Enterprise and Culture Committee, 29 Nov 2005

Meeting date: Tuesday, November 29, 2005

Official Report 279KB pdf

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BBC (Internal Reviews)

Item 3 on the agenda is the internal reviews of the BBC.

I welcome the BBC representatives to the committee. They are Jeremy Peat, the new—relatively speaking, that is—governor of BBC Scotland; Ken MacQuarrie, the controller of BBC Scotland, who has been to the committee before; and Donalda MacKinnon, head of programmes at BBC Scotland.

Would Jeremy Peat like to kick off?

If I may, very briefly.

I have now been governor of BBC Scotland for almost 11 months. I am honoured to have the job. This is a fascinating time for the BBC generally and specifically within Scotland. At the United Kingdom level, the charter is up for renewal; a white paper is due; the licence fee settlement is coming up; and digital switch-over, which will start in the Borders, is not far away. At the Scotland level, there is a host of issues. The four internal reviews are being implemented and there is the establishment of Pacific Quay. Other developments include an out-of-Glasgow policy, the prospect of a Gaelic digital channel and what I see as the huge opportunities for BBC Scotland and for the independent sector that will come from changes in commissioning processes. Opportunities will arise for Scotland and the other nations.

Talks on the reviews have continued since Ken MacQuarrie attended the committee earlier in the year. Those talks have been constructive. There are some unresolved issues, but essentially we believe that considerable progress has been made. The governors and BBC Scotland remain committed to achieving greater efficiency as well as improving technical and programme quality. The funds that are being released from the efficiency reviews are being recycled and reinvested in the programme process; the recycling process has started. In that context, as well as saving money, personal digital production is a crucial element in the achievement of enhanced quality.

I will say a brief word on governance. It now looks as if the white paper will not come out until February next year. I look for the white paper to place great emphasis on accountability to licence fee payers. That is hugely important. I am optimistic that we can look for an enhanced role for the broadcasting council for Scotland in that context and for appropriate representation among the trustees, who will replace the BBC's board of governors from 2007.

Closer to home, the development of Pacific Quay, which will be a key link to all BBC facilities in Scotland, is on time and on budget. It will have up-to-date technology; it will be top of the range and a major facility for all the BBC in Scotland. I note that a new facility has opened in Selkirk—it was opened by David Steel a few weeks ago. The search is on for a new location in Dumfries and there is a commitment to a major reinvestment in Inverness.

What is happening on the regional news side is important for what will be available across Scotland, from Scotland. That may merit discussion.

Finally, on the commissioning side, I want to reiterate the opportunities that exist. There is a commitment to a 50 per cent increase in commissioning from the nations in the years ahead. I look to Scotland to achieve more than its proportionate share of that increase—there is certainly the opportunity to do that. There is also a commitment to commissioning 50 per cent of all television drama out of London—that is another major opportunity.

There is to be a comedy commissioner shared between Manchester and Glasgow and an entertainment commissioner based in Glasgow. There is therefore an opportunity to develop a centre of excellence in comedy and entertainment, building on and matching what has been achieved on the children's side.

There is also a much more transparent commissioning process generally. The issue is not just whether commissioners are changed and relocated. There are far more opportunities for all to participate. In our view, the window of creative competition provides opportunities for the independent sector. With the assistance of BBC Scotland, that sector, large and small, can flourish.

I have described some of the challenges and opportunities that are ahead. The key challenge for BBC Scotland is to deliver quality and public value, but to do so in a cost-effective manner.

Good afternoon, lady and gentlemen. I would like to set my remarks and questions in the context of the experience of the viewer and listener and the improvement in the quality both of current output and as a result of the digital switch-over. To some extent, I am less concerned about the internal mechanics of how you do things than about the impact that that will have on the quality of broadcasting.

Mr Peat, you said in your opening remarks that, bar some minor elements, the internal reorganisation was about done. Could you identify those minor elements and say why they are less important to the output that you seek?

It is probably appropriate that I ask Ken MacQuarrie to talk about that issue. I am much more concerned with the strategic overview than with the detail of the reorganisation and the specific point that it has reached. I would prefer Ken MacQuarrie to answer the question.

The issues that we are discussing at national and divisional level with the joint unions include the phasing of reinvestment and the prioritisation of the proposed job reductions over years 1, 2 and 3. We have constructive discussions that will continue over the next two months. It is worth noting that we have started the reinvestment programme with text-based journalists. The service will be up for six regions of Scotland from the end of February and the beginning of March. Recruitment is under way. One journalist has been appointed and five others will be appointed between now and January. Those are the sorts of detailed issues that we have been discussing with the joint unions.

I have one further question. In your introductory remarks, Mr Peat, you spoke about new facilities opening in various parts of the country. Can you say a little about how you intend to make facilities available in places where there would not be a full studio or permanent members of staff? What are you looking to put in place in Fife, which I represent, for the next 20 years, so that if I need to do something for the BBC, I do not have to come all the way through to Edinburgh or go to Dundee?

Ken MacQuarrie can answer the question in detail. The generic point that I wish to make is that, in the years ahead, the BBC wishes to progress telling the story of components of Scotland to the whole of Scotland. For that reason, it wishes to have many more people in the field providing stories and undertaking interviews across Scotland. The development of PDP will permit more people to be out there providing stories on radio, television or multimedia without necessarily being committed just to the studio base. We will have a studio base in different locations, but we will also have a growing capability to have more people out and about collecting and delivering stories through different media channels.

I will ask Donalda MacKinnon to give a couple of examples of stories that have been gathered on PDP since we last gave evidence to the committee.

We are not saying that one size fits all forms of storytelling and I do not think that it ever will, but this year we have already conveyed 150 stories through our news outlets that would not have been conveyed without PDP—certainly not as efficiently. They include stories of what happened in Beslan, Spain, Niger and Iceland. PDP has allowed us to extend some of our sports interviews, particularly one-to-one interviews with people such as Andy Murray, David Coulthard and Kenny Logan. We have shown 30 films from Shetland. It also gives us access to exclusive profiles. The smaller cameras offer the kind of intimate access that would otherwise be difficult to achieve. That demonstrates that, with the caveat that I have given, we can bring people's reality to them in a much more accessible way than we would have been able to without PDP technology. We expect that the technology will improve.

To answer the question about whether there will be BBC facilities for people such as Christine May, we are actively engaged in discussions with various organisations, not least of which are educational institutes, so that we can, in partnership, offer better studio facilities without creating big studio facilities in every part of the country.

I would like to ask about the formation of the new BBC trust from 2007. You will be the last BBC governor for Scotland, but the committee would be keen to know that there will be somebody on the new trust who will have responsibility for ensuring that Scottish interests are represented. I appreciate that we do not yet know the detail, but can you tell us whether the Department for Culture, Media and Sport consulted you on what the new structure might look like? What feel do you have from the DCMS about what the white paper that is to be issued shortly is likely to say about Scotland's representation in the new structure?

I cannot give you any firm view or knowledge about what the white paper will contain, but I can assure you that the governors of the BBC and the chairman, Michael Grade, have made their views clear to the Secretary of State for Culture, Media and Sport in Westminster and to the DCMS more generally about the need for appropriate national representation; for someone who continues to wear an international hat; and for someone to look after the English regions. Those points have been made very firmly. Michael Grade said that it would be unthinkable if there were not national representation among the trustees. Those views have been made forcibly and regularly to the DCMS. I have had personal, informal conversations with ministers to make that point.

My personal expectation is that there will be a trustee for Scotland with specific Scottish responsibilities, although there is no guarantee that that will be the case. We do not know how many trustees there will be—we have no firm and final knowledge and the delay in issuing the white paper from early December to late February means that the period of uncertainty will continue. However, the BBC as a whole—with the firm and undivided support of the governors and the executive—is making that point very firmly.

You have made that point very clear. How essential is it that we have a trustee who is responsible for looking after Scottish interests?

Having such a trustee is essential—we live in a devolved society. BBC Scotland is more than just a part of the BBC: it is the BBC in Scotland. It is essential for good accountability to licence fee payers in Scotland. I think that it is also important for the BBC to have accountability, to an extent, to the licence fee payers' representatives in Scotland. I am surprised and disappointed that the House of Lords Select Committee on BBC Charter Review did not see the clarity of that case. Remarkably, the case for a Scottish trustee is not accepted by everyone and it was not included in the green paper. It is not a done deal. Personally, I think that it is utterly essential for the good management of the BBC in Scotland.

Does the committee agree to write to the secretary of state to emphasise that point?

Members indicated agreement.

I see members nodding all round the table.

I will pick up on a recurring theme of the process—achieving efficiency savings, largely through reducing the number of staff, while improving the quality of BBC Scotland's programming output. You will be aware that the trade unions and Voice of the Listener & Viewer said in previous evidence that they found that argument fairly difficult to square, because they could not see how you could reduce staff while maintaining the quality of your programming. What is your response?

I have looked at the matter closely as the national governor for Scotland and, at the UK level, as chair of the audit committee and as a member of the finance and general purposes committee. Towards the tail-end of Mark Thompson's development of his proposals, I came into post, following Sir Robert Smith. It was determined that the governors should have an independent and detailed assessment of Mark Thompson's plans, to ensure that implementation of his proposals was feasible without damaging quality or public value and that the proposals went far enough—that they were sufficiently robust to deliver the improvements in efficiency and value for money that licence fee payers and the Government seek, especially in the lead-up to a licence fee debate that was never going to be straightforward.

The governors engaged external consultants to look at the proposals carefully and we charged our governance unit with working with the consultants, who reported to us. During the process, we were satisfied that the end-product of the value-for-money proposals for the BBC as a whole met the two conditions to which I referred.

The proposals changed—an iterative process of our examining and discussing them with the executive took place at the UK level. The broadcasting council for Scotland has likewise challenged Ken MacQuarrie and his team to show how the circle can be squared of maintaining and enhancing quality and output while achieving significant improvements in value for money and staff reductions. We have been satisfied thus far and I expect to continue to be satisfied that that can be achieved, given the technology changes that are being implemented and given all that Pacific Quay will bring.

The sector changes rapidly. Since entering it, I have been amazed at how rapid the change has been. From experience in different sectors, I know how change works through and how we must always look for efficiency and efficiency improvements. The opportunities are available in our sector, but both the governors and the broadcasting council for Scotland are determined to keep a handle on what is happening and to remain satisfied that quality is not being risked.

That response was helpful, but I am still a wee bit confused about how exactly you square the circle. For example, how will the proposed changes that you will introduce through the new efficiency savings improve weekend news bulletins? Once the efficiencies have been put in place, what exactly will happen in a weekend news bulletin that is different from now?

I will ask Ken MacQuarrie to supplement my answer, but I will start by saying that you should see no reduction in the quality of the programmes or the production, even though changes to how programmes are produced will have occurred.

You should also see that having more people out and about means that more stories throughout Scotland can be reported to Scotland. When I speak at public meetings or meet licence fee payers, they are very keen for more stories about Dundee, Tayside or the Borders, for example, to be told throughout Scotland. That is not so much about boring down to the detail of local news for them but about having a richer set of stories about Scotland in the news programmes. You should see no reduction in the quality of production and you should see a spread in the stories that can be generated, because of the changes that will have taken place. That, to me, is enhancement of quality and of the product.

At the moment, we operate a tape-based system, whereby we have to gather our news on tape. The technology that we are putting into our new headquarters means that we will lead Europe with a system that will be accessible from Shetland, Orkney and any of our centres throughout the country.

Will Pacific Quay be the first to get it?

Very much so. That will allow the content that we gather to be available to every part of Scotland from all the centres. As I said on the previous occasion on which we met, we aim to increase the quality of our output. Let us take the example of the weekend news bulletins. We will have more opportunities to refresh the stories because our newsgathering power will be much greater. Although we are reducing the number of posts overall—the figures that were mentioned show that there will be a gross reduction in jobs—we intend to have more journalists at the end of the period than we have now. That is the answer to your question. We will continue to invest heavily in training—the journalists will be the subject of intensive training investment over that period.

I picked the weekend news bulletins because the National Union of Journalists highlighted that example. It made the point that, at present, weekend news bulletins have a fully staffed studio gallery, but that that will not continue to be the case if the proposed efficiency changes go ahead; what is called a cut box will be used instead. The NUJ states that even BBC management accepts that such a system is not as flexible as the existing system in allowing journalists to respond to news that develops while they are on air. If that is the case, in my view the proposals will affect the quality of what we see. Journalists will not be able to respond directly to news stories that emerge during transmission. Is what the NUJ has told us an accurate reflection of what will happen?

I do not believe that that is an accurate reflection of what we will have in Pacific Quay at the end of the period of investment. We will start installing the new technology in July 2006. The cut box that you mentioned, which we will have between now and July 2006, is an intermediate technology. We could get stuck in an argument about the merits or demerits of the cut box, but suffice it to say that the overall investment will allow us to have just as much flexibility as a gallery provides because, ultimately, a gallery is driven by software. In Pacific Quay, we will be able to select our sources by using a touch-screen system or whatever is the most appropriate technology.

As I said, we must take on board the concerns of staff and ensure that they are comfortable with the transition, with regard both to the technology and to the production method. We are doing that—a number of leaders have been chosen from the huge range of staff in our industry and our business to lead that cultural and technological change. They are the most experienced journalists who are available to us and they will challenge any proposal that is likely to diminish quality. We have an absolute commitment not only to maintain but to enhance the quality of our service.

I think that your original figure for the number of intended job losses was 189 over three years. Does that remain the same?

The figures remain the same. I think that the final total that we gave was 195, which included the job losses in the professional services that we mentioned.

What kind of vision do you have for Scottish content on the BBC's website?

We aim to increase our factual and entertainment output and to develop a centre of excellence in specialist factual content in particular. Entertainment, drama and comedy are huge strengths for the BBC and we want to deliver more and better for BBC Scotland and throughout the UK networks. Our children's output is a good example of what we have achieved. BBC Scotland is responsible for more than a fifth of the content of children's productions in the UK as a whole.

I think that the two commissioners out of London will create a different dynamic in relationships both with in-house production staff and with the independent sector. Those commissioners will give us an opportunity in the genres that I have mentioned not only to be significant contributors in a Scottish context—we are already the majority broadcaster in Scotland—but to be lead contributors within the 17 per cent of UK output that has been designated for the three nations. As Jeremy Peat mentioned, 50 per cent of drama, for example, will be made outside London and we are eligible to bid for as much of that as we want.

My question was specifically about the BBC's website content.

I am sorry. As far as the web is concerned, we will develop interactive services. Currently, we offer a degree of interactivity, but it is inconceivable that we will not offer radio programmes with accompanying interactive websites and the ability, for example, to download the content of such programmes and to give much deeper links to different areas of interest. One thing that we will be able to do is point the audience towards other programmes that are available from the BBC that will enhance their enjoyment and experience of television or radio programmes.

Obviously, the web will play a hugely significant part in education through BBC jam, which we are working on in partnership with people throughout the BBC and which will be rolled out from January. The BBC and the independent companies are working on a full curriculum for the schools. That is a big plus that is coming up. Both English and Gaelic will be used in BBC jam and the digital curriculum.

BBC Scotland interactive currently produces a considerable amount of the BBC website's content. Do you intend that more or less of that content will be produced in Scotland?

As Ken MacQuarrie explained, it is important that our web content is available for all the genres. It is also important for us to examine what is going on in other platforms and to ensure that our web content reflects what goes on in them. When video on demand is available, we should offer video on demand; radio on demand is already available and popular. As technologies develop and we are able to access programmes via mobile phones, for example, we expect that our web content will complement such services. Does that answer your question?

The charge that is being made is that because of the proposed cuts in staff—particularly for BBC interactive—and the cuts and staff reductions that are currently taking place, the same website content cannot possibly be produced that is currently produced, and there will have to be a consequent reduction. If that is the intention, I would like to know.

I think that Ken MacQuarrie and Jeremy Peat mentioned reinvestment, which is at the heart of our overall proposition to build value for the public and to ensure that we offer value for the licence fee. Our web content is included in that. It remains to be seen whether we will reprioritise and move away from what we currently offer, but our aspiration is that our web content will reflect the expansion. That was explained as far as network production is concerned.

I am confused. You have mentioned reinvestment, reprioritisation and reflecting expansion, but will more or less be produced in Scotland for the BBC's website? People use the website a lot and they like what is available—they like the Scottish content. However, we are clearly being told that you intend to reduce the input from Scotland. The staffing figures and current breakdown seem to indicate that that will be the case. If that is not true, I will welcome that, but until now you have not said that you will not reduce BBC Scotland's website content.

We will certainly not be reducing the content of the BBC Scotland website. Because of the way in which the sector and the industry are going, I anticipate that we will have to increase rather than reduce content. We have a new media and interactive department, which produces that content exclusively. Production of that content will not, however, remain the exclusive province of the new media department; for example, we will want the producers from the main production areas to deliver and develop web pages and web content to accompany their programming. We will have to strengthen our specialist skills, but it is not as difficult to produce web content as it was five years ago. It is still a skill, but it is much easier to acquire the general skills to produce web content. There is no intention on our part to reduce the content—on the contrary; we intend to bid for as much of the BBC's overall web business as we can win.

I am very pleased to hear that commitment from Ken MacQuarrie. I also think that Scotland generally has abilities in this field. The BBC can interact with people in universities and the private sector. There is a lot of skill in Scotland and a lot of talent in web business. There are substantial opportunities for the BBC Scotland website and the broader BBC website to spread beyond the BBC in Scotland. I am very glad to have heard Ken MacQuarrie's assurance that there is no intention to reduce content. We will certainly be looking to explore with Julie Adair and her team at BBC Scotland how that will progress.

The BBC has traditionally had a strong commitment to training. In the committee's previous report, concern was expressed that the efficiencies that you are seeking might mean that you might need assistance to maintain that level of training. Have you done any further investigation? Have you worked with other major companies to assist you with training? Have you involved Skillset in developing training packages?

I will allow Ken MacQuarrie to give more detail, but I was—as a former vice-chairman of the Scottish Higher Education Funding Council, until the new council was set up—interested to listen to the committee's second agenda item. At SHEFC, I examined training processes for the sector, spanning further and higher education and the BBC. There is a great deal of co-operation between the BBC and Skillset and others; I was aware of that in my previous incarnation. I am looking for continuation of that co-operation on training for this important sector, with the BBC in Scotland playing a pivotal role.

This year we will spend £1.1 million on training. I envisage that we will, because of factors that we discussed earlier, have to increase our training budget because we are introducing new technology with new desktop production systems.

In terms of relationships with other bodies, we are represented on the Scottish industry skills panel, the Scottish audiovisual industry developers' group and the Scottish Qualifications Authority radio and TV validation panel, and our producers contribute to a variety of media-related courses throughout Scotland for which staff go out and do ad hoc lectures.

Our internal training will continue, but we are also a major contributor to the Research Centre for television and interactivity, and we contribute to a series-producer programme for development of high-end production skills. We believe that there are gaps in our skills set at the moment at executive-producer and series-producer levels. Although we are pretty strong in terms of our intake across the sector as a whole, we are contributing to programmes that address that gap.

Obviously, it is a huge commitment on the part of the BBC to provide that training. How can you engage with independent broadcasting companies on that? Do they contribute to training or do they just use the trained technicians and other staff in whom you have invested?

Independent companies contribute to training, but not on the scale of the BBC. When we sit down together around the table at meetings of the various industry panels, we try to ensure that, as far as intake is concerned, we do not duplicate the courses or the level of courses that we offer. We try to offer diversity, particularly in terms of addressing the method of intake and gradation of skills. There is constant dialogue among the industry's human resources departments in order to ensure that we get the maximum from the available training spend for the young people who are coming into the industry.

Okay.

I am concerned about the 50 per cent content that will be produced out of London. As is the case for other successful companies, media companies can become involved in takeover bids or mergers. I gather that a merger has been suggested between IWC Media Limited and RDF Media Limited. How would the merger of a substantially Scottish company—IWC—and the London-based RDF affect IWC's content?

First I will, if I may, clarify the commitments that have been made. Fifty per cent of TV drama commissions will be made out of London and there will be a 50 per cent increase in the number of commissions that will go to the nations. Those are two separate commitments.

In addition, there is the so-called window of creative competition whereby, in addition to the 25 per cent of commissioning that is left for the independent sector across the UK, that sector has the opportunity to bid for another 25 per cent of commissions. We have the commitment to the nations, the commitment to out-of-London production and, separately, the opportunity for the independent sector across the UK to engage with the BBC and compete with internal bidders for commissions. A variety of elements are involved. The independent sector in Scotland has the opportunity to bid for BBC Scotland activities, for Scottish commissions and for commissions through the window of creative competition. There are real opportunities out there for the sector, which include genuine opportunities to work with BBC Scotland. That has been found to be of value in the past.

I accept the point about the different companies and the issues that are involved—we have to be aware of that when we consider how best the sector can develop and take advantage of the opportunities that will open up in the years ahead. Ken MacQuarrie may wish to add something about particular companies or issues.

Later in the afternoon, the committee may hear more about that. Obviously, the Office of Communications has criteria on what constitutes out-of-London production. There is a bar on spend, which production companies must meet, in terms of both on-air and production spend.

On consolidation in the industry, without going into specific examples, there is some indication that there will be aggregation—companies are coming together. I believe that that is a healthy development; it creates companies of scale that can compete at UK level. I also believe that the BBC must be watchful to ensure diversity of supply. We have to ensure that the companies that have specialist skills in particular genres or areas are nurtured, in terms not only of their skills bases but of their geographical locations.

As Ken MacQuarrie said, two out of three of the following criteria must be fulfilled by independent production companies for them to qualify for out-of-London production: 70 per cent of the spend has to be outwith London, 50 per cent of the staff must be based outside London, and/or their production base must be outwith London.

When Michael Grade was in Glasgow last week for the meeting of the board of governors and an accountability session in a public forum, he stressed from his lengthy experience in the sector how much talent there is in Scotland. He went on about that at great length and we applauded him onwards. He said that he expects that talent to take advantage of the available opportunities: we have opportunities and the talent exists. I am sure that there will be support from BBC Scotland and from Parliament, but it is up to small and large companies in Scotland to grasp the opportunity.

I note an interest in that my partner is employed by the BBC.

I will pick up where Jeremy Peat left off. I seek to explore further how Scotland can maximise its potential in relation to commitments that have been made at UK level. I would like you to put more meat on the bones of what we have heard. A commitment is mentioned in the BBC submission

"to increase network commissions from the Nations by 50%".

"Nations" is a curious word. Can you tell us more about what that commitment means for Scotland specifically and whether you are working to any target in that regard?

Another commitment is to make 50 per cent of all television drama outside London. By definition, that could be pretty much anywhere in the UK that is not London. I know that we will talk more about the matter later, but does BBC Scotland have a particular target on that?

Secondly—in addition to what you said in response to Murdo Fraser about the new trust—what other forums or levers are or should be available to you to ensure that BBC Scotland's voice is properly heard by the BBC at UK level so that you can develop objectives such as the ones that I mentioned?

I will answer your three questions in turn. There is no sub-division between the nations of the 50 per cent increase in commissioning from the nations. It is a matter of who comes up with the best ideas and presents them in the best manner so that they attract the commissioners' interest. It is up to BBC Scotland and the independents to make their cases, but there is a window of opportunity.

Likewise, there is a commitment to move 50 per cent of TV drama production out of London, but no one is saying to where—specific quotas would not represent efficient or good use of licence fee payers' money. That commitment gives the incentive to BBC Scotland and the independents in Scotland to go out and get it. If that is to happen, we need a transparent, open, appropriate and fully competitive commissioning process.

There has been a risk of there being a cosy relationship in the past in that too much commissioning has been in London, with the bidders and commissioners in the same building rubbing shoulders in the canteen. By moving commissioners out of London to Manchester, Scotland and elsewhere, and by opening up the commissioning process—the governors have pressed hard for separation, genuine transparency and openness in that process—greater opportunity has been provided for everyone to get in there, display their wares and prove that they have the wherewithal to be commissioned. We now have a much more competitive and open system, which gives opportunity to BBC Scotland.

I know that I have still to allow you to answer my other questions, but I just want to clarify something. I appreciate what you said about why the figures have not been sub-divided at nations level. As BBC Scotland management, have you at board level—or do you plan to—set any targets for the share that you seek to secure?

The broadcasting council for Scotland, which I chair, has not set a target but has indicated to management that we expect it to use all its good offices to achieve more than its proportionate share, that we wish to be kept in full touch on how it is progressing towards that end and that we will monitor that. The council is on the case. We have regular monitoring reports at our monthly meetings, at which good information comes through. We will regularly seek information on how work is progressing. Kenny MacQuarrie, Donalda MacKinnon and others know that the work is of great interest to the council, which I must praise, because it does a tremendous job—unpaid and unproclaimed a lot of the time—of representing licence fee payers' interests and helping me to ensure the accountability of BBC Scotland.

I return to the third question about the other levers that can be brought to bear. It is important that we are now operating in a climate in which the BBC has a genuine out-of-London commitment, which I have seen change and develop over the past 11 months. The national governors are really quite influential. The regional governor for England represents England outwith London and there are four of us on a board of 12. We punch our weight in discussions about what is going on and we work together on interests in a devolved society, just as I represent the Scottish interest where I see fit. However, I am not a delegate from Scotland; I am first a member of the board of governors, which is responsible for oversight of the BBC. I am secondly the governor for Scotland, looking out for the Scottish interest and trying to maximise it in the overall context of the interests of licence fee payers and good governance of the BBC as a whole.

Thank you for that. I have a couple of other questions, the first of which is also on how Scotland's voice is heard but is slightly different. I was interested to see you quoted in the press as saying—I assume that this is an accurate quotation—that

"We have some way to go in the BBC to properly reflect the devolved nature of Scotland in national programming."

Will you elaborate on that statement? We are all familiar with the issue, particularly post devolution, and have all bristled often about how Scottish matters are referred to in network news or are just forgotten about. You have obviously thought about that. How can that understanding be developed effectively at UK level? What more must you, or the rest of us, do to ensure that it is?

The quotation was accurate; I believe it is from The Herald. I made that statement at a public meeting in Glasgow last week. Nothing aggravates me more than BBC UK news stories about policy that do not make it clear that the policy will apply only in England or in England and Wales, and which do not take the opportunity to enrich the story by talking about how equivalent policies operate in Scotland and by exploring what lessons might be learned, rather than just stating narrowly that Scotland is different.

I have made that point many times and Mark Thompson and Mark Byford—the director general, and deputy director general and editor in chief—accept it fully. At the meeting that I mentioned they accepted openly that we must improve in that respect. What can be done? First, we can nag away whenever we see examples. During the UK general election, we made absolutely sure that the editorial guidance that was issued across the BBC was utterly and totally clear about the need to distinguish between devolved and reserved issues. That was set out starkly.

Secondly, we come back to training. I still think that not all BBC journalists fully understand the niceties of devolution. In some people's minds, we are still at a fairly early stage in the process. Mark Byford has agreed that, from next year, there will be a core course at the BBC school of journalism on devolution. All journalists will be required to consider devolution and to keep an eye on what is happening with regard to it. BBC Scotland and Helen Boaden, the head of news in the BBC, are monitoring the situation. I have asked the broadcasting council for Scotland to alert me to examples of inadequate reporting and we will continue to make those known.

We can do more. We have an opportunity to develop stories by adding components from Scotland to news stories and by getting them onto BBC News 24 and the United Kingdom national network. BBC Scotland can engage in such things with Helen Boaden and others. That is well known to the folk in Scotland. There is a lot that we can do, but I will not be satisfied until we get not only accurate but enriched reporting.

I have a final question on a separate matter; I do not want to miss the opportunity to pursue a matter that is a bit of a hobbyhorse of mine.

We have talked—no doubt we will continue to talk—about news coverage and we have touched on drama. However, one of the jewels in the BBC's crown is its children's television. BBC Scotland has made some immense contributions in that regard. That is a crucial aspect of our wider interest in promotion of Scottish culture. Some of us genuinely weep over the demise of "Balamory". I am genuinely interested in what you are going to do with programmes such as "Shoebox Zoo", which are tremendous export products in terms of promoting Scotland on the world stage. I understand that issues might arise in relation to support for further series or films on the back of that programme. How will you ensure that you build on those successes in order to promote Scottish culture at home and abroad to the next generation?

I will ask Ken MacQuarrie to say more about that, but I will say that there are some people on Mull who are probably quite relieved about the demise of "Balamory". We had to accept that we had made sufficient episodes of the programme to meet the requirements of the age group that is attracted to "Balamory" for some time to come. The case for making additional programmes was relatively weak, which is sad but true.

I think that "Shoebox Zoo" is fabulous. I regret that parts of it were filmed in the Balmoral hotel rather than in Roslin chapel, which would have added a bit extra to the programme, but that is a personal hobbyhorse of mine.

The challenge for Ken MacQuarrie, Donalda MacKinnon and the others is to do exactly as Susan Deacon has suggested; they must consider how to maintain the momentum that has made them a centre of excellence. Following up "Balamory" and building on "Shoebox Zoo" are big challenges, but such are the challenges that face the creative people in BBC Scotland as they work with the commissioners.

With regard to building on our success, we should regard the targets that have been set as floors rather than ceilings. However, that approach will be possible only if we get the development process right. The key to delivering successful follow-ups lies in investment in development and in a rigorous development process.

We are considering that closely and are working through a number of experiments, such as cross-genre development, which involves meetings of minds of people from various disciplines. Our children's department contributes to that creatively.

On children's programmes, it is essential that we maintain the reputation that we have consolidated with programmes and series such as "Balamory" and "Shoebox Zoo". There are successors to those programmes coming up the tracks.

It is also important that we have sufficient critical mass to consolidate the skills base. I am confident that we will be able to do that and that there is a commitment at network level to ensure that that will be the case.

I should say for the record that I do not want anyone to think that "Balamory" is a literal picture of Scottish culture; rather, it shows the creative abilities that we have here in Scotland.

For once you and Alex Salmond are on the same side. I can see you running the campaign to save the programme.

At what stage is your review on the strategy? What might you do to resolve any problems that it throws up? You seem to be asking a lot of some staff. The National Union of Journalists tells us that graphic design support—for news programmes, for example—is to be withdrawn, with journalists being taught to create basic graphics from a set of templates. It conjures up images of Microsoft clip art on the "Politics Show". That is an example, but if something like that leads to a visible reduction in quality and you get complaints from viewers, what strategies will you have in place to restore the quality that viewers will demand?

We are regularly monitored by the board of governors at the United Kingdom level—I am watching that carefully—and by the broadcasting council for Scotland. They are as keen as I am on ensuring that the commitment to quality is retained. We are watching through both those forums and we are determined that, if there are signs of issues arising, those issues will be dealt with speedily. That is the process that is in place. I can assure you that it is rigorous and that we are all committed to achieving the same ends. Kenny MacQuarrie may wish to refer to the specifics.

The quality of our visual image and our production values is of the highest importance to us. We need to pilot some of the changes that you have mentioned. We will not experiment on air; we will pilot all the technology and the software that we are going to introduce. We will find out the areas in which we can train staff and where there are difficulties in the acquisition of skills. In general terms, that piloting programme has a lead sponsor, but there is also an individual who will analyse the benefits of our projects and pilots. There will be a fully developed, piloted model before we introduce any change.

If you piloted the decision to withdraw graphic support from the "Politics Show" and the pilot did not work, could you reverse that decision?

Yes. We would have to find a solution that worked, whether or not that meant reversing the decision. However, our challenge is to find a solution that works as far as the viewer, the listener and the surfer on the web are concerned. I am confident that, with the teams that we have working on the issue, we will deliver that solution.

From next year onwards, we have to develop our approach to accountability in Scotland and at the UK level. In Scotland, I would like to explore how we can use the internet to make more regular contact with interested parties. I have asked Julie Adair at BBC Scotland to find out what is possible. For example, there were 110 applications to join the broadcasting council for Scotland, so we know that more than 100 people are sufficiently interested in and informed about the BBC—they came to our public meeting and I met a lot of them. Is there some way in which we could use them as a virtual group to help us to get views from a representative cross-section? We need more organised feedback so that we are consistently and coherently getting the views of licence fee payers.

That is helpful. I have a final, specific question, arising from our report. We welcomed the out-of-Glasgow strategy, but concern was expressed about how you would secure cross-Scotland representation on the project committee. Have you managed to achieve that, as I remember you saying that you would? I have particular concerns about north of Scotland representation on the committee.

As with the out-of-London strategy, the out-of-Glasgow strategy will be evolutionary. We are committed to reflecting the diversity of cultures and the realities of communities in Scotland as well as we can. To that end, we have begun to look at our editorial proposition. For example, we have decided that an additional radio series will be commissioned from Aberdeen. A new television series will also come from Aberdeen in the coming year and there is network commitment to the production team there. We are moving in that direction, but it will take time. It is our aspiration to look at recruitment outwith Glasgow and that strategy is now in place.

I understand that there is a project group comprising BBC people from across Scotland.

The group is represented in different ways by people from across the country and it involves senior management who have responsibilities outwith Glasgow.

A lot of the strategy is driven by the reprioritisation and redeployment of investment. What is the overall investment in BBC Scotland this year? What will it be annually by the end of the three-year period?

BBC Scotland's overall investment is in the order of £170 million. We envisage being able to add £10 million of extra investment from local efforts alone at the end of the three years. That does not take into account what we might reasonably win in relation to the 17 per cent that we discussed earlier. I am reluctant to put a figure on that because, although I am confident about what will happen, it is impossible to quantify exactly.

Is the £10 million not redeployment of existing investment rather than additional investment?

It is from the reduction in our cost base, which we are putting into programming.

How do you define investment? Is £170 million not your turnover?

Yes.

So we are talking about reallocation of investment.

There will be investment over the three years.

In your definition of investment, what is your actual level of investment, as opposed to turnover?

Do you mean without self-help?

You are taking £10 million out of the total BBC investment programme and reallocating it from the centre to the regions. What is the global figure for the year-on-year investment in BBC Scotland? What is that as a percentage of the UK figure? How do you define investment in the BBC?

That is complicated. For example, would you include the investment that is going into the property at Pacific Quay? Scotland is getting a new custom-built head office, which is fantastic, but Wales and Northern Ireland are making do with their existing facilities. Major extra investment is going into Scotland purely on the property and the information technology sides to fit out the new building from next year. Precise definitions may be somewhat difficult, but the property and IT sides alone demonstrate the commitment to extra investment.

What do you say in your annual accounts to the Inland Revenue about your capital investment?

An indicative figure for the technology is an investment of approximately £60 million over the three years to July 2007.

That is an average of £20 million a year. How does that compare with the past two or three years?

The investment in technology in an average year is £1 million.

So you are going from £1 million to £20 million a year.

That is for Pacific Quay over that three-year period.

Let us be clear on this point. You are saying that your current average investment in IT is £1 million.

The capital investment is of that order.

And that amount is increasing to £20 million.

I defined it as a one-off investment of £60 million. It is not calculated over a three-year period. I think that you are dividing the £60 million, which is a one-off capital investment that will be completed by July 2007, by the three years of the value-for-money review.

So, after July 2007, you will go back to £1 million.

Then we will simply replace worn-out equipment and maintain other equipment. However, we will have a fantastically positive development for Scotland, with high-definition capable studios and editing suites, a digital library and, as I said earlier, a desk-top technology system that will be a leader in Europe by the end of the period.

So it is a one-off investment of £60 million for a three-year period.

Yes.

That investment is just for the technology.

I was merely giving an example. I have not provided any figures for investment in training or for the new investment that we will accrue from the 17 per cent of UK output that we will bid for.

I know that other people will lose their jobs over the three-year period, but specifically how many journalists will be made redundant?

In news, approximately 37 to 40 individual posts will be closed. However, I stress that we believe that we will achieve all our efficiencies in news through natural wastage and voluntary redundancy rather than through compulsory redundancies.

But you also say that the number of journalists will increase after the three-year period.

Yes. The overall number of people working in journalism will increase because of our proposals for local services.

What will be the size of that increase and over what period will it happen?

It is difficult to put a figure on that until we have completed the pilot that we hope to introduce in the south of Scotland and until we see the results of the pilot in England. Until we understand what those pilots require, I am reluctant to give a figure.

So are you saying that you hope not to make any compulsory redundancies because, in three years' time, anyone in journalism could be offered one of the new jobs anyway?

No. One factor in avoiding making compulsory redundancies wherever we can will be the merging of post closures and those who are volunteering for redundancy. I have to say that that is my sense of where we will end up.

So you expect that there will be no need to make compulsory redundancies among journalists.

That is my expectation.

And you will recruit after the three-year period.

As I said earlier, we are already recruiting text-based journalists. That system will be up and running by the beginning of March.

So far, we have heard about what is happening in news and drama. Are there any particular implications for Gaelic broadcasting or music, neither of which has been mentioned so far?

As members will be aware, a group chaired by Sir Neil MacCormick involving the Gaelic Media Service, the BBC and other interested parties is examining the possibility of establishing a Gaelic digital channel. The Scottish Executive and the DCMS are being kept informed of developments. Discussions are continuing. We are optimistic that there will be a positive outcome, but the issue comes down to questions of finance from the various sources and of how best to deliver a multimedia Gaelic digital channel. We hope to have news of the way forward before the end of this year, but of course that will, to some extent, be subject to the outcome of discussions on the BBC licence fee.

Constructive discussions are continuing and a lot of progress has been made. We were talking just last night to representatives of the Gaelic Media Service and there has been another informal meeting today. Matters are progressing, but I do not particularly want to go into details at this stage—the discussions are taking place under the impartial stewardship of Sir Neil MacCormick, so it is best to let those involved develop their ideas. Ofcom knows what is going on as well and we hope to have an outcome before the end of the year.

That is helpful. Apart from those other discussions, do proposals that are on the table at the moment have any implications for Gaelic broadcasting?

No, they do not. Michael Grade has personally had a meeting with me and the chairman of the Gaelic Media Service and has given us a commitment, subject to being able to secure the money and the appropriate delivery mechanism. Donalda MacKinnon may want to add something about music.

Music forms part of our overall editorial strategy. We have been committed over a long period to providing music programmes. Radio Scotland, with its current schedule changes, is assessing its music policy. Indeed, one of the series to which I alluded will be a new music series, which is to be made in Aberdeen. We are committed to music on all platforms—on television, on radio and on the web—and we are looking to develop a number of 360° projects in that respect.

We are looking forward to the new home of the BBC Scottish Symphony Orchestra being ready early in the new year.

My final quick question is whether, in light of what you said about the London eccentric—[Laughter.] Perhaps it is both London-centric and eccentric. In the light of the London-centric nature of some of the BBC broadcasting—admittedly, things have got slightly better, but it is still a major problem—is the best way round that to have a Scottish 6 o'clock news?

You said that your question was a short one, convener. I came in after the thorough review in 2003 of the issues regarding Scottish news. That was the most complete review that has ever been undertaken by BBC Scotland, involving a wide range of consultation and a huge number of public meetings. The outcome, as you would expect, was that there were mixed views. Forty-eight per cent of those who were consulted preferred to maintain something like the status quo. I hope that I have got my figures right. I think that it was 38 per cent who wanted a Scottish six, with 17 per cent being uncertain. That was the outcome and on that basis it was decided that the best way forward was to maintain something like the status quo.

The "Ten O'Clock News" is widely watched and "Reporting Scotland" is hugely watched. What is critical is to deliver really good-quality news that picks up the points that I was discussing with Susan Deacon and gives the right kind of reporting on Scotland at UK level, as well as wider opportunities for reporting about Scotland to Scotland through opt-outs such as "Reporting Scotland". We do not want a regionalised news service in Scotland along the lines of the English model; we want reporting about Scotland but we also want the right, good-quality reporting internationally and in the UK, taking account of the fact that we live in a devolved society.

That is the way forward for the moment. If in a few years' time there are different views about what is needed, the situation can be looked at again. However, after the thorough review that was undertaken just two years ago, let us try to make the best of what we have now.

We shall have to disagree on that for the time being.

I thank all three of our witnesses for their contribution to what has been an exceptionally helpful session. We may invite you back this time next year to see what progress is being made. I thank you all for your written material and oral evidence.

Meeting suspended.

On resuming—