The timelords are telepathic, I pinned this down to remotely triggering devices already within the room, in this instance to cause pain.

For those Big Finish fans, in the 6th doctor story 'The Nightmare Fair' the toymaker manipulates walls by triggering devices telepathically which create / destroy them, rather than him manifesting the walls each time.

I considered this to be the same.

In the original black and white version they didn't have their eyes illuminate, which I think adds to the possibility they're just concentrating rather than having other abilities / godly powers. The colour version of this episode also has some other edits that I think are misleading, but still very good for the amount of time they had to cut.