The Media Column: It's your money. Don't you want to know how the BBC spends it?

In 1991, a committee under the leadership of Gavyn Davies, who was a City economist at the time, investigated the funding of the BBC. It identified as "the most serious lacuna" in the arrangements the anomaly that, although the BBC was "disposing of a substantial sum of public money", it was not subject to independent audit. The Davies report concluded that "there is nothing in the National Audit Office's [NAO's] remit that threatens the proper independence of the BBC" and recommended that the NAO have authority to scrutinise the corporation's spending.

Last week, in the House of Commons, members of the Public Accounts Committee (PAC) sought to introduce Davies's proposal as an amendment to the Communications Bill. The PAC is Westminster's most powerful expert body. It is uniquely well resourced and competent, as it is supported by 700 NAO civil servants. Edward Leigh, the Conservative chairman of the PAC, spoke with the unanimous support of his Labour and minority-party colleagues and argued that it was bizarre that the NAO could not scrutinise the BBC's disbursement of £2.5bn of public funding.

Leigh's speech was shorn of ideology. In the tradition of the PAC, he presented points of cross-party consensus. Some Tory colleagues invited him to condemn the BBC as biased. He refused. He emphasised that his committee was not interested in compromising the BBC's editorial independence. The committee was not competent to do that and would not prejudice its standing by trying. Leigh and his colleagues sought powers to subject BBC spending to the scrutiny they already applied to the Arts Council and British universities. He pointed out that the Comptroller and Auditor General is an officer of the House of Commons, not a minister subject to a party manifesto. Leigh asked the house to implement the proposals made by Davies.

Sadly, Davies no longer supports them. He is the chairman of the BBC now and sings from a new propaganda sheet. He had briefed his friends on the government benches – those who are not PAC members – that independent audit would threaten the BBC's editorial freedom. That is an argument he once rejected. The PAC has never allowed the NAO to influence artistic policy at the Arts Council or research at universities. It tries to ensure that public money is spent wisely. That does not mean a ban on risk-taking. The evidence from organisations subject to NAO audit proves it.

The Culture minister, Kim Howells, did not confront Leigh's logic. But he made sure that the PAC amendment was defeated by a government majority of 104. The Government has promised to look again at the suggestion that public financing demands public scrutiny. But it kicked into the long grass the opportunity to make principle reality.

That exposed what the BBC is really scared of: independent oversight of its financial management. The corporation has powerful friends but, on this question, it is not arguing from a position of strength. It knows that its internal allocation of funds is so complex and wasteful that even its own staff find it as transparent as a lead overcoat. Despite the internal reforms imposed by John Birt, financial management at the BBC is arcane and egregious. It is not subject to shareholders or the discipline of the Companies Act. It is a mystery that costs every licence-fee-payer £116 a year.

I, like the members of the PAC, am a supporter of the BBC's core purpose. I agree that external audit would apply real pressure to end waste and justify investment. That would strengthen the corporation. It might end the practice of sending twice as many staff as any other broadcaster to news events and awards ceremonies, but, given the BBC's unparalleled scale, it would support the argument that the BBC has more outlets than others and needs more resources to feed them. It would provide answers to those who regard the corporation as a foul left-wing conspiracy.

Last week, we learnt more than that the PAC has an impressive grasp of the public-service ethos. We saw how perversely the BBC is prepared to resist it. That is perplexing; but it is more perplexing that a government ostensibly committed to best value is so supine and is colluding in the process. Shame on you, Mr Howells, and you too, Mr Davies.