Ken McQuarrie's announcement to BBC Scotland staff on budget cuts in full

Here is his announcement to staff in full:

BBC Scotland’s aim remains to provide high quality and distinctive programmes, content and services that reflect the interests of audiences in Scotland. This is our core public purpose – to capture key cultural moments for our nation, to cover Scottish news and politics, to make content which is distinctively Scottish and which cannot be found on the network.

We do have to take some tough decisions on our spend on services and content for audiences in Scotland and there will be some reduction but we will safeguard the output which is most valued by our audiences and which best fulfils our role as Scotland’s national public service broadcaster.

This means that:-

- We will protect our spend on peak time audiences and we will cut back content of lesser value or lower impact to our audiences. So the bulk of the reduction in programmes will happen off peak.

- we will focus on high quality content which meets the 5 editorial priorities set out in the Putting Quality First strategy – Best Journalism in the world; Inspiring knowledge, culture and music; Ambitious UK drama and comedy; Outstanding Children’s content; Events that bring communities and the nation together

- we will prioritise content and services which are distinctive and which no one else provides

Under DQF, we will also continue the story of TV network growth in Scotland. PQ will be firmly established as one of the BBC’s five creative UK hubs and BBC Scotland will make even more network TV content for UK-wide audiences. We are already ahead of the NSR target set for 2012 and indeed are on course to achieve early the target which was set for 2016. We could well exceed it by the end of the Charter period.

In addition, the BBC’s TV proposals assume that more of our TV opts will transmit on the networks. For network radio, there is a commitment to sharing more content, such as drama and features, while online, the nations’ templates will integrate our web content into the BBC’s network sites.

FINANCIAL CHALLENGE

The scale of the financial challenge to deliver our ambition will be tough. Our target is to achieve a reduction of 16% of the BBC Scotland budget by 2016/17. That 16% is calculated against a baseline of £102m, resulting in reductions of £16.1m.

We believe that these DQF reductions will lead to the closure of between 100 and 120 posts between 2012/13 and 2016/17. We will also need to complete the final year savings of the 5 year Continuous Improvement Programme (which is 2012/13) by closing the last 20 posts under that plan.

Just to underline that these budget and jobs figures relate to our BBC Scotland budget only. They exclude all network TV output where I have already indicated that the story is one of relative growth and of an increased proportion of investment in Scotland - which should offset some of these reductions. I will come to that later.

We will ensure that the majority of savings will be sourced from improved productivity and efficiency measures that have least impact on our content and services.

So about 6% of the DQF budget reduction will be delivered by scope reductions in content areas – that means cutting programmes. The remaining 10% will come from productivity savings in content areas and efficiency measures in our non-content areas. Overhead and support areas will be expected to deliver higher savings – of between 20 and 25% - in order to protect content and minimise impact on audiences

We are in a strong position to start, because BBC Scotland has a track record of operating efficiently. We have been successful in reducing our spend through investment in new technology and new ways of working which are represented by Pacific Quay. We can build on that experience and continue to exploit technology and to promote collaborative and effective ways of working across all our departments.

DETAIL BY AREA

I’ll now talk through the headlines of our DQF plans and what they mean for each of our main areas. Heads of department will be talking through the proposals with their teams in the next few days and weeks and will do their best to answer all your questions. But I should underline that this is a five year plan which will evolve over time – many of the proposals will not take hold until the later years of the period so we will not have firm detail on all our plans to share with you now.

NEWS AND CURRENT AFFAIRS

Providing the best journalism for our audiences in Scotland remains a key editorial priority and in our plan we will protect and enhance the quality of our core News and Current Affairs output across all platforms.

We will need to make some reduction in spend on N&CA during the five year period. There will be some limited reductions in some areas of output – but we will do as much as possible through efficiencies in order to protect core service to audiences. We believe the total impact on jobs over the 5 year period will be around 30 post closures and we will discuss more details with staff and unions in the coming weeks.

We want to start by simplifying the structure of the management team and Editor roles within the department – John Boothman has talked to the management team in News already regarding the detail.

We also want to introduce a single radio news rota where staff are truly integrated across all our programmes and bulletins. We will have one Editor responsible for Radio news and current affairs

As I’ve said, we will make as many of our savings through the most effective and efficient working practices, making the best possible use of technology and collaborative, cross-platform working.

We will also look at increasing collaboration and shared ways of working with Gaelic News.

We are planning some changes to the scheduling and formatting of our news output on Radio to ensure we are delivering the news at a time and in a form which audiences want. We will not be reducing the overall amount of news output on Radio.

On TV, our politics coverage during the week and on Sundays will remain in place but in line with changes across the UK we will review our party conference coverage with a view to making some financial savings in this area.

In the recent service licence review of Radio Scotland, the Trust made it clear that, with limited resources, it should focus on providing a national service - so we have no plans to extend our local journalism beyond where we are at the moment. John Boothman and Jeff Zycinski will be looking at the best configuration of our regional radio news opts.

We intend to continue prioritising high quality investigations programming and commission only the best agenda setting investigations.

I am delighted that Question Time has made such a confident start in Scotland and I am sure that the reputation of BBC Scotland as a provider of high quality current affairs output will continue to grow.

RADIO SCOTLAND

I want to talk now about Radio Scotland.

We have been developing Radio Scotland’s programme strategy well before the DQF process began. That strategy has been based on detailed audience analysis and has been endorsed by the BBC Trust in the recent Service Licence Review. Here are the key points of the strategy:-

We will offer distinctive quality programming for adults in Scotland and a schedule that contrasts with commercial radio and other BBC radio services available to listeners in Scotland.

We will continue to invest in quality speech for our daytime schedule and will extend the amount of news and current affairs programming in peak hours.

We remain committed to programming reflecting Scottish culture, leisure and lifestyles – this will include comedy, drama, documentaries and conversation formats.

We know that Sport – especially Scottish football – attracts big audiences and we want to continue with the high quality coverage we provide now - but that, obviously, will depend on the rights deals we negotiate over the next few years.

And we will continue to offer an evening music schedule which offers content not available elsewhere.

We do need to reduce our costs in Radio Scotland between now and 2017. If the savings targets were translated directly into staff post closures, it would mean the loss of 15 - 20 jobs over the next four years. But there are other factors, beyond staff costs, which impact on the costs in radio and which may mitigate these job losses.

So we will phase our changes between now and 2016/17 - and our detailed proposals will depend on some complex negotiations around sports rights, our commitment to independent production and the outcomes of the WOCC - and the mix of new investment or cutbacks coming from the radio networks. We will also introduce different guide prices for different dayparts and will spend more of our budget on the autumn/winter schedule when, in general, more people are listening to radio.

We are now looking hard at areas where we can share programmes and content across BBC Radio and consider where we can reduce costs in non peak-time listening. We aim to save money and improve impact by co-commissioning more programmes and projects with the BBC networks (eg as we have done so successfully this year at the Edinburgh Festival and will do within drama and landmark factual programming).

We have discussed with the Trust some of the changes we may make to Radio Scotland if we do not achieve our savings in other ways – these proposals will form part of the public consultation over the coming months and include the following:-

• A 10 to 20 per cent reduction in originations of comedy, drama and documentaries which would be replaced by more repeats and relevant programmes which have been produced in Scotland for the BBC's UK radio networks

• Reduce the number of different weekday afternoon programmes, while maintaining the commitment to cover the arts and culture of Scotland in longer-form programmes

• Fewer differences in programming between the Medium Wave and the FM schedules. (Again that would depend on the sports rights we secure and the price we pay for them.)

• The service would stop at midnight when Radio Five Live would be broadcast until half past five in the morning.

At his team briefs this month, Jeff Zycinski will be talking about the potential impact of all these proposals on specific teams within Radio.

SSO

The SSO is subject to a separate review of the BBC’s Performing Groups being carried out by John Myerscough. We expect this review to report towards the end of 2011. The SSO has been going through a golden period under the leadership of Donald Runnicles who I’m delighted to say has just extended his contract until 2015 and will continue to play a central role in our offering to audiences.

ONLINE

The New Media, Online and Learning department has been subject to the BBC’s Online Review over the past 18 months which has led to a 24% reduction in scope for the department’s online activities.

Total Online spend has to contribute a further 10% saving over the period 2013/14 to 2016/17 from its local funding, including News and Sport, with the potential loss of around 3-5 posts.

We expect that this will be offset to some extent by any increased network activity for Learning (including Outreach) and Knowledge and Learning Online resulting from an Online Network Supply Review

BBC ALBA/Gaelic department

We believe that we will need to close around 5-8 posts in Gaelic over the period but

the economy of the Gaelic department is a complex one in that its non-news television output is broadly equally funded by the BBC and by external funding from MG ALBA, the partner in the BBC ALBA service. The results of the MG ALBA funded volume commissioning process for the next 2 years (2012-13) will have an impact on the future business and staffing levels of the department and we will not know this until later in November or December this year.

On Radio nan Gaidheal, there is a potential loss of non-news live programming with a review of the scope of the station’s schedule underway to achieve its savings.

We will continue to examine any production efficiencies which can be made across all our Gaelic bases and will bring any proposals to staff and unions as they emerge.

SPORT

A few words about our Sport output. What we do in Sport is largely driven by our portfolio of Sports Rights and staffing levels will always to an extent be determined by the Rights we hold. We will be looking to make further savings in the area of Sport Rights spend as and when appropriate and there may be some limited reductions in some areas of output but we will do as much as possible through efficiencies in order to protect core services to audiences.

TV for Scottish audiences/BBC ONE AND BBC TWO SCOTLAND

We will continue to provide a wide range of TV output for Scottish audiences across all the genres – and in line with the 5th DQF editorial priority we will continue to offer key events such as music festivals, Children in Need and Hogmanay.

We will focus our investment on the highest quality programming, though we will be reducing the amount of programmes.

And I should mention at this point - despite inaccurate press reports – and the immediate public protests which they invoked – we have no plans to scrap River City – we recognise both its huge appeal to its loyal and large audience – and its importance in developing key Drama talent in Scotland.

We will explore potential options for River City’s future – including whether it could be shown to a wider UK audience.

Under DQF proposals, we aim to bring more television programming made specifically for Scotland, to network audiences with a new strategy for Nations opt-out programming in general. There is significant scope to bring more Scottish output to audiences around the UK. The current aim is for £10m worth of nations programming to transfer to the networks by 2015. Ewan and others will work closely with Vision commissioners to achieve this.

As Mark T said this morning, we will invest to make BBC One Scotland broadcast in high definition by the end of 2012. This represents a £2m investment in the transmission of our services for our audiences in Scotland.

However we do not believe it is affordable or good value for money to convert the current BBC TWO Nations variants into high definition. The current standard definition

BBC Two Scotland will be maintained until at least 2015 while we review its long-term future. However, we are committed to maintaining the range and quality of the television output we currently provide in Scotland.

These proposals on BBC ONE HD and BBC TWO SD will form part of those that the Trust put out for consultation with licence fee payers

NETWORK PRODUCTION

As I said a few minutes ago, the Television Network Supply Review has been a huge success story for Scotland so far and we are set to continue on our journey of growth over the period up to Charter renewal and beyond.

While the proportion of network TV production spent in London and parts of England reduces, Network Supply Review will continue to expand the spend on TV production in Scotland as a proportion of the overall total network TV spend. We have already made significant progress against our NSR targets – in 2007 only 3.3% of the Network TV budget was spent in Scotland, but by 2010 this had more than doubled to 7.4% ahead of our 2012 target of 6.2%. We expect to meet the 8.6% target earlier than 2016 and indeed to exceed it by the end of the Charter.

Building on the success of programmes such as The Culture Show, The Review Show and Imagine, BBC Scotland will become a major centre for Arts network production, and I can announce today, that the Head of Arts network production for the whole of the UK, will be based in Scotland. This is a significant move in helping sustain the distinctive contribution Scotland makes to the network economy. While further synergies are achievable through the dispersal of commissioning power across the UK, these too will be examined and implemented in due course.

We will also continue to be a major centre for Specialist Factual. I’m delighted that Natalie Humphreys has joined us recently to head up this area and I know that she with Andrea will take this department from strength to strength.

Drama and Comedy are reputation-defining genres and are critical for driving audience approval and building portrayal. A commitment to ambitious UK drama and comedy is one of the BBC’s 5 editorial pillars and investment in these genres will be prioritised in our DQF plans.

BBC Scotland has delivered some fantastic Drama for both UK and Scottish audiences over the past few years –Waterloo Road, Lip Service, Case Histories, Field of Blood, Wallander and Young Herriot to name a few.

We will build on this success over the coming 5 years by increasing the amount of network drama made in Scotland by both in house and Indie teams. We’ve announced recently that Waterloo Road is to move to Scotland bringing around 200 jobs and £22M over the next few years.

We will continue to invest in Scottish Comedy talent and seek to develop great comedy shows for BBC Scotland – like Gary Tank Commander and Burnistoun - which transfer successfully to the network.

Scotland is recognised for its strong track record of producing great Children’s content for both CBBC and CBeebies. Under DQF, BBC Scotland will continue to be the second centre for Childrens, working collaboratively with our colleagues in Salford and investment in this genre will remain constant over the period.

In Entertainment , under Eileen Herlihy’s leadership, we have successfully transferred big BBC brands such as Weakest Link and Tonight's the Night, building skills and reputation in the process. Independently produced shows such as Ask Rhod Gilbert, Frank Skinner's Opinionated and Alan Tyler’s new Kevin Bridges commission What’s the Story further contribute to this success. New Daytime commissions by Jo Street like Antiques Road Trip, Homes Under the Hammer and Eggheads have also secured huge audience appreciation and acclaim. We acknowledge that there are challenges to face in response to Entertainment and Daytime reductions but will work confidently with colleagues in London to build on the firm foundations already established in Scotland.

You will have heard Mark say that we will be organising the management of all our inhouse TV network production business through a new Pan UK production structure. To deliver our DQF plans, we need BBC in-house production to be at the top of its game – winning more business in the WOCC, eradicating all internal competition and bringing in more commercial income.

We think that by joining up production right across the UK we can reduce internal competition and duplication and make the business simpler, more efficient and more effective.

Our plan is to create a single network production economy across England, Scotland, Wales and Northern Ireland. It will be driven by creative leaders for each genre taking responsibility for all network strategy, development and production in that genre, irrespective of where the production is based.

The leadership of this network economy will be through a new UK Network Production Board, chaired by George Entwhistle, Director of Vision, with all three Nations Directors, Pat Younge from Vision Productions and Bal Samra as members.

In this new structure, Nations Genre heads and senior editorial roles will report 50:50 into the Nation and the network, and the network economy will be run as one business, in partnership between Nations and Vision Productions. The senior team in Scotland have been fully involved in developing these proposals – there is more detailed work to be done and full implementation will not be until 2013 – but we believe this is a very positive step towards a radically simplified structure which will support the success of the inhouse network business.

We believe all this puts Scotland is in a very strong position to compete for more network TV output in the coming years in these key genres – building on our current slate of fantastic content of which we should be very proud.

9. CRAFT AND PRODUCTION TEAMS

Some of the reductions in output I’ve outlined will inevitably have an impact on our craft and production teams as well as support teams such as production management. We will consult staff and unions on our detailed proposals over the coming months. At this stage we expect that post closures in these areas will be around 35 posts over the 5 year period.

10. OPERATIONS AND SUPPORT AREAS

We will be asking our Operations and support areas to deliver higher savings targets – in the range of 20-25% - in order to protect content wherever possible and minimise the impact on audiences.

Support areas such as Technology, Media Management, Mc&A, HR and Finance are finalising their plans for efficiency savings over the 5 year period and will consult staff and unions on their detailed proposals over the coming months.

We will do all we can to reduce our spend on overheads. We will make sure we are getting maximum utilisation of our property and studio facilities. We will make savings through leaner, flatter management structures. We have recently achieved some savings in senior management posts in Scotland and we will make further reductions over the period.

We expect that the post closures in Operations and Support areas will be around 30 over the 5 year period.

NEXT STEPS

I have talked through some detail this morning – and there are further ringmain sessions to come from George Entwhistle and Helen Boaden for colleagues in Vision and News who wish to hear these sessions.

We will put a summary of BBC Scotland’s DQF proposals up on gateway Scotland after this session – and department managers will be making sure that you have the opportunity to discuss these proposals in your own areas and ask questions over the coming days. I and senior colleagues will hold further staff sessions here in PQ and across Scotland in the next few weeks – and details of all these will also be up on gateway and emailed round to you all.

We will meet with the joint unions on Wednesday 26th October to talk through our proposals and consult them more formally about our early detailed plans for 2012/13 – and we will talk to staff in the relevant departments in more detail at that time as well.

You will also be invited to take part in consultation taking place across the BBC in the next few weeks about some of the People proposals you’ve heard about from Mark this morning.

So this is the beginning of the discussion rather than an end and I look forward to working with you all over the coming months as we shape the detail of our DQF plans.

Although I don’t underestimate how tough these changes will be, I should like to underline our track record of great success in delivering fantastic content to our audiences, made by all of you, and also of investment in BBC Scotland.

The post closures I’ve mentioned will be hard to deliver and painful for everyone involved – but our experience over the last few years of the CI programme has shown that alongside delivering tough financial targets, we have been able to bring new work and new investment to Scotland through the strengthening of our news output and the growth in our TV network departments - and we have seen the development of the Indie and freelance markets and the skills base of Scotland. I am confident that this positive story of sustainable growth, opportunity and skills development will continue over the period from now up to Charter renewal.