What price public service?

"The BBC and the Civil Service are ultimately about public service ... Competition and market-testing are important, but they are not ends in themselves."

Question: which leftie said that? Answer: Douglas Hurd in a lecture delivered as Foreign Secretary at the University of Birmingham on 10 March, 1995.

If the broadcasting unions were really on the ball, they would be quoting those words from a leading Tory back at the top mandarins of the BBC, who are in the process of brazenly seeking to justify obscene pay increases for themselves by citing the salaries of chief executives in commercial media companies.

The salary of John Birt, the director general, is being raised by 18 per cent to pounds 354,000 in order, we are told, to bring his earnings closer into line with those of Michael Grade, who earned pounds 464,000 as Channel 4's chief executive last year, and Greg Dyke, who received pounds 400,000 as chief executive of Pearson Television.

Apparently, the BBC's top brass is in the same business as top executives in the commercial sector and should be similarly rewarded. As Birt himself puts it, "We've no choice but to be in the market if we want this institution to remain strong ... The market moves and we have to move with it."

But the BBC is not a business. And it does not have to compete in the media marketplace as do commercial companies for a simple reason - 95 per cent of its pounds 1.5bn annual programming budget is handed to it by the nation's licence-payers. It follows that John Birt is fundamentally not doing the same job as Michael Grade or Greg Dyke.

The principal reason the BBC survived almost two decades of New Right rule is that there was always, mercifully, a sufficient counterforce of traditional Conservatives in key Cabinet posts who appreciated the value of the BBC and were determined to protect it from Thatcherite philistines and bean-counters. When, in the aforementioned Birmingham speech, Douglas Hurd averred that the BBC was "ultimately about public service", he added: "Recognising that role is in the mainstream Conservative tradition."

During his time as Secretary of State for National Heritage, David Mellor also fell into the mainstream Conservative tradition. Birt has credited him with defending the licence fee at a crucial juncture in 1992.

Birt acknowledged, when we spoke on Monday, that "we had many supporters in the Conservative Party ... Very powerful forces in the last government argued for sustaining the BBC." We were speaking after he and the BBC's chairman, Sir Christopher Bland, had hosted a press conference to unveil the latest annual report and accounts.

Neither Hurd nor Mellor - now pursuing careers outside Parliament - have returned to the political arena in the past few days to vent their views on the BBC bosses' pay rise. But Hurd surely laid down a guiding principle in such matters when he warned against "undermining the whole concept of people making a career out of service to the public".

It may sound terribly naive in these still Thatcherite times, but many people who have worked for the BBC throughout its history have, at all levels, done so out of a strong sense of commitment to an institution that was not market-driven. Some felt it was a glorious privilege to work for the world's most respected public service broadcaster. And a few idealistic souls even felt they were doing something for their country.

That public service ethos has not evaporated entirely, but it is hardly bolstered by bosses who are crass and insensitive enough to serve warning of further 20 per cent operational savings on the same day as they come clean about their own salaries going up by 20 per cent. And this is barely a week since the BBC's 22,000 staff accepted a 2.8 per cent wage rise. Yet the new Secretary of State for National Heritage, Chris Smith, is reported to be relaxed about the situation. Maybe he's given up tackling fat cats, after his failure to get very far with Camelot's top executives when they created their very own lottery win in the form of whopping bonuses.

Smith has sought assurances from BBC management that "the commercial tail isn't wagging the public service dog". Birt has no problem giving him such assurances. In his introduction to the BBC's annual report and accounts - submitted to Parliament yesterday - he writes: "Later this year, the BBC will celebrate its 75th birthday. As we enter the digital age, we are determined not to lose sight of the principles that have guided us over those 75 years."

Fine words, but there are many on Auntie's payroll who wonder how he can possibly square such rhetoric with the latest evidence of creeping commercialism in the corporation.