Jeremy Paxman said recently that it was a mystery why the BBC, with income of more than £3 billion a year, was having a “budget crisis”. A mystery it certainly is. For all the wailing and gnashing of extra-whitened teeth that is going on at Television Centre, the truth is that today’s corporation receives considerably more income from the licence fee, about 20 per cent more in real terms, than it did ten years ago. As unions threaten strike action over job cuts and presenters sulk about having to reapply for their very highly paid positions, it is important to remember that this is an organisation that is still, as its Director-General Mark Thompson once remarked (when at Channel 4), a “Jacuzzi of cash”.

So what has gone wrong? The current rows are partly the result of having raised, rather than lowered, staff expectations. It was always risky to assume that the Government would continue to award above-inflationary increases in income. But Mr Thompson and his colleagues gave that impression. They irritated the Treasury by demanding an outrageous increase in the licence fee, and their plan to hold the Government to ransom over digital switchover and the move of some staff to Salford backfired. A BBC that had planned for inflation-beating rises was unprepared for what turned out to be a net decline. In truth, the cuts should have been deeper and the settlement was exceedingly generous.

The real drop in cash is small – 1.1 per cent a year for five years – on a budget of more than £3 billion. The BBC still benefits, unlike commercial broadcasters, from having its income guaranteed. It has also been able to find £300 million to invest in new “personalised” online news and sports services. So the question is why it should have decided to make so many cuts in news and factual programming, its core skills, when there are many better candidates for the chop.

The new licence fee settlement was an oppor-tunty for the corporation to take a sober view of its operations and to realise that it could not continue to play in every game going. The bizarre decision two weeks ago by BBC Worldwide to buy the Lonely Planet guides for £100 million suggests that corporation executives think they are running a venture capital company. It is legitimate for Worldwide to repurpose BBC content for other audiences, and to pump revenue back in. It is less clear why it is trying to compete in the crowded travel guide market.

There is no need for a public service broadcaster to have hundreds of websites and loads of digital channels. The BBC Three and BBC Four digital channels cost about £200 million a year. On a cost-per-viewer basis, these are the two most expensive channels after BBC Parliament. On a cost-per-hour basis, BBC Three outstrips even BBC One. The argument that these channels are a vital test-bed for new programming is completely undermined by the declared intention to show more repeats. It would be better to scrap these channels and shore up original programming. Mr Thompson, in a megalomaniacal moment, even saw himself creating a new Google.

Years of empire-building have left a legacy of duplication and inefficiency. But Mr Thompson must be careful where he wields the axe. The distinctiveness and quality of the BBC’s factual programming is its reason for being, but the organisation has become such a behemoth that it seeks size for the sake of size. That quest is far from its original remit and certainly not what taxpayers want in contemporary Britain.