This week the BBC brought back to the airwaves that much loved antidote to panel games, I’m Sorry I Haven’t a Clue. Lord Carter of Barnes, it seems, is making himself available for the show.

For his Digital Britain report, published yesterday, shows an extraordinary willingness to extend government intervention into almost every nook of Britain’s broadcasting and communications industry. The public may have its own views on the principle of a £6 tax on universal broadband access. But the Government’s willingness to meddle in the market for content creation suggests too great a zeal for plunging too many fingers into too many pies. If Lord Carter’s vision of “industrial activism” comes to fruition, the public will not just pay for the BBC, but also help to fund Channel 4 and ITV, the production of regional news, arts programmes and children’s television, as well as the expansion of the privately owned telecommunications networks across the country. This not only discounts the power of creativity and innovation in the market, it destroys it. It is as if the Government has surveyed the media landscape and come to a simple conclusion: Britain’s got no talent.

The first victim of this timid and muddled report is the BBC. Its monopoly on licence fee funds looks less comfortable today, but only a little. The Government’s notion that a small part of the BBC licence fee might be given to other terrestrial broadcasters to fund “public” programming opens up a host of potential claims on BBC funds. If regional news has a claim on the licence fee, why not also local community programming? Or science and language teaching online? Or downloadable cookery lessons? Or an iPod app for ornithologists or genealogists?

Top-slicing the licence fee is, indeed, potentially damaging to a BBC that had come to think of itself as untouchable. But it is wrong to think that top-slicing would benefit its rivals. Rather than making the industry more innovative, or competitive or diverse, expanding the culture of public subsidy in the media would be a market distortion that could stifle innovation. And all without curbing the BBC’s empire building and inefficiency.

Another victim is Channel 4. It has put out the begging bowl and discovered that, indeed, beggars cannot be choosers. Digital Britain suggests some kind of tie-up between a few of the more marginal commercial operations owned by BBC Worldwide and some of Channel 4’s non-core businesses. It is the media equivalent of emptying a box of liquorice allsorts into a bag of wine gums and claiming to have formed a sweet shop. It is not clear that this combination will provide sufficient funds to support Channel 4. Nor is it clear how it works without value bleeding out of the BBC. Frankly, it is not clear how it works at all.

The Digital Britain report sidesteps the central issue of tackling the size, role and regulation of the BBC. Instead, it seeks to expand the cake of public funding for the media and then spread it more widely. This is ultimately damaging to Britain’s digital future, suffocating precisely those entrepreneurs eager to build new business in the media and communications marketplace.

The other victims run into their millions: Britain’s taxpayers. Lord Carter had the opportunity to advocate returning some of the licence fee, but has increased it instead, adding a tax on telephone lines to boot. Digital Britain? Only in the sense that Lord Carter has let it slip through his fingers.