§ 3.17 p.m.
Baroness VICKERSMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they will arrange for any money not expended by Departments at the end of their financial year to be carried forward into the following year.
§ Baroness BIRKMy Lords, my right honourable friend the Chancellor of the Exchequer does not propose to change the present arrangements. There is a long-standing Parliamentary rule that balances of Supply grants unspent at the end of the financial year must be surrendered.
Baroness VICKERSMy Lords, does the noble Baroness realise that a great many Departments, including local government departments, look round to see on what they can spend this money? Surely this is a great waste of money and, therefore, if the balance could be carried over to the next year it might obviate 142 some of the cuts which were to be introduced during the following year, and also in the long run it might save the Government money.
§ Baroness BIRKMy Lords, there have been a number of anecdotes on this matter in circulation, and although we keep hearing stories about it little real evidence exists. If the noble Baroness can give me information concerning any concrete cases with regard to either local authorities or anybody else, I will, with great pleasure, have them looked into.
I do not think that there would be any real advantage in such a carry-over, because, whatever incentive exists to get money spent before the end of the financial year, any programme manager carrying forward more than he had brought forward at the beginning of the year might gradually accumulate a reserve which would put current expenditure out of control altogether. In any case, money cannot be spent on something which has not already been estimated for; so it is quite natural that very often the frills of expenditure are carried out at the end of the year rather than at the beginning. Finally, although I would not for a moment say that this situation is absolutely perfect, it is a matter which has been argued backwards and forwards throughout various Administrations; and with a total Government public expenditure of about £50,000 million it really is best at the moment, if we are to keep proper control, to have a yearly control.
§ Lord PEDDIEMy Lords, will my noble friend not agree that there is a fair measure of criticism of the current method of financing and it is difficult to know whether or not that criticism is justified? Can my noble friend say whether there has been any detailed inquiry into current practice and, if not, whether there is any possibility of such detailed specialist inquiry being made?
§ Baroness BIRKMy Lords, inquiries have taken place. As I understand it, from one Administration to another the Chief Financial Secretaries have looked into this matter to see whether there really is very much of this alleged wastage at the end of the year and whether it would be possible to devise another system. It does not appear that any other 143 system would have any advantage. Departmental accounting officers have to account to Parliament through the Public Accounts Committee for the way in which they have discharged their responsibilities. This appears to be the best way of doing it. Further, there has been no directive issued by the Treasury to Departments to spend any surplus or saving by the end of the year, nor have they been told that failure to do so would result in the surplus being deducted from the following year's budget. Any such directive would be contrary to Government practice.
§ Lord HAILSHAM of SAINT MARYLEBONEMy Lords, while the noble Baroness has been piously regurgitating the pure milk of Treasury orthodoxy, may I ask whether it is not a fact that, although this matter has been agitated within the Treasury for generations, there must be an incentive to spending Departments to go on spending and not to save if they are not to be allowed any degree of virement at all? Is it not a fact that outside there has been a continuous challenge and a continuous criticism of the refusal of the Treasury to allow virement in any form?
§ Baroness BIRKMy Lords, first of all, nothing can possibly be spent, except on approved programmes; so that immediately circumvents that point. Over and above that, there are the auditors. There are also the programmes, which are looked at when the next year's Estimates are being considered. So if there are cases of people behaving in this way—I do not say that there may not be some cases where money is spent in a way it should not be spent—then this can be taken into account. This is why I have asked for these cases, which are always talked about in a general way, to be made more specific and given to me so that I can pass them on to my colleagues in the Treasury.
§ Lord HAILSHAM of SAINT MARYLEBONEMy Lords, I am sorry to press the noble Baroness on this matter, but does she not realise that the necessity to obtain House of Commons approval for expenditure has nothing at all to do with the present dispute? What is in question is the negotiation, prior to House of Commons approval, which takes place 144 between the Treasury and the spending Departments. Does not she realise that the reason why there is no specific evidence is because the spending Departments habitually cover up their tracks?
§ Baroness BIRKMy Lords, they cannot cover up their tracks when they are required to have audited accounts. What I have been trying to explain, in answer to the noble Baroness's Question, is that in fact even if they carried money over, there would still be the same incentive to exceed expenditure or to save it. The Departments could also be in a worse position when the next year's Estimates come up. I agree that this is a kind of hoary annual which goes on and on, and I do not know whether even the Treasury has the exact answer for it. With that amount of Government expenditure, it is not like running a series of commercial companies.
§ Baroness LLEWELYN-DAVIES of HASTOEMy Lords, the House is deeply interested in this Question; that is quite obvious. We have had nearly 16 minutes on Questions. As we have not heard from anybody from the Cross-Benches, I think the House would wish the noble Viscount, Lord St. Davids, to ask his question, and we hope it might be the last.
Viscount ST. DAVIDSMy Lords, I am sorry to disappoint noble Lords. I wanted to ask this. While the noble Baroness is thinking about so many matters, may I ask whether she would consider that there might be an advantage in offering a bonus to such local government officers and other public servants as did not spend all the money that was put in their hands. If this was offered, it might be a considerable incentive and result in considerable saving, which is what we must achieve at this moment.
§ Baroness BIRKMy Lords, I believe that this suggestion has been made before to the Treasury, but I cannot hold out any hope of such a system being worked out.
§ Viscount ECCLESMy Lords, may I ask the noble Baroness whether she is aware that for many years it has been the practice to allow the Government hospitality fund to carry over its balance into 145 the next year, and that is the reason why Ministers are able to offer their friends such good wine? I did it myself. Since this is a very difficult subject, I should like the noble Baroness to suggest to the Chancellor that it might be possible to offer certain Departments the right to maintain a small reserve—not a very large reserve. Then, if they do make economies and do not want to spend the money in the month of March, they could have up to a certain figure carried over without prejudice to the next year's grant.
§ Baroness BIRKMy Lords, health authorities, as the noble Viscount probably knows, are able to carry over about 1 per cent. of their expenditure. This applies to them, as they are a central spending Department—but it applies only to them. I will certainly carry forward the noble Viscount's suggestion.