The BBC looks set to be handed a £650 million bill to fund the free television Licence Fees for the over 75s.

The move was trailed in The Sunday Times ahead of The Budget speech on Wednesday.

However, the pill of footing the bill for 4.5 million pensioner licences could be softened with an extension of the fee to cover anyone using the iPlayer to catch up on viewing – a factor that has contributed to a £150 million shortfall for the BBC. Present legislation requires anyone watching live TV – streamed or otherwise – to pay the £146 a year charge. However, technology has moved quicker than regulators meaning that catch up TV falls outside the letter of the law.

In an interview on the BBC’s Sunday morning political programme, The Andrew Maar Show, Chancellor George Osborne said the BBC must also make a contribution to dealing with the deficit.

BBC Executives would argue that is already the case; since 2010 it has taken on the funding of the World Service, Welsh Channel S4C, local TV and the funding of rural broadband.

Last week, the BBC said it would make 1,000 staff redundant as part of a new £50 million savings programme.

Osborne has accused the BBC of becoming “imperial in its ambitions”. He told Maar that the role of the BBC website should come under scrutiny to avoid covering territory of other newspapers and websites. The future of papers like The Times, Daily Telegraph and Daily Mail was, said Osbourne, clearly online.