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How does the Government get its money?
I can explain what the Budget is and how the Government funds the country.
Lesson 2 of 6
New
New
- Year 10
How does the Government get its money?
I can explain what the Budget is and how the Government funds the country.
Lesson details
Key learning points
- The Budget is a financial framework that annually shows how the Government generates and allocates money.
- The Government funds the country through six primary revenue streams including taxation, borrowing, natural resources.
- Taxation is the main source of government revenue, with income tax, VAT and corporate levies funding public services.
- The Government incurs debt by issuing bonds, creating national liabilities that must be repaid with interest.
- Natural resources, such as oil from the North Sea, and public assets like land are sold or taxed to generate revenue.
Keywords
Budget - the Government's yearly financial plan, showing how much money it will collect and spend on public services like healthcare, education and transport
Funds - provides money for something, for example, the Government raises and allocates money
Common misconception
The Budget just shows how money is allocated across the country.
The Budget maps all income and expenditure so it shows us what money goes where and how money is generated, not just allocated.
You could look at an example of a company's budget so pupils could see a comparison between this budget and the Government Budget. Alternatively, you could access the Chancellor's Budget speech online and show part of it to pupils.
Teacher tip
Equipment
Content guidance
- Depiction or discussion of sensitive content
Supervision
Adult supervision recommended
Licence
This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).
Lesson video
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Prior knowledge starter quiz
6 Questions
Q1.Match the terms to their correct definitions.
Match the terms to their correct definitions.
Q2.Which of the following is a sign of a healthy economy?
Which of the following is a sign of a healthy economy?
sharp increases in taxes
falling consumer spending
rising government debt
Q3.Fill in the blank: The UK Government takes advice on economic policy from the .
Fill in the blank: The UK Government takes advice on economic policy from the .
Q4.Why might bus services be cut during a recession?
Why might bus services be cut during a recession?
The Government wants to discourage public transport use.
Bus companies make more money by reducing routes.
There are fewer people using buses during a recession.
Q5.Fill in the blank: One important measure of a country's economic health is its , which represents the total value of goods and services produced.
Fill in the blank: One important measure of a country's economic health is its , which represents the total value of goods and services produced.
Q6.Why does the Government aim to keep inflation low but positive?
Why does the Government aim to keep inflation low but positive?
It ensures people never have to pay more for goods and services.
It allows wages to stay the same over time.
It keeps the cost of borrowing money high.
Assessment exit quiz
6 Questions
Q1.What does the Budget show?
What does the Budget show?
the financial plans of private companies
the salaries of all government employees
the value of properties owned by the monarch
only how money is allocated across the country
Q2.Which of the following is not a primary way in which the Government raises money?
Which of the following is not a primary way in which the Government raises money?
borrowing
selling natural resources
fines and fees
Q3.Which of these industries has been fully privatised in order to raise money for the UK Government?
Which of these industries has been fully privatised in order to raise money for the UK Government?
the police
the NHS
the fire service
Q4.Why is taxation important for government funding?
Why is taxation important for government funding?
It allows the Government to avoid borrowing.
It only affects wealthy individuals.
It ensures businesses make profits.
Q5.Fill in the blank: The Government borrows money by issuing , which create national debt that must be repaid with interest.
Fill in the blank: The Government borrows money by issuing , which create national debt that must be repaid with interest.
Q6.Match the terms to their correct definitions.
Match the terms to their correct definitions.
