History
In the past, the UK's Civil Government day-to-day costs were paid for by the sovereign under normal circumstances, the monies in this Public Purse being raised from the income of the Crown Estate lands and holdings. Under "extraordinary" circumstances, namely in time of war or during budget shortfalls, Parliament raised additional monies through taxation. The system was to a large degree self-funding through the Crown's large holdings, taxes being applied only when necessary, and almost always at the risk of public outcry. Taxes were normally very low, and the necessity to go to Parliament to fund wars was an effective check on the monarch's power.
As the role of the government increased in the 18th century, the Public Purse was increasingly unable to raise enough to fund the development of the country. In 1760 when George III came to the throne, it was decided that the whole cost of civil government should be provided by Parliament, with the crown surrendering most of the hereditary revenues (principally the net surplus of the Crown Estate) by the King for the duration of the reign. In this new system Parliament was responsible for the finances of the UK, including paying the Crown the Civil List allowance to meet the Sovereign's official expenses. In the fiscal year 2007/2008 the Crown Estate paid the Treasury £211.00 million in return for £7.9 million in Civil List payments to the Queen.
Read more about this topic: Privy Purse
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