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I. Whereas it appears by the Navy Appropriation Account for the year ended the 31st day of March, 1951, that the aggregate Expenditure on Navy Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto, appended, the net surplus of the Exchequer
|No. of Vote||Navy Services, 1950–51 Votes||Deficits||Surpluses|
|Excesses of Actual over Estimated Gross Expenditure||Deficiencies of Actual as compared with Estimated Receipts||Surpluses of Estimated over Actual Gross Expenditure||Surpluses of Actual as compared with Estimated Receipts|
|1||Pay, &c., of the Royal Navy and Royal Marines.||—||23,802||10||7||884,775||7||6||—|
|2||Victualling and Clothing for the Navy.||—||—||216,121||11||10||252,404||5||2|
|3||Medical Establishments and Services.||9,770||16||11||—||—||3,255||18||6|
|4||Civilians employed on Fleet Services.||—||—||154,486||11||4||33,561||13||0|
|7||Royal Naval Reserves||—||—||129,790||18||9||334||7||1|
|8||Shipbuilding, Repairs, Maintenance, &c.:—|
|Section III.—Contract Work.||331,684||16||7||4,163||13||6||—||—|
|10||Works, Buildings, and Repairs at Home and Abroad.||—||—||400,768||6||2||187,081||6||3|
|11||Miscellaneous Effective Services.||—||—||332,500||14||6||398,198||4||0|
|14||Merchant Shipbuilding, &c.||—||—||17,826||10||3||80,603||19||1|
|15||Additional Married Quarters.||—||178,903||18||1||178,903||18||1||—|
|—||Balances Irrecoverable and Claims Abandoned.||7,583||11||6||—||—||—|
|Total Deficits:||Total Surpluses:|
|Net Surplus 18,455,805||16s.||5d.|
I am a little surprised that the Minister does not think fit to make a few opening observations with regard to this £8 million surplus. We are, of course, considering tonight, not the activities of the present Government or the figures for the present year, but those for the year 1950–51. All these matters are well out of the control of the Minister, and now that he has presented a surplus to the House he does not even get the credit for the fact that there is this £8 million surplus, if in fact it is a matter for credit at all, which I do not think that it is.
The first matter to which I wish to call attention in the Appropriation Account is the somewhat remarkable matter of the forecast of March, 1951, which is presented in this account, and the difference between that forecast which took place on 19th March, 1951, when a letter was written,
I am commanded by My Lords Commissioners of the Admiralty to forward, for the information of the Lords Commissioners of H.M. Treasury, the accompanying statement showing the expected outturn of Navy Votes for the current financial year.
That "expected outturn" was a surplus of £4 million and that prophecy was made within a fortnight of the termination of the financial year. Tonight we are recording a surplus of £8 million. The figure is £8,455,000-odd surplus to be surrendered to the Exchequer. That is perhaps even more remarkable when we find that so far as this particular Service is concerned, it contrasts strangely with the other Services. There was an estimated complement of 143,000 and the actual number of personnel borne was 141,832; it is normally the practice to give a little margin beyond the overall figure approved by the House. I think that we should have an explanation of that surprising discrepancy and how it came about.
The next matter that arises, and the specific matter to which the attention of the Committee is called by the Comptroller and Auditor General, is that of the purchase price of warships. As far back as 1946–47, various Committees reported to the House the determination to revert to the system in which contract prices were charged and agreed, and one knew the cost of a warship before the building actually commenced.
Unfortunately, year after year, in these various reports, we have been told time after time that it was hoped that would happen soon, but this still goes on. In many things we have reverted to the old and pernicious system of cost plus 10 per cent., of putting in all extras, of bargaining for overhead charges, and that has carried us so far that in some of the Estimates we are continuing outstanding claims in respect of contracts finished many years ago. I am certain I carry the Financial Secretary with me when I say that he himself would welcome a clearer system which would enable him to know precisely what amount is allowed him by the Treasury and how it can be laid out, instead of having on almost every one of these figures a fantastic series of rises from time to time.
The Report of the Comptroller and Auditor General is that the original estimate provided for a gross expenditure of £216,250,000. This was increased by the Supplementary Estimate of January, 1951, by £13,500,000. Therefore, although we are reporting a surplus today, we actually spent more than the original Estimate, the difference being £5 million. That included or purported to include provision for acceleration of the naval re-armament programme announced in July and September, 1950.
Thus, so far as one can judge by a careful reference to the accounts, there has been a good deal of lag in the period of the development of the programme. I suppose that is inevitable. One cannot build naval stores rapidly. There is a long planning process, and everyone anticipates a time lag. However, there is a good deal of information that we ought to be given in connection with these accounts. I ask the Financial Secretary to say what is the explanation of the 100 per cent. error in the estimated surplus and the surplus now revealed.
There are some gratifying features about these accounts. I find the accounts much more gratifying than the other two which we shall be called upon to discuss later tonight or in the early hours of the morning. Here the losses appear to show a much tighter system of discipline in the Navy and a much tighter system of accountancy than is perhaps possible in an Army strung over the four quarters of the globe. I congratulate the Financial Secretary on that. Subject to what I have said, I have no other observations that I desire to make.
I want to ask one or two questions about this. First, I observe in the column, "Deficiencies of actual as compared with estimated receipts," the sum of £23,800 against pay of the Royal Navy and the Royal Marines. As a matter of interest, why does the Admiralty expect to receive pay? I thought pay was something the Admiralty parted with. I should be interested to hear the explanation.
Secondly, under "Surpluses of estimated over actual gross expenditure" we find nearly £1 million relating to pay. Does that really mean that the Admiralty were authorised to pay £1 millionmore than they have paid? One cannot help knowing, certainly with regard to allowances, that many people in the Navy, when continually changing stations, find themselves in very difficult situations, and if £1 million is voted and available for pay or additional allowances to the Navy, surely it can be used.
Finally, with regard to item No. 11, which is additional marriage quarters, there is a deficiency of actual as compared with estimated receipts and surplus of estimated over actual gross expenditure of just the same size. Why is that?
I wonder whether I might add one or two points to the catalogue of questions which the hon. and gallant Gentleman has got to deal with. I only want to deal with two points. In the report of the Comptroller and Auditor General, the hon. and gallant Gentleman will notice that the explanation of these surpluses is that manpower and production fell short of expectations. It is fair to say that in the Navy there is not very much of a manpower shortage. I think I am right in saying that the figure is about 1,180 below the maximum fixed by Parliament, and presumably when we fixed that maximum we were not expecting to get to that figure. It does not seem to me that there is a manpower shortage.
What the Committee is interested in is the point made by my hon. and learned Friend the Member for Northampton (Mr. Paget) when he said that apparently there was a large sum set aside by way of pay which has not been accounted for. Is that because the maximum was reached very late in the year and that the considerable sum expected to be necessary was not reached until a later stage?
There is one other point which also arises from the Report of the Comptroller and Auditor General and concerns the contracts for the building of warships. I do not know what the position is in regard to that, but in civilian shipbuilding all contracts were of a fixed-price nature, except for a short period in 1948. There is no increase in the profit, for the profit was a fixed element. The only increase was an increase in the cost of materials and other costs, so that there is no question of cost-plus. I think it would be valuable to the Committee if we knew whether the same position obtained in regard to naval shipbuilding.
For Married Allowance and National Service grants, there is a surplus of over £250,000. I should like to ask, first, why married allowances and National Service grants are lumped together in the Navy Estimates and are separate in the Army Estimates. We cannot see whether the surplus is on the married allowances or on the National Service grants. What I am concerned about is whether we are satisfied that in the National Service grants we are doing justice to the Service man's family by the amount of grant we are allowed to pay?
I am very glad to have this opportunity of answering the various points that have been made. I agree with the hon. Member for Oldham, West (Mr. Hale) that it seems odd that the Admiralty should have stated a week or two before the end of the year that the surplus was going to be less than it actually was. The explanation is quite a fair one. It was only in the autumn of 1950 that the re-armament programme began in three steps. The Committee will remember that it started in July and went up until we had the sum of £4,700 million over a period of three years. It would have been a little difficult to assess what the actual position was going to be at the end of the year until one could see how the re-armament programme was going to go. I would say that that is the answer to the hon. Member's first point.
But the curiosity is that anything is said at all on that date. There is no financial obligation, the accompanying statement is not printed in account. Yet suddenly the Lords Commissioners of the Admiralty decide to inform the Lords Commissioners of the Treasury that they are now in a position to make a reasonable forecast, and they are over 100 per cent. out. It is a huge difference. Even in these days £4½ million is a lot to have floating about.
I quite agree with the hon. Member, but the letter is written as part of the procedure that is carried out by the Treasury and the Service Departments which leads up to this formal approval being given tonight. It is merely to make quite certain that another Supplementary Estimate is not required and that the accounts balance on the right side.
With regard to the point raised by the hon. and learned Member for Northampton (Mr. Paget) about the very small sum, which I must say it looks as if the Admiralty will receive in pay, that is due to income from other Departments and other Services to which officers or men have been loaned. It is really a ledger transaction.
As for the large surplus of the pay, the Committee will remember that in the 1950 Navy Estimates, Vote A was running down to about 127,000. When the re-armament programme started the figure was increased, I think to 147,000. The surplus is a result of a Supplementary Estimate of £13 million, which was to cover the re-armament programme and the fact that the increase in Vote A was not achieved.
That also answers the hon. Member for Brierley Hill (Mr. Simmons), when he queried the question of allowances. I can assure him that the Admiralty, like the other Service Departments, does everything possible for the families of Service men.
The question of married quarters was raised by two hon. Members. That again is a ledger transaction. The sum referred to was not drawn from the Consolidated Fund, which the Admiralty and other Service Departments are allowed to do, as hon. Members will know, under the Armed Forces (Housing Loans) Act, 1949. The sum is balanced by the equivalent under the surplus. That is merely a ledger transaction; the amount is not really drawn and is shown on the other side as the surplus. That is the money which the Admiralty borrow to build married quarters.
In reply to the profit question which was raised by the hon. and learned Member for Hornchurch (Mr. Bing), I would say that the same system is in force today, and the profit allowed is re-considered from time to time.
As I understand it, I may be wrong about this, in the case of civil contract for the building of a ship a fixed element of profit is provided for and is not varied even though the contract price may be exceeded as a result of a rise in the price of materials or an addition in the cost of labour. The profit element does not vary with the change in the total sum to be paid out on the contract. I was querying whether the same thing took place in regard to naval contracts.
I should not like to give the hon. and learned Member a categorical answer on that point. I will confirm my facts, but as far as I know, the same arrangement applies to naval contracts. I will certainly let the hon. and learned Member know at a later stage.
I am concerned about the large reduction under the heading "Miscellaneous Effective Services," because I understand from what I have looked at that it covers welfare. I think it very important in these days when we wish to bring men into the Armed Forces that the welfare services should be maintained at the highest possible degree. Can we have an assurance that this £332,500 reduction in the expenditure under that head covering welfare services, canteens and things like that, is only of a temporary character, due perhaps to the check on capital expenditure, and that it will be pushed forward in the future?
I can assure the hon. Member that there is no policy of permanent reduction in that sort of way and. as I think he knows, the Services do attach great importance to these welfare services.
11. Whereas it appears by the Army Appropriation Account for the year ended 31st day of March, 1951. that the aggregate Expenditure on Army Service has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer
|No. of Vote||Army Services 1950–51 Votes||Deficits||Surpluses|
|Excesses of Actual over Estimated Gross Expenditure||Deficiencies of Actual as compared with Estimated Receipts||Surpluses of Estimated over Actual Gross Expenditure||Surpluses of Actual as compared with Estimated Receipts|
|1||Pay &c. of the Army||—||230,398||3||3||1,026,225||14||9||—|
|2||Reserve Forces Territorial Army and Cadet Forces.||—||—||71,243||3||0||31,445||15||3|
|8||Works, Buildings and Lands.||—||—||2,827,904||9||6||495,000||18||3|
|9||Miscellaneous Effective Services.||—||—||686,006||0||9||19,710||1||2|
|11||Additional Married Quarters.||—||1,290,004||2||6||1,290,004||2||6||—|
|—||Balances Irrecoverable and Claims Abandoned.||307,629||18||4||—||—||—|
|Total Deficits:||Total Surpluses:|
|Net Surplus £6,497,749||1s.||4d.|
There are some serious matters to discuss in the Army Estimates. I think that in fairness I should say again that we are discussing the accounts for 1950–51, and it is impossible to blame anyone on the benches opposite in respect of anything which has happened. But we are entitled to know what has been done about the exceedingly important Report
I must confess it may very well be that I have failed in the performance of my duties in this House, but I am surprised at some of the figures given in this connection and at some of the figures given for the cost of married quarters. The Auditor and Comptroller General ought to be thanked by the Committee for the careful investigation he made into the costing, which shows that very large sums have been spent on the provision of married quarters over and above the comparable costs of similar houses being built for local authorities.
The Report covers both the Army and Air Force Estimates so far as the investigation into this matter was concerned, and the replies to the questions he put are in fact contained in the next Estimate we have to discuss. It is fair to say that it is quite obvious that something like £300 or £400 a house, or more, has been paid in respect of items which we would not have been called on to pay had a local council been looking after the matter with their staff in charge.
The Auditor and Comptroller General called our attention to this matter and it is right that we should give it serious attention. It is right to say that some of the Ministerial explanations are shown by his careful investigation to be completely inadequate and indeed inaccurate. One explanation given is that it was the small number of houses being built on one site that added so substantially to the cost of each house. The comparison with the Birdwood Committee's investigations shows that in point of fact the advantage was with the Service Departments in this matter and that they were building, on the average, larger numbers per site than were being built in the case of other houses at the comparable time.
I would remind the hon. Member that we are concerned only with the disposal of surplus funds and not with a question of general policy. We cannot discuss that.
I am much obliged to you, Sir Charles. May I say, with respect, that that completely contradicts the Ruling given by your predecessor. Major Milner, who said in answer to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes)—and I regret the opening Words:
That is out of order. The only questions which can arise on this matter are as to how respective surpluses or deficits arise. The rest is a matter of accountancy."—[OFFICIAL REPORT, 10th July, 1950; Vol. 477, c. 1097.]
May I, with respect, refer you to Erskine May on the matter, because he says that in point of fact the one thing we cannot discuss is how the surpluses are disposed
of. We cannot challenge or put down any Amendment to that at all. Erskine May does not repeat the wording of the Ruling of your predecessor, but does describe the whole procedure of the House constituting itself in a special Committee.
What the Navy, Army and Air Expenditure Committee has to do is to consider the Report on the surpluses. I am referring you, Sir Charles, to the bottom of page 275 and the top of page 276 in Erskine May, where it is stated:
A Committee of the whole House, known as the Navy, Army and Air Expenditure Committee, is set up every Session to consider the application by the three service departments, on the temporary authorisation of the Treasury (under what is known as the power of 'virement'), of surpluses on some of their grants to meet deficiencies on other grants.
Then it describes the procedure which takes place earlier in the Session regarding Exchequer and Audit Department Acts, and the Appropriation Accounts, to which I am referring, are then presented, with the Report of the Comptroller and Auditor-General, and goes on—
and these accounts and reports are referred to the Committee of the whole House when it is set up.
That is precisely the procedure which is now going on. The Reports and Accounts are referred to this Committee for consideration, and may I remind you, Sir Charles, that once we have finished doing this, the Committee of the House ceases to exist for the current year. This is the sole function which we have to perform.
I cannot find offhand the reference which I wish to quote, but there has been a ruling that we cannot criticise the disposal of the surpluses as such. We can only consider the Accounts and the Report.
On a point of order. You have ruled, Sir Charles, that we are only concerned with the disposal of the surpluses. This is really a very important matter of interest to all of us in the Committee. Some time ago, we had the Estimates before us from the Services, and it has now been found, in the event, that the sums which were allocated to the Departments for specific purposes were either not used or were exceeded. What we are asked to consider tonight under this process in this Committee is a means to enable the money which is surplus to be devoted to some other purpose within the Department. I take it that that is the reason.
If we are to be limited, as I gather from your Ruling we are, to the mere discussion of the surpluses, without reference to the way in which a Department has been spending its money, and if it is shown in the Report of the Comptroller and Auditor General that the Department has been mis-handling or misspending its money, are we not then in a difficulty in agreeing to their having the use of whatever surpluses there are, when they may again waste the money, as they have done in the past?
I am grateful for that intervention of my hon. Friend, for it has enabled me to find the passage that I wish to quote. Surely it is important that we should get the matter straight? On page 726, of Erskine May, it is stated:
In the Navy, Army and Air Expenditure Committee, criticism of the system of applying surpluses has been ruled out of order.
That is not quite what I said, and, therefore, it is quite right that I should have checked it. It might well be argued that criticism of the system is different to criticism of the separate applications of each different surplus, but, as the surpluses here are going into the Exchequer anyhow, there is nothing very material about that.
I do respectfully submit, Sir Charles, that Major Milner, on two or three occasions in the last discussion, did make it quite clear that we could range questions on the items of expenditure, and, indeed, I venture to suggest that the whole point of this procedure surely must be that our function is to receive the Report of the Comptroller and Auditor General.
This is the only occasion upon which the Committee can consider the Report of the Comptroller and Auditor General, and this a very important point. The mere fact that the Opposition in the last two Parliaments failed in their duty in raising these matters really should not enable one to suggest that the matter has gone by the board because of desuetude. It has often been said that the main job of a Member is to exercise a close and rigorous control over our financial system, and that is what I am trying to do.
If I may continue, in the whole of these two Reports the very substantial point which is made throughout is the question of married quarters, which is a matter we must look into. There is a substantial increase in the cost of married quarters, and, therefore, a diminution in the number provided. In other words, we are providing fewer and fewer for more and more. That is a serious matter, and I will if I may refer the Committee to what precisely the Comptroller and Auditor General says in paragraphs 18 and 19 of his Report. He says:
In January, 1948, as an interim measure to meet the deficiency of married quarters for officers, the Treasury authorised the War Office to accept tenders for the construction of houses similar to those being built by the Ministry of Works for civilian officers at research establishments, etc.
If tenders had been accepted on normal lines, the rest of the problem would not have arisen. He goes on to say:
The larger of these houses was 1,320 square feet and the smaller 1,252 square feet in size. The average recorded costs of 42 houses of the larger type, and 228 of the smaller, constructed under schemes completed by 31st March, 1951, were £2,614 for those completed in 1949–50 and £2,650 in 1950–51.
No one can doubt for a moment that that is a very serious matter, and when we realise that he goes on to say that provision was made for still larger houses which amounted to £3,300 and £3,690 and some, indeed, to nearly £4,000, it is a matter for very serious consideration.
I accept that it is as much my responsibility as that of anyone in the Committee that we did not exercise close control, and I personally think that is to be regretted.
The hon. and gallant Gentleman has just walked into the Chamber and, in effect, asks me to repeat for his benefit an observation of which I openly boasted. But as he has addressed a question to me, may I say to him, yes I do.
There is another aspect of the matter raised by the Comptroller and Auditor General's Report which is also a serious matter. The War Office operated with Treasury authority a scheme for hiring furnished houses and flats. The Report says:
At 31st March, 1951, hirings had been arranged for 1,300 officers and 480 other ranks; the cost in March Quarter, 1951 … was £99,500 and, in the whole year, approximately £330,000.
That gives us a figure of something like £200 for each set of quarters hired for the year. That seems an exceedingly high figure, although one must realise that this was a difficult time and that matters improved somewhat towards the end of this period.
Another matter to which substantial attention is directed, although we do not want to comment at any length on it, is the disposal of stores in East Africa. The Stores Disposal Board was set up for this purpose, and I will accept the proposition that it is right that we should be a little generous in dealing with this matter in areas of some poverty and distress. But the figure of £93 per vehicle as the revenue that is obtained from the disposal of these vehicles seems to me to be a very small figure indeed. I should be very glad if we could be given some information on this subject.
I do not think there is anything else which I want to criticise at all. [Interruption.] I will do my best, but I was being congratulated on the other side five minutes ago because I was criticising. Adaptable as I am, it is exceedingly difficult to know what to do to satisfy hon. Members opposite. There is, of course, one general point of very great substance that arises on this matter. The original Estimate was £341,600,000. That was increased in January, 1951, by a Supplementary Estimate for a fraction under £25 million.
Surely the point before the Committee is simply that in the Schedule a total surplus of £9,593,189 is shown and a total deficit of £3,095,440 and the Motion is that so much of that total surplus of £9 million odd as will be sufficient to defray the deficit of £3 million odd shall be applied as indicated in the Schedule.
In my submission, all that the Committee is entitled to discuss is whether or not it is proper that £23,000 odd should be applied in defraying the deficit on pay and £50,000 applied to the deficit on the War Office, and so on right down the Schedules. How that surplus came about does not arise at all on the Motion before the Committee.
I thank the hon. and learned Gentleman very much. That is exactly what we are doing, and we are only dealing now with the application of these surpluses.
Further to that point of order. I wonder, Sir Charles, if you can elucidate this point on which I find myself in some difficulty. We were provided by the Vote Office with Appropriation Accounts, which I understand are ordered by the House of Commons to be printed; and the accounts which deal with the financial matters under consideration begin with the Report of the Comptroller and Auditor General which, if not addressed to the House, must be addressed to Her Majesty's Government.
It is obvious, therefore, that it is addressed to this Committed and it is surely our duty not only to consider figures printed for convenience on the Order Paper but also the various points raised by the Comptroller and Auditor General, acting in his capacity as servant of the House, so that we can arrive at a conclusion whether these deficits should have arisen and whether the surpluses should be applied to meet them. If we do not do that we shall be gravely failing in our duty. I should be grateful, Sir Charles, if you could clear up whether it is or is not in order that we should consider this Report presented to us for our consideration.
Further to that point. I should like to call attention to the final item in the Schedule relating to the Army —"Balances Irrecoverable and Claims Abandoned. "In my respectful submission, obviously before this Committee agrees to write off the sum of £307,000 odd we ought, at least, to investigate the reasons or have some explanation why it is necessary to abandon these claims. In one case it seems that a sum was due to the sudden posting of the Quartermaster, and that the Comptroller and Auditor General draws attention to the undesirability of this practice. It may well be that it is proper for the Committee to address one or two questions on those sort of issues, and before we write off a sum surely we are entitled to ask why it is that these sums should be written off. Fortunately we have the Report of the Comptroller and Auditor General which gives various explanations and, supplemented by what the Minister has to say, assists the Committee to come to a decision on what may be written off and what may not.
I have obtained a copy of HANSARD which is referred to in Erskine May. It is Volume 452 of 1947–48. The Chairman's Ruling arose on precisely the discussion of this particular section, and indeed on the Army section of the Committee's activities. Again, curiously enough, it was my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) who was speaking when the Chairman gave his Ruling. What the Chairman said was this:
The hon. Member cannot discuss the eventual disposal of the surplus. That question may only be discussed on the Estimates in which that item appears. The only question here is why there is a surplus. Questions on general policy are not permissible."—[OFFICIAL REPORT, 2nd July, 1948; Vol. 452, c. 2476.]
The particular point to which I was addressing myself when you interrupted me, Sir Charles, was why there was a surplus, and the reason is that the Army was not up to establishment and was indeed greatly below it.
Surely, in the terms of the Ruling which my hon. Friend has read out, we are entitled to discuss why any particular surplus has arisen and not why we should spend so much money in this or that direction, but why, having voted £X, there should only be £X minus so much spent on that surplus. Surely we are entitled to discuss that aspect of it, and surely that is completely within the Ruling read out by my hon. Friend?
On a point of order. A moment ago I asked whether it was in order for us to discuss a report which has been presented to this House. I raised that point of order because the hon. and learned Member for Kensington, South (Sir P. Spens) raised the question of the limitation imposed on this Committee. It is a little difficult for us when hon. Members opposite, now that they are in power, try to impose limitations upon our capacity to discuss.
I am obliged, Sir Charles. If in one or two of my observations I did go outside your Ruling, I express regret. Clearly, on your Ruling, it is possible to raise the question that I want to raise, namely, that the original allocation of numbers for the Forces was 467,000 men in this year. Under the Supplementary Estimate it was estimated that we should need another 55,000 men, which gives a total estimate at the end of the year of 522,000.
Of course, I must bow to your Ruling, Sir Charles, but I do submit that it has been said time after time in Erskine May that it is proper to discuss the question how the surplus arose. This is a question of how the surplus arises. It arises because we are 20,000 men short. It is the whole substance of the Report that is before us. In fact, the Report shows on page 1 that we never reached within 20,000 of the maximum total, except in the very last week of the year. I should like the Under-Secretary of State to tell us what is the situation now and explain why, when we look at that figure and see that we were never within 4 per cent. of the maximum estimated, the surplus is only 2·3 per cent. of the total. It seems to me that there is a very real discrepancy there.
I do not want to weary the Committee, but I think it is material that I should say just a concluding word. The Report of the Comptroller and Auditor General calls attention to the fact that the cost of the operations in Korea amounted to £7 million up to the end of the financial year. That is a very considerable sum. It may be that that is one reason why the surplus is not so great as it otherwise would have been having regard to the diminution of forces. For the moment I am content to seek the answers to those questions and I hope that we shall have full answers.
Before we leave this point I think that we might pursue in further detail this problem of the irrecoverable balances and abandoned claims. The Committee appreciates the point which the hon. and gallant Member for Portsmouth, West (Brigadier Clarke) made— that these events all took place under the administration of the late Government. But even the late Government had to work through brigadiers and, as the Committee will appreciate, some brigadiers are more competent than others.
It would be a very proper course for the Committee to pursue the question of the disappearance of these various sums of money, in order to see whether proper steps had been taken in these various cases. I do not think the Committee want to go into this matter in any great detail. Indeed, the Comptroller and Auditor General has given a very full account of the losses. Earlier on I referred to the case of the Middle East Land Forces Hospital, where there was an accounting lapse owing to the sudden posting of the quartermaster.
Those are the sorts of small items in which there is a great value in using the machinery of the House to see that the Army does not always get away with this sort of thing and to discover who was responsible for the sudden posting of a quartermaster. Perhaps it was a brigadier here or a brigadier there who thought he did not need a quartermaster and recalled him.
We ought to know how these losses come about and who is responsible. I think it is difficult for the hon. Gentleman to deal with details of items like this, but when we are dealing with a loss of £307,000 we must remember that that is about 10 times the sum that is going to be saved by closing down some of our most notable museums, and before we write sums like this as irrecoverable we should see whether we cannot get back a few of them. I think the Committee should consider whether all the balances are in fact irrecoverable.
I hope that the Financial Secretary will deal with a few of the bigger claims and explain how they arise, what steps have been taken to deal with the people responsible for allowing the losses to occur and how he proposes, in the future, to prevent the recurrence of a loss of £307,000 and other irrecoverable balances lost through bad accountancy or through foolishness on the part of officers and others in the Services.
I think some protest ought to be made about the archaic presentation of these Accounts. The responsibility does not rest with the present Government; it is lost in the pages of history. I should like to know why the House of Commons, almost 18 months after the financial year has ended, requires to have Appropriation Accounts in this form.
I think there was a time when the civilian population looked upon every member of the Armed Forces, whether he was a private soldier or a brigadier, as either a crook or a potential crook. Therefore, they hit upon a type of accounts which, I have often been told, are not accounts in the modern sense but merely a conglomeration of figures which can mean anything to anybody.
It is clear that there is some misconception in the mind of my hon. Friend the Member for Oldham, West (Mr. Hale), because when he was talking about Vote A, he was mixing up the numbers on Vote A with the actual establishment. In discussion of the Army Act, we persuaded the Government to set up a Select Committee to look into that Act and to bring it up to date.
I mentioned it only by way of illustration and I do not want to dwell on it. If the Government have been prodded into such an excellent step as appointing a Select Committee to look into the Army Act, would it not be very useful to appoint another Select Committee to look into the presentation of these Accounts, and not only these Appropriation Accounts, but also the form in which the Estimates are presented?
My hon. Friend referred to some observations I made. I was dealing with what was said on page 1:
Vote A—maximum number of officers and other ranks actually maintained for Army Service.
I may be wrong, and if my hon. Friend is correct in saying that I am wrong, I am most happy to have the correction.
I did not say the hon. Gentleman was wrong; I said he did not understand it, which is quite different. There was a time in the affairs of this House when there was a conflict between Parliament and the King. The King took money voted for pay and used it on rations, with the result that he had more men on the establishment than Parliament wanted him to have. In the 17th century, they set about the task of limiting the number and they did so by saying that in the course of a particular year they would not allow the size of the Armed Forces to go above a certain figure and——
We had some discussion on the Army Act this year and one learned quite a bit from that, although I do not pretend to understand all this. The point I made is that we have voted an increase for the Estimates and that increase obviously was for the year in question; and for that year that was the effective and proper number.
It is clear that my hon. Friend still does not understand. He is confusing establishment with Vote A. I am not pleading for a reform of the establishment but for a reform of the presentation of the Service Accounts to the House. Hon. Members opposite joined with my hon. Friends in the years 1945 to 1950 in pressing the Government to give us more information, and as a result of the steps which we took in 1945 and 1946, we have considerably more information than we had in the immediate post-war years.
We have gone one step further this year, and I plead with the Under-Secretary of State, not perhaps to give a pledge, but to promise to have a look at this between now and next year to see whether this method can be avoided. I suggest that it is a waste of time of the Committee, 16 months afterwards, to have this sort of mumbo-jumbo which gives little or no information and which means little or nothing. If one reads Erskine May, one sees that even this is not the end of the process, because there is yet another step to be taken. It does not add to the power which the Committee can exercise and to that extent, therefore, it is a waste of time.
It may well be that something like this should be done. The House is quite right to keep a tight grip on the disposal of these surpluses, but I think there is a better way of doing it than the presentation of these Appropriation Accounts. I will not spend any time now in going into detail, because I am not at all sure that I should not make the same mistake as that with which I charged my hon. Friend, but I most earnestly plead with the Under-Secretary of State to go back to his right hon. Friend and see whether, between now and next year, we cannot do better than we have done in the past.
I agree with my hon. Friend the Member for Oldham, West (Mr. Hale) about the importance of this debate and examination of these Votes. I wish with my hon. Friend the Member for Dudley (Mr. Wigg) that they were a little simpler, so that simple chaps like myself could understand them without our having to ask questions about how the figures are arrived at.
I understand that Vote 9, Miscellaneous Effective Services, includes educational and technical training. I thought that today technical training was one of the vital things in a modern mechanised army. I think we ought to have some explanation why such a large surplus has been arrived at on that item of education and technical training.
I am quoting from page 3031 of the Notice Paper—Vote 9, Miscellaneous Effective Services. Of course, the full Vote will be found in the Appropriation Account. Under the same heading there is also welfare and recruiting. I am very concerned about welfare. I have already asked a representative of the Senior Service here about welfare so far as that Service is concerned. I think the Army is just as important as the Navy —probably a bit more. Anyway, I think welfare is an important thing.
I understand that under Miscellaneous Effective Services we have an item for fees and payments for services which include legal aid, and I understand that the legal aid to soldiers has either been abolished altogether or considerably curtailed. I do not think a surplus should be arrived at in that way.
I see that Non-effective Services includes Chelsea, and a surplus is arrived at there. I am concerned to know whether that surplus is arrived at by the application of a means test to the Chelsea pensioners, because of the more generous social service benefits which they are receiving. I think it is rather a bad thing for the general position of recruiting if we have cheeseparing going on at the expense of pensions for which the Minister of Pensions is not responsible, as the Minister of Pensions would not be cheeseparing.
Chelsea is included in the Vote, and the surplus which is arrived at on that item of Non-effective Services includes an amount arrived at partly as a result of economies at Chelsea Hospital. I am not, of course, talking about the chaps in the red coats, but the people who are receiving pensions through Chelsea Hospital.
I hope that I shall be able to satisfy hon. Members on the points that have been put. I think I may be granted a certain amount of indulgence, because it has been made clear to the Committee that none of us was sure in what detail on this occasion one was expected to go. Subject to that, I hope that I shall be able to answer the questions, and not be led away from the rules of order in the way that the hon. Gentleman the Member for Dudley (Mr. Wigg) was led astray by his hon. Friend.
The hon. Member for Oldham, West (Mr. Hale) was good enough to absolve me and my colleagues from any direct liability for these Accounts, for which. as he rightly said, we have no parentage. While we are in no way responsible for the parentage I should, nevertheless, like to try to clear up the points he raised. The first point to which he drew the attention of the Committee was the question of the cost of married quarters, about which the Comptroller and Auditor General has made remarks in the preamble to the Army Appropriation Accounts. I am bound to say that, looking at those remarks, I did not read into them the acute criticism by the Comptroller and Auditor General which the hon. Member seemed to think was there.
In point of fact, I could not deal with it because in the combined Accounts he selected the areas for investigation, but makes it quite clear that similar considerations apply to both. A comparison is to be found in the Air Estimates, although with the Army this is the problem to which he directed careful attention.
No doubt when we come to the Air Estimates, in which the matter is dealt with in greater detail, there will be a more adequate explanation than I am able to give. In the short time at my disposal I have inquired why there should be this discrepancy between local authority prices and the prices paid by the Army for somewhat similar houses, and I am informed it is because in general the Army has erected its buildings in more isolated areas, and that the expenditure on curtilage and preparation, and things like that, in the case of the Army is generally higher than that involved in the case of local authorities whose building is more concentrated. It will be noticed, however, that the logic of the hon. Member for Oldham, West—that because these houses cost more therefore the sum
available was more rapidly absorbed, and there results from that a diminution in the provision of married quarters—is not really an explanation why the married quarters did not amount to the total for which we had hoped, because it states at page 20 of the Appropriation Account that
Owing to severe weather and delays in planning, progress in building additional married quarters was less than was anticipated.
I am sorry to interrupt again, but I am sure the Under-Secretary would, out of courtesy, like to get this clear. If he reads the report I think he will find the answer to the two observations he has made. In the first place, paragraph 15 of the Report of the Comptroller and Auditor General says:
In my Report on the Air Services Accounts I have recorded that the designs' of quarters",
and so on. In paragraph 16 the Report gives the complete reply to the observation the Under-Secretary has just made, because there it says:
The price limit fixed in February, 1948, was £1,750, or £1,800 in exceptional circumstances. These figures excluded the cost of land and of services outside the curtilage and extra costs incurred by contractors in bringing workmen to the sites.
So one of the answers the Under-Secretary has given—I admit at very short notice and with the shortest consultation —is excluded by the very terms of the financial arrangements.
I may have used the word "curtilage" wrongly as part of the explanation. It is understandable nevertheless, that when building houses in small numbers in isolated areas the cost invariably goes up. I know we found that in Scotland, because a house in Scotland costs more than an equivalent house in England because of the distance over which materials have very often to be carried.
We ought to be very careful in considering these figures—because the hon. Member referred to figures in the neighbourhood of £2,600 and £2,650, or nearly £3,000 as he said—that we compare like with like. These houses, as will be seen from paragraph 18 of the Appropriation Account, are considerably larger in superficial area than the local authority houses with which the hon. Member was making a comparison.
The next point of the hon. Gentleman was in connection with the Mackinnon Road stores. I say frankly that I think the Mackinnon Road adventure was an unhappy one, and considerable steps have been taken, as is shown in the Report of the Comptroller and the Auditor General to clean the place up. Such stores as the Army still requires out there are now held in different places, and what the Mackinnon Road store holds is, in effect, virtually scrap not required by any of the Services. As to the vehicles which fetched the almost derisory figure of £93 each, this was a scrap value for vehicles in very unget-at-able part of the world.
The hon. Gentleman also mentioned the hiring of furnished quarters. I realise that it is costing the country money, but I think it is money well spent. We have to provide for these families, and if we cannot provide them with the married quarters that we should like to build, I think we have to put our hands in our pockets and pay the difference between the normal rate and the market rate for such houses as we are able to hire and provide for them. I think this will soon terminate. It is reducing as we catch up with the total of married quarters to be provided, and I hope that eventually it will be completely extinguished.
The hon. and learned Gentleman the Member for Hornchurch (Mr. Bing) was concerned—I quite appreciate the fact— with the proposal to write off as irrecoverable £307,000 on claims. When I saw that figure I made inquiries, because it is rather a staggering figure when one first looks at it. When it is realised that we are really dealing with enormous sums of money and that in one item which is detailed in the Appropriation Account there was a loss of £1,100,000 in one fire alone, the hon. and learned Gentleman will appreciate that, when dealing with sums of money like that, and with scattered units and many people handling cash all over the world, it is very difficult to avoid having something in the nature of this sum. I understand that it is not greater than in the past. The Comptroller and Auditor General seemed to show in his Report that the accounting system is being tightened up and that things are improving, and I very much hope that they will continue to improve, and I shall be only too glad to do anything I can in that direction.
The hon. and learned Gentleman asked whether we were getting any of these sums back. He will see in the Appropriation Account that each of these cases is gone into in very considerable detail. and wherever it has been possible to recover from anybody responsible for these losses that has been done. I am afraid I cannot at such short notice solve his problem of the posting of the Quartermaster-General. [HON. MEMBERS: "Quartermaster."] Yes, it was the Quartermaster. I am glad to say that the Quartermaster-General is still with us. If the hon. and learned Gentleman is very anxious about this matter I will make some inquiries.
I now come to the point raised by the hon. Member for Dudley (Mr. Wigg) about the archaic form of the accounts. I agree with a great deal of what he has said. We may remember that 18 months or two years ago a body of opinion in the country thought the whole system of national accounting was out of date and that, instead of being on a cash basis, it should be on an income and expenditure basis. I believe it was a body called the Associated British Chambers of Commerce which took up the cudgel strongly. We applied for a Select Committee to consider this, and it reported to the then Chancellor of the Exchequer that the form and presentation of the national accounts could not be altered because a great deal of confusion and difficulty would be caused if that happened. I do not think there is much hope of being able to select one facet or slice of the national accounts for this purpose, but I will take up the question again.
I myself think it is an archaic system. Here you have the whole of the accounting dealt with on a cash basis and once the cash is over and done with, anything that happens afterwards has to be written off. If there had been an income and expenditure basis there could be a writing off of bad debts instead of putting them into the Accounts merely to be noted and passed by the Committee, as is the system at the present time. May I point out, however, that the Public Accounts Committee are charged with the duty of examining these Accounts and part of their duty is to consider the form in which the Accounts are presented to the House, so it is more properly a question for the Public Accounts Committee to consider.
Finally, there was a question raised by the hon. Member for Brierley Hill on the question of technical training. I was not altogether clear what his point was, because technical training is going on apace and is tremendously important, but I can find no trace of there being any technical training provided under Vote 9, and I do not think it comes in there at all. The various heads on page 16, as he will see, cover a variety of activities, but I cannot see any provision there for the technical training of soldiers in the Army.
"Miscellaneous and Educational and Technical Training Charges." I beg the hon. Member's pardon. I had not gone into it in that detail. I will inquire and see whether there is any curtailing in any way of technical training. I am sure there is not. If there is a surplus I am sure it is because we could not get the personnel to train. We are finding it extremely difficult to get personnel with technical knowledge. It is one of the problems we are examining at the present time. I was also asked about legal aid and whether the surplus meant that that was being curtailed. Again I will look into that, but I do not think it is being curtailed. I am constantly being asked whether a man can have legal aid, whether he should have legal aid and whether it is necessary for him to have legal aid.
Finally, I was asked about the surplus on the Royal Hospital, Chelsea. I shall have to go into that, because I see that the Comptroller and Auditor General has not made any particular or specific explanation of that item. The Comptroller and Auditor General makes his comments on the basis of percentages in the deficits or surpluses, and when we are dealing with sums of money in the nature of £7,700,000, £264,000 of a surplus is proportionately not so very high. I will make a point of finding out for the hon. Member and let him know how that surplus does, in fact, arise.
I should like to put one other question to the hon. Gentleman. I do not know whether he will be able to deal with it now, but I should like to put it on record. I want to inquire about the method by which attempts are made to recover losses. Let me give two examples from the Accounts.
There is a deficiency on accommodation stores of £1,157, due to inaccurate accounting and faulty administration, and an ex-commanding officer paid £25 towards the loss. If he was really responsible for such a large sum, it seems rather a small amount to pay. If he was not responsible, it seems rather wrong to make a charge at all. The same is true of another item where rations were overdrawn to the value of £1,035, and the officer responsible was ordered to pay £30 towards the loss. If rations of that value were overdrawn, they should have found somebody who had that value.
I do not want to detain the Committee, but surely the whole point we are considering is whether or not we should write off these sums. If we can recover more than £30 out of this £1,035, surely we should. It is quite unfair to ask the hon. Gentleman to deal with it at the moment, but I raise it so that the War Office can look into the matter again.
Of course, all these losses are the subjects of inquiry, and it would be quite impossible for me, as the hon. and learned Gentleman appreciates, to have at my finger tips any one of the 104 cases outlined here.
We ought to express our thanks to the Under-Secretary for the courtesy and fullness with which he has answered these questions at a moment's notice. I express not only my thanks but congratulations. But can he, for the sake of stimulating recruiting, find out which unit was able to overdraw its rations?
III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March 1951, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Air Services over the net Expenditure is £8,166,612 3s. 2d. namely:
|No. of Vote||Air Services, 1950–51 Votes||Deficits||Surpluses|
|Excesses of Actual over Estimated Gross Expenditure||Deficiencies of Actual as compared with Estimated Receipts||Surpluses of Estimated over Actual Gross Expenditure||Surpluses of Actual as compared with Estimated Receipts|
|1||Pay &c, of the Air Force||—||—||776,738||15||2||110,442||17||9|
|2||Reserve and Auxiliary Services.||—||247||15||8||35,309||5||2||—|
|4||Civilians at Outstations||—||806||6||8||214,909||19||9||—|
|7||Aircraft and Stores||—||—||2,234,244||6||8||926,516||4||10|
|8||Works and Lands||—||250,332||17||1||2,628,451||1||6||—|
|9||Miscellaneous Effective Services.||—||26,454||18||7||217,489||10||11||—|
|11||Additional Married Quarters.||—||270,102||18||10||270,102||18||10||—|
|—||Balances Irrecoverable and Claims Abandoned.||13,890||0||1||—||—||—|
|Total Deficits:||Total Surpluses:|
|Net Surplus £8,166,612||3s.||2d.|
The most significant item in this Appropriation Account is a blank on page 34. It comes under Subhead (d)—"Losses due to other causes"—and would appear to be a whole series of writings off of stores in the Middle East. Whereas earlier on, such as the safe stolen from the Air Ministry with £10,000 in it and the fact that there was an over-issue of rations in the R.A.F. as well, we get details of the losses, there is this extraordinary item on page 34 in which, I imagine, a very large amount of stores was written off as a result of the difficulties in Palestine and the Canal Zone, without even an estimate by the Service Department or, indeed, by the Comptroller and Auditor General of what the losses were.
It is easy to see how vulnerable these stores in the Middle East might be and how the losses occur. In the Report, the Comptroller and Auditor General draws special attention to the fact that he referred to these losses in his earlier reports, considered by the House in previous years. But in the last paragraph on page 10, at the very beginning, he just mentions that owing to the difficulties there has had to be a wholesale writing off of these stores in the Middle East. I should like to know whether the Minister can give any estimate at all of what was involved in this figure.
The Deputy-Chairman (Mr. Hopkin Morris):
I do not think the hon. Member is in order in discussing the losses and the deficit, nor, indeed, the report of the Auditor General. The Question before the Committee is that the application of sums be allowed. It has been ruled that how the surplus arose is in order.
It is unfortunate, of course, that the very long discussion on this point we had with the occupant of the Chair previously took place in your absence. I ventured then to draw the Chairman's attention to Erskine May on this point, which does make it quite clear that the one thing we cannot discuss is the application of the surplus and the one thing we can discuss is how the surplus arose.
If I may be allowed to intervene in respect of my own speech, I did address a point of order to the previous occupant of the Chair. In the Vote Office, we are provided with the Air Services Appropriation Account, "ordered by the House of Commons to be printed," and it includes a report which, under the constitutional procedure of the House, can only be considered at this period of the year.
I have not the advantage of knowing what has gone before, but it is quite clear that the only thing that can be discussed is a very narrow issue. The point which the hon. Gentleman is now discussing can be raised on the Estimates and on the appropriate item of those Estimates, but it cannot be discussed on this issue.
My imagination boggles at the thought of trying to discuss what happened in 1950 on the Estimates for 1953, and I should think the occupant of the Chair would take a very stern view of the width which I interpreted the Estimates to possess. Here, we are asked to provide money, because if we are transferring surpluses to cover deficits we are providing money, and I was asking what those deficits were. I am requesting your guidance, Mr. Hopkin Morris. We are told in the Accounts that there was a huge deficit, but no figure is attached to it. I want to know from the Minister —and I see from his anxious look that he is anxious to reply—what exactly was the extent of that deficit, and to ask him if he has any news about other deficits also mentioned in this Report.
This matter has been discussed many times before, and Rulings have been given. Deficits cannot be discussed, and it would not be in order for the hon. Gentleman the Under-Secretary to reply with regard to the deficits. Questions can be asked about how the surpluses arise; otherwise, the narrow issue here is the transfer of surpluses to meet the deficits.
With very great respect, Mr. Hopkin Morris, it is surely in order to discuss how the surpluses can be spent? If the losses were less, the surpluses would be greater, and to inquire into that is surely relevant to the application of the surplus?
Will you guide me on this point, Mr. Hopkin Morris? The only difference between a surplus and a deficit is that, in the one case, expenditure exceeds receipts, and, in the other, receipts exceed expenditure, and, in this case, we have a deficit where there might, possibly, have been a surplus. If we can get an explanation of these deficits, we might find that we should have had a surplus. This is the whole burden of my point, and it is exceedingly difficult to consider financial matters when we are allowed to discuss only one side of the balance-sheet, and, throughout the whole of the Accounts, see that every meaningful symbol is produced by balancing one against the other.
It might be a hardship on the hon. Gentleman, but the point capable of discussion here is a strictly narrow point. It is the transfer of surpluses to meet deficits, and the question that can be raised and discussed here is whether the surplus is a genuine surplus or not, or whether it has been arrived at by a juggling of the figures. That can be raised, but the purpose for which it is devoted cannot be discussed.
Might I refer you, Mr. Hopkin Morris, to a previous Ruling which I quoted to your predecessor in the Chair? I think it is rather important. This question of watching financial expenditure is a matter of grave responsibility to every hon. Member. In column 1097 of volume 477 of 1950, Major Milner, as he then was, said this, when intervening in a speech by the hon. Member for South Ayrshire (Mr. Emrys Hughes):
That is out of order. The only questions which can arise on this matter are as to how respective surpluses or deficits arise. The rest is a matter of accountancy."—[OFFICIAL REPORT, 10th July, 1950; Vol. 477, c. 1097.]
It would be improper for me to try to quote from memory what was said by the previous occupant of the Chair in your absence. If I tried to do that I would be liable to error. Certainly this discussion has proceeded for some considerable time, though not for a long time, having regard to the fact that we are considering accounts of this magnitude.
Major Milner gives another Ruling in 1948, namely,
The hon. Member cannot discuss the eventual disposal of the surplus.
That is quoted by Erskine May with approval. He went on to say,
That question can only be discussed on the Estimates in which that item appears. The only question here is why there is a surplus."— [OFFICIAL REPORT. 2nd July, 1948; Vol. 452. c. 2476.]
That is, I think, what we have been trying to discuss, namely, why there is a surplus, and why there is a deficiency.
I should like if possible to make my second point, if I cannot make my first. My first point was simply that Parliament had voted a sum of money and it had disappeared. I am interested in why it has. But I understand that that question is out of order. My second point may tax you even further, Mr. Hopkin Morris, because it is something which is put down as a surplus but is a deficit. I do not think you can intervene, Sir, until we hear from the Minister whether it is a surplus or a deficit, because we understand from the Accounts, page 1V of the Report of the Comptroller and Auditor General, that air training of the R.A.F. Volunteer Reserve is carried out under contract with civil flying schools.
On page 22 the Minister will see that training of personnel at establishments outside the R.A.F. shows a surplus of £92,000. The reason for this is that a number of outstanding accounts could not be settled within the year; but if one has money left over because the butcher has not sent in his account, is it fair to define that as a surplus? It may be; but that money may be just a balance. It may be a substantial deficit.
I bow to that Ruling, although I find it difficult to believe that the House, which after all has to keep a careful control on expenditure, is not allowed to consider these details.
The House has already considered the expenditure and voted the money. What we are now dealing with is a certain deficit on a certain fund and the surpluses on others, or the transfer of deficits to meet the surpluses, but the money is already voted.
Surely that meets the point on which the hon. Member is talking. If we look at the Order Paper—Item 9,"Miscellaneous Effective Services"—we see that there is a surplus of roughly £217,000. One item is made up of a sum of £92,000, which, if we look at the Comptroller and Auditor-General's Report, appears not to be a real surplus but to be due to the fact that certain accounts had, at this time, not been paid.
If we are examining whether a sum is a surplus or not, we are entitled to look at the account to see whether it is a surplus or whether it is due to the fact that, on the day the account was struck, a certain sum had not been paid, in which case it would not be a genuine surplus because it would have to be paid the following year. I submit that this point is very much within the rather restricted meaning under which we are discussing the Item.
I always understood that the larger figure was the sum of its parts. Perhaps I can put it this way—that I believe the surplus as given is inaccurate because one item—on the page to which I referred earlier—which I am not allowed to mention, is a false surplus. If that is within the Rules of Order, I am obliged to put it in that way.
Perhaps I may make, as a point of order, a very serious protest against this Ruling. Surely it is the function of the House of Commons to do three things——
Perhaps I may refer to another Ruling by Major Milner which is directly contrary to that which you have given, Mr. Hopkin Morris. [HON. MEMBERS: "No."] I am perfectly certain that you, Mr. Hopkin Morris, would welcome a reference to the Ruling of your predecessor. In column 1099 of Volume 477 of the OFFICIAL REPORT—the same volume from which I quoted earlier— Major Milner said:
I do not think the hon. Gentleman can indulge in a roving commission of that description. He must ask a specific question on a specific item and bring something to support his question."—[OFFICIAL REPORT. 10th July, 1950; Vol. 477, c. 1099.]
With great respect, that was precisely what I understood you to say we could not do.
What I said was that we were concerned with total surpluses and total deficits. If it is suggested that a total surplus is not accurately arrived at, reference to items which go to prove that would be in order, but to deal with specific items one by one apart from that would not be in order.
On a point of order. May I make one more attempt to suggest what the Committee is doing? The Resolution before the Committee states that there is a large surplus of over £9 million and a very small deficit of £856,000, and that there is a net surplus of £8,156,000. It goes on to state that,
And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants…as is necessary to make good the said total deficits on other Grants…
These deficits are set out in the first column of the Schedule. What the Committee is asked to do is to ratify what the Lords Commissioners of the Treasury have temporarily done. That is all we are being asked to do. In those circumstances—and I was not in the Committee when the previous Ruling, which was quoted, was made—how it is possible to discuss anything more than whether it is right that these deficits should be met out of the total surplus, I myself, very respectfully, cannot understand.
Further to that point of order. I do not know where we are coming to over this. We had this point of order made while your predecessor was in the Chair, Mr. Hopkin Morris, and rejected by him. Since then we have had a long discussion based on your predecessor's Ruling. Now, apparently, because there has been a change in the Chair, all the discussion has to go over again covering exactly the points which were raised before. If the Ruling which is now made is right, everything which we have discussed in the last two hours has been out of order. If, with every change of the Chair, there has to be a re-opening of each point of order, and re-discussion——
I do not know what happened in previous discussions, and cannot enter into it at all. I am merely drawing the attention of the Committee to the issue before it, and that is, that Parliament having already voted money, we have now to decide whether these surpluses shall be used for the purposes indicated in the Vote. That is a very narrow issue.
Surely the object of this exercise is to circumvent the previous Parliamentary decision? In the course of the year, as my hon. Friend the Member for Oldham, West (Mr. Leslie Hale) has already pointed out, the Government Departments have found that they could not spend the money which Parliament had voted, and what we have to do is to give an indemnification to a Department which has spent money contrary to the will of Parliament. It is not that we are simply looking at something which we have previously approved, but that we are looking sympathetically at whether Government Departments were right to incur these surpluses; and if we may not do that, then I submit that we cannot function in re-appropriating such surpluses.
When I had the honour of serving as Under-Secretary for Air, the Department came down to the Committee to justify this matter year after year. The Government is on the defensive and has to justify its case to the Committee.
It is no use hon. Members opposite making a noise, because we need a little daylight on this. For two hours, as has been pointed out by my hon. Friend the Member for Oldham, West (Mr. Hale), the Chair has ruled that we cannot examine the surpluses on individual items. What you say, Mr. Hopkin Morris, is that we have already had the opportunity of discussing those items when the Estimates were first introduced; but, as my hon. Friend has explained, during the course of the year, the Department found that it had to depart from the project which it had set out to accomplish.
In the Auditor General's Report there are some matters which I think call for comment, and unless we are permitted tonight to consider how these surpluses have arisen, it is very difficult for us to say if it is sound for us to agree with the proposal which is now before the Committee, namely what the Lords Commissioners propose. Vote 11, on page 3032, refers to additional married quarters, and here there is both a deficit and a surplus. This becomes a very argumentative subject. Shall we be in order in discussing that?
Further to that point of order. There is one other point which I think I ought to put before you, Mr. Hopkin Morris. You said that in many cases this was money voted by Parliament, but in one case there is no money that could possibly have been voted by Parliament, and that is the balance of irrecoverable losses. Parliament could not have anticipated beforehand that the quartermaster would have been posted— or whatever it was that we were discussing—and that therefore there would be a deficit.
Surely we are in a position to discuss whether we ought to make up these losses, whether we ought to say they should be made up in some other way, and whether the Treasury, as it has done for some time should pay for services out of other funds and make up losses incurred by some unfortunate circumstance or some unfortunate individual, and say whether the sum should be recoverable in some other way. In no other way can we make the Services accountable publicly. That seems to be the issue here. We have a balance which is borne on no Vote at all, and therefore there is a blank against it. That is what my hon. Friend was talking about when we interrupted him.
Is talking about, indeed. A point arises because the losses could not have been voted on any occasion. There are sums which have been lost. What we are discussing is whether or not it is right that public money should be used to meet a loss incurred for some reason by the action of some individual.
What hon. Members are seeking to do by their arguments is to convert this Committee into Committee of Supply. This Committee is not the Committee of Supply. It is not concerned with Supply at all. It is concerned merely here with the transfer of the surpluses already voted to meet deficits which have arisen. In previous years when debates have occurred they have been within strictly narrow limits, confined, as I understand it, to that position and that position alone. It is legitimate and proper to inquire if a surplus is a genuine surplus, or, may be, how the deficit arose. However, this is not the Committee of Supply to inquire whether the sums have been properly applied.
Perhaps I may be allowed, with the help of your guidance, Mr. Hopkin Morris, which is very fruitful, to make very briefly the point I wanted to make. The first point, which you said a moment ago would be in order, was how the deficit arose. I want very briefly to refer to this writing off of losses. I would ask the Under-Secretary of State whether he would explain this writing off of losses. Curiously enough, it is not reported in the figures of the Accounts.
At each stage, Mr. Hopkin Morris, I refer to your Ruling, which I hope I can use to cover me. and the second point I want to refer to is about Vote 9 B. I shall not mention the amount, because I do not want to go into too great detail, but the surplus is far from being a surplus because the money has not been voted. We were told that the money has not been paid, and that that is a surplus. Well, that is not a very real surplus, in those circumstances.
The last point is one that I am sure, Mr. Hopkin Morris, you will admit is a fair one, and that is that the case where we do not know whether it is a surplus or whether it is a deficit because we have no accounts at all. That is the case of the Far East Air Command. On page 3 of the First Report of the Comptroller and Auditor General we are told, in effect, that the examination of the cash of the Far East Air Command for the year would not be completed as the accounts were not available for his officers when they visited the Command.
It may be that because of the war in Korea and because of difficulties in the Far East Air Command it has not been possible to see that the accounts were audited, but what I want to know is how far this is the beginning of a sort of difficulty that may lead to the wholesale writing off of losses in the Far East as we saw it in the Middle East. We have had to write off a lot of losses in the Middle East. We were warned in previous Appropriation Accounts that we could not get full figures of claims in the Middle East, and finally we were told that we had to write them off. Now the Comptroller and Auditor General sounds a note of warning about stores in the Far East. Admittedly it is only the first note of warning, but we may find next year a similar note of warning, and finally in two years' time find that a lot of stores have had to be written off. If the Under-Secretary could give any explanation of that it would help us to be satisfied that we were right in passing these appropriations from surplus to cover deficit.
Although we have had quite a long discussion there have not been many Questions put to answer, so I shall not take very long in replying. However, I am sure the Committee will understand that if this was Question time I should probably be asking for notice and for the questions to be put down on the Order Paper. I have in the very short time available been able to do something about finding out the answers, and if they are not as complete as they might be perhaps the hon. Gentleman will write to me and I will try to amplify them a bit.
The first question put by the hon. Member for Bristol, South-East (Mr. Benn) was about the loss of stores in the Middle East, and he drew attention to a note in the Report of the Comptroller and Auditor General on page 34. The depot referred to in that note is the Central Works Stores Depot at Kasfareet in Egypt. The position was that by March, 1950, the physical check of stores and stocks at that depot was very considerably in arrears because there had been a large accumulation of stores and materials there, which was mainly stores which had been brought back in a great hurry from the Delta and from Palestine.
There was simply not adequate staff available there to cope with the checking of these stores, and to make that staff available would have considerably prejudiced and interfered with the operational work of the Air Force there. There was, I understand, no question whatever of fraud or theft involved. It was purely physical inability to keep track of this sudden accumulation of stocks. But we did very shortly after that make available additional supervisory and clerical staff in order to keep the stores and records in a reasonable state, and I trust the Committee will accept this as being rather an exceptional case which I hope will not occur again.
The hon. Gentleman also asked about the £92,000 relating to Reserve flying training. That was a real surplus because it was money which was not spent, and therefore it is fairly part of a total net surplus which has to be returned to the Treasury. Of course, the claims will have to be settled in the following period, in the period 1951–52, and it will have been allowed for in the Estimates for that year, so it is quite a simple transaction really.
The hon. Member for Stoke-on-Trent, North (Mr. Edward Davies) did not press his question about married quarters, but he made what I thought was a valid point, to which he might like to know the answer. He asked why, apparently, when dealing with married quarters there is a surplus and a deficit shown at the same time. The explanation is that we are underspent on married quarters owing mainly to slower progress being made than was expected. This was largely due to the abnormally wet weather in this country in the autumn of 1950 and the following winter. Having underspent that, and not building as many houses as we would have liked, we naturally did not receive in return as much by way of grant under the Armed Forces (Housing Loans) Act, 1949. So the amount of loan we did not receive is shown as short receipts.
That is a point which I should like to look into, but I would draw the attention of the hon. Gentleman to paragraph 5 on page 3 of the Report. The Comptroller does not in fact make any mention of stores. He refers to cash accounts. I do not think there is anything there which might be assumed to refer to stores. However, I will look into it, but I think the hon. Gentleman was jumping to conclusions in the light of what happened in the Middle East.
I had not intended to intervene because I had thought that the Under-Secretary would have dealt at some length with the question of married quarters in view of the fact that a great part of the Report deals with a somewhat unsatisfactory position. This matter is of considerable importance to most people, and certainly to me, because I have in my constituency Hornchurch aerodrome, where the married quarters question is extremely acute. One of the great problems is the provision of adequate quarters.
I appreciate that, but the argument of the Comptroller and Auditor General is not only that there has been underspending but overspending in the sense that fewer houses are built at a larger cost, and a great deal of his Report deals with that particular aspect. I do not know whether the hon. Gentleman is in a position to deal with it, but it is unfortunate, when we have the Report before us, that we cannot deal with it when the accounts come up.
There are two curious differences in the presentation of the Air Estimates and the presentation of the Army Estimates. We are not told what the original estimate of surplus or deficiency for the Air Estimates was when the Report was made. When we come to the question of the presentation of the deficiencies and losses of stores and losses, in each case they are written off as stores of the Air Ministry, whereas in the Army Estimates we are told the amount written off by corps and formations.
This is a question which is nearly always raised. Anyone who has experi- ence in the Forces knows that if a unit wants to write off a certain amount it never likes to go to a higher authority and get a ticking off. As little as possible is written off in the hope that the quartermaster will carry over which is left to the next writing off time. I remember we had a great amount of trouble about a certain loss of petrol and all-night sittings as well to avoid reference to a higher command.
This question of married quarters is one which I would ask the Under-Secretary to deal with. The Comptroller and Auditor General comments on what appears to be a very unsatisfactory explanation. If the Under-Secretary would be good enough to refer to paragraphs 17 and 18 of the Report, he would himself come to the conclusion that a very serious point has been treated by the Air Ministry somewhat perfunctorily and that no adequate investigation has been undertaken. Indeed, it appears that they have submitted an explanation of this extraordinary spending which the slightest investigation would have shown would not stand investigation at all.
They suggest that the higher cost of the married quarters as compared with the global figures was that it was due to the fact that they were building in smaller units whereas, in point of fact, they were building in larger units. That should not happen, and the Comptroller and Auditor General is entitled to the thanks of this Committee for the care with which he has examined these figures and the difficult task that he has——
I do not want to pursue the matter, but I should like respectively and courteously to ask you, Mr. Hopkin Morris, for a definite Ruling on this. Is it really the case that these figures can never on any occasion be discussed, because I respectively submit that we are presented with the Appropriation Accounts and Erskine May says that they can be discussed?
Upon the report of the Public Accounts Committee, but this is not a proper occasion for them to be discussed. This is a very narrow point, as has already been pointed out, and it has been held time and time again that this is a very narrow point.
I am very much obliged, and I am quite sure you wish to try to co-operate with me, Mr. Hopkin Morris, in trying to clear up this matter, because I apprehend and venture to submit that it was through the negligence of the previous Opposition that a very valuable right of scrutiny of accounts was allowed to lapse. I realise that this is a very difficult point on which there has been disagreement in the past. I did not mean to intervene, but my hon. Friend the Member for Bristol, South-East (Mr. Benn) was presenting his arguments about the Ruling on the application of surpluses. I gathered that the Ruling then given was precisely the opposite to that given in Erskine May on page 726:
In the Navy, Army and Air Expenditure Committee, criticism of the system of applying surpluses has been ruled out of order.
It then refers to 1906 and a Ruling by Major Milner in 1947 to which I have already referred.
If I can, I should like to refer to what Erskine May says on this subject generally, as found on pages 725 and 726:
A committee of the whole House known as the Navy, Army and Air Expenditure Committee is set up every session to consider the application by the three service departments, on the temporary authorisation of the Treasury (under what is known as the power of 'virement',) of surpluses on some of their grants to meet deficiencies on other grants. Earlier in the Session the Treasury, in accordance with statutory provision (see Exchequer and Audit Department Acts, 1866 and 1921), will have presented a copy of the Appropriation Accounts for each defence service, with the reports of the Comptroller and Auditor General thereon, and these accounts and reports are referred to the Committee of the whole House when it is set up.
That is what is happening now.
We have set ourselves up in this ancient and traditional form—by the movement of the Mace from the Table—as the Navy, Army and Air Force Committee of the whole House for this Session. The moment this discussion concludes this Committee of this House will cease to exist. The function of this particular Committee is to receive these Accounts and, according to Erskine May, to receive and discuss the Comptroller and Auditor General's Report on these Accounts, and then to pass a Resolution for the application of the surpluses. It has been said that we cannot discuss the method of application of these surpluses.
Let me add that this matter has been raised before in the last two hours, and that is why I am referring to it only briefly now. The figures given in paragraph 16 of the Comptroller and Auditor General's Report show that the Girdwood figure for a house of 1.050 sq. ft. was £1,400 in May, 1946, and £1,550 in the second half of 1948, while the comparable figures for married quarters for the R.A.F. are £1,901 in 1946–7 and £1,875 in 1947–8. Both figures exclude the cost of land. In fact, the square footage area of the R.A.F. married quarters is somewhat smaller than that of the council house.
The Comptroller and Auditor General regarded this as important. It appears that he formed the conclusion—and the House may form the conclusion—that the answers given were rather perfunctory and the Air Ministry did not take this criticism seriously at all.
I have only one other observation arising out of what the Under-Secretary himself said. We are indebted to my hon. Friend the Member for Bristol, South-East (Mr. Benn) for raising this question of the Far East accounts, which show that the representative of the Auditor General visited this Command in the spring of 1951. He said that the accounts were still not complete for the last two months of 1950. I do not want to press the matter. There may be frightful difficulties facing them. But it is a matter on which Members would welcome some information.
I wish to ask the Under-Secretary a question about the surpluses. In Item I, "Pay of the Air Force"—page 3032, Vote 1—there is a surplus in the two columns of some £877,000. How does that come about? We should like to be satisfied that the money voted is being properly expended. Are we to assume that the Air Force is below establishment? If so, is it due to the absence of recruits, because there are many men who are anxious to get into the R.A.F. if they are accepted.
I have really answered the main points which have been made. With great respect, I do not think the question of the cost of married quarters really comes into this debate, because we are dealing now with surpluses and deficits, and the cost of married quarters would seem to be outside the scope of that discussion. In order, however, to avoid being accused of a lack of courtesy, I will say that there are a number of reasons—good and sound reasons— for it, and they are all here, I think they are sound reasons, though I will not trouble the Committee by reading them all, because I think that would be outside the scope of this debate.
I am permitted to put this question, since I put a similar question on the previous debate and got a reply. Is it not ineffective for the Under-Secretary to say now that this is out of order? If the Chairman were to rule me out of order, of course, I would not complain.
I did not say it was out of order. I would not presume to give rulings for the Chair. I said I thought it was rather outside the scope of the particular point we were discussing about. over-spending or under-spending on numbers of houses. However, there are various considerations, such as site considerations and freedom of choice in the siting of airmen's quarters. We have to take into consideration where they are placed, because of flying hazards, availability of communications, drainage and so on.
On a point of order. I merely wished to call attention to a particular section of the Exchequer and Audit Departments Act, but if you feel that I am out of order in so doing——
The point here is a rather complicated one. I will try to put it as shortly as I can. We lent the Government of Pakistan a number of personnel, for which we made certain financial. claims. The Government of Pakistan, without agreeing to our claims, did however pay us certain monies which were deposited against these claims, and that has been going on since April, 1948. Although these deposits have been coming in, the outstanding claims have never been agreed by the Pakistan Government, and that is the reason why we show this surplus on the pay of the Air Force. It is not a true position, because eventually the position will be regulated by the Pakistan Government agreeing to these claims.