Following reports over the weekend, the BBC has agreed it will take the cost of free TV licences for the over-75s, thereby relieving the DWP of the bill. But the broadcaster will only start bearing the costs for free TV licences from 2018-19, according the Culture Secretary John Whittingdale.
Speaking in Parliament, the Culture Secretary said the change would be phased in, with the BBC paying the full cost by the 2020-21 financial year.
Responding to a question about the so-called "iPlayer loophole", which allows viewers to watch TV programmes without a licence, he said that Government had agreed that catch-up TV would in the future be treated the same way as viewing live TV in legislation. Full details about how this would be implemented remain to be seen.
However, it was confirmed that BBC funding would rise in line with the CPI calculation of inflation, subject to the BBC meeting efficiency targets and the outcome of Charter Review. This would break the freeze on the licence fee that is still in place until 2016. The amount ring-fenced for broadband roll-out projects will be gradually reduced as the BBC takes over funding for licences for the over-75s.
Shadow Culture Secretary Chris Bryant criticised the way the news about the over-75s licence changes was leaked to media organisations following the conclusion of what he called "a back room deal", instead of first being brought to Parliament for consideration.
The BBC Trust noted that Licence Fee payers hadn't been consulted about the changes and could not endorse the way the deal had been reached.
Tony Hall, Director General of the BBC said the deal was the right one for the BBC "in difficult economic circumstances for the country."