The BBC is dealing with “enormous challenges” amid high inflation and changes to the licence fee.

Director general Tim Davie also told the Commons’ Public Accounts Committee (PAC) on Monday the corporation “welcomes” the Government announcing in December that the funding would be at a lower rate of inflation as it provides certainty to the broadcaster.

He said: “You’ve got the financial settlement, which was two years flat, four years CPI (a rate of inflation).

“We can talk about the joys of quite high inflation in year two and the additional pressures that we’ve got at the BBC, like many organisations and businesses to be fair but this does put enormous challenges.”

Mr Davie also told MPs that the corporation will look into whether there should be changes to the licence fee this year amid the Government’s review into the current funding model.

The corporation is currently looking to find £500 million in annual savings and has been reassessing its priorities because of the licence fee freeze at £159 a year.

The BBC licence fee is set to rise in April, to £169.50 a year in line with September’s CPI, less than what was originally thought, which the corporation previously said would “require further changes on top of the major savings that we are already delivering”.

Cost-cutting measures at the corporation have included moving a number of World Service TV and radio broadcast services online, merging the domestic and global news channels and axing the soap Doctors later this year due to “super inflation in drama production”.

In January, it announced a deal had been agreed to sell its famous BBC Elstree Centre, which includes the set of EastEnders.

PAC is also supposed to question the BBC about spending as its plans to spend least an extra £700 million outside London between March 2021 and March 2028 to “strengthen” UK delivery.