The BBC could soon be forced to foot a £650m bill to fund free television licences for the over 75s after George Osbourne dived into the broadcaster's budget as part of a £12bn package of promised welfare cuts.
Senior government sources have revealed that deal is close a move that will see the BBC take on the cost of 4.5m licences (worth £145.50 per household) from the Department for Work and Pensions, according to the Sunday Times.
In a bid to claw back the hole in its budget, the BBC will be allowed to charge for the use of catch-up service iPlayer and other online services.
The controversial deal comes as the BBC announced it will axe 1000 jobs in a move to streamline the organisation.
In a letter posted 2 July, director general Tony Hall blamed the rise in people using catch-up services for the £150m shortfall in expected income from the licence free.
Moving forward, there will be a convergence of the technology teams across the broadcaster's digital, engineering and Worldwide teams with further changes “also possible”.
General secretary Michelle Stanistreet said that a review of the licence fee is now critical.
“The looming negotiations on charter renewal will be a critical juncture for the BBC - without a new deal that modernises the licence fee and provides for a real-terms increase the BBC as we know it, a world-respected broadcaster and a key driver of the entire British creative industry, will be unable to function,” she said.