Is the Coalition preparing to go to war with the BBC?

6.45pm update: As I suspected the Coalition hasn't forced the BBC to adopt the cost of licence fees for over 75s but it has, nonetheless, imposed funding for the World Service on the Corporation. The Foreign & Commonwealth Office has, up until now, funded the World Service. The Coalition is also preventing the BBC from meeting this extra responsibility by hikes in the licence fee. The current annual charge of £142.50 will be frozen for six years. This, blogs Nick Robinson, amounts to a 16% real terms cut over six years rather than this morning's draft suggestion which would have meant a larger cut over a shorter period (25% over four years).

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By Tim Montgomerie

On a morning like this there are too many big political stories to cover. Later today - once David Cameron has made his statement to the Commons - I'll be writing more about Britain's defence and foreign policy priorities but I'll start with the extraordinary speculation that the BBC may be forced - from 2012 - to shoulder the £556 million cost of providing free TV licences to the over 75s. The cost of providing this benefit for four million households currently comes out of the Department for Work and Pensions budget. The savings could be used by Iain Duncan Smith to fund his ambitious welfare-to-work programme.

Newsnight's Michael Crick broke the story last night and a spokesman for the BBC Trust told him that "it would be unacceptable for licence fee payers to pick up the bill for what is a DWP universal benefit." Crick wrote:

"The effects for the BBC are quite serious. If the whole cost is to be met by the current licence fee, then I'm told it would be the equivalent of a 26% real terms cut in the BBC's budget."

The alternative is that part of the £556m cost is made up from economies in the BBC budget (currently £3.6 billion) and part from a higher licence fee.

The Daily Mail reports "the move as a penalty for the Corporation overpaying its presenters and executives." The BBC has become known as 'Guardian TV' by many Tories for the way it has slavishly followed the left-wing newspaper's attacks on Lord Ashcroft and Andy Coulson. There is also exasperation at the BBC's unimaginative coverage of deficit reduction.

My guess is that the Coalition won't have the cojones to impose the whole cost on the Corporation and perhaps it shouldn't. The Coalition is already reforming at breakneck speed and recruiting enemies in the police, medical, educational, arts and local government establishments. The BBC would easily become the most formidable enemy of all. As Michael Crick warns, the Corporation and all its celebrities would fight the move "tooth and nail".

> Up until now Jeremy Hunt's approach to the BBC has been firm but hardly radical.