Grade tours the studios to defend his reforms of the BBC

During a day-long PR offensive yesterday, which concluded with the BBC chairman and the board facing members of the public at the organisation's first annual meeting, the chairman defended the Government's plan to replace the board with a new trust. He denied that plans for the trust, proposed by the Government in its Green Paper on the BBC published in March, were "throwing out the baby with the bath water", saying that it would be a huge step towards greater transparency.

Mr Grade began the day at 7.50am with an interview with John Humphrys on the Today programme. "There is no quick sticking-plaster solution to years of neglect of licence fee-payers' interests," he said.

"I think the governors have behaved impeccably and with good will, but they have brought their own ideas and tastes to the table and have not paid sufficient attention to the views of licence fee-payers."

It was then on to an appearance on BBC1's Breakfast News, followed by a phone-in with Victoria Derbyshire on Radio Five Live.

In the afternoon Mr Grade and the BBC director general, Mark Thompson, gave evidence to a House of Lords select committee investigating the renewal of the BBC's charter.

Mr Grade told the committee: "There were many symptoms that the system of governors was showing signs of age and was in desperate need of modernisation. The governors had been captured by management. Put Hutton to one side, the other symptoms of disrepair seem to me the fact the governors were making major policy decisions on the basis of evidence supplied solely by management."

A new system of giving licences to new services would be decided on a much more transparent basis, according to what licence fee-payers wanted, Mr Grade said.

Under the former system it had been possible for governors with vested interests to be appointed, something that would not happen in the new trust. He said: "There was a certain secret template for the board of governors: an ex-spy, a trade unionist and someone from business".

But Mr Grade admitted that changes he had already introduced to the system of governors, including moving the board to a separate location, with a separate staff, were "behavioural rather than structural".

Mr Grade and his fellow BBC governors faced a Question Time-style grilling from viewers and listeners last night when they answered questions posed by an audience of 150 licence fee payers.

In the BBC's first public annual general meeting, held at Television Centre in west London, licence fee-payers quizzed the governors on the BBC's use of the word "terrorism", whether the corporation was right to apologise over the Hutton affair, whether there are enough black women on television, and the weather.

Ari Soffer, 16, from London, asked why the BBC described attacks by Hamas as "militant", attacks in Iraq as by "insurgents", and last week's London bombings as "terrorism".

Mark Thompson, the director general, said: "The point of our guidelines is that journalists should think very carefully about the words they use because potentially those words are emotive.''

The partnership so far

* 2 APRIL 2004: Former BBC1 and Channel 4 boss Michael Grade takes over BBC chairmanship from Gavyn Davies, who resigned after the Hutton report in January.

* 21 MAY: Mark Thompson, chief executive of Channel 4 since December 2001, is Greg Dyke's successor as director general of the BBC.

* JUNE: Grade and Thompson launch Building Public Values, their blueprint for the future of the BBC.

* DECEMBER: Thompson announces plans to sack 2,900 staff and outsource thousands of jobs to make savings of £355m by 2008 and to move sport and children's departments to Manchester after four major reviews of BBC activities.

* JANUARY 2005: Grade says the BBC should not soften its agenda in response to pressure to win ratings, and should be delivering serious news. He said that BBC journalists should be "making the important interesting".

* MARCH: Grade welcomes the Green Paper proposal to replace the BBC's board of governors with a new trust.

* MAY: Grade and Thompson face strikes at the BBC over job cuts, totalling 3,780 staff.

* JULY: Thompson waives his right to a bonus as the BBC cuts the upper limit for executive bonuses from 30 per cent to 10 per cent of basic salaries, announced in its annual report, although other executives receive bonuses averaging 25 per cent. He also promises to remove all repeats from BBC1 and BBC2 within 10 years.