Timing of the Presentation of Supplementary Estimates (Estimates Committee's Reports)

– in the House of Commons at 12:00 am on 12th July 1963.

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2.59 p.m.

Photo of Sir Spencer Summers Sir Spencer Summers , Aylesbury

I beg to move, That this House takes note of the Sixth Report and of the Tenth Special Report from the Estimates Committee relating to the Timing of the Presentation of Supplementary Estimates. There is one very noticeable difference between the Report we have just been talking about and this one, and reference was made to it by two speakers, one on each side, who said that they would have to be careful of what they said in the debate because of the effects, perhaps, outside. The last debate dealt with a topic with which many members of the public are concerned. In this debate I do not think that I need worry very much about what people outside may think, because I doubt very much whether anybody will understand what it is we are talking about, and I am afraid that that goes for the very large number of Members of Parliament as well.

From time to time kind things are said about the Estimates Committee, as, indeed, they were today. Comments are made about the value of our affairs in Parliament of the work of the Committee, but I would say that one of the values of the Estimates Committee is what it gives to members of the Committee, because I am one who has, over a number of years, learned from it a great many things which I never knew before. This particular topic, the manner in which our affairs are dealt with on the constitutional side of the financing of public expenditure, is something which I doubt it is easy to obtain understanding of but through membership of that particular sub-committee.

To explain the real value of this Sixth Report, I think that it is proper to set it in the context of a rather wider sphere. It was, I think, about three years ago that a number of hon. Members on both sides of the House were concerned to try to tighten up the control of public expenditure, and one of the steps which were taken in the face of the recommendations then made was to add an additional sub-committee of the Estimates Committee charged with two duties which had not hitherto fallen upon the Estimates Committee as such. The first was to report on Supplementary Estimates; and the second, which followed it in time, was to report on the variations in the Estimates of one year compared with those of earlier years. This Report is concerned only with the first of those two functions assigned to that subcommittee.

It was during the course of our examination if Supplementary Estimates last autumn that we came across what seemed to be, a rather unusual feature of them. We were advised that the Estimates brought forward for December, 1962, comprising about £60 million worth if expenditure, were, in reality, Supplementary Estimates which, in the ordinary course of events, would have been brought forward in the spring, but, for a reason which I shall explain, were, in fact, brought forward in December.

The reason for that was that it was feared that if they were left over to the spring the amount of money in those Supplementary Estimates, coupled with the other Supplementary Estimates which were coming forward in the spring anyway, would have resulted in a larger burden being placed on the Civil Contingencies Fund than was possible with its restricted size of £75 million.

The Civil Contingencies Fund was set up many years ago for three main purposes: first, to finance the overspending on existing services; secondly, to finance unforeseen new services, such as disasters, floods, hurricanes; and, thirdly, to provide working balances at the end of the year.

Here I think that I should perhaps pause to say that to understand the link between the recommendations in this Report, the control of public expenditure and the size of the Civil Contingencies Fund, it is necessary to go over the steps by which Parliament authorises expenditure, and it is this sequence of events, which takes place annually, which Members of Parliament may be expected to know but which, I believe, relatively few either know or understand.

As is well known, our financial year begins early in April and some time in March, just before that year begins, there is what is known as the Consolidated Fund Bill. It may be the first or second of such in that year, about which more later. The Consolidated Fund Bill, which becomes an Act after the due processes, not only authorises expenditure on the Supplementary Estimates then outstanding, and in addition repayments into the Civil Contingencies Fund of expenditure temporarily taken from that Fund, but provides a Vote on Account for the year that is just coming in. In practice, one finds that the Vote on Account is for approximately 40 per cent. of the year's total expenditure and is intended to provide enough money to enable the Departments to carry on until the end of July.

That provision applies to civil expenditure, and it is necessary, so to speak in brackets, to distinguish between the technique which is relevant to civil expenditure and the technique which is relevant to expenditure in the Services. In the Services there is a right to what is know as virement, namely, the power to spend money voted for one class of expenditure in another class of expenditure if it is not required for the first, with the result that at that stage, instead of having a Vote on Account, Parliament takes four or five of the Votes for the Services for twelve months and approves them, knowing full well that they may be used for other Votes which may need money in the first four or five months of the financial year. This process, therefore, provides the means for the Departments to spend money from the beginning of the financial year until somewhere about July.

At that stage the Appropriation Bill is presented, and its main purpose is to appropriate to the Departments the Estimates which have been presented to Parliament before the financial year began. It is the word"appropriation" which distinguishes it from similar Bills in that it appropriates to the Departments the money which is relevant to them rather than the total sum which Parliament would authorise through the Consolidated Fund Bill. It also takes up, so to speak, any Supplementary Estimates which may have been brought forward since the beginning of the financial year to provide authority to cover a service which has been brought in which was not foreseen when the original Estimate was produced.

Those two steps, the Consolidated Fund Bill just before the financial year starts, and the Appropriation Bill in July, would suffice for all the needs of Parliament if the Estimates in the first instance proved to be adequate in all respects for the needs of all the Departments, but that is never so.

Here I want to digress for a moment to allude to a point that has come to light in my researches into this subject, which did not come before the subcommittee and which finds no place in its Report, but which it is perhaps relevant to allude to at this stage. I hope that I have my facts right. It is a very confusing subject and I do not profess to be anything but a very new student of it. It is a fact that the Appropriation Bill, in July, not only appropriates the main Estimates for the year in question to the relevant Departments, but also appropriates the Supplementary Estimates for the preceding financial year brought before Parliament in the spring and authorised by the last Consolidated Fund Bill. In other words, until the Appropriation Bill for this year is passed the authority of Parliament to spend money through Supplementary Estimates last March cannot be related to the Departments to which they referred.

It would be an improvement in our technique if the Consolidated Fund Bill which is passed in March, in addition to saying all the things that it now says, were to say that authority is given to appropriate to the relevant Departments the sums referred to in the Supplementary Estimates presented to Parliament in March. It would in effect, be doing then what is now done in July, four months or so afterwards.

The Comptroller and Auditor-General uses the Appropriation Bill as his authority for examining and reporting to the Public Accounts Committee on the out-turn of the year. He cannot do his work for a year ending on 31st March until the following July, when Parliament has passed an Appropriation Bill. Therefore, although I have not had the opportunity to consult, it would appear, on the face of it, advantageous to enable the Consolidated Fund Bill, in March, to appropriate supplementaries presented to Parliament in that year.

That was a digression, referred to now only because opportunities do not easily come to refer to the manner in which Parliament deals with its affairs.

Photo of Mr William Yates Mr William Yates , The Wrekin

What was the last time that this House or the Treasury or anybody examined this subject? Has there been a committee on it recently? Has there ever been one?

Photo of Sir Spencer Summers Sir Spencer Summers , Aylesbury

I cannot answer my hon. Friend's question. As a result of our examination of Supplementary Estimates last autumn, we came across this strange procedure of bringing forward supplemenlaries earlier than was expected, which prompted us to examine the timing of Supplementary Estimates. Hence this Report. I cannot enlighten my hon. Friend on his wider question.

I have explained so far the manner in which we deal with our affairs, which would suffice if the original Estimates proved sufficient. But they do not. Pay rises occur. New conditions arise. With the best will in the world, Supplementary Estimates are inevitable. It is natural that Departments which pride themselves on accuracy should wish not to bring forward a Supplementary Estimate until so late in the financial year that they can rely with some confidence on its accuracy. This means that the assessment of the position is put off as long as possible.

Consequently, Parliament tends to be asked to authorise additional expenditure which may be necessary near to the end of the financial year and frequently without much time to do justice to the problems which may be posed. Moreover, because these things come about in March, the predominant pressure on the Civil Contingencies Fund for financial operations pending Parliamentary authority falls mainly in March.

I am aware that as a result of the comments of the Public Accounts Committee, Departments follow the advice that when an unusually large Supplementary Estimate is called for, it is their duty not to include it in the March Supplementary Estimates, but to bring it forward, if possible, to earlier in the year, preferably before Christmas, so that steps may be taken to deal with it. When these matters are dealt with, it is of vital interest to attempt to discover what should be the size of the fund available to Departments for their use pending Parliamentary authority.

In the years after the war, up to 1955—it was very much larger during the war—the size of the Civil Contingencies Fund was £126½ million. I have not discovered how such a strange sum came to be arranged, but that is only of historical interest. In 1955, the then Financial Secretary to the Treasury, the present Home Secretary, in a Miscellaneous Provisions Bill, explained to Parliament that in the view of the Government of the day it was no longer necessary for so large a sum to be available to Departments through the Civil Contingencies Fund. The Government had examined the position very thoroughly and had come to the conclusion that £75 million should suffice for the needs of Departments from then on.

The then Financial Secretary made considerable play with the effect of the system of guaranteed prices to farmers on the size of this Fund, because he was at pains to point out that the size of the obligation assumed by the Government to farmers did not really depend on skilful forecasting, because that might be completely thrown out, as experience has shown it to have been, by the weather or the effect of imports on market prices, and so on. Therefore, with what one might term an open-ended cheque, it was argued that a substantial sum was necessary to take care of the ups and downs brought about in this way and for these reasons the Fund was larger than might otherwise have been necessary.

It is of interest to see how far the forecast of the then Financial Secretary has worked out in practice. Amongst the information provided by the Treasury, the Committee was given details of the use of the Civil Contingencies Fund in respect of expenditure on agricultural support. The information is provided in page 49 of the Report.

In the month of March, when most of the claims are on the Fund for the reasons I have already explained, £10 million was used in 1957, £3 million in 1960 and £2½ million in 1961. At that time, when the impact of the Government's agricultural policy would have been least welcome, experience has shown that it was not serious in those years. Moreover, in 1958, and again in 1960, special Supplementary Estimates for the Ministry of Agriculture were brought forward before Christmas and were debated and sanctioned by an addi- tional Consolidated Fund Bill and the Civil Contingencies Fund repaid in February before the great pressure fell upon the Fund.

The Estimates Committee found that the position was not satisfactory and that Estimates had to be brought forward before Christmas, which in their nature ought not to be brought forward, simply because departments feared the pressure on the Civil Contingencies Fund. In fairness to the Treasury, I ought to say that the size of the Fund must be somewhat influenced, by no means entirely influenced, by its relationship to the total of public expenditure. In 1955, when it was fixed at a limit of £75 million, the total of public expenditure was very much less than it now is. It is now running at about £6,000 million a year. The Estimates Committee was concerned that for what might be called a technical reason undesirable steps were taken to bring forward Estimates.

What is more important, if the Civil Contingencies Fund is used, it means that the discussions in Parliament and the authority of Parliament take place after the expenditure has been made.

This point was stressed very strongly by the Comptroller and Auditor-General, who said, in effect, that it flouted one of the essentials of the control of public expenditure by Parliament if discussions and authority were given after the expenditure, in fact, had been made. The horse was out of the stable. Therefore, from the Estimates Committee's point of view, and that of those who charged the Estimates Committee with this particular duty, namely, the control of public expenditure by Parliament, it was of paramount importance to see whether it would be possible, by a more skilful timing of the presentation of the Estimates, to reduce the need to use the Civil Contingencies Fund. This might even lead to the time when a lower figure would suffice.

We were glad to find that the provisional views we held were supported by the Treasury witnesses that the technique of presenting Supplementary Estimates on account to Parliament before Christmas should be initiated. This would mean that a Department would no longer be fearful of bringing forward a Supplementary before Christmas lest, by so doing, it should have to come again with a further Supplementary in March. No one would blame, but rather would encourage, the taking of two bites at the cherry. Parliament would be alerted some months sooner than is possible under the present system that a particular Department would be spending substantially more than the original Estimate presented at the end of the preceding financial year.

As a yardstick by which to determine when a Department should bring forward a Supplementary Estimate it was suggested, and has been accepted, that if the Department foresaw the likelihood of exceeding its original Estimate by 10 per cent., or £5 million—whichever was the lower—a Supplementary Estimate should be brought forward in December amounting to50 per cent. to 75 per cent. of the amount by which it was expected that the original Estimate would be exceeded.

This would have one result which, at first sight, might be regarded as a disadvantage, namely, that a second Consolidated Fund Bill would have to be passed to give legislative effect to the decision taken by Parliament in December on the Supplementary Estimate. I think that I am right in saying that in the last seven years there have had to be a second Consolidated Fund Bill on five occasions, so that this would merely be bringing into conventional routine practice what experience has shown to be necessary in nearly every year so far.

The system of Supplementary Estimates on account would have three main advantages. It would enable Parliament to exercise greater control over the voting of Supply. It would enable Parliament to be given earlier notice of those Votes on which there were deficiencies without the difficulty of producing fully accurate figures and it would reduce the pressure on the Civil Contingencies Fund.

We were gratified to hear the response of the Treasury witnesses to our provisional ideas, and still more gratified that when they came back on a second occasion, after consulting selected Departments, they reiterated that such a scheme was practicable and that they would be prepared to assist us and Parliament to work it.

It is, of course, always inappropriate to mention civil servants by name. But I do not think that I should be flouting that very proper convention were I to say that in the study of the various aspects of affairs since this sub-committee was set up three years ago we have had the full assistance, co-operation and help of what we regard as highly distinguished representatives of the Treasury who have come to see us. I should like to pay my tribute, on behalf of my colleagues, to the tremendous help which they have been to us in our studies.

I hope that experience will show that this technique would enable Parliament to discuss these matters sooner than is possible now and at a time when, as I am told, Parliament is not particularly busy with other affairs—the latter part of November, and the early part of December. But as I have never been a Whip, I cannot comment about that. I hope that it will be found to have made some contribution, at any rate, to what I believe is of immense importance and what is seen by many people outside as immensely important, namely, the proper control by Parliament of public expenditure.

3.28 p.m.

Photo of Sir Godfrey Nicholson Sir Godfrey Nicholson , Farnham

Everyone who has heard, and those who will read, the speech of my hon. Friend the Member for Aylesbury (Sir S. Summers) will be as deeply impressed as I have been over the past two years, by the extraordinary degree to which he has mastered a most intricate subject. I can only call it esoteric. A mediaeval schoolman, or an early father of the Church, would have been delighted at the complexity of this business. It is truly Athanasian.

As Chairman of the main Committee I must pay a deeply felt tribute to my hon. Friend, although I shall not attempt to rival him in his knowledge of the subject. When he referred to what he called"a major digression" I thought that his argument was sound, and I think that his argument was sound in respect of the Civil Contingencies Fund. He did not quote the actual words of the Comptroller and Auditor General, so perhaps I may be permitted to do so: 'expenditure out of the Civil Contingencies Fund is expenditure over which Parliament has surrendered control'. Your Committee therefore consider it to be axiomatic that the Fund should be used as little as possible, especially in the sphere of providing advances for deficiencies which have been incurred on existing services, and furthermore that the limit on the size of the Fund should be as low as possible". Like all the most intricate theological arguments, this esoteric subject really has a very practical bearing on the work of Parliament and on the control by Parliament of expenditure. It raises extensive and far-reaching prospects. For instance, is Parliament prepared to give up the necessary time for consideration of Supplementary Estimates and Appropriation Bills? Only too often—it happened this spring on two or three occasions—the Leader of the House announces business for the following week and says that Supplementary Estimates"will be taken formally".

Ultimately, I persuaded my right hon. Friend the Leader of the House to add the words"if the House agrees", as a sort of sop to our sense of duty. I believe that the work of my hon. Friend the Member for Aylesbury and his subcommittee, and the publicity given to consideration of these complex subjects, will compel Parliament to pay more attention to Supplementary Estimates, Appropriation Bills and the rest.

There is, however, the other side of the coin, which is that the Whips on both sides are averse, it seems to me, to giving up the necessary Parliamentary time to the consideration of supply as an intrinsic subject. I hope that my hon. Friend's speech, and what will be said by the Economic Secretary, will focus attention on a fact that is too often forgotten—that this House exists primarily, if not wholly, to control expenditure and to vote Supply.

There has been a terrible tendency for the House just to become a debating chamber. It is not just a debating chamber. It is primarily a Committee of Ways and Means and a Committee of Supply. I hope that what has been said in this Report and in this debate will focus public attention on the way in which Parliament is tending to neglect its primary duties. It will need considerable pressure by back benchers on the Whips to get the necessary time allotted. One of the most attractive aspects of my hon. Friend's suggestion is that most of the time he asks for would come before Christmas, one of the few times of the year when the Whips are sometimes at a loss to find enough business for Parliament.

3.34 p.m.

Photo of Mr James Boyden Mr James Boyden , Bishop Auckland

Having served under the chairmanship of the hon. Member for Aylesbury (Sir S. Summers) I wish to add my tribute to the way he conducts the subcommittee and gets us to work. The fundamental principle we are discussing is embedded in our Constitution and is one of its glories. Indeed, when we forgot"no taxation without representation" at one time we lost a very great part of the British Empire, with results which, in the long run, turned out to be disastrous.

Be that as it may, it is a pity that more public interest is not shown in this very important subject. The fact that a number of people will get on with this job without very much publicity is welcome. I have appreciated serving under the hon. Member's chairmanship and have enjoyed the work of his sub-committee because, as he rightly says, such work assists not only on forwarding public business, but in educating hon. Members as well.

3.35 p.m.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

My hon. Friend the Member for Aylesbury (Sir S. Summers), in his most able and very valuable speech, described this subject as being one of immense importance and I thoroughly agree. Indeed, I think that the importance of the subject is in inverse ratio to the number of hon. Members who have participated in the debate, although I realise that my hon. Friend the Member for Farnham (Sir G. Nicholson) and the hon. Member for Bishop Auckland (Mr. Boyden) have probably curtailed their remarks because of the time factor.

I wish to be associated with the remarks of hon. Members in paying tribute to my hon. Friend the Member for Aylesbury who will recall that I, too, served as a member of Sub-Committee G of the Estimates Committee. I therefore find myself on both sides of the fence, so to speak. I enjoyed serving under his chairmanship and I know how hard he has worked at this extraordinarily interesting, complicated and difficult subject in order to make himself master of it. Parliament is a richer place for that fact alone.

I hope that I can reassure the three hon. Members at once by saying that the Government are indeed concerned that Parliamentary control of expenditure should be effective. I would go further and, without going as deeply into the history of this as did the hon. Member for Bishop Auckland, or speculating as to the advantages and disadvantages of systems of the past, say that it must be essential for the good of the country, as well as for the good of Parliament, that Parliamentary control of Supply should be fully effective.

My hon. Friend the Member for Aylesbury retailed some of the history of this matter and I pray in aid past events as an indication of the Government's earnest intentions. In 1960, my right hon. Friend, then the Leader of the House and now the First Secretary, made certain proposals. They are recorded in the Official Report in columns 1292 to 1302 of our proceedings on 26th July, 1960. These involved an increase in the size of the Estimates Committee to enable it to set up an additional sub-committee—Sub-Committee G, which we are discussing. The second concerned an enlargement of the scope of the Committee to take into account the spring Supplementary Estimates and the main Estimates as a whole as opposed to the equally important work of examining particular subjects. The third proposal was to give specific opportunites for debating Reports from the Public Accounts Committee and the Estimates Committee. Hence the fact that we are discussing these matters today.

The Estimates Committee took a substantial initiative. It interpreted its terms of reference as requiring it to look at all Supplementary Estimates other than those presented for new services. The Committee demonstrated its anxiety to take the opportunity for increasing the effectiveness of Parliamentary control, about which we have already spoken and about which we are all plainly agreed. The Sixth Report and the Tenth Special Report are earnests of the Committee's views in this connection.

I turn to the next matter to which I wish to refer under the heading of this three-year-old background. My hon. Friend the Member for Aylesbury paid tribute to certain officials who gave evidence particularly before his sub-committee. Like him, I have been responsible for cross-examining these officials. Whether or not I am in order in commenting on this I am not certain. Suffice to have associated myself with my hon. Friend's remarks. The Treasury will and is determined to co-operate in these matters.

Photo of Sir Godfrey Nicholson Sir Godfrey Nicholson , Farnham

As the Chairman of the Estimates Committee, may I take this opportunity of saying how enormously impressed I have been at the co-operation and friendliness of the Treasury?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I am obliged to my hon. Friend for those remarks. It is rare for the Treasury to receive good marks all round.

My hon. Friend the Member for Aylesbury retailed some of the immediate history and I will go over that ground in slightly more detail. On 17th December, 1962, it was found necessary to present to the House a number of Supplementary Estimates for a total sum of £61·9 million, which was subsequently revised to £59·8 million.

The sole reason for that, as was explained to Sub-Committee G, was the expectation that the over-spending in advance of additional Supply being voted by Parliament would be of such magnitude as to make it impossible to accommodate it within the Civil Contingencies Fund at its present level. Since it seemed that this situation might again arise in future—it is always a possibility that the Civil Contingencies Fund may not be as high as in past years—the alternatives seemed to be to increase the size of the Fund or to reconsider the general arrangements regarding the timing of Supplementary Estimates.

Sub-Committee G took it upon itself to undertake the second alternative while, at the same tune, examining the implications for the size of the Fund. In the absence of a change in the arrangements, such as is now proposed and agreed to, about the timing of Supplementary Estimates, it is entirely clear that an increase in the size of the Fund would have been inevitable.

Speaking in parenthesis, the Civil Contingencies Fund is 101 years old. It was established in 1862, and then amounted to £120,000. In 1913, it went up to £300,000; in 1919, to £120 million, and in 1921 it went down to £1½ million, which was the permanent sum. In 1946 there was an increase, over and above all, of £250 million, and that was the subject of a substantial debate, as some hon. Members will remember. In 1950, the Fund was reduced to £126½ million—that is, £125 million plus £1½ million—and in 1955 it was again reduced, this time to its present size of £75 million. I should point out that as Supply has risen by over 60 per cent. in money terms since 1955, it is possible to argue—and I do not make too much of it—that retention at that size is, in effect, a reduction in the real size of the Fund.

That is the Civil Contingencies Fund. It is, in fact, a sort of working balance. It is a kind of petty cash, perhaps on a somewhat large scale—

Photo of Sir Godfrey Nicholson Sir Godfrey Nicholson , Farnham

My hon. Friend has large ideas.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I hope that my hon. Friend does not imply that my ideas are too large. In relation to the total amount of Supply, the present level of the Civil Contingencies Fund is, after all, a fairly minor amount, but that is not a reason for not watching the amount seriously, and looking at it with care. I make the point simply for what it is worth, which is that, in real terms, the value has declined over the last seven years.

My hon. Friend detailed two of the Fund's uses, but I would like to be rather more specific and deal with six. Of those, five are the most important. First, a Department may suffer a shortage of cash during the Vote on Account period between April and July. Alternatively, a Department may need to incur urgent expenditure on a new service for which provision has been made in its original Estimates but for which, under the rules, Vote on Account money may not be used. In either case, an advance can be made from the Fund, which is repaid when the Department's full Supply for the year becomes available at the end of July. Such drawings do not affect the peak demands on the Fund, since they normally occur when few other calls are being made on it.

There is a second category. Departments may need cash because the pro- vision in their original Estimates has proved insufficient, and the money is needed before they can obtain a Supplementary Vote—a pay increase is an obvious and proper example—or money may be needed for new services not provided for in the original Vote, being services of a kind that cannot be deferred until the necessary Supplementary Votes can be taken.

Here, one thinks of disasters, such as the hurricane disaster in Mauritius, to which it is obviously proper that we should contribute immediately. Again, loans sometimes have to be provided at short notice, particularly to Commonwealth countries. All these mainly relate to any ordinary Supplementaries, for which no Consolidated Fund Bill is taken, and the greater part, if not the whole, of the spring Supplementaries. They are repaid after the Consolidated Fund Bill is passed, normally at the end of March.

In the third category advances may be made to provide working cash balances which may be needed by a trade Department, because although its trading turnover for the whole financial year may be favourable, at a particular point of time payments may be very much greater than receipts. I am sure that hon. Members can imagine many examples of this. One original and minor one is in the case of a court which is self-financing through fines but may find itself temporarily short of money.

In the fourth category, some Departments have sub-accountants in many places, for instance the Foreign Office and Service Departments. They must hold an amount of cash in working balances. It is necessary sometimes for advances to Departments to be made from the Fund towards the end of the financial year to make funds available until the Fund can be repaid from the provision of the Vote on Account for the next financial year. It is really a petty cash working capital transaction which I am sure the House will understand.

In the fifth category advances may be made on account of new services where the need for expenditure arises too late for a Supplementary Estimate to be presented within the same financial year. This is a question of timing rather than of a new category of expenditure. An example, perhaps, is the emergency expenditure which resulted from the floods of January, 1953, which will be within the recollection of the House and which was met by advances from the Fund which were repaid from money obtained on the original Estimate for 1953–54.

As for the sixth category, I have referred to the whole of the Fund as petty cash. This is really what one might call petty petty cash. Advances from the Fund in the categories I have mentioned are the main categories, but in addition the Fund is used for a number of miscellaneous services, for instance, for equipage money for an incoming Lord Chancellor, the grant of money towards the cost of judicial robes for High Court judges, certain expenditure in connection with Royal funerals, and other items of that sort.

I elaborate these matters, because I want my hon. Friends to understand particularly that while I and the Government share with them the ideal and the desire to control expenditure I must make the point that there will always be circumstances where there will be unexpected expenditure and there have to be funds available to meet it. This was a point which my hon. Friend was good enough to acknowledge and recognise. Therefore the Fund is operated within the established conventional rules and is always subject to the scrutiny of the Comptroller and Auditor-General and of report to the House.

The House will have seen his remarks to the Estimates Committee from which I would quote two extracts which appear on page 32 of the Sixth Report. The first is: The use of the Fund is limited both by the terms of the law and by the definitions of its proper scope that have been made from time to time in debate in Parliament and in reports of the Public Accounts Committee. Secondly, and this also has a bearing on the points already made: …indeed in all the operations of the Civil Contingencies Fund the criterion for the use of the Fund is not convenience but urgency.

Photo of Sir Godfrey Nicholson Sir Godfrey Nicholson , Farnham

My hon. Friend has told us that for a long time the Fund has been £1½ million. Since then it has fluctuated up and down and is now £75 million. Even allowing for the great fall in the value of money and the astronomic rise in Government expenditure, does my hon. Friend think that the Fund which was adequate at £1½ million 40 to 50 years ago must now be £75 million? Is there not a danger that the Fund is being used as a matter of convenience and not of urgency?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I am sure that my hon. Friend is right to make that point. I will not spend time in discussing the difference between the volume of Supply in 1921 and today. We all know about that. I am satisfied, however, that this Fund is not at present being held at an artificially high level. My hon. Friend will appreciate from what I said earlier that there was a real difficulty here this year. Were it not for these proposals which we are now discussing, the charges and winter estimates on account, there is no doubt that the Fund would have had to be increased. In 1946 the Fund was as high as £250 million. [An Hon. Member:"For special reasons."] I agree, for special reasons. It was substantially reduced in 1950 and it has been substantially reduced again. I think it is now at the bottom.

Photo of Sir Spencer Summers Sir Spencer Summers , Aylesbury

Whilst it may be true that the Fund might have had to be increased, and this step which has been recommended may prevent it, whatever his brief says will my hon. Friend avoid saying that it cannot come down if experience shows that it ought to?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

Certainly I would not say that it should not come down if experience shows that it ought to. Indeed, I think that it is the whole purpose of our discussion to look at the matter seriously and see what the potential is for the future.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

But surely we have the auditor's report. It would be detailed, and surely that would decide whether the Fund should go up or come down? I believe the hon. Gentleman will agree that that is logical.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

It is true that it is always possible to examine the details of the Civil Contingencies Fund. Indeed, I have in my hand a statement prepared on 24th January, under the name of my hon. Friend the Financial Secretary, which describes in detail precisely what has happened to the Fund and the uses that have been made of it over the past year. It is true to say that the use of the Fund is a matter which is always before Parliament and can easily be seen.

There are four key points in relation to the Fund which I must make. The first is that no final charge can rest on the Fund, and Parliament is always asked to vote any temporary financing at an early date. Secondly, where provision for existing services is likely to be substantially overspent the House is informed by the presentation of special Supplementary Estimates. This is a method which has proved useful to the House in the past. Thirdly, recourse to the Fund for new services is almost invariably made only after the House has been informed. If there are difficulties in informing the House it is because of the House's own timetable. After all, we are in recess for some five months of the year, and this inevitably makes for certain difficulties. Fourthly, the accounts of the Fund are presented annually to Parliament after examination by the Comptroller and Auditor General and his report upon them as he thinks necessary.

But—and I think this is the point which bothers my hon. Friends—the Government possess the ultimate power to use the Fund in any way in which they are prepared to defend it. I think this is the difficulty that hon. Members may have in mind. I cannot help feeling that this power is fundamental to the existence of the Fund, just as in private business the board of directors must delegate authority to the managing director to use such moneys as they may think appropriate for him to have for such essential purposes as may arise from day to day for the ordinary running of the business.

I recognise and applaud the Estimates Committee's genuine concern at the extent to which it has become the practice to incur additional expenditure in advance of the money being voted by Parliament. Indeed, I applaud the way in which the Estimates Committee is constantly on the look-out for ways of increasing the effectiveness of Parliamentary control of expenditure. It has taken the view that it would be salutary for Departments to have to come with their demands for additional Supply to meet expected overspending, which were either substantial in themselves or sub- stantial in relation to the existing provision at a tune when the Estimates Committee could examine them and report upon them. The new arrangements for Supplementary Estimates on account in the winter seem to achieve this objective to a considerable and desirable degree.

To sum up on the subject of this Fund, that there needs to be a fund, that a fund is essential there can be no doubt whatsoever—

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

—and I am glad to see that I take my hon. Friend the Member for Aylesbury with me. The question is, always has been, and no doubt always will be: what will the proper size of the Fund be? I believe we have it about right at the present time.

Before I come finally to the proposals for implementing the recommendations of the Estimates Committee I want to try to answer one of the specific questions that I was asked by my hon. Friend the Member for Aylesbury. He said, rightly, that this was a most complex subject. He described a part of the process of Supply. The memorandum which I have in my hand sets out 22 stages which ordinarily form the normal annual cycle of Parliamentary Supply business. They are certainly involved. My hon. Friend asked me particularly about No. 22, the last stage of all, the Consolidated Fund (Appropriation) Bill which is brought in and passed through all stages in both Houses between the end of July and early August.

My hon. Friend asked me why this stage covers, in brief, not only current but also past expenditure. The reason is that we are, in one legislative act at the end of the Session, appropriating all moneys voted by Parliament in the Session even though, inevitably, they may extend over two financial years. He asked whether it would be possible to have a first Appropriation Bill in the year. This is a suggestion which we should like to consider. Indeed, I go further and undertake to see that all the points made during the debate are brought to the attention of my right hon. Friend the Chancellor of the Exchequer. I hope that that goes further to implement what I said when I began.

I come now to the proposals for implementing the Estimates Committee's recommendation. We have entirely accepted the recommendation of Sub-Committee G, and so the Departments and the Treasury will look at prospective out-turns on Votes in mid-October. We shall then make a judgment as to the presentation of certain Supplementary Estimates on account. We shall see that the Estimates Committee has confidential proof copies to enable it to undertake its examination and report to the House before the Supplementary Estimates are taken in Committee of Supply. On this occasion, as in the past, we shall give the Estimates Committee any help we can in undertaking that examination.

This change is to be introduced in the coming winter. I should make the point at once—my hon. Friends will, I know, understand—that the change must be regarded as experimental. We may well need to review the suggestions which have been made in the light of experience. There are three other relevant factors. First, the House must understand that this will inevitably involve extra time. My hon. Friend the member for Farnham has reminded us of this. As he said, there are peculiar difficulties in preparing Supplementary Estimates for potential deficiencies on existing provisions only half way through the financial year. Circumstances may change during the next six months. Wage rates and price levels may well have an unpredictable effect in the remaining six months. The time of submission of bills to Departments for payment is always difficult to forecast.

These are the practical difficulties, and I know that the Estimates Committee will very fairly have them in mind. They should not be underestimated. This is why we say"on account". It is a matter of fact, not a term of art. There are some kinds of expenditure which are very difficult to estimate—for instance, production services, agricultural support, agricultural services, for example compensation for unexpected outbreaks of foot and mouth disease, and so on, and other matters of this kind which I have not time to particularise.

I hope that I have said enough to make clear that Government are as anxious as the Estimates Committee to see that Supply expenditure is properly controlled. They are anxious to co-operate wherever possible with the Estimates Committee in looking into the matter, formulating recommendations and acting upon them. Last, but by no means least important, we are grateful for the assistance which we have had from the Estimates Committee, and we shall do our best to see that the assistance we have been able to give in the past is repeated in the future.

Question put and agreed to.

Resolved,That this House takes note of the Sixth Report and of the Tenth Special Report from the Estimates Committee relating to the Timing of the Presentation of Supplementary Estimates.