Factsheet P6
Procedure Series
Revised August 2010
Contents
Introduction
2
Estimates
2
Votes on account
2
Main Estimates
2
Revised and Supplementary Estimates 3
Excess Votes
3
Parliamentary consideration of estimates 4
Estimates Days
4
Formal Consent from the House of
Lords
5
Evaluation of expenditure
5
Changes to the Supply Procedure
5
19th Century
5
Supply Guillotines
6
The changes of 1966
6
The changes of 1982
7
Recent changes
7
Resource Accounting
8
Contact information
9
Feedback form
10
August 2010
FS No.P1 Ed 3.3
ISSN 0144-4689
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House of Commons Information Office
Financial Procedure
This Factsheet has been archived so the content
and web links may be out of date. Please visit
our About Parliament pages for current
information.
One of the main responsibilities of the House of
Commons is to hold the Government to account
for the way in which it spends money. This
factsheet describes the various ways in which the
Commons does this.
This Factsheet is closely related to Factsheet P5
on Budgets and Financial Documents.
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Financial Procedure House of Commons Information Office Factsheet P6
Introduction
Financial procedure can be defined as the way in which Parliament scrutinises the spending
decisions made by Government and the taxes imposed to fund that expenditure.
The process can be looked at as being made up of a series of stages:
 Requests (Government)
 Approves (Commons)
 Consents (Lords)
 Evaluates (National Audit Office)
Government requests the money necessary to meet its spending commitments amending these
supply estimates as they are known, in the light of experience over the course of the year. The
Commons approves these requests and the Lords gives formal consent to the Commons’ action.
To support each request, the Government provides detailed information about what the money will
be spent on, and who will be responsible for ensuring that it will be spent properly. If these requests
are approved, an Act is passed to make the money available to the Government. The Act places
certain limits on the way in which this money may be spent.
After the expenditure has been incurred, it is audited and accounted for, to check that the amounts
approved by Parliament have not been exceeded, and that the money has been spent on the
purposes for which it was intended. This evaluation task is carried out by the National Audit Office,
and the Select Committee established to monitor its work, the Public Accounts Committee. The
whole process takes more than two years.
This Factsheet will look at each of the stages of this process in turn starting with the Government
requests for expenditure, the estimates.
Estimates
Votes on account
Strictly speaking, the first stage of this process predates the presentation of the Main Estimates.
Prior to the beginning of the financial year, the Government has to obtain approval for any
expenditure it may incur over the first four months of the year between 6 April and sometime in
July when the Appropriation Act is passed. This Act is so called because it sets out in detail
how money for that year is to be appropriated between different departments and between
different ends within a department. Technically, this request for an interim spending power is
known as the Votes on Account. They are published in November at the same time as the winter
supplementary estimates (see below). Around 45% of the previous year’s total estimates are
covered by the Votes on Account. They must be agreed by 6 February.
Main Estimates
The Estimates set out the resource budgets for each government department. They are made up
of a number of “Requests for Resource” (RfR) and show the total gross expenditure and
appropriations-in-aid (income) for each RfR. Expenditure is authorised by the House of
Commons by voting the Estimates.
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Financial Procedure House of Commons Information Office Factsheet P6
The Main Estimates are now contained in four volumes. The first of these covers the main
central government departments and there are separate volumes for the House of Commons, the
National Audit Office and the Electoral Commission. There is a separate estimate for each
government department and each one contains the following key facts:
i.
the net provision sought (i.e. the amount of expenditure in resource terms and the net
cash requirement for the coming financial year);
ii.
a formal description of the services to be financed from the Estimate, known as its
Ambit. The Ambit clearly indicates the scope of the expenditure to be financed from
each RfR contained within the Estimate, including where appropriate associated noncash items.
iii.
the department which will account for the Estimate; and
iv.
any amounts, resources and cash, which have already been allocated to it in the Vote on
Account.
Part I of each estimate forms the basis of a Supply Resolution, which is usually voted on by the
House of Commons before the end of July. A Consolidated Fund (Appropriation) Bill is then
brought in and passed before Parliament rises for the summer recess (by 5 August).
This bill becomes the Appropriation Act. It authorises the Government to spend the funds set out
in its Main Estimates, and specifies the maximum amount of money that can be spent for each
Estimate. The legal authority to draw down extra funds is provided by Parliament passing a
Consolidated Fund Bill, which it does three times a year. In the summer the Act is simply
incorporated into the Appropriation Act. Since the business for financial years may overlap, a
single Consolidated Fund Bill could contain provision for the previous financial year, the current
financial year and the year to come.
Revised and Supplementary Estimates
The Appropriation Act also allows the Government to draw down from the Consolidated Fund (the
general ‘pot’ of tax receipts which funds all Government expenditure) any additional sums requested
in the summer Supplementary Estimates. This is the first of the three annual revisions to the Main
Estimates the Government may make. Revisions can also be made in the winter and spring (must
be passed by 18 March) and separate Consolidated Fund Bills are passed for these. Revised
Estimates affecting some expenditure may be presented to replace the original Estimate before the
Supply Resolution is voted on. These can either reduce the provision sought in the original estimate
or vary the way in which it is to be allocated.
Excess Votes
If expenditure on any RfR or the net cash requirement for an Estimate exceeds the provision
voted, and it is too late to seek a Supplementary Estimate, the excess will appear in Schedule 1
of the Department’s resource account and will be reported to the Public Accounts Committee by
the Comptroller and Auditor General. Subject to that report, the necessary provision is sought in
an Excess Vote. The Treasury presents a Statement of Excesses to Parliament, usually in
February of the following financial year at the same time as spring Supplementary Estimates.
Funds (resources, cash or both) are then voted by 18 March (i.e. over 11 months after the end
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Financial Procedure House of Commons Information Office Factsheet P6
of the financial year to which they relate). They are then appropriated in the following year’s
Appropriation Act in July.
Parliamentary consideration of estimates
Estimates Days
During the Parliamentary year the Commons sets aside three days, spread out through the
calendar, to consider the supply estimates. One of these days may be taken as two half days and
the two full days are often divided, so that two separate debates may take place. The choice of
subject lies with the Liaison Committee which recommends, in effect, particular Select
Committee Reports, which can be ‘pegged’ to an individual Estimate.
The motion which the House debates is worded simply that the sum specified in the Estimates
should be granted and is moved by a Minister, since financial initiative is a matter for the Crown.
A Member may table an amendment to such a motion seeking a reduction in the sum, but
cannot recommend an increase. A token reduction of £1,000 is often sought and is often “in
respect of” a particular RfR area within the Estimate. The question on the motion is put at the
moment of interruption1, even if the debate was a half-day one. All other outstanding Estimates
may be approved, in aggregate, without debate, at this time.
Two things are worthy of note at this point. First, the supply estimates are not the only financial
report to Parliament. Each year, every department produces an annual report, which deals with
the department's activities of the preceding twelve months and sets out its plans for the future.
Indeed, these provide the best source for ascertaining how a department is spending its budget.
These are usually examined by the relevant departmental select committee.
Second, the wording of the motion used when the House debates an individual Vote is very
restrictive. The motion is put down by the Financial Secretary to the Treasury and will set out
the total expenditure under the vote and the Department responsible. For instance, the first half
of the first estimates day of 2001-02 was on the World Athletic Championships. The motion
was on the 2002/03 Vote on Account for all expenditure by the Department for Culture, Media
and Sport:
That resources, not exceeding £1,489,011,000, be authorised, on account, for use
during the year ending on 31st March 2003, and that a sum, not exceeding
£1,488,290,000, be granted to Her Majesty out of the Consolidated Fund, on
account, for the year ending on 31st March 2003 for expenditure by the
Department for Culture, Media and Sport.
Some further information about the debate is also given on the order paper including the area of
the Estimate that is under discussion and any relevant documents. For the debate on the World
Athletic Championships the information was:
1
10pm on Monday, 7pm on Tuesday and Wednesday and 6pm on Thursday. Estimates Days do not take place on
Fridays.
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Financial Procedure House of Commons Information Office Factsheet P6
This Vote on Account is to be considered in so far as it relates to policy towards
the staging of the world athletics championships in the United Kingdom
(Resolution of 26th November).
Relevant documents:
First Report from the Culture, Media and Sport Committee, Session 2001-02, on
Unpicking the Lock: the World Athletics Championships in the UK, HC 264; and
The Department for Culture, Media and Sport: Annual Report 2001, Cm 5114.
After the two Estimates for discussion have been voted on, all other outstanding Estimates are
voted on formally, without debate. The Consolidation and Appropriation Bills are set down for a
second reading on a day soon after the relevant Estimates have been agreed. The process is
formal: there will be no debate on any of the stages, and each stage will go through ‘on the nod’.
Formal Consent from the House of Lords
After the passage of the Appropriation and Consolidated Fund Bills in the House of Commons,
the House of Lords must give their consent for the bills to receive royal assent. This stage is
purely formal; in financial matters the Lords’ have no parliamentary power to overturn the
Commons’ approval.
Evaluation of expenditure
After the end of the financial year, the National Audit Office (NAO) audits the Government’s
spending for that year. The NAO is an independent body, headed by the Comptroller and
Auditor General with direct responsibility to Parliament. Each Estimate which the Government
presented is examined, and an Appropriation Account is produced, to show exactly how this
money was spent, and if it was spent for those reasons it was appropriated for; i.e. by the
relevant Appropriation Acts. So for the financial year 2001-02, the main summer Estimates are
covered by the 2001 Appropriation Act and the winter and Spring Estimates are covered by the
2002 Act. As well as auditing Departmental accounts, the NAO will also select individual
subjects for closer scrutiny, including any requests for Excess Votes by the Government. These
accounts are examined by the Public Accounts Committee, a committee of Members of
Parliament who are charged to examine the accounts of both government departments and
Government-funded bodies, to ensure that these organisations provide an efficient, cost effective
service.
Changes to the Supply Procedure
This Factsheet has described the current system of parliamentary scrutiny of government
expenditure. The procedure has evolved over the years and this section gives a brief description
of some of the changes which have taken place.
19th Century
During the nineteenth century the examination of departmental estimates (the money granted is
known as Supply) took up a considerable proportion of House of Commons time. Each
departmental vote had to be moved separately; and amendments to reduce even small items of
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Financial Procedure House of Commons Information Office Factsheet P6
expenditure could be voted on. As with all House of Commons business, the Government's
majority was generally used to override most of these amendments. An opportunity, however,
was available to debate and question any particular estimate in which a Member or Members
were interested.
Increasingly, however, these debates came to be used not to scrutinise the Estimates but to
criticise Government policy. Also, the desire of the House to conclude its business in the
summer meant that earlier votes tended to be discussed at length and later ones rushed through.
Supply Guillotines
In 1896, a limit was set on the number of days available for such discussions, and an automatic
supply guillotine was inaugurated, whereby the questions on all outstanding votes were put on
the last day available. From 1947, similar guillotines also covered supplementary estimates,
which are prepared by departments which have under-estimated their main estimates and must
be presented to Parliament by the end of the financial year.
In general, governments knew they would get their supply business through under the guillotine,
and as a result they ceased to interest themselves in which Estimates were actually debated.
Effective control of what was discussed on these supply days therefore passed to the official
opposition, who tended to concentrate attention on wide issues of national policy and political
controversy. By the post-war period, these days had come to be regarded as opposition time.
By 1966 there was a considerable discrepancy between the theory of supply procedure, under
which individual estimates were put down for detailed consideration at regular intervals, and the
practice, under which supply days were used by the opposition to discuss topics of their choice.
Because of this, a select committee on procedure recommended major changes. The committee
took the view that the practice that had evolved represented the wishes of the House and that
the real nature of supply debates was the opportunity provided to the opposition to examine
government activities of their own choice.
The changes of 1966
The changes made as a result of the Committee's recommendations included altering the
definition of "business of supply" to include substantive motions and motions for the
adjournment, thus allowing more debate free from specific estimates. A third guillotine was
introduced to ensure a more frequent grant of money to the Government and a more even
distribution of the 29 (prior to 1966, the number had been 26) supply days throughout the
session. Questions on outstanding Votes under the guillotine were put en bloc, with no
opportunity for individual Members to move amendments and very restricted opportunities to
vote.
Voting, on the rare occasions on which divisions on the Estimates were forced, was carried out
without debate. The 29 supply days became, as stated above, days on which opposition
business was discussed. That business was not in general geared to the Estimates. Indeed the
right of the opposition to select and vote upon a motion of its own choice was further recognised
by the House on 31 October 1979.
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Financial Procedure House of Commons Information Office Factsheet P6
The changes of 1982
The Select Committee on Procedure (Supply) recommended several means by which effective
scrutiny of Estimates by the House could be re-established. Their Report (HC 118, 1980-81)
was debated on 19 July 1982. Among the changes agreed were:
 That there should be three full (i.e. not Friday) sittings devoted each year to Estimates
appointed by the Liaison Committee (see Factsheet P2), which in practice allows select
committee reports on estimates to be considered.. (All divisions on selected Estimates
and amendments thereto would take place at the moment of interruption). That there
should be a time limit on discussion of the Recess Adjournment Motion. This had over
recent years grown in importance to back-bench Members, who used it as a means of
raising points of concern on national, and commonly, local issues, under the pretext that
the House should not adjourn until time was found to debate the matter. Mr Biffen
(Leader of the House) agreed to accept an official Opposition amendment to the effect
that the limit should be 3 hours, and not the 90 minutes he had originally proposed.
 There should be 19 Opposition days. Mr Biffen also said that the Government intended
to make available an extra Private Members' Friday.
 That, although proceedings on Consolidated Fund Bills should be formal, a series of
adjournment debates should be permitted thereafter, to last up to 9 am the next day
 These adjournment debates continued until the 1995-96 session.2
The reforms came into force at the beginning of the 1982-83 session.
The effect of the changes was to give the House for the first time in recent years an opportunity
again regularly to discuss particular Estimates. The first day allocated to this was 14 March
1983, when supplementary estimates relating to HMSO and Overseas Development were
discussed. It was not, of course, open to Members to propose increases in expenditure on these
days: the constitutional theory being that the Crown (i.e. the Government) asks for Supply, and
the House considers whether to grant it at the level requested or some reduced level, not to offer
enhanced provision.
Recent changes
Proposals for making financial scrutiny a more significant part of select committee's work have
been made a number of times. The supply system was, for example, considered in the
Procedure Committee's Sixth report of 1998-99, Procedure for debate on the Government's
expenditure plans.3
The report discussed the involvement of the select committees in the supply process, particularly
the possibility of specifically referring the Estimates to select committees. Although they had
some sympathy with the argument that select committees already have the power to consider
the estimates, as many reports link both financial and policy matters, they felt that the matter
needed to be more explicit. They commented:
2
HC Deb 2 Nov 1995 c408 http://www.publications.parliament.uk/pa/cm199495/cmhansrd/1995-11-02/Debate2.html
3
HC 295 1998-99 http://www.publications.parliament.uk/pa/cm199899/cmselect/cmproced/295/29502.htm
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Financial Procedure House of Commons Information Office Factsheet P6
given that, almost without exception, committees do in fact undertake some
examination of their department's annual report, we do not believe that a formal
referral of Estimates to committees would present them with too great a burden.4
The Government response to the report rejected this recommendation, on the grounds that:
Since Select Committees have the freedom to set their own agenda, committees
already have power to examine and report on the Government's expenditure plans.
The Government welcomes committee scrutiny of these plans. However, formal
referral of Estimates and expenditure plans to Select Committees would reduce the
committees' ability to determine their own priorities, and the Government is not
persuaded that this would be desirable.5
In May 2002, following a debate on the first report of the Select Committee on Modernisation of
the House, Select Committees6, changes were introduced to the remit of select committees to
bring in common objectives for committees which included:
“to examine and report on main estimates, annual expenditure plans and annual
resource accounts”
At the same time it was agreed to set up a central scrutiny unit to provide more expertise to
select committees.
Resource Accounting
Changes to Parliament’s supply procedure were made following the passage of the Government
Resources and Accounts Act 2000 and the agreement of the parliamentary committees to the
move to resource-based Supply from April 2001. These largely reflected the change in the
format of the estimates. From 2001/02, Government for the first time asked Parliament to
approve the resources it consumes as well as the cash it spends; and detailed departmental
Resource Estimates were presented from 2001/02 as an integral part of department’s forward
plans set out in their departmental reports, alongside a new Main Estimates Summary Request
for Supply (SRfS) presented to Parliament by the Treasury. The SRfS is the Government’s formal
request to Parliament for Supply.
4
Ibid, para 45 http://www.publications.parliament.uk/pa/cm199899/cmselect/cmproced/295/29502.htm
Government Response to the Sixth Report of Session 1998-99: Procedure for Debate on the Government's Expenditure
Plans, HC 388, 1999-2000, http://www.publications.parliament.uk/pa/cm199900/cmselect/cmproced/388/38802.htm
6
HC Deb 14 May 2002 c648; HC 224, 2001-02
http://www.publications.parliament.uk/pa/cm200102/cmhansrd/vo020514/debtext/20514-06.htm#20514-06_head0
5
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