New Clause. — (Provisions as to the custody of public moneys.)

– in the House of Commons on 11th April 1935.

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(1) Rules may be made by the Governor-General and by the Governor of a Province for the purpose of securing that all moneys received on account of the revenues of the Federation or of the Province, as the case may be, shall, with such exceptions, if any, as may be specified in the rules, be paid into the public account of the Federation or of the Province, and the rules so made may prescribe, or authorise some person to prescribe, the procedure to be followed in respect of the payment of moneys into the said account, the withdrawal of moneys there from, the custody of moneys therein, and any other matters connected with or ancillary to the matters aforesaid.

(2) In the exercise of his powers under this section the Governor-General or a Governor shall exercise his individual judgment. —[Mr. Butler.]

Brought up, and read the First time.

6.38 p.m.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I beg to move, "That the Clause be read a Second time."

In view of the fact that one hon. Member felt that there had not been sufficient explanation of a previous Clause, perhaps I had better begin by reading the terms of the new Clause. [HON. MEMBERS: "No."] I take it that hon. Members prefer to take the Clause as it is printed on the Paper without hearing it read, and in that case let me try to explain the reasons why we wish to introduce it. It relates to the custody of public money, and its object is that all public moneys shall be paid into the revenues of the Federation or Province, as the case may be. This is with a view to regularising the receipts of money and finally allocating those receipts either to the revenues of the Federation or of the Province. It is desired, in the first place, to prevent any department making money on its own account. For instance, a department might sell land and then appropriate the proceeds of the sale to its own finances, and thereby upset the appropriations that had originally been authenticated for it, or the Public Works department might buy a piece of land and thereby increase the amount of the grants voted for the purposes of that department. Another object of the Clause is to ensure that no Government officer can keep sums of money in his custody. It is provided that he should pay such sums into the treasury of the Province or Federation, as the case may be. In India the treasuries are scattered about, and it is important to ensure that moneys should be paid directly into the treasury of the Province or Federation. In the case of certain departments like the Post Office, it is necessary to make exceptions, and these are provided for by the words with such exceptions as may be specified in the rules. This duty was laid upon officers and departments under the existing Government of India Act. That is to say up to now this matter has been governed by Devolution Rule 16, to which statutory sanction is given in the existing Government of India Act. We regard this form of regulating the finances as so important that we think this provision ought to be put into the Statute. We are doing so with a view to creating the financial procedure I have indicated and this Clause implies little more than that we are inserting in this Bill the terms more or less, of the present Devolution Rule 16 under the Government of India Act.

6.41 p.m.

Photo of Mr Morgan Jones Mr Morgan Jones , Caerphilly

I do not see the necessity for this new Clause, having regard to Clause 164 by which the Auditor-General in India is authorised to prescribe how the accounts of the Federation shall be kept, and under which he is entitled to give directions in regard both to the methods and the principles of the accounting. Since the Auditor-General in that case only acts with the approval of the Governor-General I should have thought that there was no necessity for this new Clause which appears to be merely an amplification of the same point.

6.42 p.m.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

The hon. Gentleman is confusing the written record with the cash. Clause 164 only prescribes the way in which the books are to be kept. Broadly speaking, this new Clause prescribes what is to happen to the £ s. d. I am grateful to the Under-Secretary for having, partly as a result of my comment on the previous Clause, given a rather fuller explanation on this occasion, though I fear it was not as full as I would have liked. He has not told us what is meant by the words "paid into the public account of the Federation or of the Province." In this country we have what is called the Treasury Chest and when the Treasury do certain things which they are not authorised to do they take the money out of the chest and come to us later to have the matter put right. That to-day is a matter of bookkeeping though I suppose that originally there was an actual Treasury Chest in which cash was kept in the old days. I wish to know whether the public account referred to in the Clause is a physical treasury or a banking account. When I read the Clause first I thought it meant payment into the account of the Federation or Province, kept by whatever banking institution acted for the Federation or the Province. It may mean that a subordinate officer cart collect cash and hand it to a superior officer and that all requirements will be satisfied if he keeps a proper record of it. I am not satisfied, however, that the Clause is well drawn for the purpose of ensuring the satisfactory custody of the cash.

We know that one of the conditions precedent for the safe custody of money and for currency policy in the establishment of the Federation was the establishment of a central bank. I do not know whether ultimately the central bank is going to perform, in relation to the Government of India, those functions which the Bank of England performs in relation to the Government here, in acting as the Government's bankers as distinct from its other functions of controlling monetary policy, the rate of discount and the rest of it. If this Clause is intended to ensure proper banking arrangements on behalf of the Federation or Province, it is not very well drawn. If it is something different, we shall be glad to know why it is different, because I do not think that as it stands it is tight enough. An ordinary football club has better rules than these, because they do prescribe that the funds shall be kept at such and such a bank. They do not say that the funds are to be paid into the treasurer's account; that might mean the treasurer's own pocket. If the Attorney-General can give me a full explanation of the words "public account," my mind may be set at rest.

Photo of Mr David Mason Mr David Mason , Edinburgh East

I agree with a good deal of what the hon. Member for South Croydon (Mr. H. Williams) has said. I should like to ask the Minister whether there is any provision for an official audit.

Photo of Mr Charles Emmott Mr Charles Emmott , Glasgow Springburn

Following what was said by the hon. Member for South Croydon (Mr. H. Williams), is the expression "the public account" an expression which is used elsewhere in the Bill?

6.47 p.m.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

In this case the hon. Member for South Croydon (Mr. H. Williams) is pitting his knowledge against the practice which has been in force in India for a considerable time. I believe that the method of the Government of India's finance is as good as any and it is impossible to improve it at short notice. May I remind the hon. Member of Devolution Rule 16, to which I referred, the substance of which is embodied in the new Clause. The hon. Member suggested that no football club would draft a rule in this manner. If he had studied the Clause a little more closely, he would have seen that it empowers rules to be made. That possibly answers some of the doubts and apprehensions which he has felt on the subject. With regard to the last question that was asked me, I think that the phrase "the public account" will be fully understood when it is realised that it is governed by the later words about the rules. Those rules will prescribe, as now, exactly what is to be done with public moneys, and there will be no misunderstanding in India. All matters relating to the account will be governed by the rule-making power we have already given.

Photo of Mr David Mason Mr David Mason , Edinburgh East

That will involve an official audit?

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

That is covered by previous provisions of the Bill, in Clause 162 and onwards, which deal with ordinary accounts.

6.49 p.m.

Photo of Mr Thomas Levy Mr Thomas Levy , Elland

I am a little confused because I understand that the moneys are to be paid into a banking account. The procedure in England, I understand, is that when you pay Income Tax to the Inland Revenue, they put it into their account and it is subsequently transferred. In this case, there are moneys to be collected from various sources. They are to be mixed up and paid into a banking account, but what banking account, and in whose name? It will presumably be the account of the Federation, but that seems a very ambiguous term. There may be some hon. Members whose brains function as slowly as mine, and perhaps if the Under-Secretary will explain a little more fully the method of this collection and paying in, it will help us a good deal.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

If I were to start an explanation of the method of the appropriation of moneys in India, I should detain the Committee for a considerable time. I feel that I should say like Sherlock Holmes that I have written a monograph on the question and have taken considerable interest in the subject. It is a case of "virement" in the opposite direction, and I feel sure that the hon. Member can understand that.

Question, "That the Clause be read a Second time," put, and agreed to.

Clause added to the Bill.