§ Sir E. NICHOLLasked the Chancellor of the Exchequer why an expenditure of £87,000,000 under the Votes of Credit of earlier years was included in the accounts for the year ending 31st March, 1920; why this expenditure was not foreseen when the Budget was introduced a year ago nor again last October, when the revised Financial Statement was published; and whether he will state now the main heads of this large and unexpected expenditure of £87,000,000?
1910W
Mr. CHAMBERLAINNo expenditure under Votes of Credit, 1918–9, is or can be included in the accounts for 1919–20. What the hon. Member has in mind is that it was necessary to issue from the central cash account, namely, the Exchequer in 1919–20, £87,000,000 in respect of expenditure within the Parliamentary Votes for 1918–19 and actually incurred and defrayed in 1918–19. Under the British financial system the income and expenditure of the year are arrived at on the basis of Exchequer receipts and issues and not on the basis of audited accounts. This enables a balance sheet for the year to be issued to the public on the 31st March of each year showing the financial position of the country at the close of the financial year on the very day on which it closes. In ordinary years the Treasury is in a position to make the issues approximate very closely to the facts as regards expenditure as subsequently disclosed in the audited accounts. The very large expenditure all over the world in the last year of war and the sudden change resulting from the Armistice in November, 1918, made it impossible at the end of March, 1919, or even in October, 1919, to foresee either on the expenditure or on the receipt side what the position as at the end of 1918–19 would ultimately prove to be when the accounts for that year were finally closed. These accounts have only recently been completed, and on their results it has been necessary in 1919–20 to make adjustments with the Exchequer by paying in cash from the receipts and issuing out cash in respect of the expenditure. The transaction is a technical adjustment, analogous to passing through a central banking account income and expenditure previously dealt with in subsidiary accounts.