The BBC Trust is to be abolished and replaced with a new unitary board with media and telecommunications regulator Ofcom taking over the Trust’s regulatory role.
In order to ensure stability, existing Trust chair Rona Fairhead will head up the new board until at least the end of her current term.
Culture secretary John Whittingdale has also confirmed that the BBC will in future be obliged to boost the number of BME and other under-represented groups both on and off-screen.
Both sets of changes form part of the BBC’s new 11 year charter settlement which Mr Whittingdale set out in the House of Commons on Thursday.
The Secretary of State said his decision to grant an 11 year charter meant future renewals would no longer take place close to a General Election, helping to depoliticise the debate about the BBC’s future.
Under the new settlement, the Director General’s editorial independence will be “enshrined”.
Whittingdale said recent media reports that ministers wanted to micro-manage the scheduling of programmes were unfounded and that the BBC would always be free to determine what it aired.
However the broadcaster will be expected to “focus on high quality, distinctive content.”
In another significant change, the BBC will subjected to greater scrutiny from the National Audit Office which will become its chief financial auditor.
On funding, Whittingdale confirmed that the BBC’s licence fee will rise with inflation for five years from 2017/18 and that those viewing BBC shows on iPlayer will need to buy a licence.
In return, the broadcaster will introduce more flexible payment plans and look again at rules which require new licence fee payers to buy their first licence over six months, something which can adversely impact those on low incomes.
While the licence fee will remain and a “new regularised process” for setting the cost will also be introduced, the Government says any new services should be covered by subscription in order to reduce the universal burden placed on licence fee payers.
Mr Whittingdale said: “These reforms will embolden the BBC to take risks, to create confidently and unashamedly the highest quality, distinctive content for all audiences.
“It will provide the foundations for a stronger, more independent, more distinctive BBC that will inform, educate and entertain for many years to come.”
Commenting on the new charter settlement, BBC Director-General Tony Hall, said: “There has been a big debate about the future of the BBC. Searching questions have been asked about its role and its place in the UK. That’s right and healthy, and I welcome that debate.
“At the end, we have an 11-year Charter, a licence fee guaranteed for 11 years, and an endorsement of the scale and scope of what the BBC does today. The White Paper reaffirms our mission to inform, educate and entertain all audiences on television, on radio and online.”
Speaking on behalf of all Trustees, Chairman Rona Fairhead said: “Constructive engagement between the Government, the BBC and the public has delivered a White Paper that sets good principles, strengthens the BBC’s governance and regulation and cements a financial settlement that will sustain the strong BBC that is loved and admired by the public.”
Despite welcoming today’s announcement, both Fairhead and Hall said the BBC still had some concerns about appointments to the new board.
Lord Hall said: “We have an honest disagreement with the Government on this. 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.”