HC Deb 28 March 1905 vol 143 cc1392-8

Considered in Committee.

(In the Committee.)

[Mr. JEFFREYS (Hampshire, N.) in the Chair.]

Clause 1 agreed to.

Clause 2.

MR. McKENNA (Monmouthshire, N.)

moved to insert, after "granted," the words "or proposed to be granted." He said he would not press the Amendment if the Chancellor of the Exchequer was able to give them satisfactory assurances concerning the point raised on the previous day—namely, that in consequence of the way in which this Bill had been drafted he would be bound to act illegally.


Order, order! I think the Amendment unnecessary and therefore out of order.


Do I understand you rule it out of order?




Then I must argue——


No, there can be no argument. I hold it is out of order because it is outside the scope of the Resolution on which the Bill is founded.


On the point——


There can be no discussion or argument on it.


as a point of order, asked leave to draw the attention of the Chairman to a precedent for his present Motion in the year 1902. On August 8th in that year, on the Appropriation Bill, an Amendment was moved by the hon. Member for West Islington to Clause 3 to insert the words "£20,000,000 at any one time," and that was certainly not in the terms of the Resolution on which that Bill was founded. It was allowed to be proposed, and he could quote precedent after precedent of similar Amendments having been moved.


That seems to me to be quite a different case. I adhere to my ruling.


said he would be perfectly satisfied if the Chancellor of the Exchequer would give him the assurance he had asked for.


rose to reply, but


I still adhere to my ruling, and there is no Question before the House.

Motion made, and Question proposed, "That Clause 2 stand part of the Bill."


said he thought he would now be in order in answering the hon. Member. The point of the hon. Member opposite—which he raised on the previous day—was that the words of the Act of 1891, which were intended to extend the legal power of the Treasury, had, in fact, a limiting effect, and that they prevented the Treasury from legally employing money voted, as on the present occasion under Vote 1 of the Navy, on the feeding of the Navy until such time as the Victualling Vote had passed through the Committee and been reported. That was not the case. The illegality the hon. Member feared did not arise, because Section 15 of the Exchequer and Audit Department Act, 1866, provided that the issues for Army and Navy services should be made under the general heads of "Army" and "Navy" respectively. The issue was made for the Army and not for any specific Vote, and no illegality arose in applying it to any particular service of the Army Estimates.


said he would like to point out to the right hon. Gentleman that his construction of Section 15 was not accurate, and he would refer him to Clause 4 of the Appropriation Act of last year, in which an express provision was introduced in order to enable the Comptroller and Auditor-General to sanction payments in respect of the Army which had not been specifically appropriated. Such a provision would have been entirely unnecessary if the view now stated by the right hon. Gentlemen was correct. As a matter of fact, as no money had been voted for the Army and as only Vote 1 for the Navy had been voted, the right hon. Gentleman could not legally do more than use the money of Vote 1 for the Navy and could not use any money at all for the Army. The words in the Act on which he relied were— Every sum issued in pursuance of this Act shall be applied towards making good the Supply so granted at the time of such issue. These words clearly limited and defined the powers of the Treasury, and they were in an Act subsequent to the Act on which the right hon. Gentleman appeared to rely. All he desired the right hon. Gentleman to do was to introduce words in the present Consolidated Fund Bill instead of in the Appropriation Bill in August, legalising at once that which he was now illegally doing.


suggested that the words "granted at the time of issue" were sufficient to cover any subsequent Votes, and that was all the Chancellor of the Exchequer wanted, as he was going to get Vote A and Vote 1 of the Army as soon as possible. But if there was a doubt about this matter, the doubt should be resolved not by a Committee of the House, but by the Comptroller and Auditor-General, who had been appointed by the House in order to see that every legal formality was fully complied with before he sanctioned the issue of one sovereign or even of one halfpenny out of the Consolidated Fund.

MAJOR SEELY (Isle of Wight)

said that, by the admission of the Chancellor of the Exchequer himself, it was quite unprecedented to have a Consolidated Fund Bill which did not include any sums voted for the Army specifically.


said he never made any admission of the kind. What he stated yesterday was that, so far as he was aware, Army Supply had never been in this condition before. He had since had further inquiry made; and as a result he found that Navy Supply had been in exactly the same position before, and that in 1883, when hon. Gentlemen opposite were in power, not merely had there been no Navy Vote, but no Civil Service Vote either.


pointed out that the Public Accounts and Charges Act, on which they relied, was passed subsequently to 1883. He submitted that it was a direct violation of that Act, and that it was highly unconstitutional to use money which had been voted for the Navy for other purposes of the Army than those for which it had been specifically voted for the Navy. For the first time since the Public Accounts and Charges Act was passed, they had no money voted for the Army in the Consolidated Fund Bill, and the House should take cognisance of that fact, seeing how the principle of the control of the House was involved.

Question put, and agreed to.

Clause 2 added to the Bill.

Clause 3:—


moved to insert the following proviso— And the Treasury shall repay the moneys so borrowed, with interest not exceeding 5 per centum 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. If these words were inserted it would restore the Act to its original shape. The form of this Bill had suffered an important change at the hands of no less a person than the Chancellor of the Exchequer. Before 1902 the Treasury had power only to borrow the money for three months. When, in 1902, in a moment of inattention he thought, the House permitted the Treasury to borrow for twelve months, it thereby quadrupled their borrowing power in point of time, and so added to the Unfunded Debt. He maintained that that added to their Unfunded Debt. It was true that the Chancellor of the Exchequer said that there was no more borrowing power, but there was only power to borrow for a longer time. That was, however, the whole point. Was it advisable that the power given in 1902 allowing the Treasury to borrow for a whole year instead of for three months only should be continued. He submitted that this was a time when the Treasury's power to borrow should be contracted in the most jealous way. The Chancellor of the Exchequer himself, when he made the Motion in 1902, said the borrowing powers had hitherto been exercised on the I.O.U. of the Chancellor of the Exchequer. But now the money was obtained on Treasury Bills, and the power formerly exercised of borrowing on the personal I.O.U. of the Chancellor of the Exchequer had been quadrupled. He thought that that was very unfortunate. They had seen their debt increasing, and any powers given to Ministers in regard to money matters ought now to be more carefully watched and more jealously circumscribed than at any previous period of history. Already their Funded and Unfunded Debt and contingent liabilities had reached a total far beyond the dreams of any of their ancestors, and for that reason he earnestly begged the Committee to assist him in restricting the powers of the Treasury. His Amendment would restore the Act to its original form, and if it were carried he would have to move to leave out Sub-sections 2 and 3 as a consequential Amendment.

Amendment proposed— In Clause 3, after the word 'powers,' to insert the words 'and the Treasury shall repay the money so borrowed, with interest not exceeding 5 per centum 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. Gibson Bowles.)

Question propased, "That those words be there inserted."


said the gravamen of the hon. Gentleman's contention that the Treasury's borrowing powers were, by the words introduced into the Act of 1902 by the right hon. Gentleman the Member for West Bristol, quadrupled in point of time, might hold good if the whole transaction were as the hon. Gentleman had stated it. But the old practice was for the Treasury to borrow in the first three months of the year as much as was needed to finance the Exchequer during that period. Having paid off that sum, the Treasury then re borrowed it, together with an additional amount to finance them during the second quarter, and in the third quarter they reborrowed the amount they had borrowed in the first and second quarters, plus the further money they required. It would be seen, therefore, that the only difference of practice inaugurated in 1902 was that in the first quarter the Treasury were allowed to borrow there and then what they required for the year, instead of renewing their borrowings three times in the course of the year. It was, moreover, more economical for the country that they should be enabled to borrow on Treasury Bills in the market instead of being confined to borrowing for this purpose from the Bank of England. He hoped the Committee would consent to pass the clause in its present form. The only circumstances which, so far as he could make it out, would ever enable them to dispense with this power would be a reduction of the income-tax by 4d. or 6d. and that was a prospect which he did not think they were likely to realise in the near future.


asked was he to understand the submission of the right hon. Gentleman to be that there were certain financial advantages in making the loan for the longer period?


said that was so, and whatever Bills were issued for this purpose must be paid within the financial year. The real object of the proviso was to enable the Treasury to finance itself against the first nine months of the year, when the revenue was thin, and in anticipation of the great bulk of the income-tax, out of which the bills were paid, coming in in the last quarter.

*MR. McCRAE (Edinburgh, E.)

hoped that the Motion would not be pressed. It was quite wrong to suppose that the practice under discussion increased the borrowing powers of the Government by sixpence.


I never said it did.


said the hon. Gentleman suggested that it increased the floating debt, but it did not even do that. It provided the Chancellor of the Exchequer with the power of borrowing on better terms by giving him greater freedem.


suggested that the Chancellor of the Exchequer in one part of his speech gave away the other part. But although he held that there was substance in his Amendment he would not, by pressing it to a division, stand between the House and the more important business set down for that evening. He would, therefore, ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

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

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