The economy, government spending and priorities

• Democracy originates from Greek, meaning 'government by the people,' with interpretations evolving throughout history.
• Core tenets of a democratic society include freedom of expression, opinion, and the press, the rule of law, equal opportunities, tolerance, and respect for human rights.

UK vs. USA Constitutions

• The US Constitution is seen as revolutionary, unlike the UK's, which evolved organically over 1,000 years.

UK Constitution: Historical Building Blocks

• Magna Carta.
• The Bill of Rights.
• The Act of Settlement.
• Acts of Union.

UK Constitution: Modern Building Blocks

• European Communities Act.
• Human Rights Act.

UK Constitution: Future Building Block

• European Union (Withdrawal) Act 2018.

2nd Amendment (USA)

• Agreed in 1791, it protects the right to keep and bear arms.
• Established when America lacked a police force and faced potential war with Britain.
• The Supreme Court has consistently upheld the right of Americans to keep and carry guns.

HM Treasury

• The government’s economic and finance ministry.
• It controls public spending, sets economic policy, and aims for sustainable growth.

UK Budget

• Prepared by the Chancellor of the Exchequer, who manages economic and financial matters.
• The Chancellor controls HM Treasury, revenue collection (HMRC), and public sector expenditure.
• The Budget is presented annually, usually in March, with a mini-budget in November.
• The red briefcase carried to the House of Commons during the budget speech is a tradition dating back to 1860 with William Gladstone.
• The Institute For Government calls the treasury the most powerful department in Whitehall."

Government Spending Reviews

• They occur every two to five years.
• Set departmental budgets for three to five years.
• They shape public service programs and investment.
• They impact the government’s goals, public services, and citizens' lives.

Previous Chancellor's of the Exchequer

• George Osborne. 2010 to 2016.
• Alistair Darling. 2007 to 2010.
• Gordon Brown. 1997 to 2007.
• Kenneth Clarke. 1993 to 1997.
• Norman Lamont. 1990 to 1993.
• John Major. 1989 to 1990.
• Nigel Lawson. 1983 to 1989.
• Sir Geoffrey Howe. 1979 to 1983.

Economy

• Refers to a country's production, consumption, and money supply.
• A strong economy creates jobs, wealth, and investments.
• A weak economy leads to unemployment, reduced tax revenue, failing businesses, and recession.
• Reduced living standards may also occur.

Government's role in managing the economy

• Governments work with the Bank of England to manage the economy.
• Encouraging consumer confidence and business activity sustains economic growth.
• The Bank of England can lower interest rates to encourage borrowing and spending.
• Governments can also cut business rates and income tax.
• Increasing lending to businesses.
• Encouraging investment in new technologies.
• Funding construction projects to increase employment.
• Cutting VAT rates.

Structure of the UK Economy: The Public Sector

• Local authorities/councils make decisions about local services via elected councillors.
• Councils manage children and families, social care, public health, libraries, planning, roads, and emergencies.
• They handle local planning, parks, waste management, food hygiene, and elections.
• Local authorities also improve quality of life through public amenities.
• The public sector consists of state-owned institutions and services provided by local authorities (e.g., NHS).
• Services are free at the point of access meant to serve a need.

Structure of the UK Economy: The Private Sector

• The private sector consists of privately owned enterprises.
• Its primary goal is to make a profit.
• Businesses increasingly run public services on behalf of the government for a profit.

Government Spending Priorities

• The government influences the UK economy.
• Differing views exist on how much the government should provide services and support.
• Some parties (Conservatives, UKIP, Liberal Democrats) favor individual responsibility.
• Others (Labour, Green Party, Scottish/Welsh Nationalists) support government-provided services based on need.

UK Government Departments

• Attorney General’s Office.
• Cabinet Office.
• Department for Business, Energy & Industrial Strategy.
• Department for Digital, Culture, Media and Sport.
• Department for Education.
• Department for Environment Food and Rural Affairs.
• Department for Exiting the European Union.
• Department for International Development.
• Department for International Trade.
• Department for Transport.
• Department for Work and Pensions.
• Department of Health and Social Care.
• Foreign and Commonwealth Office.
• HM Treasury.
• Home Office.
• Ministry of Defence.
• Ministry of Housing, Communities & Local Government.
• Ministry of Justice.
• Northern Ireland Office.
• Office of the Advocate General for Scotland.
• Office of the Leader of the House of Commons.
• Office of the Leader of the House of Lords.
• Office of the Secretary of State for Scotland.
• Office of the Secretary of State for Wales.
• UK Exports and Finance.

Managing the Economy - Looking to the Future

• Governments should plan 50 years ahead.
• Plans should consider advances in medicine and in technology.
• Plans should consider changes in climate.
• Plans should consider availability of natural and non-renewable resources.
• Plans should consider population changes (death, birth, migration rates).

Key Terms

• Austerity: Reduced wealth due to government measures cutting public services/expenditure.
• Standard of Living: Measure of wealth and material support for individuals/communities.
• The Budget: Annual financial statement by the Chancellor with government spending and revenue plans.
• HM Treasury: Government department responsible for public finance and economic policy.
• Chancellor of the Exchequer: Government member overseeing government finances.