Consolidated Fund

A consolidated fund or the consolidated revenue fund is a term used in many countries with political systems derived from the Westminster system to describe the main bank account of the government.

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 Her 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 authorised 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 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.

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