Dyke sets out his vision for the BBC's future: Seven channels to bind the nation together in a digital age

David Lister introduces an edited version of Greg Dyke's MacTaggart Lecture at the Edinburgh Festival
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From Dennis Potter's likening of John Birt to a Dalek to Janet Street-Porter calling television executives the M people (male, middle-aged and mediocre), the MacTaggart lecture tends to set at least a temporary agenda for the world of television.

From Dennis Potter's likening of John Birt to a Dalek to Janet Street-Porter calling television executives the M people (male, middle-aged and mediocre), the MacTaggart lecture tends to set at least a temporary agenda for the world of television.

In his speech, Greg Dyke, the director general of the BBC, sets a much longer-term agenda and gives one of the most important lectures in the series yet. It is one for the digital age, a concept with which Mr Dyke - like his predecessor John Birt - is obsessed.

There is vitally important detail in this lecture. Mr Dyke's commitment to two children's services to challenge the depressing invasion of American pap would in itself be enough to mark him as a director general who has made a difference.

The BBC, he says, must be "the glue to bind society together in the digital age" but he recognises that he has to wrestle with a new generation of viewers, who do not complain if they don't like the schedules; they simply turn over.

There are questions to be asked about Mr Dyke's vision; legitimate concerns about the possibility of BBC 1 forsaking its role as a channel that embraces entertainment and serious programming, and that upmarket specialist channels may not be selected by swaths of the population. These concerns mean that this seminal MacTaggart lecture is only the opening salvo in a long debate about the future of public service broadcasting and the future of British television.

Here is the text:

"The stark choice facing the BBC today is that we either change or we simply manage decline gracefully, and none of us joined the BBC to do that. Digital television, and with it as many as 160 channels in digital satellite homes, has arrived faster than any could have imagined, certainly faster than I anticipated when I gave this lecture six years ago.

Society is changing. Huge gulfs have opened up in the attitudes and values of different generations in a way not seen before. The people brought up in the Thatcher age are the biggest challenge of all. This generation doesn't complain if they don't like our schedules; they simply turn over. 'Disgusted of Tunbridge Wells' is disappearing and being replaced by 'Not bothered of Newcastle'.

The BBC's competitive environment has changed and will be transformed beyond recognition in the next decade. Our competitors today are bigger, richer and more ruthless than at any time in the BBC's history.

So what are the changes we plan to make? BBC 1 certainly needs more money, particularly for drama and quality entertainment and two of our digital services, BBC Choice and BBC Knowledge, were started without enough money to commission truly original and inspiring programmes, programming of the quality people expect from the BBC.

This year's licence fee settlement was a fair, even generous, award. By 2007 this will produce a real increase of £250m in that year compared with last year. But 2007 is too late. If we want to shine in the new competitive digital age, we need to spend more money now, which is why I've spent so much time in my first six months as director general looking for ways to save money right across the BBC.

I believe the potential for savings is significant. The BBC currently spends 24 per cent of its income on running the institution of the BBC. Our target is to reduce that figure to 15 per cent over the next three years, which will give us an extra £200m a year to spend on programmes and services if we achieve it. We've made a good start - and believe me it's a lot more than just cabs, croissants and consultants.

A criticism of the BBC over the years has been that it has tried to do everything the commercial sector has done. Those days have to be at an end. We cannot possibly afford to have a tank on every lawn, or compete in every area of the market place. That way we can ensure that those services are properly funded and are services we can all be proud of.

In this financial year we will be spending £100m more on programmes than last year. Next year we plan to increase that by a further £250m above inflation and the year after by another £130m. Considerably more than half of that money will have been saved inside the BBC.

So what are we planning to do with the money? In the age of digital television it will not be sufficient for the BBC to offer only two mixed-genre channels which are somehow supposed to meet the needs of everyone. We need a more coherent portfolio of channels.

Universality has been one of the core principles of public service broadcasting in the past and should remain so in the digital age. It means that everyone, regardless of race, creed or bank balance, will have access to the BBC's services. Like many others, I have at times toyed with the idea of a subscription-funded BBC. But now that we can all see the dangers of the digital revolution, as well as the advantages, the principle of universality is more important than ever.

We must avoid the emergence of a digital underclass, a world where some are information rich while others are information poor. In practice, what all this means is that we believe we should offer a portfolio of seven services across five channels. Five, because this is the maximum number we believe we will be able to deliver on our digital terrestrial multiplex, the platform with the least capacity.

BBC 1 and BBC 2 will continue as the mainstays of BBC Television for the foreseeable future and be the only BBC channels available in every home until the analogue switch-off. BBC 1 needs to have a greater impact on people's lives. It needs to be more modern, more in touch, more contemporary. It needs more programming that you simply cannot miss. While this may mean that some old faithfuls disappear and others move from the fringe of BBC 1 to peak time on BBC 2, it does not mean we are banishing all current affairs, documentaries, religion and arts to other channels. Far from it.

After a great deal of thought we have decided that we will move the BBC's nine o'clock news to 10 o'clock next year. Ten is a more secure slot for the BBC's main evening news in the digital world. Currently in digital homes audience share for the nine o'clock news often falls below 10 per cent. In the multi-channel world the nine o'clock slot, the start of the post-watershed schedule, is a lot tougher than 10.

The move gives us the opportunity to expand in an area which is increasingly under threat on ITV - regional news and regional programming. With ITV's late regional news now relegated to 11.20pm we believe we have a real opportunity to provide a stronger regional news service at a more accessible time.

Let me move onto BBC 2. This is a success story, but it is also a channel with a split personality. In the long term we plan that BBC 2 will increasingly focus on intelligent specialist factual programmes, our key leisure and lifestyle programmes, thoughtful analysis, creatively ambitious drama and comedy, and specialist sports.

BBC 3 will offer original British comedy, drama and music as well as providing arts, education and social-action programming delivered in a way likely to be attractive to a young audience. We've also been piloting a very different sort of news bulletin that breaks many of the conventions of traditional news services.

BBC 4 will be very different. It will be unashamedly intellectual, a mixture of Radios 3 and 4 on television. It will be based around arts, challenging music, ideas and in-depth discussion. It will be serious in intent but unstuffy and contemporary. We know there's a potential audience, the challenge is to attract it to the channel. I am also very keen for us to deliver a rolling breakfast-time business news on BBC 4.

Our fifth channel will be News 24. It seems obvious to me that the world's biggest news gatherer, the BBC, needs a 24-hour news service as part of its channel mix.

Finally, we plan two new children's services to be played in the daytime on the channels occupied by BBC 3 and BBC 4 in the evenings. One will be for pre-school children and the second for children aged between six and 13. However, we cannot go ahead with these without further consulting the public and then seeking the approval of the Secretary of State. We plan to do both this autumn.

So is all this public service broadcasting? I believe it is. The BBC's role in our society will always be complex - we're the guardian of impartiality and political independence, we're arguably the country's most important cultural organisation, we're a major player in the world of education, and increasingly we're Britain's leading global media player. But in the digital era I believe the BBC's single most important role will be to make possible the production of great British programmes.

Channel fragmentation alone will gradually erode the current revenue base of Britain's commercial channels. If advertiser-funded television starts to struggle, the responsibility for the commissioning and production of British programming will fall increasingly to the BBC. This is why I believe the public service role of the BBC could well be far clearer in 10 years' time than it is today.