The evolution of
parliament’s power of
the purse
Overview

Parliamentary control of taxation

The rise of modern budgeting

More recent developments
Control of taxation 1: Medieval
England’s Parliament

Guards against despotic royal rule.

Limit kings’ powers to impose taxes

Limit standing army beyond times of war.

1689 Bill of Rights established principle that only
Parliament could authorize taxation:
‘… levying money for or to the use of the Crown by pretence
of prerogative, without grant of Parliament … is illegal.’

No annual budget, no control of expenditures.
Control of taxation 2

Parliament did not volunteer money to the Crown.

Resolved in 1706 ‘That this House will receive no
Petition for any sum of Money relating to public
Service, but what is recommended from the Crown.’

This ‘financial initiative’ of the Crown has been
enshrined in the Standing Orders of the Commons
since 1713.

This limitation is considered an essential
constitutional principle to this day in many countries.
The rise of modern budgeting 1

Parliamentary control is incomplete as long as governments were
discrete public spending.

Requests for funds could not be properly evaluated, without knowing
needs.

Beginning of 19th Century, the US Congress used detailed line item
appropriations prescribing exact use of authorized funds.

France was first in modern European spending control mechanisms
(1830s).

In UK, the Gladstonian Reforms in the 1860s introduced annual and
comprehensive estimates.

UK and French systems provided influential blueprints for budgeting.
The rise of modern budgeting 2

Spending control achieved through detailed appropriations,
i.e. legal authority granted to executive to spend public funds.

The nature and detail of appropriation legislation varies.


Some countries, many appropriation laws passed each year.
Other countries have a single appropriation act.

Legislation typically provides spending authority for a single
fiscal year.

Supplemental or adjustment appropriations can be granted if
additional funds are required.
More recent developments 1

Developments reduce budgetary activism of parliaments in
OECD countries, in particular:
 Emergence of disciplined political parties led to cohesive voting
behavior, and more executive control.
 Expansion of entitlement spending, e.g. social security, made
budgets more rigid, and more difficult to amend.

Growth of public spending means that the executive budget
proposal became the standard for legislative action.

Initiatives in OECD countries reinvigorate legislative control

France National Assembly recently passed budget reform legislation
requiring better information and growing Parliamentary powers to
shift money between programs.
More recent developments 2

Trend in non-OECD countries less clear.

Democratisation and constitutional reform can
open previously closed systems.

International financial institutions and donors
supportive of legislative budget involvement.

Participation of legislature & accountability linked
to debate on budget transparency.
Concluding remarks

Historically, struggle for parliaments in Western
Europe was for a say in taxation.

Expenditure control followed later, through use of
modern budgets and appropriations.

Now renewed appreciation for parliamentary
scrutiny of public finances as a tool in making
governments more accountable and effective.