Parliament’s scrutiny and authorisation of the government’s taxation plans is fundamental to the political system. As the public’s representative body, it is Parliament’s responsibility to hold government to account – between elections – for the money it raises and spends.
This guide is part of the collection: How does Parliament authorise the Government's taxation plans? A procedural guide to the Budget process
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There are a number of constitutional principles and procedural rules that govern the Budget process.
This is the central constitutional principle underpinning the relationship between Parliament and government in relation to both taxation and expenditure. (For these purposes, the Crown is the government.) As Erskine May, the authoritative source on Parliament, sets out, “the Crown requests money, the Commons grant it, and the Lords assent to the grant”. This principle thus precludes Parliament from seeking to impose taxes (‘a charge upon the people’), or authorise expenditure, unless requested to do so by the government.
Control of taxation and expenditure can be exercised only by the House of Commons, not the House of Lords. As Erskine May states, the financial powers of the Upper House are limited ‘by the ancient ‘rights and privileges’ of the House of Commons’ and the terms of the Parliament Acts 1911 and 1949. The role of the House of Lords in respect of finance is ‘to agree, and not to initiate or amend’.
Taxes and duties set out in the Budget are known as a ‘charge upon the people’. Income and corporation tax provisions must be renewed annually in the Budget to maintain parliamentary control over these core revenue streams; but other taxes or duties may be introduced or increased, via the Budget, for a defined period or permanently. The Budget seeks to reconcile spending plans with projected income: the level of revenue requested by the government through taxation should only be that necessary to cover its expenditure (supply) plans.
The government’s taxation plans as set out in the Budget require statutory (that is, legislative) authority. The subsequent Finance Bill provides this.
These are Bills the primary purpose of which is to levy taxes or authorise expenditure. As it is such a Bill, the Finance Bill must:
originate in the House of Commons;
be based on ‘founding’ Ways and Means resolutions; and
adopt particular terminology in both the passage of the Bill and the signification of Royal Assent.
Historically it has been a convention that governments regard the votes at the end of the Budget debate as a matter of confidence. Given the fundamental importance of the Budget, if a vote was lost, it would likely be considered a resigning matter for a government. This would generally have led to a dissolution of Parliament and a general election. However, this was no longer the case after the passing of the Fixed-term Parliaments Act 2011. This Act was subsequently repealed and replaced by the Dissolution and Calling of Parliament Act 2022.
Whether the previous convention has been fully restored by this new Act has not yet been tested, although comments by Ministers during the parliamentary debate on the legislation suggest this was their intention.
Regardless, MPs – particularly government backbenchers – who vote against their party on the Budget are likely to lose the Whip.
08:06 am, 14 March 2023
Hansard Society (2022), How does Parliament authorise the Government's taxation plans? A procedural guide to the Budget process, (Hansard Society: London)
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