2 - History (I): Parliament and Executive

Summary

This chapter explains how a distinct constitutional model of public finance developed in the UK between 1700 and 1900, focusing on the legal and institutional relationship between Parliament and the Treasury. After providing critical economic context regarding the financial activities of British governments, the chapter explains how the complex inter-play of taxation and appropriation legislation distributed financial authority between parliament and executive government. It then moves to survey the growth of statutory public borrowing, the law underpinning the Bank of England's public financing functions, the appointment of the Treasury at the financial apex of Westminster government and the growth of a settled system of public audit. Special attention is paid to a number of topics: appropriation legislation (annual and standing); time-limited taxation statutes; the Treasury's power to adjust parliament's approved expenditure (virement); the connection between annual appropriation legislation and the UK's 'National Debt'; the Bank of England's powers to finance government; and the complicated relationship between Treasury and Comptroller and Auditor-General.