Crown’s financial veto
7.123 All members of Parliament are able to propose legislation or amendments to legislation that involve an increase or decrease in expenditure or taxation. They also have the power to move amendments to the composition of a Vote in the Estimates. The Standing Orders give the government the power to veto such initiatives if, in the government's view, the proposal would have more than a minor impact on the Crown's fiscal aggregates as specified in section 26J(1)(a) of the Public Finance Act 1989, or on the composition of a Vote. The relevant House procedures are set out in the section entitled "Crown's financial veto" in the chapter on financial procedures in the Standing Orders. A practical explanation of the House procedures is in the Legislation and House Procedure Handbook.
7.124 As the timelines for the government to decide whether or not to exercise the financial veto can be very tight, departments and Ministers' offices must:
- have processes in place for monitoring developments in the House and select committees affecting their Minister's portfolio or Vote, and for identifying initiatives that may have an impact on the government's fiscal aggregates or the composition of a Vote;
- alert their Minister and the Minister of Finance/Treasury as soon as possible to any such initiatives;
- provide prompt advice on the fiscal implications of such initiatives.
7.125 Detailed administrative arrangements within government to support the veto power are approved by Cabinet from time to time. Advice on these arrangements and on the responsibilities of Ministers, their offices, and departments is issued by Cabinet Office circular CO (07) 2 The Financial Veto and 24 Hour Rule.
