A damned corporation could find itself in real danger

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The Independent Online

Towards the end of his statement, in which he had called the BBC "dishonest" and its behaviour "unforgivable", the Prime Minister's former director of communication Alastair Campbell made a plea. Lord Hutton "has set out the truth", he said "and I hope the media reports truthfully what he says".

So here is the truth, unvarnished and unspun. If the BBC's supporters are not vigilant, Lord Hutton's verdict could be used by the corporation's enemies to bring it down.

The judge's conclusions may have been dressed up in establishment lawyer-speak - Andrew Gilligan's allegations were "grave", "unfounded" and "false"; the BBC's editorial system is "defective"; BBC management "failed" to chase up Mr Gilligan's notes quickly enough - but they were more than a disappointment to the BBC. Coming at a time when the future shape of the organisation is unclear, yesterday's report could be disastrous.

As the news presenter Huw Edwards said, Lord Hutton's report "was better than the Government could have hoped for and worse than the BBC could have feared". The BBC's political editor, Andrew Marr ,said: "I don't think anyone [at the corporation] expected this report to be quite so damning."

The BBC is facing the greatest threat since it was created as the British Broadcasting Company in October 1922. It is being attacked from every direction: from the Government, the Opposition and the press.

Tessa Jowell, the Secretary of State for Culture, Media and Sport, recently embarked on a comprehensive study of the role of the BBC, whose 10-year Royal Charter - the permission it must obtain to continue collecting a licence fee - is due for renewal in 2006.

She wants the investigation to ask the fundamental question: what is the BBC for? Ms Jowell said: "We need to ask ourselves what we want and expect the BBC to deliver, what range and scale of services it should provide, how it should be positioned in relation to the market, how it should be funded and regulated and whether it delivers value for money."

A few years ago, it would have been unthinkable for the Government not to automatically renew the licence fee. Today, it still seems very unlikely. But it is equally unlikely that the Government will choose to be as generous with the corporation, which for the past few years has been guaranteed licence fee rises above the rate of inflation.

Even if the licence fee remains, Ms Jowell may decide that the cash need not go to just one broadcaster. Why should the BBC broadcast all the programmes funded by the fee? Perhaps ITV and Channel 4 should be given some of the proceeds to increase and improve their own public service programming?

This scheme, known as "top slicing", is not the result of an eccentric economist without a television and too much time on his hands. It is already happening in Ireland, where the state broadcaster is no longer to be entitled to 100 per cent of the licence fee.

Ms Jowell will not be immune to voices, not just from right-wingers, that the BBC is in need of radical surgery.

The David Kelly affair is not a mere flash in the pan and although Ms Jowell has promised to keep the funding of the BBC separate from her party's fight with the corporation, it will be difficult to see how she will be able entirely to shield the charter review from the political poison that was released yesterday.

The problem for the BBC is that many are keen to see that the debate is informed by yesterday's report.

Large sections of the press, led by The Sun, have seized upon the David Kelly episode to further their long-running campaigns against the BBC.

It was The Sunwhich on Tuesday seems to have been handed a leak of Lord Hutton's report on a plate. It was difficult to read political editor Trevor Kavanagh's description of Hutton's "devastating indictment of the BBC and its defence correspondent Andrew Gilligan" without detecting a hint of glee, just as it is difficult to imagine that the leak came from anyone with the BBC's best interests at heart. The Sunis owned by Rupert Murdoch, who also controls BSkyB, Britain's leading pay-TV company. In other words, he has everything to gain from the end advantage conferred on the BBC by the licence fee, an interest reflected in the newspaper's coverage.

The Conservatives, too, are looking hard at how to take the BBC down a peg or two. Virtually the first response of Tory leader Michael Howard yesterday was to announce that the Hutton inquiry demonstrated that the BBC governors should be stripped of their regulatory powers. The case for independent regulation of the BBC "has never been stronger" he said.

It will have caused the director general, Greg Dyke, who is losing his chairman of governors, no satisfaction to hear the Prime Minister's response: "There will be a thorough review of the charter. I think all these issues should be considered in the course of that."

The Tories, meanwhile, are doing their own blue-sky thinking. They have appointed the free-marketeer David Elstein, the former chief executive of Five, to investigate the future of the corporation under a Conservative government.

Mr Elstein has not delivered his report but he told The Independent at the outset of his investigations: "At the very least, I expect a significant reduction in the licence fee... I find it difficult to see why it is necessary for the BBC to impose a poll tax of £116 on every household." It would be foolish to portray all these arguments as spiteful or politically motivated. Funding aside, there is an issue to be addressed about the governance of the corporation. At present the BBC governors have two roles, which in times of crisis - the only times these roles come into play - appear to be in opposition to each other.

The governors are there to judge the BBC management when mistakes are made, but they are also meant to act as a bulwark against any government which does not respect the independence of the corporation.

As the David Kelly affair has shown, sometimes an obsession with the latter prevents the governors from treating the former with the dispassion that it deserves. As Mr Elstein said a few days ago, there is an inherent contradiction in being both "cheer leader and regulator".

Many broadcasting executives, even those who love the BBC, question whether the BBC's judges should drink BBC tea, meet at in a BBC building and use the services of the BBC press office. Now might be a time to give them more distance from the corporation.

Others ask whether the new "super-regulator" Ofcom, which already has its eye on everyone else in the broadcasting industry, ought to be allowed to govern the most important broadcaster in the country.