How to cut £20m and do us all a favour

Memo: DG cc MDTV.

Subject: Cash Crisis

You appear to be having some difficulties with your finances at the moment. I realise that, in relative terms, the £20m shortfall is not quite as catastrophic as some newspapers have been making out. After all, set against an income of some £1.95bn last year it's fairly small beer. If you hadn't had to tell anyone, and if you could have gagged the staff involved, most viewers probably wouldn't have noticed. Nonetheless, appearances matter crucially for the BBC and the appearance of this is not good. If I can put it in terms that might clarify it for you, the shareholders of BBC Plc are the licence fee payers; they receive their dividends in programmes. As far as viewers are concerned these should be the last thing to go, not the first. With that in mind, perhaps I can suggest some off-screen savings.

1 Postpone some capital projects

It is very bad politics to spend £3.5m on tarting up Wood Norton, the BBC's conference centre, when you are cutting staff and programmes. Never mind all that talk of future revenue from hiring it out and the smoke- screen mutterings about the BBC's nuclear bunker. I can understand how tempting it must be to construct a blast-proof bolt-hole but the moment is wrong. Where possible, other capital projects should be cancelled or delayed; after all, if you're suddenly required to pay off part of your mortgage you don't go ahead with building the conservatory. I did hear a suggestion that a fixed camera would be pointed at the current construction work on Television Centre and the resulting programme, BuildingWatch, be used to plug the holes in BBC2. I take it this is gallows humour.

2 Sell some of the family silver

Unpleasant, I know, but times are hard and having made this unnecessary promise to the Government you may have no choice. You had, at last count, £851m worth of fixed tangible assets, most of which consists of buildings. While you have gone some considerable way to rationalise the BBC's property portfolio it's surely not inconceivable that you could ask everyone to squeeze up a bit and sell something else, particularly since you claim staff numbers have fallen by 6,000. Failing that, why not arrange a leaseback arrangement with the Prudential? Of course, this will put your cost base up in the long term, but it would supply you with a immediate cash injection to ease you over what you say is a "cash-flow" problem. And if you won't exploit bricks and mortar, how about taking a leaf out of the Churchill's book? I would have thought you could raise some £5m or £6m by trawling through your archives and selling the choicer items to American libraries. This might sound shocking, but the BBC is a broadcasting organisation, not a heritage library.

3 Cut back on the cosmetics

You're committed to increased regionalisation (30 per cent of production by the end of 1996, I'm told). This should mean lower costs, but only if it is for real. At the moment it often isn't. One weekly radio programme, notionally a Manchester production, regularly transports its presenter and its producers to and from London. Because almost all the contributors work in London it often requires two studios rather than one, not to speak of the line costs. Similar examples are readily available in television. When it comes to nationally networked programmes, geography makes no difference to the audience - so make it where it's cheapest.

4 Sack some consultants

I don't expect you to go cold turkey on this one. After all, the BBC is heavily addicted to this corporate drug - to the tune of £9m last year, according to your own figures. But you shouldn't be misled by the fact that none of these expensive advisers has yet concluded that you should spend less on expensive advisers. You might also dispense with the services of the spokesman who said "Management sometimes doesn't have the time to stand outside and take the view ahead". So what are they paid for?

5 Sack some accountants

You have been driving for a "total cash economy", with programme makers paying real sums for all resources used. To that end you hired a great many accountants to assist producers with their sums. Now it seems that the "total cash economy" might not be as close as everyone had imagined. There is surreal muttering about "non-cash cash", which seems to be a euphemism for the old internal resources that Producer Choice was intended to put an end to. Perhaps you don't need as many accountants as you originally thought.

6 Take a long, hard look at expenses

You've gone some way with this, but not far enough. Most junior staff now travel economy air and second class rail, but it might be politic to extend this to senior executives, too. You might consider making a sacrificial gesture yourself, given the current state of morale. And have a close look at the Corporation's taxi bills. When the Late Show engaged a full-time driver it was regarded as a perfect example of the programme's flagrant extravagance. In fact, they saved money, given the reckless use of taxis up to that point. Old ladies do not pay their licence fee to feed meters ticking outside London restaurants.

7 Keep your talent happy

This, you will be relieved to know, is my last point. It may not immediately seem like a proposal that will save you money, but if you ignore it you stand to lose a great deal. Take the recent signing of Chris Evans to Radio 1, for example. This might not look like a bargain, but it undoubtedly is. There's no question that his market price is greater than what he's been paid by Matthew Bannister. He agreed to come because of associations formed when he was making his name on GLR and because of an idea about the work he would be permitted to do. Such loyalty constitutes the BBC's most valuable asset, one that accountants will never be able to register in the books. Broadcasters like David Attenborough and Desmond Lynam could increase their incomes tomorrow with a single telephone call. They stay at the BBC because it represents something to them other than money. Cutting programmes rather than managerial frills is the very last thing calculated to cement their allegiance.