Negotiations over the cost of the television licence fee from 2022 have formally begun, according to the Culture Secretary.
Oliver Dowden has asked the BBC to set out its financial needs to inform his assessment of the licence’s pricing, as well as its plans to maximise commercial revenues and continue to deliver savings.
The negotiations will determine how much public funding the BBC and Welsh language channel S4C receive.
Mr Dowden said: “Public service broadcasting is woven into the cultural fabric of the UK, but to remain relevant and meet people’s needs in the digital age it must evolve.
“We are today taking a step forward in our roadmap for reform of the BBC and beginning negotiations to agree the cost of a TV licence from 2022 so that it offers fee payers the best value for money.”
The Government expects the television licence fee settlement process to be concluded by autumn next year before coming into force on April 1 2022.
A group of independent professionals have also been appointed to a panel to help consider the future of broadcasting in the UK.
The Public Service Broadcasting Advisory Panel will include former Channel 4 chief executive and BBC chairman Lord Michael Grade and Facebook’s vice president for Europe Nicola Mendelsohn, as well as former senior executives from Sky, ITN and TV production company Endemol Shine.
Mr Dowden said the panel will “help shape the future of the public broadcasting system and explore the reforms needed to make sure it is modern, sustainable and successful”.
The group will advise ministers on whether the public service broadcasting system remains relevant today and whether the current funding and governance model is fit for purpose.
The experts will look at the impact of technology on audiences, as well as the financial sustainability of broadcasters and the overall TV market, including streaming services.
Lord Grade said: “Our public service broadcasting remit has served the nation well for over 80 years but the time has come to review its relevance for the digital age and maybe redefine it.”
A BBC spokesperson said that the “past few months have served as a powerful reminder of just how much the BBC matters locally, nationally and globally”.
“Our programmes and services have never been more relevant, important or necessary,” the statement said.
The BBC is “committed to delivering great value” and “will continue to innovate, adapt and lead change,” it added.
“We welcome the Government’s commitment to conducting an open and transparent process.
“We look forward to working with Government to secure the right funding settlement for the BBC and its audiences.”
Earlier this year the universal right to a free TV licence ended for those over the age of 75, however those who receive pension credits are still entitled to the benefit.
The Government is also consulting on proposals to decriminalise non-payment of the licence fee.
Josh O’Connell, chief executive of the TaxPayers’ Alliance, said: “These talks must deliver a fairer deal for taxpayers.
“Auntie must be ordered to keep costs down to protect households from yet another painful rise in the licence fee.
“But to guarantee the best value for money, ministers must prepare to bring the BBC’s funding model into the 21st century.
“In the long term, public service broadcasters can only compete and survive if we axe the TV tax and let the BBC stand on its own two feet.”