More repeats on BBC2, fewer entertainment shows and smaller BBC3 and BBC4 as corporation seeks to save £670m

The BBC will axe nearly 2,000 jobs as it looks to save £670m a year in long-awaited cost-cutting plans announced on Thursday morning.

The changes will see more repeats on BBC2, fewer entertainment shows, less money spent on sports rights and a shrunken BBC3 and BBC4.

BBC3 will be moved to the BBC's new northern base in Salford, which will become home to at least another 1,000 jobs, taking its total workforce to 3,300, while the BBC prepares to vacate its west London headquarters. There will also be wide-ranging cuts to the BBC's radio output, with the exception of Radio 4.

The BBC said today's proposals – the result of its nine-month "Delivering Quality First review" – would lead to a smaller and radically reshaped BBC.

It follows last year's licence fee settlement which frozen the BBC's funding – and the £145.50 fee – until 2017 and saw the corporation take on extra responsibilities including the BBC World Service.

As anticipated, BBC director general Mark Thompson has avoided the wholesale axing of one of its digital channels or services.

But Thompson warned the changes would mean "stretching efficiencies and significant job losses. It's my judgment that this is the last time the BBC will be able to make this level of savings without a substantial loss of services or quality or both".

Lord Patten, the chairman of the BBC Trust, said: "The BBC is far from perfect but it is a great institution and, at its best, a great broadcaster. We have a tough and challenging new licence fee settlement, but it should still be possible to run an outstanding broadcaster on £3.5bn a year."

The proposals outlined by the BBC today will save £670m a year by 2016/17 which, along with extra efficiency savings of £30m a year, will result in total savings of 20% of the BBC's budget. About 4% of the savings will be reinvested into programming.

BBC2's existing daytime schedule will be scrapped, replaced by international news and current affairs at lunchtime and repeats in the afternoon. Both BBC3 and BBC4 will be "refocused" to play a supporting role to BBC1 and BBC2 respectively. There will also be fewer entertainment programmes and overseas acquisitions.

It is also proposing that children's programmes such as Blue Peter will be dropped from BBC1, airing exclusively on its two dedicated digital channels, CBBC and CBeebies, sometime after the whole country has moved switched over to digital television in 2012.

On radio, there will be greater sharing of news bulletins across networks with Radio 5 Live, which has recently been expanding its entertainment programmes, refocussed on a "core output of news and sport".

Radio 3 faces cuts to lunchtime concertsand live music, and the BBC's orchestras and singers will be "reviewed". The Proms will not be affected.

Local radio will also be hit, with a focus on peak-time programmes and more syndicated programmes across neighbouring stations.

The BBC will continue with plans to reduce senior management numbers and cut BBC Online's budget by 25%.

In total, £400m of the savings by 2016/17 will come from productivity savings, with £205m from "scope" – that is, programmes and services. The BBC will also quit its various west London properties, including TV Centre.

Thompson said: "This is a plan which puts quality and creativity first. It's a plan for a smaller BBC, but a BBC which uses its resources more effectively and collaboratively to deliver a full range of services to the public. The plan meets the savings target we agreed in last year's licence fee settlement, but also identifies nearly £150m per year to invest in high quality output and in the platforms and services of the future."

The BBC Trust has now launched a public consultation on the proposals. Lord Patten said: "The trust's view has been clear from the start of this process – the BBC must look to run itself as efficiently as possible before we consider cutting services. Over half of the savings announced today will come from changes to operations, but there will need to be some changes to services and we now need to test BBC management's proposals for this. We agree with the direction that the director general has taken, but we want to hear what the public think, as it is ultimately their BBC."

The sports rights budgets will be cut by 15%, with a reduction in the amount of money it spends on overseas drama and films. The entertainment budget will also be cut, focused on "programmes which have lower impact that the big events on BBC1, as well as some entertainment on BBC2".

All new first-run daytime programming will be run on BBC1, with BBC2's daytime schedule given over to repeats of "outstanding" shows which have already run in peak.

Overnight programming on TV and radio will be reduced, while regional current affairs shows on television will be shared across larger region. The BBC HD channel will be closed, replaced with a high definition broadcast of BBC2.

The BBC News budget will be cut by £24m, with "limited reductions" in current affairs across TV and Radio 4. Non-news programmes on the BBC News channel will be scaled down with more repeats in off-peak.

BBC1's Sunday lunchtime strand, the Politics Show, will be axed, replaced by a weekend version of Daily Politics. Regional current affairs show Inside Out will survive but be shared across wider regions.

But the BBC said it would "sustain its commitment to core journalistic output" with an increased investigations budget for Panorama and more international current affairs on BBC TV.

Running through all today's proposals were a focus on peaktime output, sharing and repeating more content on TV and radio.

The number of repeats on BBC1 and Radio 4 will increase by one percentage point, while BBC2's entire daytime schedule outside of lunchtime will consist of repeats.

Radio and TV factual production is to be axed at the BBC's Birmingham base, which produces shows including the Chelsea Flower Show. But Birmingham will remain the home of the BBC1 soap Doctors and Radio 4's The Archers. Thompson described it as "one of the tougher pieces of news" in Thursday's announcement.

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