HM Treasury

HM Treasury
Headquarters	London
Web site	www.hm-treasury.gov

HM Treasury is the United Kingdom's economics and finance ministry. It is responsible for formulating and implementing the UK government's financial and economic policy.

History

Amazingly, the history of the HM Treasury can be traced all the way back to around the Norman Conquest. According to the HM Treasury, the first “Treasurer” was probably “Henry the Treasurer”, who owned land around Winchester, where most of the royal treasure was kept under both the Anglo-Saxons and the Normans.

In 1833, the Treasury became a ministerial department under the Chancellor of the Exchequer. The position of the Treasury was consolidated by reforms that introduced open competition for posts in the civil service and appointment on merit, coupled with internal reforms to cut paperwork which improved morale and efficiency. At the same time, the Exchequer and Audit Act of 1866 improved the control and audit of public money by establishing a new Audit Department, headed by the Comptroller and Auditor General which continues to audit public expenditure today.

During the 1914-18 war, the Treasury developed new expertise in foreign exchange, currency, credit and price control skills which it put to use in the management of the post-war economy. On the downside, the demands of the military and failure to increase taxes sufficiently to meet the bulk of wartime expenditure meant the Treasury effectively lost control of spending by departments.

For a short period after 1964, some of the responsibility for economic planning and growth was transferred to the new Department for Economic Affairs. The Department was, however, wound up in 1969 and the responsibility for all economic planning reverted to the Treasury. Soon after, in 1970, responsibility for staffing and pay matters was transferred from the Treasury to a new Civil Service department, meaning the Treasury could concentrate on the core business of finance and economics.

Membership of the European Community from the 1970s led to further developments in the Treasury’s role, managing not only the UK’s contributions to the EU budget but in pressing for improvements to the management of European finances generally.

A final significant development in the twentieth century was the transfer of monetary policy to the Bank of England in 1997, while the Treasury retained control of fiscal policy.

The year 2001 marked a major reform in government finances managed by the Treasury. Traditional cash accounting for income and expenditure was replaced by “resource accounting and budgeting” which introduced commercial-style budgets and accounts in government. These effectively replaced procedures which had been in place, with some modifications, since the Exchequer and Audit Act of 1866.