This is taken from The Guardian:

BBC chief warns that job cuts are only the beginning

by Owen Gibson, media correspondent
Friday September 16, 2005

The BBC director general, Mark Thompson, has warned staff that radical plans to axe almost 5,000 jobs won't mark the end of his cost-cutting as the corporation faces up to its "biggest challenge" yet in maintaining its relevance over the next decade.

In an interview with the Guardian, he also waded into the row over the disappearance of Test match cricket from free-to-air television, signalling his determination to bring the sport back to the BBC.

Mr Thompson, who is negotiating with unions over plans to cut staffing levels by almost half in some areas in an attempt to save £355m a year, insisted that he was determined not to follow the path of predecessors who lowered the BBC's headcount only to increase it again over time.

"I don't think value for money is something you do and then stop doing," he said. "We want to use as much of the licence fee as we can creating value rather than destroying value with bureaucracy and waste."

His comments are the opening salvo in negotiations with the government over the level of the licence fee over the next charter period, running for 10 years from 2007. The BBC will argue for an above-inflation rise to pay for the plan to switch the nation to digital TV by 2012 - a move confirmed last night in a speech by the culture secretary, Tessa Jowell - and its plan to move key departments to Manchester. Ms Jowell said elderly and disabled people would receive financial assistance to help them pay for the set-top box and potential aerial upgrade required to go digital. The BBC will be required to lead, and pay for, much of the conversion.

Mr Thompson said he hoped that the BBC would not have to repeat the "enormous correction" of the past year, but said he wanted to introduce a "new mindset" among staff. "Even people I speak to who make programmes about business, they often take that hat off when it comes to the BBC. In most industries, productivity does not mean cutting quality," he said.

Unions said yesterday that Mr Thompson's comments were not unexpected, given the context of the licence fee negotiations. But they warned again that they would resume industrial action if compulsory redundancies were enforced.

"While he is warning us that this may not be the end of the pain, we are also warning him that this isn't the end of his pain if we don't reach an agreement over compulsory redundancies," said Jeremy Dear, general secretary of the National Union of Journalists.

Mr Thompson said he was hopeful that the majority of the cuts could be achieved through voluntary redundancies. It is understood that while the quota for voluntary redundancies is likely to be reached in news and the nations and regions department, the factual and learning arm is likely to prove a stumbling block.