The Big Question: Why is the BBC cutting jobs, and how will the upheaval affect its output?

Why are we asking this now?

This morning the Director General of the BBC, Mark Thompson, will announce the biggest round of staff cuts in the history of the Corporation. It is expected that at least 2,600 posts will be axed over the coming five years. Allowing for natural wastage, the creation of new jobs, and some rehiring, that makes a net loss of 1,780 jobs.

Most of those who are sacked will go fairly quickly, within the next 18 months. The news and documentary programmes will take the biggest hits. The news team alone is likely to lose 300-400 jobs. Mr Thompson also claims that there are more people than necessary employed on "factual" programmes, particularly in the light of plans to move work out of London and to commission more programmes from independent companies.

Why is this happening?

This is the outcome of talks the BBC had with the Government a year ago over the cost of a television licence. Mark Thompson tried playing hard-ball during the talks, telling the Government rather publicly of the dire consequences if they held down the price of a licence. He even threatened that if he did not get the money that he wanted, he would abandon the multi-million pound plan to open a new centre in Salford, where 1,500 staff from sport, 5 Live, children's programmes and the internet operations were to be redeployed.

The threat alarmed Salford's civic leaders, without having the required effect, and ended up sounding hollow. Gordon Brown, who was then Chancellor, refused to budge. The BBC was presented with a six-year deal under which the licence will increase from £131.50 to £151.50 by 2012, not enough even to keep up with inflation. The Salford project will go ahead anyway. Mr Thompson is now looking for other ways to fill a £2bn black hole in its finances.

Which staff should the BBC go without?

There are any number of people inside and outside the Corporation willing to air their opinions about where the axe should fall, if fall it must. Norman Fowler, the former journalist and Conservative chairman who now chairs the Lords committee on communications, said yesterday that, if he had to choose, he would rather the BBC made one drastic cut, like closing down BBC 3, rather than spread the misery everywhere. But BBC 3 is one of the Corporation's most effective vehicles for reaching young viewers, who watch less television than their elders because of the competing pull of the web and computer games. One in five 16- to 34-year-olds watch BBC 3.

Lord Fowler particularly did not think news broadcasts should be cut, an opinion vociferously shared by some of the BBC's best known employees, including John Humphrys. Jeff Randall, until recently the BBC's Business Editor, has said that the BBC has legions of meeting-obsessed, decision-averse middle managers it could manage very well without. On Tuesday Mr Thompson outlined his plans at a meeting of 150 of the most senior of those innumerable managers. We can guess that whatever feedback he got from the meeting will have born little relationship to Mr Randall's forcibly expressed opinions. It will be the middle managers who decided whose jobs must go, and they will doubtless think that they themselves are indispensable.

Is the BBC's reputation at risk?

The BBC has had a bad year, convulsed by controversies ranging from the misrepresentation of the Queen – an episode that led to the resignation of the Controller of BBC1 earlier this month – and phone-in deceptions.

In addition, it faces never-ending complaints of political bias. These come mostly from the right, from people who claim that there is a left-liberal cult in the Corporation, but also from the left. The BBC's coverage of the Israel-Lebanon conflict last summer also drew 5,000 complaints, some from people who thought they were pro-Hezbollah, others from people who thought they were pro-Israel.

But these problems reflect the very high expectations from the BBC, which is still highly regarded at home and abroad. A survey into viewers reaction to BBC coverage of the Lebanese war found that 64 per cent trusted it, while 11 per cent distrusted it.

The BBC's reputation abroad can be gauged from the fact that they made £101m profit last year selling home-made programmes overseas, and that 233 million people around the world listened to or watched the World Service. That is one arm of the BBC with nothing to fear this morning, because its money comes out of a separate budget, direct from the Government. While the rest of the corporation faces cuts, the World Service has been told it can expand its operations, especially in the Middle East.

What does the BBC cost to run?

Last year, the BBC spent £3.3bn, around twice the annual budget of the Department of Culture, and directly employs over 23,000 staff. Thousands more on the outside look to the Corporation as their main source of income. This makes it an important regional employer, and a major of income for anyone involved in the creative industries. About a third of the total budget is spent outside the BBC, commissioning programmes from independent companies, buying in programmes, or paying freelance artists.

Just over a quarter of the BBC's budget, £864m last year, was spent outside London. That proportion is on the increase. The BBC's finance division was shifted to Cardiff last year. The new broadcasting centre in Salford will also, obviously, add to the number of staff employed outside the capital.

This may help answer one of the commonest criticisms of the Corporation – that it is too London centred. Most people, when asked, complain that the BBC say that the BBC fails to cater equally for all parts of the country, a complaint that is heard more loudly the further you are from London.

What about the big stars and their salaries?

The people at the top of the BBC are well paid by almost anyone's standards. Mr Thompson received £788,000 in pay, expenses and pension contributions last year. The BBC's highest paid performer, Jonathan Ross, has a deal worth £18m over three years. Graham Norton has a contract worth £5m, and Terry Wogan is paid £800,000 a year. None of the big earners is likely to be affected by today's announcement.

Will there be a strike?

Staff unions, including the National Union of Journalists and the technicians' union, Bectu, are due to meet BBC management today and will insist that those who do not want to leave are redeployed, where possible. If the talks go badly, then a strike is possible. If it happens that will certainly affect the BBC's output while the strike lasts. As to the long-term effect on output, Mr Thompson will assure us today that the BBC will stay true to its mission to produce top-quality programmes. We shall see.

Will these changes lead to a better BBC?

Yes...

* The BBC has always overstaffed, with people duplicating each other's jobs

* Far too many BBC staff have been concentrated in London. Dispersing them is good practice as well as a money-saver

* If the licence fee had been allowed to go up and up, there would have been increasing pressure for it to be abolished

No...

* This crisis arose only because Mark Thompson failed to convince Gordon Brown of the case for raising the licence fee

* The cuts will hit the programme makers, not Mr Thompson and his army of BBC middle managers

* News is what the BBC does best, but that is exactly where the cuts are going to be