The agreement to freeze the licence fee at £145.50 for the next six years means the Corporation will have to cut its annual £3.6m budget by £140m, according to MediaGuardian.
The BBC has also taken on extra costs, including the £300 World Service, which mean the total affect in real term reductions will be four per cent a year until 2017, when the current licence fee settlement ends.
The Beeb aims to protect services by reducing costs. It has already cut senior management wages by £10m and expenses “by a fifth”. Expenditure on new offices in Salford and major redevelopment work on London’s Broadcasting House are also due to finish soon.
The BBC insists it has secured the best deal possible. The government wanted it to shoulder the costs of not charging over 75s for the licence fee. An anonymous senior source told told MediaGuardian that that would have amounted to a 26 per cent year-on-year cut.
“That was no idle threat,” he said. “Now the [licence fee] is all going on broadcasting. It won’t be used to pay the licence fee for rich people in Kensington.”