The BBC was an organisation beset by “hippie influences” and run by producers who thought everyone around them was “a s**t”, according to secret Government documents from the 1970s.

The comments were made in 1975 by Sir Michael Swann, the former Chairman of the BBC, during a dinner with Harold Wilson, the Prime Minister, who deplored the “lavish over-expenditure” of the corporation.

According to minutes taken from the dinner, Sir Michael thought: “Too many young producers approached every programme they did from the starting point of an attitude about the subject which could be summed up as: 'You are a s**t', a situation he ‘deplored’.”

The confidential minutes of the meeting were found among secret Government documents discussing plans to scrap the television license fee to make the BBC more accountable to state control.

Correspondence between Mr Wilson and Roy Jenkins, the Home Secretary, revealed Government plans to impose “financial discipline” on the BBC and to arrest the “decline in the standard of broadcast English” brought about by the “casual” speech of radio DJs.

Wilson wrote a confidential note to Jenkins on October 30, 1974 in which he said: “I think the time has come for us to give urgent consideration to alternative methods of financing the expenditure of the BBC.

“The TV license itself is in many ways unsatisfactory. It is a regressive form of taxation.”

The BBC asked for an increase in the licence fee in 1974, which then stood at £12 per year for a colour television and £7 for a black-and-white set.

The Prime Minister was reassured in a series of private notes that the BBC was a “national asset” and that “by international standards, our television is cheap and good value”.

Nonetheless, Wilson was not convinced and a handwritten note pencilled at the top of a letter from the Home Secretary simply made the point: “£2 million for the Sound of Music!!”

Eventually Mr Wilson and later James Callaghan, relented and gave the BBC the licence fee increase it desired.

Nonetheless, Government aides brought to the PM’s attention a clipping taken from The Times on November 18 1978, where Robert Parker wrote: “The BBC is in the depths of what is probably its worst crisis,” faced with a “debilitating lack of cash in the face of the overflowing coffers of the 19 independent television companies”.

The Government commissioned the Annan Report, which recommended that the BBC be allowed to retain the licence fee as its primary source of funding and also approved the creation of a fourth terrestrial channel, which would become Channel 4.

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