CONTROL OF THE TREASURY OVER OTHER GOVERNMENT DEPARTMENTS. (Hansard, 20 March 1900)

MR. GIBSON BOWLES (Lynn Regis),

in moving, "That the exercise of the powers of the Treasury in governing every Department of the Government is not for the public benefit; that by exercising the power of the purse it claims a voice in all decisions of administrative authority and policy, and that the position which through many generations it has occupied has resulted in much delay and many doubtful resolutions," said: I require no small amount of nerve to raise this question, considering the sacred nature of the Department of the Treasury. Other Departments one may raise questions about, but the Department of the Treasury is held to be sacrosanct, because, I suppose, it is the Department which carries the purse. The Treasury has grown from being the guardian of the strong box to becoming the universal controller of every Department of Her Majesty's Government. It regards all other Departments as inferior to itself; it looks upon them as licentious spendthrifts, as prodigal sons from whose voracious maw it is the province of the Treasury to snatch the fatted calf. When a question arises which needs the exercise of high skill and great knowledge, it has to be decided, not by the Department itself, which possesses all the knowledge required, but by the Treasury, to whom the knowledge has been revealed in some manner from on high. The result is that all the Departments labour under a more than Egyptian bondage, to being called upon to make their bricks without straw, to being subject to a "Mikado" system of duality which requires that the War Office, the Admiralty, and other officials shall be looked after by a member of the Treasury. Who is at fault for the charges set out in the Resolution if they are well founded? We are told it is not the Cabinet. We are told it is not the Chancellor of the Exchequer (although he did write a letter), it is not the Permanent Secretary, Sir Francis Mowatt, and it certainly is not the Financial Secretary. At first I came to the conclusion that it must 1354 be the three Junior Lords who were at fault; but I am now of opinion that nobody is at fault, that it is the usual scapegoat we always fall back upon and which is called the system. A thousand years ago the Treasury was a box and the officials were the persons who sat on the box, and they have been sitting on it ever since. The difficulty is that they sit upon it too tightly. The Treasury consists of the First Lord of the Treasury, the Chancellor of the Exchequer, the three Junior Lords, and the Financial Secretary. The First Lord is not arraigned in this indictment, because he has no public duties in connection with the Treasury. The three Junior Lords are not included in the indictment because their duties seem to consist of sending to members letters giving inaccurate information and making presumptuous requests for their attendance. For what purpose does the Department, as constituted in modern times, exist? I conceive that the most important of its duties is to look after the high finances of the country and to assist the Chancellor of the Exchequer with its knowledge and advice, but it is for that purpose less adequately manned than perhaps any other Department of the State. It should know all about the capacity of the country to bear taxation, and it should know something about taxation. It, however, is so little competent to deal with outside financial matters that it scarcely ever takes a step without making a mistake. I need only recall to the recollection of the House the abandonment of the stamp duty on contract notes in respect of sales of produce, and the fact that every English subscriber to the Greek loan had to pay 1 per cent. more than the subscribers in either of the other two guaranteeing countries. One official who pretends, I believe, to understand these matters, is no doubt a very able man—Sir Edward Hamilton—but he does not suffice for all purposes in which the Treasury should be qualified. The powers of the Treasury are partly derived from Parliament and partly by oral traditions. The powers derived from Parliament are immense and very dangerous. It has power to establish rules for keeping accounts. All objections to items in the accounts must be referred to the Treasury. It may 1355 prescribe forms of accounts, and I have seen forms of accounts prescribed by the Treasury respecting the purchase of Salisbury Plain, which are of the most unsatisfactory character. It has to sanction expenditure and to direct what accounts, other than the appropriation accounts, are to be examined by the Controller and Auditor General. Under the Public Accounts and Charges Act, 1891, the Treasury has power to make every extra receipt to the State what is called an appropriation in aid, the effect of which is practically to entirely withdraw it from any effective control by the Departments. But the claims of the Treasury go far beyond this. Giving evidence before a Select Committee on public moneys in 1856, Mr. Anderson, principal clerk, said that the source of all administrative authority for expenditure was the Treasury, Mr. Anderson, added— The right of the Treasury to determine what the civil departments may spend and what they may not spend, though modified occasionally by certain special enactments, is incontestable and rests upon an unbroken prescription which has, accordingly, the force of law. In 1866 Sir William Dunbar said that, generally speaking, the Treasury made the appointments in all the offices. Now the House will see what it comes to. These are the rights that the Treasury claims. The powers of the Treasury are indeed immense. They are so large that I imagine that in all they extent they have scarcely yet been known to the Members of this House, but they are known and felt daily by every one of the public Departments which is striving to do its duty. Every one of the Departments tells you again and again that it is hampered by the Treasury's exercise of these enormous powers, with no small degree of prejudice to the public interest. I will quote one extract in which it is shown how this power works. Sir R. Knox gave evidence on this subject in 1877, and being asked whether in the public interest he would object to an increase of the Treasury control over the War Office expenditure, he replied— That is a very large question; I think the Treasury control is increasing every day, and I cannot say that I think it has been of any advantage to the public service; rather the reverse as regards small matters. I think the Treasury control, from a large point of view and upon large matters, might be strengthened, but as regards small matters I think that, organised as the department is, it would be much better to leave more to the discretion of the Secretary of State; we are frequently by 1356 the action of the Audit Department and the Treasury led to make rules and regulations to meet special cases which have a general effect, because it is thought necessary by the Auditor General, and the Treasury that wherever any payment is made there should be a rule for it. I think we have been driven into excessive expenditure by over-regulation, and that over-regulation has been brought about by the action of the Audit Department and the Treasury. In large matters I think that the control of the Treasury Department might be increased; in small matters I think it is a pity that it has increased; it has given rise to much work and much expenditure and no advantage. Then Sir R. Knox was asked if he agreed that the Treasury control had increased in the sense of looking after expenditure, and he replied— It has increased in looking after the twopences; it would be better if it looked more after the hundreds of thousands of pounds. I think so too, and hundreds of thousands of pounds are allowed to slip through the net. When it is a question of controlling the Foreign Office, the Treasury makes no question at all. It passes the proposals from that quarter without a word, but when it is a question of stopping a few pounds in other Departments, the Treasury puts its foot down and stops the whole thing. I have shown, and I have endeavoured to do it very briefly, what are the powers claimed by the Treasury. I have shown in the case of one important official what he knows to be facts in relation to the exercise of these powers. I say with regard to the control of expenditure by the Treasury, that it is neither more nor less than the fifth wheel to the coach. I would ask you to remember the authorities and consents which must be obtained before any expenditure whatever can be authorised. First of all, there is the Department itself and the Secretary at the head of the Department. In the case of the War Office, that Department is not likely in any of the various authorities before whom it must come to propose expenses that are not necessary. No Department likes to expose itself to the reproach of being extravagant. Let us suppose that the Department is enormously extravagant, and that the Secretary of State is enormously extravagant, the matter has still to go before the Cabinet, and the Cabinet has to decide the relative claims of the different Departments. If a Department puts its claim too high, the Cabinet has the country before its eyes. Then there is this House, and there is nothing this 1357 House revels in so much, and especially some of the excellent Scotch Members, as in dissecting the items of expenditure. On one occasion, I remember, I actually saved the country £500 a year for ever by obtaining a reduction of salaries of the officers of the House of Lords. Then you bring in the Treasury in addition to all these authorities. You bring in what I have called the fifth wheel of the coach, which at various stages interposes its authority and rights in order to stop expenditure. It may be thought that I ought to give instances of this interference with expenditure. I could but for the fact that my mouth is closed. Ministers of State—I will not look at the Treasury bench lest suspicion should fall on some one—and heads of Departments have imparted to me the most awful instances of the interference of the Treasury, but it has always been with the addition, "You must not quote me." The fact is they are afraid; they tremble at the idea of a Treasury clerk. When they see a Treasury minute they hoist the white flag, and consequently I am precluded from telling the story that otherwise I could tell. I am able to mention one or two relatively small matters, but I think they will suffice. It is in the small matters that the interference of the Treasury is most felt. If a policeman is wanted in the West of Ireland for an urgent purpose the Treasury will prevent it. [An Hon. MEMBER: "Never."] If money is required to whitewash Bethnal Green Museum the Treasury will prevent it. If the War Office says that a military attaché is required at some new European centre which has developed a military interest, suddenly the Treasury refuses its assent. The Treasury some years ago withdrew the police from West Kensington Museum, with the result that a large and valuable gold collection was stolen, and this year the Treasury has had to restore the police. Again, in the case of the National Portrait Gallery they withdrew the police, and the result was that many portraits were damaged and defaced. I am only at liberty to mention these small matters. If hon. Members will give me a Committee and enable me to calm the fears of great Ministers and officials, and to make them disclose their secrets, I can assure the House that I could make your hair stand on end. I maintain that it is nothing but mischievous. You must trust somebody. 1358 The Treasury theory is that the only person you can trust is a Treasury clerk. I think they are much less to be trusted than the officials of the other Departments. If you refuse to trust the officials of a Department, they are discouraged when they enter on a new project requiring expenditure. You destroy to a certain extent their sense of responsibility, because they feel that their decisions are not final. They know that the Treasury will still have to decide, whatever decision they may come to, and that their decisions may be entirely over-ridden by that Department. Suppose for a moment that this Japanese dual system of trusting only two people is the proper one, is the Treasury a good Department to exercise it? I think it is the worst. As soon as ever a man in the Department arrives at years of Treasury discretion he is at once planted out in some other Department. Treasury officials become the permanent heads of the Post Office, the Customs, the Inland Revenue, the National Debt, and even the Exchequer and Audit Department. The result is that the Treasury is chiefly composed of young and inexperienced persons, some of them fresh from the universities, with a small and inadequate knowledge of life. Being so young and inexperienced, of all others they are least fitted to control other Departments whose officials have greater experience and expert knowledge. Now, I want to show that the Treasury power is not always exercised in restraint of expenditure. The Treasury assumes and has power to sanction expenditure incurred without any previous knowledge of Parliament. I can give one or two instances of it. In 1898–99, for example, it sanctioned, in the case of the Admiralty, expenditure to the amount of £60,335, not a halfpenny of which ever came before Parliament. The purposes to which the money was applied were all very proper and necessary matters of expenditure, but why call in the Treasury? Another illustration is the case of Wei-hai-wei. The Admiralty took possession of the bay there, and it suddenly occurred to them late in 1898 that they had not got Wei-hai-wei itself. The applied to the Treasury for permission to buy the wall of the place, and without any knowledge or permission on the part of Parliament the Treasury gave their sanction to the expenditure of £14,897 17s. 4d., and the Admiralty bought the walled town of Wei-hai-wei. 1359 The Treasury also to an enormous extent withdraws expenditure from the purview of Parliament. The Exchequer and Audit Act of 1866 laid it down that the gross revenues of the State are to be paid into the Exchequer, but that principle has been gnawed away by successive statutes until at last by the Public Accounts and Charges Act of 1891 the most complete power is given to the Treasury to say that anything it liked in the way of extra receipt is to be considered an appropriation in aid. The effect of that was that the Treasury passed a comprehensive minute declaring almost everything that could be conceived to be an appropriation in aid, and at this moment £8,000,000 was in this way entirely withdrawn from the power of that House, and in respect of this large sum they could not move a reduction even of a halfpenny. You must leave them as they are. You cannot increase or diminish them. Those appropriations in aid do not appear, as they should, on both sides of the public accounts; they are deducted from the total, and it is the net amount that is set down in the account. Now I come to the end of my attack. I have endeavoured to cut it short, and I have omitted many interesting circumstances I otherwise should have mentioned. I now appeal to my right hon. friend the Secretary of the Treasury, who was once a candid critic of the Treasury, and who in one of the best and last of the speeches he made while he was still a Member of the Commons of England, and before he became a placeman, was filled with sadness and sorrow at the misdoings of the Treasury, which he complained hampered people who were endeavouring to do their duty in the public interest. I beg him to remember that this is not my indictment. It is the indictment of his own self. I have done nothing more than elaborate imperfectly and inadequately, no doubt the indictment made against it by his own self. I have heard him described in this House as an old poacher turned gamekeeper. I hope that on this occasion he does not propose to take off his velveteen and turn squire. That would be truly sad. Is he going to say that "all's for the best in this best of all possible worlds," or is he going to admit, as I hope, that even the Treasury is not absolutely perfect, that even a Treasury clerk is a finite being capable of being improved, and that the Treasury system did not come down from heaven absolutely complete and perfect?