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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...