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Why does Parliament approve Government spending?

The House of Commons, 1833 by Sir George Hayter. ©National Portrait Gallery, London
The House of Commons, 1833 by Sir George Hayter. ©National Portrait Gallery, London

The legal basis for parliamentary control of Government expenditure dates back to the Glorious Revolution of 1688-89 and Parliament’s decision to legalise the standing army but provide its expenses only for 12 months in advance. This 12-months in advance principle was extended to other areas of Government expenditure until, by 1830, all civil government expenditure was provided on this basis. Six key principles or rules now govern what has become known as the Estimates process.

The principles or rules governing the Estimates process are derived variously from practices of the House of Commons stretching back to the early eighteenth century, from Standing Orders, and in some instances from statute.

Resources are authorised by Parliament only for use in the financial year set out in the Supply and Appropriation Act. The original purpose behind this rule was to prevent the Government hoarding surplus money from one year to the next and then spending it in ways not authorised by Parliament. This annuality rule was first applied in the 1862-63 session, following a recommendation from the then newly-established Committee of Public Accounts in 1861. The rule is now formally set out in the Government Resources and Accounts Act 2000 and is important in the context of NAO auditing of government accounts at the end of the financial year.

Expenditure resolutions must, subject to certain exceptions, be given statutory effect in the parliamentary session in which they are passed (although this has been disapplied from time to time, including in relation to the post-2011 shift in the start and end of parliamentary sessions from autumn to spring. The rule is now regarded as far less important than it used to be).

Standing Order No. 48 states that the House of Commons will:

"receive no petition for any sum relating to public service or proceed upon any motion for a grant or charge upon the public revenue, whether payable out of the Consolidated Fund or the National Loans Fund or out of money to be provided by Parliament, or for releasing or compounding any sum of money owing to the Crown, unless recommended from the Crown."

The provision that the House will only consider expenditure proposals made by the Crown dates back to an Order of the House of Commons on 11 June 1713 which stated "That this House will receive no Petition for any sum of money relating to public services but what is recommended from the Crown." This Order gave the Government the sole power of financial initiative in Parliament. It was partly designed to limit ‘pork barrel’ politics by MPs seeking funds for local constituency expenditure but with little or no regard for the nation’s finances.

Control of spending can be exercised only by the House of Commons, not by the House of Lords. The Parliament Act 1911 provides that all Supply and Appropriation Bills must be certified as Money Bills and can receive Royal Assent without the consent of the Upper House.

In practice, Supply and Appropriation Bills go to the House of Lords but their passage there is a formality: such Bills are not printed and are not debated or amended.

Preliminary approval of expenditure by MPs must be given in a resolution of the House prior to legislation to enact the spending plans.

Standing Order No. 49 sets out that "Any charge upon the public revenue whether payable out of the Consolidated Fund or the National Loans Fund or out of money to be provided by Parliament including any provision for releasing or compounding any sum of money owing to the Crown shall be authorised by resolution of the House."

The Supply and Appropriations Bill for final authorisation of the release of monies from the Consolidated Fund to departments can therefore only be brought forward once the House has considered the Supply motions. In the same way, the Finance Bill follows consideration of the Budget motions.

Spending can only be for the purposes approved by Parliament, as set out in the ‘ambit’ of each departmental Estimate. The National Audit Office (NAO) audit function provides a check at the end of the year on whether or not departments have spent money only for the purposes approved by Parliament.

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