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      How does the Government spend its money?

      Lesson details

      Learning outcome

      I can explain what the Government spends money on and how it makes spending decisions.

      Key learning points

      1. The Government allocates funding to essential public services, including health, education, defence and infrastructure.
      2. Financial decisions are determined by the Treasury and debated in Parliament to uphold democratic accountability.
      3. Spending priorities are influenced by societal needs, economic conditions and long-term fiscal strategies.
      4. Ongoing debates consider whether increased investment should be directed more to sectors such as the NHS or housing.
      5. Government spending seeks to balance economic growth, public welfare and fiscal responsibility.

      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

      • Treasury - the Government department responsible for managing the country's finances

      Common misconception

      The only person in charge of finances in the UK is the Chancellor of the Exchequer.

      There is a whole structure of people in charge of the UK economy within the Treasury, including the Prime Minister who is the First Lord of the Treasury.

      Teacher tip

      There may be some current debates happening in the news about the economy which you could include in the lesson to allow pupils the chance to critically evaluate different sources of material when debating financial affairs.

      Content guidance

      Depiction or discussion of discriminatory behaviour

      Depiction or discussion of sensitive content

      Depiction or discussion of violence or suffering

      Depiction or discussion of sensitive content

      Supervision

      Adult supervision required

      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.
      People pay to qualify for benefits and the state pension.

      Correct Answer: National Insurance, National Insurance (NI), NI

      Q2.
      Which of the following is not primarily funded by taxation?

      the NHS
      state schools
      the police
      Correct answer: car insurance

      Q3.
      Which government department does the Chancellor of the Exchequer oversee?

      Department for Health and Social Care
      Correct answer: HM Treasury
      Department for Work and Pensions
      Foreign, Commonwealth and Development Office

      Q4.
      is a progressive tax, meaning the more money you earn, the higher percentage of tax you pay.

      Correct Answer: Income Tax, Income

      Q5.
      Which of the following taxes would be a flat tax?

      Income Tax
      Council Tax
      Correct answer: Value Added Tax (VAT)
      Corporation Tax

      Q6.
      Match the income tax bands to the relevant tax rates.

      Correct Answer:Personal Allowance,0%

      0%

      Correct Answer:basic rate,20%

      20%

      Correct Answer:higher rate,40%

      40%

      Correct Answer:additional rate,45%

      45%

      6 Questions

      Q1.
      Match the words to their correct definitions.

      Correct Answer:Budget,the Government's yearly financial plan for income and spending

      the Government's yearly financial plan for income and spending

      Correct Answer:Treasury,the Government department managing national finances

      the Government department managing national finances

      Correct Answer:infrastructure,public facilities such as roads, bridges and transport networks

      public facilities such as roads, bridges and transport networks

      Correct Answer:fiscal policy,government decisions on taxation and spending to affect the economy

      government decisions on taxation and spending to affect the economy

      Q2.
      Who is responsible for debating and approving government spending plans?

      the Bank of England
      the European Union
      local councils
      Correct answer: Parliament

      Q3.
      Government spending priorities are influenced by conditions, societal needs and long-term financial planning strategies.

      Correct Answer: economic

      Q4.
      Who is responsible for making decisions about the UK’s financial plans?

      the Chancellor of the Exchequer
      board members of the Bank of England
      the Mayor of London
      Correct answer: the Prime Minister, the Chancellor of the Exchequer and the Treasury

      Q5.
      On which of these areas is the largest amount of UK Government funding spent?

      Correct answer: social protection
      transport
      education
      defence

      Q6.
      Why were some people unhappy about the furlough scheme introduced during the Covid-19 pandemic lockdowns?

      It only helped business owners, not workers.
      Correct answer: It increased government borrowing and future debt.
      It caused immediate tax increases for everyone.
      It only supported healthcare workers.

      To help you plan your 10 citizenship lesson on: How does the Government spend its money?, download all teaching resources for free and adapt to suit your pupils' needs...