I am amazed by some of the people whom I encounter every day who do not know anything about politics. Everyone should know how their government works so I am writing down my old college notes as a beginner’s guide. As it’s the credit crunch some of you will feel too busy and confused by the political situation and the criticism of the government on financial and borrowing matters. This is why everyone should take a little time to understand government rolls and why they affect everything from your home insurance to your grocery bill.

The United Kingdom is run with a democratic government. The House of Commons and The House of Lords hold the government in check although the House of Commons is the more powerful of the two houses.

We live under ‘Prime Ministerial’ rule – this means the rule of one person.
The powers that the P.M has depends on five key factors.

– The personality of the P.M
– Majority that the P.M has in the House of Commons
– The success of the P.M’s policies
– The unity of the P.M’s party
– The effectiveness of the Opposition party

Unlike in America where there is a deputy president, in the UK there is constitutionally no such role as a deputy Prime Minister.

The Prime Minister is the leader of the House of Commons. He appoints and dismisses members of the government. He is also the Chairman of the Cabinet. The Prime Minister has his own offices and advisors and is the most important representative of the Government. The P.M holds wide powers of patronage and also chooses the date of the general election.

Now for a bit of economics. There is no excuse not to pay attention to this part if news coverage of the credit crunch has left you baffled. Economics basically means the study of using scarce resources as efficiently as possible so that society’s unlimited demands for goods and services can be met.

The term that we so often hear in the news ‘the public sector’ refers to the sector run by the state like Government departments, Local Government and Nationalised Industries. The main role of the public sector is to provide efficient and adequate services.

The term ‘the Private Sector’ refers to organisations that are privately owned such as companies, clubs, partnerships etc. The main role of the private sector is to maximise profits.

Recession is a state of affairs that indicate a down turn in the business cycle. Output and investment has dropped, demand has dropped and unemployment has risen. This can be caused by a number of factors i.e. external factors such as a world oil crisis.

Reflation is a policy to combat recession. The policy may include reducing interest rates, reducing taxes, increasing public spending and devaluing the currency.

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