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I assume most people are aware of the recent US budget crisis where a disagreement between House and Senate caused non-essential parts of the US government to be shut down. There is a question here about how the Australian system handles similar situations.

How does the British parliamentary system handle such a situation? Is there a mechanism to prevent this kind of deadlock?

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    I think the queen would order them to figure it out or she will...
    – SoylentGray
    Oct 24 '13 at 19:55
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In a parliamentary system, the government is, by definition, the party (or coalition) of parties which controls the lower house (in the UK, the House of Commons).

In particular, achieving parliamentary approval for supply -- i.e. the ability to spend money -- is a make or break issue for a government, akin to vote of confidence. If a government loses supply, it means that it no longer has control of the house, which typically triggers a general election.

As for the upper house: in the UK, the House of Lords has only attempted to block supply once in the last 300 years, when it attempted to reject the "People's Budget" of 1910/11. This ultimately led to the Lords having their power to block supply removed, and there hasn't been such a crisis again since.

So to summarise: a loss of supply is very unlikely (though not impossible) in the UK, because the government controls the Commons, and the Lords don't have the power to reject it.

See also: fact sheet on parliamentary financial procedure.

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In general, the government administrative functions carry along under "Special Warrants." The Queen, or her representative (Governor General) authorizes more money.

See this http://www.cbc.ca/newsblogs/politics/inside-politics-blog/2013/10/government-shutdown-could-it-happen-in-canada.html

When something a bit more severe happened in Australia, the GG called an election. Having a GG do so without the request of the Prime Minister is a severe breach of convention, but it can be done.

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    Hmm. What happened in the 1975 Australian Constitutional Crisis was a little more subtle than suggested here. Kerr only dissolved the parliament on the advice of Prime Minister Fraser (i.e. within convention) and only dismissed the Whitlam government on the loss of supply (also within convention). The situation was as partisan as the recent US shutdown has been and Kerr was between a rock and hard place of uncodified law ("conventions") of which the main criticism against Kerr was the lack of honest prior warning given to Whitlam. But then Whitlam, while in the trenches with Fraser, forgot
    – LateralFractal
    Oct 25 '13 at 1:38
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    that doing an end-run-around of the dissolution triggers by strongly implying that he'll dismiss Kerr if Kerr doesn't tow a partisan line is not appropriate even if Fraser's conservatives were abusing loss of supply precisely to induce said dissolution. Interestingly a joint sitting after a previous dissolution was what introduced universal public health care to Australia in 1974 (e.g WhitlamaCare).
    – LateralFractal
    Oct 25 '13 at 1:39

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