Don't let Murdoch smash this jewel. The BBC must act to save itself | Jonathan Freedland

Rupert's son is bent on continuing the war his father started. But he'll find Auntie matches the NHS in public affections

Credit where it's due: the free-market right is nothing if not brave. Fainter-hearted souls would have spotted the imminent first anniversary of the collapse of Lehman brothers that started the global financial crisis and decided that now was not the moment to trumpet the case for unfettered private enterprise, free of meddling regulation. But the evangelists for turbo-charged capitalism are made of sterner stuff. With the American conservative assault on Britain's "Nazi" and "Orwellian" National Health Service still fresh in the memory, a leading US free marketeer has trained his sights on another British institution: the BBC.

He is James Murdoch whose weekend MacTaggart lecture was a 39-minute plea for comprehensive deregulation, warning of the dangers of state interference in the "natural diversity" of the media industry. Of the recent history of deregulation, with its catastrophic consequences for the world's economy, there was not a mention.

Nor did he detain his audience at the Edinburgh television festival, sponsored by the Guardian, with a declaration of his own interest in the subject. He spoke as if he were a mere policy wonk, rather than the heir to a broadcasting empire that would make billions if he had his way and the BBC were cut down to size. This was like a fox arguing that the henhouse doors be thrown wide open – not for his own sake, you understand, but for the good of society.

So Murdoch showed some brass neck. But he made some sharp points, too. He is probably right that Ofcom is bloated, poking its nose too often into areas where it's not needed. Right, too, to note that the old distinction between the press (where no rules on impartiality apply) and the broadcasters (obliged to be neutral) makes less sense when the two are rapidly converging, forming "an all-media market" where, say, the Guardian and the BBC both run websites that include text, audio and video. These days, we're a bit like a broadcaster and they're a bit like a newspaper, and the rules probably ought to reflect that. (Though if that means dropping the impartiality obligation on the TV networks there are two words to give us pause: Fox News.)

Of course, a Murdoch attacking the BBC is not news. But these are perilous times for the organisation. Buffeted by a series of scandals and set to face a Conservative government headed by a man whose sole job outside politics was as PR man for a private TV company, the BBC should feel vulnerable. David Cameron has warned that we're entering a new age of austerity, and that will surely include the BBC and its licence fee. James Murdoch, bent on continuing the war Rupert started, might succeed where his father failed. Which is why his argument has to be tackled head on.

First, his case is undermined by the fact that, while everyone has their pet grumbles, most Britons feel a strong attachment to the BBC. Those Republican attacks on the NHS ran into a solid wall of British affection for the service, and a similar fate awaits any attempt to argue that the great malaise in our national life is the BBC. Most Britons continue to use it and trust it: one survey last year put the BBC at the top of a list of trusted institutions, ahead of the NHS, the church and the military.

Or take the view from abroad. The BBC is one of the few British exports to be universally recognised as world class. That's why BBC programmes from The Blue Planet to the Dickens adaptations are snapped up around the globe. They may not be watching Bleak House in Burma or Iran, but they are relying on BBC News for an independent, truthful view of the world. Spend a day absorbing public television and radio in the US. They do their best, but the begging bowl of fundraising appeals intrudes regularly. You have to listen to National Public Radio's Morning Edition to realise quite what we have in the Today programme. It's not just slicker and better resourced. It actually does a civic job, invigilating those who hold elected power, following an agenda set not by a profit-seeking corporation but by the journalists themselves. Speech radio of the kind served up 24 hours a day on the BBC barely exists as a form outside Britain. (Full disclosure: I present The Long View, an occasional series on BBC Radio 4.) It adds up to an output not achieved anywhere else, by any other funding model. To get rid of it, even to shrink it into the "far, far smaller" BBC James Murdoch yearns for, would be an act of cultural vandalism. We'd only appreciate what we had once it was gone.

For the very thing that so appals Murdoch is what makes the BBC precious. As with the NHS, it ensures that part of our national life is organised according to principles other than profit and loss. We are not customers of the NHS, nor of the BBC. Our relationship with it is measured in a less tangible, but ultimately more valuable, currency than pounds and pence. Murdoch cannot understand that. The final sentence of his speech declared: "The only reliable, durable and perpetual guarantor of independence is profit."

These are perennial arguments for the BBC, but that does not mean nothing should change. Murdoch was heard respectfully in Edinburgh partly because the BBC has allowed its critics too many grounds for opposition and partly because other media companies, threatened with extinction by declining advertising revenues, eye jealously a BBC beast which only seems to get bigger, forever insulated from those pressures.

So the BBC should not wait for a Cameron administration to act. It should move first, blunting its critics' strongest lines of attack. The bosses could reduce costs instantly, and visibly, by paying themselves far less. There is no reason why the director general, Mark Thompson, should be paid £816,000, as he was last year. He can't claim that that is the market rate, since the BBC does not operate like any other company in the market. His salary should be pegged to the rest of the public sector. If Gordon Brown can get by on £185,000, so should Thompson.

Next, the BBC can rein in its ceaseless expansion. It had every right to move online, but it surely cannot justify buying up the Lonely Planet travel guides. Again, its unique privilege is that it does not have to operate according to market logic. Which means it does not have to behave like a rapacious media giant.

Then it could do something really bold, fulfilling its public service remit by providing something the market is failing to provide. Local newspapers are dying or dead. Yet towns and cities across Britain need to know what is happening in their councils, town halls and police forces. The BBC has an army of reporters and offices across the land, unmatched by any other news organisation. Why doesn't it set aside a few millions to cover those unreported communities – then put the results into the public realm, "open source" style. Commercial radio stations could pick up audio of the council leader; a local paper could run a BBC-originated report from the court. If people are worried about state-run media let the BBC share the money with, say, the Press Association.

The BBC ought to do this, before even its friends come to resent its gargantuan size and scale. But this cannot be a matter solely for media folk. This is a cultural jewel, one we dare not take for granted.


Jonathan Freedland

The GuardianTramp

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