Budget Vs Money

As a small private company I always scratch my head when I hear the term 'we have the budget'. A business of our scale talks in pounds and pence. We never have to 'spend money' before the end of the financial year but we know of many organisations that 'have to spend their budget' or they will not receive the full allocation next year. This does not sound prudent in recessionary times. Perhaps this is at the core of the MPs expenses debacle. Does the Fee Office have to 'spend' it's budget on an annual basis to ensure full allocation for the next financial year. I wonder?