(THE NATIONAL LOANS FUND.)

HC Deb 19 February 1968 vol 759 cc146-67

9.7 p.m.

Mr. Deputy Speaker (Sir Eric Fletcher)

The first Amendment selected is Amendment No. 1, and it may be for the convenience of the House if with this Amendment we discuss the following: Amendment No. 2, in page 2, line 2, after 'Treasury', insert: 'within the provisions of a statement approved by a resolution of the Commons House of Parliament'; Amendment No. 4, in Clause 4, page 4, line 22, leave out from 'exceed' to end and insert: 'the credits on the National Loans Fund granted for this purpose by the Comptroller and Auditor General in accordance with section 1(3) above'; Amendment No. 5, in page 4, line 23, leave out subsection (2), and

Amendment No. 11, in Clause 7, page 6, line 35, at beginning insert: 'Subject to section 1(3) above'. That can be done only if it is acceptable to the House.

Mr. R. H. Turton (Thirsk and Maltion)

I beg to move Amendment No. 1, in page 1, line 11, at end insert: (3) For the financial year ending on 31st March 1969 and each subsequent financial year the Treasury shall prepare and lay before the Commons House of Parliament before the beginning of the financial year a statement specifying the purposes and the estimated amount for each purpose of payments to be made out of the National Loans Fund. I agree that this Amendment and Amendments Nos. 2, 4, 5 and 11 all hang together and that it would be convenient to have one debate on them. These are important, although I hope non-controversial Amendments. When the present Home Secretary introduced his last Budget, he presented the new form of accounts rather on the lines of this Bill, and went on to say: I have also been considering whether the time is coming to consider changes of substance…I have therefore put a review in hand."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, cc. 998–999.] On 7th November, when he was speaking in the debate on the Address in reply to the Gracious Speech and referring to this Bill which had been mentioned in the Gracious Speech, he said: First, it will make for greater clarity in presenting the Government's financial transactions,… Secondly, the size of the Government's borrowing and lending, not for this alone but for other bodies—local authorities, nationalised industries, and so on—is now so great in its own right and the significance of these lending transactions in relation to the Government's total borrowing requirements is so large that the issues should be dealt with separately from the revenue and expenditure transactions of the Government."—[OFFICIAL REPORT, 7th November, 1967; Vol. 753, c. 865–6.] I feel rather like one does when in a desert seeing a mirage a long way off. It looks very large and attractive, but, as one gets nearer, it become less large and eventually it disappears. This is what I feel about the present Home Secretary's description of the Bill, because on Second Reading the Chief Secretary said that the Bill deals merely with accountancy arrangements. "Changes of substance" had disappeared. In Committee the Financial Secretary said that the Bill was only "an accountancy exercise".

What is needed is proper parliamentary control of the Government's borrowing and lending. Just as the Commons receives each year from the Chancellor an estimate of his revenue and expenditure and approves the Estimates so, too, the House should receive each year a budget on capital account, or a budget on the National Loans Fund, which it can debate separately and approve.

It is clear from what the Financial Secretary said in Committee that it is the Chancellor's intention to present the financial statement in the new form adopted by the present Home Secretary last year. If so, it should be a separate debate on the Government's capital account and it should require the approval of the House. This is the object of the first two Amendments.

After all, this is an important matter. The net borrowing requirement has risen from£355 million in 1964–65—I agree that it may have a different meaning, because in that financial statement the old form of calculation was used—to£726 million in 1966–67 on the new definition, and it will rise to£1,115 million in 1967–68. This is a great part of our troubles. This huge borrowing requirement is not financed by genuine borrowing or saving but by the creation of new money to an extent which causes the serious inflation from which the country is now suffering.

In support of this belief, I quote words used on 18th March, 1966, at the end of his term of office, by Lord Cromer, then Governor of the Bank of England. Referring to 1964–65, when the Chancellor said that the net borrowing requirement was£355 million, Lord Cromer said this: This surely is one of our basic problems. For the last year our money supply increased by some 7½ per cent. against our increase in the real national product of about 2 per cent. I ask the House to study these words well: We unfortunately have a system under which Exchequer financing can, and does, lead to the creation of money quasi-automatically to the extent that the requirements of the Exchequer are not met by general savings or taxation". The first two Amendments seek to give the House proper control over and information about the Government's capital account. I understand from what was said in the Committee and by the Chief Secretary on Second Reading that the House will have the information in the new form, but it has not, as the Bill is drafted, proper control. Amendment No. 2, therefore, would provide that, before the Comptroller and Auditor General approves grants under the subsection, he will be restricted to those grants which have been approved by the House, in other words, to the capital budget statement made by the Chancellor which will have to be approved by the House.

9.15 p.m.

Amendment No. 4 deals with local loans, probably the least satisfactory part of our financing and the part where there should be far more effective Parliamentary control than there is at present. Under the Bill as drafted, not only is there no improvement in Parliamentary control but the present Parliamentary control is reduced. There would be less opportunity for the Commons to scrutinise the capital expenditure involved in local loans. At present, we have an annual review of local authority lending when the Public Works Loans Bills are brought before the House each year. Under this Bill, however, there will be no opportunity for the House to review local loans annually. The only opportunity the House will have under Clause 4 will come when the limit of£1,000 million in the local loans part of the National Loans Fund has been exhausted and the Chancellor has to bring forward not a Bill but a Statutory Instrument to make further provision for local loans.

There are, therefore, two points here. As the limit of£1,000 million is taken, and the present expenditure on local loans is somewhere in the region of£600 million a year, there are likely to be intervals of 18 months to two years between the time; when the House has an opportunity to look at lending for local authorities. Second, it will not be by a Bill. Although it is unusual to amend or seek to amend a Public Works Loans Bill, it has a stage at which we may take that course if we wish to do so. But it will not now be by a Bill with three stages; it will be merely a Statutory Instrument requiring an affirmative Resolution, without amendment. Motions for an affirmative Resolution are apt to be taken not at what. I hope, is regarded as a normal hour of business but very late at night. Therefore, Parliamentary control over local loans as provided for in the Bill is worse than it is at present and is far from satisfactory.

Amendments Nos. 4 and 5, therefore, would insert into the subsection a provision that local lending would be included in the statement of the National Loans Fund, so that the House would each year have an opportunity to examine, criticise and approve that amount of the Chancellor's capital account which dealt with loans to local authorities. That would give proper Parliamentary control over local lending.

Amendment No. 11 is merely consequential. Under Clause 7(1) which deals with the issues to the Exchange Equalisation Account, there is no limit to the Treasury's discretion in giving directions. In the Amendment we tie this to the approval of the House given in the new subsection (3) to Clause 1 which forms the first Amendment.

In the group of Amendments we propose to see that control over borrowing and lending requirements is restored to the House. That is especially important at present because under paragraph 10 of the Letter of Intent the Government have given an undertaking on behalf of the House that they will have firm control over the capital account. They have also given an undertaking that their net borrowing requirement will be limited to£1,000 million. Therefore, the House would be failing in its duty if it did not insert into the Bill some way in which it can scrutinise and approve the Government's provisions for lending.

I do not believe this to be a party issue. It is something much more important and wider. In a booklet entitled "A Programme for National Recovery—Research Paper No. 1", published about a fortnight ago, the economists concerned examined what Parliament and the country have been doing in the past six years, covering not only the period in office of the present Government but of the Conservative Government. They found that over the six years from 1961 to 1966 central Government expenditure exceeded income by a net total of£1,840 million, and that of that net deficit there was a£756 million increase in the issue of notes and coins, of which£570 million was added to the currency in circulation with the public, which was thus expanded by 26.1 per cent. over the six years at an average annual rate of 3.9 per cent. Over the same period, net deposits by United Kingdom residents with the United Kingdom banking sector increased at an average rate of 5.1 per cent. The combined effect was to increase the total money supply—by the Bank of England's definition—at a rate of 4.7 per cent., when the gross national product at constant prices was increasing at the rate of only 2.9 per cent. It really examines what is wrong with the country and why prices in the shops go up.

It is not the wage-cost inflation that we are all talking about. It is this inflation of money supplies which is created largely by Government lending. It is the capital account about which at present the House of Commons hears so little and over which under the Bill it will have so little control.

Taking those six years, 1961–66, one finds that there was a surplus between income and expenditure of£3,813 million, but the long-term loans amounted to£5,653 million, giving the deficit figure that I mentioned of£1,840 million. This is why I attach importance to the question of Parliamentary control of the capital account and why I ask the Government to reconsider the parts of the Bill which I am seeking to amend and insert in them proper control by the House of Government lending both to public corporations and to local authorities.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

I intervene briefly to support the Amendments put forward by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). Having lived a long Parliamentary time with the Bill, I realise that it is, as the Financial Secretary described it, an accountancy Measure, and that, much as we should like to get into the Bill the sort of reforms that my right hon. Friend has so eloquently expounded, this is not a Measure that will hold them.

However, as it is a Measure of clarification and a matter of accountancy, I still think that on the accountancy side it does not do as good or clear a job as it could do. We had long discussions in Committee about the role played by the Exchange Equalisation Account in dis torting the figure of the next borrowing requirements. I hark back to this because the net borrowing requirements now figure in a State document, the Statement of Intent appearing in columns 649–50 of the OFFICIAL REPORT of 30th November last.

This Letter of Intent to Mr. Pierre-Paul Schweitzer laid great stress on the net borrowing requirement. However, as we expounded in Committee, and as I think the Financial Secretary learnt and accepted, the intervention of the movement of the Exchange Equalisation Account into the calculation of the net borrowing requirement has a distorting and not a clarifying effect that is to say, when there is too much sterling capital at the disposal of the Exchange Equalisation Account, as a result of the need for the Exchange Equalisation Account to support sterling in the markets it makes a repayment and thereby reduces the net borrowing requirement.

I know that this year all will be well. I am sure that many of us, including the Chief Secretary, read in the Financial Times of 16th February about the advent of the I.M.F. team who are to breathe down the Chancellor's neck to study all the figures which are to be put into his Budget. I should like to quote from the very interesting article in the Financial Times, which has not been contradicted: …the I.M.F. team will produce a list item by item of the promises made in the Letter of Intent and accompanying private documents "— We did not hear much about them— and assess quantitatively as well as qualitatively how each is being carried out. I do not think that anyone on this side of the House would think that there could be a more satisfactory scrutiny of the Chancellor's intentions and the documents than is liable to be produced by this team of experts, and I am certain that, if we are to have the same sort of inquiry every year, there is no need to amend the Bill. But God forbid that we should be in the position every year of having to have Mr. Good and his experts going through our Budget item by item, scrutinising the promises made in the Letter of Intent and assessing quantitatively and qualitatively how each is being carried out.

9.30 p.m.

This is a frightening prospect, and I do not envy the Chancellor and his colleagues in the Treasury what this examination brings, but, regardless of which side of the House we sit, we all hope that this will be a once for all occasion—that, after this year, we shall be able to satisfy our creditors that we are keeping our promises. If, as I hope, Mr. Good and his team do not function in the same spirit after 1968, we need the sort of book-keeping suggested in this group of Amendments and we particularly need to get the movements on the Exchange Equalisation Fund out of the net borrowing requirements.

My right hon. Friend quoted a document of the National Recovery Programme, and I want to quote a sentence which puts in clear language what I have been trying to say: The large haphazard flows of sterling in arid out of the Exchequer, which now arise automatically out of official borrowing overseas and the working of the Exchange Equalisation Account, must be dealt with separately from the Government's borrowing and lending. These are unexceptionable sentiments. We all agree with them. I am sure that the right hon. Gentleman agrees with them. But these movements figured in the calculations of the net borrowing requirements and I know that Mr. Schweitzer and his team have not been taken in by them. These men who are breathing down the Chancellor's neck ate too intelligent for that.

But I put it to the right hon. Gentleman, who has great knowledge of accountancy, that this is not satisfactory in accountancy terms and should be remedied by keeping the Exchange Equalisation Account separate from the net borrowing requirement. In view of that I ask him to accept the Amendments. I hope the right hon. Gentleman will acquit me of discourtesy if I do not hear the end of this debate, since I will have to leave, but I would point out that in Parliamentary terms, I have spent more time than he has on this Measure, although not more time generally, of course.

Mr. Michael Shaw (Scarborough and Whitby)

I should like wholeheartedly to support my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). I was very interested in his exposition. I confess that my emphasis on the Amendments, particularly on the first two, is rather different from his. The important feature of the Amendments is that concerned with supplying additional clear-cut information to the House and the country.

I do not believe that we should in any way curtail Government decisions, except that the knowledge on which their decisions are likely to be based should be made public. The decision must remain with the Government. The detailed statement which the Amendments would provide for being brought before the House each year to specify the purpose and estimated amount of each payment out of the National Loans Fund would give a much better appreciation of the financial picture at the beginning of the year of how much was to be spent throughout the year.

The present difficulty is that the amounts to be spent are largely to be spent out of sums already authorised—because every payment out of the National Loans Fund has to be authorised by the House at some time or other. The difficulty is that these authorisations are not given when each detailed amount of expenditure arises, but by authorising limits. So long as those limits are not reached, it is entirely for the Government to decide to make payments out of the Fund as and when they think fit. Those limits are now so large that in any one year the total amount of discretion which the Government have in total payments is very considerable.

If the Amendments go through, there will be nothing to stop the Government, if they find that they have to pay more than is set out in the original statement, from bringing a further statement before the House during the year. There is no objection to that, because the Government will have to make a clear statement of the purpose and the amount of the money involved.

When we were discussing the Companies Act, we had long debates about the virtues of complete disclosure. There were long speeches about the evils of hiding information from the public, from the shareholders and from the work-people. If this argument is true, as I believe it largely to be, many of the arguments used about the disclosure in private industry could be applied to the public sector far more than has been acknowledged.

If this expert team is to come to this country to look over the shoulder of the Chancellor of the Exchequer at all the secret facts and figures, those facts and figures, or at least their general import, will be known in full measure throughout the knowledgeable world, and I see no reason why they should not be known to the British public. Everything is to be gained. After all, one thing that no one believes nowadays is the monthly figures about our cash position, because in many months they are obviously cooked. If we are to restore meaning to them, people's confidence must be restored through knowing that they are correct.

Our position is like that of the family with a bathroom. When there is a good supply of hot water, one does not worry about how much one uses and the whole family has a good bath, but if the plumbing is suspect, one does not worry about getting as much as necessary, but takes care to judge how many people want a bath and how much hot water there is in the system. Exactly the same is true of the amount which we should spend on the ventures which would be listed in such a statement. It is not a question only of those who need it but of how much money is available. Both ends must be considered. Unless we know the facts, we cannot properly appreciate the situation, and cannot, as we should, provide a proper check on the Government, whatever their complexion.

Mr. J. Bruce-Gardyne (South Angus)

support the Amendment for two reasons, the first in the international context. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) drew attention to the report in the Financial Times on Friday of the examination to which the Chancellor will be subjected by the team from the I.M.F. later this week and rightly said that we hope that this procedure will not be necessary in future. But this makes it all the more important that Parliament should be better-informed, as these Amendments suggest, of how the Government see the requirements of the National Loans Fund over the coming year.

My hon. Friend also referred to the operations of the Exchange Equalisation Account and I hope that the Chief Secretary will say something on this. I have studied what the Financial Secretary said in Committee and I find it a little worrying. He said: The I.M.F. is perfectly well aware of the meaning of ' borrowing requirement' which broadly follows the meaning which the hon. Gentleman wants to put upon it.…The I.M.F. is certainly not naive on these matters, and is perfectly well aware that the Government can sometimes have flows of money from the E.E.A., which, of course, would appear, if not taken into account, to reduce the borrowing requirement below what it really is."—[OFFICIAL REPORT. Standing Committee E. 30th January. 1968; c. 134.] He also said that Mr. Schweitzer cannot have the wool pulled over his eyes. We would accept this, but, in the other years, when the Chancellor, as we hope, is not subjected to this sort of scrutiny, we in this House do not want the wool pulled over our eyes as it can and has been by the operations of the Exchange Equalisation Account. Therefore, the first point is that which my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) made—the question of accountability to Parliament. If this information this year must he given to the I.M.F. team, surely in future years it should be given to Parliament so that we can effectively debate these matters in a way which we have not been able to do in the past.

9.45 p.m.

The second point is an external point. When I was in Bonn last week, one of the German officials to whom I was speaking said, "Suppose that the scheme for special drawing rights were activated and that under the scheme the British Government were entitled to draw 5 million dollars worth. How do we know that the British Government would not use this credit facility to finance their own deficit spending at home, as they did last year?" This is a very ominous question. The implications behind it are that the activation of a scheme like the S.D.R. scheme, which may be attractive for general purposes, may be postponed or delayed precisely because a foreign Government does not have confidence in the bookkeeping operations of the British Government. That is what it comes to.

This is another strong argument in favour of the Amendment. This year, we have the I.M.F. team to do the Chancellor's homework for him—to breathe down his neck, as has been said—and to keep him in order. My goodness, it will be needed. But it seems reasonable that in future years the House should be given information of a similar nature so that vie can conduct our debates in knowledge of the facts and so that Governments abroad do not have the qualms which evidently they have about the bookkeeping of the Government.

I hope that the Chief Secretary will look with a kindly eye on the Amendments and, above all, on the thinking behind them.

Mr. Terence L. Higgins (Worthing)

It is with some diffidence that I support my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), who proposed the Amendment in a manner truly worthy of the Father of the House. It is absolutely right, however, that we should emphasise the very great importance of Parliamentary control over the country's financial affairs.

Many of my hon. Friends have pointed out that it is very unsatisfactory when we know, and indeed it is widely publicised, that the I.M.F. is looking into international accounts and examining them in detail and the House of Commons does not have the same information laid before it.

May I quote again from an article in the Economist which I had occasion to quote in another context in Committee. The traditional case for Parliamentary control of the country's finances has been 'frequently set down in its columns. The article states: Down the 700 years of British Parliamentary history one of the main purposes of 'having a Parliament has been so that the people should be given a clear bill of why authority is imposing taxes upon them. I do not think that the House should have 'any doubt that the question of the extent of Government loans is every bit as much an imposition of taxes on the people as a:-e direct or indirect taxes, because if the lending and borrowing of the Government are not subject to Parliamentary scrutiny it is very likely that we shall find ourselves in an inflationary situation which in turn imposes effectively tax on the wealth of the country.

Therefore, these Amendments are very important. They raise broader questions concerning the quantity theory of money, but my right hon. Friend was right to quote this in support of his case. While it is true that over a period it has become unfashionable with economists, in a series of articles and other studies which have spelt out the assumptions on which the quantity theory of money has been based economists have, on the whole, come very much to the theory that there was rather greater validity in it than was thought five or 10 years ago, although it requires considerable qualifications in a number of respects. None the less, the essence of the theory is undoubtedly right and it is right that my right hon. Friend should have brought it into the argument in favour of his case.

Throughout the debates on this interesting Bill, we have emphasised the greater need for forecasting in an economic context but we have also emphasised the need for forward estimates. I always have the greatest trouble in carrying the Chief Secretary with me in economic forecasts, and it would be out of order to probe the matter now, but I would say that it was common ground between us that there is a strong case for the Government, in presenting their accounts for the year, to present forward estimates, at least on an accountancy basis, of what they intend to do concerning expenditure and income. If that is so. it is surely wrong that expenditure which is to be financed out of borrowing should not have similar forward estimates.

We were repeatedly told by the Financial Secretary in Committee that we should in future have as much information in the accounts and estimates presented at Budget time as we had had in the past. With particular regard to Amendment No. 1, however, it is important that we should have an estimate of the Government's likely borrowing requirements and a breakdown of what they expect the composition to be.

On that there should be common ground between us. Given the general expectations which have been aroused in recent months that the Government would in future be more forthcoming on their economic analysis, I hope that we might have a sympathetic statement from the Chief Secretary with regard to the forward estimates of borrowing requirements.

Surely, if it is possible to put a figure in a letter of intent to the I.M.F., it is also possible to give a reasonable breakdown of how the figure has been arrived at. Unless this is done, clearly the figure is extremely suspect. In the debates on the Bill, we have probed consistently to see just how suspect it is. We were absolutely right a few moments ago to point out the crucial rôle played by the Exchange Equalisation Account in fudging. if that is the right expression, the analysis of the borrowing requirement. We hope that the Government will be more explicit about this in the future on the lines suggested by my hon. Friends.

Amendment No. 2 seeks to impose on top of the forward estimates the specific consideration that the provisions of a statement should be approved by a resolution of the Commons House of Parliament". This is an important Amendment. It may be that the Government would not feel able to make a specific estimate but would rather wish to give limits beyond which they would not go without applying again for further Parliamentary approval. That should be a good way of carrying out my right hon. Friend's intention that at the beginning of the year the Government should make estimates.

In order not to impose too rigorous a degree of exactitude upon the figures and to cover the likelihood of margins of error around those figures, the Government might give the figure which they expect to see in the forthcoming year and a margin above it, but anything in excess of that limit should require further Parliamentary approval. In that event, we would have a far better system of Parliamentary control than we have now.

It is very dangerous that Parliament's role in this matter, particularly with regard to the financing of borrowing and lending, should have declined to the extent that it has. The House will be grateful to my right hon. Friend for his set of Amendments.

The Chief Secretary to the Treasury (Mr. John Diamond)

We are grateful to the right hon. Member for Thirsk and Malton (Mr. Turton) for drawing attention to these matters. I am particularly grateful because there is nothing I enjoy doing more than removing misapprehensions and misconceptions, and I hope to demonstrate to the right hon. Gentleman that his Amendments, which he has explained so clearly and so well, do not achieve the purpose he has in mind, are unnecessary to achieve the purpose he has in mind in so far as that can be achieved, generally, therefore, would not bring any benefit to us and, in particular, are of such closely controlled and limited a character as to be incapable of being acted upon. If I am able to satisfy the right hon. Gentleman and the House of all those propositions I dare say that the right hon. Gentleman will not wish to press his Amendment to a Division, so I shall seek to direct my remarks straightaway to those propositions.

First of all, he started by referring to the Second Reading debate and the comments I then made about this being an accountancy exercise, which was not quite a mirage but was a small pool left after the original wide and attractive oasis which the Chancellor described. I hope I satisfied the right hon. Gentleman in my Second Reading speech that we had examined all the concrete and substantial proposals which might properly have been examined. We did examine them very carefully, and came to the conclusion that what was left of them was something less than we had contemplated as possible to us, but nevertheless of benefit, although meriting the description of being only an accountancy exercise. It is difficult, in terms of an accountancy exercise of this kind, to carry out the kind of monetary policy control which the right hon. Gentleman had in mind.

He is anxious about the amount of additional money supply, and in this he is supported by his own Front Bench in the person of the hon. Member for Worthing (Mr. Higgins). Let me clear one misconception of fact while we are on that point. The right hon. Gentleman referred to the increase in money supply between 1960 and 1966. I have fortunately been supplied with figures which show that there had been lending to the private sector during that period by the banks of£3,700 million, and lending to the Government was minus£520 million, so that the net figure of approximately£3,200 million represented lending to the private sector and repayment by the Government of£520 million. I thought I ought just to mention those figures lest the right hon. Gentleman thought that, owing to some lack of Parliamentary control, excessive amounts of money supply had got into the system.

Now let me come to the essential proposal which the right hon. Gentleman makes for Parliamentary control, and let me try to repeat what I said on Second Reading, but referring it more precisely to the Amendment, as to the lack of need for what the right hon. Gentleman is proposing.

It is the case that all the receipts into the National Loans Fund are defined by stature. It is the case that all payments out of the National Loans Fund are authorised by this House, and, with one exception, authorised up to the limits—I will deal with that one exception later because the right hon. Gentleman, with his usual skill, put his finger on the one exception. If we have Parliamentary authority for everything corning in and Parliamentary authority for everything going out, then Parliament, it ought to be clear, must be in control of the difference. That is a simple proposition of logic. The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) is shaking his head in a negative fashion, saying that, though there is Parliamentary control over a period of years, Parliament does not necessarily have control each year as to the precise amount.

10.0 p.m.

I accept that. There is no major difference between us about it. I shall seek to explain the position and hope to demonstrate that we are doing everything on the lines suggested by the mover of the Amendment. I repeat that the right hon. Gentleman and his hon. Friend the Member for Scarborough and Whitby drew attention to the fact that although what I am saying is absolutely right in respect of a period of years it is riot necessarily right in respect of each individual year. They seek to improve the situation—not to create a new one—by delimiting and defining it in respect of annual control. What occurs to the right hon. Gentleman is an annual control similar to that on Estimates.

I will tell the right hon. Gentleman why that would not work. First, the control of Estimates is needed, because for most items for which Supply expenditure is incurred this is the only authority—the Estimates and the approval of the Estimates by this House—whereas expenditure out of the National Loans Fund has already been authorised by the various Statutes under which the loans were permitted. That is a major difference

There is another major difference, in the sense that whereas Supply expenditure is normally recurring expenditure, going on from month to month, week to week and often from day to day, payments out of the National Loans Fund are anything but recurring expenditure. They are made from time to time at irregular intervals, as they must be. They are therefore not susceptible to the same kind of treatment

The kind of control suggested by the hon. Member for Scarborough and Whitby is impossible to accept because it would not permit of a variation in the way that a Supplementary Estimate provides. Perhaps that is a matter of drafting and it is intended that it should permit it; I mention it only in passing. The real point is that with the best will in the world we cannot estimate in this irregular field with the necessary degree of accuracy that we can in respect of Supply expenditure, so as to permit of the Government's being bound as they are by Supply expenditure

It is not a question of not informing the House. The House can and does have every kind of information. It is a question of accepting, as we do under the Estimates procedure, a binding authority which limits us and makes it necessary to come to the House for a further amount or a variation in it. We cannot forecast with that accuracy. It may be said, "But surely you can forecast to some extent—even to the extent that you are not willing to be bound and even having regard to the fact that this expenditure arises intermittently and irregularly."

The answer is, "Yes, certainly we can." That is why, each year, there is published—and there will continue to be published—at Budget time a complete list of what have hitherto been called loans from the Consolidated Fund and what will in future be called loans from the National Loans Fund. It is a complete and detailed list. I have the 196768 list—Cmnd. 2343—running to 21 pages. It gives all the details of every kind of loan from the Consolidated Fund. It gives summaries, details, the past situation, the aggregation of loans made, the description of the amount authorised to be drawn and the amount remaining within that authority

That is the way in which the information should be presented to the House. It is made available at the time of the Budget because it is closely linked with the Budget, as the right hon. Gentleman knows. That is the way the information can be given, is given and has been given, and it is the way in which it will continue to be given. It has been given for some years. It was started by a Conservative Government, I believe, in the early 1960s, and it has been continued every year since. We shall continue to give it and it will be tied up with the new provisions

I suggest to the right hon. Gentleman that the information which can reasonably be required is there but that we cannot go further and tie ourselves, in the binding way in which an Estimate requires us to be tied, because it is not humanly possible to estimate with the same degree of accuracy over one year expenditure which by its nature is intermittent and irregular as is possible with Supply expenditure which, by its nature, is regular and occurring from day to day or month to month.

Mr. Turton

I accept that, but what we do not get at the moment is a separate debate on capital account, with a separate Resolution on it. That is the defect of the present system. It may well be that it could be done by altering the procedure of the House. It is important that the House should be acquainted with what is the capital account, should debate it and, I believe, approve it.

Mr. Diamond

The right hon. Gentleman is always careful in his choice of words. He said, "What we do not get at the moment". He is. therefore, drawing attention to what in his view is a con tinuing defect. He is not suggesting that this new accountancy exercise is producing a different situation in respect of control by the House. It is not. It is adding to the information before the House. But I agree with him at once that it is not producing a new situation.

Perhaps the best way of debating this is in the Budget debate. That will be made the more intelligible in future because of the full information available and because the division between the Consolidated Fund and the National Loan Fund will be before the House and, therefore, each right hon. and hon. Member will be able to be more informed in his speeches. But the information is there, and the matter of control is a continuing matter and not a new matter arising out of the Bill.

The right hon. Gentleman drew attention to the Exchange Equalisation Account. It is true that because of the overwhelming need of those operating the Account not to be inhibited, in the interests of the country, in the amount which they have available and their use of it from time to time. it has been the practice not to put a limit on it. There is authority for it, but the amount is not limited either in one year or over a period. But it is not right to say that because that is the case—and I address myself particularly to the hon. Member for Worthing—the House has any less information than a team of visiting experts would have. The information on the Exchange Equalisation Account and the working of that Account is available to the Public Accounts Committee. It is true that it is not available to the House. because it is available to the P.A.C. in secret session. The P.A.C. has that information. The account is audited by the Comptroller and Auditor General and the P.A.C. is a Committee of the House. That has been accepted by the House as the nearest we can get to complete and adequate control of the individual transactions within the E.E.A., and that will continue to be the case.

What the right hon. Gentleman is asking in terms of annual control within the authorised limits is not open, because a vote of the House. about which he is talking, would be binding in the way that I have indicated, and no Government could estimate with sufficient accuracy to enable themselves to be so bound. But they do the next best thing, and very nearly the same thing, in putting forward a fully detailed Command Paper each year—which is not subject to Resolution of the House, for that very reason—giving the best information they can, as we all wish to do.

Mr. Bruce-Gardyne

On the question of the Exchange Equalisation Account, the right hon. Gentleman pointed out that this information was available to the P.A.C. in secret session and, therefore, in effect was available to the House, but today we have all these details gone into at great length by the officials of the International Monetary Fund. If they are given the information, why should not the House have it?

Mr. Diamond

I can see a variety of reasons why we should not depart from a well-established procedure. I do not think that this accountancy exercise provides a suitable or an adequate opportunity for fully debating that matter. There is no reason why it should not be debated, but the House has decided over a number of years that this is the way in which it should be done. I myself think it a reasonable way, and one that effectively gives information—information of detailed operations—in the best way it can be given to the House.

I believe it to be in the best interests of the country that it should continue in that way. I would not propose that we should alter that procedure without very full and careful consideration and debate in the House, which, as I say, cannot take place in an accountancy exercise like this. I was only seeking to make clear that we were not unaware of the need to have this account examined, as it is, by the servant of the House, the Comptroller and Auditor General.

The control of borrowing which the right hon. Gentleman seeks would not be achieved by his proposals. He is assuming that control of borrowing relates only to the difference between amounts coming into the National Loans Fund and issues from it, but that is not the case at all. It relates also to the difference between revenue and Supply expenditure which, again, is voted on and authorised by the House. The right hon. Gentleman control it—not by himself, but with every right hon. and hon. Gentleman: the House has control in approving the Budget Resolutions, and so on. What the right hon. Gentleman now proposes would cover only one of the elements which go into the total borrowing requirement.

I hope that I have satisfied the right hon. Gentleman that what he proposes would not be a practical way of achieving the kind of control he wants; that it would not be a full method of doing it because other elements enter into the problem, but that information that should be given to the House is being given in all practical respects. I refer in particular to the White Paper Loans from the Consolidated Fund. Having regard to all those matters, I hope that the right hon. Gentleman will feel that his proposal has been given careful consideration but need not necessarily be pressed too far.

Amendment negatived.

10.15 p.m.

Mr. Diamond

I beg to move Amendment No. 3, in page 2, line 19, leave out subsection (7) and insert: (7) No provision in any Act requiring money to be paid into the Exchequer shall be construed as requiring or authorising money to be paid into the National Loans Fund. (8) Where the intention is that money be paid into the Consolidated Fund it shall be sufficient to enact that it be paid into the Consolidated Fund (instead of enacting that it be paid into the Exchequer). There was difficulty, I understand, in Committee because of the wording which originally existed. Therefore it is suggested that new wording should be used to remove the difficulty caused by the phrase "exchange money". I hope that the redraft makes the position quite clear. The subsections involved do not add any substantive provisions. This, in a real sense, is a drafting Amendment.

Mr. Higgins

I think the difficulty was that the wording was incomprehensible. It is now comprehensible and we are very happy that this Amendment should be made.

Amendment agreed to.