UK broadcasting minister Shaun Woodward says while the BBC licence fee settlement did not give the corporation all it asked, it still leaves it "well resourced and well financed to meet the challenges of the digital age".
Writing in Broadcast magazine the minister said the BBC would now have to "manage its wish list and make choices" since the Government was not prepared to "issue blank cheques to fund the BBC's future".
Woodward said the settlement—a 3% rise this year and in 2008, followed by 2% increases for three years after that, with up to 2% in 2012—would also generate an extra £600m from household growth, and represented "a huge opportunity".
"Overall I feel that the corporation got a very good, fair and just settlement," said Woodward.
"The Government has met its obligations to the licence fee payer by agreeing a settlement. Now it's up to the BBC to act as a pioneering force in the digital age as the public rightly expect it to do."
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