From Reith to Ross via Murdoch – how it came to this for the BBC

The Corporation's retreat was forced by its many enemies, and its own mistakes

Of the hundreds of thousands of people who have worked for the BBC, none made better use of his experiences than George Orwell, who was employed there during the Second World War, when the Corporation was being heavily leant on by a misnamed Ministry of Information, and the Cabinet wanted broadcasters to use a bastardised form of the language, called Basic English.

From these unhappy memories came the Ministry of Truth, where the hero of Nineteen Eighty-Four, Winston Smith, worked, and "Newspeak", the ghastly language that the novel's characters are compelled to use.

The story illustrates that having politicians on its back does not bring out the best in the BBC. That "best" is some of the finest innovative programmes made anywhere in the world, and a news service which plays a major role in giving British broadcasting an influence out of proportion to the country's political standing in the world.

On the debit side there is the vast BBC bureaucracy, cosseted from normal market discipline, presided over by an army of executives with fat salaries and strange job titles. When Lord Reith, the BBC's founder – who was good at keeping politicians at bay – was offered a share in profits from the Radio Times that would have quadrupled his salary, he turned it down on the grounds that he was a public servant who was not in it for the money. His salary was £1,750 a year. The Prime Minister of the day was paid £5,000 a year. The BBC's director-general, Mark Thompson, is on a total remuneration of £834,000 a year, more than four times Gordon Brown's annual pay of £194,250.

The cost of the BBC, and the way it has spread itself into every media outlet, including the internet, will become a hot political issue if a Conservative government is elected this year – which explains yesterday's attempt to head off trouble with an announcement that some operations will be cut.

If the proposal to close Radio 6 Music and the Asian Network was supposed to take the political heat off the Corporation, it failed dismally, as was attested by the reactions from politicians, from staff, and from thousands of listeners who have signed up to the Save 6 Music campaign launched in Facebook.

There was even a theory going around that it was a deeply subtle manoeuvre by the BBC's top brass, who wanted to incite a backlash to warn the Conservatives of the trouble they could face if they mess with public broadcasting.

A counter-theory is that the BBC's top managers are not that clever, but spend so much time enclosed in offices, exchanging memos, that they have no idea what people in the outside world think.

There are rival commercial interests, notably the Murdoch media empire, who complain that the way the BBC branches into every medium is creating unfair competition for media organisations who do not have the advantage of a guaranteed income from a licence fee.

James Murdoch, in particular, has a direct line to David Cameron's office through Andy Coulson, the Tory leader's valued spin doctor, who is a former editor of the Murdoch-owned News of the World.

Last August, Murdoch delivered a speech at the Edinburgh Festival in which he complained that "other organisations might rise and fall but the BBC's income is guaranteed and growing... the scale and scope of its current activities and future ambitions is chilling".

One of Murdoch's many complaints was that the BBC hired performers for salaries that its commercial rivals allegedly could not afford. He named Jonathan Ross as an example – a lucky choice because just two months later, on 15 October, Ross made that now infamous broadcast in which he and Russell Brand left obscene voice messages on the voicemail of the comic, Andrew Sachs. The resulting outcry drew yet more attention to Ross's eye-watering salary. He was reported to be receiving £6m a year at the time of the Sachs prank. By comparison, BBC Radio 4's flagship news programme, Today, has an annual budget of around £4m.

Generally, the BBC seeks to protect the salaries of its top entertainers from the public gaze. But its senior managers have recently had the public spotlight turned on them in a manner that must have caused some discomfort. In November, the BBC went public in a manner unprecedented in its long history, and revealed that 137 of its executives are on pay and other benefits that come to more than £100,000 a year. Details of their expenses were also made public. Thus, people learnt that Mr Thompson's vast salary did not deter him from claiming 70p for parking, on seven separate occasions.

Though the BBC earned some plaudits for its new spirit of openness, it left people wondering why so many of its executives need to be paid so much. The escalation of BBC salaries began in the Eighties, when John Birt tried to shake the place up and introduce a kind of market discipline, to appease the Thatcher government. He was himself very well-paid by earlier BBC standards, but was still taking less than he could have earned in commercial television. He brought in talent from outside, and paid the market rate.

But not many of today's highly paid BBC executives have arrived at their present salaries by demonstrating how much they can earn on the open market. Mr Thompson joined the BBC straight from university in 1979, and has been chief executive of Channel 4, but he is an exception – with other senior colleagues there is no way of knowing what salary they would command if they changed employer.

"I simply don't believe these kinds of salaries are necessary to get the best candidates. These are some of the best jobs in British broadcasting and it is an honour to be asked to do them," Mr Cameron claimed, in an article published recently in The Sun.

Mr Cameron has called for the licence fee to be frozen, and has said that a Tory government will abolish the BBC Trust and put the Corporation under stricter regulation.

In a speech six weeks ago, the shadow Culture minister, Ed Vaizey, declared: "A public service broadcaster with guaranteed revenue shouldn't compete with the private sector on top-talent salaries. The BBC actually pushes up the price of talent with its interventions. So we will ensure that the BBC publishes fully audited accounts, which will include details of the salaries of all its top talent.

"Our watchword will be simple," he added. "If the private sector is already doing a good job in the area, the BBC should be prevented from going in with all guns blazing."

If these words mean anything, they do not bode well for some of the richly remunerated workers at BBC headquarters.