Chris Smith: The BBC deserves better than this

This settlement is too severe. I suspect programme quality will suffer

The BBC is Britain's most important cultural organisation. It tells us what is happening; it shapes the national debate; it shows us the world; it tells us stories; it brings us our history, art, culture, science, politics, enjoyment, knowledge, and fun. And, on the whole, it does it well.

Ever since it was established, the BBC has been based on three fundamental principles that have helped to ensure its importance and its quality. The first is that it is independent of government. It is a public broadcaster, not a state broadcaster; I well recall my discussions as secretary of state with the Chinese broadcasting minister, who found it rather difficult to understand this concept. It is one of the reasons why I found the Hutton report so deeply flawed, not to mention the cobbled-together response the governors made immediately afterwards. The independence of the BBC in making its judgements about the way it reports the news has to be defended against all comers, even when - occasionally - it gets it wrong. In the case of Hutton, it probably didn't.

The second principle is that it is funded by a licence fee. Having a broad spread of funding for broadcasting in Britain - licence fee, subscription and advertising - means that we are able to have a richer range of television and radio programmes than almost anywhere else. The licence fee is an imperfect mechanism; it is in effect a poll tax on every household. But it works; it provides, on the whole, good value for money; and without it the BBC would be a shadow of what it is currently able to be, and broadcasting as a whole would be the poorer.

The Treasury, in insisting on the licence fee settlement just announced, have, I fear, squeezed the BBC a bit too much. The BBC's own bid to the Government was badly put together. The figures hadn't been carefully worked through, and the lobbying that went alongside it was largely counterproductive.

There is room, too, for savings. I doubt if Jonathan Ross really needs every penny he's being paid. And I wonder whether BBC3 comes anywhere near to fulfilling the ambitions originally set out for it - if I were searching for savings, it's the first place I'd look. So the BBC needed to be challenged in this settlement. But to give it a formula which, whatever the Treasury says, will almost certainly be below inflation in the third and fourth years and beyond, and which has to include both the costs of the Salford move and the national costs for digital switchover, is too severe. I suspect programme quality will suffer.

The third principle has always been that the BBC's prime responsibility is as a public service broadcaster: to inform, educate, and entertain. Its primary role is as a benchmark of quality, thereby helping to raise the quality of broadcasting across the board. "Quality, not necessarily ratings" should be the text sitting on every BBC producer's desk. Of course, good ratings are a bonus; and it is vital that the BBC seeks to reach out to the entire population on a regular basis, with a broad spread of programmes appealing to all tastes: that comes with the licence fee principle. But it shouldn't try to outdo the commercial sector in everything; inevitably there will be things the commercial broadcasters are better placed to do.

The BBC must remember it's quality, above all, that counts. This should be inscribed also on the table around which the new BBC Trust - replacing the old board of governors - meets. Whoever is appointed to replace Michael Grade as chair of the Trust must have, above any other attribute, a genuine passion for public service broadcasting and the quality principle.

There's a lot that the BBC is getting right at the moment. Creatively, it's on a roll. Good programmes are being made; radio is flourishing; while BBC3 languishes, BBC4 is producing real excellence; Sir David Attenborough is becoming even more of a national treasure; vital parts of our national debates - about the state of the union of Great Britain, or about the NHS, or about the sustainability of the way we treat our planet - are thoughtfully analysed and discussed; its online presence is world class. What's more, it is (thank goodness) not responsible for the inanities of the Celebrity Big Brother household.

There will always be things the BBC should be criticised for. There are certainly ways it can be less wasteful with its money. There are parts of what it does that should be tested and questioned. But it deserved better than the Hutton report. It deserves, now, better than this licence fee settlement. And it deserves our support as a continuing and vital part of our national cultural life.

The writer is the former secretary of state for culture, media and sport, and a Labour peer