Where public money comes from and goes
Every tax you have met so far ends up in one pot, and every argument on the news about hospitals, schools or benefits is an argument about how that pot is divided.
Lesson overview
What you'll learn in this lesson
Understand a range of financial products and services, and how public money is raised and spent
Key learning points
- • The main sources of revenue
- • Progressive and regressive together
- • Where it is spent
- • Deficits, debt and choices
This lesson at a glance
- 30 minutes
- 19 parts to scroll through
- 4 quick checks
- Marked quiz at the end
- Gentle pace: short sittings with pauses
Words to know
Scroll down — the lesson carries on below
Watch & discover
Part 1 of 19
Watch first
Where public money comes from and goes
An English teaching video on this topic from IMF. Watch it, then scroll down for the lesson.
In a nutshell
Understand a range of financial products and services, and how public money is raised and spent
What you already know
Part 2 of 19
Before we start
What you already know
You know how income tax, National Insurance and VAT are charged.
Key words
Part 3 of 19
Key words
Words you'll need today
- Budget
- The Chancellor's annual statement of tax and spending plans.
- Public spending
- Money government spends on services, benefits and investment.
- Deficit
- Spending more than is raised in a year, met by borrowing.
- National debt
- The total amount government owes from past borrowing.
- Progressive tax
- One taking a larger share of income from higher earners.
- Council tax
- A local tax on homes that funds local council services.
Learning cycle
Part 4 of 19
Learning cycle 1 of 2
Raising the money
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 5 of 19
Learn
The main sources of revenue
The largest single source is income tax, followed by National Insurance and VAT. Together these three raise well over half of all government revenue. Corporation tax on company profits, fuel and alcohol duties, business rates, Stamp Duty and Vehicle Excise Duty make up much of the rest. Local councils raise council tax on homes, which pays for services such as bin collection, social care, road maintenance and libraries.
Explore the idea
Part 6 of 19
Learn
Progressive and regressive together
Income tax is progressive: bands mean a higher earner pays a larger share. VAT and duties are closer to regressive. The overall fairness of the system depends on the mix, which is why politicians argue about which taxes to raise rather than simply whether to raise tax at all.
Quick check
Part 7 of 19
Quick check
The largest single source of UK government revenue is
Quick check
Part 8 of 19
Quick check
Council tax pays mainly for
Reset break
Part 9 of 19
Pause
That's sitting 1 of 2 done
Stretch, get a drink, look out of the window. There is no timer and nothing is counting down — your place is saved, so you can come back in five minutes or tomorrow.
Learning cycle
Part 10 of 19
Learning cycle 2 of 2
Spending it and arguing about it
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 11 of 19
Learn
Where it is spent
The biggest areas of spending are health, pensions and welfare, and education, followed by debt interest, defence, transport and public order. Because health and pensions dominate, an ageing population increases spending pressure without any policy change at all. Departments bid for money, the Treasury allocates it, and Parliament votes it through in the annual Budget process.
Explore the idea
Part 12 of 19
Learn
Deficits, debt and choices
If spending exceeds revenue there is a deficit, which is covered by borrowing and adds to the national debt. Interest on that debt then becomes its own large spending line. A government facing a deficit has three levers: raise taxes, cut spending, or borrow more and hope growth catches up. Each choice creates winners and losers, which is exactly the debate you hear at every election.
Quick check
Part 13 of 19
Quick check
A deficit means
Quick check
Part 14 of 19
Quick check
Income tax is progressive because
Common mix-ups
Part 15 of 19
Common mix-ups
Things people often get wrong
- Confusing the deficit with the debt. The deficit is one year's shortfall; the debt is the accumulated total.
- Assuming benefits are the largest spending area. Health and pensions are far larger.
- Thinking council tax funds the NHS. It funds local services; the NHS comes from central taxation.
- Believing tax rises always increase revenue. Behaviour changes, so the effect is argued over by economists.
Challenge round
Part 16 of 19
Game · Sort it
Which of these are true?
Drag each card into the right column. Tap a card first if dragging is fiddly.
True
Not true
Challenge round
Part 17 of 19
Game · Fill the gaps
Finish the sentences
Choose the word that belongs in each gap.
Local councils raise council tax on homes, which pays for ____ such as bin collection, social care, road maintenance and libraries.
The biggest areas of spending are health, pensions and welfare, and education, followed by debt interest, defence, transport and ____ order.
Mastery quiz
Part 18 of 19
Marked quiz
End of lesson quiz: Where public money comes from and goes
6 questions, marked with the reasoning shown. No timer.
1. Which is the largest area of public spending?
2. Debt interest matters because it
3. Corporation tax is charged on
4. An ageing population increases spending pressure mainly through
5. The annual statement of tax and spending plans is called
6. Three ways to close a deficit are
Lesson round-up
Part 19 of 19
Lesson round-up
Ready when you are
Quiz score
Not sat
Games
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Points this lesson
0
Best run
0 in a row
Luna: 0 out of 4 on the practice checks. Only if you feel up to it — one more?
Ask LunaDo the work
Your written work for this lesson
This is the part you'd do in your book at school. Pick the pieces below, write here or on paper, and photograph anything you draw or work out.
Should the town centre have a curfew for under-16s?
After a rise in reported vandalism, Harbrook council proposed that under-16s should not be in the town centre after 9 pm without an adult. Police recorded 62 incidents last year, most between 9 pm and midnight. Shopkeepers signed a petition supporting the plan.
A youth council objected. They pointed out that most young people in town at night were going home from sports clubs or work, that the plan punishes a whole group for the acts of a few, and that the library and the bus interchange are in the town centre. They asked instead for a late bus and a youth space.
The council voted to trial the curfew for six months and to publish the crime figures at the end.
Written for Good Learning Co.
Reading questions
- Give the strongest point on each side of the argument, using a fact from the case.
- Whose rights and whose responsibilities are involved here? Explain both.
- Write your own view on the curfew with reasons and one example.
Reading and response
ReadingRead the case in the lesson again and write what you think should happen, and why it is fair. Use one fact from the case as evidence.
2 paragraphs (PEE)
Extended writing
WritingWrite your answer to the lesson's big question in full: the strongest point on each side, then your own view with reasons and an example.
250–350 words
Reading log
ReadingFind one news story this week that links to this lesson. Note the headline, where you read it, and how it connects.
1 story, 4–5 sentences
Two sides of the argument
WritingWrite the strongest point for, the strongest point against, and then your own view with a reason.
3 paragraphs
Poster or leaflet plan
DiagramPlan a leaflet that explains this right or responsibility to someone your age, then photograph it.
1 planned page
Saved as you type.
Part 1 of 19 · Watch & discover