The tough licence fee settlement will not see the closure of BBC TV or radio services, director general Mark Thompson has maintained, despite the BBC Trust chairman refusing to rule out the move in the final conclusions of his Strategy Review.

Speaking at a Select Committee meeting on Wednesday, Sir Michael Lyons insisted it would be “impossible” to meet the 16% cut to the BBC’s budget without the “reduction, or even the cessation, of services”.

However, at the same hearing, Thompson spoke only of making efficiency savings, which he broke into two categories - productive and allocative - the latter including “reducing services and transferring money from one thing to another”.

In this week’s final presentation of the BBC Strategy Review, launched by the Trust in July 2009, Thompson also said internal reform would see savings. The executive board is keen to protect frontline services.

But within this review, published a day before the meeting, Lyons again said deeper cuts were needed and a “reduction in the scope and scale of the BBC” was inevitable.

Despite signing off Thompson’s Putting Quality First proposal, and renewing the BBC1 service licence for another four years, Lyons said a more “fundamental review” was required, adding: “In the course of the next year or so, the BBC Trust and Executive will need to agree a realistic target for productive efficiencies… and how any remaining gap in funding is best met.”

He refused to rule out the closure of TV, radio or online services, though it is not in the Trust’s remit to axe existing services. However, programming cuts are expected and could include a reduction in the length of strands and reduced spend on sports rights and acquisitions.

BBC’s online activities are also being curtailed, with a 25% cut to budgets being mooted.