Question again proposed,
That leave be given to bring in a Bill to authorise issues and transfers from the Consolidated Fund of the United Kingdom without the grant of credits by the Comptroller and Auditor-General, and to suspend the necessity for the counter-signature by or on behalf of the Comptroller and Auditor-General to warrants authorising the issue of Treasury Bills.
§ Sir J. Simon
In moving for leave to introduce this Bill, I said that we did not wish to take the Second Reading to-day, as I think hon. Members who are interested in this subject may like to examine the Bill after the short explanation that I shall give. The Bill touches the functions of the Comptroller and Auditor-General, which are an extremely important element in our financial machine which is looked to, and rightly so, by the House of Commons, as a means by which irregularity in spending may be exposed and checked. Therefore, I do not take any alteration of these functions at all lightheartedly.
The basis of the present arrangement was the Exchequer and Audit Act, 1866, and successive Governments have always paid the very greatest attention to preserving these checks on our finances. The main and most important duty in this connection of the Comptroller and Auditor-General is, I suppose, to make a meticulous examination of our expenditure and to make the reports, which we know he does make, in which he calls attention to any slip or irregularity, even of the smallest kind. Members of the Public Accounts Committee and others know that this is very important in order that the authority given by Parliament for spending for particular purposes may be most strictly adhered to. We do not seek to interfere at all with this.
There is another function normally discharged by the Comptroller and Auditor-General, not by any means of equal importance, but none the less one which he discharges under Statute, and which we 503 think we must modify now. It is in regard to the credits —rather a curious word —which are necessary before the machinery for getting money from the Bank of England on the Treasury demand can operate, in order that that money may be paid by the Bank of England to the appropriate Department for spending. It is the provision of what is called a credit, which consists really in the Comptroller and Auditor-General informing the Bank that he has granted such credits. It is, therefore, in the nature of a preliminary process —the House votes that money should be spent up to such and such an amount for such and such a purpose —
§ Sir J. Simon
Not quite, I think; but I appreciate the hon. Gentleman's desire that that should be raised on an early occasion, when the large question may be discussed. I will bear that in mind. It is a very limited matter, but it is important. In the ordinary way the Treasury has to make a requisition upon the Comptroller and Auditor-General for credits to the amount which the Treasury is about to issue, and, in the ordinary way, the Bank of England cannot honour the Treasury's draft until the Comptroller and Auditor-General has informed the Bank that he has granted the credit. Nobody would seek to alter that procedure in ordinary circumstances. I myself would be against it being altered merely because we are at war. But I think the House will see that if events should occur in which, for example, the normal working of the Bank is interrupted and the department of the Bank concerned has to be moved to a different point, or if, on the other hand, the work of the Comptroller and Auditor-General's Department is carried on at a different point and we have to make all these communications by messenger and in writing, without my elaborating the hypothesis anyone can see that a situation might arise which would prevent us from providing the finance necessary for the war. If hon. Members will look at Clause 3 of the Bill which I am asking leave to introduce, they will see that I wish to use this power only in the circumstances set out in Subsection (2) of that Clause. This is a limited provision, which I think ought 504 to satisfy the most careful guardian of the public purse in this House. It says:This Act will come into operation on such date as His Majesty may appoint by an Order-in-Council declaring that the circumstances render it expedient in the public interest to put this Act into force, and shall continue in force until His Majesty by Order-in-Council directs that it shall cease to have effect.What I desire is to get authority —and the Comptroller and Auditor-General, having examined the matter, is in agreement with me that we ought to get this authority —so that the paying out of public money for public purposes shall not be held up. If that happened there would be most serious dislocation of the financial machinery of the Government. So Clause 1 of this Bill —if it is approved —provides that, instead of having this machinery as in ordinary times, there may be, as long as these exceptional conditions exist, requisitions to the Bank by the Treasury to pay out to the Department a credit without the previous authority of the Comptroller and Auditor-General. This, of course, does not in the least interfere with the main duty of the Comptroller and Auditor-General, which is in the nature of an audit, after which if there is anything in the nature of an irregularity he must report it to the House of Commons. I think I have served the House fairly in explaining what we want.
§ Mr. Gallacher
Have you made any arrangements for the House of Commons sanctioning a credit after the money has been paid?
§ Sir J. Simon
Yes, that is what I meant by saying that the main duty of the Comptroller and Auditor-General remains exactly as it was before, and the control of the House of Commons remains as it was.
§ 6.26 p.m.
§ Mr. Pethick-Lawrence
I am glad that the Chancellor of the Exchequer has arranged that this Bill should not be dealt with in precisely the summary way in which the other Bills that we have been discussing have been dealt with. In those cases it has been found convenient, for the purpose of facilitating the arrangements made by the Government in the emergency, that we should take Bills, through all stages in some cases, and in other cases through the introduction and Second Reading, in one day. I am glad the Chancellor of the Exchequer appreciates the very great importance of this 505 Measure and has arranged only to introduce it to-day, and to have the Second Reading to-morrow. As to the importance of this Bill, I fully endorse, and will even go further than, the Chancellor's own remarks. The Comptroller and Auditor-General is a person of very great importance to this House. He is the servant of the House of Commons, and it is his business to be a watchdog for the House of Commons as against the Executive itself. But for the Comptroller and Auditor-General the Government could very largely set aside the deliberate and declared intentions of the House of Commons in matters of finance. Therefore, any tampering with the duties and rights of the Comptroller and Auditor-General would be, and in fact is, a very serious matter to the House of Commons.
It is of special importance that the House should have the opportunity of examining this Bill in a little more detail, and that it should not be asked to give its consent, even so far as the Second Reading is concerned, before reasonable time has elapsed. With regard to the merits of the Bill, I do not think it is necessary to deal with them at great length to-day. It will be for us tomorrow, if we find matters in it which require criticism, to make that criticism. But when the Chancellor of the 'Exchequer says, "Well, it is just a formal duty of the Comptroller and Auditor-General to give this instruction and his counter-signature, and the really important thing is his examination," I am not prepared to go as far as that.
§ Sir J. Simon
The right hon. Gentleman, I daresay unconsciously, misrepresented my words. I never used the word "formal" —still less with the intonation and the insinuation which he used. What 1 said was that if you take the two functions, the more important is the detailed examination every year. Far be it from me to say that the other is not important.
§ Mr. Pethick-Lawrence
I am glad that the Chancellor of the Exchequer has made that interruption, because I think that what I stated was the impression he had given. I do not pretend either to have reproduced his words or his intonation, but he gave the impression that what was happening was of no great importance. I do not take that view. These two functions are really two sides of the same shield. They are parts of 506 the same function. One is to be asked to express an opinion before the credit is given at all, and the other is, after the credit has been given, to be convinced through an audit that the money has been spent in the way intended. Therefore I regard the two functions of the Comptroller and Auditor-General as being really one function. The question, of course, arises whether in the particular circumstances of this emergency there are grounds for abrogating the first half of the function and whether any serious loss to the control of the House of Commons is involved in this abrogation.
A question was put to the Chancellor whether the sanction of the Comptroller and Auditor-General would be given afterwards. What I think was intended by the question was whether, although the sanction was not given in advance, within a few hours or a day or two afterwards it would be given in retrospect. That will not be done under the Bill. What will be done is that the procedure which is always followed, namely, a complete audit afterwards in the course of months, sometimes more than 12 months, will take place and the House of Commons through the Public Accounts Committee will be acquainted with the views of the Auditor-General on the matter. I quite agree that that is the more import-and half of the function, and that remains. I thought it my duty, in the short interval that I have had before the knowledge that this Bill was going to be introduced, to seek the opinion of the Comptroller and Auditor-General, so that, as chairman of the Public Accounts Committee, I could give his opinion on the matter. I am glad to confirm what the Chancellor said, that the Comptroller and Auditor-General sees no objection to this course in the very special circumstances and that it will not detract from his control, in the interest of the House of Commons, over expenditure. I think that is as much as I need say now. I am glad that we are to have a longer opportunity of examining the Bill and —I speak for those on these benches, and possibly for the members of the Public Accounts Committee —we have no objection to its introduction.
That leave be given to bring in a Bill to authorise issues and transfers from the Consolidated Fund of the United Kingdom without the grant of credits by the Comptroller and Auditor-General, and to suspend
the necessity for the counter-signature by or on behalf of the Comptroller and Auditor-General to warrants authorising the issue of Treasury Bills.
§ put, and agreed to.
§ Bill ordered to be brought in by the Chancellor of the Exchequer and Captain Crookshank.