§ * COLONEL R. WILLIAMS (Dorsetshire, W.)
In rising to move "That the three Reports of the Public Accounts Committee be now taken into consideration," I desire to thank the Government for giving the House this opportunity for helping to turn a precedent into a practice—a precedent set by the right hon. Gentleman the Leader of the Opposition in 1905, followed by the late Sir Henry Campbell-Bannerman in 1906, and cordially continued by the present Prime Minister. These Reports differ in one respect from those of the previous year, in that most of the muddles arising out of the South African War have gradually been got rid of, after a great deal of perseverance on the part of the Comptroller and Auditor-General and his staff. I can only say, with regard to a certain outstanding claim between the Mother Country and one of the Colonies which has been abandoned, that in this one case at least the Treasury have felt that it was not much use making further representations, and have left the matter to the conscience of the Colony concerned. There are two questions in these Reports which are of considerable importance, and both of them requiring legislation. The first is a question which arises in paragraph 11 of 1880 the first Report, dealing with certain expenses which, though properly chargeable on the rates, have been paid by the Treasury. The question is as to whether it is possible for Parliament to override the provisions of the existing statutes. This question was raised last year by the right hon. Gentleman the Leader of the Opposition with regard to an educational grant of £100,000 which was given for the building of schools. You, Mr. Speaker, were appealed to on that occasion—it was on 22nd July, 1907—and your answer was that the question would come before the Committee on Public Accounts, and further that two questions arose out of it, the first as to whether the House of Commons could disobey an Act of Parliament, and the second as to whether the House of Commons ought to disobey an Act of Parliament. Your concluding remarks, Sir, were, with regard to the first question, that you thought it was obvious that the House of Commons could disobey an Act of Parliament, and with regard to the second question, that that was a matter which you must leave to the conscience of the House. The House will see that the Committee on Public Accounts has gone no further than you thought it right to do, because they say that there is no doubt that it is within the discretion of Parliament to override the provisions of an existing statute by a Vote, and they prefer to leave it to the conscience of the House and not to say whether that ought to be done or not. Personally, I must say that I am strongly of opinion that the House ought to obey its own Acts of Parliament and that, unless they are properly repealed, they ought to be obeyed, and that a mere reference in the Appropriation Act to a Vote ought not to be reckoned sufficient to override previous statutes. All your Committee have recommended has been that where any Vote does override any particular statute, it should be so stated on the face of the Estimate, with the reasons for adopting that course; and in the Estimates for 1908–09 the Acts which are overridden by this particular Vote are so stated, but the House will notice that the Committee think it of great importance that, should a service be continued and paid for by Parliament, 1881 the governing statutes should be repealed or amended, and I hope the Government will take that course into consideration. The other case calling for legislation is a very curious one arising on the next paragraph—paragraph 12—of the first Report. That deals with a most curious misprint in the revised edition of the statute where the Secretary of State for War can now cause any military lunatic to be committed on discharge to a lunatic asylum, and be chargeable to the rates. In Great Britain a man so committed does become a charge on the rates, and Votes of Parliament are only charged if the man had been a military prisoner at the time, and was committed as a military prisoner; and the charge on the Vote only lasts for so long as he is a prisoner. After he ceases to be a prisoner he becomes chargeable to the rates. There was a misprint in the Criminal Lunatics Act, 1884, and the word which in the English statute is "prisoner" in the Irish Act becomes "person." The consequence is that the soldiers committed to an asylum for dangerous lunatics, whether prisoners or not, are now charged on the Prison Vote instead of on the rates. Although Bills several times have been introduced with the object of overcoming this difficulty, they have so far failed to pass into law, I suppose, because the Irish authorities have restricted this small charge. As it is a point which needs amendment, I hope the Government will take this question also into their careful consideration. The question of Parliamentary control being made or kept more effective arises more than once in the Reports. It arises, I think, in all three Reports, in the first Report on the question of Revenue buildings, in the second Report on the question of triennial contracts, and in the third Report on the question of Admiralty contracts. The question of Revenue buildings is very important. In the Estimates there is a long list of a great many Revenue buildings, such as post offices, bankruptcy Courts, and all sorts of Courts, which are presented to be dealt with during the year. It often occurs that some accident happens which causes delay, so that a building cannot be completed. On the other hand, it often happens—and it did happen in one case last year—that a 1882 work which has never been put on the Estimates, but has been long desired, suddenly becomes possible, because, as in this case, land falls in which is very much wanted. The land was, very properly, purchased, and the work begun at once, but as a matter of fact, that particular work had never been sanctioned by Parliament, although expenditure on similar works had been so sanctioned. The Committee have given careful consideration to the question as to how this might be avoided and how works which had never received full Parliamentary sanction might be brought within the purview of Parliament. They did not see their way to recommend a large alteration in the system, and only recommend that a strong distinction should be drawn between the diversion of money to a building already sanctioned and the diversion of money to one that has never been on the Estimates. The Committee did at one time think it would be possible for two lists to be presented to Parliament, one for work intended to be undertaken during the year, and the other for supplementary works which could be undertaken if any one of the works in the first list fell through, but it was represented that there were so many difficulties in the way that it was not a practical proposal, and they had to content themselves to urging the Treasury to exhibit the utmost jealousy in this matter. Another subject which deals with the effective control of Parliament is the question of triennial contracts in paragraph 15 of the second Report. It was a War Office question where the Army Council had thought they were at liberty to vary the limits of triennial contracts without reference to the Treasury; but the Committee cannot see that this is a licence that ought to be granted to the Army Council. When once the limits of triennial contracts are fixed by the Treasury the War Office ought to abide by them until they can get Treasury sanction for the alteration, and can prove satisfactorily to the Treasury that the larger figure is really for the advantage of the public service. Another question arises out of that. It appears that in these triennial contracts, so long as there is a contract for any particular amount remaining, the contractor is bound to have any work which 1883 comes within the terms of the contract and within the amount of the contract, so that supposing a building had to be put up, and a builder had the contract for all the building work up to £400, and another contractor had the contract for all the foundation work up to £400, and another the contract for the glass and iron work, for roofing, etc., up to £400, although the building might amount in total to more than the limit to which the Army Council might go, it appears that the triennial contractors are bound to have these contracts given to them, and that thereby a building which costs £1,200 may be undertaken by the Army Council without the sanction of the Treasury because the contractors have the contracts for the amounts of £400 each. Your Committee have been obliged to say that they cannot agree with the arguments of the War Office in this matter, and that they consider the general rule to be in such cases that the thing should be put to open tender. The other case in which the question of Parliamentary control comes up is the question of Admiralty tenders. There, of course, the Committee were on more difficult ground. The question of putting large battleships out to contract, with new designs, is a very difficult one. In the Reports the Committee have done what they could to make it clear that they expect the Admiralty on every possible occasion to take counsel with the Treasury, and above all, not to undertake large works without giving them out to tender, unless in cases of really great national importance.
Now, turning to the Reports themselves, there is nothing of very great interest in them. I am glad to say that the demands of the Auditor-General with regard to the money spent in diplomatic services have been met, and that all sums passing through these channels are now brought under his purview. There is an interesting note from the Reports, and that is the continual progress of the Crown Colonies in Africa, which is evidenced by the fact that the six Crown Colonies in Africa required £100,000 less grants-in-aid last year than the year before, which is very satisfactory testimony to the administration of these Colonies by the officers there. It is 1884 curious that apparently nickel coinage is appreciated in West Africa before it is here, and that the Mint make considerable profit out of furnishing nickel coins in certain parts of West Africa. I am glad to notice that the issues from the Consolidated Fund on account of the Uganda Railway have now ceased. It is not contemplated to issue any further amounts for that purpose, and the Treasury have already made a Minute providing that this shall cease. Turning to the second Report, which deals with Army Accounts, both the first and the last paragraphs bear witness to the harmonious working of the War Office and Exchequer and Audit Departments generally. The Appropriation Accounts are rendered more rapidly than before, although I am afraid they have not much chance that they might be dealt with by 31st March. The Appropriation Accounts for the Army are now got out much earlier than before, and a more careful examination is applied to them. I am also glad to notice that the surplus in the Army Appropriation Account is getting smaller year by year. It is a gratifying result of the working of the new system, and the new staff are gradually getting ito their work. The thing to be avoided is the constant change of staff and the change of too many of the staff at once. It is the tendency of all men coming into a new office to over-estimate; their requirements, and therefore the less changes that can be made of these officers of the Army who have to frame the Estimates the better it is. The difficulty of estimating is a good deal increased by decentralisation, because there are in consequence of that a good many more officers concerned—general officers in command of districts and so forth—and they are all naturally anxious to estimate as highly as possible. The multiplication of estimating authorities is apt to swell the Estimate unduly, and therefore, to swell the surplus unduly. On the question of the Engineer Store Account the Committee have felt constrained to draw rather serious notice to it. This is to be found at Store Accounts of the Army, Paragraph 24, of the second Report. Your Committee are glad to know that the Treasury have sanctioned a new 1885 staff altogether, an expert store-keeping staff for these Royal Engineers stores, and moreover they hope that the responsibility of the officers is being gradually realised. I think it has been in times past, that officers have received a statement for the purpose of passing it on, but have not been careful to realise that the statement which they pass on to somebody else ought to be verified, and did not take that course. It is almost impossible in the hurry of war to do so, but it is very important that it should be very seriously understood that however small the statement is whoever passes that statement on makes himself responsible for it. There is one subject which runs more or less through both the Army and Navy Reports, and that is, the necessity of grave co-ordination and revision of the regulations. Over and over again there are cases where officers have misread the regulations, or else they have had regard to an obsolete regulation or one for which another regulation has been substituted, and it does seem to the Committee that more care ought to be taken in the constant revising of regulations, both of the Army and the Navy, and in co-ordinating the regulations of the various branches of the service, so as to make them perfectly intelligible, and not only intelligible but so clear—I will not say that it is impossible that they should be misread, because there is no getting to the bottom of human possibility of mistake, but unlikely that they should be misread and not acted on properly. In the Army Report there is one subject of very great importance indeed; I refer to what has been known as the Stock valuation return. The Report of the former excellent Accountant-General of the Army—the Director of the Finances of the Army—characterised that return "as a work of supererogation not worthy of the trouble bestowed on it"; but at the same time it is very necessary that Parliament and the nation should be assured that the stocks in hand are what they are reported to be, and that a proper reserve is kept up in the Army. That is quite easy because there is a reserve, known as the Mowatt Reserve, which is laid down as the minimum which ought to be kept in store, and your Committee are of 1886 opinion that the best way of dealing with the matter would be to do away with the stock valuation return, but to ask for a certificate to be rendered annually to Parliament, as early as may be, to the effect that the Mowatt Reserve is fully and duly kept up. The certificate is to be rendered by someone responsible to Parliament. It should be rendered with the Estimates, although I believe there is a further proposal on the question, and it will come before the Public Accounts Committee again, because the form of the certificate, the person by whom it is to be rendered, and the time at which it is to be rendered are still under consideration. But the change is one which your Committee consider to be eminently desirable in the interests of the public and in the interests of the nation. The last paragraph of the second Report, the Army Report, deals with the question of the Director of Army Finance, and the Secretary of State for War was good enough in answer to two Questions to say that in any modification which would be made in the position the principles laid down in the second Report of this year would be carefully and accurately respected, and the financial control of officers would be in no way weakened, but he would lay documents dealing with the duties of the Financial Secretary. I hope the time may come when that Paper will be laid, but it seems to me that the two functions of the Assistant Director of Finance should not be mixed up. He is the Assistant Financial Director, and as such is responsible to the financial member of the Army Council, but as Accounting Officer of the Army he is responsible to the Secretary of State for War alone, and he ought to be able to have direct access to the Secretary for War, because any alteration which he is authorised to make must be made on the authorisation of the Secretary of State and only of the Secretary of State. It is very important to keep clear the two functions. As Director of Army Finance and Accounting Officer; in one function he is responsible to the financial member of the Army Council, but in the other he is responsible to, and ought to be in contact with, the Secretary of State for War.
1887 The only thing which I need say on the Navy accounts is that it would seem to be of advantage if it were possible to get for the Navy some sort of Mowatt reserve as in the Army. The Navy are under a statutory obligation to furnish certain valuation returns, and with those, of course, we cannot interfere, but it is worthy of consideration whether it would not be possible that the Navy should be able to furnish to the House and to the Nation some sort of certificate in the same way as it is proposed for the Army. The only other question arising out of Paragraph 24 the Third Report is that the Committee of Public Accounts in the Second Report of 1898 recommended that with or without Supplementary Estimates Parliament should be informed at the earliest possible opportunity of any alteration of programme. In regard to the programme of 1906–1907 Parliament was only informed of the alteration of the programme by a statement by the First Lord of the Admiralty in Parliament in July, 1906, and though your Committee are informed that that statement was made in order to carry out the recommendation of the Public Accounts Committee, and while they appreciate the intention of carrying it out they think that a mere statement to the House is not sufficient, and an earlier presentation of a Paper, if not of a Supplementary Estimate, would be very desirable. I think that those are the only observations I need make on these Reports of the Committee, but I want to thank the Government once more for continuing the practice of recalling to the House the fact that its functions are not merely the control of the finances of the nation but also the control of the accounts as well. I also think, indeed I know, the Committee would like me to say how zealously they are served by the Comptroller and Auditor-General, by his Assistant and by his staff; how effectively and willingly all requirements are met by the officials of the Treasury who come before them, and how they think that there is a real desire on the part of the officers of the spending Departments to conform to the demands of Parliament and to keep their expenditure within reasonable bounds. At the same time, I think the functions of the Public 1888 Accounts Committee are very valuable, and I should like to take this opportunity of saying that I believe that the members of few Committees in this House attend so regularly, or when they are there take such a keen interest as the members of that Committee, and the House may be satisfied that the Committee does its best to carry out the functions entrusted to it. I beg to move "That the Reports of the Public Accounts Committee be now taken into consideration."
§ * SIR D. GODDARD (Ipswich)
said he had much pleasure in seconding, and he should like to represent the gladness they all felt that the Government had again given them another opportunity of considering the Reports presented to the House, and bringing them directly under its attention. He should like also to add his testimony to the exceeding ability and thoroughness with which the Auditor-General and his Department carried out the important work which the House entrusted to them. The work of the Public Accounts Committee and the Reports which they presented were, he thought, a very important part of the control of Parliament over national expenditure, and he would like to take the opportunity to impress on the House the importance of maintaining as much control over the expenditure as it was possible to do. Of course the principal means of Parliamentary control over expenditure was through the Estimates which were regularly presented to the House, although he noticed that when they were considering them a great deal of time was devoted to the discussion of great principles involved, rather to the exclusion of some financial details which were bound up in those principles. He did not find fault with that, because after all, principles controlled expenditure, and details depended upon them. At the same time he regretted the growing tendency of the House in discussing Estimates to pay more attention to some great matter of principle rather than to the financial aspect of the question. Another matter was—he hoped in this session less than usual—the large number of Votes which escaped criticism altogether, and never came under the observation of the House, and to that extent the assembly lost control, 1889 Parliamentary control would be very greatly improved if the recommendations of the Committee on National Expenditure set up some years ago had been adopted. One was that there should be a Committee of Estimates as well as a Committee on the Appropriation Account. It was said that the Public Accounts Committee had not much control over expenditure because they dealt with accounts that had been voted and expended eighteen months or two years before; and that therefore it was useless to go into the question of extravagance with regard to them. But the Public Accounts Committee did exercise considerable influence over the expenditure of the nation. Many recommendations were made which led to the keeping of better accounts and to other improvements. There was, for example, an aggregate of contracts amounting to £261,000, and further expenditure of £163,000; that latter expenditure was undertaken without any competitive tender at all. The Committee had elicited that all these expenses occurred before the Report of the Public Accounts Committee in 1906, and that no such arrangements had been made since that time, nor were they likely to be made. He thought that was an illustration of the usefulness of the Committee. He agreed with the Chairman of the Public Accounts Committee in his Minute in the Second Report, that in no circumstances should the War Office be permitted to lessen the financial responsibility of the accounting officer and his staff. That matter was carefully looked into, and the Committee considered it was essential for effective Parliamentary control over military expenditure that this Minute should be carefully observed. That was a matter the House should not lose sight of because there had been a tendency to make changes such as that which would have been made by the Army Council Bill that was introduced and afterwards withdrawn. There were several causes which helped to diminish the effectiveness of the control of Parliament. The most vital was the power, known as virement, given to the Treasury, to sanction variations in the Estimates passed by Parliament, and enabled surplus money unspent on one or more subheads of a Vote to be 1890 used to meet deficiencies caused by over expenditure on other subheads. In the case of the Army and Navy there was an extended power of allowing money unspent on a whole Vote to be transferred to meet deficits caused by over-expenditure on other whole Votes. Few Members of Parliament really realised how that power of the Treasury worked out. He was not at all sure that it could be avoided altogether; nevertheless the greatest vigilance ought to be exercised in guarding the use of that power. The Treasury, in reality, was empowered to revise the decisions of Parliament. In the accounts under review the Vote for the Navy was £33,500,000, under practically seventeen heads. Of these heads, eleven had surpluses amounting to over £1,000,000, while six had deficits amounting to £643,000. Under the power conferred upon them the Treasury consented to allow the surpluses to be used to cover the deficits. The effect of that was that the balances surrendered to the Exchequer were reduced from over £1,000,000 to £400,000. He was not suggesting that there was anything wrong in such payment of money, but it meant that the Navy spent on certain votes £643,000 more than Parliament voted for those purposes. It was quite conceivable that if this large amount had been added to the Estimates Parliament might have refused the expenditure, and, therefore, that large sum was lost to Parliamentary control. Great changes were effected in this way. On Vote 9 for the Navy (Armaments) there was a saving of £260,000, which was swallowed up by a deficit of £265,000 upon shipbuilding, Vote 8 (Material). He could not help thinking that this power went a little too far. As to the Army; on Vote 11 (Military Education) there was a deficit of £2,300; on Vote 15 (Non-effective Charges) a deficit of £32,700; but these were met out of a surplus on Vote 1 for Pay of Army, of £358,000. But the evil did not end with losing Parliamentary control. It resulted in bad Estimates. Of course, no one would suggest in connection with a Department that an over-estimate was put into an account for the purpose of finding money for something else; but, after all, they could not ignore human nature, and those who 1891 had the preparation of Estimates had great incentives before them in this matter. They all desired to avoid a deficit, which meant that a bad Estimate had been made, and one naturally fell back upon the people which made the Estimate. It also had the effect of requiring a Supplementary Estimate to be laid before the House, and those who were in charge of the Votes in the House did not like Supplementary Estimates because they involved bringing before the House of Commons the whole or the greater part of the Vote, thus causing discussion which might occupy a great deal of time. One incentive was that it was a very nice thing after all to have a little nest egg on which to draw. That was the first thing which arose from this plan. The second was that it involved very serious changes in the Estimates that had been passed by Parliament. The fact was that money voted for one purpose was either not spent or was only partly spent, and the object for which it was voted was either left undone, or was not completed, or was only done in a small way. Meanwhile the money voted for that object was spent on something else. In this way they started entirely new works, which often proved very expensive, without any Parliamentary sanction whatever, but merely done with Treasury sanction. ["No."] He would give illustrations to show that he was correct in what he was saying. Take the Army Account, Vote 10. There were six subheads in this Vote, and in respect of these there had been an expenditure of only £47,000. This meant that out of these six subheads four had a surplus amounting to £98,000, or about two-thirds of the whole amount voted. Take subhead (b) barracks and hospitals. The Vote was for £10,000, and the expenditure was £18,000. It was worth while looking at the evidence given in the Report. Four of these items were abandoned for one reason or another; four were not commenced during the year—that sometimes happened, and it could not be avoided—on eleven the progress was less than expected; one was a continuation from the previous year; one was considerably in excess of the Estimate; and there was one new item which was not in the Estimates 1892 at all, and which was begun with Treasury sanction. He knew there were difficulties which prevented the money being spent—doubtless difficulties in acquiring sites, or sometimes difficulties in regard to foundations for buildings as the Chairman of the Committee had pointed out. Take Subhead N, Vote 10, Fortifications. Here the Vote also was £100,000, and the expenditure £115,860. What was the reason of that excess of expenditure? One item was not proceeded with; on seven items the progress was less than anticipated; three items on which there was an excess of expenditure were carried out with Treasury sanction, and on ten items there was no estimate at all before the House—they were begun with Treasury sanction only. On the ten items begun with Treasury sanction, and not by control or vote of the House, £31,458 was expended during the year. There might be, and probably would be, further liabilities in regard to expenditure of that kind. In Navy Vote 10 they had examples of the variations in the estimates. For the public station, Portsmouth dockyard, the original estimate passed by the House was £11,600, which was revised and raised to £31,600. For Sheerness harbour protection the provisional estimate of £6,800 was increased to £11,000. Turning Granville Hospital into a Marine barracks was originally estimated at £3,000 in the first instance, then £7,500, and afterwards £8,300. These were the sort of variations which occurred in the estimates. He now came to the third heading showing the new works commenced with Treasury sanction only. In the Civil Service, Class I., Vote 5, in respect of the public works, Swansea, and the acquisition of the site and erection of buildings—he thought it was in connection with the Bankruptcy Court—no estimate was ever put before the House for that expenditure; Parliament had never had a word to say about that work at all. The sum of £1,267 was spent with the Treasury sanction out of the savings on other items. The building would involve a cost of, say, something like £7,500. That had been given in evidence he believed. Over that expenditure of £7,500 Parliament lost all control whatsoever. It would be said that it came up next year; that 1893 was perfectly true, but when they had spent £1,200 they were compelled to vote the balance of the money to complete the work.
§ * SIR D. GODDARD
thought it was the site and buildings. Then take Vote 8, the Revenue Buildings: there were seven new Works started during the year with Treasury sanction only. The expenditure during the year was £1,720, and there was of course much further liability upon all those works. There, again, he did not think it would be possible, since these works were started, for Parliament to withhold the balance. In the Navy Vote 10, there was an item as to a culvert from the river to the basils in Chatham dockyard, which was to cost £5,300, but no estimate had been before the House, and the work had been carried out. Another item of £2,900 for the training establishment, and additional accommodation for boy artificers, had not been before Parliament at all. He was not contending that these Works should not be carried out, for probably it was most desirable that they should be carried out; he was only dealing with the point that, so far as Parliamentary control was concerned, they never had an opportunity until after the money was spent of having a word to say in regard to them. He saw very little chance of reducing expenditure in respect of all these items if works could be carried out in this way without any Parliamentary sanction or control. He supposed that any suggestion of varying or reducing the power given to the Treasury would be met with the reply that if they did that it would inevitably lead to over-estimating in the Departments. He thought that would be the general answer to the proposition. At all events, if the Departments chose to put in overestimates, they would have to come before the House of Commons, which would have an opportunity of discussing them and of saying whether they agreed. He had felt that a number of Members of the House might not know all these details which really only came under 1894 the notice of members of the Public Accounts Committee, and this was the one opportunity they had of bringing them to the notice of the House. With these remarks, he had much pleasure in seconding the Motion.
§ Motion made, and Question proposed, "That the Reports of the Public Accounts Committee be now taken into consideration."—(Colonel Williams).
§ MR. BOWLES (Lambeth, Norwood)
said he should like to associate himself with everything the hon. Gentleman the Chairman of the Committee had said in expressing the obligation which they felt to the Government for having allowed them this opportunity of discussing the Report of the Public Accounts Committee. For his part, he wished it had been possible to give them the opportunity earlier in the session and before August, because that would, at any rate, have relieved to some extent the necessarily rather antiquated character of a debate of this description, and he hoped that in future it might be possible to allow the House a little more time for consideration of the Reports. The question was: "That the Reports of the Public Accounts Committee be now taken into consideration." The result of that form of putting the Question was that the moment the Motion was carried the House immediately proceeded to consider something else, the effect of which was, as it seemed to him, that the House never actually expressed its agreement with the Reports at which the Committee had arrived. Technically, this was the last link in the chain of Parliamentary control, and he would suggest whether it would not be better in future that there should be some expression of agreement of that sort. For some reason he had never understood, the Public Accounts Committee had always chosen to make its Reports on the accounts of the year in three parts, and it would be difficult to ask the House of Commons in one Resolution to agree to all three Reports containing very varying propositions. Consideration of this matter had led him to ask whether the better course in the general interests of this procedure would not be that the Committee should issue in fact as well as in 1895 name one Report on the whole Appropriation Accounts of the year, although perhaps in instalments and with interim Reports—that it should not be first, second, and third Reports, but one Report to which the House before the year was out should give its express assent. They were dealing here with both sides of the accounts for the financial year 1906–7, and they amounted to an examination by the Committee of a total raised and expended of no less than £166,986,719, and that was the true and real expenditure upon the Government services of the country during that period. There was one duty and one power which had always been admitted to be upon the Public Accounts Committee—that of considering any changes which might be proposed and, if necessary, of suggesting changes in the form of the account of the national expenditure. That really must be so, because it was only through accounts that the Committee could do its work and that Parliament would be informed what was the real situation with regard to finance in any particular year. He thought it was a most extraordinary thing that in a great commercial country-like this, and one in which national finance had been the subject of thought and care on the part of so many great men, there should be at this moment no single account presented to Parliament which gave or even pretended to give an exact true and complete statement of Imperial expenditure which had been undertaken for any one year. It really was literally true as could easily be shown. He had taken some trouble with this. There were six accounts presented to the House and the country of the expenditure of this particular year 1906–7 to which any taxpayer could go who wanted to find out how we stood in regard to any item. There was first of all the Budget statement made at the end of the year, there was the Finance Account, there was the Statistical Abstract, there was the Return of Public Income and Expenditure, there was the further Return which purported to be a Return of national expenditure for a particular purpose, and there were the Appropriation Accounts. It was a very remarkable thing that the first four of these gave one figure—they all agreed—the Fowler Return gave another, and the Appropriation Accounts 1896 gave a third, and in his belief the figures which were brought under the review of the Public Accounts Committee were different from each one of these and larger than any of them. According to the Budget statement, the Finance Account, the Statistical Abstract, and the Income and Expenditure Return, the cost of the Army was £27,765,000. According to what was called the Fowler Return, it was £26,878,477. According to the Appropriation Accounts it was £32,000,000 odd, and according to the Prime Minister in a speech he made to the House in direct contradiction to his own Budget statement, amusingly enough as he thought, it amounted to well over £32,000,000. In all cases the accounts were different, and it seemed to him that in the interest of the taxpayer and of the House and the country as a whole, the time might really have come when with the assistance of the Public Accounts Committee some attempt should be made to render to the country and to Parliament a real, full and complete statement of the expenditure on national services during the year. That was not done now, and it appeared to him that it ought to be done. He would like to deal with two points raised by the Report of the Committee of very great importance. The first was Paragraph 11 of the first Report. It dealt with the practice of overriding any existing Act of Parliament by means of a vote taken in Committee of Supply and supported by the Appropriation Account of the year, and the Committee unanimously laid down this rule.In cases where such an emergency arises, and there are reasons against the amendment or repeal of the statute governing the case, your Committee recommend that the fact that the proposed Vote overrides an existing statute should be clearly stated on the face of the Estimate, with the reasons for adopting that course, so that no doubt can exist of the deliberate intention of Parliament. The exceptional nature of the Vote should also be indicated in the Appropriation Act.That matter was evidently one of importance, and it was not a new matter. It had certainly twice before been before the Public Accounts Committee and the Treasury, and the Committee had always been perfectly clear that this was constitutionally and financially an improper and dangerous thing, and the Treasury, he believed, had always agreed and heartily supported that view. He 1897 gathered the impression from the Treasury that they still held the opinion that to over-ride the provisions of an Act of Parliament by the Estimates was constitutionally and financially a dangerous proceeding. They might make in that way great changes in policy. They might alter the whole system of administration of a particular branch of the public service from beginning to end by altering the direction and the object of the various grants on which that service depended. If they were going to make administrative changes they ought not to do it otherwise than under the full and free discussion which alone could be secured if the change was carried out by means of statute in the ordinary way. The effect of doing it in this way was to deprive the House of any opportunity of adequately discussing the matter. That evidently, therefore, was a matter of considerable importance, and the Committee unanimously upheld the view which it had always held whenever this question had been brought before it that it was an improper and dangerous thing to do. This first Report was presented to the House, and was in the hands of the Government early in June last, but the Government, in fact, went on with proceedings of exactly that character, while it was perfectly open in the succeeding Appropriation Act in August to adopt the recommendation of the Committee by indicating what they were doing in the Appropriation Act. Where the entry under the Educational Vote occurred, the Government for one reason or another did not adopt that part of the recommendation by indicating in the Appropriation Act of last year the reasons for the course they were taking with regard to the £100,000 to which his hon. and gallant friend had referred. He did not refer to that particularly to complain of the Government, but they would be glad to know what view the Government took of their liabilities under the recommendation of the Committee in the future. Did the Government intend to adopt the recommendation of the Public Accounts Committee? Did they intend only to resort to this practice as rarely as possible, and only for a temporary emergency? If so, the House might be assured that this course would not be adopted for the third time during 1898 the forthcoming year. Might they take it, when this course was adopted in future, that it would only be because of temporary emergency, that in every case the fact of its being adopted would be clearly stated in the face of the Estimates, that it would be indicated in the Appropriation Act, and that in this particular case of the educational £100,000, and in the case referred to by the Report of the Committee, the statutes which were being over-ridden in this way would be amended or repealed in accordance with the plain recommendation of the Committee? That was a matter upon which, in view of the clear and distinct views of the Committee, the Government might properly be asked to give them their views. The other point was also of great importance, and was raised in Paragraph 39 of the second Report dealing with the position of the Accounting Officer of the War Office. They expressed a very strong opinion that under no circumstances should any change in the administration of the War Office be permitted to impair the independence of that branch or to lessen the direct financial power and responsibility of the Accounting Officer and his staff. The Committee regarded this independence and undivided responsibility of the Accounting Officer as essential to the proper discharge of their duties, and to the maintenance of effective Parliamentary control over military administration and expenditure. That dealt directly with the position of the Accounting Officer of the War Office, who came before the Committee to account for some £32,000,000 of expenditure in the year. It had been announced that changes in the title of this officer were being made, or had been made, and he desired, in view of the recommendation of the Committee, to ask the right hon. Gentleman for an assurance and explanation with regard to that matter. The House was well aware of the vital importance of the place of the Accounting Officer in the whole fabric of that system. It all depended on that. He was the vitally important man. He it was who was personally responsible, not to the Department but to Parliament, for the correctness of the accounts, and for the legality and the propriety of the expenditure. 1899 He might refuse to issue any money from his Department, even though it might be ordered by all the great authorities of the Departments, subject only to the power of the Secretary of State himself to discharge him from that responsibility. If the Accounting Officer in any Department was to exercise these vitally important functions as they should be exercised, he must necessarily have what every Accounting Officer hitherto had had, an absolute power to advise and guide the spending officer as to the legality and propriety of the expenditure. The Accounting Officer of the War Office was appointed by the Treasury, and he had been up till now the Director-General of Army finance. By Order in Council of 10th August, 1904, the powers and duties of that officer were defined, and they were told—The Director of Army Finance will act as Deputy and Assistant to the Finance Member of Council, and as the Accounting Officer of Army Votes, Accounts and Funds shall be charged with the allowance and payment of all monies for Army services; with the accounting for and auditing all cash expenditure, and preparing the annual accounts of such expenditure for Parliament; with the audit of all manufacturing expense, supply and store accounts, and with advising the administrative officers at the War Office, and in commands on all Questions of Army expenditure.Under this system, which had existed up till now, the Accounting Officer of the War Office had been given directly and expressly by Order in Council the power of advising administrative officers at the War Office and in command on all matters affecting Army expenditure. That power was confined by the terms of the Order in Council to the Director of Army Finance. He understood it was now proposed that the Director of Army Finance should cease to exist.
§ THE FINANCIAL SECRETARY TO THE WAR OFFICE (Mr. ACLAND,) Yorkshire, Richmond
It is an alteration in name and nothing else.
§ MR. BOWLES
said he understood the office had been abolished, and the Order in Council no longer really applied to anybody, because there was no Director of Army Finance, and the express duty and power given by the Order was withdrawn. If the change 1900 was made, and there was no new Order Council—
§ THE SECRETARY OF STATE FOR WAR (Mr. HALDANE,) Haddington
In every substantial and material respect the same.
§ MR. BOWLES
said he did not know what that meant. The right hon. Gentleman went to the trouble of altering the name of an officer in the War Office who was entrusted with vitally important powers in the control of finance. He could not alter the name because he thought some other name would sound better or prettier. There must be some reason. In view of this paragraph in the Committee's Report what he wanted to know was whether this new officer with a new and more beautiful name would, in fact, be in the same position, and not merely substantially the same, in regard to his power of advising administrative officers at the War Office in questions of public expenditure.
§ MR. BOWLES
said he should be glad to have that carried out, because if not the duties and responsibilities of this gentleman under the Treasury remained and yet the power to carry them out might under this new Order in Council be withdrawn. He hoped the right hon. Gentleman would not think he was unduly suspicious, but he would remember that there had been repeated attempts in the War Office and in other Departments to relieve Spending Officers from Accountant's and House of Commons control. So lately as 22nd April, 1907, he had asked whether the right hon. Gentleman's attention had been called to the Army Order No. 28 of 1901 February, 1907, in which the Accounting Officer in command had had to be put on the staff and under the orders of the Spending Officer whom he was there to control. The right hon. Gentleman's reply was that his attention had been called to it, but that it was a misprint, or a slip. It was not the first slip of exactly the same character that had been made in Army Orders. That sort of misprint and slip following one another produced an impression that there was a desire in the War Office in some way or other to carry out what they knew were the wishes of a great many prominent persons connected with military administration, to exempt people who had the spending of money from Parliamentary control. In view of the Committee's recommendation on this matter, he desired to ask why the right hon. Gentleman wanted to change the name of this officer. What was the particular objection he had to the name of Director of Army Finance? What was the new name he proposed, and in what respect did he consider it more useful in the public service? If he insisted on changing the name of this officer on whose duties, functions, and independence the whole control by the House of military expenditure depended, he hoped he would be able to give them a definite assurance that the Order in Council defining his duties should not be merely substantially the same, but, in fact, the same as the duties of this important officer, and that, in fact, whatever the new name would be, he would have the same power in all respects as the officer whom he superseded. The points he had mentioned, whether the Government intended to accept the recommendations of the Committee with regard to overriding statutes and whether the right hon. Gentleman would give them the assurance with regard to the financial administration of the War Office for which he had asked, were, perhaps, the most important questions raised by the Reports of the Committee.
§ MR. KETTLE (Tyrone, E.)
said he had had the honour to be a member of the Public Accounts Committee, and he had regarded hon. Members' continuous interest and attention on matters which came before the Committee as one of 1902 the most marvellous spectacles of unrewarded industry that had ever borne under his notice. The chief thing that struck him about the Committee was the entirely futile and illusory character of its pretended control over public expenditure. In these Reports they were dealing with expenditure that they could in no way check or prevent, but with the accounts of two years ago. The money had been paid, cheques had probably been burned, and some people who had paid, or to whom payments were made had gone to their reward in another world. He went on the Committee with the intention of being as industrious as the hon. Member for Norwood, but when he had attended four or five meetings, he realised the inequality of the terms on which a humble Member like himself approached the public officials who were present, and the completely illusory character of the control of the Committee over public expenditure, and he was led to the conclusion that he would be better employed if he gave his attention only to expenditure in Ireland. There were only two or three items of Irish expenditure to which the Public Accounts Committee were able to give any attention. One was a charge of £358 for the early delivery of letters to the Lord-Lieutenant. He did not mind when the Lord-Lieutenant's letters were delivered; it was with the letters sent out by the Lord-Lieutenant he was concerned. Another item related to the law charges for criminal prosecutions. The point to which the Committee drew attention was that the expenditure showed that there had been an overriding of the statutes on the subject. The other point was with regard to the maintenance in Irish lunatic asylums of soldiers and sailors who were afflicted with lunacy during the course of their service. That was probably the only case in which the English language misused had worked in favour of Ireland and against this country. Owing to a mistake in a revised Statutes Act, expenditure which would have fallen on Ireland fell on the Prisons Vote. His point was that out of a total expenditure for the home government of Ireland of £7,500,000, the items which came under the observation of the Committee made a total of £8,400. Could control of that sort over public expenditure be regarded as 1903 in any way effective? He wished to deal with the constitution, powers, and general policy of the Committee, and not with special points of detail. Under the present system if special points were raised it fell to the Secretary to the Treasury to reply, but in view of the limitations of the human intellect no Member of the House was really capable of answering for all the public services whose accounts came before the Public Accounts Committee. Some members of the Committee, including those belonging to the Labour Party, had come to the conclusion that for this House to have any real control over public expenditure there must be not one Committee, but that really every Minister ought to have a Committee of Members representing all parties to overlook the expenditure in his particular Department, The powers of these departmental Committees ought to be not merely retrospective. What could they do? The hon. Member for Norwood said they could disallow. He did not remember any case in which the Committee disallowed anything. If every Minister was—he would not say assisted, but hampered, by a Committee of the House which did not concern itself with questions of policy, but with questions as to how the best value was to be got for the taxpayers money, he was convinced that the House would have something like real control over public expenditure. He did not wish to make any unfavourable criticism of the heads of the various Civil Service Departments. Having listened to them when they were before the Public Accounts Committee, it struck him that they were in a position of undue advantage when a comparatively uninformed Member cross-examined them in regard to the details of expenditure. If there were departmental Committees sitting continuously during the session and examining the expenditure of each Department item by item there would be some sense in Members devoting a portion of their leisure time of examining the public accounts. He thought there was a great future before a Government of this country which would come into office on the programme that they would refuse to legislate for an entire year, and that they would scrutinise jealously every single item of expenditure. The 1904 present Government ought to favour that proposal. Their legislative programme this session had not met with any conspicuous success. If the House had devoted the weary weeks given to the Licensing Bill to the scrutiny of public expenditure they would have got better results for the time spent. He went on the Committee with a sincere desire to secure economy in public expenditure in Ireland. He did not possess the matchless energy of the hon. Member for Norwood, who always came up smiling after a futile encounter with a public official, but he had come to the conclusion that the Public Accounts Committee as at present constituted belonged to the region not of business but of illusion and make believe. He hoped the House would consider the suggestion he had made. The Reports of the Public Accounts Committee constituted a fresh argument for Home Rule and the devolution of the business of each country to the representatives of that country, but failing that and during the interregnum that must elapse before some Government went to the country on that policy [Laughter]—he believed hon. Members above the gangway were not unfavourable to that—but failing that, or pending that, he sincerely hoped the House would take into consideration the idea of establishing sub-committees of the Public Accounts Committee to each of which would be apportioned the work of supervising the expenditure in a given Department. He believed if that system were adopted a sum under the present Estimates of between £2,000,000 and £10,000,000 a year might be taken off the public expenditure.
THE FINANCIAL SECRETARY TO THE TREASURY (Mr. HOTHOUSE,) Bristol, E.
I wish to refer briefly to the remarks which fell from the hon. Gentleman who has just sat down. I can assure him that if I thought for a moment, or if any Member of this House who for the time represented the Treasury thought that the appointing of separate Committees, to examine the expenditure of the different Departments would result in greater economy than is secured at present, such a suggestion would be welcomed and accepted by the representatives of the Treasury in this House. 1905 On his own confession, he has only attended the meetings of the Committee three or four times, and I do not think he has attended a previous debate on this subject. I think he is under a misapprehension as to what are really the functions of this Committee. They are not appointed to control public expenditure, present or future, but rather to see whether the money which has been spent in the past has been properly spent and allocated to the proper heads of expenditure, and is in general accordance with the views of the Comptroller and Auditor-General. That is the function which has been, I know, given to them, and I think right hon. Gentlemen opposite will agree with me that is the sole function of the Public Accounts Committee. Having made this very brief statement of the proper questions to be raised in debate in this House, let me answer one or two points of the hon. Member for Norwood. He drew attention to the Report of the Public Accounts Committee, and he rather gave the House to understand that the Treasury had failed to act up to the understanding which they had come to with the Comptroller and Auditor-General, and they had not presented to the House a clear statement on the Estimates of how expenditure in regard to law charges and criminal prosecutions in Ireland was set out.
§ MR. BOWLES
said he did not refer to law charges in Ireland particulaly. His point was that this recommendation had been made, but the Government went on dealing in the exact way which the Committee had condemned with the £100,000 grant for education, and failed to make any communication of the appropriation. It was perfectly open to them to pursue the course which the Committee recommended, and he wished to know whether, in future, they intended to carry out the recommendation.
§ MR. HOBHOUSE
I do not see the paragraph in this Report with which the hon. Member deals. I thought he was dealing with their expression of opinion in the first Report of the Committee, paragraph 11, with regard to expenses in connection with law charges and criminal prosecutions in Ireland. Upon that 1906 point I desire to meet him. For the first time in the Estimates of this year it is clearly set out in Class 3 of the Estimates how the prosecution expenses are met, and it sets forth in detail that they are grants-in-aid in relief of expenses under certain Acts of William the Fourth and seven or eight other Acts. These are grants-in-aid in relief of expenditure under those Acts, so that there can be no possible misapprehension of the intention with which the grant is made or the purposes for which it is used. That has been done for the first time in the Estimates of this year, and therefore I think the complaint of the hon. Gentleman is not a well-founded one.
§ COLONEL R. WILLIAMS
I think the point to which the hon. Member drew attention was the last sentence in the recommendation of the Committee to the effect that—The exceptional nature of the Vote should also be indicated in the Appropriation Act.
§ MR. HOBHOUSE
I will take care that in the next Appropriation Act that recommendation shall be attended to, but I think the real point is that the views of the Committee have been met for the first time on the Estimates this year. I do not think that there is any other point which the hon. Member raised for which I am responsible, and with which I need deal, but I would say, if one may speak from one's own private point of view, and from one's action in another Department, that I have felt, and I do feel, that it might be desirable to have set forth the total expenditure on the account. But the difficulty of doing that is complicated by the fact that nearly all these Returns look at the point from a different point of view, and the moment you do that the figures are so complicated by the aspect from which they are viewed that it is almost impossible to put them definitely. In the case of the finances of India, with which I was familiar for a short time, my recollection is that with far smaller sums to deal with, they have exactly the same difficulty to meet, and although they do present to this House of Commons a set of figures which is approximately,, and very closely approximately, correct yet there are discrepancies in the financial 1907 statement which are no greater and no worse than those in these accounts. That is only an opinion which I venture to express from that short experience, and from my own personal knowledge. I hope this explanation will meet the views of the hon. Gentleman.
§ MR. AUSTEN CHAMBERLAIN
I am sure of what the hon. Gentleman said as to the divergencies of different financial statements, and coming to the present one a very simple explanation will show how these divergencies arose—for the reason the hon. Gentleman has referred to, namely, that in making the different statements you are approaching the figures from a different point of view, and are desirous of showing a different kind of thing. In the Fowler Return you see, for instance, the net proceeds of the Post Office; in the Budget statement you see the items constituting the whole particulars of those earnings on I the revenue side—the whole gross revenue. I do not think it is possible to avoid altogether discrepancies of that kind. I think that for different purposes we must, to a certain extent, have different Returns, and if we were to endeavour to reduce all these statements to one, I am quite sure there would develop the gravest disagreements in this House as to what that one statement should be. I only know of one in regard to which there has been anything like common agreement by those who have spoken, without party discussion or debate of a party nature, of: what would be an ideal statement of the kind. I am inclined to think that the statement which bears the name of Lord Wolverhampton—the Fowler Return—is the best statement for a person to consult in regard to our national expenditure. However that may be, I do not want to dwell upon it any further, but I wish to go to the other point with which the hon. Gentleman dealt. I think he misconceived altogether the Question which the hon. Member for Norwood put. It is quite true that the hon. Member referred to Paragraph 11 of the first Re ort of the Public Accounts Committee, and based Iris Question upon it, but the Question he asked was whether the Treasury intended for the future to accept the 1908 principles laid down by the Committee in that paragraph. He was not particularly concerned with the instances which were quoted in which what the Committee considers an undesirable practice took place, but he was very much concerned with the general principle advocated for the future, and which the Committee laid down—Your Committee, after hearing the evidence of the Comptroller and Auditor-General and of the representative of the Treasury are of opinion that while it is undoubtedly within the discretion of Parliament to override the provisions of an existing statute by a Vote in Supply confirmed by the Appropriation Act, it is desirable in the interests of financial regularity and constitutional consistency that such a procedure should be resorted to as rarely as possible and only to meet a temporary emergency.What we want to know from the Government is whether they accept that principle so laid down by the Committee, and whether they will act upon it in future. If they do, it will naturally follow that the further recommendations of the Committee, that the exceptional nature of the Vote should also be indicated in the Appropriation Act, would find expression also. The hon. Gentleman says in regard to the particular matter of the particular Vote which was before the Committee at the time when they made that Report that the Government have accepted their views, and they printed on the face of the Estimates an indication of the character of the Vote, that it is making an exception to the Statute and that they are going to do that always.
§ MR. HOBHOUSE
was understood to say that he was informed that the Government had introduced a measure to repeal the various Acts which stood in the way of that orthodoxy being observed, and it had not been possible to proceed with that measure, but as soon as possible he would undertake to get the repeals made, necessary to observe what was called financial regularity.
§ MR. AUSTEN CHAMBERLAIN
That is satisfactory as far as it goes, and I do not want to press the hon. Gentleman unduly about the legislative steps. I think that the irregularities date back for a very long time, and all Governments 1909 seem to have been willing when their attention was called to them to legislate whenever they could do so without waste of public time and without interference with legislative and other Parliamentary business that they had in hand; but it is one of the defects of our system that this kind of non-controversial measure, exciting no interest except among members of the Public Accounts Committee, and officials and ex-officials, gets crowded out in the competition. I presume I may understand, however, from what the hon. Gentleman says that he clearly recognises that the practice of doing by Vote what is in contravention of a statute is an irregular practice, not to be repeated and is only to be continued in those special cases where it is admittedly desirable until such time as early as possible when Parliament can legislate by repealing these Acts, and that consequently the Government would never think of using this power in order to drive a coach and six through an Act, when they have any doubt that Parliament would approve. That was what my hon. friend referred to; it was not to these little grants which really raised the question, but which are of no consequence except for the precedent which they create. My hon. friend called attention to the fact that the Government had, since this Report was in their hands, done something of exactly the same kind on a much bigger scale, and we think they had no pretence for saying they were waiting for an opportunity for a non-controversial Bill to pass. We think they have distinctly used this power, condemned by the Public Accounts Committee, in order to do that which we believe Parliament would not sanction. The hon. Gentleman has spoken and I do not know that I can press him further, but I should give way if he were inclined to speak again. But we have his admission that it is wrong, his statement that it is the intention of the Treasury in future to conform to the recommendation of the Committee, to resort to this practice as rarely as possible, and then, only to meet a temporary emergency, and when they do it, to call Parliament's attention to it. I think if this discus ion leads to no more than that, it will have justified the appropriation 1910 of time to debating these Reports. As regards the discussion in general on the Reports of the Public Accounts Committee, I feel what the hon. Gentleman the Member for Norwood said about the inconclusiveness of the Motion upon which the discussion now takes place, and I think it would be convenient sometimes if we could raise particular points, and take a vote, rather than discuss a Resolution which means nothing. I do not think it is possible to ask the House, after a single day's discussion and on a single Motion, to approve of and endorse every portion of the Public Accounts Committee's Reports. The bringing of the Public Accounts Committee's Reports before the House is a comparatively novel proceeding. It was followed in the last two years of the Government of my right hon. friend, and then discontinued for two or three years, and resumed last year. He hoped it would become an annual practice, but before that is done it would be convenient to consider whether at the time we discuss the Reports we could have the Treasury Minute before us, and see how far that agrees with the Committee's Reports. We should then have the satisfaction of seing how far there was agreement between the Treasury and the Reports of the Public Accounts Committee, and the opportunity of challenging at once any divergence between the Treasury and the Public Accounts Committee. With reference to the position of the new Accounting Officer under the War Office, I associate myself entirely with what my hon. friend has said as to the independence and authority of this officer if he is properly to discharge his duties to the House, the Secretary of State, and the Treasury. It is of the greatest importance that we should know that the authority under which he acts is definite, and that his power and his position have not been altered. In July of the present year the right hon. Gentleman, in answer to the Chairman of the Public Accounts Committee, promised to lay on the Table a document defining the responsibilities of this officer. But this officer's authority was going on all the time and we should like to know under what authority he is acting? He has to wait nine months before his responsibility is defined. A little later the right hon. Gentleman said 1911 it was intended to modify his duties to a slight extent in regard to contracts. I do not understand how the Accountant-General is going to discharge the duties of his office if someone else has power to make contracts without his knowing anything about them. It is the greatest safeguard we can have. It prevents mistakes being made, and prevents things being done in the wrong way when there is a right way of doing them. It calls our attention to conditions that we ought to observe and the responsibility we enjoy. Nothing could be worse than to place the financial officer in such a subordinate position to the military officers that he is not able to speak to them frankly and enforce strongly the financial obligations to which they, as much as every other servant of the State, are subject. For if you allow any officer to make contracts without the papers being passed to the Accounting Officer you will find that quite unwittingly mistakes are made and money expended without Parliamentary sanction or in other ways which are not proper. One word more I wish to say on another matter, which formed the subject of the speech of the hon. Member for Ipswich. I wish to say that unless you have some confidence in the officers at the head of the different administrative departments, and particularly in the officers controlled and checked by the Treasury, you will bring our financial system to ruin. It is not possible to carry out the financial operations that we have unless you allow variations to be made by responsible officers with the control of the Treasury. Take the case of the officials of Departments, the War Office, the Admiralty, or the Office of the First Commissioner of Works. Is there any private business which has to make its forecasts under such circumstances as are imposed on those who are in great public Departments? In a private business they consider from day to day, or from board meeting to board meeting, what fresh expenditure is necessary. They do not hesitate to sanction it on the spur of the moment if safe and good opportunity arises or some special emergency gives occasion for that fresh expenditure. But the officers of these great spending Departments are expected to foresee what is going to happen eighteen months 1912 or twenty months ahead. At the present time the Navy Department are hard at work on their Estimates. Probably by this time the Works Vote of the Office of Works has already gone to the Treasury; I should think, if it has not, that probably the Chancellor of the Exchequer will be wanting to see it and asking why he does not have it before him. This is for expenditure, none of which is to begin until 1st April next, and which is to comprise everything that may be wanted and to be set down in very great detail in order to satisfy Parliament, And that is not all. I speak of the Admiralty as having only just parted with their Estimates. But they must be dependent on the Reports of officers at distant stations, and even on home Reports, which ought to have been sent in three, four, or five, mouths ago. You are, therefore; asking the officers of the spending Departments to prepare Estimates for an expenditure which has to begin a year, eighteen, or twenty months after those Estimates have been sent in. No human foresight can foresee what will arise in that period. Necessarily such things happen as this. Take a distant station: the statement is made that a building is in a very dilapidated condition, and must be renewed by an estimated expenditure of £5,000. You do not accept that at once. That is as far as you have got. You have not been able to probe the matter to the bottom at the time you framed your Estimates and apparently" there is no urgent need for the expenditure of £5,000 put into the Vote. Between your putting that into the Vote and spending the money you send an inspecting officer to the spot to investigate the circumstances, and he says: "Oh, this is a mistake. By utilising another building we can save all the expenditure, or by some other plans we can adapt the old building to our needs at a very much less cost." If they spend only £2,500 on that account it is regarded as somewhat of a blemish on the Department instead of being something for which it should have credit. It only shows how careful the Departments are, once they have got Parliamentary sanction to spend money, not to spend it unless it is really necessary. Of course, there are other cases where 1913 there is even still greater difficulty in getting information. The hon. Gentleman the Member for Ipswich cited one case, that of the building of a county court in Swansea. I asked him, drawing my bow at a venture, whether the expenditure had been incurred on the site, and he said it had. The difficulty about the Government's purchasing land is that once it is known in a particular town that the Government want land for the building of a county court, or a post office, or a coal depot, the value of every available site, is at once doubled in the market. The only chance of buying a site at a reasonable price is to do so before it becomes known that the Government are needing it. If every place where the Government want land were published or scheduled, or if the purpose for which you are going to buy land is known, you have no chance of ever making a good bargain. I remember well a case in which I was concerned when I was at the Post Office. In a large Midland town—not my own—we had an admittedly insufficient and inadequate post office for the business done. A great firm, in pursuance of several amalgamations, had great business premises in a suitable position for sale. I had representations made to me by the landowner, and finally a deputation invited me, as Postmaster-General, to purchase those premises for the business of a post office. I inquired what the fair price was, and they told me the lowest price which the vendors were prepared to take, and they said as there very likely would be very few bidders I might even get it at a little less than that. I replied that I was very sorry; I admitted that we wanted a new post office, but the House of Commons had not provided us with any money to pay for this particular place; the House of Commons was very jealous of our spending money which it had not authorised, that the Public Accounts Committee were very much on the qui vive to discern expenditure of this kind, that the Treasury itself was very loth to sanction our exercise of any such power, and that was all I could say. I sent them away rather unhappy, I suppose, with our financial system. Having done that I sent a Post Office clerk down to bid for the premises, and he got them for 1914 very much less than the sum which they had named as being what they thought fair, I am afraid to state the figures, but the price was certainly less than a third part of the sum at which the property had been offered. That was done by sending down somebody who was not known in the town. When it came to the auction nobody knew that the Postmaster-General was represented, find when the clerk gave the name of the Postmaster-General, the auctioneer adjourned the auction to consult his clerk, because if he had known that he had sold to the Postmaster-General he perhaps thought that he would have got a little more out of him. That is the only way in which you can buy cheaply. If you insist on limiting too strictly the powers of the Treasury and the powers of the Departments to vary the purposes for which Parliament had voted money, though not to vary, I think, the policy of Parliament, or do anything contrary to the general sense of Parliament, you will make all this sort of transaction impossible. You will certainly increase the cost to the public of necessary services; you will certainly increase the temptation of the Departments to over-estimate, and, when they have over-estimated, the temptation to spend. You will deprive the Treasury of the checks it has on new demands presented in the course of the year as urgent by the great technical Departments. They hear technical arguments which they cannot possibly judge from such Departments as the Admiralty and the War Office. It must necessarily occur again and again that those Departments go to the Treasury and say: "We must have so much money for a matter which is urgent for the defence of the country;" but this is of such a technical character that the Treasury cannot set its authority against the Army Council or the Board of Admiralty. What can the Treasury do? It can test the bona fides of the spending department, and their real care about the particular matter in respect of which they make the demand for money by saying: "If you must have something more, and if you will forego something less urgent, you can then have the money for that which you declare to be more necessary." I suspect the 1915 Treasury will continue to pursue that practice. It certainly did in the days when I knew it, and when I was its victim or its representative. I am sure that that kind of authority works well for all the Departments, and therefore works well for the public service. As a matter of fact, the House has very little financial control except in the way of reductions. I have sat here for sixteen years, and I cannot remember any serious effort being made in Committee to reduce the Estimates. Time has been occupied over a rat-catcher's wages, but the efforts were to spend Parliamentary time and not to give the Government any money. Really, during the sixteen years I have been here I do not remember any serious attempt having been made to reduce expenditure. All the effort has been the other way. When we discuss the Estimates we try to increase them. The only attempt to check them at all is when the Chancellor of the Exchequer proposes to raise the money which is to be spent. No doubt it is natural that Members of the House, private Members especially, who have never been in office, and have never seen the working of the system, should seem to think that under such a system expenditure must be reckless and extravagant, and that it would be right to tie down all the Government officials much more strictly than they are tied down now. I think that may be easily carried too far. No private business is comparable in magnitude to the business of the Government, or even a portion of the Government, but if you make a comparison of the mistakes made by a private concern with those made by a Department of the Government, you will find that in proportion to size, no business is run with so few mistakes as that of the Government, in spite of the fact that the private business is managed under much more easy conditions of control than are public affairs. Though I do not deny that some mistakes are made, yet I believe that, on the whole, the system works well. I am certain that the best control that the House can have is, not in attempting to foresee every mistake that may be made, not in attempting beforehand so to tie down everybody that they cannot make a mistake, with the result that they cannot 1916 do anything at all, but that those who are responsible for the action of officials should make them understand that their responsibility is a reality, that if by investigations of the Treasury, of the Comptroller and Auditor-General, and of the Public Accounts Committee, they are adjudged not merely to have made pardonable errors, but to have been guilty of a serious lapse of duty, then they cannot expect mercy, either from the Government or from the House, and that we shall, while trusting them in the future as we have done in the past, expect that same high standard of public spirit in the discharge of their duties which their predecessors have shown.
§ * MR. ACLAND
said he would reply on the question of the powers of the successor of the late Director-General of Finance. The Order in Council, which would be published he hoped in a few days—the new officer only came into his Work in November, so there had been no very great delay in publishing the Order in Council—contained exactly word for word every sentence which was contained in the old Order of Council. The hon. and gallant Member for Dorsetshire said very rightly that the head of the Finance Department, who was appointed Accounting Officer by the Treasury, had two functions, and that it was necessary that both these functions should be defined, and that it was desirable that they should be kept distinct. One of the functions was that of financial advice to Members of the Council and to officers in command. The other was that of Accounting Officer, in which capacity he was personally responsible for the regularity of every payment which was made. The old Order in Council of 10th August, 1904, rather mixed up these two functions. The new Order in Council put in the first few sentences one of these functions, and in the final few sentences the other function. Every single sentence in exactly the same words would be contained in the new Order as in the old. They were only getting the two functions more clearly defined, and the different duties grouped more clearly under the two headings. He could quite understand that there had been a natural nervousness, and perhaps even suspicion, 1917 which had been the result of the change in title, but he could assure the right hon. Gentleman that it was a change in title only except that it was also a change in salary. The War Office wished last autumn to facilitate the utilisation by the Government of India of the services of Sir Guy Fleetwood Wilson, and in order that the necessary arrangements might be made at the Treasury it was found to be necessary that his successor should have a rather lower salary, and it was found advisable that he should have a Bather different title, but the difference which was made in title and salary was purely to facilitate the arrangement which it was desired to make with regard to Sir Guy Fleetwood Wilson's new appointment. There had been no alteration whatever in the powers of the officer, and he thought it was a good beginning for the officer who would have control over the whole finance of the Army that he should make a beginning with his own salary and cut that down a little. He was afraid the hon. Gentleman would want to make a continuation with his (Mr. Acland's), but he had shown no signs, he was glad to say, up to the present. With regard to contracts, the position was this—that every matter which involved variation in the terms of the contract, such as letting off the contractor from penalties in default, or from a fine which had been confirmed, or giving a higher price than that which the contractor had tendered, must come to him through the Assistant Financial Secretary. But the question of the making of the contracts seemed to him to be an administrative question, and he believed the Department was better served if all the members of the Contracts Department were civilians—it was a civilian financial staff directly under the Financial Secretary, and if that staff was charged with the financial consideration of the conditions under which they made the contract as well as the purely administrative making of the contract and issuing the tender and so on.
§ MR. AUSTEN CHAMBERLAIN
said he did not mean that the Assistant Financial Secretary or the Director of Finance should make the contracts in any way at all. What he had in his mind was the case of a man making a contract 1918 without having any authority to buy anything at all, or any funds on which to draw. But before a man signed a contract which covered a charge on a particular Vote, or a particular subhead of a Vote, surely a member of the Financial Director's staff ought to have vised them, so to speak, to see that there was Parliamentary authority for charging it to that sub-head.
§ * MR. ACLAND
said that was so at present. There was oversight by men directly under the Director-General of Finance as to the issue of money out of which contracts were to be met. He should be glad to show the right hon. Gentleman the old Draft Order and the new one, but there was only a rearrangement and no alteration in wording whatever, and no alteration of powers except with regard to the administrative side of the contracts had ever been contemplated. Perhaps the Chairman of the Committee would desire that he should refer to some of the questions that he had raised. He had naturally referred to the possible loss of Parliamentary control in the matter of triennial contracts for repairs, and so on. That was a very important point, and two points arose out of it. One was a question of splitting up a certain order into such small parts that each part might be carried out by the triennial contractor without exceeding the amount of the order which could be given to him. That was a practice which was adversely commented on by the Public Accounts Committee, and he thought they were perfectly right. The practice, so far as it existed, was no doubt a bad one. But, if one looked through the instances which the Committee took, there seemed to be a fairly reasonable explanation of the cases which came before them in which a total exceeding the sum of any individual order had been made up out of separate orders carried out by the triennial contractor. For instance, there was the case of the explosion in February, 1907, at Woolwich, where it was a matter of very great urgency that the buildings which had been shattered should be replaced, and if they had not been replaced without the delay of issuing tenders and so on, the whole of the work of the Royal Laboratory might have been brought 1919 to a standstill. That was a very exceptional case, and the excess of the usual limits of triennial contractors' work was in that case justified. There was a case where separate orders were given to a triennial contractor for the foundations of a building and for the superstructure. He understood that was a very common practice even in ordinary house building, and it was particularly necessary at Woolwich where foundations were apt to be very bad, the ground was full of peat, and they could never judge of the sort of building they would be able to put up until they knew how firm the foundations were which they could lay. It had been found, quite apart from triennial contracts, absolutely necessary to make different tenders for the foundation and for the building itself. As to the extension of contracts, that was giving a further contract on the same terms for similar work to a man who had already had a contract; that was under careful consideration at present by the Treasury, the Admiralty, and the War Office. No conclusion as to how this matter should be kept on right lines had yet been come to, but there were two views. One was that they got better control by the House if all extensions beyond a certain point were referred to the Treasury for sanction. The other view was that the Ministers concerned, the Secretary of State for War or the First Lord of the Admiralty, would exercise more care, and really be in a more responsible position if they had to sign an authorisation in writing for these extensions than if they had to refer the matter to the Treasury and to come again if they were unable to get Treasury sanction. That matter was now being discussed. All cases, even the smallest, of extensions of contracts of course came to the Financial Secretary in person, and his view, so far as he had had an opportunity of forming it, was that in nearly every case it was far better to have a fresh contract than an extension of the old one. The reason so often urged that the builder had his materials on the ground and would, therefore, be able more easily to continue at the same price seemed, to his mind, to be a particularly good reason why he should be asked to tender at a lower price. The hon. and gallant Member had referred to the size of the surplus in the year under review of money voted 1920 by Parliament over that actually expended. He would be gratified to know that since the year in review a good deal of progress had been made in the direction of more closely estimating the expenses of the year. In that year there was a surrender of rather over £1,250,000, and if they included the Supplementary Estimate it brought it up to nearly £1,750,000. In 1907–8 the surrender also including the Supplementary Estimates was a little short of £1,000,000, and this year so far as he could see at present, excluding a windfall from India, which they did not expect in the financial year, the surrenders would be only about £300,000. There had been a reduction of surrenders from about £1,750,000 two years ago to between £300,000 and £400,000. The hon. Member had referred to the question of engineers' store accounts. They had had a good many cases where account keeping for the engineers' stores had not been all it should be, and a Committee was sitting considering this question, which was a very important one. The hon. Member had referred to the question of stock valuation returns, and he was glad he agreed that the keeping of that very elaborate Return was not really worth the amount of expense that it involved, and he thought he could tell him what was now proposed in that direction. First of all, of course, the Treasury had control and was bound to be informed whenever the War Office proposed to vary what was called the Mowatt reserve. The money was advanced originally from the Treasury, on that condition. They quite rightly laid down the condition that if it was proposed to increase or diminish its reserves the Treasury was to be communicated with, but they hoped to adapt something more than that. The Mowatt reserve did not include the whole of the war reserves. Certain important items, for instance, rifles, were not included in the Mowatt reserve at all. They hoped to be able to give a certificate with the Appropriation Accounts to somewhat the following effect—We certify that on the 31st of March last the authorised war reserves of store?, for the provision and maintenance of which we are respectively responsible were, in all respects, complete with the exception of temporary deficiencies of the agregate value of about £.—.1921 It would then be seen how matters stood and they would have a personal certificate by two members of the Army Council concerned that the war reserves had not been depleted in order to mask an increase of expenditure in the order. As to the question of allowances by the Treasury in excess of certain Votes, so long as there was not an excess of the total Vote, the Office concerned was compelled in each case to show the real reason for the extra expenditure which they proposed. They were bound to show that the service was urgent, and if they could not do that to the satisfaction of the Treasury the service was not passed. No doubt if they were forced to adhere tightly to the total of any particular Vote—and of some Votes more than others this could be said—it would not be possible to make that close estimate as compared with expenditure so satisfactory as they hoped to make it. To be out by £300,000 in a total of £27,000,000 could not be regarded as a very bad estimate. It would be impossible to frame estimates for stores so close if it were not for this practice. A sudden necessity might arise, for instance, for a supply of mules or camels for an expedition in some distant part of the world, and of course, as things stood, the Treasury would sanction expenditure as a matter of emergency and the animals would be provided and one would hope that the emergency would pass before the matter had come before Parliament. But if the "War Office could never buy animals beyond the Vote without consulting Parliament, it would prevent them altogether from doing certain things which they were bound to do quickly and privately, and for which the sanction of the Treasury ought to be sufficient. As a newcomer into these domains he thought the careful consideration of the Public Accounts Committee and the discussion of their Report had a very good effecton the spending Departments concerned, and he joined in the hope generally expressed that these discussions, which brought to a head the valuable consideration of the Committee, would be of annual occurrence because he was sure they did a very great deal of good in the spending Departments concerned with the regu- 1922 larity of the expenditure which the Government trusted to their keeping.
§ MR. JAMES PARKER (Halifax)
said it was with some small degree of trepidation that he spoke on the Report, of the Public Accounts Committee. He was a member of that body, and had taken some interest in its deliberations. He would like to associate himself with what had been said by the hon. Member for Tyrone, and he did not think that the work of the Committee was in any sense a check on expenditure for the purpose of Parliamentary control. The Secretary to the Treasury had twitted, possibly rightly, the hon. Member for only attending half the meetings of the Committee. That could not be said of him, because he had been present at nearly all the meetings, and he had come to pretty near the same conclusion as the hon. Member for East Tyrone. He gathered from the Secretary to the Treasury that the only purpose of the Committee was to see that the accounts were kept in proper order and presented in a proper manner before Parliament. If that was the work of the Committee, he submitted that there was better work which could be done. He could quite understand that the Gentlemen on the Front Benches were not desirous of the ordinary private Members of the House having any part, after the Estimates were passed, in dealing with the expenditure of money. Let them compare for a moment the action of this Committee with the action of a big city council. He admitted that the conditions were not exactly alike, but there were city councils that spent some millions of money in undertakings of various character almost as complicated so far as accounts were concerned as the undertakings of the Government. They managed them without harassing the officials at all. So far as he had met the officials of the various Departments, he had always been treated with the greatest respect, and they had always been willing to give him any information he had sought. But the function of an official was entirely different from the function of a Member elected by the people of the country to take part in the legislative and administrative work 1923 of the House. Might he quote a few words written by Lord Esher? He did not agree with all his conclusions, but he agreed with what he had to say with respect to the Public Accounts Committee. He said—Curiously enough the House of Commons, which has to vote these enormous sums, takes great trouble by means of a Standing Committee to see that every penny is applied to the service for which it is voted. This Committee overhauls accounts, call witnesses who are examined and cross-examined, and, in short, possesses very wide powers, which it exercises thoroughly with excellent results. But there is no Standing Committee to inquire whether the money voted is spent to the best advantage.It seemed to him that that was practically what his hon. friend suggested, that what they required before they could be said to have any adequate control whatever of the finances was in some way to bring hon. Members into touch with expenditure, not two years after the money was spent, but before it was actually spent. After attending his first meeting of the Committee he happened to meet a very responsible Member of the Government, who remarked that the Public Accounts Committee was like Minerva's owl. He did not know what that meant, but he looked it up in the Library, and found it meant, to use a Yorkshire phrase, that it was always two years after the cart. They wanted some means of dealing with expenditure which would bring the private Member into touch with it, and give him some power to check it, without his trying to be at one and the same time a bureaucratic official and a representative. He would not be a party to any Member of any public body endeavouring to harass an official in the performance of his duty, but he submitted that there was a function which belonged peculiarly to the elected representative in regard to expenditure and another which belonged to the official, and if they passed over all expenditure after the Estimates had passed the House, and left it absolutely under the control of the official, the House had no real financial control. He had been amused on occasion at the work of the Committee. Once when the question of triennial contracts was before the Committee it was necessary to get some information from the War Office, and the reply they received in one case as to digging out the foundations of a building and the erection of the building in another 1924 place was that it was necessary that the foundation should be put in before the superstructure could be erected. It was worth being on the Public Accounts Committee in order to have a piece of information like that. He supposed there was no other institution in the world except the War Office where one could be supplied with information at first hand of that particular value. There were two items he wanted to refer to, as illustrations of the necessity of a check upon expenditure before it was entered into, in addition to the check which the officials possessed. The first was a case of compassionate gratuities for servants occupying positions abroad which were to be dispensed with. There were in the accounts certain charges for what were called compassionate gratuities. He found that it was the custom to pay these pensions three years ahead. That being so, if a recipient died soon after the compassionate gratuity had been paid the relatives had three years money to go on with. That was a good idea, and he would not mind being pensioned in that way himself. Looking at the matter from the business point of view the system was absolutely ridiculous, and he submitted that in all probability if there were Members of the House dealing with this expenditure they would prevent the occurrence of things of that character. There were also in the accounts charges amounting to thousands of pounds for overtime and extra remuneration. There were thousands of young men in the country who had received good education, and whose parents were anxious that they should obtain situations in the Civil Service. The money paid for overtime and extra remuneration was received by officials who already had high salaries while those men who desired to enter the public service could not get appointments in the offices of the State. He submitted that these charges should be reduced by the Government Departments as much as possible. There was ample scope for great reductions in the amount paid for overtime and extra remuneration. He believed the work of the Public Accounts Committee did good, but he submitted that before the general body of the House could claim to have any real check upon public expenditure the Committee would have 1925 to sit, not two years after the accounts had been paid, but before the expenditure was entered into. There ought to be several Committees if the check was to be really effective.
§ LORD R. CECIL (Marylebone, E.)
said the speech of the hon. Member who had just sat down was one of very great interest. The suggestion made was that there should be Committees to revise the Estimates in the interests of economy before the expenditure was incurred. Though it might be worth while trying the experiment he doubted very much whether it would be of great value. If they were to keep down expenditure, they could only do it by having very considerable knowledge of the actual Departments with which they were dealing. He very much doubted whether a Committee would have sufficient knowledge to enable it to deal with the experts who would come before them. The hon. Member had referred to the practice of municipal councils. He only knew of their work from the outside, and, judging from the results, he could not say that their procedure was a particularly good one, with the view of keeping in check the spending officials, and that was really what all these devices were intended to accomplish. He doubted very much whether a committee of a municipality did succeed in checking expenditure, and he had greater doubt whether a Committee drawn from the House would be able to check the very much larger and more complicated matters involved in the public expenditure of the country. There was only one point arising on the Report of the Public Accounts Committee to which he desired to refer. It had been mentioned more than once, and he was not quite sure that they had succeeded in making exactly clear to the Government what the point really was. Paragraph 11 referred to certain payments for law charges and criminal prosecutions in Ireland, and laid down the general principles of control of expenditure in the following terms—Your Committee, after hearing the evidence of the Comptroller and Auditor-General, and the representative of the Treasury, are of opinion that while it is undoubtedly within the discretion of Parliament to override the provisions of an existing statute by a Vote in Supply confirmed by the Appropriation Act 1926 it is desirable in the interests of financial regularity and constitutional consistency that such a procedure should be resorted to as rarely as possible, and only to meet a temporary emergency. In cases where such an emergency arises, and there are reasons against the amendment or repeal of the statute governing the case, your Committee recommend that the fact that the proposed Vote over-rides an existing statute should be cleary stated on the face of the Estimate, with the reasons for adopting that course, so that no doubt can exist of the deliberate intention of Parliament. The exceptional nature of the Vote should also be indicated in the Appropriation Act.That was not an isolated expression of this particular Committee. It was not merely a casual expression of opinion; it represented the settled policy of the Public Accounts Committee. It was laid down as early as 1875, and it was repeated in 1883, 1885, 1886, 1887, 1888, and 1889. He did not mean that exactly the same words had been used on each occasion, but the Public Accounts Committee and the Treasury had repeatedly laid down the principle that it was unsound to over-rule express legislation by means of an Estimate afterwards confirmed by the Appropriation Act. What he felt anxious about was whether the Government full-heartedly accepted that view or not. He thought the House had a right to a plain and distinct answer on that point. The hon. Member for Norwood had referred to a particular case which had caused some hon. Members to doubt whether the Government accepted that principle. The particular case was the authorising in 1907 of an expenditure of £100,000 for the building of new schools throughout the country. There was no doubt whatever that that was in direct conflict with an existing Act of Parliament. It was a far stronger case than any with which the Public Accounts Committee had so far dealt. The Public Accounts Committee had hitherto dealt, not with a direct prohibition in an existing Act of Parliament, but merely with a case where an Act of Parliament had set a particular limit to expenditure, or something of that kind. Here they had a case where by the Act of 1870 there was an absolute prohibition against Parliamentary grants being made in aid of building, enlarging, or fitting up any elementary school, and what the Government had done, not once or twice, but oftener, was to over-rule the prohibition 1927 by Estimate for the purpose of building schools and to follow that by the Appropriation Act confirming the Estimate. He thought they had a right to ask whether the Government intended in future to abide by the fresh expression of the Public Accounts Committee as contained in the present Report in reference to this matter or not. Did they, in the first place, think they had complied with it? What was the temporary emergency which compelled them to make the grants and proceed in this manner? He did not think it would be suggested by any Minister that there was any temporary emergency in the ordinary sense of the word at all. It was a fresh departure in policy. There was no special emergency suddenly occurring which the Government had to meet. Let him take another test. Even if there was a certain emergency, the Committee recommended that certain precautions should be taken. They must first show a temporary emergency and some special reason against repealing the statute involved. What were the reasons against repealing the statute involved? He knew of none. He knew that one of the statements occasionally made from the Treasury bench was that they were able to defeat the interference of the other House. That, was seriously put forward as a reason for the use of the procedure, but the branch of the Legislature whose power was really taken away was not so much the other House as this House. It was the House of Commons which suffered by procedure of this kind. It involved the deliberate setting aside of an Act of the whole Legislature—of the House of Commons as much as of the other House. They had no security that they would be allowed to discuss the Estimate even. In this case, as a matter of fact, he did not think they did. When they came to the Appropriation Bill they could not raise the point effectively at all. They could not raise it in Committee. He thought he had ingeniously devised an Amendment by which it could be done, but found that he could not. They could not raise a specific point on the Appropriation Bill; all they could do was to object to the Second Reading of the Bill. That was an absolutely futile remedy. He did not think anybody said anything as to the desirability of making this grant, 1928 but, because they disapproved of the method, the only way they could control it was by rejecting the Appropriation Bill. That was a farcical control; indeed it was no control at all. He fully accepted that the great object of this Committee and of its Report and the discussion that afternoon was to enforce, the control of the House over the expenditure which had to be made. The hon. Member for Ipswich drew attention to the great difficulty of the control of the House, and that had been emphasised by other hon. Members, who had shown that there was nothing more ineffective than the detailed control of the House over Estimates. This particular action of the Government was one more infringement of their powers in regard to policy as well as expenditure. He ventured to say to the House and to the Government also that the House had a right to learn whether the Government intended to be bound by the principle-laid down by successive Public Accounts-Committees, or whether they intended to defy it. They ought to know that definitely and clearly.
§ * MR. WEDGWOOD (Newcastle-under Lyme)
said he felt great sympathy with the speech of the hon. Member for Ipswich and with his desire that the Treasury should no longer be able to transfer surpluses on one Vote to another Vote—to prevent an estimated saving on men; being applied to barracks. He thought, however, it was necessary to approach this question with a great deal of caution. He should deprecate, for several reasons other than those given by the ex-Chancellor of the Exchequer any further cramping of the heads of Departments by a prohibition to make good use of savings in their Departments. Everybody who knew the public services knew that towards the end of a financial year every single Department tried to spend money to the full extent of their Estimates, partly to justify them and partly that they might claim in the succeeding year a similar grant. Heads of Departments were anxious to run their Departments cheaply, but the chief incentive to making savings in one branch was that the money so saved might be spent in other branches. That incentive would disappear if transfer of savings from one 1929 Vote to another was prohibited. In order to spend all the money voted before the end of the financial year there was a rush of work, and everybody was put on overtime. That was the case in the War Office and Admiralty alike. An endeavour was made to spend travelling allowances so that those to whom they were granted might claim the same amount in the next year. For these reasons he deprecated an excessive desire for Parliamentary control. It was desirable that the heads of public services should have the incentive to practice economy. In the matter of grants-in-aid the Reports of the Public Accounts Committee showed a constant and progressive reduction in regard to certain of our Protectorates. The grant to British East Africa had fallen from the £251,000 of four years ago to £153,000; and that to Northern Nigeria had fallen from £465,000 to £295,000. There was a constantly increasing drop in the amount of money demanded from this country for the development of the Colonies. There were other cases where grants previously given had ceased altogether, notably in the case of the Gold Coast, Airhere the grant of £243,000 was reduced gradually until in 1905 it ceased entirely. He thought it was the duty of the Public Accounts Committee to see whether in cases of progressive Colonies it would not be possible to treat these grants-in-aid not as grants but as Imperial advances, which would, as soon as the Colony became solvent, bear interest, so that we might be ultimately recouped for the expenditure we had made, in order to develop these Colonies. In Northern Nigeria for instance we had an extremely valuable asset. The actual revenue this year was largely in excess even of the estimate, and in ten years that Protectorate would undoubtedly pay its way. It would only be right and fair to the taxpayers of this country that if and when such Colonies became prosperous we should have a prior lien upon them, and get the interest on the public debt incurred by us for their benefit, often in reproductive work.
He would pass on to another point concerning the Army. In the evidence before the Committee they came across the case of the foreshore off Shoeburyness. These sands, which were 1930 euphemistically called the foreshore of Shoeburyness were really the Maplin sands, which were covered by the sea at high-water. For forty years the War Office had had right of shooting their guns at Shoeburyness, and for this they had paid £10 a year to the owner of the sands; and £10 was also paid to the Commissioners of Woods and Forests, who also had a claim to a portion of these sands. Later on in 1892 the owner of these sands took it into his head that he was not getting full value for them and demanded, instead of a rent of £10, that he should be paid £265 a year. The War Office with that prescience which characterised them occasionally still, did not accept that offer of £265, and they had in consequence to buy 1,760 acres for a sum of over £10,000. Besides these 1,760 acres they had also to acquire the 900 acres belonging to the Commissioners of Woods and Forests, which for over forty years they had paid £10 a year rent for. No sooner did the question of buying up other portions of the sands arise than private owners chimed these other hitherto public portions of the sands from the Commissioners of Woods and Forests. The latter, thinking the sands were of no value, did not contest the title, and allowed these private people to clam without dispute; and the War Office bought this also for between £5 and £6 an acre at a cost of nearly £6,000. On this point bore one of the most startling pieces of evidence in the Report. The Woods and Forests Department said the land was of no value, and they would not contest the matter, and when the private owner demanded £5,500, the War Office never went to the Woods and Forests Department and urged them to fight the claim. They said they should—Have to pay the money in the end in any case, and if the Office of Works had proved their title they should have had to pay them for it.That was the reason given for not establishing a public title, and if that sort of principle was carried on by the different departments of the public service, no doubt the public was bound to suffer. It really did not matter to the taxpayers of this 1931 country whether the land belonged to the Commissioners of Woods and Forests or to the War Office. But it did matter that one Department should regard another as an alien body and pay £5,500 to private persons for that to which another Department had a claim.
Passing on to another question he pointed out that all Departments of the public service were entitled to inflict upon contractors who did not fulfil the terms of their contracts, fines and stoppages. He was rather surprised to see that the Admiralty, at any rate, considered themselves empowered to remit these fines and modify the terms of the contract without applying to the Treasury for sanction. He did not, however, think that applied to every Department in the public service, but there ought to be a certain amount of conformity in this matter, and if a contract was to be modified, and if the modification exceeded a certain sum, then he thought that Treasury sanction should be applied for, or, at any rate, that the spending Departments should all pursue the same practice in this respect. But this was part of a more important question than that of whether mere Treasury sanction should be obtained or not. He deprecated the increasing habit of the public service to make provision in their contracts for fines and stoppages, and then not inflicting them: because it frightened off the good contractor who did not know whether he had what was called "pull" enough to get his fine rebated. It led to nothing wrong no doubt, but to all manner of suspicion, grievances and complaints. Many contracts did not have these fines and stoppages, but if they were there they should be enforced remorselessly. He had come cross cases which showed that in the clothing trade contracts had been made three years ago, at ridiculously low prices just after the war. The contracts in question were with the Post Office or the War Office, and the contractors found later on that they could get better prices from other people. In consequence the bad class contractors pleaded that they could not and did not carry out their Government work. He hoped that when a contractor threw up Government work 1932 under those circumstances, that he would not be allowed to be let off say fine or to obtain the same work at a higher price.
There should be competition by open tender for Government work. He was opposed to the "list" system by which only prominent manufacturers were open to tender. There were, of course, a great number of such firms in each trade on the list, though not all were asked. He could assure the Government that when there were only a few big firms asked to tender, they charged a higher price because of the limitation. By allowing tenders to be open small manufacturers would undercut the established firms by offering articles at lower prices if merely in order to have the privilege of having had a Government contract that helped them to further contracts. Government Departments were especially able to deal with such small manufacturers, as they had the best inspectors in the world. No other buyer in the country could secure better value for his money than could the War Office and Admiralty. He wished he could persuade these two-Departments of the enormous savings-they could secure by giving work to the lowest tender which was likely to prove satisfactory. He believed these Departments could save 10 per cent. on their orders. There was another direction in which these Departments lost money and that was by insisting upon certain cast-iron specifications which were handeddown from year to year unaltered. Such rigidity prevented many firms from tendering. Here was one of the matters that the Public Accounts Committee ought to be able to deal with. They must see that the specifications were revised and were drawn up in conjunction with the trade. They would not get people competing when all their patterns and moulds were of an entirely different character from that required in the specification. He heard of a case the other day of a large firm of chemical manufacturers who were asked to supply-two chemicals in a mixed form. They offered to supply them separately as they supplied the rest of their customers. The Government said they wanted them, mixed. The firm did not want to go to the trouble of mixing them, so they supplied the mixed article at a price thirty times as high as they would have sold the 1933 chemicals separately for, and they were very much astonished when they got the contract. That was not the way to do business. That was where money was thrown away in the public service.
MR. MITCHELL-THOMPSON (Lanarkshire, N.W.)
thought that the question of non-recovery of liquidated damages referred to by the hon. Member was a matter of supreme importance, because if the Government refused to pursue a course which they had given warning they would adopt they only discouraged the contractor who was disposed to act up to his contract. The Admiralty, he noticed, were the worst offenders in this matter. There was one case in the Report in which it was pointed out that out of 71 craft of all sorts on which final instalments were paid during the year, thirty-three were late in delivery. Of those there were only five on which liquidated damages were obtained and in four of those it was obtained in a modified form. He rose, however, not for the purpose of drawing attention to that point but to another specific point also in relation to the Admiralty, the question of "quantities in reserve." For the first time there was a divergency of practice between the War Office and the Admiralty in this matter. As a result of a conference between the representatives of the Treasury, the War Office, and the Admiralty, the War Office representative decided to abandon the provisions as to "reserve," and to adopt the recommendation made by the Committee in their second Report of this year, that was to say so far as giving a certificate by the Director-General of Ordinance was concerned as to the reserve and stores being up to standard. The Committee suggested that a quantity return should be given as well, but he could quite understand the War Office Minute that such a return was on public ground undesirable. The same view was held by the Admiralty, but they also held the view that these Departmental Stock Reports were of some value and that in regard to three Votes they were said to be of special value. He wished to know whether the representatives of the Admiralty could say that they would adopt the suggestion with 1934 regard to the other Admiralty Votes other than Vote 8. A certificate similar to that given by the War Office should be given by the Admiralty.
* THE PARLIAMENTARY SECRETARY TO THE ADMIRALTY (Dr. MAC-NAMARA,) Camberwell, N.
said a statement was shown at the foot of the Store Votes in the Appropriation Account.
pointed out that when the hon. Gentleman was asked whether he would adopt that course he stated that the matter would require some further consideration. He hoped that it would receive that consideration, because where the Admiralty had not a statutory reserve he thought a certificate for these other Votes would give a security, financially and in speech, the value of which he thought the House would not fail to appreciate.
§ THE UNDER - SECRETARY OF STATE FOR THE COLONIES (Colonel SEELY,) Liverpool, Abercromby
said he did not think the Government could adopt the suggestion of the hon. Member for Newcastle-under-Lyme that all grants-in-aid should be treated as loans as soon as the Colonies receiving them had become solvent. That would put this country into a position which it did not want to take up. We should be money lenders pure and simple instead of being the centre of a great Empire. That they should feel that at the moment they became prosperous these grants-in-aid would become loans would be to place this country in a situation in which it would not wish to find itself and for which he did not think his hon. friend would really press. At the same time all these questions of grants-in-aid must be carefully scrutinised. He did not suppose the hon. Member desired to make this proposal retrospective. ["No."] Then he could say at once that the Treasury did very carefully scrutinise every proposal made to them for a grant-in-aid, and did not agree to it except in cases where it was shown to be absolutely necessary.
§ MR. BELLAIRS (Lynn Regis)
said a powerful appeal had been made by the 1935 hon. Gentleman the Member for Newcastle-under-Lyme in favour of open tender. But owing to certain considerations that system could hardly be applied to every instance. The Admiralty would be continually cross-questioned as to whether they had accepted the lowest tender, but that Department were bound to consider the situation and ability of a firm to cope with a large order. They had to consider war preparations and if a firm suddenly failed the Admiralty would be brought to book for having placed an order with such a firm. He had on several occasions noticed, however, that the Admiralty had exceeded the necessities of the case in the number of firms they asked to tender. He believed that something like twenty-three firms had been asked to tender for Rosyth, and he did not think that any stone could be legitimately thrown at the Admiralty in respect of their confining the great works at Rosyth to particular firms. He associated himself with those hon. Members who had drawn attention to the ineffectual nature of a debate of this kind which concerned itself with the Estimates of 1906–7 in the financial year 1908–9. He wished they could have some system by which a Committee could really look into the Estimates in the year in which they were current, and cross-question the officials as to the principles on which those Estimates were based. He thought that both the French and the German Parliaments had derived great advantages from such a system. If necessary, the Committee could hold its meetings secretly and consider the evidence, dealing with it only in their Report, and keeping such portions private as the officials desired. The Committee, as it stood to-day, as far as he could make out from reading the Report and the evidence, considered the whole question from the point of view of the Auditor-General's Report. If the Auditor-General did not draw their attention specifically to any questions there was a tendency to gloss over those questions, and there was also a tendency to consider only the financial side. Anybody familiar with administration in this country would bear him out in saying that infinitely more economy was derived 1936 from the consideration of principle than of petty details of finance. Then there was the question of the "Invincible," for which no tenders were invited. The Committee in their Report drew attention to the value that lay in secrecy. Of course, the Committee might be diffident about discussing the question whether it was necessary to build ships secretly, but he believed that it was the opinion of many naval officers that it was not necessary to keep designs so absolutely secret, nor did they succeed in their purpose of maintaining secrecy, while at the same time they lost the whole advantage of the expert criticism of such a body as the Society of Naval Architects. Attention was drawn in the Report to the loss incurred in salving of the "Montagu." There again, a principle was involved on which the Committee was quite competent to pronounce in favour of or against the Admiralty. Any body of civilians must feel very strongly in reference to the salving of the "Montagu." People who were connected with salvage companies, and who devoted a lifetime to the work of salvage, must be better acquainted than naval officers with the salving of ships. The Admiralty had placed the whole of the salvage operations under the direction of a naval officer, so they were not able to judge whether a salvage company would have salved the ship for less money; but certainly the system which the Admiralty had tried had resulted in utter failure, and the failure was acknowledged soon after Parliament had adjourned. There was no way, therefore, of bringing the Admiralty to book at the time, and one necessarily relied on the Public Accounts Committee to look into the question if they considered it their duty to do so, as to whether the Admiralty were to blame for placing the operations under the direction of a naval officer instead of a salvage company. He believed that in the case of the "Gladiator" the work was done under contract by a salvage company, and the ship was salved. In the Report of the Committee many things were omitted which should have been considered if the Auditor-General himself had only drawn the attention of the Committee to them. Wherever there was a break in 1937 the ordinary rules of Parliament, and any question arose, he thought it was positively the duty of the Auditor-General to draw the attention of the Public Accounts Committee to it. By an Order in Council, dated 8th January, 1906, which, according to the invariable rule with an Order in Council, should certainly he published in the London Gazette, the salary of a distinguished naval officer was increased. It was an invariable rule also for an Order in Council to be laid on the Table of the House. But neither of these ordinary rules was followed in that case, so that the discovery was not made until a year after. He really did not know why the Admiralty or the Privy Council should have disregarded the two rules in this particular case, for he was perfectly certain that if the Admiralty had come to the House of Commons and said that they considered it necessary that this distinguished officer should have an increase of salary, the House would have unanimously granted it. He did not see the advantage of breaking the ordinary rule, and he thought the Auditor-General should have drawn the attention of the Public Accounts Committee to the fact that the ordinary rule had been broken. Throughout the year 1906, a couple of dredgers were lent to the Egyptian Government for the purpose of dredging the Harbour of Alexandria. They were lent without payment. One of these dredgers was built in the year 1904; it was a new one, and presumably was built because it was wanted. The Egyptian Government made no payment whatever. Alexandria was one of the richest and most rising ports in the Mediterranean; it had a rich and thriving trade, and was well able to pay for the services of the dredgers. There, again, he thought the Auditor-General should have drawn the attention of the Public Accounts Committee to the correspondence with the Admiralty in regard to placing the two dredgers at the disposal of Alexandria for nothing. There were many ports in this country where they would like to have dredgers placed at their disposal for nothing. On the estimates for the year there was a charge of £20,000 from Osborne College. There, again, was a case whore the Public Accounts Committee might have looked into the 1938 matter. They drew attention to the fact that the original estimate was something like £40,000. The Admiralty then went to the Treasury and asked that they might utilise the savings on other Votes and devote them to Osborne College. In that way the expenditure had been increased to £160,000—about four times the original cost—without the sanction of Parliament, and the Public Accounts Committee drew attention to the fact. In 1906, there was the item of £20,000 for the hospital, so that gradually and insidiously the cost of the scheme, in regard to which the Admiralty got praise for their wonderful economy, had turned out to be about four and-a-half times as great as the first Estimate. There was another point which illustrated a great scandal. An enormous scrapping of ships took place in the year 1902. Some of those ships, although they had recently been refitted before they were scrapped, the Admiralty in 1906 found it necessary to take to the dockyards and again refit at great expense. The "Philomel" had £23,000 spent on her refit during 1903–4, and just after the refit of that little cruiser the Admiralty fiat went forth that the vessel was to be put in "scrap" for a time. She was left without a maintenance crew on board. In 1905, the Admiralty determined to refit her, and they took her to Haulbowline, where she was refitted, and where she remained a great length of time—he did not know how long, nor at what expense, though it was considerable, and he believed that if the heads of Departments had not to look to the Treasury, who were putting a considerable check upon them, and were left to exercise their own judgment in effecting economies, it would be the better system. The whole thing depended on the character and capabilities of the heads of Departments. If they were men of considerable character, capable of estimating the value of evidence, they would undoubtedly arrive at conclusions as to what was vital, and what was not, to the country, and it was their bounden duty when the country wanted economy to check those things which were not vital and to refuse them if necessary, but never to refuse what, on the evidence of their official advisers, was vital. There were 1939 in this Report references to the Works Vote. He felt most strongly that if the First Lord and the Secretary of State for War had greater power given them and were made to look upon it as their business to provide economy as well as efficiency, the Works bill would never have reached such great dimensions. Before undertaking many of these naval Works, for instance, the fortifications of the West Indies, the works at Bermuda and Halifax, the backwater at Malta and Dover Harbour, the Admiralty should have asked their advisers if these particular works were vitally necessary for this country to win success in war. He was convinced that no body of soldiers or generals would have told them they were vitally necessary to win success in war, though they might have told them they were useful, and the result would have been that many of those naval works that had cost so much money, and which we now so deeply repented, would never have been built.
§ * DR. MACNAMARA
said everybody must agree that there should be the fullest possible control by Parliament over expenditure. They wanted the greatest measure of Parliamentary control consistent with prompt and efficient administration. The hon. Member for Ipswich took exception to the system under which the Navy and Army were entitled, supposing the aggregate of their Votes was not exceeded, to transfer a surplus on one Vote to meet a deficiency on another Vote. That was set up temporarily under Section 4 of the Appropriation Act and was confirmed by Parliament in Section 5 of that Act. The seconder of the Motion said that that system led to bad estimating. He should like to look into that from the point of view of the Navy Estimates. Having regard to all the difficulties our public officials laboured under, they certainly estimated the future requirements of their Departments remarkably closely. In this connection he had heard with pleasure the speech of the right hon. Gentleman the Member for East Worcestershire. Their actuals came out very close indeed, having regard to all the circumstances. Estimates were effected, of course, by all sorts of unforeseen circumstances. 1940 They had industrial disputes, changes in price of materials, and delayed execution of contracts and there might be casualties such as the loss of the "Montagu" in 1903–7, and the "Gladiator" in 1808–9. But notwithstanding all these things, and the fact that they were estimated so long before the actual expenditure, it was remarkable that they came out so closely to Estimates. The Vote they were considering involved a ret Exchequer grant of £31,472,087. The seconder of the Motion before the House gave some instances in which Navy Votes had been exceeded and some in which they had a deficiency. Take Vote 1. Considering that the Vote for the pay of all ranks in the Navy amounted to £6,810,700, and had to be estimated eighteen months beforehand, it was remarkable there was not a larger deficiency than £254,137. Then on Vote 2, for the victualling of the Navy, which was £2,053,300, they had only a surplus of £187,206. The Vote for the "Royal Naval Reserve was £426,600 and they showed a surplus of £80,303. On the Vote for shipbuilding, the dockyard personnel, which came to nearly £2,500,000, it was remarkable there was only a deficiency of £82,848. On the Vote for dockyard material of £2,827,200 they showed a deficiency of £284,934 and on the Vote for contract work, for which there w-as an Excheqer grant of £8,588,400, they showed a surplus of £199,886. That was partly due to a revision of the programme of 1906–7, and his predecessor had stated specifically on 27th July, 1906, that they proposed to lay down three "Dreadnoughts" instead of four, two ocean-going destroyers instead of five, and eight submarines instead of twelve, and to that extent got Parliamentary sanction for a departure from the programme as set out in the original Vote. The Naval Armaments Vote was practically £3,000,000, and there was a surplus of £260,000. The Works Vote was nearly £2,000,000; the surplus under £200,000. The Vote for miscellaneous effective services was very nearly £500,000, and the suplus was £78,000. Having regard to all the difficulties referred to by the right hon. Gentleman the Member for East Worcestershire, these were remarkable approximations to the Estimates. The seconder of the 1941 Motion pointed out that on the net Estimate of £31,472,087 taken together they had surpluses of over £1,000,000, and deficiences of £660,000. They were entitled to wipe out their deficiences from their surprises so long as the aggregate total was not exceeded, and they had surrendered this year nearly £400,000. He gathered that the idea was that they should have water-tight Votes, that they might be able to transfer from and to a sub-head with Treasury sanction, but they must stick to the Vote as it stood, without assistance from any other Vote, if they exceeded it. If they insisted upon that the country would run a serious risk of Departments over-estimating, and then there would be the temptation to over-spend. As a sailor would say they were bound to have something to veer and haul with and they would probably take care that they had it in the interests of the service. Having largely over-estimated they would live up to their Estimates. His hon. friend said this system of transferring the surplus of one Vote to meet the deficiency on another meant that they had a nice little nest egg to deal with before the close of the financial year. But in this case, if there was any egg at all, it was a bantam's egg while under the hon. Gentleman's proposal he was afraid it might be an ostrich's egg. He did not think it practicable either in the interests of sound finance or of good administration. The question of non-competitive contracts and the question of the extension of contracts already entered into without Treasury sanction had been raised. The latter point was now receiving very serious consideration by the Admiralty, the War Office, and the Treasury, and he had better leave it there for the moment. The question of noncompetitive contracts arose in this particular case in connection with the three "Invincibles." The Admiralty held that as they were secret designs it was desirable to depart from the principle of competitive tender. He would make a short quotation from a letter to the Treasury on the point—My Lords cannot believe that it is the intention of the Public Accounts Committee, or the desire of their Lordships of the Treasury, to detract in any way from the full and unfettered responsibility which must rest upon the Admiralty for the administration of the business of His 1942 Majesty's Navy. They therefore consider it desirable to place on record that, in recognising the necessity for Treasury sanction in an exceptional case like that of the 'Invincibles,' involving a departure from the principle of competition, they cannot consent to an interpretation of that principle which would impair their responsibility, or impede their administrative action. At the same time they recognise that they must at all times be ready to justify to the satisfaction of Parliament any course of action on which they may decide in, this respect.They concluded—I am also to point out that cases do, and must constantly occur in which competition is practically out of the question. In the exercise of their administrative functions the Admiralty alone can judge when such a case does or does not arise, and no useful purpose would be achieved by laying it down that Treasury sanction is required in such cases while delay and unnecessary correspondence must result.He might add that the competitive tender was the rule at the Admiralty, and, where practicable, the open tender. It was only in cases like that of the "Invincibles," and where very highly specialised or patented articles were required and they had a list of firms who could supply them, that the Admiralty were bound to reserve a discretion, to depart, if necessary, from the system of competitive tenders. The Chairman and the seconder had referred to works undertaken without Parliamentary sanction. It was the rule that no new work of any magnitude, £2,000 and upwards, not specially approved by Parliament, should be begun without the prior sanction of the Treasury. But there were cases where there was a certain amount of urgency which did not fall within the definition of new works in the broader sense of the word. One was the case of making further provision for the boy artificers of Chatham. A hulk was requisitioned and it was found that the accommodation was not sufficient for all purposes, and it was decided to add certain further accommodation on shore, and they went on without coming to Parliament. The total involved was £2,900 and this year they spent as a matter of fact. £812 17s. 6d. With regard to the question of whether they should give a certificate, as the War Office did, the value of stock at the close of the year was arrived at by actual valuation at current market, rates of the whole of the articles on store charge. The stock was maintained in accordance with the authorised reserve approved by the Admiralty from time 1943 to time. A statement was included in the Appropriation Account under each Store Vote of the values of the stock at the beginning and end of the financial year. He was new to these matters, but he was giving very close personal attention to them. The Admiralty bad one system in regard to these matters, and the War Office another. With the information at his disposal he was considering the relative value of the two systems, and would continue to give the question his closest personal consideration. He did not think he need deal with more than one more point, the point namely of liquidated damages from contractors for failure to carry out the conditions of their contracts. All large Admiralty contracts contained a clause providing for the recovery of damages in connection with failure to complete by a certain date. Extensions of time were, however, allowed in cases such as where the Admiralty required a change of design, or had failed to supply to the contractor by the time specified such articles as they had undertaken to supply. In certain cases not covered by the terms of contract, they had waived, wholly or partially, the liability of the contractor where no loss had been sustained by the Crown in connection with the contract. That was a fundamental principle which had been laid down. In special cases, such as work of an experimental character, they dealt with the matter on its merits in considering whether or not they would waive damages. That was in regard to large contracts. With regard to ordinary store contracts the conditions were different, and the check they had on the contractor was that if ha failed he was face to face with the penalty of being struck off the Admiralty List, and that was not infrequently done. As to the extent to which liquidated damages had been waived, that was a matter with regard to which he had taken very great care. This year there had been twenty-six cases in which liability had been incurred and damages were recoverable, and of these they had waived nineteen, and had recovered in part respecting the remaining seven. The total amount of penalties waived was £8,000. Both he and the permanent officials, whom he could not praise too highly, took the 1944 greatest possible care to see that equity was satisfied and the interest of the public service safeguarded.
§ Motion, by leave, withdrawn.