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The domestic services of the BBC are financed principally from the sale of television licences. Households with television must buy an annual licence costing ₤80 for colour and ₤26.50 for black and white. More than two-thirds of expenditure on domestic services relates of television. Licence income is supplemented by profits from trading activities, such as television programme exports, sale of recordings and publications connected with BBC programmes, hire and sale of educational films, film library sales, and exhibitions based on programmes. The BBC meets the cost of its local radio stations. BBC World Service radio is financed by grand-in-aid from the Foreign & Commonwealth Office, while BBC World Service television is self-funding. In 1991 the BBC took over from the Home Office responsibility for administering the television licensing system. Since 1988 annual rises in the licence see have been linked to the rate of inflation; this is intended further to improve the BBC’s efficiency and encourage it to continue to develop alternative sources of revenue.

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