There's one position a political donor should never occupy

The point about the job of running the BBC is precisely that it is in a special category

THERE ARE lots of good reasons why Alan Yentob would make a good, possibly a great, Director General of the BBC. He has a fine track record of making and commissioning good programmes. He has a profound understanding of the central problem of the BBC: the combination of its remit as a quality public service broadcaster with the need for mass audiences large enough to justify the licence fee.

And while it is fashionable to assume that only outsiders, and private sector outsiders in particular, can modernise an institution, this is almost certainly just the moment, after the John Birt years, for the Corporation to be led by someone who has dedicated all his working life to the BBC. When people say the BBC needs a "Blair" they seem to forget that the Prime Minister came from inside his party.

Finally, if it's a complaint against Mr Yentob that he has less direct experience in news and current affairs than his rivals, there is no reason why the highly organised but less charismatic Tony Hall shouldn't be his deputy. There is, in other words, an entirely credible alternative to Greg Dyke. Which is worth remembering in the highly confused debate about whether Mr Dyke should or shouldn't be disqualified by the fact that he has given up to pounds 50,000 to the Labour Party.

Imagine, for a start, if the position was reversed. Suppose the Tories were in power and the BBC Board of Governors were considering appointing as Director General a media mogul who had donated pounds 50,000 to Conservative Party funds. There would be unanimous uproar within the ranks of those opposed to the government. The fact that there is real uncertainty on the liberal left about whether Greg Dyke should or should not be eligible stems, I think, from one potentially insidious consequence of Tony Blair's stunning victory in 1997.

In the 1950s and early 1960s, Toryism was so woven into the fabric of British society that it almost ceased to be thought political at all. This was the era in which to be a Conservative member of the establishment - a businessman or a magistrate or a chief constable or a member of the security services or even a bishop - was thought to be part of the natural order. It was the sprinkling of Labour figures in the ranks of the great and the good who were regarded as the dangerous oddities, as, in short, political in a way that their peers weren't.

This hasn't yet been mirrored by a similarly invisible absorption of New Labour's party political values into British society. But that at least some commentators and editorialists on the left think that there would be nothing wrong with a Dyke appointment suggests it might be in future.

Nor has this uncertainty anything to do with Mr Dyke's personal integrity, which is not, as far as I know, in doubt. Indeed, one of Mr Dyke's undoubted qualifications for the job is precisely that he would be an articulate and pugnacious defender of the BBC against its critics - something the Corporation badly needs at present. (So as it happens, would Mr Yentob.)

And yet every row that Greg Dyke would have with the Government would be judged, unfairly or not, against the fact that he is a party donor. If he were to back down, as even Directors General of the BBC have to do from time to time, it would damage the Corporation because of the suspicion that it stemmed from his links with Labour. Equally there is a lesser danger that he would have to pick - and win - a fight simply to show that he is his own man. And that, too, carries the risk of damaging the Corporation unnecessarily.

Nor is it a relevant argument that chairmen of the BBC, including the present one, have been prominent Tories (as also have chairmen of Channel Four). The BBC chairman is not responsible for output in the way the D- G is. And in the all-important task of appointing the D-G he is constrained by his board of governors.

Enter, at this point, Michael Portillo, who in an article in the Scotsman last week added his considerable weight - since he is a Tory - to the argument that there is nothing wrong with a BBC Director General being a party donor. One of Mr Portillo's points is that it is no good complaining about the Labour Party's historic dependence on trade union funding if restrictions are then imposed on the access to public office of the business donors who are increasingly replacing the union barons as Labour's paymasters.

Leave aside for a moment the slightly self-serving element in what Mr Portillo is saying - that he does not want to discourage future donors to the Conservative Party by attacking Mr Dyke. Mr Portillo is nothing if not astute; he knows that the more controversy there is about business donations to the Labour Party - which does have an alternative source of funding - the more businessmen will shrink from giving money to the Conservative Party, which doesn't. No, consider instead the argument on its merits.

The first answer concerns the appropriateness of parties relying on business donations at all. This is not the place to rehearse the arguments in favour of state funding, which the Labour Party supported through much of its long period in opposition after the 1979 election. But the debate about state funding is surely dormant rather than dead.

The chief objection to it is that the taxpayers will resent having to bankroll politicians. Perhaps, but in the long run they may resent it less than the alternative, if there is increasing suspicion, for example, that large corporate - or for that matter personal - donations may help the donors influence public policy.

Nevertheless that isn't the issue with Mr Dyke. Instead the implication appears to be that donors will be discouraged from giving money if they know it will disqualify them from jobs like that of Director General of the BBC. This is frankly daft. Whatever you think about the present systems for funding political parties, the number of public jobs from which potential donors might be disqualified is pretty limited. No one, for example, is saying that a big donor to a political party should be automatically disqualified from chairing a quango, or running a non-profit making lottery, or heading a think tank on trade with Latin America.

The point about the job of running the BBC as Director General is precisely that it is in a special category, defined by one of the Corporation's greatest assets as a public service broadcaster: its political impartiality. This doesn't mean that as a private citizen a Director General shouldn't have views or vote. But giving large donations or bankrolling three successive Shadow Heritage Secretaries is a public act, at least as much as being a party activist, or even, arguably, a councillor or peer taking the party whip. The deterrent effect to potential donors of disqualifying Mr Dyke is negligible to zero. There aren't many jobs that require their incumbent to be free of party politics. But the Director Generalship of the BBC is one of them.