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The Financial Veto

Under Standing Orders[47], Members of the House can initiate proposals that affect revenue or expenditure. The Government can exercise a 'financial veto' over such proposals if it considers they would have more than a minor impact on the fiscal aggregates[48] or the composition of a Vote.

The spending proposal might be contained in:

  • a new Bill
  • an amendment to an existing Bill
  • a motion that, if passed, would have the force of law[49]
  • a proposed change to a Vote in the Estimates.

A financial veto is exercised by presenting a Financial Veto Certificate in the House, signed by the Minister of Finance or the Minister in charge of a Bill. A veto certificate in respect of a Billmay be given only when the Bill is awaiting its third reading. If any member proposes an amendment that may have fiscal implications, the Clerk must be provided with the amendment at least 24 hours before the House meets on the day on which the amendment is to be proposed or the amendment may be ruled out of order. This rule does not apply when the House is considering a Bill in the Committee of the Whole House immediately after its second reading (usually when Urgency has been taken).

Procedures for considering and issuing a financial veto are laid out in CO (07) 2. Departments and Ministers' offices monitor developments in Parliament that may impact on the fiscal aggregates, advise their Minister and the Treasury of proposals that may have fiscal implications, and provide their Ministers with prompt advice on those implications. The Treasury will normally coordinate advice on fiscal implications and draft the certificate.

In the case of a Bill, amendment to a Bill or a motion, the certificate lays out the impact of the proposal on the fiscal aggregates and why the Government does not concur with the proposal, and it may state the cumulative impact of all such proposals during the year.

Impact on the Crown's financial position may result from the particular proposal or from the cumulative effect of a series of proposals. It is up to the Government to determine what it considers to be 'more than a minor impact' and to defend its view when a veto is debated in the House.

In the case of a proposed change to a Vote in the Estimates, a financial veto certificate can be presented where the proposal is considered to have more than a minor impact on the composition of the Vote. The certificate must state the impact of the proposal on the composition of the Vote and why the Government does not concur with the change.

The financial veto certificate must be presented to the House before the proposal is voted on.

Once a financial veto has been exercised and the certificate issued, the veto cannot be overturned by the House. The proposal that is the subject of the veto cannot proceed to a vote in the House. However, the reasons for exercising the veto may be debated when next the House is debating the Bill, amendment, motion or Vote for which the veto was exercised.

The financial veto procedure applies to both initiatives:

  • affecting expenses or revenue
  • that may affect the Government's balance sheet by affecting the value of an asset or liability, for example, the value of the Crown's investment in an SOE.

Notes

  • [47]Rules that lay out how Parliament conducts its business.
  • [48]Namely the total operating expenses, total operating revenues, balance between total operating expenses and total operating revenues, total level of debt, and the total level of net worth.
  • [49]In particular, some motions under the Regulations (Disallowance) Act 1989.
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