The Governors said that on BBC Television much progress had been made in responding to audience expectations of quality and distinctiveness. However there is still more that must be done. There needs to be fewer repeats in peak-time on BBC One as well as increasing the quality of comedy and drama across television. BBC Two's reach needs to be increased without endangering its new-found distinctiveness.

There is also a need to improve the value-for-money proposition of the digital television channels. On the radio front the governors noted the success of Radios 1 and 2 and their distinctiveness from others in the commercial sector. But the Governors also recognised their responsibility for ensuring that BBC Radio continued to meet its public service remit. bbc.co.uk and BBC News were identified by the Governors as clear examples of how the BBC's purposes articulated in Building Public Value have delivered greater responsiveness at the BBC.

These include the six objectives which were set by the Governors last year. These covered journalism and impartiality; creativity and ambition; value-for-money; driving digital; and the BBC's global reputation . Here, the Governors noted that significant progress was being made in the journalism arena which is driving the BBC's digital and global reputation. On the value-for-money criteria the Governors were satisfied, having commissioned independent analysis, that the savings through job cuts and the selling of divisions like BBC Broadcast were achievable and in the interests of licence fee payers, but they recognised these changes had impacted on staff morale.

Meanwhile the report also states that the new system of service licences will provide greater clarity on what management, staff, audiences and commercial competitors can expect from all the BBC's services. It will enable the Board to judge performance transparently using consistent measures. The Governance Unit is developing the framework for the service licences. This will shortly be opened to consultation and the initial licences are scheduled for publication early next year, to ensure formal operation at the start of the new Charter in 2007.