider costs of digital switchover. Next year, for
instance, we'll only be able to spend 1.4% of the 3% increase on the BBC
It's the same story when you look at the settlement as a whole. We'd said that
we needed to invest an additional £4.4billion over the six years to deliver
the Government's vision for the BBC. Most of that, you may remember, wasn't
"new money", but money released by the BBC itself through efficiencies and
other so-called "self-help" measures.
Well, what we will actually have available is £2.2billion from the self-help
and new licence fee money combined – and much of that is already earmarked.
Earmarked, as I said, for digital switchover, both our own costs and the wider
ones, and earmarked for Salford. We expect Salford to actually save the BBC
money in the long-run but there are significant upfront costs in the next few
Take switchover and Salford away and the settlement leaves just £900million
for everything else we wanted to do – everything from new programming for
CBeebies to local TV. The gap then between what we've got and what we
originally asked for is £2.2billion.
So how do we deal with that gap? Well, there are three possible ways:
First, by just crossing some new ideas off the list.
Second, by pushing harder on efficiencies and self-help. That's pretty
challenging. We've always accepted that efficiencies and productivity would be
part of the story even after the present value-for-money programme was finished
- our licence fee
bid promised further savings to help fund our future plans. But we've already
taken a lot of cost out and the scope for traditional BBC cost-cutting is
limited in many areas. If we are to make further gains, we've going to have to
be more imaginative and more targeted in our approach.
And third, we can look at moving money from some of our current commitments to
some of our new plans. Switching priorities isn't easy either – pretty much
everything we do, we do for a good reason – but we may end up concluding that
some of the new proposals are so important that we should move the money.
Reduced investment. Increased self-help. Switching priorities. To deliver
Creative Future and balance the books, we're going to need some combination of
all three – though the mixture will vary across different parts of the BBC and,
in many cases, the right people to determine what's possible and what's best
will not be me or the Executive Board but people inside the different Groups
What happens next
That's why our response to the settlement shouldn't and won't be either purely
top-down or one-size-fits-all. Of course I and the Executive Board have got to
take overall responsibility and have to figure out how we think strategic
priorities and resources should be divided across the BBC as a whole – and it
will be the BBC Trust which will make the ultimate decisions.
But I believe that the different Groups should play a leading part in
developing their own plans. How much more efficiency is possible without
damaging quality, and how quickly? The answer to that is going to vary
depending on where you are. How critical are divisional plans for new
investment? How possible is it to fund those plans by freeing up money from
existing commitments? Now I, the Executive Board, the Trust, all have a role
in this, but I believe we'll end up with a better plan for the future if much
of it is
developed and agreed by teams across the BBC.
So here's the timetable. [slide] After a couple of days last week during
which I and all the directors shared our initial thoughts, they've gone off to
work up detailed plans with their own teams. Around 150
creative leaders and managers from across the whole BBC are going to join the
directors and me to report progress and swap ideas in late February. In March,
the Trust will need to approve a budget for the next financial year, 2007/8.
Then, in April, the Groups and the Executive Board will agree recommendations
for a full six-year plan for the BBC and we'll submit that to the BBC Trust. We
hope to share it with all of you too. The Trust will review the plan over the
summer and decide on it in the autumn.
Delivering Creative Future
It's worth remembering what all this is about. All of it – new investment,
efficiencies, switching priorities – is about delivering Creative Future.
Making programmes and content that our audiences really love. Not just keeping
pace with digital but taking a lead. Turning the BBC into a more creative,
more enjoyable, better place to work.
Is all of that still possible with this settlement? I believe it is. In fact,
as I said on the day of the settlement, I believe that Creative Future is even
more vital given this settlement than it was before.
What will the impact on jobs be? Well, I think that story will vary across the
BBC. The Groups haven't yet developed detailed plans, but I believe it's
inevitable that those plans will both put some additional pressure on existing
job numbers while also creating quite a few new posts and new opportunities as
well. Even in the same department there may be areas that grow and areas that
Realistically, the net effect across the whole BBC is likely to be down, though
I don't believe we're likely to be talking about
the scale of job losses we've seen under the current value-for-money programme.
If there are to be further redundancies, I believe we should tell colleagues
and get on with them as soon as we can.
It's going to be a tough financial environment. All of us - managers,
unions, everyone who works for the BBC - are going to have to be a bit more
open-minded and flexible as we go forwards. But, although it's tough, we really
shouldn't think it's a disaster or anything like.
From the inside, the BBC can sometimes feel fragile and insecure. From the
outside we look like an island of security and strength in a very uncertain
world. This is going to be a fantastic time to build
a career at the BBC. We have access to more talent than any other broadcaster
in the world. We have the creative freedom
which certainty of funding allows. We have great values - we know what we stand
And in Creative Future we have a clear and inspiring vision of our future. The
challenge now for us all is to make that vision a reality.