Only the House of Commons can authorise Government spending and taxation. This is known as Commons financial privilege.

The House of Commons approves the Government’s taxation plans through the Budget cycle and you can scrutinise them during the debates on the Budget and the Finance Bill. It approves the Government’s spending plans through the estimates cycle, and you can scrutinise them on estimates days. Select committees also scrutinise the spending plans of departments.

Three main rules usually apply to financial procedure:

  • Government spending and taxation must be authorised by legislation and that legislation must start in the House of Commons.
  • a Government proposal for spending or taxation must first be considered by the House of Commons in the form of a resolution (a proposal to be decided by the House), which, if agreed to, prepares the way for the legislation authorising the spending or taxation
  • only the Crown (in practice, the Government) can make proposals for spending or taxation—this is known as the financial initiative of the Crown

Government spending is sometimes known as ‘a charge on public funds’ and taxation is sometimes known as ‘a charge on the people’. MPs must agree a money resolution if a bill proposes spending public money on something that hasn't already been authorised by Parliament and a ways and means resolution if a bill authorises the creation, extension or increase of taxes or other charges.

If a bill that starts in the House of Lords involves spending or taxation as an incidental purpose, the bill will include a statement that “nothing in this Act shall impose any charge on the people or on public funds…”. This is called a privilege amendment and is a way for the Lords to acknowledge the Commons’ financial privilege. The statement is removed by the Commons when the bill is considered there. A privilege amendment can also be inserted in a Lords bill that has spending or taxation as its main purpose, as long as a Minister of the Crown takes charge of the bill in the Commons.

If the only purpose of a bill is to impose or alter taxes or spending, it may be certified by the Speaker as a money bill. This means that, under the Parliament Act 1911, it can be passed without the agreement of the House of Lords as long as certain conditions are met. Money bills can’t start in the Lords and the Lords can’t amend them.

Finance Bills and Supply and Appropriation Bills are bills of aids and supplies. Other bills can also be bills of aids and supplies. Bills of aids and supplies can’t start in the Lords or be amended by the Lords. But they are not necessarily the same as money bills. For example, some Finance Bills include provisions that mean they don’t meet the definition of money bills. The Clerk of Legislation in the Public Bill Office can provide advice on the difference between money bills and bills of aids and supplies.

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Public Bill Office