Last week, the three Westminster political parties came to a private agreement on how to regulate the British press.

They propose that an independent press regulation body should be set up, essentially to adjudicate on issues of press unfairness, and issue penalties of up to £1 million against newspapers which flout a code of conduct. Membership will be voluntary, but newspapers or magazines which opt to go it alone will face the risk of much higher costs in defamation and other legal actions in the courts.

Many people believe that the press has been behaving badly. However, we should be in no doubt that this proposal is a profound change in the culture of British journalism and constitutes a considerable infringement of freedom of speech. This is because the independent press regulator will be overseen by a shadowy "recognition body", which will meet every three years to ensure that the independent press regulation body is acting in accordance with the codes of conduct.

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The question is: who watches over the watchdog? The recognition panel will be composed of senior politicians, lawyers and academics appointed by the Government (or the Privy Council, which amounts to the same thing). They will have limited experience of the way journalism works and may impose standards that may be incompatible with press freedom. Moreover, the whole system can be over-ridden by a two-thirds majority vote in Westminster or the Scottish Parliament.

This form of statutory control - and make no mistake, this is what this "statutory backstop" amounts to - would be considered unconstitutional in countries such as the United States, where a free press is considered essential to the functioning of democracy. It is also, arguably, in violation of article 10 of the European Convention on Human Rights. It is also shot through with anomalies, since it appears to be only the printed press, not publications on the internet, that will be subject to regulation.

The big question, of course, is why should the public care? The answer is that there are implications which go far beyond the interests of those who own or work in newspapers. It will almost certainly have an impact on information which the public has the right to know but which may be kept out of the public domain because the press cannot take the financial risk of publication.

Critics of the press suggest that newspapers should not be above the law; that the press should not it be judge and jury over its own conduct. In fact, the press is not above the law. Phone hacking, as in the Milly Dowler scandal, is already illegal and should have been dealt with by the full force of the law - more than 60 journalists have been arrested under the various police investigations, such as Operation Weeting, that were launched in the wake of the Dowler affair.

The political parties are now proposing something very different: the imposition of standards of decency, which are subjective and arbitrary. The Labour member of the Privy Council, Harriet Harman, gave the game away on BBC radio's Today programme when she said the press "should not be allowed to mark its homework". This is an attempt to subject the press to indirect political direction under pain of financial penalty.

If the British press is subject to licensing, for the first time in 300 years, it will make it very difficult in future for newspapers to take the risk of running stories that upset governments - stories which reveal official secrets, like the Edward Snowden revelations in The Guardian, or about MPs' expenses, as seen in The Telegraph. That would be a sad day for press freedom - and a disastrous day for democracy.