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Consolidated Fund
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Consolidated Fund
In many states with political systems derived from the Westminster system, a consolidated fund or consolidated revenue fund is the main bank account of the government. General taxation is taxation paid into the consolidated fund (as opposed to hypothecated taxes earmarked for specific purposes), and general spending is paid out of the consolidated fund.
The British Consolidated Fund was so named as it consolidated together a number of existing accounts, detailed below, and facilitated 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, formerly known as The Account of His 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. 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 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 authorized 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. The Aggregate Fund was paid all the hereditary revenues of the English (and later British) Crown, such as profits from the Crown Estate and the Royal Mail. 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. 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.
The Consolidated Fund Services 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.
The government of Ireland established separate funds for its own purposes when it gained autonomy in 1922 and then independence in 1937. The modern equivalent to the Consolidated Fund is the Central Fund.
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Consolidated Fund
In many states with political systems derived from the Westminster system, a consolidated fund or consolidated revenue fund is the main bank account of the government. General taxation is taxation paid into the consolidated fund (as opposed to hypothecated taxes earmarked for specific purposes), and general spending is paid out of the consolidated fund.
The British Consolidated Fund was so named as it consolidated together a number of existing accounts, detailed below, and facilitated 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, formerly known as The Account of His 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. 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 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 authorized 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. The Aggregate Fund was paid all the hereditary revenues of the English (and later British) Crown, such as profits from the Crown Estate and the Royal Mail. 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. 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.
The Consolidated Fund Services 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.
The government of Ireland established separate funds for its own purposes when it gained autonomy in 1922 and then independence in 1937. The modern equivalent to the Consolidated Fund is the Central Fund.