Limitations on Government Debt and Deficits in the United Kingdom

Control of taxation and of public expenditure is in principle a central function of the UK Parliament. However, the practical powers of Parliament are limited, especially in relation to borrowing and the planning of public expenditure. In the case of borrowing, there is some degree of scrutiny through the EU processes, and the creation of the Office for Budget Responsibility has greatly increased transparency. As regards expenditure, internal controls administered by the UK Treasury, in particular now through the process of the Spending Review, are in practice much more important than advance Parliamentary scrutiny. A striking characteristic of the UK is the near-total absence of substantive legal constraints on the ability of central government to run deficits or increase debt. These currently take the form of provisions in the Charter for Budget Responsibility, but are not legally enforceable and remain largely symbolic. Although the UK has privatised almost all its public enterprises it also has a variety of forms of extended government. Classification as public or private is complex and is the responsibility of the Office for National Statistics; it may have a substantial effect on the size of public debt. The financial autonomy of local government is severely limited. Scotland, after voting to remain part of the UK in September 2014, is being given substantial further taxation and borrowing powers, and further powers are being given to Wales.