The Times were told the BBC licence fee will rise by less than the rate of inflation during the next five years. The BBC licence currently stands at ￡159 a year. This comes as ministers are worried about hitting households with a higher licence fee to pay.

       A government source said: “The BBC is a hugely important national institution. But equally these are hard times.

       “Nobody wants to punish the BBC but it’s got to be subject to the same efficiency savings as everyone else.”

       Also, an additional source said the BBC has suggested that not raising the licence fee in line with inflation could lead to diminishing ‘quality’ of programming.

       The talks between the government and the BBC will conclude in the next few weeks.

       READ MORE: Jeremy Clarkson’s bitter swipe at BBC: ‘Forced to pay’

       The licence fee currently earns the BBC ￡3.2 billion a year.

       However, Greg Dyke, former director-general of the BBC, said: “It’s hard to see why it shouldn’t increase with inflation given the competition it now faces.

       “The BBC has had a good run in terms of quality drama, for example, but that costs a lot of money.

       “A lot of the money goes on news. It needs to be properly funded.”

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       The BBC ended its licence fee grace period for over-75s this year.

       The National Audit Office estimates the BBC has lost ￡50 million in the last year alone due to people failing to pay the licence fee.

       Anyone who watches telly without a licence can be fined ￡1,000 - unless they are exempt.