CIVIL (EXCESSES), 1929. (Hansard, 26 February 1931)

§ Sir WILLIAM MITCHELL-THOMSON
I think we ought to have an explanation of this Excess Vote from the Treasury Bench. An Excess Vote is always regarded by this Committee with peculiar care. It may shorten the proceedings if I address one or two questions to the right hon. Gentleman who is in charge of the Vote. This Vote, taken as a whole, comprises really four items, and for the information of hon. Members who may not have it before them I will read them. They are: Clause II, Vote 2, Diplomatic and Consular Services; Class VI, Vote 7, Office of Commissioners of Crown Lands; Class VIII, Vote 1, Merchant Seamen's War Pensions; and Class VIII, Vote 2, Ministry of Pensions. All the Votes belong to the excess which we are now asked to make good. The largest is in respect of the Ministry of Pensions, which is no less than £342,266, a very considerable sum, although the Select Committee of Public Accounts very properly point out that It bears only a fractional relation to the total amount of the Vote.
At the same time, as the Minister of Pensions is here, I think perhaps he ought to amplify a little more the circumstances referred to under paragraph 5 of the report of the Select Committee of Public Accounts. I ought to explain again to the Committee, in case there are some hon. Members here who do not fully appreciate the procedure in regard to the excess grants, that Parliament is always extremely jealous about a Department spending in a particular year more money than has been appropriated by it to the service of that Department. I should point out that in the Army and Navy Departments there is power to appropriate savings under some other Sub-heads for expenditure under any other particular Sub-heads; but that does not exist in the Civil Departments. When it takes place in the Civil Departments it has to be regularised by an Excess Vote. This particular Excess Vote is a much larger sum than that of any possible savings. The circumstances in which it arose are explained in the Special Report of the Select Committee of Public Accounts which goes, as it always does, carefully through the Excess Votes. When ever an Excess Vote is asked for the Committee has to report on it. They report: 2387 In December, 1929, the Ministry of Pensions felt grave doubts whether the original Estimate would prove sufficient, so much so that they suggested to the Treasury that a Supplementary Vote should be taken for £297,000. Later,"— that is to say after the month of December, 1929— on further examination, the Ministry came to the conclusion that the original Vote would suffice, and the proposal to present a Supplementary Estimate was withdrawn. My only observation on that is that it seems a little extraordinary that the Ministry's calculations should have been so very far wrong as all that. It will be observed that in December they were thinking that they would have to present a Supplementary Estimate for £297,000. Later on they thought their original Vote would suffice and, in fact, it has turned out that they had to come to the House for the sanction of an excess of no less than £342,000. That is a rather remarkable thing to happen, and calls for a little more explanation than is given in the report.
As regards the other particular small Excess Votes, I do not think there is really very much to which to object in any of them. They are only two very brief points—both of them Treasury points—to which I should like to refer. The first is in the Vote for the Diplomatic and Consular Services. I see that the Financial Secretary to the Treasury is here, and I should be grateful if he would tell us how the £5,523 which we are asked to vote is divided: how much is due to the loss on currency, and how much to the excess on telegraphs. I rather fancy that in fact the different Consular offices in China must have been holding a rather excessive reserve in Chinese dollars, because between January, 1929, when the Estimate must have been originally made up, and March, 1930, which was the end of the last financial year, I do not think that the drop in the Chinese exchange was so large, and so it must represent the holding of a very considerable balance in Chinese dollars. That is a practice against which the Treasury has always, and very rightly, set its face. I remember that several years ago I was on a Treasury committee which inquired into this particular subject. It arose in connection with the Treasury Chest Fund, 2388 and we then laid down the principle, which has been adhered to ever since, that so far as possible the Treasury Chest Fund—and an analogous principle ought to be applied to this fund—ought to be financed by telegraphic transfers in order that the loss on the exchange should be kept down to the smallest possible amount. I rather fancy it will be found that the currency reserves in Chinese dollars were on the large side.
I mention the Merchant Seamen's War Pensions only to recur to the suggestion which we threw out on this side of the House the other day and which deserves serious consideration by the Government. That suggestion was that in the case of this comparatively small pension fund—it would not apply to the Ministry of Pensions, because there the amounts are, obviously, much too large—the State should form some sort of general equalisation reserve, owing to the slight variation in the rates between what the actuaries expect to be the mortality and what is borne out by the actual mortality. It is hardly advantageous that the time of the Committee should be occupied, in the first place, with a Vote on the subject. In the second place—it is all right in this case, because we are being asked to vote more money—supposing we had appropriated more money than has been required by the Service, then we should be getting the extremely vicious effect that the taxpayer was having more money extracted from him than was required for the Service, which in the present situation everyone is anxious to avoid. An ordinary insurance business would work this by an actuarial reserve. It would be perfectly well known what the mortality rate would be. It would vary, and would sometimes be above and sometimes below the average; it would be averaged over a number of years and would be maintained by carrying a reserve. I cannot ask for more than an assurance that the Financial Secretary to the Treasury will go into this; I know he will have the purists of the Treasury against him, but an insurance business would certainly maintain a reserve of that kind, and it is worth considering whether the State should not maintain such a reserve also.

Mr. ROBERTS
Perhaps I may, in a few sentences, answer the point put by the right hon. Gentleman. This Excess Vote to which he has alluded is accounted 2389 for, first, by reason of £20,500 on account of the non-reduction of salaries, and certain increases of pay to junior officers. In the second place, there is £16,000 on account of more numerous medical hoardings undertaken to increase the number of permanent pensions, and consequent travelling expenses. In the third place, there is a sum of £25,000, anticipated reduction in staff which was not realised, and which was due largely to increased work in the provincial offices. That is under sub-head A. Under sub-heads K and L the amounts, though considerable in themselves, are small in proportion to the total of those items, and they are in the main due to variations, such as deaths, re-marriages, etc. A sum of £90,000 in excess was due to the failure of certain widows to take advantage of an additional pay day in the previous financial year. Under O.1 the payments for treatment have always been a matter of uncertainty, but the increased claims for pensions have never been large. As the right hon. Gentleman said, this matter has been reported upon by the Select Committee on Public Accounts, and he has very generously and properly made allusion to some of their observations. Perhaps I may say further that they observe that the amount of the excess— is not large in relation to the total amount of the Vote. It is an excess of £342,266 on a net total expenditure of £54,000,000. For the information of the Committee, I will point out that that works out at 0.6 per cent., which is not a very large proportion. It was expected on the experience of past years of the expenditure of the last quarter of the financial year, that the original Estimate would prove sufficient, but the drop in the expenditure during that quarter which was expected did not take place. That is the only explanation which I can give in regard to this Vote.

§ The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Dalton)
May I take this opportunity of dealing with a point to which the right hon. Gentleman the Member for South Croydon (Sir W. Mitchell-Thomson) referred. We regret, of course, that we have to ask for this small Excess Vote. The cause of it is in respect of currency depreciation in China, and he will appreciate that when I say that during the 2390 year the Chinese dollar fell from 1s. 9d. to 1s. 5d., a fall which it was difficult to foresee. The right hon. Gentleman asked about our balances; he was afraid that perhaps too large balances were kept in China. There is a net deficit on the whole account of £5,523. As to the exchange the net loss is £9,369, so that with certain surpluses under other subheads to apply to its reduction, there is a net deficit in the aggregate of £5,523 which we are now asking the Committee to give us. We have been able to bring it down to that figure. Taking the exchange by itself—

§ Sir W. MITCHELL-THOMSON
How much is telegraphs and how much currency?

§ Mr. DALTON
As I said, on currency the net loss is £9,369. That is due to the fall of Chinese dollars from 1s. 9d. to 1s. 5d. We have watched carefully the matter which the right hon. Gentleman has raised, by keeping our balances at a minimum figure during this period. The maximum which we have established at Shanghai is 80,000 dollars, and the balance is never allowed to rise above that. The right hon. Gentleman will appreciate that this balance accrues from the payment of consular fees in dollars. Our own people out there are paid in sterling, and the depreciation of the dollar does not affect those payments, but the consular fees and the court fees are paid in dollars which are, of course, remitted home as soon as possible. Occasionally, it may be that there is a rush of payments, and it is therefore often not possible to keep the balance at shanghai very much below the figure of 80,000 dollars. I think I have dealt with the currency point—

§ Sir W. MITCHELL-THOMSON
Yes, except that I would ask this—I do not know if it can be answered at the moment—is there any estimate relating to Treasury Chest Fund on the one hand and these consular balances on the other? I think the Committee would like to be satisfied that at any one moment the consular department is not collecting dollars and remitting them home to change into sterling while at the same time the Treasury is drawing telegraphic transfers in sterling to pay the Army and Navy in China.

§ Mr. DALTON
I cannot answer that off-hand, but I will get the answer, and perhaps the right hon. Gentleman will let me give it a little later.

§ Sir SAMUEL ROBERTS
It is clearly important.

§ Mr. DALTON
It is clearly important, and I expect that steps would be taken to prevent any loss. I feel quite sure that our people will have brought that about. Perhaps the right hon. Gentleman will allow me to take the other point about the telegraphs. The total cost of telegrams, etc., in 1929–30 was £53,500, as against an estimate of £45,000. The excess is almost wholly due to communication with China. These amounted during the year to rather more than £18,000, which is rather less than one-third of the total. The excess in the total cost of telegrams was due to the exceptional need of communication with China. During this year the state of China was unsettled. In addition there were certain special negotiations proceeding. The Boxer indemnity negotiations involved long telegrams to and fro, so did the extra-territoriality negotiations, and also the rendition of Wei Hai Wei. As the right hon. Gentleman, my predecessor knows, he having handled some of these things himself when he was in the office which I now hold, these were very complicated questions. As far as the Boxer indemnity was concerned, it was impossible to avoid very long telegraphic communications to and from Sir Miles Lampson. I will now ascertain whether we can answer the previous question which the right hon. Gentleman put.

§ Sir W. MITCHELL-THOMSON
Perhaps the Financial Secretary to the Treasury may be able to answer it?

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)
I understand the position is that there are arrangements for making transfers where such can properly be done, but under the particular case of China the Treasury chest is at Hong Kong and this fund is at Shanghai. I understand that the currencies are not the same, and that it is not usually profitable to make the transfer. With regard to the equalisation of reserves, as I said last night, I shall be happy to look into the question to see whether the right hon. Gentleman's suggestion is practicable.

	Amount to be Voted.
	£.	s.	d.
Class II.
Vote 2. Diplomatic and Consular Services	5,523	3	4
Class VI.
Vote 7. Office of Commissioners of Crown Lands	74	3	1
Class VIII.
Vote 1. Merchant Seamen's War Pensions	907	15	2
Vote 2. Ministry of Pensions	342,266	10	1
	£348,771	11	8"