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Consolidated Fund (Appropriation) Bill

Volume 180: debated on Friday 16 August 1907

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Considered in Committee.

(In the Committee.)

[Mr. EMMOTT (Oldham) in the Chaire]

Clause 1 agreed to.

Clause 2:—

said he desired to move an Amendment providing that the Treasury should repay moneys borrowed on Treasury Bills within three months. The point was a very simple one. If the Amendment was added to the Bill, it would put it back into the position in which Appropriation Bills always stood. Before 1902 the Treasury were forced by this provision to repay any money borrowed on Treasury Bills together with the interest every quarter, or, if necessary, they could borrow again. The provision was got rid of in that year on the ground that there was economy to the country in allowing the Treasury to borrow for more than three months at a time. That could not, however, now be said. The price of money at the present moment was as high as it was likely to be for some time, and therefore to borrow for a longer period than three months would be less economical by reason of the probable fall in the price of money. Therefore he begged to move.

Amendment proposed—

"In page 2, line 3, at the end, to add the words 'And the Treasury shall repay the moneys so borrowed with interest not exceeding 5 per cent. per annum out of the growing produce' of the Consolidated Fund, at a period not later than the next succeeding quarter to that in which the said moneys were borrowed.'"—(Mr. Bowles.)

Question proposed, "That those words be there inserted,"

said that if the suggestion was that the Government should revert to the old system, he might point out that the Treasury were not compelled to borrow on Treasury Bills. He did not think it was at all necessary that this addition should be made to the Bill, because in any case they were not likely to adopt the most expensive system of borrowing money. At the present time the market was jumping up and down, and it was not desirable that this addition should be made. He hoped the Amendment would not be pressed.

Amendment, by leave, withdrawn.

Clauses 2 and 3 agreed to.

Clause 4:—

MR BOWLES moved the deletion of this clause on the ground that it was not only a new feature, but because it made a change in our financial system of far-reaching importance. The clause really went a long way to complete the destruction of the appropriative power of the House as the only real security over public finance, a power which had been steadily encroached upon by successive Governments, successive Chancellors of the Exchequer and successive Houses of Commons. The clause referred to Schedule B which appropriated the expenditure for the year. If hon. Members turned to the Schedule of the Navy Vote, for example, on page 89, they would see that the Navy Vote gave two separate sums, one the grant and the other the appropriation-in-aid, and there was an express direction to the Treasury and everybody concerned in the expenditure of this money that in respect to each of these Votes the total should not be exceeded. He need not press the question of the vital importance of the House keeping intact financial control. The control of, the House was only secured by the fact that instead of handing over the money in bulk to the Department or to the Minister, each Vote was appropriated to certain purposes. During the last forty years the House had built up a great machinery of control and every halfpenny of the money voted the Treasury had to account for. If the control was to be kept real neither of these sums ought to be exceeded, and in so far as that rule was departed from, so far was Parliamentary control defeated. In the case of the Army and Navy, a special power was given to the Treasury in cases of emergency to depart from the strict appropriations of Parliament, by using the savings on one Vote to defray expenditure on another. The real effect of that was that the amount of these thirteen Votes on page 89, £31,500,000, though appropriated to separate Votes, might be spent in any way the Treasury thought fit, so long as it was spent for some urgent purpose, and so long as the expenditure was made out of the savings on some other Votes up to the present moment. That power of pooling all the money granted to separate Votes into one total and allowing the Treasury to do with it as it pleased, was subject only to the check of requiring an indemnity in the next Appropriation Act, and, as that Act was passed in the last days of the session, the check was illusory.

said the hon. Member had forgotten that the Public Accounts Committee could challenge the expenditure.

said the assent of the House was given on the Appropriation Bill passed in the middle of August. His point was that the right hon. Gentleman was going to extend this power far beyond the point to which he was entitled to extend it. He was going now to extend it beyond the supply grant to appropriations-in-aid.

admitted that it was no novelty in practice, but it certainly was in law. If hon. Gentlemen turned to page 9 of the Bill they would find the total sum granted was £31,500,000, and the appropriation-in-aid for the naval service was £1,500,000. This appropriation ill aid was made up of receipts which came to hand during the year owing to the Admiralty Belling oft old ships' stores and so on, and the Admiralty was allowed to take it as an appropriation - in - aid. Supposing the Admiralty received £2,500,000 from that source instead of £1,500,000, then the right hon. Gentleman proposed that the extra £1 000,000, which they had never voted and knew nothing about, should, instead of being paid into the Exchequer, be used as an appropriation-in-aid.

said it was a practice which the right hon. Gentleman knew was not justified by the law. The reason why the old clause in this Bill was not good enough was that it did not allow the right hon. Gentleman to do what he now proposed to do. If the Admiralty received £1,000,000 more than it estimated it would, that £1,000,000 was to be kept by the Admiralty to be spent as the right hon. Gentleman pleased. It need not be spent on urgent matters. It might be spent in order to make good other bad estimates of appropriations-in-aid. The right hon. Gentleman proposed that that money was to be kept in the Department and spent. The result was that £1,000,000 less would be issued from the Exchequer, and the effect would be to give the Treasury power over more money in one year than the House had voted, or than it was suggested the House should vote. The right hon. Gentleman could not defend that on the ground that Parliamentary appropriation was unfettered. He would not attempt to do so. But he would defend it on the ground that it made no particular difference, that the surrender to the Exchequer was exactly the same, and that the old sinking fund was not affected; that it was a mere matter of foolish pedantry and of no significance to raise such an objection to this clause. That might be the view of the right hon. Gentleman, but it certainly was not the I view of the Comptroller and Auditor-General, as stated in very plain language before the Public Accounts Committee. That gentleman was asked on this very point if there was anything in the change that had been made here, and whether as a result the amount paid into the old sinking fund had been increased, and he replied that in his opinion the practice might lead to the fund available for the old sinking fund being less in one year, or it might be increased more than Parliament intended it should be increased; he further said that in the year 1899 it happened that money was not used for the sinking fund which Parliament intended should be so used. This was a matter which the House should take seriously into consideration. The right hon. Gentleman said that the proposal made no difference at all. If that was so, what was the object and value of the clause? If everybody was exactly where he was before, why not surrender the money the moment the amount was ascertained? The Treasury had plenty of money for all purposes, and this money came as a windfall into the Department. Why was the right hon. Gentleman so anxious to keep it in the Department if it was all the same? It ought to be paid into the Exchequer where it was due. It appeared to him that the real reason for not surrendering these fortuitous receipts to the Treasury was that adherence to the old rule would bring to light that there had been bad estimating. Hitherto the House had had security for appropriations-in-aid in the Votes, but if this proposal became law they would be entirely giving up all effective power over appropriations in aid in regard to naval and military expenditure, and what they would really be doing would be to hand over a block sum to the Treasury and the Department which might be spent within the year, subject, of course, to an Act of Indemnity. If the right hon. Gentleman desired to do that, he had nothing more to say, except that it was a mistake to increase without any necessity the power of the Treasury, and thereby decrease the effective control of this House over expenditure.

pointed out that exactly the same process which was prescribed here had been followed ever since 1892 under various Chancellors of the Exchequer, and had received the approval of Parliament, and until this year it had never been called in question. As the hon. Gentleman had said, there might be loose transactions, but there were no fewer than five occasions on which those transactions could be examined, on each one of which anything that was irregular could very easily be stopped, though he admitted it could not be rectified. What the Treasury urged was that none of the Departments concerned in these transactions had done anything irregular.

asked what was the object of the Government, if this clause made no difference, in making this large change in the form of the Appropriation Act?

said that some doubt was felt by members of the Public Accounts Committee, by the Comptroller and Auditor-General, and even by the Chancellor of the Exchequer himself, as to the interpretation which might be placed on the old Clause 5, and it was to set those doubts at rest that this clause was brought forward.

Amendment, by leave, withdrawn.

Clause agreed to.

Clause 5:—

MR BOWLES moved to leave out certain words which, he said, ratified and gave the assent of the House to an action which was not denied by the Treasrry to be illegal.

Amendment proposed—

"In page 3, line 25, to leave out from the word 'whereas' to the end of Hue 26."—(Mr. Bowles.)

Question proposed, "That the words proposed be left out stand part of the clause."

said he was very glad to have the opportunity of making some kind of amende to the hon. Gentleman, whose zeal in this matter had been most praiseworthy. The hon. Gentleman had discovered—he thought it was very much to his credit—he would not call it a flaw, but a possible flaw, in the law which had gone on for fifteen years, under he did not know how many Chancellors of the Exchequer and subject to the scrutiny of a distinguished relative of the hon. Gentleman himself, who, so far as he was aware, never put his finger on this particular flaw. He thought it was only a fair recognition of the service the hon. Gentleman had rendered to the cause of financial purity that they should in deference to him omit these words. [At this moment Mr. WHITELEY held a whispered conversation with the right hon. Gentleman.] He hoped the hon. Gentleman would allow him to withdraw that offer, for it was necessary, in order to avoid a Report stage, that there should be no Amendments. The words would be retained in the clause, but they would never reappear and no harm would be done. He hoped the hon. Gentleman would be content with the acknowledgment he had made.

Amendment, by leave, withdrawn.

Clauses 5, 6, and 7 agreed to.

Schedule agreed to.

Bill reported, without Amendment; to be read the third time upon Monday next.