# HM Treasury

His Majesty's Treasury (HM Treasury), occasionally referred to as the Exchequer, or more informally the Treasury, is a ministerial department of the Government of the United Kingdom. It is responsible for developing and executing the government's public finance policy and economic policy. The Treasury maintains the Online System for Central Accounting and Reporting, the replacement for the Combined Online Information System, which itemises departmental spending under thousands of category headings, and from which the Whole of Government Accounts annual financial statements are produced.

## History

The origins of the Treasury of England have been traced by some to an individual known as Henry the Treasurer, a servant to King William the Conqueror. This claim is based on an entry in the Domesday Book showing the individual Henry "the treasurer" as a landowner in Winchester, where the royal treasure was stored.
The UK Treasury traces its origins to the Treasury of the Kingdom of England, founded by 1126, in the reign of King Henry I. The Treasury emerged from the Royal Household. It was where the king kept his treasures, such as in The King's Chamber. The head of the Treasury was called the Lord Treasurer. Starting in Tudor times, the Lord Treasurer became one of the chief officers of state, and competed with the Lord Chancellor for the principal place. Thomas Cromwell transformed the financial administration of the country, restoring authority to the Exchequer and making the King's Chamber, of central importance under Henry VII, back into a small spending department overseeing the Royal Household. The fact that Cromwell had a key post in the old Chamber system as well as being Chancellor of the Exchequer shows how he did this. For the majority of the medieval period the office of the Treasury was within the Exchequer (responsible for managing the royal revenue in addition to collecting and issuing money). As is often the case, wars are expensive and in 1433 war with France led to a deficit of £30,000 – the equivalent of over £100 billion today. Money that the Treasury received was recorded by using tallies. These were sticks with notches marked on them according to the amount of money involved. The stick was cut in two and one half given to the Sheriff as receipt for the money. They were in use until 1834 when a fire destroyed the Palace of Westminster. By 1584, the deficit had been turned into a surplus equivalent to one year's revenue. Monarchs tended to bypass the Exchequer because of its ineffectiveness until it was reformed by Lord Treasurer Winchester and his successor, Lord Burghley, under Elizabeth I.
In contrast, the Stuarts failed to enforce limits on inflation, war, corruption and extravagant tendencies and were forced into debt again. In 1667, King Charles II was responsible for appointing George Downing, the builder of Downing Street, to radically reform the Treasury and the collection of taxes. The Treasury was first put in commission (placed under the control of several people instead of only one) in May or June 1660. The first commissioners were the Duke of Albemarle, Lord Ashley, (Sir) W. Coventry, (Sir) J. Duncomb, and (Sir) T. Clifford. From the middle of the 17th century the need for a national bank became pressing. England and, in particular, London was greatly changing due to fast expansion of The Empire's trade, not least N.America, but also entrepot trade that grew to over one third of trade and with Continental Europe, however, what was needed was a "fund of money," or a term familiar today, but by which is really meant either precious metals or 'hard' currency such as US dollars mainly that grew in importance after WW1 to pay external trade bills i.e. questions of financial liquidity or circulation needed to maintain and grow the nation's national income and trade, but above all to honour the nation's foreign obligations. Failures to do so can lead to casus belli.
The early 1700s saw the meteoric rise of the banking and financial markets, with the emerging stock market revolving around government funds. The ability to raise money by means of creating debt through the issue of bills and bonds heralded the beginning of the National Debt. Improved controls over public spending ensured that creditors were more willing to lend money to the government. By the 1730s an early version of the public spending survey and the annual Budget had been established. In its evolution the Treasury had to learn some valuable lessons. In 1711, the Treasury established a scheme whereby it secured government debt by the authorisation of its subscription into the capital of the South Sea Company, with government creditors in return holding stock in the company. After 1714, the Treasury was always in commission. The commissioners were referred to as the Lords of the Treasury and were given a number based on their seniority. In 1720 the South Sea bubble burst and thousands of investors were affected; such was the outrage that the Chancellor of the Exchequer was sent to the Tower of London. Eventually the First Lord of the Treasury came, however, to be seen as the natural head of government, and from Robert Walpole on, the holder of the office became known, unofficially, as the Prime Minister. Until 1827, the First Lord of the Treasury, when a commoner, also held the office of Chancellor of the Exchequer, while if the First Lord was a peer, the Second Lord usually served as Chancellor. Since 1827, however, the Chancellor of the Exchequer has always been Second Lord of the Treasury.
If important lessons were learnt that the National Debt (and public finances) require prudent management, when the Exchequer was abolished in 1833, HM Treasury became the ministerial department under the Chancellor of the Exchequer. When the Treasury was under commission, junior Lords were each paid £1,600 a year. It is insensible to consider the Treasury's history without the Bank of England, set up in the 17th century. The argument for England's bank grew after the "Glorious Revolution" of 1688 when William of Orange and Queen Mary ascended to England's throne. London-based Scottish entrepreneur, William Paterson proposed a "Bank of England" with a "fund for perpetual Interest" (not yet bonds or bills) that was passed by Parliament, supported by Charles Montagu, Chancellor of the Exchequer and Michael Godfrey, another leading City merchant. The public were invited to invest subscriptions totalling £1.2 million forming the initial capital stock onward loaned to the Government in return for a Royal Charter. At the same time the National Debt was born, paper money came into existence.
From the start, complementing the Treasury's policy-setting and oversight role, the Bank became the Government's banker; managing the Government's Treasury bank accounts, providing and arranging loans, maintaining cash-flow as required. It is also a commercial bank, dealing in bills and bonds (its own are called Gilts) sold to fund government borrowing, sometimes The Great Trading Franchises such as East India or Royal Africa and South Sea Companies. Involvement was indirect as well as direct, personal as well as institutional, in slavery and other heinous trades. The Bank's main roles were, however, more equivalent to that of overdraft finance or factoring, with responsibilities for external account or trade finance. Like all banks, assets and liabilities must always balance. The Bank and took the Government's Treasury deposits, including specie and precious metals, and issued notes. With paper money and debt securities and credit notes, it became widely better understood, especially internationally, that money had taken on many new forms or denominations, possess no intrinsic market value like Gold and yet still retain qualities of creditworthiness or trust to fulfil money payment obligations. But money in its various forms also meant money that can only be used in certain contexts or place and or types of business, requiring the existence of an international network of mutually-trusting Governments' Departments of Finance, Treasuries and or Central Banks that in turn accredit and guarantee commercial banks.
During the 18th and early 19th centuries great demands were placed on Treasury and the Bank for funding-gap finance; the National Debt grew from £12 million in 1700 to £850 million by 1815, the year of Napoleon's defeat at Waterloo. However, in creating credit-issuing notes not fully backed by cash (gold) in hand, but were partly supported by credit given to the Government or by commerce – rendered itself liable to its depositors wanting all their money returned at once. The Bank therefore, needed to retain a prudent reserve of gold to ensure liabilities could be met on demand. This can be seen as the beginning of a policy of monetary stability. The 1844 bank Charter Act, After the French Wars, sterling's exchange rate was high so that the trade balance with Continental Europe was a long series of deficits, for which in addition to the offsets of the Empire's entrepot trade, Gold was needed, such as from Canada, Australia, USA, and South Africa, culminating too in the Boer War. Prudence and discretion alone almost always proved insufficient. The Treasury and The Bank faced many crises regarding gold reserve needed for domestic, British Empire, and foreign trade and policy purposes, not all good, practical or merely pragmatic, some undoubtedly nefarious?
Considered by some as the first move towards nationalisation, the 1844 Bank Charter Act was also the key move towards the monopoly of banknote issue. The crucial clause of the Act was a monetary one; it provided that, beyond the Bank's capital of £14 million, its notes were to be backed by gold or bullion. This, together with a fixed price for standard gold, laid the foundation for the gold standard, which during the 19th century, spread world-wide and created a long period of price stability. Money flow is based on confidence and is therefore vulnerable to panic shocks. A rescue operation, later termed the BoE's Lifeboat, in the form of syndicated guarantees by leading banks to fund for banks in crisis was established by the Governor of the Bank of England with over £17 million promised. The Bank therefore had to fully accept responsibility for the stability of the banking system as a whole. This is now generally accepted duty by all central banks, each of whom issue annual Solvency and Financial Condition Reports of their national banking sectors.
The threat of World War One pushed Government finance and the banking system into a short and medium term, then a longer run ongoing embarrassment of unprecedented high national debt (measured as a ratio to national income) overseen by both The Treasury and The Bank together. This crisis arguably pre-dates major world wars, and began by when half of world trade by value was financed by British banks and when as a consequence the circulation of international payments became less liquid i.e. dried up. In response to this crisis, John Maynard Keynes (renowned economist), persuaded Chancellor Lloyd George to use the Bank of England's gold reserves to support banks. This ended the immediate crisis. Keynes stayed on as adviser to the Treasury until 1919. The war of 1914–18 saw National Debt rise from £650 million to £7,500 million by 1919.
The Treasury developed new expertise in foreign exchange, currency, credit and price control skills in the management of the post-war economy. The long slump of the 1930s Great Recession necessitated the restructuring of the economy, first by Command Economy necessitated by World War, then following World War II when the National Debt stood at £21 billions by 1945, or 219% ratio to GDP, emphasis on peacetime planning to avoid the slump after WWI when agricultural market prices collapsed. With better international financial relations following 1944 Bretton Woods and the USA's Marshall Plan and other plans and focus on growing and trading out of debt while also de-colonising and honouring intra-Empire debt such as owed to India. The 1950s and early 1960s saw an increase in authority delegated to departments to spend within predetermined totals. with awareness of the net costs after tax generated and recovered (a practise stopped after 1979) and national industrial planning (abolished in the 1980s) and a system for fiscal transfers between rich and poor regions (much simplified and abolished in much of its refinements), through high inflation years the 1970s and 1980s (triggered by Middle-East oil wars) led to the rise the national debt (in nominal terms) from about 64% GDP ratio down to £36 billions in 1972 or 49% GDP ratio, then to £197 billion in 1987 or 39% ratio, followed by £419bn or 41% ratio by 1998. Although figures for the national debt are rising after inflation they fell as GDP % ratios from a peak of about 250% of GDP at the end of World War II to 1/6 that by century end. The decision in 1997 to transfer monetary policy setting responsibility to the Bank of England, alongside maintaining responsibility for financial system stability while relegating-out operational banking risk management, oversight and rule-enforcement, to the new Financial Services Authority while the Treasury retained control of fiscal policy led to the creation of the United Kingdom Debt Management Office (DMO) as an executive agency of the Treasury. Since April 1998, gilts have been issued by the DMO. Other than gilts (and Treasury bills, see below) the National Debt also includes the liabilities of National Savings & Investments and other public sector debt and foreign currency. In 2010, in a similar policy innovation, the Office of Budget Responsibility was created to be an authority on macro-economic forecasting by and for Government departments.
Central Authorities such as Treasury or Government Finance departments and The Central Banks had to assume responsibility for financial stability. The most glaring example of failure being Germany's currency collapse and Hyper-inflation 1921–23. Monetary stability alone is however not enough of a guiding principle. As with the French a century before, the First World War saw the link with gold broken and the issue of low denomination notes returned once again. A vain attempt was made in 1925 to return to the discipline of the gold standard and remains handled by the Bank. The gold and foreign exchange reserves passed to the Treasury in 1931. Also in 1931, UK abandoned the Gold Standard for domestic currency redemption. Domestic note issue was no longer backed by gold. It may be remarked, quite fairly, that in the last half century, monetary systems management, financial planning and regulatory oversight, effectively everything but a political-economy policy direction strategy, has come to be applied comprehensively to financial services, all at a time when industrial policy and strategic oversight to all industries making tradable goods, has been discarded. Government can get involved in industrial strategy and public and some private services in response to strikes, closures, or FDI investment flows.
Crises of systemic collapses after excessive confidence inevitably continued through the nineteenth, twentieth and into the twenty-first centuries, some 2 years apart, sometimes ten. Apart from cycle downturns or recessions that linked the US and UK economies especially up until WWI because large amounts of capital flowed annually from USA to London after each Autumn Harvest and flowed back again in time for Spring planting. There were recessions, often called panics, in 60 out of the 126 years between 1785 and 1911. The UK's 1844 Bank Act even had to be suspended in 1847, 1857 and in 1866 to prevent The Bank of England's own collapse. By the time of the 2007–08 Global Financial Crisis (GFC) The UK Treasury with Bank of England staff were especially innovative in providing off-budget solutions to bank bale-outs by offering The Asset protection Scheme, whereby banks could sell large percentages of their loan-books, heavily risk- discounted, to the Central Bank in exchange for Treasury Bills, kept on deposit as part of the banks' regulatory capital. They therefore did not have to finding funding gap finance in the now very expensive short term Money Markets. When US Treasury Secretary Henry Paulsen learnt of Alistair Darling's approach, only then did he realise he had had no need to apply to Congress for TARP or closedown Lehman Brothers!
The Bank's relationship with the Treasury changed several times, and continues no less intimate than that between US Treasury and The Federal Reserve. The funds which the Bank deploys, including note sat issue, specie in circulation, securities, Gold and foreign exchange reserves. Nationalisation in 1946, after WWII, made little immediate practical difference to the Bank. It remained the Treasury's partner, adviser, agent and debt manager. During War years and after it, and or they together, determined and administered exchange controls and various borrowing restrictions, often on the Chancellor's and therefore The Treasury's behalf. However, a revival of interest in Chicago and Austrian Schools of Monetarism, calling for depoliticised central base-rate policy settings, and claiming much would have been better had that been available during the high inflation 1970s. The re-evaluation of monetary policy roles began in the 1980s but did not result until 1997 in granting The Central Bank sole responsibility for setting interest rates and at the same time no longer be responsible for Government debt management, or, as it turned out, the National Gold Reserve. In 1997 the Government transferred for monetary policy claiming this meant The Bank of England was now a truly fully independent central bank.
The Debt Management Office United Kingdom was created in April 1998 as an executive agency of HM Treasury to take over responsibility for debt management. In April 2000, responsibilities for Exchequer cash management was transferred to the DMO and represented the conclusion of the Government's restructuring of the management of monetary and debt policy launched by the Exchequer in May 1997. The DMO assumed responsibility for issuing Treasury bills (very short–dated securities) from this date. In July 2002 the operations of the Public Works Loan Board – now referred to as the PWLB lending facility and operated on behalf of HM Treasury; and the Commissioners for the Reduction of the National Debt (CRND) were integrated with the DMO. The facility lends to local authorities for capital purposes and the CRND's principal function is to manage the investment portfolios of certain public funds. The PWLB lending facility and CRND continue to carry out their long-standing statutory functions within the DMO.
A brief explanation of two terms: "Exchequer" derives from the chequered abacus table used from about 1110 for summing income and expenditure. Exchequers were held twice yearly when the Chief Justice, Lord Chancellor, Treasurer and others sat round the chequer board, to audit and agree accounts of each local sheriff who collected taxes and duties and spent money on behalf of the crown. The word "budget" derives from the term "bougette"- a wallet in which either documents or money could be kept.

## Ministers
### Chancellor of the Exchequer

Although the Kingdoms of Great Britain and Ireland had been united by the Acts of Union 1800, the exchequers of the two kingdoms were not consolidated until 1817 under the Consolidated Fund Act 1816 (56 Geo. 3. c. 98). For the holders of the Irish office before this date, see Chancellor of the Exchequer of Ireland.

### Current Treasury Ministers

As of 14 January 2025, the Treasury Ministers are as follows, with cabinet ministers in bold:
| Minister | Office | Portfolio |
| The Rt Hon. Sir Keir Starmer KCB KC MP | First Lord of the Treasury | Formal head of the Treasury, concurrently serves as the Prime Minister. |
| The Rt Hon. Rachel Reeves MP | Chancellor of the Exchequer & Second Lord of the Treasury | Overall responsibility for the department; fiscal policy (including the presenting of the annual Budget); monetary policy, setting inflation targets; ministerial arrangements (in role as Second Lord of the Treasury). |
| The Rt Hon. Sir Alan Campbell MP | Parliamentary Secretary to the Treasury | Government Chief Whip, though formally a junior minister in the Treasury. |
| The Rt Hon. Darren Jones MP | Chief Secretary to the Treasury | Spending reviews and strategic planning; in-year spending control; public sector pay and pensions; Annually Managed Expenditure (AME) and welfare reform; efficiency and value for money in public service; procurement; capital investment; infrastructure spending; housing and planning; spending issues related to trade; transport policy, including HS2, Crossrail 2, Roads, Network Rail, Oxford/Cambridge corridor; Treasury interest in devolution to Scotland, Wales and Northern Ireland; women in the economy; skills, labour market policy and childcare policy, including tax free childcare; tax credits policy; housing and planning; legislative strategy; state pensions/ pensioner benefits; freeports – with support from FST on customs aspects. |
| The Rt Hon. The Lord Livermore | Financial Secretary to the Treasury | Leading on the UK tax system including direct, indirect, business, property and personal taxation; corporate and small business taxation; Value Added Tax (VAT); European and international tax issues; overall responsibility for the Finance Bill; National Insurance Bill; customs policy; HMRC planning and delivery of our future partnership with the EU; departmental Minister for HM Revenue and Customs and the Valuation Office Agency and the Government Actuary's Department; tariffs policy; trade policy; freeports (CST policy lead – FST support on customs); infrastructure policy: National Infrastructure Strategy, National Infrastructure Commission; Infrastructure and Projects Authority (IPA, joint with Cabinet Office); Public – Private Partnerships; (PPPs) and Private Finance Initiatives (PFI/PFI2); parliamentary deputy on public spending issues. |
| Emma Reynolds MP | Economic Secretary to the Treasury | Banking and financial services reform and regulation; financial stability, including relationship with the PRA; financial conduct, including relationship with the FCA; financial services including all banking, insurance, asset management; retail financial services, including banking competition, consumer finance, financial advice and capability; bank lending and access to finance; financial Inclusion (lead on the government's financial inclusion agenda); access to affordable; credit, including credit unions; women in finance agenda; EU financial services including EU exit and decisions as a member state; city competitiveness, including global financial markets, Global Financial Partnerships and financial services trade; green finance, Islamic finance, and Fintech; financial services taxation, including bank levy, bank corp. tax surcharge, IPT; personal savings tax and pensions tax policy; sponsorship of UKGI and State owned financial assets – RBS, UKAR; financial sanctions and countering economic crime and illicit finance; foreign exchange reserves and debt management policy, National Savings and Investments and the Debt Management Office; cash and payments including, Royal Mint Parliamentary deputy on economy issues. |
| James Murray MP | Exchequer Secretary to the Treasury | The UK tax system including: Direct, indirect, business, property, and personal taxation; European and other international tax issues; Customs and VAT at the border; The Finance Bill and the National Insurance Bill; Departmental Minister for HM Revenue and Customs (HMRC), the Valuation Office Agency, and the Government's Actuary's Department; Tax administration policy; Input to Investment Zones and Freeports focussing on tax and customs elements; Overall responsibility for retained EU Law and Brexit opportunities. |
| Torsten Bell MP | Parliamentary Secretary for the Treasury | Supporting the Treasury's role across government and Treasury ministers in their duties. |

## Whips

Some of the government whips are also associated in name with the Treasury: the Chief Whip is nominally Parliamentary Secretary to the Treasury and traditionally had an office in 12 Downing Street. Some of the other whips are nominally Lords Commissioners of the Treasury, though they are all members of the House of Commons. Being a whip is a party, rather than a government, position; the appointments to the Treasury are sinecure positions which allow the whips to be paid ministerial salaries. This has led to the Government front bench in the Commons being known as the Treasury Bench. However, since the whips no longer have any effective ministerial roles in the Treasury, they are usually not listed as Treasury ministers.

## Permanent secretaries

The position of Permanent Secretary to the Treasury is generally regarded as the second most influential in the British Civil Service; two recent incumbents have gone on to be Cabinet Secretary, the only post outranking it.
From October 2022, the Permanent Secretary to the Treasury is James Bowler and there are two Second Permanent Secretaries: Catherine Little and Beth Russell. The previous Permanent Secretary, Sir Tom Scholar, was sacked by Chancellor Kwasi Kwarteng and Prime Minister Liz Truss shortly after they took office.

## Guidance

The Treasury publishes cross-government guidance including Managing Public Money and The Green Book: Central Government Guidance on appraisal and evaluation, current version dated 2020. Managing Public Money includes a definition of "value for money" and sets out the responsibilities of an Accounting Officer within central government:
   Value for money ... means securing the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought. It is not about minimising up front prices.
   The responsibilities of an Accounting Officer [include] responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the department’s assets.
The Treasury appoints the permanent head of each central government department to be its Accounting Officer.
The Green Book includes the historic five case model, which requires consideration of the policy, economic, commercial, financial and management dimensions of a proposed project.$^{:19}$

## Banknote issue

Banknotes in the UK are normally issued by the Bank of England and a number of commercial banks (see Banknotes of the pound sterling). At the start of the First World War, the Currency and Bank Notes Act 1914 was passed, giving the Treasury temporary powers to issue banknotes in two denominations, one at £1 and another at 10 shillings, in the UK. Treasury notes had full legal tender status and were not convertible for gold through the Bank of England. They replaced the gold coin in circulation to prevent a run on sterling and to enable purchases of raw materials for armaments production. These notes featured an image of King George V (Bank of England notes did not begin to display an image of the monarch until 1960). The wording on each note was UNITED KINGDOM OF GREAT BRITAIN AND IRELAND — Currency notes are Legal Tender for the payment of any amount by the Lords Commissioners of His Majesty's Treasury under the Authority of Act of Parliament (4 & 5 Geo. V c.14). Notes issued after the partition of Ireland from 1922 had the wording changed to read "United Kingdom of Great Britain and Northern Ireland".
The promise (never adhered to) was that they would be removed from circulation after the war had ended. In fact, the notes were issued until 1928, when the Currency and Bank Notes Act 1928 returned note-issuing powers to the banks.

## Associated public bodies
### Executive agencies of HM Treasury

* Government Internal Audit Agency
* National Infrastructure Commission
* UK Debt Management Office, reporting to the Economic Secretary to the Treasury, is responsible for government borrowing operations.

### Other bodies reporting to Treasury ministers

* HM Revenue & Customs, a non-ministerial government department for which the responsible minister is the Exchequer Secretary
** Valuation Office Agency, an executive agency of HM Revenue and Customs
* National Savings and Investments, a Treasury-owned savings bank
* Office for Budget Responsibility, a non-departmental public body of HM Treasury
* UK Government Investments, a Treasury-owned holding company
** Reclaim Fund, a Treasury-owned company operating the Dormant Assets Scheme
** Royal Mint, a Treasury-owned coinage company
** National Wealth Fund, a Treasury-owned fund

## History of the Treasury Main Building

The Treasury Main Building at 1 Horse Guards Road, often referred to as the Government Offices, Great George Street (GOGGS), was designed by John Brydon following a competition. Construction took place in two phases. The West end was completed in 1908 and the East end was completed in 1917. It was originally built as offices for the Board of Education, the Local Government Board, and the Ministry of Works Office; HM Treasury moved into the building in 1940. A major refurbishment of the building was procured under a Private Finance Initiative contract in 2000. The works, which were designed by Foster and Partners together with Feilden and Mawson and carried out by Bovis Lend Lease at a cost of £140 million, were completed in 2002.