After World War II, the British fiscal system was further developed due to the strengthening of the tendency of state monopolies. This was first reflected in the establishment of a new link, namely the State Enterprise and Sector Treasury (known in the UK as "corporate" treasury) and the development of extrabudgetary earmarked funds.
There have also been changes within the traditional links of the national and local budgetary and fiscal systems that have enabled the State to intervene actively in the economy.
The UK fiscal system includes: the central government budget or the national budget; Specialized (extrabudgetary) funds; Local government budgets; Finance of various state corporations.
Britain is a country with a highly developed state monopoly economy. This is evidenced by the existence of powerful monopoly conglomerates (such as Shell Transport and Machinery, Royal Chemical Industries, BP, Hoxsidelli Associates, British Electricity and Unilever, etc.) and their close links with State institutions, as well as the redistribution of a large share of national income through the fiscal system for the benefit of large monopoly capital.
The proportion of state investment in financial intervention in reproduction processes and in scientific research and experimental design has increased.
The sector of the state-run economy has expanded. The trend of state monopoly in the British financial system is reflected in the fact that the part of national income through fiscal redistribution has increased, that is, national income has become more nationalized; Finance is increasingly becoming the main tool for the state to influence the reproduction process and to implement social adjustment policies; The process of centralization of funds held by countries representing the interests of big capitalists has been accelerated.
Local authorities, the fiscal policies of State-owned companies and extrabudgetary funds are increasingly subordinate to the central authorities. As a result, the role of financial supervision of a class nature has become increasingly important.
The financial system has been reorganized along with the gradual evolution of the "common market."
This development inevitably led to the intensification of antagonistic contradictions between labor and capital in the British Empire, first and foremost, because the state adopted the means of intensifying the financial exploitation of working people to mobilize more funds. The tension between the central and local governments for more revenue and the contradiction between Britain and the "common market" on many fiscal issues have intensified.
The national budget, in Britain, as in any other industrially developed country, is the main link in the national financial system. It plays a major role in ensuring the conditions for political and economic reproduction of capitalist relations of production. About 40 per cent of the country's national income is redistributed through the state budget. As the main tool of the state monopoly to regulate and stimulate the economy, the state budget exerts influence on all aspects of the country's economic and social life.
Relying on funds from the State budget for the militarization of the economy and basic investment in new sectors requiring huge expenditures (such as the atomic industry, the electronics industry, etc.), the allocation of funds among the various sectors of the State economy and economic regions, the allocation of funds for scientific research, subsidies for private industry and agriculture, and loans to nationalized sectors, etc. Through the national budget, "assistance" was also provided to the former British colonies to maintain the sphere of influence of the British Empire in these areas.
Earmarked funds are also an important link in the financial system. Total: National Insurance Fund, Local Public Bond Fund, Postal Savings Fund, etc. The National Insurance Fund, which is actually part of the central government, plays a major role. This fund is mainly composed of contributions from working people themselves.
Local budgets are not included in the national budget. From the point of view of the national treasury, those minor and ineffective local taxes are reserved for the local budget. At the same time, a large part of the costs of developing social and economic public facilities - school expenses, vocational education expenses, housing construction, water supply and drainage works, passenger terminals, road construction, bridge construction, etc. - are passed on to the local budget.
The output value of the state-owned industrial sector accounts for 20% of the country's total industrial output, which is a characteristic of British state monopoly capitalism. Many sectors of industry in Britain, rail transport and the nationalisation of British banks gave a strong boost to state-owned enterprises. 1
In 967, fourteen large steel companies were transferred to the state, establishing the British Steel Corporation. By 1969, a number of companies had switched to the State-managed post and telecommunications business, which had previously been in government ministries. In 1975, in response to the worsening energy crisis, the government established the British National Petroleum Development Company to extract oil in the North Sea. In 1975, a decree on the nationalization of the shipbuilding and aviation industries was issued. There are seventeen state-owned companies in the UK. Massive state investment re-equipped the technology of these companies, and the finances of these state-owned companies correspondingly became a new link in the British fiscal system.
Although each link of the financial system has different characteristics, its socio-economic content is the same, that is, it is a tool to exploit working people and serve big monopoly capital. Many of the budget links are formally independent, but depend on the national budget, from which grants, pensions and loans are allocated.
The balance of income and expenditure of each link of the fiscal system and its change in its share of GDP reflect the development trend of the British fiscal system and its role in the economy. From the above data, it can be seen that the growth rate of expenditure in the fiscal system exceeds the growth rate of gross national product. In the 20 years from 1955 to 1974, the gross national product increased by 3.43 times, while the total expenditure of all links of the financial system increased to 5.9 times, that is, more and more of the gross national product was redistributed through the financial link. The share of expenditure in GDP in the fiscal system increased from 41.6 per cent to 56.2 per cent. In absolute terms, the state budget takes first place.
At the end of 1974, 35 per cent of gross national product was redistributed through the State budget. The rate at which spending is growing elsewhere in the fiscal system is different.
Spending on local budgets has grown at a much higher rate in these years – sevenfold. And the state budget expenditure has grown more than four times faster. This is due to the transfer of expenditures for social purposes, especially for education (not counting higher education), to local budgets.
Local budget spending has grown so rapidly without a commensurate expansion of the own revenue base. More than half of this expenditure is offset by grants and loans from the central budget, owing to the Government's intention to include funds in the national budget to the maximum extent possible.
The government's fiscal policy is first and foremost aimed at speeding up the process of centralizing central finance and increasing state budget revenue. Revenue revenues mobilized to the central budget from 1955-1956 to 1976-1977 (the British financial year from 1 April to 31 March of the following year) increased from £4.6 billion to £31.9 billion at current prices, or nearly sevenfold, thus increasing revenues from the State budget.
As a result, the share of state budget revenues in the total revenue of the fiscal system has also increased. It also illustrates the acceleration of the process of centralization in the fiscal sphere. The Government considers the funds of the National Insurance Fund as an account of its own income. At the same time, together with contributions to national insurance, the share of State budget revenue in GNP increased from 33.5 per cent in 1955 to 43 per cent in 1974. The amount of income over expenditure of these funds also disturbed the treasury's short-term bonds and converted them into medium- and long-term national securities.
The government also has a great influence on the finances of state-owned companies. In addition to setting prices for its products, it determines the amount, direction and source of allocations for capital investment and addresses a number of major problems in the development of the State sector.
The continuous expansion of financial supervision and its scope has to a large extent promoted the subordination of all links of the financial system to the central power. In practice, the capital construction carried out by local administrations and state-owned enterprises is under the strict supervision of the central government organs. All this shows that although all parts of the financial system have formal autonomy, in fact, the process of revenue and expenditure growth is a process of fiscal centralization, and most of the funds are concentrated in the state budget. The State budget has an impact on the financial system and the economic life of the country, both on a macro and micro scale.
The increasing role of the national budget called for a study of the structure of the British state budget in the post-war period and the reasons for its changes. The UK national budget consists of two parts. As of 1966, it was divided into regular budget (or "online budget") and off-the-books budget (or "offline budget").
Some new expenditures, particularly those relating to decolonization ("aid" to developing countries) policies, were charged to the off-the-books budget. Governments seek to create the illusion of balanced budgets and no deficits, since "online" budgets are usually aggregated in terms of revenue exceeding expenditure. If the deficits of the hyper-balanced projects are added together, the budget is a permanent deficit.
In 1966, the "offline budget" was renamed the "Public Debt Consolidation Fund". There were also some changes in the structure of the State budget in 1968. The Public Debt Consolidation Fund was changed to the "National Bond Fund". The essence of these changes is that only credit operations, that is, long-term credit for capital investment, mainly provided to state-owned enterprises and local governments, have begun in the expenditure part of the "National Debt Fund", and under the "Public Debt Consolidation Fund", subsidies are provided in addition to credit operations.
Since the establishment of the National Debt Fund, all grants, i.e. grants provided on a non-reimbursable basis, have begun to be collated only to the regular budget, and much of the expenditure of the former "Consolidation Fund" ("aid" to developing countries) has been transferred to the regular budget. It should be noted that the concentration of credit funds in earmarked projects of the State budget and on credit conditions makes it more legitimate for debtors to use budget funds, since they must repay the debt and interest within the specified period of time for the loan.
The revenue of the National Bond Fund consists in part of interest on long-term loans to state-owned corporations and local governments, the profits of the British Banks Issuing Authority and the funds provided by the regular budget when revenues exceed expenditures.
The basic income of the regular budget is made up of taxes, which account for about 96% of revenue. The expenditure of the budget is divided into the current expenditure (93% of the expenditure in 1966-67) which is subject to the approval of the House of Commons each year, and the expenditure of a so-called permanent expenditure without the approval of the House of Commons (7% of the expenditure of the regular budget), which includes: military expenditures, management agency expenses, expenditure regulating the economy, expenditure for social purposes, subsidies to local authorities and state companies, and "aid" to developing countries.
A separate unified fund for permanent expenditure is a feature of the UK national budget. Most of the expenditure in this fund is used to service the national debt. However, the fund here plays the role of a transmission procedure, since from 1968 the payment of public bonds was transferred to and paid by the National Bond Fund. The original expenditure of this consolidation of public debt was contributions to the European Economic Community, royal expenses, salaries of the Chief Inspector and Deputy Prosecutors, payments to Northern Ireland and other items.
Over the past two decades, while the absolute figure for denominated public debt has tripled, its share of regular budget expenditure has shrunk from 15% in 1956-1966 to 7% in 1966/1967. The decline in the share of public debt expenditure reflects a sharp increase in government expenditure, mainly due to the increase in military spending and the need for State intervention in economic life.
If the deficit in the regular budget is covered by loans from the National Debt Fund, the amount of this deficit is increased in the government's national debt.
The total revenue from the State budget consists of revenues from the regular budget less contributions to the National Bond Fund in the amount of double counting (£1.77 million). Similarly, expenditure consists of the regular budget expenditure component and disbursements net of double-counting amounts (£1.77 billion in government debt payments).
Thus, the 1976-77 Budget was set at £33,627 million in consolidated revenue and £47,077 million in expenditure. The composite composition of the budget, with expenditures shifting from one part to another, can obscure a considerable portion of expenditure and obscure the true amount.
Permanent deficits characterized the British national budget in the post-war period, and the cumulative deficit grew to £20.9 billion from 1971/1972 to 1975/1976 alone, and grew year after year. The deficit in 1971/1972 was £566 million; £5.8 billion in 1974/1975; £8.8 billion in 1975/1976; The budget deficit in the draft budget for 1976/1977 was £10.8 billion. This testifies to the increasing strain on the national budget and the deepening of domestic inflation.