HC Deb 18 July 1955 vol 544 cc162-72

Resolutions reported,

I. Whereas it appears by the Navy Appropriation Account for the year ended the 31st day of March, 1954, that the aggregate Expenditure on Navy Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Navy Services over the net Expenditure is £6,187,988 5s. 7d. viz.:—

£ s. d.
Total Surpluses 16,015,397 17 3
Total Deficits 9,827,409 11 8
Net Surplus £6,187,988 5 7

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:

(1) the application of so much of the realised surplus on Vote 10 for Navy Services as is necessary to meet the net deficit of £1,315,250 19s. 4d. on Vote 15 that would otherwise have been met by issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Acts, 1949 and 1953.

(2) the application of so much of the remainder of the said total surpluses on certain Grants for Navy Services as is necessary to make good the remainder of the said total deficits on other Grants for Navy Services.

1. That the application of such sums be sanctioned.

[For details of Schedule see OFFICIAL REPORT, 12th July, 1955, cols. 1877–78.]

II. Whereas it appears by the Army Appropriation Account for the year ended 31st day of March, 1954, that the aggregate Expenditure on Army Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Army Services over the net Expenditure is £42,667,050 2s. 4d. viz.:—

£ s. d.
Total Surpluses 49,650,553 6 1
Total Deficits 6,983,503 3 9
Net Surplus £42,667,050 2 4

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:

(1) the application of so much of the realised surplus on Vote 8 for Army Services as is necessary to meet the net deficit of £4,139,114 2s. 7d. on Vote 11 that would otherwise have been met by issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Acts, 1949 and 1953.

(2) the application of so much of the remainder of the said total surpluses on certain Grants for Army Services as is necessary to make good the remainder of the said total deficits on other Grants for Army Services.

2. That the application of such sums be sanctioned.

For details of Schedule see OFFICIAL REPORT, 12th July, 1955, cols. 1879–80.]

III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March 1954, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Air Services over the net expenditure is £79,760,849 16s. 11d. viz.:—

£ s. d.
Total Surpluses 85,106,577 7 4
Total Deficits 5,345,727 10 5
Net Surplus £79,760,849 16 11

And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Air Services as is necessary to make good the said total deficits on other Grants for Air Services.

3. That the application of such sums be sanctioned.

[For details of Schedule see OFFICIAL REPORT, 12th July, 1955; cols. 1881–82.]

Motion made, and Question proposed, That this House doth agree with the Committee in the said Resolution.

10.1 p.m.

Mr. Emrys Hughes (South Ayrshire)

Before we sanction this expenditure I should like to ask the Admiralty spokesman if he can explain whether any of this expenditure has been incurred in the recent exercises in the North Sea. I have before me a report of those exercises, which presumably, cost a considerable amount of public money, and I want to know if any of that expenditure is covered in this Resolution.

Mr. Speaker

The hon. Member is mistaken as to the period covered by these Resolutions. They cover the year 1953–54. It is merely a question of applying surpluses in one Vote to deficiencies in another.

Mr. Hughes

Perhaps I shall be in order if I ask if any of the vessels in respect of which expenditure was sanctioned in these Resolutions were involved in the exercises.

Mr. Speaker

It is not customary to raise points of detail upon these Resolutions.

Mr. Hughes

Is it in order for me to ask for an explanation from the Admiralty upon this point?

Mr. Speaker

It is not in order to do that. These are commonly called Monk Resolutions, and they merely authorised the transference of surpluses from one Vote to deficiencies in another Vote. Parliament is asked for no more money.

Mr. John Dugdale (West Bromwich)

I understand that this is not a matter for the Admiralty but for the Financial Secretary. Is it not in order for my hon. Friend or anybody else to ask the Financial Secretary some questions upon it? If the Financial Secretary is responsible and is here surely we are quite entitled to ask him certain questions.

Mr. Speaker

I do not think that anyone can shed any particular light upon this matter beyond what may be gleaned from a perusal of the document. It is purely an accounting matter. We are not being asked for any more money.

Mr. Hughes

Is not the question of whether there has been wise expenditure of this money in order?

Mr. Speaker

I do not think that it is, in these circumstances.

Motion made, and Question proposed, That this House doth agree with the Committee in the said Resolution.

10.4 p.m.

Mr. Michael Stewart (Fulham)

You have just reminded us, Mr. Speaker, that we are dealing with the Monk Resolutions—an item of Parliamentary procedure which is less generally well known than it deserves to be. In a previous Parliament, when I was a newly-elected Member, I remember inquiring of a more senior colleague what was the nature of a Monk Resolution, and being assured that it was something to do with monasteries, which was always introduced in a Session following a Dissolution.

In fact, it deals with the process of virement, a power of the Service Departments to use the Service Estimates to ensure that money which they have not spent under one Vote is used to meet a deficiency on another Vote. We understand that that has been done in each of the three Services. The fact that they have done it has been reported to the Treasury. The Chancellor of the Exchequer has given his approval to it.

The fact that he has given his approval has been reported to the Public Accounts Committee, which has approved the Chancellor's approval. The fact that the Public Accounts Committee has so approved the Chancellor's approval has been approved in a Committee of this House, known as the Standing Committee on Army, Navy and Air Force Expenditure.

We are now considering the Report of that Committee, which tells us that it has approved the action of the Public Accounts Committee in approving the action of the Chancellor of the Exchequer in approving the action of the War Office in exercising its power of virement.

I am sure, Mr. Speaker, that you will tell us to be careful, in any question we address to the Financial Secretary, to remember that this is an accounting and financial matter. I think I am observing that rule if I ask a question which is suggested to me by page III of the Army Appropriation Account, where we find, for example, that the power of virement has been exercised, and that the Financial Secretary is answerable to the House for the fact that it has been exercised in a matter affecting Votes 11 and 8.

What appears to have happened is this. Vote 11 deals with additional married quarters. Normally the Army gets help in providing married quarters at home from the Consolidated Fund, under the Armed Forces (Housing Loans) Act, but on this occasion, instead of getting that help from the Consolidated Fund under that Act the Army has used the surplus arising under Vote 8, Subhead A. Does that mean that the Army has lost a claim to funds under the Armed Forces (Housing Loans) Act that it might otherwise have exercised, and that in the long run a less sum of money will be spent in providing married quarters at home for the Army than would otherwise have been the case? If so, it is to be regretted.

This House passed the Armed Forces (Housing Loans) Act because it realised that the provision under ordinary financial arrangements for building Army married quarters was not adequate. Now, apparently, there has been approval of the use of the power of virement in a way that means that the Army has not made use of facilities which it could have enjoyed under that Act.

Does this use of the power of virement mean that in the long run there is a net loss of funds to the Army for the provision of married quarters? The position is the more remarkable in that the surplus under Vote 8, subhead A—from which arises the surplus which was appropriated to Vote 11—arose in part because less was spent on building barracks at home than the Army had originally intended to spend. That is a somewhat remarkable position.

We have been told that it is the policy to reorganise the number of men in the Army so that there shall be a greater proportion of them at home, and so that a strategic reserve may be built up. Surely that will require greater expenditure on barrack and accommodation for the Army at home. Yet here we are told that the Army is using this process of virement, because it has not been able to build the amount of housing at home that had been planned during this financial year.

The matter is clearly set out in the Appropriation Account on page 16, Note A, where there is a reference to Appendix II. If we study that Appendix we find that a considerably smaller sum was spent on building accommodation for Army personnel at home than had been expected. What is the position for, on the one hand, we are planning to build up a strategic reserve at home and on the other, we are not spending the amount of money which the Army hoped and planned to spend on accommodating these men? It is known that already the Army is experiencing something of a tight fit in relation to its home accommodation.

What I am concerned about is this example of the use of the power of virement, because permission having been given by Parliament to the Treasury to use this system, the Treasury is doing something quite different from what Parliament originally intended. For what purpose was that power given? It was to make allowance for the fact that expenditure in the Service Departments cannot be as nicely calculated as is the case in the civilian Departments. The contingencies that Service Departments have to face are less predictable.

It is to meet that kind of thing that the power of virement was given. I will not weary the House by quoting particular examples nor run the risk of getting out of order by doing so, but I will suggest that the Treasury is here giving permission for the use of virement on a scale and in a manner quite beyond that originally intended by Parliament. If we go through the Appropriation Account in detail we find, for example, in page 4, Vote 1, subhead B, that the average Regular strength of the Army was less than was expected, and on page 5, subhead N, we find that fewer men extended their service than was anticipated.

What does that mean? It means that the Army was not able to recruit as many Regulars as was expected. So we are getting an Army with fewer Regular soldiers in it and a smaller proportion of experienced men than the Government hoped for, an event which underlines the warning given from this side of the House time and time again.

On page 14, subhead D, we find very considerable underspending on warlike stores, again illustrating a point repeatedly made from this side of the House, that the Government, while maintaining large masses of men in the Armed Forces, are failing to equip them. They ask Parliament to vote money for equipping those men, and then they find themselves incapable of spending the money. If we were able genuinely, and with regard to the safety of the country, to spend less on the Armed Forces, we should all rejoice, but there is no cause for rejoicing in this underspending when we maintain the men but cannot spend as much as we should to equip them properly. That is what this under-spending on warlike stores, recorded on page 14—

Mr. Deputy-Speaker (Sir Charles MacAndrew)

The hon. Gentleman is going rather beyond what we are allowed. I would remind him that in the Navy, Army and Air Force Expenditure Committee criticism of the system of applying surpluses has been ruled out of order.

Mr. Stewart

I am obliged, Mr. Deputy-Speaker. I always feel a certain sense of regret when we debate this Resolution because when I was on the other side of the House, if I remember rightly, Rulings were somewhat different, and Service Ministers were expected to reply in some detail.

Mr. Deputy-Speaker

The practice was condemned from the Chair.

Mr. Stewart

With great respect, Mr. Deputy-Speaker, that is so, but I am sure that you will sympathise with me when I say that when I was on the other side of the House I had to answer all the questions, and now I am precluded from asking them. Although I fully recognise that the Ruling you have given is entirely correct, it seems to me that it bears rather hardly on myself and on some of my colleagues on this side of the House.

I will not transgress further on your patience, Mr. Deputy-Speaker, and I will therefore conclude by suggesting to the Financial Secretary to the Treasury that in his exercise of power in this elaborate chain of approvals which runs from the War Office to the Chancellor, from the Chancellor to the Public Accounts Committee, and from the Public Accounts Committee to the Standing Committee on Navy, Army and Air Force Expenditure, and so to this House, the exercise which his right hon. Friend the Chancellor of the Exchequer has made of the power of virement is one which, under an apparently innocuous financial form, is in danger of disguising from the House the fact that we are getting an unbalanced, ill-developed Force, justifying in many ways the criticisms that have been repeatedly made from this side of the House.

10.17 p.m.

The Financial Secretary to the Treasury (Mr. Henry Brooke)

I should like to congratulate the hon. Member for Fulham (Mr. M. Stewart) on having achieved the conspicuous feat of finding a substantial point on the Money Resolution which it is in order to debate in the House. I should be out of order in discussing a number of the matters to which he referred, but I should like to remind him, as his hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) was reminded, that all this refers to the affairs of two years ago. It is, therefore, a fundamental fallacy to draw conclusions from these figures or these notes as to what is happening today. This is purely an accounting procedure, and the House is being asked whether it will agree to a Report from the Committee that certain transfers should be sanctioned.

The principal point that the hon. Member raised concerns the financing of married quarters. He will remember that under the Armed Forces (Housing Loans Act), 1949, as amended by the similar Act of 1953, married quarters can be financed by loan to an amount not exceeding £75 million, that amount being payable by annuities from Service Votes. Quarters that do not qualify for loan continue to be provided for in the normal works Votes of the Service Departments.

The hon. Gentleman has raised the question whether it is proper by the exercise of virement to pay by transfers from other votes money which would under the original Estimates have been raised by loan, and that is the question which I want to answer. He may not recollect it, but the question thus using savings on other Votes to reduce the amount of borrowing which would otherwise be necessary for these special married quarters was referred to the Public Accounts Committee some years ago, indeed in the time when he and his right hon. and hon. Friends formed the Government of this country.

The Public Accounts Committee in their Second Report in the 1950–51 Session ruled that if the Service Departments: …wish to use any savings which may accrue on the ordinary Works Votes to finance the construction of special married quarters under the new Votes,… they should be allowed to do so by the use of virement if the Estimates for the year have stated that the estimated allocation from loans for special married quarters may be varied by the application of savings on the ordinary Works Votes. It will be found that the condition laid down by the Public Accounts Committee was fulfilled in the 1953–54 Estimates and therefore I hope that I can satisfy the hon. Member for Fulham that we have been acting entirely in order in accordance with the principles and rules laid down by the Public Accounts Committee. I would not be asking the House this evening to approve this Motion if I were not satisfied that the Public Accounts Committee had had its requirements met at every point.

Motion made, and Question proposed, That this House doth agree with the Committee in the said Resolution.

Mr. John Strachey (Dundee, West)

We are reminded that we are discussing Resolutions which immortalise the name of Mr. Monk. I take it that the purpose of this annual discussion is to ascertain whether in the past—as the Financial Secretary has said—this right of virement was exercised properly and within the limits which it was intended by the Monk Resolutions, or whether it was improperly exercised. That is why the Government have to ask for the approval of the House. If that was not the proper matter for the House to discuss there would be nothing to discuss, and the Government would not annually have to obtain the approval of the House.

Therefore, the material, and strictly financial point which is before us is whether virement has taken place as between the different items of the accounts in this Estimate in a reasonable way and, as my hon. Friend the Member for Fulham (Mr. M. Stewart) has said, in a way which carries out the original intentions of the Monk Resolutions. That intention was that the Service Departments, with their specially varying needs, should be able to balance from surplus accounts their deficits in particular Votes.

I submit that that must be the point which we are now discussing and that when one considers the annual turnouts in the Air Estimates and the accounts for 1953–54, it is asking a great deal of the House to regard those transactions as a legitimate and ordinary instance of virement within the meaning of the Monk Resolutions. What happens? We find it clearly in pages ii and iii of the Appropriations Account that the surpluses involved are of a magnitude of £78 million and the deficits of £600,000. This is a case of virement which we are to discuss and it is, I claim, differing in order of magnitude to that degree. Therefore, I put it to the Financial Secretary that that is quite outside the ordinary conception of virement as the balancing of items between different Votes in the Air Ministry.

We know what the result was. Because there were mis-estimates in the appropriations in aid no less than £79 million was surrendered to the Exchequer. We are not concerned with the realities which those figures mark. The realities were the extraordinary inability of the Government at that time to get aircraft delivered. What we are concerned with is the degree of mis-estimating what went on and which now has to be squeezed into the Monk Resolutions and come to us as an instance of virement.

I think the House really has a right to ask the Financial Secretary to tell us whether that degree of virement, that degree of inbalance between surplus and debit on the accounts, is anything like the sort of thing which was ever contemplated as permissible under the Monk Resolutions. We see the accounts set out in this very posthumous way, and this is the first opportunity the House has had of discussing the accounts as they finally come before it. We must convict the Government of an extraordinarily high degree of mis-estimating, which makes a profound effect on the Budget as a whole when it comes to £78 million on the Air Estimates.

We suspect that when next year we have the following year's accounts for 1954–55 they will show something of the same order. I know the technical difficulties, but we ask the Financial Secretary whether the Service Departments, in this case the Air Ministry, can be brought to give their estimates somewhere nearer the correct amount, not only item by item, but as a whole, because it seems rather an abuse of the right of virement to ask us to swallow differences in accounts of the order of £78 million.

10.29 p.m.

Mr. Brooke

I understand the right hon. Member is criticising the magnitude of the figures which are here brought out. I quite agree that a surplus of £85 million is a considerable sum. I do not think the House ought to be altogether regretful that we managed to save £85 million at some period two years ago, and it certainly is not possible on the Monk Resolution to examine the question which, I think, the right hon. Member is seeking to raise, whether we got good value for our money.

Mr. Strachey

The right hon. Gentleman used the word "save" which itself begs the question because we know the sums were not spent by deliberate act of the Government because of their inability to get the aircraft delivered. That is shown by Votes 6, 7 and 8.

Mr. Deputy-Speaker

I am very sorry, but we cannot discuss the surplus.

Mr. Strachey

The right hon. Gentleman raised it by using the word "save."

Mr. Deputy-Speaker

I think the right hon. Gentleman was encouraged.

Mr. Brooke

I was using the word in the strictly financial sense. As far as arithmetic is concerned, there was undoubtedly a saving. What we are asking the House to do is to agree that total deficits amounting to £5⅓ million should be covered by transfers from these surpluses. That is really not at all an unreasonable action for us to take. In fact, the deficit which we are now asking the House thus to cover is just about 1.1 per cent. of the total original net grant, including the Supplementary Estimate, for the Air Ministry in the year 1953–54. So that we have not been incurring any substantial deficit.

It was somewhat different in the days when the right hon. Gentleman was connected with the conduct of these matters. I notice that in the year 1946–47 the total deficit that had to be covered by a Monk Resolution—

Mr. Deputy-Speaker

I do not think we can go back on to that.

Mr. Brooke

I thought I was being criticised as regards the relative magnitude of these figures. It was solely on that point that I wished to defend myself.

If I have sufficiently established my argument that £5⅓ million is a relatively small deficit to cover in relation to the total of the original Vote, I have no hesitation in asking the House to agree—this is the one thing which is before the House—that it is entirely proper that those deficits should be met out of the surpluses that are show.