The BBC is facing another round of cuts with the public broadcaster predicting its income will fall by £125m this year as people stop paying the licence fee during the coronavirus pandemic and with revenue from its commercial arm dropping substantially.

The outgoing director general, Tony Hall, told staff on Wednesday he is deferring negotiations over pay rises until later in the year, putting a freeze on all but the most essential recruitment and reviewing major capital projects. This alone will not be enough to make up the shortfall, meaning there are likely to be cuts to some programmes.

BBC likely to make cuts to output with £125m income drop forecast Read more

Discussions over the appointment of a new director general are also continuing remotely, with the process to appoint a new boss to lead the BBC still on track to be concluded by June, according to sources at the corporation.

Income from the TV licence is forecast to be below expectations, with door-to-door enforcement activity stopped during the pandemic and a call centre that handles payments shut down because of physical distancing rules. The BBC has also been hit by the decision to delay the introduction of the licence fee for most over-75s, which had been due to come into place this year but was deferred when older people were asked to self-isolate at home.

The financial outlook for the BBC is substantially better than many of its commercial rivals. Channel 4’s advertising revenue has halved since the start of the lockdown as the economy grinds to a halt, forcing it to cut its programme budget by around a quarter.

Lord Hall told staff the BBC was receiving less income from its commercial operations than had been planned, with production of programmes that are sold to other broadcasters put on hold and a major slump in advertising income on its global outlets.

He said spending on capital projects, overheads and technology would be reviewed, with hiring only allowed for roles that are used to support “the BBC’s output and ability to perform immediate, essential operations”.

The corporation’s reputation, which took a battering from politicians and the government during the 2019 general election, has been boosted by its response to the coronavirus pandemic with enormous audiences tuning into its news output and substantial investment in its education service to aid children unable to attend school.

However, questions remain over the fate of the 450 BBC staff whose jobs were due to be cut this year as part of an enormous reorganisation of the news division. These cuts were postponed as the scale of the pandemic and the drain on the BBC’s resources became apparent, leaving employees working during the outbreak but wondering if they will still have jobs when the lockdown lifts.