Consolidated Fund or the Consolidated Revenue Fund is the term used for the main bank account of the government in many of the countries in the Commonwealth of Nations. A bank account is a financial account with a Banking institution recording the financial transactions between the customer and the bank and the resulting financial position of
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Establishment
The idea of a single government bank account was first established in 1787 by Prime Minister William Pitt the Younger as part of his reform of government finances influenced by the ideas of Adam Smith. William Pitt the Younger (28 May 1759 &ndash 23 January 1806 was a British politician of the late eighteenth and early nineteenth centuries. Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. Prior to this, funds had accrued through the Exchequer of Receipt into three main funds: the Aggregate Fund, the General Fund, and the South Sea Fund. For the Noel Coward play see South Sea Bubble (play. The South Sea Bubble of 1720 was an Economic bubble that occurred The Consolidated Fund was so named as it consolidated these existing accounts together, and ensured proper parliamentary oversight of the spending of the executive - it was defined as "one fund into which shall flow every stream of public revenue and from which shall come the supply of every service".
The Treasury established this account, formally known as The Account of Her Majesty's Exchequer, at the Bank of England where it remains to this day, and the legal term 'Consolidated Fund' refers to the amount of credit held in this particular account. The Bank of England (formally the Governor and Company of the Bank of England) is a state-owned institution and the Central bank of the United Kingdom
Under the Exchequer and Audit Departments Act 1866 most of the revenue from taxation, and all other money payable to the Exchequer must be paid into the Consolidated Fund. The Exchequer was (and in some cases still is a part of the governments of England (latterly to include Wales) Scotland, and Northern Ireland
Earlier funds
The General Fund was established in 1617, the Aggregate Fund in 1715, the South Sea Fund in 1717.
These funds were established in relation to specific Government borrowing authorised by Parliament, which had a defined type of revenue appropriated to put towards the interest and repayment. That particular revenue would be paid into the fund related to the loan. For example, the South Sea Fund was related to the debts of the South Sea Company. For the Noel Coward play see South Sea Bubble (play. The South Sea Bubble of 1720 was an Economic bubble that occurred
The Aggregate Fund was paid all the hereditary revenues of the English Crown, such as profits from the Crown Estate and the Royal Mail. In the United Kingdom, the Crown Estate is a Property portfolio associated with the monarchy. Royal Mail is the national postal service of the United Kingdom. The hereditary revenues of Scotland were paid into the Consolidated Fund from 1788 onwards.
From 1716 onwards, the surplus of the first three funds, after the interest and principal payments flowed into a fourth fund, the Sinking Fund. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations Historical Context A Sinking Fund was a device used in Great Britain in the 18th century to reduce National debt. This was intended to be applied to the repayment of the National Debt, but was instead mainly used for day-to-day necessities. It was eventually placed into the hands of the National Debt Commissioners, and was abandoned in the 1820s.
In 1752, before the Consolidated Fund was formed, the debts owed to the three existing funds had themselves been consolidated, and became irredeemable (the principal would only be repaid if the Government chose to do so). They therefore became annuities, paying an annual rate of interest of 3%, and known as Consolidated Annuities, or Consols. An annuity can be defined as a contract which provides an income stream in return for an initial payment Consols (originally short for consolidated annuities but can now be taken to mean consolidated stock are a form of British Government bond ( gilt) dating originally
Ireland's Consolidated Fund
The Consolidated Funds of Great Britain and Ireland were merged by the Consolidated Fund Act 1816 into the single Consolidated Fund of the United Kingdom that exists to this day. A Consolidated Fund Act is an Act of Parliament passed by the United Kingdom Parliament to allow like an Appropriation Act, the Treasury to
Payments into the fund
Taxation
All tax revenue is paid into the fund unless Parliament has specifically decreed otherwise.
Consolidated Fund extra receipts
Any money received by the government which is not taxation, and is not to be retained by the receiving department (for example, fines) is classed as a Consolidated Fund extra receipt, or CFEG. These are to be paid into the Consolidated Fund as soon as they are received.
Standing services
Certain expenditure is by law charged directly to the Consolidated Fund and is not subject to Parliament's annual budget process, ensuring a degree of independence of the government. Services funded in this way are known as Consolidated Fund Services and include, judges' salaries, payments to the European Union, the Civil List payments, the salary of the Comptroller and Auditor General, and the expenses paid to returning officers at elections. Consolidated Fund or the Consolidated Revenue Fund is the term used for the main Bank account of the government in many of the countries in the Commonwealth of The European Union ( EU) is a political and economic union of twenty-seven member states, located primarily in A civil list is a list of individuals to whom Money is paid by the Government. Comptroller and Auditor General is the abbreviated title of a government official in a number of States, including the United Kingdom, the Republic In various parliamentary systems a Returning Officer is responsible for overseeing Elections in one or more constituencies In the case of the judges, this is to ensure the judicial independence introduced by the Act of Settlement 1701. The Act of Settlement is an act of the Parliament of England, originally filed in 1700 and passed in 1701 to settle the succession to the English throne
Other modern funds
National Loans Fund
The National Loans Fund is the government's main borrowing and lending account.
It is closely linked to the Consolidated Fund, which is balanced daily by means of a transfer to, or from, the National Loans Fund.
Contingencies Fund
In the early part . . . . . . . . . . . . . . . . of the nineteenth Century the Civil Contingencies Fund was created. It is held by the Treasury, and its use is regulated by the Miscellaneous Financial Provisions Act 1946. It may be used for urgent expenditure in anticipated that the money will be voted by Parliament, or for small payments that were not included in the year's budget estimates.
The Contingencies Fund Act 1974 sets the size of the fund as two percent of the amount of the government budget in the preceding year.
When Parliament votes to approve the urgent expenditure, the monies are repaid into the Contingencies Fund. As Parliament is effectively forced to approve actions ex post facto (after they've happened), the Treasury's use of the fund is actually scruitinised in detail by the Public Accounts Committee.
Appropriation Acts and Consolidated Fund Acts
Parliament gives statutory authority for the Government to draw funds from the Consolidated Fund by Acts of Parliament known as Appropriation Acts and Consolidated Fund Acts. Funds are made available under the Acts only for a specified financial year, a concept known as annuality, although an individual Act can cover more than one financial year, listing separate amounts for each. Often, a two year period is covered by a Consolidated Fund Act, and roughly two or three are passed in each parliamentary year.
A Consolidated Fund (Appropriation) Bill is brought in and passed at the end of the parliamentary year before the Summer recess. When passed, this is known as the Appropriation Act, and allocates the monies from the Consolidated Fund to the purposes set out in the main annual departmental expenditure estimates (the annual government department budgets, known as Estimates).
In the interim period between the start of the financial year and the passing of the Appropriation Act, a process known as Votes on Account is used to grant to departments up to 45% of the amounts they were allocated in the preceding financial year.
These Votes on Account, and any necessary changes to departmental budgets (Supplementary Estimates) are passed as Consolidated Fund Acts, normally twice each year in November and February. Additional funds may be requested at any time, and will either require an additional Consolidated Fund Act, or will be included within other legislation.
The preamble of these supply acts is different from that on most other Acts of Parliament. It currently reads:
Whereas the Commons of the United Kingdom in Parliament assembled have resolved to authorise the use of resources and the issue of sums out of the Consolidated Fund towards making good the supply which they have granted to Her Majesty in this Session of Parliament:—
Until a few years ago, an older form of wording was used:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards making good the supply which we have cheerfully granted to Your Majesty in this Session of Parliament, have resolved to grant unto Your Majesty the sums hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
This follows the constitutional principle that the Crown (Government) demands money, the House of Commons grants it, and the House of Lords assents to the grant. Throughout the Commonwealth realms The Crown is an abstract metonymic concept which represents the legal authority for the existence of any government The House of Commons' is the Lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords The House of Lords is the second house of the Parliament of the United Kingdom and is also commonly referred to as "the Lords"
1784 has been the only year since the Glorious Revolution of 1688 that the Commons has refused to grant access to funds. The Glorious Revolution, also called the Revolution of 1688, was the overthrow of King James II of England (VII of Scotland in 1688 by a union
If money paid from the Consolidated Fund is not spent by the end of the financial year, it must be repaid to the Fund. Grant-in-aid payments are however excluded from this rule. A grant-in-aid is money coming from central government for a specific project
Comptroller
The Comptroller (who is also Auditor General and head of the National Audit Office) controls both the Consolidated Fund and the National Loans Fund. A comptroller or controller (kənˈtroʊlər ˈkɑmˌtroʊ- also financial controller, abrv The National Audit Office (NAO is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments The full official title of the role is Comptroller General of the Receipt and Issue of Her Majesty's Exchequer.
The Comptroller must authorise each requisition request received by the Bank of England from the Treasury, to assure that the request is compliant with the amounts and purposes authorised by Parliament in statute.
If funds are mistakenly paid into the Consolidated Fund then both the Comptroller and the Treasury must agree to its return.
Principal accountants
Payments can only be made from the Consolidated Fund to one of the principal accountants defined by law. These are the Paymaster-General, the Commissioners of Revenue and Customs, the National Debt Commissioners, and the Chief Cashier at the Bank of England. HM Paymaster General is a ministerial position in the United Kingdom. Government debt (also known as public debt or national debt) is Money (or credit) owed by any level of government either Central government
Devolved government
The Westminster Parliament provides a sum of money annually to provide a budget for the Scottish Executive and fund the operation of the Scottish Parliament and the salaries for judges of Scottish courts. The Scottish Government (SG ( Scottish Gaelic: Riaghaltas na h-Alba) is the executive arm of the government of Scotland. The Scottish Parliament ( Scottish Gaelic: Pàrlamaid na h-Alba; Scots: Scottish Pairlament) is the devlolved national unicameral This money is transferred from the UK Consolidated Fund into an account known as the Scottish Consolidated Fund. The is the main fund operated by the Scottish Parliament. It receives a grant from the UK Parliament 's Consolidated fund, plus the operational receipts
If the income tax varying powers of the Scottish Parliament were to be used (the rate can be changed by plus or minus three percent), the additional revenue raised would be paid by the Inland Revenue directly to the Scottish Consolidated Fund. When legislating for the Scottish Parliament, a number of matters were reserved by the UK Parliament ('Westminster' If the tax is reduced then the amount paid from the UK Consolidated Fund in that year would be correspondingly reduced.
There is also a Welsh Consolidated Fund to provide a budget for the Welsh Assembly. The National Assembly for Wales (Cynulliad Cenedlaethol Cymru is a devolved assembly with power to make legislation in Wales.
The Northern Ireland Consolidated Fund has existed since 1921.
External links
- Appropriation Act 2006, an example of drawing from the Fund
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