HL Deb 07 April 1905 vol 144 cc893-904
*LORD HARRIS,

on rising "to call attention to the Report of the Accounts Committee on the final account of the Imperial Yeomanry Committee (Third Report, page 13), and to ask His Majesty's Government what steps they propose to take to rectify the mistake into which the Accounts Committee has been led," said:—My Lords, It would not have been necessary for me to trouble your Lordships this evening upon the matter I am about to bring to your Lordships' notice if the War Office had, as I think they might fairly and even in justice ought to have done, protected a very limited number of individuals who consider themselves to be aggrieved, and whom on this occasion I represent. Your Lordships may remember that there were a few gentlemen who were suddenly impressed, so to speak, by the War Office a few years ago, and placed in a position of considerable publicity, in order to assist the War Office in raising the Imperial Yeomanry for service in South Africa. That body was entitled the Imperial Yeomanry Committee, and certain funds were entrusted to it for expenditure. In course of time, that expenditure, being of public money, came under the review of the Auditor-General, and subsequently the Public Accounts Committee of the House of Commons. Last year, late in the session —I think in the month of August—the Public Accounts Committee published their Report, and I will take leave to read to your Lordships the portions of the Report upon which I wish to comment to-night. "The Final Account of the Imperial Yeomanry Committee" is the heading of a paragraph on page xiii., and the Committee there say— Out of the total sum granted (£1,265,000), it appears that for more than one-third (£460,000) no details or vouchers can be produced, and failing these the Comptroller and Auditor-General asked for a certificate from the accountants. He has received this certificate, bat it is to an account in a summary form, without any sub-vouchers for purchases. It is obvious that this, being the certificate of the accountant of the expending parties, and unsupported by vouchers, is in the highest degree unsatisfactory, and precludes any real audit of the accounts. That paragraph is full of errors. It says, in the first place, that No details or vouchers can be produced. That is absolutely incorrect. All the details and vouchers are in existence. It goes on to say— And failing these the Comptroller and Auditor-General asked for a certificate from the accountants. The Auditor-General never asked the accountants for a certificate. What happened was this. Directly the Imperial Yeomanry Committee was formed, it appointed a very well-known firm, Messrs Kemp, Sons, and Co., to be the accountants of the Committee, and the body from whom the Auditor-General asked for a certificate was not our accountants, but the War Office. It is quite possible that the request passed first through the Treasury, and then on to the War Office, but in the form in which it finally reached our accountants—I have the letter here—it did not say that any vouchers were required; it simply said that the Auditor-General required a certificate, and suggested to our accountants the form in which the certificate should be supplied. Upon that request the certificate was supplied. Our accountants, as a matter of fact, were never asked for any vouchers by the Auditor-General, and that is the reason none were supplied. The Report goes on to say— The Director of the Finance Department at the War Office expresses the hope that this experiment of trusting outside parties to perform War Office work will never again be resorted to, in which your Committee cordially concur. Of course, the Director of the Finance Department at the War Office is quite entitled to express a pious opinion on a subject of that kind, if he pleases; all I can say is that that opinion is absolutely opposed to the opinion of the noble Marquess who was at the head of the War Office at the time the Imperial Yeomanry Committee was formed, who insisted upon the Imperial Yeomanry Committee being a separate body, and who would not allow it to be brought under the immediate supervision and control of the War Office.

Now, my Lords, what I complain of is not the Report of the Public Accounts Committee. They have obviously been misled by the evidence that was placed before them. The evidence was placed before the Public Accounts Committee by Sir Douglas Richmond, as I believe he is now—he was then Auditor-General—and in the presence of a representative of the War Office. The representative of the War Office was Sir Guy Fleetwood Wilson, who, I believe, is now Accountant-General at the War Office, and he was present when Sir Douglas Richmond was asked certain questions which I take leave to read to your Lordships— Did you make any attempt to get any details and vouchers?—Yes, I have asked for vouchers. And you have not obtained them?—I have not received them. Am I right in presuming that it is in consequence of your failure to obtain them that as a last desperate resort you fall back upon the suggestion that the Committee's accountants should give their certificates?—Yes, that is so. I observed that accounts were mentioned, and I thought at least I might get a certificate from the accountants. In this case, where so large a sum is involved, the total expense of the Committee, if I am right amounting to something like £1,265,000, in respect of £460,000 odd, that is to say, more than one-third of the whole amount, you have received no vouchers and no details?—That is so. And, as a matter of fact, you have only fallen back upon that suggestion because you were unable to get either vouchers or details?—That is all I could get, and I thought I would state the facts plainly to Parliament. Subsequently this question was put to Sir Guy Fleetwood Wilson— Have you any remarks to make with regard to this matter? This was the representative of the War Office, but I submit he was also something more under these circumstances—he was there to defend the business capacity and the honour of the Imperial Yeomanry Committee, because that Committee were never called by the Public Accounts Committee. Not only were the Imperial Yeomanry Committee never asked, or any member of it, but its own accountants were never asked to go before the Public Accounts Committee or to give any evidence whatever about this subject. I submit, therefore, that Sir Guy Fleetwood Wilson, as representing the War Office, was bound to consider the interests of the Imperial Yeomanry Committee when its system of business was being challenged by the Auditor-General. He was asked if he had any remarks to make with regard to this matter—"this matter" being that the Auditor-General had told the Public Accounts Committee that no vouchers could be produced for an expenditure of half a million of money; and he said in reply— Yes. I have this remark to make—that the Yeomanry Committee was an organisation entirely outside the War Office. Yes; of course it was, because the Secretary of State for War had put it outside the War Office, and Sir Guy Fleetwood Wilson was a subordinate of the noble Marquess who was then at the head of the War Office. He continued— The Government at the moment decided to entrust to a Committee of noblemen and gentlemen the creation of a field force, and they took such steps as they considered necessary to create it. The War Office action was limited to paying for it. The Chairman said— We are not blaming you. and Sir Guy Fleetwood Wilson went on: No; but I think it is fair to state that to lead up to what the hon. Member is putting to me. The War Office action was limited to finding £49 per horse and £35 per man, and the whole administration, accounting, and everything concerning this force was to be kept entirely in the hands of the Yeomanry Committee, and we were not to interfere with it. Later on the conditions of affairs changed, and we were brought into close touch with the administration by the Committee of the Yeomanry— —this is the remark to which I take exception— And we have done our best to put things on that footing which is the recognised footing in dealing with Army accounts; but we have to deal with what we found, and not with what we created. That is as much as to say that no accounts were properly kept until the War Office took the matter up. I submit that that is absolutely incorrect, that the accounts connected with this £460,000 were kept properly, and in an admirable manner, by the accountants, that the officials who preceded Sir Guy Fleetwood Wilson in his office as head of the Accountants Department in the War Office knew perfectly well that these accounts were properly kept, that the vouchers were in existence, and were forthcoming with all the crossed cheques as well. But Sir Guy Fleetwood Wilson, without reference to his predecessors, who would have known the facts, took it upon himself to throw over the Yeomanry Committee and to suggest that they never kept their accounts properly, and that it was only when he and his colleagues came in that a commencement was made towards the proper keeping of proper accounts. I submit, my Lords, that that is not a fair way of protecting the gentlemen who were the colleagues of the officials of the War Office for some twelve months, and that we might have expected from the officials of the War Office a more considerate regard for our character as business men. The suggestion is that although we might be good business men in our private affairs, we considered that this being public money it mattered not two-pence to us whether proper accounts were kept or not, and Sir Guy Fleetwood Wilson makes no attempt to protect us from the charges brought forward by the Auditor-General.

But, my Lords, I go further. The fact that this was a complete mis-statement of the facts was brought before the War Office during the course of certain correspondence in the autumn of last year, and up to January of this year, but the War Office have absolutely declined to take any step publicly to rectify the mistake or to withdraw the charge which has been made against the Imperial Yeomanry Committee. It is quite true that a Question was asked the other day in the House of Commons upon this paragraph in the Report of the Public Accounts Committee, and Mr. Arnold-Forster in reply said— The statement in question would appear to be based on replies given by the late Comptroller and Auditor-General— Yes, but they were replies made in the presence of Sir Guy Fleetwood Wilson, the representative of the War Office, who took no steps whatever to correct them. I understand that vouchers are, as a matter of fact, in existence, although they have not been rendered to the War Office. They could have been rendered to the War Office at any time if the War Office had asked for them, but they never asked for them. So far from asking for them, they said they did not want them. In addition to that, I am told on very fair authority that the War Office even suggested that they should be burnt, and it was only the care of our accountants which prevented that suggestion being carried out. The Secretary of State went on to point out that the War Office treated the whole of this expenditure in the same way that it treats the capitation grant of the Volunteers; that is to say, that the money is put into the hands of the commanding officer, and as long as he produces the man properly equipped, and evidence that he has put in a certain number of drills, etc., they require no further voucher. Very well; I think that that is a very reasonable way of dealing with that expenditure, but it was not what the War Office required of us. As regards the money spent by the Yeomanry colonels, the War Office first told us that they would require no vouchers at all. Two years afterwards they changed their mind, and asked for all the vouchers, and we produced all the vouchers we could. But that money is not the sum referred to by the Accountant-General. It is an entirely different sum. The sum I am referring to is the £460,000 spent by the Yeomanry Committee itself. We kept the accounts of it; we have those vouchers now; the War Office knew or ought to have known that we had them it ought to have been, and I have no doubt that it is, on the records of the War Office that those vouchers were in existence. When that fact was challenged by the Auditor-General, the representative of the War Office ought at once to have corrected the error, and I submit that in addition to the grievance which I and my colleagues think we lie under, the Public Accounts Committee of the House of Commons have every right to complain of the way in which the evidence was placed before them. The course I suggest the War Office should now adopt is to do in consequence of my public appeal to-day what they have declined to do in response to the private appeals which have been made to them, viz., to acknowledge that the information that was placed before the Public Accounts Committee was not correct, and to express their opinion that if correct information had been placed before the Public Accounts Committee that body would not have passed upon the business capacity of the Imperial Yeomanry Committee a judgment, which in our opinion, is decidedly injurious to us, both as regards our capacity as business men and also as regards the public duty which was laid upon our shoulders at the time.

*THE UNDER-SECRETARY OF STATE FOR WAR (The Earl of DONOUGHMORE)

My Lords, the noble Lord who has just sat down has, under the shadow—I do not use the word in any offensive sense—of a rather innocuous Motion, made a very severe attack upon a distinguished public servant. I am not going to follow the noble Lord in that attack further than to say that I believe, and I hope I shall be able to prove to your Lordships, that it is absolutely and entirely unjustified. The noble Lord complained, secondly, that Sir Guy Fleetwood Wilson believed that the accounts of the Imperial Yeomanry Committee were not kept properly until it fell to his lot to have to deal with them. I confess that after a very careful reading of the evidence I can find no justification for that complaint. But, after all, the gravamen of the charge lies in this—and the noble Lord will correct me if I am misrepresenting him. The noble Lord complains that the Comptroller and Auditor-General gave the Public Accounts Committee the impression that these vouchers did not exist, and that Sir Guy Fleetwood Wilson should have contradicted him. My Lords, the Comptroller and Auditor-General stated nothing of the kind. He stated that he had never seen these vouchers, and that was an absolutely true statement. He made that statement three or four times.

*LORD HARRIS

It is in consequence of your failure to obtain them. That is from the question put by the Public Accounts Committee.

*THE EARL OF DONOUGHMORE

Quite so. Perhaps I may go through this rather more in detail. In reply to Question 3303 the Comptroller and Auditor-General says— I have had no vouchers for any of those purchases. In reply to Question 3305— I have asked for vouchers. In reply to Question 3306— I have not received them. My Lords, that was an absolutely true statement, and obviously it was perfectly impossible for Sir Guy Fleetwood Wilson to contradict it. I admit at once that the Public Accounts Committee in their Report state that these vouchers did not exist, and they refer to these very questions—I think they quote in the body of the text Question 3308—as their justification for stating that they did not exist. I regret that they drew that conclusion. It is not my business or the business of anybody else to dictate to the Public Accounts Committee what impression they should take from the evidence submitted to them. I can only say, with great respect, I do not think I should have drawn the conclusion they drew from the evidence placed before them. I am perfectly aware that these vouchers did exist, and I regret very much that by the statement of the Public Accounts Committee what I cannot help feeling is an injustice—though I am sure an unwitting injustice on their part—has been done to the noble Lord who represents the Imperial Yeomanry Committee, to his Committee, and, above all, to the firm of accountants whom they employed to manage the accounts for them. It is the case that these vouchers exist; I admit it at once; and I claim that there is no justification in this evidence for saying that they did not exist. That is the reason why Sir Guy Fleet wood Wilson—obviously, as I think—did not contradict the Comptroller and Auditor-General. I think perhaps I ought to say why these vouchers were not called for, and here I disagree with the noble Lord as to a matter of fact. I am informed that the reason we did not call for the vouchers was that we considered that the sums expended were covered by the capitation grant of £75 per man and horse that we had provided for the Imperial Yeomanry Committee. We knew that they had employed a firm of first-class accountants to help them manage their financial affairs, and we did not consider it necessary to call for detailed vouchers. We had an absolute precedent for the course we followed. It is exactly the same course as is followed with regard to the Volunteer capitation grant, although, of course, that is a much smaller amount. The 35s. per man is given to the commanding officer, and we ask for no vouchers. We followed exactly the same course in dealing with the Imperial Yeomanry Committee.

*LORD HARRIS

Would the noble Earl mind reading Question 3322?

*THE EARL OF DONOUGHMORE

I think that supports what I have just said. It was for them to decide what form of accounts they should use. I am not contesting that for a moment.

*LORD HARRIS

But would the noble Earl mind reading the question?

*THE EARL OF DONOUGHMORE

Well, my Lords, I think this is hardly necessary. This is not the Public Accounts Committee and the noble Lord is not catechising me. I do not recognise the question straight out as regards the context, but I am informed by my financial advisers that what took place was as I have just stated. Of course, the noble Lord has a great advantage over me in this matter. He put the Question down only last night, and my financial advisers have been employed on the Public Accounts Committee all day; but I have done my best to meet him, and these are the facts as given to me by my financial advisers. I have but one word to say in conclusion. The noble Lord asks what attitude the Government intend to adopt in regard to rectifying the mistake into which the Public Accounts Committee had been led. I can only say that it is impossible for us to dictate to the Public Accounts Committee as to any opinion they may take. They are not subject to the Government or to anybody else. But I can assure the noble Lord that we do not associate ourselves with them upon the statement of fact which they put forward in regard to this particular matter, viz., that vouchers were not kept. We know that vouchers were kept; we are quite satisfied as to the way in which they were kept; and we regret the unjust impression that has been allowed to obtain in consequence of what I can only regard as a misconception of the evidence placed before them.

LORD SHUTTLEWORTH

My Lords, I am unwilling to trouble your Lordships, but as an old member of the Public Accounts Committee, and as one who served on that body for a great many years, perhaps I may be allowed to say a word or two on this matter. The noble Earl who has just addressed the House has spoken as if the Public Accounts Committee had fallen into an error. I think the noble Lord who brought forward the question was perfectly justified in saying that everything the Public Accounts Committee state in their Report was based upon the evidence placed before them. The noble Lord has called attention to the questions which were asked and the answers given to those questions, and I submit that taking questions and answers together it is perfectly clear that the Public Accounts Committee put the questions to elicit whether or not these vouchers existed. The answer given by Sir Guy Fleetwood Wilson was, to this question— Were any explanations given by the Committee as to their not keeping proper accounts? Perhaps I had better read his answer It was— I do not know exactly what their explanation was, but I think they considered that they received a certain amount of capitation grant, and expended it practically in the interest of the country, and it was for them to decide what form of account they should use. But that is no answer to the suggestion that no proper form of accounts was used, and I confess that reading, as I have read, the evidence upon which the Committee base their Report, I can come to no other conclusion than that the Committee were perfectly justified, on the evidence given by the Comptroller and Auditor-General and by the representative of the War Office, in reporting as they did. I just say that as an old member of the Public Accounts Committee, as I am a little jealous of the proper performance of the work of the Committee of which I was for so long a member.

But, my Lords, I think the noble Lord who brought forward this question might have strengthened his case if he had referred to the exact procedure employed by the Comptroller and Auditor-General. The Comptroller and Auditor-General has in the War Office and in the Admiralty his own officers who carry on what is called a continuous audit. In that respect the system in the War Office and the Admiralty is different from the system pursued in some of the Offices. It would be impossible in those great spending Departments to carry on the audit in any other way. Therefore, it is the practice to ask for these vouchers continuously, and it is obvious to me, reading the evidence of the Comptroller and Auditor-General, that these vouchers had been asked for in the regular course. If there were vouchers and there was some reason for not producing them, he would have been informed of the fact, or the Committee should have been informed of it. It seems to me that the noble Lord has a grievance, which has not been answered by the noble Earl representing the War Office, in the fact that the War Office did not inform, in the first instance, the officers of the Comptroller and Auditor-General; in the second instance, the Comptroller and Auditor-General when he made his Report; and, in the third instance, the Committee of Public Accounts, that proper accounts were kept, and that there were vouchers, although there may have been reasons of policy for not producing them.

*LORD HARRIS

My Lords, may I be allowed by way of reply to say a word? I have to apologise to the noble Earl for not giving him earlier notice of my intention to raise this question, and I am extremely obliged to him for having consented to reply at such very short notice. I was very sorry to have to make an attack upon Sir Guy Fleetwood Wilson, who is an old friend and colleague of mine, but I gave him fair notice a fortnight ago that I was going to put the Question, and I think that what he has to complain of is that the War Office did not earlier make that handsome apology which the noble Earl has made to-night, and which I am perfectly certain will be as satisfactory to my colleagues as it is to myself.