The BBC's governing body, the BBC Trust, would be scrapped and replaced by a board of up to 14 directors – no more than six of whom would be appointed by the government – under part of a raft of wide-ranging and controversial proposals for how the BBC should be run.
Speaking in the House of Commons on Thursday morning, culture secretary John Whittingdale confirmed the trust would be scrapped and replaced with a "unitary board" that would act as the corporation's executive body, while regulation duties would be handed to the state regulator, Ofcom.
He stressed that editorial decisions would remain the responsibility of the director general and said the BBC's independence would be "explicitly enshrined".
But the BBC's director general, Tony Hall, said immediately after Whittingdale's statement that while the BBC broadly welcomed the proposed new governance structure, it was still seeking assurances over its independence.
"We have an honest disagreement with the government on this," he said. "I do not believe that the appointments proposals for the new unitary board are yet right. We will continue to make the case to government. It is vital for the future of the BBC that its independence is fully preserved."
Whittingdale was speaking as the government published its long-awaited white paper on the future of the BBC, setting out a series of reforms on the corporation's mission, governance, finance, and content.
He called the BBC "one of our country’s greatest institutions" but said it needed to take more risks, be more distinctive in its commissioning, and do more to reach under-served audiences, particularly those from black and ethnic minority backgrounds.
"The government is emphatically not saying that the BBC should not be popular," Whittingdale said.
"But with a 33% share in television, 53% share in radio, and the third-most popular UK website, and with only 27% of people believing that the BBC makes lots of programmes that are more daring and innovative than other broadcasters, commissioning editors should ask consistently of new programming, 'Is this idea sufficiently innovative and high quality?', rather than simply, 'How will it do in the ratings?'"
To the alarm of BBC's management and its supporters, Whittingdale had previously said that the government would appoint the majority of the proposed new board, which would give the Department for Culture, Media and Sport (DCMS) a voting block and controlling stake on the corporation's most senior decision-making body.
But the government appears to have watered down this plan, apparently in response to disquiet from Conservative backbenchers.
#BBC There HAS been row back. Govt water down plans to appoint majority of BBC board after warnings of BB rebellion of up to 20 Tory MPs
Damian Green warns Whittingdale not to tamper with the independence of the BBC. Quite a few Tory MPs share his concerns.
Whittingdale confirmed that the BBC's royal charter, essentially its constitution, will be extended for another 11 years, securing the BBC's existence until at least 2028. The BBC's annual £3.7 billion licence fee income was already secured for the same period in a deal hastily thrashed out with chancellor George Osborne last summer.
Rona Fairhead, the current BBC chair, will stay in her job at least until her contract expires in 2018.
But the charter renewal comes with various reforms and conditions the BBC must meet – following years of criticism from Conservative politicians over the size of its budget and claims that it distorts the media market.
Among the government's proposals are to:
* Force the BBC to declare the pay of stars who earn more than £450,000. A previous draft of the bill had reportedly set this threshold at £150,000.
* Hand over financial auditing duties to the National Audit Office.
* Make diversity a core aim of the BBC for the first time, requiring it to serve and represent black and ethnic minority viewers and listeners as well as regions and nations.
* Create a new clause require the BBC's news output to be impartial.
* Scrap the BBC's commitment to make 50% of its TV content in-house; instead, the corporation would put all its commissions out to tender to the independent production sector, unless there is evidence it wouldn't provide value for money.
* Allow licence fee–payers to access BBC services while abroad.
As previously announced, Whittingdale confirmed that people who only watch BBC programmes through the iPlayer catch-up service will have have to get a TV licence. Currently, a licence is only required to watch live TV.
While the government has explored the use of subscriptions instead of the licence fee, Whittingdale confirmed on Thursday that the fee remained the "best way of funding the BBC" and said any subscription would only cover "additional services beyond what the BBC already offers".
The government expects, however, that the BBC will continue to trial and experiment with subscriptions so to "pave the way to a more sustainable funding model in the future" – a sign the BBC is being made to prepare for a future without the universal licence fee.
BBC supporters and media experts feared that the draft bill would include proposals to "top-slice" the BBC's income – giving some of the licence fee to other broadcasters – and introduce a ban on the BBC scheduling its biggest shows against those of its commercial rivals.
Both these elements of the bill were considered by DCMS but were left out of the final draft, much to the relief of pro-BBC campaigners and some of its stars.
No cuts to BBC budget, no interference in schedules, and majority on Board not appointed by Govt. This is good to hear.....#BBCwhitepaper
Maria Eagle, Labour's shadow culture secretary, said in response to Whittingdale's statement: "The fact that most of his wilder proposals appear to have been watered down, dumped, or delayed by the government of which he is a member is a reflection of his diminishing influence and lack of clout.
“He’s not got his way in most things, Mr Speaker, and I welcome that. There’s no point him denying that he’s been overruled by the prime minister and the chancellor. There’s no point denying that the secretary of state is hostile to the BBC – he wants it diminished in scope and size."
Eagle said Labour had concerns about the proposed new unitary board and said that, despite Whittingdale's promises, it would have ultimate control over editorial decisions.
Labour MP David Lammy, who has campaigned for greater diversity in the media, said in a statement: "The government’s announcement that diversity will be enshrined in the charter as one of the BBC’s public purpose is welcome news and is a vital first step in ensuring that the BBC reflects and represents its audience both in terms of on-screen portrayal and off-screen in the BBC’s workforce – from the newsroom right up to the boardroom."
Radio and TV presenter Chris Evans, who is thought to be one of the BBC stars who earns well in excess of £450,000 a year, said on Thursday that it was "a well-known fact that people who do what I do for a living get paid far too much" and suggested that the BBC should "just pay us less".
"Just pay us less" - DJ @achrisevans says ahead of government White Paper on future of BBC https://t.co/IfVMzN7qNW https://t.co/Kn481gdAw3