The BBC ‘will have to change’ and make severe cut backs, government sources said, as the onslaught against the corporation gathered pace.

Cabinet minister Grant Shapps confirmed a consultation was underway to decriminalise non-payment of the licence fee and replace it with a subscription-based service.

The transport secretary was speaking to Sky News after the Sunday Times quoted a senior government figure suggesting the BBC should shutter most of its radio stations in a ‘massive pruning’ of activities.

Boris Johnson, the source said, was ‘really strident’ on scaling back the BBC, meaning fewer channels, an even smaller website, and banning staff from taking ‘well-paid’ second jobs.

Mr Shapps told the programme there had been no ‘preordained’ decisions on future funding models.

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‘There is a consultation out there. It is just a consultation at this stage. There are no further decisions made at all.

‘The BBC is a much loved national treasure. We all want it to be a huge success. But everybody, including the BBC themselves, recognises that in a changing world the BBC itself will have to change.

‘But it is simply not the case that there is some preordained decision about the future funding of the BBC out there. The charter runs to 2027 so there is long way to go on all these decisions.’

The Sunday Times article marks another stage in the escalation of hostilities between No 10 and the corporation, with many Tories claiming to be angry with the national broadcaster’s coverage of last year’s general election.

A BBC spokesman said: ‘The BBC plays an important role for the country at home and abroad, it is the bedrock of our world-beating creative industries, and reaches millions of people every day.

‘The public back it and they will undoubtedly have their own views about the future.’

Ministers have also suggested license fees could be completely abolished when the BBC’s charter is due for renewal in 2027.

John Whitingdale, the former culture secretary who was reappointed in last week’s  cabinet reshuffle, is understood to be heading up the review.

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The Sunday Times quoted one source as saying: ‘They should have a few TV stations, a couple of radio stations and massively curtailed online presence and put more money and effort into the World Service which is part of its core job.

‘The PM is firmly of the view that there needs to be serious reform. He is really strident on this.’

Last week BBC chairman Sir David Clementi mounted a strong defence of the licence fee system, warning that putting the broadcaster behind a paywall would undermine its ability to ‘bring the country together’.

A No 10 spokeswoman declined to comment.