HC Deb 04 July 1956 vol 555 cc1475-86

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

I. Whereas it appears by the Navy Appropriation Account for the year ended the 31st day of March, 1955, 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

SCHEDULE
DEFICITS SURPLUSES
No. of Vote Navy Services, 1954–55 Votes Excesses of actual over estimated gross Expenditure Deficiencies of actual as compared with estimated Receipts Surpluses of estimated over actual gross Expenditure Surpluses of actual as compared with estimated Receipts
£ s. d. £ s. d. £ s. d. £ s. d.
1. Pay, &c., of the Royal Navy and Royal Marines 3,882,386 4 2 — — 230,585 16 2
2. Victualling and Clothing for the Navy — 780,178 9 5 3,112,815 8 1 —
3. Medical Establishments and Services 14,784 4 10 — — 21,551 0 11
4. Civilians employed on Fleet Services — — 2,830 17 8 4,779 18 1
5. Educational Services — — 26,916 4 3 430 6 8
6. Scientific Services — — 259,239 7 2 211,604 6 6
7. Royal Naval Reserves — — 58,701 9 0 1,792 9 2
8. Shipbuilding, Repairs, Maintenance, &c.:
Section I.—Personnel 1,685,835 4 9 — — 197,615 14 10
Section II—Matériel 172,647 17 1 — — 4,549,152 18 8
Section III.—Contract Work — 2,233,719 18 1 666,167 8 0 —
9. Naval Armaments — 1,589,382 7 6 7,617,182 5 11 —
10. Works, Buildings and Repairs at Home and Abroad 324,080 6 5 — — 313,379 0 6
11. Miscellaneous Effective Services 362,189 10 6 — — 171,666 15 5
12. Admiralty Office 201,701 0 10 — — 7,627 1 8
13. Non-Effective Services 101,885 19 8 — — 65,553 10 4
14. Merchant Shipbuilding and Repair 3,217 10 10 — — —
15. Additional Married Quarters — 155,880 9 8 155,880 9 8 —
— Balances Irrecoverable and Claims Abandoned 51,369 18 6 — — —
6,800,097 17 7 4,759,161 4 8 11,899,733 9 9 5,775,738 18 11
Total Deficits: £11,559,259 2s. 3d. Total Surpluses: £17,675,472 8s. 8d.
Net Surplus £6,116,213 6s. 5d.

appended, the net surplus of the Exchequer Grants for Navy Services over the net Expenditure is £6,116,213 6s. 5d., viz.:—

£ s. d.
Total Surpluses … 17,675,472 8 8
Total Deficits … 11,559,259 2 3
Net Surplus … £6,116,213 6 5

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 Navy Services as is necessary to make good the said total deficits on other Grants for Navy Services.

Motion made, and Question proposed, That the application of such sums be sanctioned.—[Mr. H. Brooke.]

11.20 p.m.

Mr. Ellis Smith (Stoke-on-Trent, South)

I desire to make some observations on this matter and also to interrogate the Financial Secretary to the Treasury, because in my view we have now reached a very serious situation. Our duty in Committee of Supply is to be an instrument of constructive criticism of the administration. In the Motion appeared the words "temporarily authorised." How long is "temporarily"? Is the Treasury power of virement justified when millions of pounds are at stake and when our hard-pressed people are the most heavily taxed in the world?

I charge the Treasury with having exceeded its authority derived from the virement of expenditure. The fifth Report of the Committee of Public Accounts said: Your Committee have reviewed the exercise by the Treasury of their powers under the annual Appropriation Act to sanction provisionally, subject to subsequent confirmation by Parliament,"— which I interpret as meaning that I am fully justified in speaking within the limits set and taking objection to the Treasury taking advantage of this authority— the application of surpluses on any Votes of a Service Department to meet deficits on other Votes of the same Department. They see no reason why Parliament should not sanction the virement temporarily authorised by the Treasury. I emphasise the last words. That is a very perfunctory Report. It has no explanation, no explanatory memorandum. It would have been serious in the days of the Monk Resolution of 100 years ago when only shillings were involved. Today, when millions of pounds are involved, it becomes our duty to take a stand, no matter what the time of day.

I have before me the national accounts of public income and expenditure. For National Debt service alone we are finding £674 million, for the Army Votes £462 million, for the Navy Votes £337 million and for the Air Votes £431 million. What I shall say will apply to all the items on the Order Paper, but I believe in avoiding repetition and in putting my case in as few words as possible, and so I propose to confine myself to the Navy figures, although what I have to say applies to the others as well.

It is time that the House of Commons took action to prevent this prodigious spending and manipulation of millions of pounds. I understand that no alteration in an Estimate may be made without Treasury approval. How can we have effective Parliamentary control if we allow the financial manipulation of millions of pounds, such as we see on the Order Paper? Erskine May says that the Commons do not vote money unless it is required by the Crown.

We have already voted £124.3 million not required this year. The Order Paper gives a figure of £87.8 million, and further savings of £36.5 millions have been made. This is a national scandal of incompetent estimating and the irresponsible handling of millions of pounds.

One of the duties of the House of Commons is the scrutinising of Estimates and expenditure, but how can it carry out that duty if virement is used to this extent? The Treasury are using it to an extent never intended in time of peace. The Treasury provides millions of pounds for the Service Departments, but does not act similarly when dealing with civil needs. In that case it watches every shilling. The absolute power of the Treasury and the military conflicts with the financial control of Parliament.

The Monk Resolutions of 1879 are out of date. In the last war I had dealings with the Army Council in connection with a secret weapon, and my confidence in that Council was shaken as a result of that experience. General Weeks and General King restored it. I should like to know if I am correct in my estimation of the way in which the Council functions. I understand that a minute is made to a short statement that the Army Council has reported that excesses are likely to arise on certain Votes and surpluses on others.

For the purpose of greater accuracy, and so that I shall remain in order, I have with me a copy of Erskine May. I know that I should not be in order in dealing with the surpluses and deficits, but I am in order in speaking as I have been speaking.

In the alleged public interest the Treasury have authorised financial juggling to proceed by this power of virement. We are not allowed to ask questions or to discuss the transactions of the Treasury and the Army Council. This subordinates Parliamentary control to that of the Treasury and the military. One hundred years ago it was a matter of dealing with shillings; today millions of pounds are dealt with. The House has a duty to watch this procedure, even at 11.30 p.m.

To say that it is only temporary is equivalent to issuing a blank cheque for use as one likes. I believe that we are suffering from a legacy of the last war. I accept my share of responsibility, but it is now 15 years since we voted millions of pounds, blank cheques of credit, and colossal increases in taxation. Ten years after the war we are still spending £1,600 million on armaments. In addition to having a greater percentage of our national income than that of any other country utilised in this way, we suffer from the effects of the strain of two world wars.

11.30 p.m.

The millions of pounds which have been voted should never have been used like this. Erskine May states that the Commons does not vote money unless it is required by the Crown. This year, we have voted the millions to the extent that I have mentioned. We need to remind ourselves of the procedure by which these millions of pounds are granted. The Crown makes its needs known to Parliament. This means that the Crown has asked for £123 million more than was required. The House of Commons grants the sums demanded, and so we are responsible and cannot contract out of our responsibility. The Committee of Ways and Means sanctioned the issue from the Consolidated Fund, but it was never intended that our millions of pounds should be played about with in this manner and I refuse to be a party to it.

I was going to quote from the Economist but, in view of the time, I do not propose to do that. I do, however, say that in days when we are economising at the expense of poor children's food and of people's dinners and in many other ways, this Committee ought to have been packed with Members, on both sides, doing their duty in the way that it was intended that effective Parliamentary control should operate.

I am a product of large-scale industry. Between the two wars, we had to estimate to a matter of shillings to enable us to quote for contracts when we were subjected to world competition. Had we estimated in the way that Estimates appear on the Order Paper, we would have lost our jobs time after time. The time has arrived, therefore, when this Committee in particular, and Parliament in general, should take more notice of what appears on the Order Paper and what appears in the OFFICIAL REPORT.

As is stated in the OFFICIAL REPORT for 7th June, 1956, I asked the Leader of the House a question about a Motion which appeared on the Order Paper. The Motion was in these terms: This House urges Her Majesty's Government to move for a Select Committee which shall consider and report on … the voting of credit and the need for a detailed examination of Departmental expenditure and any other suggestions which would assist the House and facilitate business. Since 1945, a large number of young men and a few young women have come into the House of Commons. They have brought new ideas, they have come in determined to do their duty. In my view, we should be giving them greater facilities in carrying out that duty than we are doing. The time has arrived when the House of Commons should agree to these matters being referred to a Select Committee so that we can do our duty in a more enlightened and modern manner than we have done during the past 10 years in voting the millions of pounds in the way that we have done.

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

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) knows from previous debates that I welcome the active interest which he takes in Parliamentary control of expenditure, and I should like to congratulate him on the rare feat of having made a speech on this Vote which was entirely in order. I will do my best to answer him.

First, however, I hope the hon. Member will not mind if I react rather violently to his allegation that the Treasury has behaved in a manner not authorised by the House of Commons. The Treasury's action in this is directly authorised by successive Appropriation Acts. On this occasion, we are discussing expenditure incurred in the year 1954–55, and the hon. Member will find that the power given to the Treasury to exercise virement on a temporary basis and subject to certain conditions, which he did not mention, was directly given by the House in the Appropriation Act, 1954.

The history of this matter is less than 100 years old. We are today carrying out a procedure based on a recommendation of the Public Accounts Committee in 1864. Since then, so far as I can ascertain, the Public Accounts Committee, a Select Committee of the House on the advice and guidance of which we largely rely in these financial matters, has been content with the present arrangement. It is true that 15 years later, in March, 1879, a Mr. Monk moved a Resolution which is not the direct predecessor of the Resolutions to which he has given his name, but that made no fundamental difference. What we are doing is based on the recommendation of the Public Accounts Committee 92 years ago.

Briefly, the procedure is this: The Appropriation Act empowers the Treasury to exercise virement on a temporary basis, but subject to the strict condition that the total expenditure of the Service concerned must not exceed that which has been directly voted by Parliament. Moreover, if the Service Department were to embark upon expenditure which should undoubtedly be brought at once to the notice of Parliament, the Treasury would not agree to exercise those powers but would insist on the Service Department bringing forward a Supplementary Estimate. If the hon. Member will look at the records, he will find frequent occasions where, despite this power given to the Treasury, a Service Department has laid a Supplementary Estimate.

In the present case, before the end of the financial year 1954–55 the Service Departments intimated to the Treasury that they would seek the exercise by the Treasury of virement. The Treasury, having examined the matter, reported to the House before the end of the financial year that, in the circumstances, it felt that a case had been made out. The hon. Gentleman may ask why the House did not hear about it earlier. The answer is that the House can hardly proceed further until the Appropriation Accounts are completed and have been examined by the Comptroller and Auditor-General.

If the hon. Member will look at the Appropriation Accounts for the Service Departments for 1954–55, he will find that the Report of the Comptroller and Auditor General on them is dated in each case "March, 1956." It is only after that date that the matter can come to the Public Accounts Committee. He has quite rightly drawn attention to the 5th Report of the Public Accounts Committee dated 15th May, 1956, in which the Committee say—I think I am entitled to read this to the Committee—that they saw no reason why Parliament should not sanction the virement temporarily authorised by the Treasury in their Minutes laid before the House in February, 1956. The Public Accounts Committee is a formidable body, and it is advised by the principal individual watchdog on behalf of this House, the principal official watch-dog, the Comptroller and Auditor General—who is the official, not of the Government, but of the House. I think, therefore, I am entitled to say to the Committee that if the Public Accounts Committee, advised by so great an authority as the Comptroller and Auditor General is satisfied to recommend that Parliament should sanction this virement, I am acting reasonably in coming forward to this Committee and asking for the sanction.

If these Resolutions are agreed to in this Committee and on Report, I am sure the hon. Member will appreciate that the matter must be finally enacted in the Appropriation Bill which will be submitted in a short time, before the end of this month. We are abiding by a strict system which has been laid down for us over many years. If the Public Accounts Committee were at any time to question anything we did, we at the Treasury would certainly pay very great regard to that.

I hope the hon. Member will not too often criticise if money has been saved. It is quite true that these accounts indicate that there has been underspending of some £136 million offset by overspending on other Votes. I think it fair to say that in the Defence Departments it is particularly difficult to estimate expenditure before the beginning of the year. There may be extra needs, or needs may be diminished by international changes during the course of the year. Although I know that my right hon. Friends in charge of the Defence Departments do their very best, and I know the Treasury scrutinises their Estimates as carefully as it scrutinises any other Estimates, nevertheless there is bound to be a greater margin of error in the Defence Estimates because of the nature of the services than in the Civil Estimates.

Mr. Ellis Smith

I accept the line of reasoning of the right hon. Gentleman up to this point, but, seeing that we are now dealing with millions and the economic situation is so serious, has not the time arrived when there should be a tightening up of estimating?

Mr. Brooke

If I may say so with respect, that is a matter for debates on the Service Estimates in the spring. Certainly the hon. Member will get the full support of the Treasury in any plea he makes for strict estimating, but he will appreciate that here we are dealing with expenditure incurred in 1954–55 on Estimates which were presented 2½ years ago. I hope the hon. Member will agree that I have answered his questions as fully

SCHEDULE
DEFICITS SURPLUSES
No. of Vote Army Services, 1954–55, Votes Excesses of actual over estimated gross Expenditure Deficiencies of actual as compared with estimated Receipts Surpluses of estimated over actual gross Expenditure Surpluses of actual as compared with estimated Receipts
£ s. d. £ s. d. £ s. d. £ s. d.
1. Pay, &c., of the Army 7,156,951 18 1 701,102 8 10 — —
2. Reserve Forces, Territorial Army, Home Guard and Cadet Forces — — 1,875,535 4 3 5,006 12 8
3. War Office 103,179 16 7 — — 8,931 13 7
4. Civilians — — 1,518,990 4 10 177,095 14 5
5. Movements — — 1,518,990 4 10 177,095 14 5
6. Supplies, &c. — 3,200,822 4 11 8,782,604 0 11 —
7. Stores — 1,663,406 13 5 51,322,133 13 3 —
8. Works, Buildings and Lands — — 5,987,589 17 9 663,774 13 8
9. Miscellaneous Effective Services 1,725,196 7 11 1,444,521 2 4 — —
10. Non-Effective Services — 8,321 3 6 263,496 15 1 —
11. Additional Married Quarters — 4,399,813 16 11 1,613,893 5 10 —
— Balances Irrecoverable and Claims Abandoned 62,302 3 5 — — —
9,047,630 6 - 11,422,063 5 3 73,454,861 13 - 854,808 14 4
Total Deficits: £20,469,693 11s. 3d. Total Surpluses: £74,309,670 7s. 4d.
Net Surplus £53,839,976 16s. 1d.

Resolved, That the application of such sums be sanctioned.—[Mr. H. Brooke.]

as I can and have taken his speech seriously.

£ s. d.
Total Surpluses … 74,309,670 7 4
Total Deficits … 20,469,693 11 3
Net Surplus … £53,839,976 16 1

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

  1. (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 £2,785,920 11s. 1d. 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. (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.

III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March 1955, 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 £28,041,822 3s. 3d.. viz.:—

£ s. d.
Total Surpluses … 44,524,266 12 6
Total Deficits … 16,482,444 9 3
Net Surplus … £28,041,822 3 3
SCHEDULE
DEFICITS SURPLUSES
No. of Vote Air Services, 1954–55 Votes Excesses of actual over estimated gross Expenditure Deficiencies of actual as compared with estimated Receipts Surpluses of estimated over actual gross Expenditure Surpluses of actual as compared with estimated Receipts
£ s. d. £ s. d. £ s. d. £ s. d.
1. Pay, & c., of the Air Force 3,441,536 3 7 19,020 4 0 — —
2. Reserve and Auxiliary Services — — 210,746 11 9 1,297 7 11
3. Air Ministry 137,729 15 5 38,499 17 1 — —
4. Civilians at Outstations 213,461 3 10 — — 644,453 19 10
5. Movements 98,378 8 9 — — 597,190 7 4
6. Supplies — — 19,715,397 15 1 24,129 17 8
7. Aircraft and Stores — 5,452,288 17 11 497,708 6 7 —
8. Works and Lands — 3,068,336 11 5 20,210,652 6 2 —
9. Miscellaneous Effective Services — — 787,589 12 3 348,134 17 2
10. Non-effective Services — — 218,659 8 6 13,959 8 0
11. Additional Married Quarters — 4,000,000 0 0 1,254,346 14 3 —
— Balances Irrecoverable and Claims Abandoned 13,193 7 3 — — —
3,904,298 18 10 12,578,145 10 5 42,895,100 14 7 1,629,165 17 11
Total Deficits: £16,482,444 9s. 3d. Total Surpluses: £44,524,266 12s. 6d.
Net Surplus £28,041,822 3s. 3d.

Resolved, That the application of such sums be sanctioned.—[Mr. H. Brooke.]

Resolutions to be reported Tomorrow. And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:

  1. (1) the application of so much of the realised surplus on Vote 8 for Air Services as is necessary to meet the net deficit of £2,745,653 5s. 9d. 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. (2) the application of so much of the remainder of the said total surpluses on certain Grants for Air Services as is necessary to make good the remainder of the said total deficits on other Grants for Air Services.