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BBC Told To Save Ahead Of '£650m Budget Raid'

George Osborne has urged the BBC to make "savings" and "contribute" to dealing with the country's deficit, amid reports the broadcaster will be forced to meet the cost of free television licences for the over-75s.

The Chancellor is expected to announce the move in Wednesday's Budget in a bid to save £650m, according to reports.

The Sunday Times quoted senior Government sources as saying a deal would make the BBC take on the cost of 4.5 million licences from the Department for Work and Pensions.

They are reportedly part of £12bn in welfare cuts, which would see the benefit cap slashed to £23,000 in London and lower in the rest of the country and savings from tax credits.

Speaking on The Andrew Marr Show, Mr Osborne said: "The BBC is also a publicly funded institution and so it does need to make savings and contribute to what we need to do as a country to get our house in order. So we are in discussion with the BBC."

The corporation is facing negotiations for the renewal of its royal charter.

Mr Osborne played down suggestions that cuts to the BBC's revenue would lead to one of the BBC's major channels being axed.

"I remember five years ago doing a deal with the BBC where actually the BBC... Took on £500m worth of responsibilities including things like the BBC World Service," he said.

"I was told at the time by people 'They're going to shut down BBC2, they're going to close Radio 4'. They always seem to pick the juiciest fruits on the tree."

He hinted, however, that the BBC's website is one area where significant savings could be found, describing it effectively as a "national paper".

"You wouldn't want the BBC to completely crowd out national newspapers. If you look at the BBC website it is a good product but it is becoming a bit more imperial in its ambitions," he said.

The Sunday Times reported that the BBC may be given the opportunity to recoup some of its lost revenues by charging for the use of iPlayer and other online catch-up services.

Asked about that suggestion, Mr Osborne said: "There are massive technological changes that if we don't address will mean the licence fee income will slowly disappear. I think therefore that's the basis of a deal we can do."

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