The television licence fee is to be "modernised" and the BBC is to foot the bill for free licences for the over-75s in a major shake-up of funding of the corporation.

 

The UK culture secretary, John Whittingdale, said the changes will be phased in from 2018/19, with the BBC agreeing to full fund TV licences for the over-75s from 2020.

It is estimated that paying for the licences will cost the BBC £650m, or one-fifth of its annual budget.

The changes to the licence fee will include a modernisation to cover the cost of catch-up TV, most notably use of the iPlayer, as well as a rise in cost in line with the consumer price index measure of inflation.

Broadcasting is not a devolved matter in Scotland under the current devolution terms.

The SNP have campaigned for a new television and radio service for Scotland, to replace BBC Scotland north of the border, funded by Scottish TV licence payers.

Mr Whittingdale said he was pleased the broadcaster agreed to "play its part in contributing to reductions in spending like much of the rest of the public sector" while further reducing its "reliance on taxpayers".

The Tory frontbencher added the government will "consider carefully" the case for decriminalising non-payment of the licence fee.

A government source made clear that the BBC could decide to scrap free TV licenses for the over-75s at any stage after 2020.

The Conservatives pledged to keep the benefit for older pensioner s before May's General Election.

But sources said once the responsibility was handed to the BBC the broadcaster could decide its future, including to "stop it altogether".

Labour said the "backroom deal" as "shabby".

Ben Bradshaw, Labour's former culture secretary, also accused the government of attempting to make the BBC a "branch office" of the Department for Work and Pensions.

Mr Whittingdale said: "Under this agreement, the BBC will take on the cost of providing free television licences for those households over 75 and this will be phased in from 2018/19, with the BBC taking on the full costs from 2020/21.

"The Government will therefore bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV."

Tony Hall, the director general of the BBC, said in an email to staff: "Discussions have been taking place over the last few days and my approach throughout has been to secure the best possible outcome for our audiences.

"I believe that the arrangements we have agreed with the government will deliver financial stability. This has been my primary concern, and indeed the concern of the Executive Board and the BBC Trust."

The National Union of Journalists greeted the deal with anger.

Michelle Stanistreet, the union's general secretary, said: "Despite repeated commitments made by [director general] Tony Hall to a process with full transparency, we find out through leaks and a forced statement to parliament that the BBC leadership has caved in to government demands that will further weaken the BBC's ability to survive as a public service broadcaster of worldwide repute."

"That staff and licence fee payers found out about this done-deal in this way is a disgrace.

"NUJ members trusted that this time round there'd be a fight by the current leadership at the corporation to preserve the BBC's independence and capacity to continue delivering quality journalism and programming. "I'm sure those individuals running the BBC have kidded themselves into believing they've got the best deal possible, just like Mark Thompson no doubt did last time round.

"There will be many more millions of licence fee payers who roundly object to the principle of the BBC allowing itself to be annexed by the Department for Work and Pensions."