Establishment
The idea of a single government bank account was first established in 1787 by Prime Minister William Pitt the Younger as part of his reform of government finances influenced by the ideas of Adam Smith. Prior to this, funds had accrued through the Exchequer of Receipt into three main funds: the Aggregate Fund, the General Fund, and the South Sea Fund. The Consolidated Fund was so named as it consolidated these existing accounts together, and ensured proper parliamentary oversight of the spending of the executive – it was defined as "one fund into which shall flow every stream of public revenue and from which shall come the supply of every service".
The Treasury established this account, formally known as The Account of Her Majesty's Exchequer, at the Bank of England where it remains to this day, and the legal term 'Consolidated Fund' refers to the amount of credit held in this particular account. Under the Exchequer and Audit Departments Act 1866 most of the revenue from taxation, and all other money payable to the Exchequer must be paid into the Consolidated Fund.
Read more about this topic: Consolidated Fund