The British political system combines hereditary monarchy with parliamentary democracy.  The Queen is titular Head of State (largely ceremonial), while political power rests with Parliament.
 

National government

The centre of government in Britain is Parliament*, which makes all the important laws for the country about crimes and punishment, taxation, etc.  Parliament is made up of the House of Commons, the House of Lords, and the monarch.  The Houses of Parliament are in Westminster in London and sometimes “Westminster” itself is used to mean Parliament.

The House of Commons (or the Commons) is the lower but more powerful of the two Houses.  It has 650 elected members, called Members of Parliament or MPs, each representing people in a particular area or constituency.  The House of Lords (or the Lords) is the higher but less powerful of the two Houses.  It has over 1,000 members, none of whom is elected.  These members include: people who have titles like Lord or Viscount which have been passed down to them on the death of their father (hereditary peers); people who are given titles as a reward for their long service in public life, but whose children do not inherit their title (life peers); and some important leaders of the Church of England (archbishops and bishops).

The government is formed by the party that won the majority seats in the House of Commons in the last general election (since 1945, it is either the Labour Party or the Conservative Party [also called the Tory Party]); the other main party forms the official opposition.  The Liberal Democrats form a smaller third party.  The Labour Party won the last general election in May 1997 and will hold office for five years.  Tony Blair is the Prime Minister and William Hague is the Leader of the Opposition.

The government brings bills (=suggested laws) to the House of Commons, which are discussed by MPs.  The bills then go to the House of Lords to be discussed.  The House of Lords can suggest changes to a bill, but does not have the power  to reject it (=refuse permission for it to be passed).  When bills come back to the Commons, MPs vote on them and if they are passed they are signed by the monarch and become Acts of Parliament.

At present England, Scotland, Wales, and Northern Ireland are all governed by Parliament in Westminster.  In Northern Ireland the political parties are different but their MPs still go to the House of Commons.  In Scotland there is a lot of discussion about whether Scotland should have some separate or partly separate form of government.  The same is true in Wales.
 

Local government

Local government in Britain, also known as councils, can make small laws (by-laws) which only apply in their areas, but these are usually about small, local matters.  For instance, they may be about fines that will be made to people who part in certain streets.

Councils are paid for by local taxes and also by an amount of money given to them each year by the national government.  Their main job is the organizing and providing of local services, e.g. hospitals, schools, libraries, public transport, street-cleaning, etc.  They are also responsible for setting the amount of local tax that people must pay and for collecting this tax.

Local councils are elected by people within each town, city or country area.  The people who are elected, known as councillors, usually represent one of the national political parties, but are often elected because of their policies on local issues rather than the national policies of their party.