§ 3.33 p.m.
§ Sir Godfrey Nicholson (Farnham)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House takes note of the Sixth Report from the Select Committee on Estimates in the Session of Parliament 1957–58 and of the Seventh Special Report from the Select Committee on Estimates in the Session of Parliament 1958–59 relating to Treasury Control of Expenditure and of the Report on the Control of Public Expenditure (Command Paper No. 1432).The Amendment I have moved is, of course, a peg on which to hang a debate on the whole subject of the control of public expenditure, particularly through the Treasury. Largely due to the efforts of my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), as I think the House knows, three days are allotted every Session between the Public Accounts Committee and the Estimates Committee, and this is one of them. Today, the choice of subject falls to the Estimates Committee.
I want to say straight away that I do not make the slightest apology for the choice of subject. Debate on it has been long overdue. This is not just a debate for the sake of airing the subject, but is a debate for a purpose, which is to elicit from the Government answers to the many questions raised by the Plowden Committee. I see my task as being to paint the general picture, to state the problems and to pose some of the questions. First, a few words about Treasury control as a whole.
It is a vast and complex subject, affecting almost every aspect of our political and economic life. I wonder whether every hon. Member, still less everybody 209 outside the House, realises what it comprises from the point of view of sheer size. Few people realise that Supply expenditure alone accounts for 22 per cent. of the gross national product. It has grown from 4 per cent. in 1870, to 6 per cent. in 1910, to 12 per cent. in 1930, and now to 22 per cent.
If we take the grand total of all Government expenditure, including the National Insurance Fund, Government expenditure above and below the line, the capital expenditure of the nationalised industries, and that of local authorities, this comes to no less than 42 per cent. of the total gross national product, which means that three-sevenths of our economy is, or could be, or should be, controlled or controllable by the Government. The total amounts to £10,000 million. A quarter of the total labour force is employed in the public sector.
All this means that the Government have a most powerful weapon at their disposal and one that must be used wisely. It is an edged tool that must be handled carefully, or it will cut the user. One of the lessons that I intend to bring out is that this tool must be used as a stabiliser and as an encouragement for growth, rather than as a combination of the brake and accelerator. Obviously, Treasury control is the keystone of the administration. Equally, it is the chief cornerstone of our economy.
I hope that I do not strain the credulity of the House—it certainly surprised me—but, believe it or not, as far as I can ascertain, this is the first Parliamentary debate which has been devoted to the subject. Incidentally, there is also very little literature about it. The rough truth is that the three documents which the House is asked to consider are a compendium of all that has recently been published, in so far as it is available to the public or to Parliament.
They are all important, but the third document, the Plowden Report, is by far the most important. The Estimates Committee's Report, in spite of the fact that it is three or four years out of date, is important largely because the volume contains such a mass of general information on the whole subject. The Observations of the Treasury in the second document are, of course, also important in 210 their own way, but the Plowden Committee's Report is the key to the debate because, in many ways, it is a revolutionary document. It poses questions that demand answers, and I hope that we shall have some of them from the Government today.
The House will see that I have undertaken a formidable task. I am daunted by the thought that Mr. Gladstone, according to Lord Morley, often used to say that a great subject should be treated copiously. That seems to be one of the most devastating remarks of that copious old gentleman. Luckily for the House, I am not Mr. Gladstone, and I trust that I shall be able to compress my remarks into a reasonable space of time. Heaven send that I succeed! I have been long enough in the House, and have listened to so many long speeches, that I tremble to think that I might inflict one myself on this occasion, If I do not interest the House it will be my fault, and not that of the subject.
Before I turn to the documents themselves, I want to make one thing crystal clear. I am not out to attack the Treasury, or to put Treasury officials in the dock. If anybody is in the dock, it is their lords and masters—in other words, successive Governments and Parliament itself. I do not attack the Treasury because, if things are wrong, if methods and practices are to some extent out of date, it is not primarily the fault of the Treasury but of those who should have issued the necessary directives. I say that the Treasury has done a great deal to keep pace with changing circumstances. It is certainly not static. It is always changing methods and ideas. It is not necessarily or primarily the fault of the Treasury that it is somewhat in a groove now.
Nor am I criticising or attacking Treasury officials. For ten years I have been a member of the Estimates Committee as Chairman of Sub-Committee D. I say with complete sincerity that I have invariably found Treasury officials and senior civil servants of Departments to be men of the utmost ability, of great breadth and integrity of outlook, and of sheer disinterested devotion to the public service and to the national interest. Man for man, I do not think that any Government in the 211 world is better served. I should like to say, too, that when I have been privileged, as I have in many cases, to earn their friendship, I have found them to be men of great kindness and courtesy, of whose friendship one could be proud.
I now turn to the documents themselves, and first to the Report of the Estimates Committee. As I have said, it is somewhat out of date, the product of an inquiry which took place in the first five months of 1958. I shall not spend too much time on it, for events in general and the Plowden Report in particular have largely overtaken its relevance. The Report is long and not easy to read, and it is full of comments and recommendations which I propose to leave severely alone. I intend, instead, to say something about the three principal motifs—using the word in the musical sense—or themes, which underlay our whole approach.
The key words are "project" and "piecemeal". Those two words are the two sides of the same medal. "Project" is a term of art used in the Treasury to mean fresh items of expenditure, or demands for fresh services. Our chief criticism of Treasury practice, to sum it up briefly, is that it is "project-minded", by which I mean that expenditure tends to be looked at as a series of projects, or piecemeal, in separate and isolated chunks, so to speak.
This, in our view, applies both within a Department, when projects fall to be considered, and as between Department and Department. The projects appear to be assessed and criticised by the Treasury in comparative isolation, and not enough attempt appears to be made to weigh the expenditure of one Department against another in the overall context of the pattern of total Government expenditure, still less in the pattern of the national economy as a whole.
Another way of putting it would be to say that the question of balance, whether between items in one Department or between Department and Department, is, if not ignored, at any rate not receiving—or was not receiving at the time of our Report—the attention that was its due. I used the word "piecemeal" as a convenient sort of shorthand expression for that idea. It is significant that the Plowden Committee dealt at some length with this theme, 212 and used the same word, "piecemeal". In its Observations, the Treasury did not agree with our view at all.
From this basic theme there stem three main lines of criticism which I shall briefly summarise. First, we felt, and recommended, that more use should be made in all fields of what are called "forward looks". This is another term of art which came into use in the Treasury at that time. As a matter of fact, I think the truth is that we in the Committee invented it and the Treasury adopted it. It came to meanforecasts for three years ahead prepared each summer, on the basis of current policy, of the total and major features of defence expenditure".Here again, the Plowden Committee took the same line, although it thought in terms of five years rather than of three. In its Observations, although expressing general agreement, the Treasury did so in a way which made us wonder whether it had really grasped what we were driving at, or understood how "forward looks" were meant to be used.
Secondly, we felt most stronglythat there is little in the system itself to ensure that established policies are sufficiently reviewed…Once a policy has graduated, so to speak, in other words, has been scrutinised and passed, it tends to have a fairly good expectation of life and to go unchallenged for some length of time. Of course, in its Observations the Treasury denied that flatly, but I interpret the Plowden Report, both for what it said and for what it did not say, as reaching much the same conclusion as we did.
Here, I want to interpolate a view which is not specifically expressed in our Report, but which I personally hold very strongly. It is based upon ten years of membership of the Estimates Committee. In the course of almost every inquiry which we undertook we came across cases of continuing expenditure, sometimes trivial, sometimes very large indeed, which should have attracted the attention of the Treasury, but, somehow or other, failed to do so. Similarly, there were frequent examples of methods or practices which were wasteful or less than efficient, whereas someone, presumably the Treasury, could or should 213 have intervened in order to secure greater efficiency, which means greater value for the money voted. After all, true economy is not so much spending less money as getting full value for what is spent. I could produce literally dozens of examples of this sort of thing, and I shall be very glad to produce such a list if the Treasury Bench wants it.
The reason why the Treasury has not intervened in these cases is obvious. It did not have the locus standi—no right of intervention. Technically, it was in the clear, for these cases were actually outside its statutory or legal powers of intervention. Treasury thought appears to run on these lines—"Expenditure is either subject to scrutiny and inquiry and control, or it is the sole business of the Department itself". The argument runs that if it is subject to control, well and good; but, if it is not, it only undermines the Department's own sense of responsibility if the Treasury intervenes. That reasoning is perfectly sound as far as it goes, but, surely the basic service which the Treasury and only the Treasury, can render is that of the informed lay critic, the friendly intelligent criticism of people who may not have any legal right of access, but whose advice is of value, and who should give it.
In the course of our inquiries, the Treasury constantly gave evidence of placing a high value on the rôle of the lay critic, but in our view it consistently underplays its hand. I am not asking for the exercise of more control—far from it—but I am asking for the continuous exercise of friendly influence and advice. I am also asking that the moral of it all should be recognised. It is that one should constantly question one's basic assumptions. I have found that the more one experiences any side of life the more one realises that most mistakes and errors occur from people taking basic assumptions for granted and not constantly criticising them. If there were this change of attitude much public money would be saved, and economy, that is, efficiency, would be promoted. Incidentally, the Estimates Committee would find itself almost unemployed, because all its reports would be negative, and that would be a very good thing!
After that digression, I come to our third main line of criticism. This was of the tendency to underestimate the 214 cost of major policies and projects. We expressed what we called our "grave disquiet and anxiety". The facts are clear. There is a good deal of underestimating, particularly in research and development projects. This is a thorny problem which cannot be fully developed or investigated without access to Cabinet papers, so I will leave it at that. The Plowden Committee published no comments, presumably because it had already reported confidentially to the Cabinet. The Treasury admitted the existence of the problem, but said that changes in internal technique would not affect it very much. Of course, that was right, so that has to be left there.
I have now finished dealing with our Report and I will quickly summarise what I have said. Our general criticism is covered by the word piecemeal ". Our three main specific criticisms related to "forward looks", reviews of continuing expenditure, and the tendency to underestimate future commitments. I leave on one side all our other comments and recommendations, except the last, which is the mast crucial, for it gave rise to the Plowden Committee and its Report.
Naturally, we were sensible and modest enough not to think that we had said the last word, and we recommended a further inquiry,at once more detailed and more expert.We suggested a small independent committee, "independent" meaning that we did not want an internal, Departmental inquiry. We thought that it should have access to Cabinet papers so that it could see the broader picture.
That, in broad outline, is our Report. Having made it, there was nothing to do except await the Treasury's reply, which is technically called its Observations. After a lengthy gestation, namely, ten months, it came. It was a disappointing document. I do not think that it matched the standard which the Treasury should set itself. Most of our recommendations and comments were rebutted and rejected. We could not grumble at that. We stuck our necks out. We risked being snubbed, and we were snubbed, and that was fair enough. But what disappointed and worried us was that we could detect that the Treasury had given expression to a slight undertone of resentment at our intrusion as lay critics into an expert field. This was 215 all the more surprising, and, indeed, distressing, because of the friendly atmosphere and relationship that had existed throughout the inquiry.
If anything that we said or wrote caused this change of atmosphere, I am sorry, and on behalf of the Committee I express our regrets. [HON. MEMBERS: "Why?"] Because I should hate to think that there was built-in antagonism between the senior ranks of the Civil Service and the House of Commons. It would be detrimental to the national interest, and it would be unjustified. I read the Treasury Observations as showing a feeling of resentment, and I again say that if it was our fault I apologise. I do not think that it was, but if it was, I apologise.
Treasury officials and Members of Parliament must not regard themselves as opponents and natural enemies. We are all allies in the same battle. Parliament must be supreme, but we are allies in the same great cause. I hope that the Treasury and senior ranks of the Civil Service will take it from me, as Chairman of the Estimates Committee, that we want to be regarded as friends and not as opponents.
I think that Members of Parliament must recognise that the chief responsibility rests with them—in our case with the Estimates Committee. We must constantly be on our guard. I hope that, in return, the Treasury and senior officials will lean over backwards to lend a sympathetic ear to our recommendations. This has not always happened in the past. It would certainly help the Estimates Committee to do more useful work.
The truth is that the Estimates Committee suffers from comparison with the Public Accounts Committee. The job of the Public Accounts Committee is to distribute blame when things have gone wrong, whereas, in my view, the Estimates Committee should not always be regarded as being bound to attack and criticise. Our recommendations should not always be looked at as automatically hostile. I believe that our most useful rôle is, or should be, to play the part of lay critics, not as enemies, but as friends, working hand in hand with Departments.
Our terms of reference should be extended. We should work in a context 216 both wider and looser. I would give a great deal to break down the feeling, which, I am afraid, sometimes exists, that Members of Parliament should always be on the attack, and civil servants always on the defensive. I hope that what I have said, and said with sincerity, will be listened to in the right quarters.
I must now get back to our Report. It was meant to help the Treasury. Of course, we meant to stick in the spur, but we did not mean to wound. Perhaps we forgot that the horse was a highmettled thoroughbred and not a heavyweight hunter. Anyhow, the horse reacted rather more vigorously than we expected, but luckily, by that time, we had dismounted.
I turn now to the Observations, in other words, to the Treasury's reply. I have said that our major comments and recommendations were rebutted and rejected, and I leave it there. Our final recommendation, that of the need for another inquiry, received qualified acceptance, qualified in the sense that we were promised only an internal inquiry, although there were to be some outside advisers in the wings, so to speak. However, in the event, Lord Plowden was appointed Chairman and there were three independent lay members, Sir Jeremy Raisman, Mr. J. E. Wall, and Sir Sam Brown, the other members being unidentified civil servants. We got what we wanted. We were satisfied, and duly grateful.
The Plowden Report, which came out last July, is a remarkable document. It is balanced, authoritative, and most significant. Incidentally, it is very well written and easy to read. I think that all members of the Estimates Committee will agree with almost everything in it, for the simple reason that so much of it seems to be drawn—incidentally, without any acknowledgment—straight from our Report. I am afraid that human nature will out, and I am sorry that some acknowledgment was not made to its sources. Be that as it may, it is a striking fact that the Plowden Committee endorsed our general concern for a reconstruction of the system of the control of expenditure, and came to similar conclusions about current weaknesses.
On the major matters, the Plowden Committee seems to have cribbed all our best points.It made much the same 217 recommendations and commented as we did on the piecemeal approach, on the review of continuing policies, on "forward looks", on programme control, on Departmental methods and management, on delegation, and so on. The Committee trod delicately and hesitated to criticise the Treasury. Indeed, it could not have done otherwise when one remembers that although only the four lay members signed the Report it is clearly stated in the introduction that their colleagues did not dissent, and they were all officials. They did not criticise, but the fact that they called attention to certain matters and recommended that certain things should be done implied that in their view insufficient attention was being paid to these matters at the time when they conducted their inquiries.
I have a schedule which lists in parallel columns the conclusions and comments of the three documents we are considering. It shows how closely the reasoning of the two Committees converged. Perhaps the Estimates Committee may claim some reflected glory, for the Plowden Committee was its child. The Plowden Report is something more than a Report upon the internal machinery of government, important though that aspect is. If what I call the "Plowden approach" is accepted, the effect on economic thinking will be revolutionary. We are asked to think of all expenditure by the State from a new angle, as a whole, and over a period.
It is with this new angle of approach that I propose to deal now, leaving alone what I call internal Treasury points. I must make several quotations because this will be the quickest way of making my meaning clear. I apologise to the House for doing this, because nothing is more deadly than a long string of quotations in a speech, but I think that this will save time in the end.
I start with what I call the diagnosis. Paragraph 3 of the Plowden Report says:In our judgment, the crucial questions are not those of detail: the precise nature of the organisation and chains of command within and between Departments, important though these are. The real problems are wider: what the machine of Government is trying to do, what its attitudes are…218 This is what Plowden calls the "kernel" of the matter.
It will be seen that the Committee was setting its sights high. It said that the real problems were the fundamental ones and not the internal ones. It defined the central problem as thatof how to bring the growth"—mark the word "growth"—of public expenditure under better control, and how to contain it within such limits as the Government may think desirable.That is how it envisages the task of the Government.
This is how it thinks it should be carried out. The Committee begins with a general statement thatPublic expenditure decisions, whether they be in defence or education or overseas aid or agriculture or pensions or anything else, should never be taken without consideration of (a) what the country can afford over a period of years having regard to prospective resources and (b) the relative importance of one kind of expenditure against another. This may appear to be self-evident, but in administrative (and, we would hazard the opinion, in political) terms, it is not easy to carry out.That is the Committee's picture of the ideal to be arrived at.
Now let us take the Committee's description of what happens now. It is disturbing and to some extent startling. It says:In the traditional system in this country, as it developed in the nineteenth century and has continued through the lifetime of successive Governments to the present day, the tendency is for expenditure decisions to be taken piecemeal.Once again we meet with our old friend, the word "piecemeal". At the end of the same paragraph the Committee says:But in general over the whole of public expenditure throughout. the year the system is one of piecemeal decisions.I need not stress again the significance of the word "piecemeal". I have already said that in one word it summarised our criticisms in the Estimates Report. I think that it does the same for the Plowden Report.
Lord Plowden and his colleagues go on, rather to my surprise, to lay great weight on the change in the climate of both public and Parliamentary opinion. In the old days the pressure was all for economy—for a reduction in public spending. Today, the Committee says, it is the other way round. After referring 219 to the Keynesian revolution, and to the new conception of the rôle of the Budget, the Committee concludes by saying:the traditional system of decision-making can no longer be expected to be effective in containing the growth of expenditure within whatever limit the Government have set. If, as must be expected, these changes are permanent, the system needs to be reconstructed accordingly.In plain English, the present system of decision-making within the Treasury is roundly condemned. Surely, these are very weighty words. I might almost call them shattering. My first question to the Government is: do they accept that analysis, and agree with what I have just read?
Lord Plowden and his colleagues demand a "reconstruction" of the system of decision-making. I now come to the nub of the Report—the sort of reconstruction they recommend. They say that theyfavour a reconstruction based on four elements.The word "elements" is a rather curious one to use like that, but there it is. With two of those elements I am not concerned. One is described asImprovements…in the tools for measuring and handling public expenditure problemsand the other asmore effective machinery for the taking of collective decisions and the bearing of collective responsibility by Ministers on matters of public expenditure.The former—improvements in the tools; in other words, the Estimates and things like that—is already under way. The latter, dealing with the question of more effective machinery—and that means in the Cabinet—is primarily a matter for the Government, although the House of Commons has the right and duty to criticise the Government when things go wrong. I shall not deal with either of those elements; they are not precise enough, nor are they apposite today.
But I am very much concerned with the other two elements. The first is an extension of the "forward look" idea, and is described as follows:Regular surveys should be made of public expenditure as a whole, over a period of years ahead, and in relation to prospective resources; decisions involving substantial future expenditure should be taken in the light of these surveys.220 This element is elaborated in succeeding paragraphs. I again direct the attention of the House to the fact that these innocuous—indeed, platitudinous—words are very significant, because they imply that these things are not being done at present.
I have said enough about the need to fit all expenditure into the total pattern, and I now go on to what the Report says about long-term surveys. In a sense, they are obvious truisms, but they are none the less true. The point I wish to make is that the implication is that "long-term surveys" were not being made at the time when the inquiry took place, and that the truth of these truisms was being neglected. Otherwise, the Committee would not have made such a song and dance about it. Again, I look forward to what the Government will have to say about the whole "forward look" approach. I allow myself to hope that they will have good progress to report. At any rate, I trust that they will.
The second so-called "element" is made to carry conclusions that may come as something of a shock. It is stated again in terms of innocuous platitudes. The Report says:There should be the greatest practicable stability of decisions on public expenditure when taken, so that long-term economy and efficiency throughout the public sector have the best possible opportunity to develop.What could sound more harmless, and obvious, and innocent? But listen to this! This is where the stab comes:The experience of recent years, both in the Treasury and in the Departments, and in the wide circles of local government and nationalised industry outside them, is that short-term 'economy campaigns' and stop-and-go' are damaging to the real effectiveness of control of public expenditure.And this:The emphasis here is on stability of expenditure policy. In the past, however, successive Governments have sought to vary public expenditure as a means of maintaining the short-term stability of the national economy. It must be accepted that some changes in plans for Government expenditure policy are inevitable. The Government are required by public opinion to seek to manage the national economy with only small variations in the level of employment. It is natural, therefore, to explore the possibilities of using variations in public expenditure to help in this task. Experience shows, however, that Government current expenditure cannot be varied effectively for this purpose. Attempts, at moments of inflationary pressure, 221 to impose short-term 'economies' (or to make increases at moments when 'reflation' is called for) are rarely successful and sometimes damaging, and we think that these attempts should he avoided.I call that very strong stuff. It hits uncomfortably near home. I should not be surprised if I detected some embarrassment on the Treasury Bench.
To me, that last paragraph is rather shattering. It may be just my ignorance, but I have always thought that there were two main fiscal ways in which the State could directly intervene in order to influence purchasing power and consumption, so as to control inflation. The first was by variations in taxation—the siphoning off of purchasing power, or its release. The second, I had always assumed, was by way of variations in expenditure, whether above or below the line. This is much less effective, but I had always assumed that it was definitely a useful weapon which it was legitimate to employ. Now that second weapon is apparently struck from our hands. That is what I meant when I called the Plowden Report revolutionary.
I do not want to underline the obvious, but three things need saying. First, this is a Report signed by four very eminent men from outside the Civil Service. It is implied in the introduction that their Civil Service colleagues, most of whom I believe are Treasury officials, did not dissent from it. So the Report must carry great weight. I do not think that anybody will contradict that statement.
Secondly, we do not know the view of the Government. History and the Library of the House of Commons are littered with the Reports of Committees, Royal Commissions, and so on, which have been made and ignored. Apparently, there has never been any occasion on which the Government of the day have been called on, or have been able, to sum up their total conclusions with regard to the recommendations of these Committees or Commissions. Do not let that happen in this case.
I say with all seriousness that I consider the Plowden Report a milestone in our economic story; and I think that this House would be failing gravely in its duty if it allowed the Government to escape without reporting to the House exactly how far they accept these recommendations, comments and analyses of 222 the Plowden Committee and how far they mean to carry out the recommendations and advice of the Committee. This House is entitled to a full and considered statement of Government intentions. I ask for it today, and I leave it at that.
§ Sir James Duncan (South Angus)
On a point of order, Mr. Speaker. I wish to draw your attention to the fact that although I was sitting just behind my hon. Friend the Member for Farnham (Sir G. Nicholson), and had my ear to the microphone, I found it extremely difficult to hear him. This question of audibility was raised before Christmas. I do not ask for an answer now, but perhaps you would be good enough to look into the question again.
§ Mr. Speaker
If I may, I will take the opportunity of saying that all right hon. and hon. Members should remember that the mechanics of amplification are so devised that when one complies with the rules of the House, and addresses one's observations to the Chair, the amplifier in that line nearest to the hon. Member speaking is motivated or activated. But if an hon. Member addresses his boots, or somebody in the opposite direction, the mechanics of the system break down. I shall he grateful if hon. Members will assist by bearing that point in mind.
§ 4.10 p.m.
§ The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke)
The House as a whole is indebted to my hon. Friend the Member for Farnham (Sir G. Nicholson) for the deep interest which he has taken in this subject over a long period and for the very interesting and comprehensive speech with which he has opened the debate today.
This is one of the most important subjects which the House of Commons could discuss. There are developments afoot. They may, when completed, seem to historians to be revolutionary. In any event, it is right that Parliament should take a hand in the shaping of them. Obviously, we all have a common interest As taxpayers, we do not want to see any money wasted. As Members of Parliament, we must want to see policies decided upon by Parliament and 223 then carried out with as little misdirection and effort and unnecessary spending as possible. Further, as ordinary citizens, we want to see the resources of the country in terms of manpower and materials used well, sensibly and productively.
Yet there is also a formidable air of mystery about it all, partly, I think, because the Treasury has a formidable reputation and is imagined to move in a mysterious way and sometimes to pass beyond human ken; and partly for the quite simple reason that the whole task of government is so vast nowadays and the figures so big that they are almost ungraspable. I think that that may contribute to a feeling, if it exists, that Parliament is at war with Government Departments over all this. That is wrong, as my hon. Friend the Member for Farnham most generously agreed.
The Plowden Committee refers to, "joint working in a common enterprise". The Committee was speaking of the relations between the Treasury and the spending Departments, which are so often thought of as antagonistic. But I am sure that joint working in a common enterprise ought to typify the relationship between Parliament and Whitehall too, in this business of the control of finance.
There is one thing of which I am quite certain. The major pressures for more spending do not generally spring from within Government Departments, as some people often make out. Not every Department is, of course, 100 per cent. efficient in everything which it does. Nor, may I mention in passing, is every private business. But Government Departments are not intrinsically and in themselves profligate. The main pressures for higher public spending on this, that, or the other come from the public, the Press and Parliament.
If one requires to test that one need only consult any newspaper which publishes leaders every few months saying that the Government—any Government of any party, whichever Government may be in office—must spend less overall. For every economy leader such as that one will find the same paper publishes half-a-dozen leaders criticising the Government—any Government—for 224 not spending more on this, that or the other. When the pollsters go round gathering public opinion, and asking people whether they would like more roads, more schools, more hospitals and more of everything, I fancy that it would make much better sense if one more question were asked, "Would you like more taxes?"
The great need is for more public understanding of these problems. That is the first reason why we owe a great debt to the Estimates Committee of 1957–58 for its Report on Treasury control. I wish to pay that tribute here in the presence of my hon. Friend the Member for Farnham. I congratulate him on having succeeded in these last few weeks to the chairmanship of the main Estimates Committee. If at any time I can assist the Committee in any of its work, my hon. Friend has only to call upon me.
It was the Report of the Estimates Committee which led directly to the setting up of the Plowden Committee. It may not have happened precisely on the lines recommended by the Estimates Committee, but the Plowden Committee was, as things turned out, happily designed to serve the purpose. The Plowden Report, which was published in a White Paper last July, is an independent Report on the efficiency with which the machinery of Government functions regarding the control of finance. I agree with my hon. Friend that the Report is the most important of the three documents before the House today. The others are becoming rather ancient history now, except for their significance as background to Plowden. I do not propose, therefore, to go over again the points on which the Treasury commented in its Observations.
I am sorry if my hon. Friend was at all surprised by the tone of the comments. I was not myself then in the Treasury, but I have been told that the Treasury itself was a little surprised at some of the conclusions drawn by the Estimates Committee from the evidence before it. It may have been that the Treasury Observations reflected that. I do not know. All that is now past. What really matters is that it was the Estimates Committee, as my hon. Friend rightly claimed, which really initiated this whole body of work.
225 My hon. Friend asked about the attitude of the Government to the Plowden Report. I can tell him that we accept the Plowden Report. We not only accept it, but welcome it, and we are already acting on it, as I shall show. The main point which both the Estimates Committee and the Plowden Committee made, and which was properly stressed in his speech by my hon. Friend, is the importance of forward looks and long-term programming of expenditure over a number of years. I have just returned to the Treasury after an absence of five years and the principal difference I have so far noticed is the great development, during hat interval, of this long-term planning. It had, of course, already started well before 1957–58. But it has ben tremendously extended, and now it is recognised as a much more powerful and effective means of securing real and large-scale economies in public spending than any short-term drive to cut the following year's Estimates can be.
Policies involving long-term commitments cannot easily be escaped from once they have been started. That is why it is so outstandingly important to look right ahead from the beginning and to weigh them well before taking the initial decision.
I wonder how many members of the Estimates Committee or of the Public Accounts Committee have ever read that fascinating book "The Dialogue of the Exchequer"—"Dialogus de Scaccario". It is in Latin, but conveniently there is an English translation, of which I have for greater accuracy obtained a copy. It was written in the year 1173 by Richard, son of Nigel, who held in plurality the offices of Treasurer of England and Bishop of London. The Treasury, as the House sees, has a very long history as well as a very long memory.
In this book, besides detailed historical information like the exact order of the seating of different officials round the Exchequer Board 800 years ago, one finds oneself taken right to the heart of sound financial control. If I may have your permission to quote briefly from it, Mr. Speaker, "Non enim in ratiociniis sed in multiplicibus judiciis excellens scaccarii scientia consistit." Broadly in 226 terpreted, that means, "The greater science of the Exchequer consists not of accounts but of decisions."
We jump the gap of eight centuries and come straight to the central recommendation of the Plowden ReportDecisions involving substantial future expenditure should always be taken in the light of surveys of public expenditure as a whole, over a period of years, and in relation to the prospective resources.
§ Mr. W. A. Wilkins (Bristol, South)
That is planning—what hon. Members opposite have always turned down.
§ Mr. Brooke
What the House of Commons does is to vote Supply expenditure each year in Committee of Supply. I do not think that anyone would question this. There must be a year-by-year control, although speeches on Supply Days seldom confine themselves just to one year's affairs. They normally dwell on policies and stretch over more years than one. It is not only Supply expenditure for a particular year which matters. The continuing policies may be much more important than the financial impact of those policies on just the one year alone.
The original Estimates voted by Parliament for the current year 1961–2 were £5,187 million, but, as my hon. Friend has said, this is only about half the total of public expenditure in the context of which Supply expenditure has to be considered. The Plowden Report says, perfectly correctly, that there is so much financial interlocking through the whole of the public sector that all the expenditure must be analysed together. Total public expenditure in that sense is over £10,000 million a year, equal to about three-sevenths of the gross national product.
Part of public expenditure consists of payments to private individuals, like insurance benefits and many other things we can think of, but it all has to be financed as public expenditure. It also has an impact, direct or indirect, on the private sector of the economy. It is the private sector from which must come the power, the drive and "know-how" to make, among other things, the exports without which, as a nation, we cannot live. Nor is it just a matter of financing the three-sevenths spent by the public authorities. How we spend it and the priorities in the spending of it are bound 227 to have an immense effect on the national economy as a whole.
The priorities are all-important. That is one thing, but another thing is that the total of all the multitudinous different items which make up public expenditure must not be too big in relation to our total national resources. I believe in plans for steady long-term growth. That ought to be the target for us all, but if we let expenditure outrun the growth of our resources we shall damage our power to compete in overseas trade, and that means we shall not get the continuing growth we require. To keep public expenditure under control it is not enough to look at the total only. If we are to do the job of control we must look at the bits and pieces which make up the total.
People who say that the total is too high must take the trouble, must have the courage, to point to the specific field or fields in which they would find the savings. Most of the people I discuss this with say that there is no difficulty about that. "If only the Government would sack all the unnecessary civil servants", they say, "it would be easy to slash a lot off Income Tax." The truth is that out of every £1 we pay in taxes the pay of all the non-industrial civil servants who work in offices takes only 1s. 4d.
There is no easy way to major savings. The Civil Service is organised at least as efficiently as the office work of the ordinary large-scale business concern. That is borne out by the Plowden Report, which very truthfully said that there are subjects in which the Civil Service can learn from the private sector and vice versa. It would be a good thing, the Committee went on, both for the private and for the public sector if more were known publicly of the performance and standards in Government Departments.
During the last two or three months we have been securing savings of several million pounds a year by a sheer drive for minor economies, but it is a fallacy to think that one can achieve major economies except by taking decisions to make real changes of policy. I know there are people who will challenge that. They will say that it must be easy to make a 3 per cent. all-round saving, and 3 per cent. on annual Estimates of over £5,000 million would give a re 228 duction of £150 million. People who talk like that have not really thought out how large a percentage of total Government expenditure is completely committed and, therefore, is not capable of major reduction from year to year.
The whole field of pensions and National Insurance, for instance, is almost wholly dependent on rates of benefit and rules of entitlement, any substantial alteration of which is obviously a major act of policy. National Assistance is the same; so are the housing subsidies, for all but the new ones are based on forty-year or sixty-year commitments. So is all but a small part of our expenditure on agricultural support, because of past pledges. There is the general grant to local authorities, which, for 1962–63, was fixed a year ago at £530 million and cannot be reduced. It is more likely to have to be increased to take account of the big rise in teachers' salaries.
§ Mr. Douglas Jay (Battersea, North)
I am glad that the right hon. Gentleman has learned all this from experience, but does he recall that when the Conservative Party was in opposition hon. Members opposite were constantly arguing that economies of hundreds of millions of pounds could be made by greater administrative efficiency?
§ Mr. Brooke
Defence expenditure, which takes more than 5s. of every £1 we pay in taxes, can obviously be varied up or down, but major financial effects from any decisions taken here and now would be seen only in the long run. Practically the whole of the defence expenditure of the months immediately ahead is committed by past decisions. Here, perhaps more than anywhere else, long-term programming is crucial.
It is the same with almost all civil public investment. To stop an investment project which has already been started is nearly always wasteful. That was why my right hon. and learned Friend the Chancellor, in his economy measures last July, was very careful not to call a halt to work that was in progress. But that means that we must 229 be watchful how we go in using that hackneyed phrase about turning the tap off and on. Whatever we do about the tap, it will be quite a number of months before it makes any difference to the speed of the flow of the bath water.
The truth is, and we must recognise it, that only quite a small fraction of the whole volume of expenditure represented by this £5,100 million Budget is capable of being modified at short notice. What is supremely important all the time is to take firm decisions which will have effect in a major way on expenditure three, five, ten or perhaps twenty years hence and to recognise what the full effect of our decisions will be as we take them. That is the right way to get expenditure into a better relationship with our resources.
That does not mean that we should not, all the time, also be searching to eliminate any expenditure that is unneeded or unproductive, and to get more value for money everywhere, but for the major savings, one must look to wise, well-informed long-term decisions. That is why my right hon. and learned Friend, in his last Budget speech, set special store by studies of future public expenditure over periods of five years or more. If only we can achieve that, we should have less need for sudden economy drives that can disrupt useful progress. That is what the Plowden Committee had in mind when referring to stability in public expenditure decisions.
It is true, as my hon. Friend the Member for Farnham said, that this reduces our power to use variations in expenditure as one means of regulating the economy. The Government's acceptance of this point has already been made clear in relation to public investment, and I thought that it had received fairly general endorsement.
My hon. Friend asked whether the results of the long-term surveys will be published or not. There are certain difficulties about publication. The Plowden Committee thought that probably no Government would be able to agree to publish, but I can tell the House that our minds are not set against the idea of publishing at any rate some of the results of the long-term surveys. Our aim will be to give the House and the country as much information as we reasonably can.
230 Obviously, some programmes of public expenditure are more capable of reliable forecasting than others are. Plans that are published carry with them the danger of tending to become rigid. We must not have absolute rigidity. We cannot impose absolute rigidity over the years ahead, but, at the same time, I attach enormous importance to creating the widest possible understanding of the realities about public expenditure.
The current idea a hundred years ago was that almost all public expenditure was bad. All that has gone now. It has been replaced by individual keenness for more Government expenditure on all sorts of particular things, but at the same time collective keenness for less Government expenditure overall, because no one is enthusiastic to pay higher taxes. The only way to resolve these contradictions is to get the facts better known.
I should like now to pass on to the very valuable Part II of the Plowden Report. Part III deals with parliamentary control and on that, obviously, the Government would like the views of the House, but Part II deals with the responsibilities of the Departments and of the Treasury. I know that the House will want a report from me on that, and my hon. Friend was perfectly justified in asking me for it.
§ Mr. Robert Carr (Mitcham)
Before my right hon. Friend passes on to Part 11, may I ask him whether we can take it that the Government accept paragraphs (C) and (D) of the four elements of the Plowden Report on page 7? My right hon. Friend has dealt with (A) and (B), but he has not referred to (C) and (D).
§ Mr. Brooke
I certainly say that we accept the Plowden Report as a whole, and I was going to make reference later to C. The other one—D—is a matter primarily for the Cabinet rather than for Departmental work, but I can assure my hon. Friend that the point has not been overlooked.
I was about to refer to paragraphs 35 and 36 on page 13 of the Report. I think that these paragraphs set out very well the relative duties of the Treasury and the other Departments in financial control. In that passage, the Report envisages that some of the Treasury's 231 functions should extend, but that some of its traditional activities may become less significant as long-term programmes get established. In some fields, the Report recommends more delegation of authority to Departments, as the Estimates Committee suggested. With this general approach the Government fully agree, and we hope for opportunity to discuss it, as we wish to do, with the Public Accounts Committee.
I was a little puzzled by the Chairman of that Committee, in a debate the other day, charging the Treasury with a laissez-faire attitude to financial control. We must thrash this out, for the Treasury cannot both place the chief responsibility for sound and economical administration on each Department—which I am sure is right—and, at the same time, retain all the strings in its own hand and keep tugging at them.
The essential point is that in each and every Department the importance of efficiency of management must be fully accepted and recognised. I am sure that we have to work tirelessly towards fuller mutual understanding of one another's problems between the Treasury and other Departments. I am sure that it will do good on both sides that all the major Departments are now being closely associated side by side with the Treasury in the central study of long-term expenditure programmes and problems which the Chancellor, as he said in his Budget speech, has put in hand.
To go into rather more detail, the Plowden Committee said, on staffing and establishment matters, that Departments are often liable to feel themselves cramped by Treasury control, sometimes because the actual amounts of expenditure in question may be relatively small. On the other hand, as the Committee also pointed out, the well-recognised system of negotiation under Whitley machinery between the Official side and the Staff side requires that the control of pay and grading and general conditions of service must remain largely centralised, and that means that it must remain in the Treasury's hands.
The Plowden Committee put to the Treasury a number of minor points which have caused irritation—things like travelling expenses, subsistence allowances, less important questions in the field of hours of attendance, and so on. 232 I should like the House to know that, following that, a study was put in hand of the extent to which existing delegated authorities could be enlarged. This study resulted in a number of improvements, and the Committee recommended that similar investigations should be a continuing feature of the relations between the Treasury and other Departments. There may, in fact, we are inclined to think, be more advantage in ad hoc examinations of this than in reviews at fixed intervals, but we are going carefully into the Committee's recommendation on that. I think it is fair to say that the Committee found no major cause for criticism in the relationship between the Treasury and other Departments, and that is something of a tribute to the machinery of government and financial control.
The Committee made a number of useful minor recommendations for improving the relationship. Here I quote paragraph 59 of the Report:We have not attempted in this Report to follow the implications of these changes. Much will depend upon the ability of the Treasury to adapt itself to a new array of central responsibilities and a different kind of relationship with the departments: it will be necessary for the Treasury to review its organisation to meet these demands on it.Arising out of that, I should like the House to know that discussions have already taken place with all heads of Departments about the ways in which the Treasury's functions of management in relation to the public service as a whole can be developed on more positive lines. These discussions have covered a number of general subjects, such as recruitment, interchange of staff between Departments, control of the size of the Civil Service, and economy of manpower. They have also dealt with more specific questions, such as methods of developing a common sense of purpose in management between administrators and people with professional qualifications—by which I mean officers in the Armed Forces, and engineers and scientists and so on in civil life.
Another matter tackled was the encouragement of consultation by Government Departments with industrial firms—consultation about practical problems, like managing stores or transporting goods. The aim of all this is to encourage awareness of the importance of management in all branches of the Service and at all levels, and to spread 233 wider a knowledge of the best practices wherever we can find them.
I am sure that this is a thoroughly valuable outcome of the Plowden Committee's work. I repeat that the Plow-den Committee was the outcome of the Estimates Committee's work. Certainly, a fresh impetus has been given to the process—it is a fairly continuous process—of examining and adjusting the Treasury's own internal organisation to match its changing responsibilities.
This process is having to take into account not only the Plowden recommendations, but also the implication of new events coming along, like the proposal to create a National Economic Development Council and—to take an example from another field—our application to join the Common Market. Each of these may—we cannot be certain—have its impact on the relationship between the Treasury and other Departments and, therefore, on the Treasury's own internal organisation.
The Plowden Committee laid a great deal of stress on management and on the responsibility of the Treasury for developing management services. It had good things to say about the work being done by, the Treasury and also by the larger Departments which have nationwide organisations. It doubted whether some oilier Departments were enough aware of the contributions which management services can make to efficiency and economy. We are taking steps to follow this up.
In the particular field of organisation and method work we have had a small interdepartmental committee reviewing the activities of the Treasury and its relations not only with the larger Departments which have their own O. and M. branches but also with the many smaller departments to which the Plowden Committee was referring. We have brought to their notice certain conclusions to be drawn from this review. We have encouraged them in various ways to help themselves and also to draw on the experience of the Treasury.
The Plowden Committee commended the Treasury for already having encouraged Departments to use methods of costing their activities so that they can make sure that staff are being used to the best advantage. Guidance on this 234 was first given to about 30 large Departments where the scale of their operations was such that it was likely to bring the greatest rewards. It has now been extended to all Departments.
The Plowden Committee next recommended the wider application of what it called quantitative techniques. Some of the techniques it had in mind are specialist tools of O. and M. work, and the Treasury and other Departments make use of them whenever they can. I mean various forms of work measurement, and activity sampling by which work can be analysed even when its component operations occur irregularly. Other techniques are more general. Statistical sampling is a common device for obtaining reasonably reliable information at the least cost, and unit costing of comparable services can on appropriate occasions be used to disclose undue expenditure.
The Plowden Committee recognised that we might have to experiment there are no cut-and-dried solutions, and there is a national shortage of experts in this field. But our policy now is to apply these quantitative techniques wherever they can improve the control of expenditure.
We have certainly not overlooked the possibilities of learning from large business firms or from Governments abroad. The Plowden Committee pointed out that business firms can also learn from the Civil Service. Indeed, its third main suggestion was that there ought to be full exchange of ideas between different Government Departments, and between the Civil Service, on the one hand, and commerce and industry, on the other.
This is being pursued in many ways, both internally and externally. Externally, the Civil Service has close relations with the Royal Institute of Public Administration, the British Institute of Management and the Institute of Office Management. We exchange information on management services with the key people in many large businesses and in other public authorities.
I have been speaking of the constructive criticism and suggestions that the Plowden Committee made. But it is fair to say that in general this Committee, which was a mixture of very highly 235 qualified outside people and civil servants of great ability—not by any means all of them from the Treasury—rated the general efficiency and wide-awakeness of Whithall far higher than popular opinion does. It said that the quality and the scale of effort put into management services in Whitehall itself compared favourably with standards outside. We now have to help all Departments to attain the standards of the best Departments.
It was rather interesting that the Plowden Committee remarked on the Civil Service's interest in automatic data processing as being in the forefront of national progress. We now have 16 installations with 21 computers; three more are being installed, and we have another five on order. I think that the Committee was justified in saying that it would be a good thing if more was known publicly of the performance and standards of Government Departments.
What I have said this afternoon is an interim report. There is no finality. To be ceaselessly trying to do better still is the best guarantee against complacency. In the internal organisation, in the techniques of decision-making and in the methods of parliamentary control, I am sure that we can go on gaining ground. I certainly intend to make this a big part of my job as Chief Secretary to the Treasury. All I would ask is that we do not underrate what has been done and that we think in terms not of a battle between the Treasury and other Departments, or between Parliament and Whitehall, but of a joint enterprise in which we can all help one another.
§ 4.49 p.m.
§ Mr. James Callaghan (Cardiff, South-East)
I, too, should like to join the Chief Secretary to the Treasury in congratulating the Select Committee on Estimates and the Chairman on the work which they have done, which resulted in the Plowden Committee's Report. I think that they did a wonderful job in stinging the Treasury into setting up a Committee of this sort, and I thought that the hon. Member for Farnham (Sir G. Nicholson) went a little too far in his expressions of regret to the Treasury. He should remember 236 what Margaret Bondfield told a very old lady, a friend of mine, who now lives in retirement in Cambridge, Clara Rackham, who was very active in political life, "Always remember this: you are never doing anything in politics unless they describe you as that intolerable woman". I do not think that the hon. Member could have hurt the Treasury very much. I think of the Treasury rather as I think of a rhinoceros—rather shy and retiring by nature, liking to keep out of the public gaze, almost impossible to wound but extremely dangerous when enraged.
I have a feeling that, as between the Treasury and the Select Committee on Estimates, the Select Committee came out pretty well, and I speak as an impartial observer who had nothing to do on either side but who has read the Reports. A number of the criticisms made by the Select Committee on Estimates which were hotly rebutted by the Treasury at the time have been sustained by the Plowden Committee's Report. This seems to me to be an example of the way in which the House of Commons can do and has done extremely useful work.
I have put in this general statement because I have been told that this is a non-party debate and that I must therefore speak in a House of Commons manner. I do not undertake to maintain it all through the speech, and I may say that the Chief Secretary tempted me once or twice. Indeed, as he spoke, I had a vision of Saul of Tarsus on the way to Damascus. I thought that there had been nothing like it since that journey when I heard the Chief Secretary saying, "I believe in long-term planning…". It sounded like Saul reciting the Creed. He went on to tell us all the things to which he has been converted.
§ Mr. Callaghan
My hon. Friend the Member for Bristol, South (Mr. Wilkins), like myself, has had a good chapel education.
If the hon. Member for Farnham and his Committee are the parents of the Plowden Committee, I am not sure that the Chief Secretary is not the child of 237 the Plowden Committee, because in paragraph 32 of the Report there is a specific reference to the need for greater support for the Chancellor. I hope that that was not intended as a reflection on the Economic Secretary. The Committee said that without any infringement of the Chancellor's responsibility,it should be possible to find means of providing the Chancellor with a greater measure of support.I wonder whether the appointment of the Chief Secretary, although obviously not determined by the Plowden Committee's Report, was not influenced by the recommendations contained in it.
Speaking for myself, I think that the appointment of the Chief Secretary is a useful and notable addition to the Treasury's armoury in this field. I may have to revise that judgment later, but certainly the idea is good. Speaking for myself at the moment, although I think that all my hon. Friends will agree, I should like to congratulate the Chief Secretary on his speech this afternoon. It was a joy to our ears to hear a Daniel come to judgment—and hon. Members may cap that one if they can.
What seemed to me to spring from this Report was the fact that the Plowden Committee had stimulated the Treasury not perhaps into new thinking but into looking at its arrangements again and reconsidering what it is doing. This seems to me to be important in any large-scale organisation. I remember that in discussions on the nationalised industries it has always been said that large-scale organisations of this kind develop a kind of inertia, inevitably, by the very growth of their operations; and, if that is true of the nationalised industries, it is also true of large-scale private industry. It was certainly true of the railways before they were nationalised, and it must also be true of Government operations.
The first point which I should like to make, therefore, is that there seems to be a case for a regular Plowden review of Treasury operations at an interval of a series of years, seven or ten years or whatever may be thought to be appropriate, so that senior civil servants can come together with the aid of people from outside in order to focus the result of their last ten years' active work into some body of principles for 238 developing the next ten years. Lord Plowden was in a very favourable position because he had been intimately concerned with the Civil Service but is no longer in the Civil Service. I think that the Government were right, as against the Select Committee, in appointing an internal committee. They were right because, knowing the beast as I do, I am sure that the civil servant would have covered up against an outside committee, whereas I think that he felt confidence in Lord Plowden and a small group of associates, who would be reporting internally. We may not like this and think it wrong, but if we wanted to get practical results, this was the best way of getting them. I believe that he was able to get the confidence of people serving on that Committee.
Reading the Report, my own feeling was that there was a great deal which I was not getting at. I am sure that this was not the Chief Secretary's view, because he has seen all the other Reports. But those of us who have not—speaking as one who has not—felt that there was much more evidence that they would have liked to see to back up some of the conclusions and some of the obiter dicta. In some ways it is a series of conclusions, and I ask whether it is possible for there to be greater publication. I do not believe that the Government are trying to hide anything from us, but I hope that they will give as much information as they possibly can on these matters so that we do not have just a series of conclusions but can follow the arguments which led to those conclusions.
I want to move the other way from that of the Chief Secretary and to have a word, first of all, about management. The control of public expenditure falls into two elements; there is the management side of it, that is to say, getting value for money, and there is the question whether one wants to control public expenditure in order to spend less. Some hon. Members opposite have given me the impression over the last few years that they are much more interested in controlling public expenditure in order to spend less than they are in trying to get value for money. I think that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) 239 does not dissent from that. It is probably his own attitude. I will come back to that point later.
But it seems to me that whatever our differences—and I differ from him on this—at least there must be unity, and he should be as interested as I am, and no doubt he is, in ensuring that there is value for money. This seems to me to be vital; when we are spending such a large proportion of the nation's resources—not as much as the 42½ per cent. to which the Chairman of the Estimates Committee referred—we must insist that every Chancellor is supported in his attempts to get value for every £ which is spent. We need and we must demand the highest standards of efficiency in the management of the national expenditure and the administration of the Civil Service.
I think that the Plowden Committee was right when it said that the standard is uneven. The contrast has been drawn between the large revenue Departments, such as the Customs and Excise and the Inland Revenue, and other smaller Departments. To my knowledge, in the Inland Revenue they have been conducting staffing investigations for at least thirty years, and these were, and no doubt they still are, looked forward to with considerable apprehension. They put one on one's toes. Having seen a little of the business as well as of the methods in the Inland Revenue Department—I take that Department because I knew a little about it and keep in touch with it—I agree with the Plowden Committee and with what the Chief Secretary says: the methods and the work there and the control systems which exist are as good as anything which can be found in private industry and better than most. I am glad that the Chief Secretary repeated this tribute which Plowden paid.
But it is uneven, and Plowden himself says that what is found in some of the large Departments—because they are so large and have so many civil servants—is not repeated throughout the whole of the Service and that there are a number of smaller Departments—he enumerates about forty—where the system of organisation and methods is not as strongly developed. I hope that the new systems of management which are being developed will be extended 240 into these smaller Departments. I have no doubt that they exist, but I should like to see them extended still further.
The Chief Secretary mentioned the need for cross-fertilisation between Departments. I agree, and I carry it further. I think that there is a need for cross-fertilisation between the Civil Service and industry, between the Civil Service and local authorities and between local authorities and the Civil Service and industry. I do not know who would gain most from it, but I do not think that either local authorities or private industry would lose from an association with the Civil Service. I think they would find, because of the scale of operations in many Civil Service Departments, that they would have a lot to learn. Likewise, I have no doubt that a civil servant could broaden his view and gain a different aspect and approach to a number of problems if he went out into a broader field. If anybody has a lot to learn, I think that local authorities have a lot to learn in this respect. I should like to see a great deal of cross-fertilisation between the Departments.
As regards the top management of the Civil Service, Lord Plowden said with his customary diplomacy that he thought that permanent secretaries were aware of the need to carry out their triple responsibility of finance, policy and management. My knowledge today is rusty after eleven years, but going back to what I saw in those days my opinion is that, human beings being what they are, some of them naturally take one aspect of their responsibilities more seriously than another. It is a very salutary reminder to permanent secretaries that they have a triple responsibility to fulfil.
We have at present joint heads of the Civil Service, both of whom are very distinguished and able men, but I cannot help wondering as an outsider whether the present structure at the top of the Civil Service is right. Is it right to have the head of the Civil Service and the Secretary of the Cabinet combined in one function? I know that this arises out of the particular qualities of the most distinguished civil servant who occupies this post, but if there are to be changes in Treasury administration I hope that the Chancellor of the Exchequer will make this the occasion, not to repeat this operation, but to consider whether a top 241 level alteration would be an improvement. [An HON. MEMBER: "Why?"] I will give one non-conventional reason. We have not before had a situation like this and we might well learn by experience. The Secretary of the Cabinet has always been regarded as being a different job and this has been a new development.
The Plowden Committee refers to a potential element of waste in what it calls the "no-man's land" of continuing expenditure. I am sure that this is right. This is where the money slips through the fingers without the proper element of control we all want. My right hon. Friend the Member for Huyton (Mr. H. Wilson) has on many occasions commented on the difference between estimates for missiles and the actual cost. The House will remember that three weapons were estimated to cost £8 million. The actual cost was £143 million.
In an earlier Report the Select Committee on Estimates referred to the modernisation of H.M.S. "Victorious". I happen to know something about this, because I was Parliamentary and Financial Secretary to the Admiralty at the time. I do not think I betray too many secrets when I say that I refused to sign the minute for the modernisation of H.M.S. "Victorious" until there had been a full Board meeting and I was instructed to do so. When the Select Committee said, as it did in its Report, that the modernisation was estimated to cost less than £10 million, that was being a little elastic. It was in fact estimated to cost £5 million. I remember this very clearly. I thought that it was a very large sum to spend on the modernisation of an aircraft carrier. At the time I deployed very strong arguments, as I thought, for spending the money in different ways, but I was—quite properly—overruled. In the end, H.M.S. "Victorious" did not cost £5 million to modernise. She cost £20 million. This is a continuing expenditure.
The modernisation of H.M.S. "Victorious" started; it went into cold storage because of the "Stop-Go"; it came out of cold storage; it was stopped again, and then it went on again and continued for some years. The modernisation went on for six or seven 242 years, at any rate. During that time we lost a large sum of money from the national accounts which we otherwise would have had available.
§ Sir G. Nicholson
Will the hon. Member bring this point out? Owing to the Admiralty's peculiar Letters Patent dating from the reign of James II, anything relating to the repair of a Royal Naval vessel is outside Treasury control. This has been adapted in modern days to mean that the Admiralty has a completely free hand, without any Treasury supervision, for the total reconstruction of a vessel such as H.M.S. "Victorious" amounting to well over £20 million.
§ Mr. Callaghan
I am obliged to the hon. Member for making that point. I agree with him. I am not so sure that I would have agreed when I was in till; Admiralty.
Then there is the recent example of the agricultural subsidies. I know that there is an Annual Review of the subsidies, but they have resulted in the very heavy Supplementary Estimate, which I suppose will have to be presented, for about £35 million. Plowden is right. If we are to get value for money, it is to continuing expenditure based on past policy decisions that Ministers and permanent secretaries have to turn their attention.
I was glad that the Chief Secretary spoke about the new management systems which are being developed. It seems as though some people hold the view that we are standing at a point in the development of public accounting which is equivalent to the development which took place at the time of the Gladstonian reforms, If this is so, some of us will have to learn a great deal more than we know at present. I confess that I was shocked when I read in preparation for this debate a recent erudite article by Ursula Hicks on the control of public expenditure. I should like to read what she says to the House, because then hon. Members will see how much homework we all need to do. I hope that what she says makes more sense to hon. Members than it makes to me. It is not her fault. It is mine. Writing about the system of budgetary control, she says this:The basis of systems analysis"—243 which she thinks is the right thing for accounts; I am sure all hon. Members know what systems analysis is—is input-output analysis, which works in terms of real flows of factors and products, maturing at different times, dissolving the current-capital distinction into a much more subtle relation.I am sure that the Financial Secretary understands this. I am not being sardonic when I confess that I do not. I very much regret the fact that I do not understand it, because if we are on the verge of a break-through into these new techniques we shall all, if we are to make any fundamental criticism of the system of the control of expenditure and accounting, have to brush up our knowledge of these new techniques. This includes the Chairman of the Select Committee.
§ Mr. Callaghan
I do not know. I am merely saying that I am told that we are on the verge of a break-through into new systems. The passage may mean something, because in paragraph 50 of the White Paper Plowden refers tothe quantitative techniques of statistics, costing accountancy, operational research and so on, as well as organisation and methods".The Report refers to new techniques.
Paragraph 59 refers to the fact that these new techniques are coming into being, in which the Treasury will have to build up its own expertise. I have the feeling that much of the rudimentary criticism which some of us make does not get down to the roots of the problem. All of us have a responsibility if we wish to do our job in this matter.
I am sorry that the Chief Secretary had nothing to say about Parliamentary control, because I have nothing to say, either. I was hoping that the right hon. Gentleman would give me a lead. I have nothing to say and therefore I will not take up the time of the House, because not having been associated with these matters for the last few years I do not know to what extent the criticism which has been uttered in Committee of Supply has been valid.
I have a feeling that the work done by the noble Lord the Member for Dorset, South, although inconvenient to the Opposition, has been valuable in bring 244 ing us round to considering sums of money in the Estimates from time to time. I ask him to think about the position of the Opposition who want to focus attention on what they regard as the political weakness of the Government's administrative case. There is, perhaps, a conflict of views, and it may be that the sort of Supply Days which now proceed on the basis that the Opposition want to make some general political criticism of the Government, whereas the House should be considering some of the financial details of the Estimates, should be altered to some different arrangement—
§ Viscount Hinchingbrooke (Dorset, South)
Would the hon. Member go so 'far as to indicate whether this is a change in method foreshadowed by the Opposition for the coming year; that they will support some of us on this side in the idea that on the Estimates and the Supplementary Estimates there should be financial and administrative discussion rather than purely political discussion?
§ Mr. Callaghan
No, that is just what I was not saying. I said that the Opposition would naturally want continuing opportunity of criticism of the Government's administration, but that is not to say that there should not be also financial criticism of the Government, and I hope the noble Lord will find a way to combine with us on both fronts—
§ Mr. David Price (Eastleigh)
I wonder whether the hon. Gentleman would agree that there is quite clearly something missing in our current procedures in this House between discussion of public policy on the one hand and detailed post-mortems by the Public Accounts Committee on the other hand? I think that we have to grant that Supply Days have become largely an opportunity for the Opposition to criticise Government policy, and I believe that the Committee must consider how to fill the gap, because it is an absolute scandal that we should vote vast sums of money on the Estimates on the nod every year. There is clearly a case for reforming our procedure to fill that gap, and if I got the chance I could develop this suggestion.
§ Mr. Callaghan
It seems to me that the hon. Gentleman has made a very good speech and will not need to embroider it in any way. I agree with him. He is making my own point in, perhaps, rather more elegant language. I fear that I have nothing more practical to say than that, but I certainly think that it is a subject to which the House could usefully turn its attention.
§ Mr. Brooke
I meant no disrespect to the Committee by not dealing with that subject. I thought that it might be rather presumptuous if a member of the Executive, at the beginning of a debate, expressed his views, but if hon. Members have views on this extremely important subject I know that my hon. Friend the Financial Secretary will welcome the opportunity to comment on them at the end of the debate.
§ Mr. Callaghan
I hope that the right hon. Gentleman will always remember that he is a member of the Executive only because he is a Member of the House of Commons, and that none of us would think it improper of him to offer his own suggestions. If he wants to do it as a member of the Executive, may I suggest that he invite his Treasury officials to think, from their own angle, what they would like the House of Commons to do? That is not to say that we would adopt what they suggested, but it would be very interesting to see what the Treasury thought was a useful way of making criticism; and suggesting methods of control.
They said a great deal in their rebuttal statement in relation to the requirements of Parliament. If they feel like that, let them tell the Chief Secretary, who can then tell us, in what way they are hampered, and what we can do and what amendments can be made to the present system to better the position. If that is to be the sort of approach for which the Chief Secretary asks, I suggest that as one way of doing it. However, I should like to leave the question of Parliamentary control and move to what Plowden called the core of his proposals.
Paragraph 13 of the Plowden Report states:The development and use by Government of long-term surveys of expenditure and resources is the core of our proposals.246 In paragraph 17, it states that these surveys are…technically practicable and administratively necessary…I am very glad to hear that the Chief Secretary endorses and accepts that view. It is something that we on this side of the House have felt should be done and could be done. Indeed, although the Chief Secretary said that it had been started even before 1958, it would be true to say that it was started in 1948, in a very halting way. There is no doubt that Sir Stafford Cripps endeavoured—without encouragement from every hon. Member at that time—to plan forward, to state what he thought our long-term objectives should be, and to develop programmes of this sort.
I see that we now have a school-building programme for five years; that we are developing a hospital programme over a period of ten years; and that we are developing a road programme over five years. This seems to me to be the absolute essence of a long-term plan for expenditure of this sort, and I hope that the Government, as they have undertaken today, will be able to complete the rest of their proposals, though these three are obviously the biggest existing items.
I was glad to hear the right hon. Gentleman say that he had an open mind on the question of publication. If that is so, I would press him very strongly to publish. I can understand the Treasury argument against publication. It is something that affects all Ministers—and I speak without offence—and all civil servants; they must never be shown to be wrong. They must always be right.
They therefore argue, "If you publish, you are very likely to be proved wrong." But the House of Commons should, in my view, say to the Government and to the Treasury, "We do not mind if you are wrong in the early stages. If this technique is worth developing, go ahead with it, and it will not be held against you unduly if you are shown to be wrong because of calculations you could not take into account at the time." That should be the approach.
We should also say to them, "If your fear of publication is that you are likely to be proved wrong, we think you are likely to be shown to be wrong in your 247 Estimates, but we recognise that and acknowledge it from the start, so do not let it be a barrier to publication." I believe that another argument against publication is that alterations in Government policy which may take place after the plan is made may not be reflected in it. One solution would be to leave a margin for any such alterations when drawing up the plan. Several other things could be thought of to obviate that practical difficulty.
I think that Plowden reached a wrong conclusion from his argument when he said that the supremely important thing here is that one should carry the public and Parliament with one in one's long-term plans. One cannot do that unless the people have a vision, and can see what is proposed and what is the objective. I therefore say to the Government, "Please publish". I think that would be an excellent thing to do, and that it would undoubtedly be a means of acquainting and informing public opinion in this country about the way in which we are going—because we must carry the public with us.
I was very interested to read that part of the Plowden Report which referred to the difficulties which arise in Government expenditure as a result of "Stop-Go" methods. The Government have forsworn that. They have said, "Never again", and I am glad of it, because none of us who reads Plowden or has some slight knowledge of what happens in a number of Departments can feel anything but the greatest regret on this score.
These "Stop-Go" methods are an encouragement to irresponsibility. Those of us who have had even a slight acquaintance with government recognise that when the political and financial climate is favourable there is a great temptation put on Ministers to push forward their ideas—no doubt, very necessary and desirable ideas—in order to get them accepted while the tide is flowing with them whereas, with a longer-phased plan, those ideas could be fitted into it and would come forward in due course to be carried out.
I should like to say a word on the general level of public expenditure, because that seems to me to tie in with what I think would be a sort of one-eyed view if we were to pursue Plowden 248 to the uttermost without looking at the other side of the economy. We get a squint-eyed view if we look only at expenditure, and it follows that if we are considering expenditure and use of resources we must also consider what resources we are likely to have at our disposal.
As we look around we see the things we should like to do; where expenditure is desirable. The Chief Secretary was right in this, for most expenditure is desirable. The question is what can we afford? The Chief Secretary put it in one way and asked, "Are we willing to pay more tax to get the additional expenditure?" That is one way of putting it. There is, however, an equal responsibility on the Government to ensure that there is the highest possible measure of growth in the economy if we are to carry out this balance.
I will not pursue this subject in detail, but I believe that it is in this sphere that criticism may be levelled against the Government. They are now asking trade unionists and the rest of us to accept that an increase in the growth of our economy of only 2½ per cent. a year shall determine our future—at a time when the Government have put their own signature to a proposed growth of more than 4 per cent. per annum and when other nations are growing even faster.
We shall have to return to this theme more and more, for I become more convinced that it is to the question of growth that the House, the Government and everyone in Britain must devote a great deal of attention and where we must put our maximum effort. I know that the noble Lord the Member for Dorset, South feels that we should reduce the level of public expenditure. I think that it has been demonstrated that as nations grow richer they tend to take more of their consumption in terms of public than in terms of private consumption. That certainly seems to be the history—if I am to believe the statistics—of the industrial nations of Europe and the United States.
I was astonished to find, in terms of the proportion of the national income, that public expenditure in this country has grown at a lower rate during the last thirty years than that of the United States. This would hardly be believed, 249 perhaps, but I believe that it has been at about the same level as Germany. I think there is nothing in the argument of the noble Lord the Member for Dorset, South that our proportion of national expenditure to national income is growing disproportionately to that of other advanced nations. Nor is it by any means proven that the amount now going or public expenditure is, in itself, a deterrent to the growth of the economy.
Colin Clark lent the weight of his authority to the statement that if one gets over 25 per cent. of one's national income going into public expenditure, one is on the way to decline. With due respect to Mr. Clark, that is an assumption. The Plowden Report, however—and I hope that hon. Members who hold the view of the noble Lord the Member for Dorset, South will address their minds to this—says that insufficient work has been done on this aspect of the relationship of public expenditure to national income.
A report—I understand that it was published today, for I was talking earlier to a friend who has just returned from the United States—issued by the President's Council of Economic Advisers, lends itself to the statement that the United States Government's public expenditure must increase year by year if they are to have a developing economy and maintain full employment. I have made that comment without the text of the report before me. I believe that to be a correct interpretation of what is stated and the statement is made by, among others, the chairman of a bank.
The Chief Secretary urged us to get away from other matters and attempt to obtain a common-ground approach. But I urge hon. Members who support the view held by the noble Lord the Member for Dorset, South to examine this matter at its face value. If they will do this I will forget all the party stuff of the past—but they must examine this matter.
§ Viscount Hinchingbrooke
May I remind the hon. Gentleman that America is in a different position from ourselves? America is in a situation of underemployment with about 6 million unemployed, and they are in need of a dose of Lord Keynes, whereas Britain is in a situation of over-employment and, 250 consequently, inflation, and is in need of Lord Keynes returning to us with a different doctrine.
§ Mr. Callaghan
I am not taking a short-term view. I might, however, say that what the noble Lord has said is not true in Cardiff where there is certainly not over-employment at present. Several of my hon. Friends will agree that the same is true of Scotland. In Cardiff, for instance, the steel works are not on short time but overtime has gone for the first time for several years.
I am taking the long-term view. Is it true, in the long-term, that the level of public expenditure as a proportion of the national income has reached the point where it is a deterrent to the growth of the economy? This is what the noble Lord must prove. Having examined this matter as fairly as I can, I do not believe that the noble Lord has begun to prove his argument. As the Plowden Report points out, there is need for a great deal more to be done on this subject before anyone knows what the right level—if there is a right level—should be.
§ Mr. R. Gresham Cooke (Twickenham) rose—
§ Mr. Callaghan
No. I am nearing the end of my speech. The hon. Gentleman, I hope, will have an opportunity to air his views. Although we have confined ourselves rigidly, as does the Report, to the techniques of public control, we are attracted mare and more to the objectives of public control and public expenditure. There is fruit for a great many more discussions on this subject. I hope that the Select Committee and the Treasury will maintain their interest in it, because if we are to have this substantial level of public expenditure, there is every reason to ensure that we get value for every £ spent. It is the duty of the House of Commons to ensure that that should be so.
§ 5.27 p.m.
§ Mr. John Eden (Bournemouth, West)
With the last remarks of the hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan) I certainly agree; that we should insist that we get full value for every pound of public money spent. I shall take up several of the points made in the hon. Gentleman's 251 most interesting speech, to which I enjoyed listening as, I am sure, did all hon. Members. I must, however, humbly say that although a complete beginner in this field I found his speech instructive and full of interesting ideas.
I was particularly intrigued because the opening note which I had prepared concerns the point which the hon. Gentleman took up. The matter that we are debating which is represented in the title of the Plowden Report, is the "Control of Public Expenditure". I would like to think that as we are not only concerned with controlling existing expenditure, but that we should also endeavour to contain that expenditure, if not actually reduce it.
I am convinced that unless we can contain it—and secure some kind of reduction in the total amount of public expenditure—we will not secure a desperately needed reduction in taxation. The Chief Secretary stated that if we want to go on allowing public expenditure to grow we will have to face the fact that, at the same time, we mean that we are accepting that taxation will continue to grow.
That is not a good thing. It is certainly not advantageous for our industries, whose profits are already taxed at 53¾ per cent.—this at a time when we are expecting more and more effort from them in the exporting field. We are urging our industries to be more competitive, but it must be remembered that Government policies, particularly on expenditure, can contribute a great deal towards making these industries more competitive.
§ Mr. T. L. Iremonger (Ilford, North)
Perhaps my hon. Friend will supplement what he has said by observing that it is not only a matter of taxation which can offset public expenditure. It can also be offset by savings, provided that they are real savings which finance any overall Budget deficit and not inflationary short-term Government borrowing through Treasury bills.
§ Mr. Eden
The real issue in the expenditure of the Government or public authorities is the size of the total expenditure that they make; the percentage of the gross national product that is taken.
252 The hon. Member for Cardiff, South-East made the point that the gross national product will increase. I certainly hope that it will and that we shall have continued growth in our economy. But the hon. Gentleman also seemed to want a commensurate increase in the size of that gross national product taken by public expenditure. He asked at what point this was to be a deterrent, if, indeed, it was a deterrent.
In attempting to answer that, I would say, first, that the nature of public expenditure is changing—the requirements of public expenditure are changing. Public expenditure as we have known it in the past, or as we know it today, will not necessarily cover the same field of activities in the years to come. I will give an example of that. Indeed, we have a perfect example of that in the Supplementary Estimate before the House for subsidies for the agricultural industry.
The built-in guarantees to which we have committed ourselves in the Agriculture Act secure cheap food for the consumer and prosperity for the farmers. I am simplifying the whole thing, of course, but what we surely ought to be more concerned to see is that the consumer pays a more honest price for the food which he consumes and that the farmers do not have to rely on the taxpayers for making up the differences which might exist between the guarantees and what they actually receive.
Then there is our social service expenditure—health, education and pensions, which were some of the points mentioned by my right hon. Friend the Chief Secretary. He referred to pensions as a continuing expenditure to which we are committed and he expressed, almost in horror, that we could not possibly change this commitment unless we changed the policies. I certainly hope that we shall change the policies. It is most essential that we should.
I am not saying that in changing these policies we should necessarily reduce the total of public expenditure. I am saying that we must question ourselves regarding whether the field in which we are now spending public money is that in which the expenditure of such money will contribute most to the growth of our economy, which is what we want. Look at what Lord Plowden said about 253 this in paragraph 102 of his Report. He said:The social changes of the last fifteen years have altered the incidence of hardship, so that there now may well be excessive social service for some purposes and inadequate ones for others. We have not examined all the agricultural grants in detail, but we would expect some to come into this category.There we have a fruitful field for Government initiative and inquiry and for changes in Government policy. Here, I think, we have a great task to do in educating public opinion to face up to impending changes which, I believe, must come.
Education and retirement pensions now take about 9 per cent. of the gross national product. If there are no changes and the process goes on as has been outlined they are likely by 1970 to take about 12 per cent. of the much larger gross national product. That may be a good thing, but I am not certain that it is if there is not quite clearly established in the minds of the Ministers preparing these proposals the importance which they attach to the degree to which education and retirement pensions should be financed directly out of public money.
I believe that in these matters of education and retirement pensions the individual citizen could now contribute a great deal more than he does to their cost. We are constantly having rammed home to us the vital importance to the continuing development of this country of first-class education. I entirely agree that we must have it and that it is vitally important, but if it is so vitally important then those benefiting from it can surely pay a little more for it? Personally, I would rather that they and I, as parents, paid directly for education rather than through taxation. I would rather pay contributions to a private pension fund in order to build up my own pension than contribute to the general State scheme. I must here declare an interest because I am associated with pension funds.
It is along these lines that I think we should be thinking. We are, after all, building up the individual wealth of the people. That is part of our aim and desire. We are all in business to make people more prosperous, but, at the same time, we want to make people less dependent upon central administration, 254 to require them to pay less in direct taxation and to encourage them to finance to a greater extent those desirable things for themselves.
I hope that very great attention indeed will be paid to paragraph 102 of the Plowden Report and that, if I read the signs aright, my right hon. Friend the Minister of Health will get every encouragement from his fellow Ministers, the Prime Minister and others in the policies which I hope he is trying to put forward. I am sure that he is absolutely right. He has already indicated that the correct priority for public expenditure in his programme is for the rebuilding of hospitals. It will involve a vast sum of money spread over a large number of years. This is the direction in which public money can and should be spent. It should not be spent on the purchase of drugs and things which individuals can well afford to pay for themselves. Where they cannot afford to do so machinery should be set up to enable them to receive compensatory payments or benefits so that the hardship is diminished even if we cannot do away with it altogether. That, I believe, is the right principle. The Welfare State should help those who most need help and we should use the resources of the country to do that rather than dissipate them by spreading them too widely in other directions where they are not actually required.
Therefore, in this debate my main contribution, if it can be considered as such, is to urge my right hon. Friend to change at once the attitude which I detected in his speech. He should be prepared forthwith to make major changes in his thinking—in Government thinking—and to look ahead to the forthcoming decades when we shall have continued growth and prosperity and, I hope, a continuing and increasing sense of responsibility on the part of our citizens, who, I trust, will he more anxious to finance these benefits for themselves rather than expect them to flow from a munificent central organisation such as the one over which he presides.
In paragraph 105 of its Report the Plowden Committee stresses the need for having public understanding concerning the control of expenditure. I hope that we shall take notice of this 255 and that we shall try to develop as far as we can public understanding—in other words, that we shall try to lead public opinion in this connection. I hope that the Conservative Central Office, for example, will give the public a little leadership in this direction. All political organisations appear to be too busy trying to vie with each other and saying, "We have spent more on this than they have."
It is not just the newspaper reports or the editorials, but the Conservative Party in particular which is making people think in terms of how well we have done just because we have spent more public money. That is no good. We would do very much better indeed if we could say, "We have reduced taxation because we have slowed down the inflationary rate of public expenditure and we have enabled you, the citizens of this country, to pay directly for those goods and services which you require."
This public understanding can flow still more easily from the formation of the National Economic Development Council, which seems to be getting off to a very slow start, and that is largely the responsibility of the T.U.C.
§ Mr. Eden
Yes. I think that for a body which sets itself up as a forward-looking organisation, it has taken a very miserable, narrow-minded attitude to this question. I cannot use flippant terms in this august assembly, but I hope the T.U.C. will "get cracking" and join the National Economic Development Council, and bring with it the whole ranks of organised labour to share in this prosperity. But if everybody is to share in this prosperity, they must share in the responsibility as well.
This applies every bit as much to the nationalised industries. There are two million people employed in the nationalised industries. Already, £7,000 million of public money is invested in them and it is important to try to understand the significance of increases in wages and in personal incomes and the effect that those increases can have on increasing public expenditure.
§ Mr. Austen Albu (Edmonton)
Does the hon. Gentleman think that the T.U.C. 256 is likely to be attracted to join an organisation which he himself said is intended to abolish or reduce the public education system which we were the last civilised country in the world to introduce?
§ Mr. Eden
Nobody suggests that the public education system should be abolished or destroyed. It is not a question of extremes. I am not saying that all of one thing is good or that all of one thing is bad—not at all. I believe that there is room for both public and private. What I am saying is that we do not want it all public, because if it is all public it has to be financed by public taxation. We want a little more private influence to redress the balance. In earlier decades, before I was born, conditions were perhaps too much the other way. Now we have gone too far in the direction of public expenditure and public participation.
I believe that there is a need—in fact, the demand is there if only it were stimulated and encouraged—for an increasing participation by private individuals, but I beg the hon. Member for Edmonton (Mr. Albu), who, I know, is a fair-minded person, not to misinterpret me as saying that I want to destroy the whole of public education. I do not—far from it—because I think that it makes an essential contribution. Obviously, one could not have an education system in this country without the participation of the State as well as of private concerns.
My right hon. Friend spoke about the continuing expenditure and the existing commitments. Would it be possible, as part of the effort of trying to create public understanding, to take a point from paragraph 75 of the Plowden Report, which says how desirable it would be…for the Government to develop means of informing Parliament and enabling it to consider and approve the broad issues of policy involving public expenditure for some years ahead at the time when the effective decisions are taken"?In addition to the admirable White Papers which we are already getting, thanks to the initiative of the Government over the past twelve months, would it be possible to have an extra White Paper giving information about the existing commitments as they now stand?
257 For example, I should like to know to what we are already committed in terms of expenditure without any changes taking place—that is, without either increasing or diminishing these commitments. It must be a very sizeable proportion of the £10,000 million which my right hon. Friend was speaking about. It would, at any rate4, indicate to us and to the public how very limited is the field for economies or changes which we should like brought about. If that is so, I should like to see the information set out, because it would point even more clearly how important it is, in some fields at any rate, to have real changes of policy.
Apart from that, I think that it would also make us appreciate how vital it is that we apply to our own demands this Plowden doctrine of viewing the matter as a whole and not asking for things piecemeal. So much of the trouble that has arisen in connection with increased public expenditure has been due to the fact that not only have Ministers been looking at these things piecemeal, but that the demands have come from sectional interests and have of necessity been made in a piecemeal fashion. I believe that sectional interests—and this is a wide-sweeping phrase covering everybody—would be more likely to temper their demands on the Government for increasing expenditure if they themselves could see more clearly the effect of their demands on the total picture. If we could get from the Government a contribution which would show us the existing continuing expenditure demand, it would be of very great help.
But, whatever happens, my right hon. Friend and those associated with him must now attempt to change some of the policies which they have inherited. This will he more effective than anything else in leading not only to the control of public expenditure, but also, I hope, to a demand for its reduction.
§ 5.48 p.m.
§ Mr. James Boyden (Bishop Auckland)
Although I serve on Sub-Committee G with the hon. Member for Bournemouth, West (Mr. Eden), I think that he would be surprised, and I should be surprised at myself, if I were to follow him along the lines of his argument.
258 One of the disappointing features of the Plowden Report has been the length of time it has taken to produce. It is more than four years since the original suggestions were made, and they are only now being put into operation. But I am sure that the operation of the Report will have a considerable effect on the Estimates Committee and on Parliamentary procedure. Indeed, I think that when Plowden refers tolarge tracts of the territory which we have hardly touched",it relates, amongst other things, to the operation of the Estimates Committee.
I believe there is some virtue in being a fairly new Member of the House, inasmuch as one sees these things rather more objectively than if one were completely immersed in the procedure. I want to make this comment on the procedure of the Estimates Committee, because I think the Committee will need to sharpen its own methods along the lines of the recommendations of the Plowden Report. Having said that, I would agree with the Report when it refers tothe positive advantages which can accrue to the efficiency of Departments when the Committees adapt themselves to the changing structure and requirements of the Governmental machine and thus exert their pressure at the points where it does most good.It seems to me that the Estimates Committee proceeds in a rather gentlemanly fashion. I remember one occasion recently when the Sub-Committee was looking for subjects and one of the Clerks advised the Committee that such-and-such a Department and such-and-such a subject had not been dealt with for some time and ought, perhaps, to be looked at.
I suggest that, if the new techniques which the Plowden Report recommends are to be put into operation, the Estimates Committee itself must very much more actively review the whole of Government machinery. For example, the Plowden Committee picks out and comments on the three different sorts of Department by way of size: 50 Departments employing 100 to 5,000 employees; only 15 employing more than 5,000; and 44 spending less than £1 million. I think it follows that Parliamentary control ought to be sharper and more in keeping with modern conditions 259 in looking at the sort of things Parliament can expect according to size and according to function in thes categories. The sort of expert assistance which the Plowden Committee recommends for the Treasury and other Departments—the use of organisation and methods, the use of mathematical techniques, the use of statisticians and the use of accountants—will become a necessity for the Estimates Committee itself. It will need to have on its staff people of that calibre and professional training who will, as it were, be the eyes of the Estimates Committee looking at the problems of the Treasury and the Departments.
One of the difficulties of the staff of the Estimates Committee is that they are bogged down with correcting drafts. The number of words produced is monumental, and this, perhaps, is one of the reasons why the work of the Committee does not make very much impact outside the House and the professionals in the Departmetns concerned. A flood of words comes out. The Reports are well written and interesting but, somehow or other, they do not make the impact on the public that they ought to make. This is partly a matter of technique, I think, but it is also partly a matter of the method which the Estimates Committee uses. This brings me to my second point.
By and large, the Estimates Committee uses the method of the courts. It calls witnesses whom it examines. It is true that it goes and looks at sites and so on, but generally its method is an old-fashioned one for modern conditions. Even the courts recognise that their method is not always suitable. Very often nowadays, when psychiatrists are called or when medical or expert evidence is given, the courts are unhappy about their method of proceeding. It does not follow, of course, that the Estimates Committee must confine itself to the method of the courts. Indeed, its methods can be much more flexible. Here, I think that it does need to use accountants and other professional people as its eyes to make sample surveys and analyses of the work going on in the Treasury and the Departments.
There is another factor which, I think, limits the operations of the Estimates Committee. Although the members of the Committee, from my observation, are 260 very keen and do their best, there must be a great limitation on the time that the ordinary Member can give to the work. I venture to make the heretical suggestion that it may well be that there ought to be three or four paid chairmen who would regard Estimates work as one of their main functions and who would, perhaps, for some time be called out of the main stream of political events. I realise that this suggestion might, perhaps, be unpopular. The right hon. Member for Thirsk and Malton (Mr. Turton) is not here at the moment. No one can say that he has not devoted an enormous amount of time, energy and attention to his duties, and I do not in any way cast a reflection on the ability with which he in the past has conducted the business of the Estimates Committee. Nevertheless, I think it may well be that the demands of time and, perhaps. the demand for more thinking rather than drafting may constitute a reason why a chairman or, perhaps, deputy-chairmen ought to be paid, partly to give them status, partly to give them influence with the Government, and partly to put them out of the stream of regular political events.
The point which the Plowden Committee raises, and which I have already raised, about the need to carry the public interest in criticisms and activities of this sort should be considered carefully. Perhaps there is a need to use the television, the radio and the Press in a non-party way, to use public media purely to explain what the Estimates Committee and the Public Accounts Committee are doing in order to project a better image of their work into the public mind. This is, after all, an essential part of all Government activity.
Here in the House of Commons there is a ready interest in what goes on. Generally, there is publicity for what takes place here, especially if it tends to be slightly absurd from time to time. News concerned with the Mace or a Member who, metaphorically, stands on his head is more readily given publicity than news about things which are somewhat dull or which come out in the form of a Blue Book. In one sense, the actual proceedings of the House receive a fair measure of publicity, but this corner of activity, which it is difficult to make clear to people, may well need special consideration.
261 I have found this myself in local government. I have in print and by speeches tried to draw attention to the fact that local government very often suffers from the failure to make itself understood to the public. In the field of Government activity we are now discussing considerations of the same sort apply.
Perhaps I may now leave those rather heretical thoughts which struck me on reading the Plowden Report and turn to another theme which also is very important and which I am pleased to see the Government are putting into practice, namely, the preparation of long-term surveys of expenditure and long-term programmes. I feel I should remind the Government, in a non-party way, that it was in local government, in the building sector through the consortium of local education authorities, that the greatest impetus was given to this kind of development. Local authorities are often criticised locally, and wrongly, for ineffectiveness and inefficiency, but here, in efficiency in building, is something where they have been leading the country.
My own experience of the "Stop-Go" policies in local government work bears out exactly what the Plowden Committee has said. They are frustrating to efficiency and economy. There is frustration for the staff making programmes which they see disappear and additional work when they see them come back again. Cost-consciousness and financial discipline at all levels is impaired, says Plowden. I am sure that that cannot be challenged. I remember very well from my experience of the technical college building programme of County Durham that practically every technical college was built in instalments as a result of the "Stop-Go" policy of the Ministry of Education. As a consequence, tenders tended to be higher and contracts more expensive, both the initial contract and the contracts for the second and third instalments. There was a considerable waste in the actual getting ready of the building after the first instalment, blocking up staircases, blocking off pipes, making false ceilings and so on, and there was subsequent waste of money and time when these things were taken out and a new section was added on.
262 There was also a social cost which it is quite impossible to quantify in terms of money in the interruption of the activities of students while the second and third instalments were being built, and a loss of what one might call educational planning. So often, when instead of the whole thing one has only the rump of a building, the local experiment does not really go off with the same energy and local enthusiasm that it could have. Apart from the direct loss and waste to which I have referred, there is the social loss from the point of view of the users. I hope very much that the new hospital programme will proceed in the new way and that other programmes of social expenditure will go through likewise.
The Plowden Committee says thatThere are significant areas of public investment in which the present system of financial authorisation gives insufficient scope for forward planning".This relates to the ordered development of surveys and ensuring that the programme will roll on. Nowhere have the social consequences of failure in this respect been more unsatisfactory than in council house estate building and the development of the new towns. I myself have not seen in the new towns with which I am familiar very much evidence of what is called "new town blues". I suspect that the idea was partly the invention of journalists and television reporters. However, I am quite certain that, if there are "new town blues", they are in large measure due to the lack of social co-ordination which there should have been—and which would in itself have made the actual execution of the plan more economic—in the development of the new town. There was nothing wrong with the plans of the town, and very often there was nothing wrong with the planning of a council housing estate. But there have been considerable deficiencies in the actual execution of the plans. The schools have usually lagged behind housing. Social buildings, community centres and youth clubs are only now coming on the scene. The village college idea, which was most appropriate for new towns, has been been almost hamstrung by the meanness of the Ministry of Education in further education. Just as with a technical college it is so much better to start with a brand new building with 263 the force of newness behind it, so it is with a new town. Even when social buildings are provided, they suffer from the fact that the building of the new town drags on and is not brought to a head.
I am sure that one of the reasons why people in housing estates and new towns become demoralised and lose interest in the general public welfare is that they get fed up with living in a sea of mud with bricks going up all around them. People want to feel that the job is finished. Whether the Government's commitment to a programme will produce a comprehensive whole in new housing development remains to be seen. One of the weaknesses in the private sector of our economy is the slow development of building techniques. Speedy building is often as important as cost. Improved economy of building plus increased speed would make a big impact on the social developments which are part of the modern age.
Finally, I turn to an aspect which is not mentioned in the Plowden Report but which seems to me vital for a long-term survey and long-term planning of expenditure, and that is a corresponding survey of the availability of manpower. We badly need a manpower budget. We must get our priorities right as to what sort of manpower can be induced to go to what place. Are we to put television engineers before teachers and dentists? I feel that that is what we are doing at the moment, and we may well do that more in future. If the right skilled manpower is not trained over a long period and is not ready to go to the right place at the right time, costs will rise in the wrong places, and, however careful the planning, it will fail because there will not be the right sort of staff in the right place.
Therefore, it might well be an addendum to the Plowden Committee's recommendations that we should continuously review our manpower situation and let the statistics on which this is based run right through the Ministries concerned. Those of us who ask Questions repeatedly about the supply of doctors, in particular, and teachers find it difficult to understand the position from the Answers or evasions that come from the different Ministers responsible. I am still waiting for a clear-cut statement on what is likely to be the position con 264 cerning medical training. The Chancellor of the Exchequer shuffles the Question on to the Minister of Health and the Minister of Health shuffles it back again. The Departments do not know the number of overseas doctors who are here. They certainly do not know the number of British doctors who have emigrated. The situation is one of confusion, but this is an absolutely vital matter to any sort of development in the hospital and local government service.
Local authorities are referred to several times in the Plowden Report as one of the areas of public expenditure where there can be least control. I should like to see the development through the Ministry of Housing and Local Government of a whole series of common services for local authorities which are not themselves able to spend money economically in this sphere. The larger authorities, such as Durham, Manchester, and London, have their supplies departments and can buy in bulk. But I have never heard, and I do not now suppose that it has happened, of a consortium of small authorities, district councils and urban councils, getting together to buy in bulk. This is an obvious economy which would not in any way derogate from the independence of local authorities but would be beneficial to everybody. It could be stimulated by the Ministry of Housing and Local Government.
There are other spheres in which it is not possible for local authorities, because they are small, to use an expert technical staff. For example, something in which I am interested is the printing and producing of guide books. A very small staff of the Ministry of Housing and Local Government could give advice and arrange the contracts, and this would raise the standard of local Government guides out of all recognition. Heaven knows, that is needed.
Training in matters such as these in small authorities could be provided on a central basis in the way carried out by the consortium of building authorities. The museum world is moving in that direction. Regional committees of local authorities are providing picture restorers and archaeologists for a wide area where individual local authorities are too small to provide such experts on their staff. This is a good tendency which I hoped the Plowden Report would 265 encourage, but I think that the initiative needs to be taken by the Ministry of Housing and Local Government.
§ 6.5 p.m.
§ Mr. Robert Cooke (Bristol, West)
With the exception, possibly, of foreign affairs and defence matters, surely this subject is or should be, the most important in our deliberations. My personal regard for the Chancellor of the Exchequer and his colleagues is higher than it is for any other Government Department, but my right hon. and learned Friend has done himself rather less than justice in his efforts to explain and to gain public support for his policies. He would do well to use more the mass media of communication with which we are all besieged on every side. I do not merely mean that he should put up a brave show against loaded questions put by some disagreeable interviewer on television. The Chancellor of the Exchequer can deal with this sort of thing perfectly well on his own.
In the Sixth and Seventh Reports of the Estimates Committee there is reference to the Departmental initiative and Departmental policy for containing expenditure. It is said that Ministers could do more than they do. But what Minister taking office goes into the job with the principal aim of containing expenditure? How many of them go into their new jobs with that end in view? I feel that certainly not all of them do that and perhaps it would be better if more of them did it. If a Minister wishes to economise, where does he start? It takes him some time to find out what is happening in his Department. Before long, perhaps, he discovers that the job is too big and is moved somewhere else before he can get very much done, and the Department has everything its own way again.
What can be done about this? I think that a change of attitude on the part of some of our Ministers might help considerably. They could make more use of their Parliamentary Secretaries. Many Ministers give their Parliamentary Secretary practically no responsibility. If they delegated responsibility for containing expenditure over, perhaps, a narrow field of smaller matters to their Parliamentary Secretaries they could get 266 on with the job, provided they were backed by the Minister if they came into collision with the Department. All the world knows that there have been occasions when Parliamentary Secretaries have tried to do what I am advocating and have more or less been strangled at birth by the Department.
No Minister or Parliamentary Secretary would be particularly popular either with his Department or perhaps even with Parliament in its present mood if he tried to effect these economies. There are too many who take the easy way out and, perhaps, are prepared to spend public money in order to gain a little popularity for themselves or for their own party. That, of course, applied to hon. Members opposite when they were in office. There have not been enough people in office since the war who were disinterested and who were not giving some thought to what might happen to their chances of advancement on the political ladder. In times gone by, people took great office in a completely disinterested way. They had no personal axe to grind. Their future life did not depend on whether they got advancement in the kind of job that we are all trying to do. It may be something which can never be reversed, but it is regrettable.
The Reports deal also with collective policies thought out by groups of Ministers and spending by ministerial committees. Obviously, one gains if Ministries co-operate with each other, but any experience that we have had of committee work leads us to think that perhaps a committee is a rather large body which does not have a firm grasp of what is going on and does not have much edge to it when trying to make an economy. There is no individual responsibility. Collectivism has its disadvantages as well as its advantages.
How can private Members help? The Reports concern Parliamentary control, and private Members could play a very large part. In present circumstances, however, they have a very small chance indeed of getting much done, because they have rotten facilities for doing research and getting information. Our Library is all very fine in its way, but it is limited in what it can do. In the United States, the Library of Congress is completely separate from the Government and from Congress and can search 267 out and seek for information. How can we, with half a secretary and the facilities which we have here, do much more than chase a few hares while lots of rabbits go on breeding undetected?
I want to say a word about one or two aspects of the Plowden Report. There seem to be no very new ideas about Parliament's rôle in dealing with this problem. I welcome the suggestion that business methods should be used by Ministries for their trading activities. In another section of the Report we read of the ease of obtaining a Supplementary Estimate. What is to be done about that? In the Sixth Report, I find a sad little paragraph at the end, where my hon. and gallant Friend who is now one of the Parliamentary Secretaries to the Ministry of Transport movedthat…a spending Department should be required to satisfy the Treasury at the beginning of a financial year that it has a definite plan for keeping within the total sum voted, despite rises in costs that may occur during the financial year".Some of us have been told that that is not possible, but I believe that if an example were to be made of the hon. and gallant admiral's activities when he served in the Navy it would be discovered that his estimates always came within the first-mentioned figure.
§ Mr. Cooke
It shows what can be done by co-operation. I hope that some of the things I have to say will be supported by the benches opposite.
The Plowden Report rejects the idea of equal percentage reductions all round, and so do I. Obviously, reductions should be made all round—the House may not go all the way with me on that—but bigger percentages can be obtained in one place than in another. There is a good point about the falsity of the argument that it is only worth while attacking some of the big spenders. Although there may be a small group of big spenders, there is a large group of moderate spenders. If all of them were gone into rather than escaped notice when the big spenders are being dealt with, the saving would add up to quite a lot.
The Report contains a paragraph about strengthening the management of certain Departmental activities. I make 268 the point, however, that the world is an imperfect place and one cannot have tiptop management in every mortal thing. Too many things are being done. The men could not be found to do all of them efficiently, and one should stick to what one can do properly.
There is a paragraph on the Socialist policy of intervention. In the cotton industry and certain other directions, my own party has been following the Socialist philosophy. The Plowden Report points out the dangers of this, because one never knows quite where it will lead. There is a paragraph, too, on the reappraisal of the Welfare State. I will not say more on that, because my right hon. Friend the Minister of Health made a splendid contribution to it at Brighton last summer and I hope that some of his ideas will be followed up.
The Report ends with a reference to public opinion, about which I will say more at the end of my speech. If, however, we do not draw such encouragement from what we have heard this afternoon, or if the House gets no encouragement from what I have said, some of us will shrug our shoulders and say that the problem was always like this and we could never do much about it. Certainly, that is the attitude of some Members of the House who are older and, possibly, wiser than I am. They say, "My boy, these things have always been talked about, but nothing much can ever be done about it." All I would say is that a few of us have given our minds to the problem of public expenditure. We expect to live with it, to be answerable for it and to try to contain it for many more years to come than some of the more elderly Members of the House. I am not prepared to sit here and do nothing at all about it.
There is just one solution, and that is greatly to reduce the vast machine of the State and to cease to find ourselves its slaves and to reassert ourselves and become its master. It is a catchphrase, but there is a certain amount of truth in the idea that Westminster must regain control of Whitehall. It is no use fiddling about with a million here and a million there. I welcome my right hon. Friend the Chief Secretary's £100 million that has been spoken about, but that, surely, must be just a beginning of what can, and must, be done. The 269 whole field of Government spending and activity must be critically re-examined. Whole enterprises and services should be abandoned or curtailed. We should concentrate on what we can afford to do really well and those services which we can manage effectively with the existing manpower resources.
The Plowden Report ends with a paragraph on public opinion and suggests that a gradual development of public interest in finance should take place. That interest is already present. What the country wants is action. My right hon. and learned Friend the Chancellor of the Exchequer has taken certain action, but some of his policies have become blurred due to the inability of the Government and of Parliament to apply them. I hope that my right hon. and learned Friend will confound his critics by clarifying and expanding his policy and will show yet more of the courage and determination of which we all know him to be capable.
§ 6.18 p.m.
§ Mr. Bruce Millan (Glasgow, Craigton)
In the last part of his speech the hon. Member for Bristol, West (Mr. Robert Cooke) fell into exactly the trap mentioned earlier by the Chief Secretary to the Treasury of saying, in effect, that the Government should make considerable reductions in public expenditure without specifying in which direction the reductions should be made. That sort of approach will not get us very far.
When we are talking about public expenditure as a whole, as the Plowden Committee does in its Report, we ought to distinguish between the different kinds of public expenditure because, at least economically speaking as well as socially speaking, one type of public expenditure is not exactly the same as another. The figure quoted by the Plowden Committee, for example, that 42 per cent. of the gross national product is made up of public expenditure should be read in conjunction with the fact that that 42 per cent. includes expenditure from the National Insurance Fund, the capital expenditure of nationalised industries, and so on.
Expenditure from the National Insurance Fund, whether too high or too low, is really redistribution of income rather than a drain on the country's economic 270 resources, and the capital expenditure of the nationalised industries is certainly as important as the capital expenditure of private industry from the point of view of the economy of the country. So it really is misleading to talk in these terms about public expenditure as a whole without breaking it down into its constituent parts.
I am sure that, certainly on this side of the House, we have been very much cheered at the conversion of the Government to the question of long-term planning. It is now such a commonplace between both sides of the House that long-term surveys and long-term national planning, and so on, are desirable things that we are in danger of forgetting that rather less than a year ago hon. Members opposite used to tell us that long-term planning was a myth, that it was something which could not work, that it was something which was extremely undesirable even to attempt. We are also glad to know that the Government have been converted to the idea that we should get rid of this stop-go approach to capital expenditure and expenditure by public authorities generally.
Again, it is now common ground between us that the attempts at short-term adjustment of capital expenditure and of public expenditure generally are not only undesirable from the point of view of getting effective planning of our resources but are also largely futile, since they take rather longer actually to have effect than a few years ago many people used to imagine, so that when they do become effective very often the circumstances have changed in a way which makes the action taken completely inappropriate.
We are glad that these facts are now accepted by both sides of the House, and I add my plea to that of my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) that the Government should now move, as there are some signs that they are, towards the idea of having long-term surveys and national planning, and that the particular plans which are drawn up ought to be fully published so that all of us, not only Members of Parliament but members of the public generally, should see what the Government contemplate over a period of years for the economy as a whole. I think that 271 it is only by doing that that we really can make national planning an effective measure. However, I do not want to talk about the politics of national planning but to make a number of remarks, non-political remarks in a way, about some of the implications of this conversion by all parties to the idea of having long-term planning.
I think it is a mistake to think, as I am sure a number of people think, that it is only a question of getting merely a number of experts, either experts from the Civil Service or an independent body of experts, to work on a national plan and then that is the finish of it. It is n-n so at all. In the first place, a national plan is, after all, the co-ordination, as it were, of a large number of individual plans, not only in the public sector but also the private sector, and if we are to get long-term planning there are certain techniques which have to be learned not only by the Civil Service and the nationalised industries but by the private sector as well, because I do not believe that the vast majority of firms in private industries, any more than some of our Government Departments, plan on a long-term basis.
It is notoriously difficult when one starts to do a bit of long-term planning—and I have at one time and another been engaged in making forward assessments for three or four years ahead—to get accuracy. Certainly when one starts to do that sort of planning there are a whole lot of expert techniques which will have to be learned in private industry as well as in the public sector.
We are in this debate concerned largely with the effect of this conversion to long-term planning on the Civil Service and particularly upon the Treasury itself. The drawing up of national plans and forward assessments, after all, is one thing, and the seeing that those plans which have been drawn up are realistic and are actually carried out in practice is an entirely different thing. As one of my hon. Friends, for example, was cynically pointing out to me today, with regard to the new hospital plan for Scotland, one hospital in that plan which is now to be started in 1964 was originally announced in the previous plan in 1955, rather more than seven years ago, and though at that time the 272 starting date was to have been 1960 it has been continually put back until now it is, under this new plan, something like 1964. There is really not much use in drawing up plans unless the plans are subsequently put into effect.
One of the difficulties about people drawing up plans is that, on the whole, people tend to be incurably optimistic about what they will be able to achieve in the next two or three years. It is very rare for people to extend the plans, and not only in so far as capital expenditure is concerned. It is far more common for actual performance to fall short of the national plan because people will have the natural tendency to think that they can accomplish more in a few years ahead—certainly in capital expenditure, but this also applies in other directions as well—than is actually physically possible at the time when the plans are drawn up.
This is one example of the fact I have been trying to put. We require a considerable amount of expertise in drawing up these plans, and I am not in the least bit convinced that we have that expertise at the moment in Government Departments, and particularly in the Treasury. If these plans and forward assessments are to be drawn up, the Treasury will, of course, have central responsibility, and it will have, in particular, a responsibility for seeing that individual Departments draw up their plans on a realistic basis and carry them out also on a realistic basis.
I do not believe it is possible for the Treasury even to attempt to scrutinise every item of expenditure. Some rather frightening facts were brought out in the Report of the Select Committee on Estimates about, in many cases, trivial items of expenditure which were subject to prior sanction control by the Treasury, whereas, on the other hand, there were very substantial items of expenditure, like that for the refitting of the "Victorious", which, because of the particular historical background, never came within the direction of the Treasury at all.
There must be a considerable amount of delegation to Departments, and I think it is a good thing that the amount of delegation has been increasing over the last two or three years, but if there is delegation there is an even stronger 273 responsibility on the part of the Treasury to see that Departments are really carrying out their work in an effective way. When the Chief Secretary says, as he did this afternoon, that costing techniques, for example, because of the stimulus of the Treasury, are now being extended to a considerably greater number of Government Departments, one can only say that it is an extremely good thing, but one can only say also that it is an extremely surprising thing that it did not happen many years ago.
As a very new member of the Select Committee I must say that when investigating London Airport last year I was appalled to find that the costing system at London Airport was in an extremely rudimentary stage. They had only just got round, after a considerable number of years' operation, to installing a costing system for London Airport. There is here riot only a general Departmental responsibility but a special responsibility on the part of the Treasury, and it ought to be far more alive than any other Department to the need for costing.
There is a considerable responsibility on the part of the Treasury to see to that sort of situation in any Ministry, but, as the Plowden Committee has very rightly said, whatever the Treasury may do, in the last analysis one depends on the management at the Departmental level. There, again, there are some rather disturbing features about Civil Service practice in the modern age.
The idea that there is some sort of innate administrative ability which can be applied to deal with different problems in different Departments, or even in different Ministeries, and that it can be equally successful in solving all those problems is, I think, to some extent implicit in the present Civil Service procedure of moving people from one Department to another after two years. In moving people from one Department to another and one Ministry to another after, perhaps, only two years' service, there is a certain amateurishness, which I do not think is appropriate in 1962.
I should like to see a good deal more professionalism in the Civil Service approach to all these things. We had it in connection with the London Airport, and, no doubt, this could be multi 274 plied many times over. It is not true to say that a highly intelligent man is able to make a success of any administrative job, and it certainly is not true that high intelligence and nothing more is all that is required for the assessment of particular financial projects. There are many highly intelligent people who are unable to grasp a simple financial or economic argument. It is no discredit to them; they do not happen to have that particular facility. In the same way, many highly intelligent people are not able to appreciate music or to distinguish between "God Save the Queen" and "Rule Britannia". There are lots of people who do not have that facility.
If the Treasury is to have proper financial control over Departmental estimates and so on, I think that there must be a large element of professional competence available to the Treasury, statisticians, economists and accountants, on the one hand, and people with engineering and scientific qualifications on the other. It is not a question of having someone in the Treasury who has particular detailed technical ability to deal with any problem that might come up in a Government Department; there is need to have qualified accountants, statisticians and, I imagine, although I have no personal experience, qualified engineers and scientists. We certainly need greater emphasis on professionalism in the Civil Service than we have at present.
The practice of shifting people from one job to another after two years is, on the whole, to be very much deplored. It gives the new occupant of the post a very considerable incentive to do nothing very drastic about changing the operations of a Department. He may make marginal improvements here and there, but when someone knows that he will be doing the job for only two years there is no incentive on his part to make any revolutionary or radical changes in the organisation of his Department, even though he may soon see that these changes are required. This movement of people from one job to another is an example of the kind of amateurishness of which I have been speaking.
There is another aspect which also affects public expenditure in the Departmental Ministries as well as in the 275 Treasury itself, and that is in their dealing with the nationalised industries. The nationalised industries draw up long-term plans for capital investment, revenue plans and so on which are very desirable, and the Minister eventually gives his approval to the plans. But it is impossible for the Minister to give his approval unless he has intelligent, well thought out advice on assessing these plans from the Ministry. I get the impression that the Minister of Fuel and Power, to take one example, and the Minister of Transport, to take another, however well intentioned, do not have at their disposal in the ranks of the Civil Service technically qualified people able to give a realistic assessment of the plans put to them.
We have had the revelation, since Dr. Beeching was appointed head of the British Transport Commission, that the railways have never done an assessment of the economics of particular branches of the system, not particular branch lines but of whole sections of the railway system. Yet we have the Minister of Transport at one time giving approval to an investment and modernisation plan of several hundred million pounds. I should have thought that the Minister in assessing that plan, as well as the Transport Commission in drawing it up in the first place, would have asked the fundamental point whether the kind of assessment which I have just mentioned had, in fact, been made. It seems to me to be the kind of fundamental question which an intelligent layman, far less a professional expert, might ask. The fact that that question was not asked shows that there was something lacking in the Ministry as well as being lacking in the Transport Commission as a whole. I think that this, again, is an illustration of the lack of professional approach that we have in the Civil Service.
May I finish on the same note with which I started, by supporting what I think the Member for Bishop Auckland (Mr. Boyden) said—unfortunately, I missed his speech—about the work of the Estimates Committee? I have been a member of the Estimates Committee for only one year, but I support the point he made that it would add considerably to the effectiveness of the Committee if it were able to have unprejudiced, professional assistance avail 276 able to it. I am not suggesting that it should have a whole body of experts, but even one person with professional knowledge giving his full time to a subcommittee would add considerably to the effectiveness of its work.
Considering the way in which the Estimates Committee operates, one marvels at the competence of its Report, if I may say so as a new member, which is eventually published. But there is no reason why we should put up with this amateurish approach. The amount of money that would be spent in giving the Committee professional advice would be very small indeed and the benefits we could get in this general field of the control of public expenditure could be far in excess of the cost of that service.
If the Government are to go over to long-term planning we shall need a considerable change in our attitude to all these matters and we shall need particularly this inrush of professionalism to the Civil Service, to the Treasury itself and to the various Ministries. I hope that in the new thinking going on in the Government about long-term planning that aspect of the matter will receive a considerable amount of attention and that we shall see a considerable improvement in the methods of dealing with public expenditure in the next few years.
§ 6.38 p.m.
§ Mr. Paul Williams (Sunderland, South)
The whole House, and, I am sure, the Treasury as well, are profoundly grateful to my hon. Friend the Member for Farnham (Sir G. Nicholson) for the way in which he opened the debate. No doubt the Treasury will pass him a vote of thanks about the complimentary things, perhaps too complimentary, which he said about that Department.
Thanks are also due to the hon. Member for Cardiff, South-East (Mr. Callaghan), who raised two points of some importance, the first being that more supporting evidence for the Plowden Report on the Control of Public Expenditure should be produced to enable us to judge the merits of what appears to be a valuable document. He also said that we should consider in further detail how best to use Supply days in future. There has been no doubt an approach to these days in the past which has been to the disadvantage of 277 the scrutiny of expenditure, and what my hon. Friend the Member for Farnham has done in the last few months has helped the House to come back to its proper task.
In reading the Plowden Report I was most struck by the fact that Governments of all parties in the past can only have come to conclusions and decisions on policy on the basis of profound ignorance. The whole art, and charade sometimes, of government appears to have been based on ignorance of statistics and on ignorance of trends and facts. If nothing else comes out of the Plowden Report it has put before the Government the need to get more substance behind the decisions which are taken.
The first sentence in the Report itself is not unilluminating:…we decided to concentrate in full committee on the central problem of public expenditure, which is the determination of policy and the distribution of resources.…Again, the first sentence in paragraph 6 reads:The Central problem"—There seem to be a lot of central problems—is that of how to bring the growth of public expenditure under better control and how to contain it within such limits as the Government may think desirable.This means, in substance, that control and containment depend on policy decisions by the Government and, like my hon. Friend the Member for Bournemouth, West (Mr. Eden) I should like to raise the whole question of policy decisions and where past policy is leading us.
In reading through this Report, I think that there may be far too many sacred cows in Government expenditure and far too many sacrosanct items and headings not queried and thought about for their fundamental reasons. I could mention one limited issue such as family allowances, the outcome of a report on population in 1938–39—"the bribe to breed". Is this so necessary in an affluent society? Is it still necessary that family allowances should be paid to all and sundry, or would it be more sensible to give 12 months' notice of termination of family allowances and apply money thus saved to give more help where help is needed? One should aim one's support more precisely and in greater degree where it is 278 most needed rather than spread it perhaps too thinly right through the body politic.
It is in this way that we should now be thinking about the control and containment of Government expenditure. There is a reference in page 31 of the Report to pump-priming operations that may go on in bringing new industry into areas of unemployment. I am proud to say that Sunderland is no longer in need of further assistance in this way. I know that there are some people who, on party political platforms, regret this and moan and say that the Government are ignoring the needs of the shipbuilding areas. I should prefer that people in areas like this should hold their heads high and be able to say now, "We can look the nation square in the face. We do not want assistance".
Many other heads of Government expenditure need to be looked at for the fundamental reason why they were created and why they are still needed today. There is, for example, the agricultural policy and other aspects of the social services. When the Government talk and think about containment of expenditure they should talk not just in terms of projected commitments or commitments already undertaken, but should think of the fundamental reasons why they were or should be undertaken and whether they are relevant today. But who takes this decision on expenditure? Certainly, it is not the House of Commons. It is the Cabinet, and, however nicely we may clothe this, because the Cabinet is made up of human beings, it is bound to be divided into two parts—the spending Ministers and the Treasury and the Prime Minister. I believe that this is today the key to control and containment of Government spending.
Inevitably, the spending Ministers, in terms of their own reputation and their own future, must want to promote their own Ministry's expenditure. It would not be human to behave in any other way. How, in practice, does one control and contain Government spending? Surely it can be done only by a consortium, with the willpower, resolution and strength of purpose, of the Chancellor and his Ministers in his Department, together with the views of the 279 Prime Minister. And if at any time the Prime Minister hesitates he undermines the position of the Chancellor.
It is, therefore, absolutely vital in this field that the Prime Minister and the Chancellor should be completely in step in controlling expenditure. Perhaps it is the Prime Minister who, in the scene today, is the key man in the situation. Does he believe in containment of expenditure, or does he believe in a mild degree of inflation? Frankly, this is the hesitation that I have, because if the Prime Minister believes in a mild degree of inflation, the Chancellor, the Chief Secretary and assistant Ministers in the Treasury will be of no avail, because when pressures are applied from the spending Ministries an argument will take place and the position of the Chancellor will be undermined.
Therefore, what we have to contrive to do in containing and controlling Government expenditure is to sustain in some way a higher rate of growth of the economy than is now envisaged, while containing inflation.
I believe that there are various straightforward and simple ways in which we can spur the economy to a greater rate of growth. Looking round the industrial scene, we see from time to time in British management a lack of drive, a lack of modernisation, and a lack of awareness of what is happening in the outside world. We see too often that feudal practices are maintained in industrial relations on both sides of the fence. Too often we keep machinery going unnecessarily long, perhaps because the burden of taxation is no great incentive to modernisation. Here again, the State has a part to play.
The task of Governments today, therefore, is not merely to control and contain expenditure, but to promote a greater rate or growth than is allowed for in the Chancellor's present thoughts and ideas. How is this done? Surely, it is done by working to try to get some form of association of all sides of industry through the National Economic Development Council. It may be that the T.U.C., for its own reasons, good, bad or indifferent, has decided that it will not join this organisation. If that is so, I cannot understand why it is 280 necessary for the whole nation to remain in a state of suspended animation.
Let that body start its work, and if the T.U.C. wishes to join it eventually it should be made welcome. The T.U.C. is perfectly entitled to take a decision to remain outside, for its own various reasons, but that is no cause for the whole panoply of Government to be held up while waiting for it. That would be the negation of leadership. The nation looks not only for containment and control and not only for a spur to greater growth in the economy, but for a lead in these various matters.
§ 6.49 p.m.
§ Mr. E. G. Willis (Edinburgh, East)
Like a number of his hon. Friends, the hon. Member for Sunderland, South (Mr. P. Williams) approaches this matter mainly from the point of view of controlling policy. We on this side of the House do our best to control the Government, though not necessarily in this direction, but I would point out to the hon. Member that it is hon. Members opposite who keep the Government in power.
§ Mr. Willis
In the House of Commons it is hon. Members opposite who keep the Government in power. In other words, they endorse the Government's actions in the House.
While it has been interesting to listen to these criticisms, I am not very impressed by them. There is no doubt that the Plowden Report is a damning indictment of ten years of Tory rule. One has only to read it to realise that. The hon. Member for Farnham (Sir G. Nicholson), with whom I had the privilege of serving on a sub-committee which was responsible for this Report coming along ultimately, said the same thing, though in a very polite manner. I say it rather more forcibly, but the hon. Gentleman said exactly the same thing—that the Plowden Committee Report is a very severe indictment of what the Government have been doing for ten years.
§ The Economic Secretary to the Treasury (Mr. Anthony Barber)
§ Mr. Willis
The Economic Secretary shakes his head, but the Plowden Committee said:There is no doubt from the evidence that we have received that chopping and changing in Government expenditure policy is frustrating to efficiency and economy in the running of the public services.
§ Mr. Barber
The reason I shook my head was that, in referring to the central problem, the Committee considered that it was common to all Governments, whatever their philosophy.
§ Mr. Willis
The Tories have been in office for ten years, not five. Indeed, they have been in office for very many years if we take the matter further back. We have had these short-term economic campaigns and "stop and go". We have lived through nothing else under their rule. We have had "go" before elections and "stop" afterwards. We are in the midst of a "stop" policy now. Do not let us be mealy-mouthed. The Government are deliberately preventing the economy from expanding. They have imposed all sorts of controls, and development of all kinds has been slowed down.
§ Mr. Willis
I am not saying whether this is right or wrong. I am merely pointing out that we are in a "stop" period. We have had an indication from the Government that we shall start to get out of it by 1st April.
§ Mr. Willis
I do not know. No doubt we shall be out of the "stop" period in time for it.
There is no doubt that the Plowden Report is a very severe indictment of Government policy over the last few years. We must accept that. I assume that the Government accept the indictment, too, because, speaking on the Government's behalf, the Chief Secretary to the Treasury said he was in agreement with almost everything that the Plowden Committee said. I could not but remember, as I listened to him, that nine-tenths of the right hon. Gentleman's speech was made by Sir Stafford Cripps 282 in 1948, but it was not received then in the same manner by the party opposite.
I remember Sir Stafford telling us how efficient Government services were compared with those provided by private enterprise. But it was members of the party opposite who, in large placards, on hoardings, spoke of "wild Socialist extravagance" and of waste being everywhere. It was the Conservative Central Office which did more to spread abroad this myth about tremendous waste and mismanagement in Government Departments than anybody else in the country. I hope that, if the Government are sincere in what they are saying, they will persuade the Conservative Central Office to be rather fairer about these things. Even when the Conservatives are in power, such campaigns do not come from the Labour Party. I remember that it was almost a weekly occurrence for a member of the party opposite to ask in this House how many civil servants there were, and then came the supplementaries about alleged gross overstaffing.
The truth is that Government Departments compare very favourably with private enterprise. I was a member of the Estimates Committee in 1948. My hon. Friend the Member for Kilmarnock (Mr. Ross) will remember that on two occasions we took evidence from private industry. When we took evidence from I.C.I. in making a comparison with a Government Department in the running of Government hostels, we found that it was costing I.C.I. more to run them than it was costing the Government. In other words, the administration of the Government was more efficient than that of I.C.I.
My hon. Friend will remember another occasion when we took similar evidence about comparisons between private firms and Government Departments. The Government Dpartments came out of it very favourably. Anyone of honesty and integrity knows that to be true and should say so. That does not mean to say, of course, that there is no waste, and that there may not be cases of overstaffing. But there is also waste and overstaffing in private enterprise. It is our duty to try to avoid these things as much as possible.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) made an interesting point when he said 283 he believed that we should seek in this House not necessarily a reduction of Government expenditure, but value for money. I do not accept the assumption that there is something wrong about Government expenditure. That is where I differ from a number of Members opposite. It is one of the differences which I noticed in the Estimates Committee when I returned to it in 1954 after some years' absence. I had two periods of five years on the Committee, one from 1945 to 1950 and the second from 1954 to 1959, when I was on the subcommittee presided over by the hon. Member for Farnham.
When Sir Ralph Glyn was Chairman of the Estimates Committee, and also Chairman of the sub-committee on which I served between 1945 and 1950, he always told witnesses, "We are not here necessarily to cut down your expenditure. We are here to see that we get value for money." Sir Ralph went further and told them, "It might even be necessary that we should spend a little more in order to see that we get value for the money we are already spending."
When I rejoined the Committee in 1954 I found a rigorous rule that it was concerned only with saving money. I make this point because I believe that this has been a bad development. The Committee would be much more effective if it operated on the basis of considering whether or no we are getting value for our money. I know that there are difficulties about this, because, of course, one reaches into questions of policy, but on certain occasions I believe that the Estimates Committee should question whether it might not be better for the country as a whole if more money were paid out in some direction. For instance, if a Department is employing 1,000 men, together with equip-men, on certain work, the Committee might consider whether, by spending a little more, better use might be made of the money the Department has already spent. That, after all, is the way in which a businessman must look at these things.
The political climate for the Estimates Committee in 1959 was that we were not able to discuss or to recommend anything that would lead to an increase in expenditure. We had to concentrate solely on the question of saving. That 284 was a wrong emphasis. I hope that the Committee may be given wider powers than that.
Before going on to one or two general points, I want to ask once again about the Letters Patent of the Admiralty. This has been raised by the Public Accounts Committee and also by the Estimates Committee in a number of Reports. It was raised at very great length in the Report which led to the setting up of the Plowden Committee. Indeed, I think that the Estimates Committee devoted to the procedure in which Letters Patent play a considerable part two or three complete paragraphs.
I have raised it in the House on previous occasions, at length in the debate on the Navy Estimates two years ago, and during the debate just before Christmas on the Special Report and the First, Second and Third Reports of the Public Accounts Committee, but I have never had even the courtesy of a reply from either the Admiralty or the Treasury. Neither has the Admiralty or the Treasury answered that point in replies to the Reports of the Committees.
All the Treasury says in its Observations about paragraphs 75–84 of the Committee's Report, covering Letters Patent, is:They are able to report that the discussions of which the Sub-Committee were informed in evidence have resulted in agreed arrangements, which they trust will prove satisfactory in practice, for the closer association of the Treasury with work on defence research and development programmes.That is to side-step the issue raised by the Letters Patent. Do the other Service Departments have powers similar to those given to the Admiralty under the Letters Patent? To what extent do those powers enable the Admiralty in practice to undertake substantial expenditure without any approval?
One of the items with which the Report of the Public Accounts Committee dealt was the expenditure on H.M.S. "Belfast" which ran to about £5½ million. An interesting question, Question 3075, was that put by the hon. Member for Wycombe (Mr. John Hall):So, would the work have been approved in any case regardless of the estimated cost?To which the answer was:Yes, because the ship was felt to be needed to keep up the cruiser strength of the Fleet.285 In other words, no matter what the cost was likely to be, that money was to be spent by the Admiralty. In the Report of the Estimates Committee we are told about the expenditure of £20 million on H.M.S. "Victorious":Neither at the beginning, nor at any stage was direct Treasury sanction required for the expenditure (which ultimately reached the order of £20 million on the modernisation of the 'Victorious'…More than that was involved. I think that the hon. Member for Farnham will remember that we had evidence that when H.M.S. "Victorious" was modernised, new radar equipment costing £2 million was installed and that the Admiralty ordered three or four sets of that radar equipment at that time to install in other aircraft carriers which it was then thinking of modernising.
I do not see what Treasury control there is over that. It may be very difficult to devise some form of Treasury control, because I can well see that, the Admiralty being able to order three or four sets of this equipment, it might be cheaper in the long run. I appreciate the difficulties, but it means sanctioning the modernisation of carriers which has not yet been even considered.
At that point the Admiralty was thinking of modernisation which would have cost a total of £80 million for four ships. There might be some justification for that and I am prepared to examine any evidence we can get, but we are never told. What are the powers of the Admiralty in this respect and do those powers exist in any other Government Department?
Thirdly, in the light of changing defence considerations, is it necessary that these powers, granted in the time of James II, although they have been changed, should still be operated by the Admiralty? Fourthly, as the Government are now engaged in trying to draw up a programme of planning ahead, is not that an additional reason why these powers should be considered and something done about them? We are told that we are to have five-year programmes, looking five years ahead, in which the expenditure for the first and second years will be known while that for the later years will not be known quite so well. If we are to do that, the possession of these special powers by the 286 Admiralty becomes less and less necessary.
In any case, they should be explained to the House, the Public Accounts Committee and the Estimates Committee, and be justified. I have tried to find some justification for them and I have pursued the matter in the House and in the Estimates Committee, but I have not received a reply. I would like the Economic Secretary to do me the courtesy of giving me some information about them.
How can we improve our control of this expenditure? We have to accept the fact that a large part of the expenditure is now almost automatic, if not beyond control, by virtue of the policies decided and supported by both sides of the House. That covers an enormous part of the £5,000 million or £6,000 million which we spend each year. The expenditure which we can control day by day in the House, or by debates in the House, is limited by the policy decisions made by the House.
It is those decisions which set in motion the very large expenditures—such as for hospitals, the Health Service, and education. The Treasury cannot do anything about that, and if there is anything wrong with those expenditures, then that is a criticism of hon. Members and not of the Treasury or its officials. I would be prepared to justify that expenditure. Although some hon. Members might not, at least we should remember that it is a criticism of ourselves.
Should we devote more time on Supply days to the actual consideration of the sums involved? I doubt that because the bulk of the expenditure arises as a result of policy decisions, and Supply days should be devoted to discussion of those decisions. That is the function which the House ought to perform. The House is not a body which can minutely examine the details of financial expenditure. It is not constituted that way. The House is for debating the big questions. We must accept the fact that the House must spend a lot of time discussing policy, which is discussed mainly on Supply days.
I am interested in the experiments which have been conducted over the past year in connection with the extension of time for the discussion of Reports of the 287 Estimates Committee and capital expenditure. These are good experiments, but our debates are bound to be of a general nature covering questions of policy. I find it difficult to visualise a system by which the House can do other than that.
I say that for this reason. There are many occasions when we discuss the expenditure of comparatively small sums of money. Ploughing grants are discussed every year. I do not know the sum involved, but I think that it is comparatively small—about £12 million. It is very difficult to get more than half a dozen Members to discuss this topic, even though the opportunity is there, and the interesting thing is that the opinion of both sides of the House last year was that this money was badly used, that we were not getting value for our money.
There are other occasions when we discuss the expenditure of comparatively trivial sums of money. In fact, many hon. Members who make a great fuss about the size of public expenditure do not even bother to attend the debates when the reason for spending it is discussed. A mere handful of Members, consisting very often of Scottish Members, attend the debates, and they are then usually criticised for keeping the House up for half the night. It boils down to this: that we are at fault. We do not use the opportunities which exist for discussing some of the money that we spend.
The more detailed consideration of questions of administration is not a matter for this House. I believe that it is a matter for Committees such as the Estimates Committee, which should be made more effective. Some improvements need to be made, and some of its methods are out of date.
If a Member serves on the Estimates Committee, he finds that during one Session he is inquiring into the hospital services. On returning from the Summer Recess, he finds that he is inquiring into legal aid. The next Session he is inquiring into atomic energy, or something else.
The Estimates Committee can operate only for the Session. By the time it has been appointed, and has appointed subcommittees and selected subjects for inquiry, it is Christmas time. It is seldom possible to start work before 288 then. The first thing a Member has to do is to learn about the intricate organisation governing a vast subject. He is provided with charts, and so on, to assist him. I regard myself as having the ability to understand these things as well as most people. I do not claim any special ability, but, quite frankly, I find it difficult to acquire within a week or two the knowledge to deal effectively with the subject under inquiry. I defy anyone to do that.
Having been asked to learn about the vast machine in a particular Department, how it functions, and how it is linked to other Departments, the Member is then asked to scrutinise expenditure by that Department. It is a tremendous undertaking. I find that it takes two or three months to begin to understand how it works.
§ Mr. Willis
I think that anyone who is honest with himself would admit that.
The Estimates Committee meets once a week. For an hour, or two hours, a week the Member asks questions. This does not seem to produce the best results, because he has to attend a number of meetings and ask numerous questions to try to find the weakness for which he is looking and which he can explore and report upon. Because he tackles the job without previous experience this takes a long time, and I think that the Estimates Committee will have to do something about this if it wants to be effective.
One thing that suggests itself to me is that the sub-committees ought to specialise more. When I say specialise, I mean that one sub-committee might deal with, say, the Navy and another with, say, the Royal Air Force, another with the National Health Service, or education, and so on. If sub-committees specialised a bit more, and each subcommittee confined itself to one Department, members of that sub-committee would get to know the Department concerned inside out, and would know where to probe to find any waste that there might be.
Is our Parliamentary procedure so rigid that we must complete a Report by the end of the summer part of the Session? If it is a long Report, there is a 289 hurry to present it by August. Is it necessary for this procedure to be continued? I realise that to change it would be a break with tradition and the procedure of the House, but surely it is not beyond our wit to devise an alternative system.
I agree with the comments made about expert asistance. The only assistance a Member gets at the moment—and I am sure that the members of the Committee are grateful for this—is from the Clerk of the Committee. If it were not for him we would not get very far at all. He provides the Chairman with a list of questions to ask to start the meeting. and helps with the procedure. If our inquiries become too involved, it might be necessary to have the assistance of someone with expert knowledge of the subject, and I think that this possibility ought to be considered.
The Estimates Committee could be made more effective by adopting the suggestions that I have made. In addition, I think that the Committee must be given a more important position in the affairs of the House. Fundamentally, this comes down to a consideration of the procedure of the House, because nowadays Members are asked to do so much. If they take an active interest in the House and serve on the Estimates Committee, their days are chock-a-block full. Because of our democratic system, hon. Members are under pressure from their constituents to take part in the proceedings in the Chamber. This means that it is difficult to find a sufficient number of Members who are prepared to cut themselves out of the life of the House for several hours every week. An hon. Member who serves on the Estimates Committee has to devote several hours a week to reading papers issued by the Committee, and in many ways this work is unrewarding. Nobody knows about it. It is unnoticed in the constituency. Half the electorate of a constituency have never heard of the Estimates Committee and what it does—and yet it is very important.
It therefore seems to me that much wider consideration ought to be given of the position of the Estimates Committee in the House with a view to giving it a much more important status, which would give the hon. Member concerned the place which he deserves. We all know that hon. Members on the Esti 290 mates Committee are doing a very good job and we must make this clear in the country. We must make it known that his work there is as important as making a speech in the House, and perhaps more important.
Yet the hon. Members who do all this work get much less credit than those who speak in the House. If an hon. Member makes a stupid interjection during Question Time, he may get a headline in the Press, or a mention on B.B.C. or on television. Another hon. Member who does a year's solid work on the Estimates Committee receives no recognition at all. We cannot altogether overcome these human traits; the Press has its own idea about these things. But we could try to give the Committee an importance which it does not possess at present.
I have spoken for rather a long time. I should not have done that but for the fact that I know that not many hon. Members wish to speak in the debate. [HON. MEMBERS: "Oh."] That is certainly so on this side of the House. I may speak frequently in the House, but I do not often speak for a long time. I apologise for having spoken for a long time tonight, and I have given the reason.
There is no doubt that the whole emphasis on the long-term planning of projects is the key, but I think that there will be great difficulties in the way. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) dealt with some of them. This is particularly true in the Service Departments, for quite a number of reasons. But in spite of all these difficulties, I agree with those who have said that this must be our aim.
§ 7.23 p.m.
§ Mr. David Price (Eastleigh)
I wish to deal with only one aspect of the important matters which have been engaging the attention of the House today, and this will follow on some of the points made by the hon. Member for Edinburgh, East (Mr. Willis). I refer to Parliamentary control of public expenditure. I want to draw attention to Part III of the Plowden Report, headed "Parliamentary Control", and to the first two sentences of paragraph 60, which read:We have not sought to go deeply into the relations between Parliament and the Executive in the control of expenditure, or into the procedures by which Parliament debates and 291 authorises Supply. We are alive, however, to the importance of the contribution that Parliament could make to our aims; and the main purpose of this Part of the Report is to show how, in our opinion, Parliament's influence and authority can best be brought to bear constructively.I wish to take up the challenge which Lord Plowden and his friends give us when they say that they havenot sought to go deeply into the relations between Parliament and the Executive.I believe that during the debate it is our duty to go a little more deeply than Lord Plowden and his friends have gone into these matters, because they are fundamental to our existence as the House of Commons.
It is a fundamental constitutional principle that the Crown has no power to tax save by grant of Parliament, and this principle has common law origin as far back as Magna Carta. So fundamental is this principle that the courts will infer that a power to tax has not been granted unless there is a clear intent to the contrary in an Act of Parliament. Similarly, Parliament has established its preeminence over Supply, which, of course, is in broad terms the other side of the balance sheet from taxation. The main Supply is granted by the Appropriation Act, which also appropriates.
We therefore see that Parliament has three functions in the financial field in which it has established supreme power over the Executive—taxation, Supply and appropriation. Since the Parliament Act of 1911, these powers of Parliament fall unequivocally and undividedly upon the House of Commons, and it is to the second of these three tasks, the function of Supply, that I want to draw attention.
I ask a question of the House: how efficiently does this modern House of Common fulfil its duty of controlling Supply? I think that it has emerged during the debate that there are three stages in the controlling of Supply. There is, first, the policy field, and a good deal of the attention of the House has been directed towards a discussion of what is involved there. Secondly, there are the annual Estimates. Thirdly, there is the post-mortem stage, which is the examination of how moneys voted under Supply have in fact been spent. It is my opinion that we as a House perform the first and third of these three 292 functions with competence and efficiency, but that, due to the manner in which our procedures have developed over the years, we do not perform the second of those stages with the care and attention of which the House would be capable if it changed its procedures.
May I say a word about public policy? Quite clearly, as hon. Members have said, financial commitments flow from the decisions which the House takes about public policy, and once policy is determined the limits in which the demands for public expenditure can vary are not very great. Possibly the limits are plus or minus 10 per cent. I doubt whether there is more variation than that, once public policy is determined. It therefore follows that if hon. Members are worried, as I know some of my hon. Friends are, about the continual rise in public expenditure, they must concern themselves with public policy, and it is no good their coming to Committee of Supply and complaining because Estimates have risen considerably.
The third stage is the post-mortem stage—the examination of how moneys voted under Supply are used. As an hon. Member who has never served on the Public Accounts Committee, I should like to pay tribute to the work of that Committee and of the Comptroller and Auditor-General. Their work has been well recognised in Lord Plowden's Report. Equally, I want to pay tribute to the excellent work done by our colleagues in the Select Committee on Estimates and also in the relatively new Select Committee on the Nationalised Industries.
But there are, as I see it, three limitations on the work of these latter two Committees which I think inhibit both of them during the second stage of controlling Supply—namely, the examination of the annual Estimates—in which I believe we are not fulfilling our duty. The first of these limitations is that the Estimates Committee does its work in hindsight after the moneys, in the main, have been spent. The second is that the Estimates Committee and the Select Committee on Nationalised Industries have no power to deal with questions of policy. In their terms of reference we always read this phrase:To report what, if any, economies consistent with the policy implied in these Estimates may be effected therein.293 That enormously restricts the field of their examination.
A third limitation is the time factor. I believe that the annual Estimates are the weak point in our Parliamentary control over public expenditure. The Estimates are in theory examined and then voted in Committee of Supply, but as Sir Ivor Jennings said:At no time since 1902 has it been suggested that the Committee of Supply has been an effective means of controlling expenditure, or even a body concerned primarily with expenditure.The Committee of Supply concerns itself primarily with public policy rather than with public expenditure.
There are seventeen Opposition Supply days. The Opposition choose the field of public policy which they wish to debate and criticise. I do not cavil at this, because it is the traditional procedure of the House that there should be redress of grievance before voting Supply. However, there are at present 128 civil and revenue department votes, of which thirty-eight account for more than 10 million each. I suggest that the House should examine these properly, which means in detail.
The view can he taken that the House of Commons is neither capable of examining them nor equipped to do so. This was certainly the view of Sir Austen Chamberlain as long ago as 1931 when he said:I do not think in these days the House of Commons will ever control the details of expenditure. You have to rely for those upon the Departments whose business it is…to control them. The more opportunities you give to the House of Commons to discuss Supply, the more pressure is put upon Ministers to spend money.I differ from Sir Austen Chamberlain's view, although today an even better case could be made out for it. I will tell hon. Members why I do not share his view and why we have to attempt to examine the Estimates more closely than we do. First, there is a wide gap between public policy in general and the implementation of policy in detail. That can be seen in all the big spending Departments, particularly in capital items. Secondly, in the complexities of modern industrial life, the extent to which a particular public policy can be pursued is largely a matter of marginal economics. Therefore, a detailed examination 294 of the Estimates is essential to the promotion of public policy. Thirdly, the excellent work of the Committee on Public Accounts, the Select Committee on Estimates, and the Select Committee on Nationalised Industries would be fortified by a proper examination of the annual Estimates before they are spent rather than after they are spent.
Fourthly, a proper examination of the Estimates would afford the Minister in charge of the Vote in question an opportunity to explain his Estimates in detail. Under our present arrangements, some of our Votes are never properly discussed. It may well be that the Press merely looks at the global figure and the Minister has no opportunity of explaining in public why some items appear to have risen to become out of line.
Fifthly, most other Parliaments in the free world on both sides of the Atlantic examine their annual Estimates with far greater care than we do. Sixthly, in my view, and certainly it would seem so to the public at large, we do not appear to be fulfilling our duties—nor are we—when we pass large sums of money on the nod. From time to time a Member of Parliament puts his friends up in the Public Gallery on a Supply day. There may be the most interesting debate on a general point of public policy, but at the end when we pass, as we often do, hundreds of millions of pounds on the nod our sense of proportion and public duty appears a little peculiar to our friends in the Gallery. Seventhly, if we as a House of Commons are not prepared to organise ourselves in order to examine the Estimates annually more thoroughly than we do at present we are failing in our job.
How can we examine the Estimates more thoroughly? First, it clearly cannot be done on Supply days as they are at present organised. Secondly, a more thorough examination of the Estimates cannot be done by a Committee of the whole House. The hon. Member for Edinburgh, East shares my view about this. Nor do I believe that the technique of general debate is entirely suitable for a detailed examination of the Estimates. I believe that such examination would be better conducted by question and answer, which suggests that the techniques used by the Select Committee on 295 Estimates would be more appropriate than general debate in the Chamber.
Further—this, if accepted, would be a major departure in the procedure of the House—there must be no limitation upon raising matters of policy in examination of the annual Estimates. Policy and expenditure are so permanently married together that even the House should not attempt to divorce them. Therefore, if we are to have an examination of the annual Estimates before they are spent members of the Committee examining the Estimates must be free to raise matters of policy, otherwise there is no point in doing the exercise.
I have, therefore, come to the conclusion that a Select Committee should be appointed annually to examine the Estimates, upon the report of which Committee they shall be recommitted to the Committee of Supply, but if not chosen for debate by the Committee of Supply they should be submitted directly to the House itself. This proposal may sound very radical, but it was first put forward to the Select Committee on Estimates Procedure in 1888. The Select Committee on Estimates Procedure in that year rejected the proposal on the following grounds:that no examination of the Estimates by a small Select Committee would be accepted by the House as sufficient or satisfactory, and as dispensing with the necessity of further discussion in the Committee of Supply, or of an equivalent discussion on Report by the House itself.Times have changed since the Select Committee reported in 1888. The whole procedure of the Committee of Supply has changed. We have dispensed with the further discussion which was then called for. We do not now have that discussion in Committee of Supply. Therefore, that objection to the proposal put forward in 1888 and which I advance again today is no longer relevant.
Estimates to-day are vastly larger and vastly more complicated than they were in 1888. It may have been appropriate in 1888 on going into Committee of Supply to have tried to examine certain Estimates in detail, but I do not believe that going into Committee of Supply or Committee of the whole House is an appropriate technique for such a detailed discussion of the Estimates as I wish the House to carry out.
296 I am not encouraged to advance this suggestion, although it is not a new one, by what the recent Select Committee on Procedure says in paragraph 46 of its Report published in 1959:We have reviewed alternative methods suggested for providing a closer and more detailed examination of the Estimates, but have concluded that none of these methods is likely to prove more satisfactory than the present arrangements. We agree with the Clerk of the House in thinking that a Committee of the Whole House is no longer capable of conducting a more detailed examination "—I agree with that—but we do not consider that the establishment of ad hoc committees as suggested by the Clerk would result in any improvement.With all humility, I disagree with the Select Committee on Procedure, believe that a Select Committee to deal with Estimates, which means that there would probably have to be subcommittees to get through all the Estimates, would be a vast improvement on what happens to-day. Therefore, I wish to put forward the proposal that as a House we consider setting up in future years a Select Committee before which the Estimates would be presented annually by the Minister in charge of each Vote. There would, of course, have to be sub-committees under the Committee, as we already have with the Committee on Estimates. I suggest that it would also involve some sort of time-table; otherwise the Minister might never get his Vote, because there are 128 different Votes to be examined. It would probably mean that during this period of the year, after Christmas, we should have to accept the fact that, as a House, we should meet probably one day a week less—when there would be four or five sub-committees dealing with the Estimates.
I am afraid that, unlike all other suggestions on the reform of our procedures, it would mean more rather than less work for Members of Parliament, but I take up the point that has been made by one hon. Member about professionalism. It is time we recognised that the job of being a Member of Parliament is a whole-time job. I am on the side of the professionals against the amateurs. We should be failing in our duty if we did not recognise that if we are to control expenditure we have, as Members of Parliament, to spend more rather than less time on examining the 297 Estimates. We must recognise the consequences of that on the life of this House and, indeed, upon the whole question of the remuneration and conditions of life of Members of Parliament.
I am not committed to the particular details of the proposal. I have been in this House only seven years, I am not an expert on procedure, and I have no doubt that the pundits can find all sorts of flaws in the details of my proposal. I do say, however, that unless we are prepared to examine the annual Estimates with greater thoroughness than we do at present we, this House of Commons, will be failing in our public duty—as I believe we are at the present time. In my view, it is an insufficient discharge of our duty to leave the whole responsibility for these matters upon the Treasury, admirably though that Department may discharge its duties.
It is because I love this House and care deeply about the continued success of the experiment of Parliamentary democracy that I invite the House to support my plea for a proper examination of the annual Estimates.
§ 7.42 p.m.
§ Mr. B. T. Parkin (Paddington, North)
I am very glad to follow the hon. Member for Eastleigh (Mr. D. Price) in directing my remarks towards the impact of our own procedure upon the spirit of the Plowden Report. It is high time that the House had the grace to admit that the improvement in efficiency, alacrity and flexibility of Civil Service procedure has greatly exceeded the rate of similar improvement in our own procedure.
I am glad, too, that the Chief Secretary to the Treasury, in opening this debate, killed—I hope for good—the popular suggestion that the Civil Service consists of a lot of bureaucrats who are all very anxious to spend more than they ought to spend, and that they could easily be supervised by a few Ministers—as one hon. Member rather deplorably, as I thought, suggested—at the level of the Parliamentary Secretary who has only just come into the Department, and that in that way there could be some discipline and control resulting in a great reduction in expenditure. I hope that we shall not hear much of that suggestion, because I should have thought it common knowledge by now that our 298 Civil Service is probably the best and most efficient in the world.
The Report talks of the propriety of spending but, after all, during the last 150 years we have gone rather a long way in the reform of administration. It is not long since an Accountant of this House, I think, did very nicely by collecting for himself fees—and there were a lot of fees to be paid over there in Westminster Hall before local government properly developed—and just paying a few clerks to do the necessary work. The immense progress that has taken place in the techniques and skills of administration ought really to remove all that from our discussions, and we should come back to considering how our own rôle is most properly played.
I only want to make one, as I hope, substantial proposal. It is one that I have made before on less important occasions, and I am glad that this occasion enables me to make the plea again. Nearly two years ago I was able to raise in a Consolidated Fund Bill debate an issue of immediate urgency concerning some of my constituents, namely, the number of children in care of local authorities, the cost of maintaining them, and the different factors that contributed to the break-up of the family which had landed those children in the care of the local authority. I shall not elaborate the whole case now, but I said that in an easily-delineated area of my constituency the number of children in the care of the local authority at a given moment was one in nine, or more than twenty times the national average.
I was able to raise that matter as a grievance put forward by an ordinary back bencher. I had the good fortune to start speaking while the Home Secretary was present. He had the courtesy to hear me out and to reply to me, so that I was able to get at the Minister responsible for children in general—because the Home Secretary is responsible for the operation of the Children Act although, in fact, he delegates the actual work to the local authority. The right hon. Gentleman gave me a very courteous reply.
I was able on that occasion to deal with many of the factors that contribute to the break-down of families, and if a Member is to discuss the operation of 299 that Act he cannot ignore the effect of housing upon such families, and the need for accommodation for large families. That, of course, is partly the concern of the Minister of Housing and Local Government, and it is also partly the concern of the education authorities. There are very few opportunities in this House for discussing the wide sphere of responsibility for the social services; the balancing of one thing against the other that the Chief Secretary has referred to in determining policy.
It is neither efficient nor dignified that a Member should have to raise these matters on the periphery of the rules of order by ingeniously studying the Order Paper to find out whether at some time he can drag in a factor that is really the concern of another Ministry, that he should furtively seek reassurance in the Table Office that he can raise a subject, and that he causes undue worry to the occupant of the Chair as he skates from the responsibility of one Department to another.
I suggest that to avoid that we have an instrument in our hands which has already been tried and applied in other directions. Each year, on the Economic Survey, we have a two-day debate that covers the general range of how we are doing from the economic point of view. The introduction of his Budget by the Chancellor of the Exchequer is followed by a general debate, after which we go into further details on the Finance Bill.
In the matter of defence expenditure we get a Defence White Paper, on which we usually have a two-day debate covering all aspects before discussing the individual Estimates of the three Service Departments in some detail, and debates in which individual grievances and proposals of detailed administration can be raised by individual Members.
It seems to me to be a perfectly simple proposition that Her Majesty's Secretary of State for the Home Department should accept normally—as it happens, by coincidence, that he does in the present Cabinet—the task of coordinating the work of the social welfare Departments, and that each year he should introduce a social survey, which could be followed by a debate on the general policy of the Government, 300 balancing one social service against the other, and indicating how the Government suggest a switch-over—I hope that it could sometimes be done more easily than in the way recommended by the Plowden Committee, I think in paragraph 84—during the course of the year.
It would be sensible and economical for the Government to have greater power to switch resources from one Department to another, provided that they are directed to tackling the same problem. In a debate such as I suggest hon. Members could follow general policy statements and raise issues which are the responsibility of the Ministers of Health, Labour, and so on.
If that were done some of the difficulties raised by the hon. Member for Eastleigh would be met. There would a greater sense of assurance on both sides of the House that we really knew about what we were talking; that is, the predetermined policy, of the Government. That would not altogether eliminate, but would almost take precedence over, the present system by which the Opposition—and I would like to see that preserved both for the Opposition and private Members—raise individual grievances. We should try to get a pattern.
Perhaps I can give an example of this. Suppose, instead of wanting to raise a subject connected with children, I had wanted to raise a subject connected with old people. I would not have been able to find a Minister on whom I could, by procedural devices, pin the responsibility for the whole problem because there is no "Minister of Geriatrics". I could, of course, table a Question to the Prime Minister urging him to appoint a Minister of Geriatrics. Some people would scoff at that, but it would not be such a bad idea—if one Minister had full responsibility for policy concerning old people. At present, there is no such Minister and no Parliamentary opportunity to discuss that subject more widely.
When the Plowden Report refers to the determination of policy and use of resources, surely our resources include the skill and experience of the older people who are still anxious to play a part in the life of the community? Indeed, from every medical, humane and psychological point of view, we should 301 be paying more attention to the problem of how to keep older people actively engaged in some kind of activity from which the community benefits.
I could not find a way, by our present procedure, of advocating this step. If we have a debate on pensions we have the usual squalid interchange of "We did this first" and "We thought of that first". If we quadrupled the old-age pension overnight we would not he doing anything nearly as useful for the old people as discussing the implementation of knowledge which is available and which has been built up since the war concerning the needs of old people and the possibility of their continuing to play their part in the community.
I am always willing to confess that I helped to allow us to build into the post-war Act the condition of retirement. That was a great mistake. My party had in mind, at that time, the 1935 idea concerning the need to get older people off the labour market so that they did not compete with their own sons who had responsibilities for growing children. We should, at that time, have thought ahead and have known more about it. But now we know it. We also know, however, that if that point is made in debate someone will say, "So now they want to send us back to work. There is a trick in it. They will use it as an excuse for not raising pensions sufficiently and they will put the remainder of us on National Assistance."
This matter cannot be proposed, opposed or discussed except as part of a package deal in a discussion on policy for old people. Equally, there is the question of where older people would like to be housed and the time of their retirement. It is ludicrous that retirement, without thought to resources or occupations, should take place on a certain birthday. How can one accept the thesis that a foundry worker should retire on the identical birthday of a worker in another field?
An interesting example of this occurred the other day concerning Lloyd's brokers. I understand that these people spend active lives rushing from telephone to telephone, pitting their wits against losses at sea. The job is exciting, full of tension and very rewarding in all senses. I further understand that the job 302 is such a strain that they have a rule whereby they retire at the age of 60. The average expectancy of life for a Lloyd's broker, after retirement at the age of 60, is three years, I am told.
This is a ludicrous waste of resources, because whether they be foundry workers, clerks, men who spend their time on the telephone, financiers, and the rest of them—if they are doing useful work, then they represent our resources. Indeed, we have no other resources except their skills. It is the hand and brain of our own people which represents our resources and we should, therefore, discuss the social services in that light. These people represent the help we need towards getting the sort of growth to which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) referred earlier. They represent part of the contribution to increased national efficiency.
If we could agree on that—that the purpose of the social services is not only a humane approach to someone who may be in difficulties, for that is only one part of it—we should also agree that there is an economic objective. The hon. Gentleman the Member for Sunderland, South (Mr. P. Williams) surprised me when he proudly said, "Sunderland does not need assistance now." I was surprised that that curious idea should have skipped a generation and still be in the hon. Gentleman's mind. When my hon. Friends campaigned on behalf of the depressed areas before the war, our case was not that Sunderland needed assistance, but that we needed Sunderland; that Sunderland was part of our national resources and that we deplored the breakdown which threw away the social capital and ceased to use it.
For these reasons, and on that basis, I should have thought that hon. Members could contribute a great deal towards drawing from the Government a picture of what are their intentions, what their provisions will do and what are the alternative proposals. We should see that if, in the course of the next year, it seems that one particular problem is being solved more quickly than another, money may be switched so that that unsolved problem may be solved.
In the succeeding discussions on Estimates I would certainly include the Minister of Labour. How, for instance, 303 can we discuss London's housing problem without his presence? Naturally, if I discussed his rôle in a housing debate, I would be out of order. There are so many questions concerning the problem of housing in the big cities, including how many people should be housed and the services required to keep the pulse of a big city beating. That is a problem in London; how many skilled and unskilled workers should be housed in London and how much land should be used for that purpose, how much money is required to subsidise that land and the element of commercial gain which could have been obtained by using that land for commercial purposes?
None of these arguments can be deployed except under a tolerant Chairman, late at night, on an unimportant issue. They should be deployed more often and hon. Members should have the opportunity to discuss, in the broadest sense, the policy of the social services. That would eliminate a great deal of the frustration which hon. Members feel now in the discussions on policy on Supply days. I hope that it will meet to some extent the criticisms which have been put by some Members of the party opposite who have themselves been conducting guerrilla warfare against the Treasury. I shall be very glad to hear later in this debate whether the Government have any ideas on that subject. The Chief Secretary said that he would have been able to develop it, and I hope that we may hear some more about it on the aspect of Part III of the Report than we have hitherto heard today, so that we as a House can add our contribution to the work and thought that have been put into the documents which we are discussing.
§ 8.1 p.m.
§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
At this time of the evening those who take part in these debates are few but fit. I am afraid that I cannot really come under the second category, for I find some difficulty in standing upright, and as a result my intervention shall be short.
However, I should like to take the opportunity, first of all, of saying how agreeable it has been to listen to the whole of this debate. I thought that 304 the hon. Member for Cardiff, South-East (Mr. Callaghan) made a most auspicious entry in his new rôle at the Dispatch Box. I enjoyed very much the speech of my right hon. Friend the Chief Secretary to the Treasury. I felt that perhaps his trip to foreign parts had given him a special authority which we all here appreciate.
Above all, this debate owes its inception to the initiative of my hon. Friend the Member for Farnham (Sir G. Nicholson) who, first of all as a member of the Estimates Committee, pressed that Committee to start the investigation into Treasury control. Then he was appointed Chairman of the Sub-Committee which undertook that investigation, on which Sub-Committee I had the honour to serve, and today he has had the great satisfaction of seeing these matters debated on the Floor of the House. At the far-off distance when that Committee sat, more than four years ago, it looked very unlikely indeed.
Mention has been made of the Committee's staff. The Clerks to the Estimates Committee are young men—highly qualified, no doubt, but they do not have great years of service to support them, and I think that the contribution made to the work of the Estimates Committee by its Clerks should not be overlooked. We have had many suggestions that they should be strengthened by outside experts or by more senior people. However those suggestions are taken, I would suggest that in a position which calls for diplomacy as well as ability, the Clerks to the Estimates Committee have shown outstanding abilities.
Going back to the Report of the Select Committee on Estimates, from which this matter originates, the last paragraph of the Committee's Report began:The system appears to work reasonably well. But it would be idle to pretend that Your Committee is left entirely without disquiet. The evidence disclosed certain anomalies and imperfections. Some things go surprisingly wrong, effort is not always applied in the right direction, there is inadequate assessment of eventual commitments, and while new expenditure may be carefully watched, continuing expenditure may escape relatively unchallenged.I call that quite a striking criticism, and I am bound to say that the coldness of the tone of the Treasury's reply seems 305 to me quite understandable. My hon. Friend the Member for Farnham apologised. I feel that he h ad no reason to do so. He was doing his duty. But the Treasury did not like his comments.
In reply to some of the criticisms that the Committee made, referring particularly to the "Victorious"—a matter which has been under discussion already—the Treasury said rather smugly:…more is done already than was perhaps appreciated by the Sub-Committee.Of course, more is being done than was appreciated by the Sub-Committee, but the fact is that the "Victorious" was a case where an original estimate of something like £5 million for work to be completed in four years became in the end an estimate of more than £20 million for work in eight years. But that bears no relation whatsoever to the difference in estimates on the missile programme—on the Blue Streak—to which reference has already been made. So whether the Treasury is doing more than was appreciated by the Sub-Committee, it would still appear that in certain fields it is not doing enough. I think it was on that that the Plowden Committee was appointed.
I should like to think a bit about Treasury control, because this debate has been rather wide-ranging, and I have been rather encouraged in this because I had the pleasure of reading recently the official life of Lord Cherwell by the present Lord Birkenhead. The late Lord Cherwell, Professor Lindemann as he was better known, was an innate enemy of Treasury control. He was entirely against it. Lord Birkenhead ascribes his antagonism to Treasury control to the day when two Treasury officials arrived at Whitchurch in order to be able to assure the Chancellor of the Exchequer that the services of the charwomen who cleaned the small officers' mess were paid for by the officers themselves, and not by the Ministry of Supply.
That was the reason for Lord Cherwell's antagonism to the Treasury. He took the view that the Treasury was overburdened with work and that, as a result, it could not meet its responsibilities fully. He therefore made it his special task, when he became a Minister in the Government of 1951, to make 306 sure that the Atomic Energy Authority was as far as possible divorced from Treasury control. His object of keeping the Atomic Energy Authority separate, OT rather of creating an Authority which was not directly responsible to any particular Government Department, was because, in the words that he used himself,Only men used to tackling large industrial developments can successfully handle operations of this nature.He went on to say:You cannot expect to win a tennis championship if you insist on using a niblick instead of a tennis racket.The great effect of his advocacy was that the Atomic Energy Authority was duly established in July, 1954. I have looked up the Vote of the Atomic Energy Authority in the current Estimates and it amounts to £78 million. The real question is: What are we getting for this £78 million which, through Lord Cherwell's provision, has been as far as possible divorced from Treasury control? The answer is that the particular object he had in mind was that the United Kingdom should diminish the lead which the Russians had established in atomic weapons. We have no reason to suppose that is the case. What we have got is an industrial complex of very large size, which, in the opinion of the man who should know best, Sir Christopher Hinton, is really much larger than would be justified on economic grounds. I base myself on an article by Sir Christopher Hinton in the Three Banks Review of December, 1961.
Sir Christopher Hinton said, first:The rapid advances of the last five years have been far less supported by industrial experience than the wise engineer would wish, and we are today building reactors with an output capacity of 290 MW when our only operating experience is on the Calder Hall reactors which are comparative babies with a capacity of 40 MWIn Sir Christopher Hinton's view, the size of the operation is larger than is justified on commercial grounds. Moreover, speaking of the 1965 target of 3.000 MW for the Atomic Energy Authority, he said:If this target were examined in the light only of scientific and technological considerations and without regard to the history of the industry, it would not be unreasonable to come to the conclusion that it is still too big".He adds:But to disregard history in this way would not be justified".307 It seems to me that the history of the Atomic Energy Authority does not provide a very good argument for trying to minimise Treasury control.
There is no doubt in anyone's mind as a result of this debate and a reading of the relevant Reports that the Treasury has within it a body of very experienced people of the highest ability and the greatest devotion who in some respects are striving to perform an impossible task. I do not think that they can be expected to be more intelligent than their masters.
Harking back to the Select Committee on Estimates, I remember very well the evidence of the Permanent Secretary to the Ministry of Agriculture. At Question No. 1145 the Chairman asked him:Does the Treasury protest against 'open-ended' grants?His answer was:Yes, it does. The Treasury dislikes them very much. So do I. It is a very disagreeable kind of exercise to have to do as an official administering a thing of this kind. But it is inherent in the policy and their Ministers and our Ministers have agreed it.We have had in the Supplementary Estimate of the Ministry of Agriculture published on 13th December last a very striking demonstration of where the policy of open-ended grants can lead us. In that Estimate there is a supplement for the implementation of price guarantees in respect of fatstock for England and Wales of £57,400,000 and for Scotland of £9,430,000. Lest anyone should think that the Scots are more moderate in their demands than the inhabitants of England and Wales, I should say that the Supplementary Estimate for England and Wales is only 217 per cent, of the original Estimate whereas that for Scotland is 225 per cent. of the original Estimate. This suggests that somehow or other the whole system of Treasury control has broken down.
I think that we in this House agree that we vote policy. My hon. Friend the Member for Eastleigh (Mr. D. Price) produced a most interesting suggestion about how we could control policy and Estimates more closely, but I think we proceed on the general understanding that we vote policy in the House and 308 pass the Estimates, leaving it to the Treasury to see that the Estimates are, by and large, effective. It is clear that in this case the open-ended grant system has been totally ineffective. There is in it a lesson for us: we cannot continue the open-ended grant system without subjecting it to a great deal of further criticism.
On the particular issue of the fat-stock guarantee, I understand—although I do not represent an agricultural constituency I have some farming knowledge—that whereas fatstock are graded Grade 1 or Grade 2 under the deficiency payment system, it has not been worth while for any producer of fatstock whose bullocks were to be graded at all to try to get them graded to Grade 1. As soon as they were fit for Grade 2, they were sent to market and got rid of so that the producer could draw his deficiency payment.
It has been suggested, also—1 think it is probably true, although, obviously, not universally so—that a certain amount of cattle graded Grade 2 were sold to the butcher on that basis, the producer drawing the subsidy, and were subsequently resold to the producer who then resold them in another market and drew the subsidy again. That, of course, is fraud and I certainly am not in a position to substantiate it. However, the size of the deficiency suggests that something very odd has happened.
I am reminded of the famous occasion when the House of Rothschild ran out of money. To celebrate the Coronation of King Edward VII, Lord Rothschild, living at Tring, arranged to make a special gift to every school child in Tring of a piece of cake and half-a-crown. He took the precaution of finding out the number of school children in Tring, added something to it for good measure, collected the requisite number of half-crowns and put them in the charge of a steward. However, the school children of Tring duly came in by the front gate, drew their half-crowns, and then, instead of enjoying the other festivities, they were seen to move very sharply out of the back gate where their parents were ready to receive them.
The parents collected the half-crowns from the children and sent them doubling round again to the front gate. After an hour or so, it became clear that 309 the resources provided by the House of Rothschild for the festive occasion were totally inadequate. There was a constant stream of claimants for the half-crowns. They were indubitably school children, of Tring and, therefore, fully entitled to the offered beneficence, but there seemed to be a lot of them. Emergency measures had to be taken.
I suggest that the case to which I have referred is one where Treasury control could not have been effective. Treasury control has not been effective in regard to these open-ended grants. We must be concerned about Treasury control because, for us in the House of Commons, it is our only protection. We have not the machinery for watching expenditure ourselves. We must rely on the Treasury to do it for us.
§ Mr. William Baxter (West Stirlingshire)
Is the hon. Gentleman suggesting that farmers selling fatstock on the market were selling cattle first graded as Grade 2. that the animals were then kept for a little while by someone else and were then nut back into the market graded as Grade 1?
§ Sir H. d'Avigdor-Goldsmid
I did not have the pleasure of seeing the hon. Gentleman in the Chamber earlier. Perhaps he did not quite hear what I said. I made no suggestion that cattle were being graded Grade 2 and then graded Grade 1. My first suggestion was that it did not pay a farmer—this is absolutely true—once cattle had become ready for Grade 2 to bother to spend extra time and money to upgrade them to Grade 1. Perhaps it paid in Scotland. It certainly did not pay here. I also suggested that there might have been cases where supervision was not as good as it should have been and that certain animals were graded twice.
§ Mr. Baxter
I think that we should have some proof of that statement. It is quite wrong to make it. I have had quite a long connection with the agricultural industry and I have never heard it even suggested that cattle were graded twice. This is the first time that I have heard such a suggestion. Unless the hon. Gentleman has some proof of his statement, I think it quite wrong that he should make it. It is obvious to anyone who has reared cattle why the extra Government subsidy was necessary. The 310 answer simply is that last year fat cattle were being sold at roughly £8 per cwt. This year the price dropped to £5 per cwt. That was why a supplementary grant had to be given by the Treasury.
§ Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)
I hope the hon. Gentleman will bear in mind that he is making an intervention in the speech of another hon. Member who has the Floor of the House.
§ Mr. Baxter
I am aware of that, Mr. Deputy-Speaker. I was merely trying to get the matter clear. I have never heard any evidence of the suggestion made by the hon. Member for Walsall. South (Sir H. d'Avigdor-Goldsmid). If he has any evidence to substantiate what he has said, he should produce it.
§ Sir H. d'Avigdor-Goldsmid
I am grateful for that intervention. With great respect, I said that that was what I had heard. I made it clear that I had no evidence of it. I accept the hon. Gentleman's assurance that that practice does not exist. I am very glad to have that assurance, but it does not invalidate my argument that a system of open-ended grants which gives rise to a miscalculation of 225 per cent. is wrong and must be revised.
As I say, I do not think we can expect those in the Treasury to be wiser than their masters, but I noticed today in the Bulletin of the Credit Insurance Association a useful quotation which stated:Big failures are a costly reminder to traders who fail to recognise the importance of having an effective system of credit control".The Bulletin mentions three very important companies which have failed, with considerable loss to the creditors in the last few months.
It seems to me that that is roughly the rôle that the Treasury should adopt towards us. We recognise the importance of an effective system of credit control. We believe that we have it in the Treasury, and nothing said in this debate has suggested to me that when the Treasury is on its own ground it is other than 100 per cent. correct. When, for reasons of policy or otherwise, it is off its own ground it is still fairly effective. But as long as we depend on Treasury control we must ensure that our policies are amenable to Treasury 311 control. If we indulge in the luxury of policies which are not amenable to Treasury control, we lose control of the expenditure of the country and, in so doing, as my hon. Friend the Member for Eastleigh said, fail to meet our responsibilities.
§ 8.24 p.m.
§ Mr. William Ross (Kilmarnock)
When we consider the amount of talk that there has been over the years on this subject—it became a matter for considerable peroration in every Conservative speech at one time—I am surprised that there should not be much interest in it when we eventually get round to discussing it in the House. It has always surprised me to hear people talking about this matter at one time of the year and then forgetting it for the rest of the year and even ignoring the opportunities that they have when we examine the Estimates and the control of expenditure.
I can well remember the right hon. Member for Woodford (Sir W. Churchill), in one of his flamboyant speeches in 1950, talking about the jaunt and jubilee of Government expenditure. Then, Government expenditure was £4,000 million, almost exactly half of what it is today.
§ The Financial Secretary to the Treasury (Sir Edward Boyle)
§ Sir E. Boyle
The date was right and the speech was right. It was the "half" that I did not think was quite correct.
§ Mr. Ross
The right hon. Member for Woodford referred to £4,000 million of expenditure. The figure quoted in the Plowden Report was £7,500 million. Therefore, there has been an increase of £3,500 million in expenditure on the part of a Government of the party which, in that speech, was pledged to prune, cut and reduce Government expenditure. This is the reason why we applaud the new sort of speech that we had today from the Chief Secretary to the Treasury. The road to Damascus has been pretty crowded by Tory Members today. They have accepted the Plowden Report.
312 What is the implication of the Plowden Report? We are to have a planning of expenditure, not over one year, but over two, three and even five years. But the Plowden Report also states that we cannot get anywhere near realism in estimating unless we know what will be the state of the economy over the same period. That means that we can plan our Estimates only if we plan our economy. One of the difficulties is the lack of data, statistics, and so on, on which we can base that plan. Reference has been made to powers in relation to the economy. It may be that we are groping towards that by the new National Economic Development Council, which I think we all want to see do a good job.
But let us appreciate the implications of what the Government now say they accept. They accept, not only planning in Estimates, but planning in the economy. They have turned their backs on their pledges and propaganda of 1947, 1948, 1949 and 1950.
§ Mr. Ross
Those were the years when we were eaten by the Tory locusts. That is what it amounts to. We have every right to be critical of hon. Members opposite who, every now and again, talk about Government expenditure but do nothing about their ability to control it.
Let us get this thing into perspective. Yesterday, we had a Bill passed through the House concerning criminal justice and increasing the number of judges. We had to provide, of course, for their salaries, pensions and the rest. The Bill was agreed by the House; there was no vote on it. Thereafter, we had a Money Resolution which laid out specifically the amount to be spent on it. No one who has talked about the control of expenditure here today and the desirability of detailed examination of this, that and the next thing said a word about it. It has become a habit in this House that Money Resolutions are not examined, apart from those concerning Scotland; and indeed, when occasional 313 discussion takes place, it is a Scot who raises it.
By the very nature of our proceedings, this aspect can be discussed only after the House has given its consent to the principle of the Bill. That means that it comes up after ten o'clock at night As soon as one gets up to speak on a matter of such vital importance, there are frowns and sighs from Tory Members who are anxious to get home to tell their wives about what they are doing to control Government expenditure, no doubt.
§ Mr. Ross
My hon. Friend anticipates my next point. In discussing the financial implications of something to which the House has agreed, we are limited to only three-quarters of an hour. If we really want to do something about controlling expenditure, having agreed to do something we should at least examine the financial implications of what we have agreed to, because, under our present arrangements, what we have agreed to will be part of a Vote which will not adequately be discussed.
I disagreed with one hon. Member opposite who put forward the suggestion that in any rearrangement that we make for committees to examine, I presume, the drafting of Estimates with Departments, policy should be discussed. I entirely disagree. The place where policy should be discussed is on the Floor of the House. What has happened is that where we should have been examining Estimates for the £7,500 million or the Supply Estimates of £5,000 million, we tend to talk about policy rather than the details of the Estimates. That is inevitable.
Anyone who has been a Member of the House of Commons knows that he can go to the Vote Office at Estimates time and get copies of every Vote. There are, I believe, about 128 of them. Some of them are together, but taking the volumes as they appear, they consist of a good shelf-full of books to contain details of all the Estimates that we want to examine and control. If an hon. Member happens to be a member of the Estimates Committee, whether he likes it or not he gets all the volumes sent to him.
§ Mr. Ross
The Scottish Members, who are determined to do their work properly, would not dream of doing that.
It is obviously impossible for the House to go through the Estimates in detail. We have reached the anomalous position that the only Estimates that are properly discussed in this House are Supplementary Estimates. They come on at a certain time on their own and have to be discussed on a particular day. Being much smaller than the rest, they can be discussed very well. We can discuss them and probably get elucidation of the mystery of what happens to the cattle be it in England or in Scotland. I did not like to interrupt the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), but I can tell him that there are whispers in articles from the lecturer in agriculture at Glasgow University that might tend to support the kind of suggestion that he was making.
When we read the Plowden Report and we see what is happening as the result of various changes which have taken place in the relationship between Departments and the Treasury, we get the opinion that the Treasury is interfering less and less with the detailed Estimates of the Departments. It is delegating a greater measure of freedom—and freedom from examination of its Estimates and of its expenditure.
If we are not doing it on the Floor of the House, the watchdog of the Treasury being preoccupied with the new conceptions of planning and with the aggregation of expenditures and possibilities and the rest, then there is a serious gap which must be filled in some way. I do not think that the Estimates Committee can, by the very nature of things, do it properly.
Here we have a Committee which started as a Committee and is now really five Committees or so; it is broken up into sub-committees. Each subcommittee takes a subject, and gets its teeth into it. All the time it is discussing that subject it gets reports from the other four or five sub-committees. I should like to know how many people properly read them. It meets only one day a week; sometimes, under the pressure of events, or of time as the Parliamentary Session draws to a close, it may 315 meet oftener. However it means that it is picking up not even one Department specially, but only sections or Votes of a Department. It cannot always cover the whole of any one Department.
I am perfectly sure that Departments heave a sigh of relief when they know that none of those sub-committees—B or C or D, whichever it is—is considering their Votes and Estimates. It is a very healthy discipline to have this Committee. I disagree with my hon. Friend the Member for Edinburgh, East (Mr. Willis) in his desire to have specialisadon—that one Committee should always consider the Navy and one should always consider the Army and so on. I disagree with that.
It was a Member of the Estimates Committee for a very long time and for some reason or another I could not fathom, I became its Vice-Chairman under Captain Waterhouse who, whatever else one may say about him, was a very good Chairman, an excellent Chairman, who dedicated an enormous amount of time and work to that Committee and who had its work very much at heart. I found that a sub-committee could with no special difficulty effectively deal with one subject after another and could find out exactly what was the proper way to tackle the problems.
However, that gap is there and has to be filled, and I think that the House should give a little more attention to how to do it. The first thing, of course, is to appreciate that the gap is there. When we pass Bills we should know whether we are getting value for money in the administration of those Measures. I agree with my hon. Frined the Member for Edinburgh, East to the extent that it may be that by spending a little more money we could properly carry out the policies as we pass them and thus get better value for the money being spent.
One thing which would immediately help, the House having set up this Committee, and recognising its importance, as we all do, would be to spend a little more time examining its Reports. It is not good enough that we should have only two days per year for that. We usually have about eight Reports from the Committee a year, with the comments of the Departments. It is quite ludicrous, important as this subject is, 316 and knowing the gap in Parliament's control and examination of expenditure and the inability of Parliament properly to examine and control the expenditure, that the House should set up the Committee and receive detailed Reports and many recommendations from it, with Departmental replies giving Departmental points of view, and then not discuss them, and often know nothing about them. Some of the subjects are terribly important.
The same is equally true of the Public Accounts Committee. I have no experience of that Committee, but I have experience of the importance of its work. I certainly hope that as a House we shall ask the Select Committee on Procedure to see how we can better fulfil our obligations in carrying out our rights and powers to control the Executive and to examine the Estimates to ensure that the money is being properly spent. When we appreciate that there are Departments which spend hundreds of millions of £s and we find how little scrutiny there is of that expenditure, it is quite staggering. I think that the same thing happens in the boardrooms of private companies. More time is spent in them discussing whether or not a 5s. a week increase in wages can be given to the caretaker than in discussing an expenditure of £2 million or £3 million; for the same reason that, to a certain extent, it gets quite beyond one.
I hope that the Government will give more indication of how they feel about the control of expenditure by Parliament. We have to reconsider once again how we deal with the Estimates. If we are to continue reviewing policy on Supply days, we must have some other Committee. It could well be on the lines suggested by an hon. Member opposite of looking at the Estimates in draft. It could well be, too, that we should have a Committee to study the manpower of the Civil Service, which could quite easily be a separate Committee.
But let us appreciate first of all our own responsibilities. We shall be passing Acts of Parliament and these Acts will cost money. Let us face the fact that far too many hon. Members, particularly on the other side of the House, gaily support Bills and gaily put forward Amendments which will cost more 317 money, and at the same time they criticise the levels of Government credit. Government expenditure is bound to rise.
§ Mr. Ross
That happens all the time, unfortunately. I hope that my hon. Friend will join me in future in doing a little bit of working by rule in Parliament. When we get a Money Resolution we should discuss and examine it. We should find out exactly what is the commitment and thereby ensure that we do our job properly as Members of Parliament. There is something very good in working to rule, but I do not say that we have the same thing in mind as other people who are working to rule. It might embarrass hon. Members opposite who have theoretical interests in controlling Government expenditure but who fall down pretty easily when it comes to the practical side of it.
The point I am making is that we must control Government expenditure, and that the major items of Government expenditure arise out of the decisions of this House. When we vote for them, let us have the courage to be prepared to tax for them. I should like to see an increase in certain Government expenditure but a cutting down of other expenditure, and I should like to see a closer examination of some expenditure.
I wonder to what extent, to take the last Government Report concerning the cost of materials, the wool was drawn over the eyes of the Treasury when we see that the initial Estimate and the final Estimate bear no relation one to the other. A few millions grow into tens of millions. The attractiveness of propositions agreed to are based on unrealistic Estimates but once agreed to, like Topsy, they start growing and it is a long time before anyone has the courage to stop that kind of thing.
If we could have more continuous examination of that we could stop these things before they got to the length of 318 five or six years of futile expenditure. There is much more that we can do if we exercise our existing rights and if we press the Government to give us a little more time to discuss Reports which come from important Committees that have a responsibility first of all of examining current Estimates and then of examining the money that is being spent, that is, respectively the Estimates Committee and the Public Accounts Committee.
§ 8.46 p.m.
§ Mr. R. Gresham Cooke (Twickenham)
I am glad that the hon. Member for Kilmarnock (Mr. Ross) came round to the view at the end of his speech that more time should be given to discussing Estimates, though he appeared to take a rather contrary view earlier. It seems to me that we waste a great many of our Supply days when we could be discussing Estimates in discussing the Congo and other subjects which are not related to financial policy at all.
§ Mr. Gresham Cooke
Then we pass thousands of millions of pounds on the nod.
There has been a spate of congratulations today to various hon. Members for initiating this debate, but it should not go unreported that we owe a debt of gratitude to my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), because it was his initiative, two or three years ago, that got the discussion going on Estimates. We have thrashed this subject fairly thoroughly, but what has interested me in the Plowden Report is that it has brought out the great growth of Supply expenditure over the last thirty years. It was 12 per cent. of the gross national product in 1930 and now it is 22 per cent.
I told the Financial Secretary to the Treasury last April, in a Budget debate, and he scowled at me for mentioning it, that local and national taxation was now 30 per cent. of the gross national product, and we are told by the Plowden Committee that total Government expenditure is now 42 per cent. of the gross national product. This brings out our own responsibility. I have pointed out in previous debates on Estimates 319 that if we divide Government expenditure by the number of civil servants it works out at about £10,000 per civil servant per annum, but if we divide it by the number of Members of Parliament it works out at £10 million per Member, which indicates our responsibility in this matter.
The Plowden Report has referred to the good business sense of taking a five-year look at capital expenditure, with an annual timetable for discussion with the Treasury—a programme of a kind which big business has adopted for many years. As a member of the Estimates Committee and a Member of Parliament I was shocked by the additional Supplementary Estimate for £78 million which the Ministry of Agriculture plonked down on the Table of the House in December. This brings agricultural subsidies and other payments to nearly £1 million a week.
§ Mr. Gresham Cooke
Yes, I should have said £1 million a day. This Supplementary Estimate was presented to us without prior notice. I cannot help feeling that if that happened in business the directors might say that it was time for the branch manager to go.
I ask whether the Ministry of Agriculture has finance progress officers and cost accountants. If not, the Ministry could learn something from the experience of the War Office and of the former Ministry of Supply, which had officials who made a great study of costing and accounting problems.
§ Sir Spencer Summers (Aylesbury)
The topic which my hon. Friend is criticising is the subject of examination by the Estimates Committee at present. He will have a chance to comment on the Report to be submitted to the main Committee next Wednesday.
§ Mr. Gresham Cooke
I am pleased to know that, because, obviously, this is a subject which needs careful thought. It brings me to the administrative practice of our great Ministries, fifteen of which employ over 5,000 people. The Permanent Secretary is responsible for policy management and finance, as has been pointed out. These Permanent Secretaries are excellent men, but are 320 they perhaps being overworked in having to look after finance as well as other subjects.
The Permanent Secretary is really a chief of staff. His is rather like a military appointment. He is the chief of staff through whom everything has to go. Of course, that is not the modern practice in business. I was once secretary of a large industrial company and I know something of the work of chairmen and managing directors. The managing director has under him the production manager, the sales director, the research director, the secretary, and the chief or cost accountant, and all of them have direct access to him.
I ask myself, therefore, whether in Government Departments everything has to go through the Permanent Secretary, because if that is the case the force of the comment of finance officers may be lost. If anything goes wrong in business, the chief accountant has immediate access to the managing director and there is generally a monthly meeting of all executives to discuss costs and trends, so that anything going wrong is nipped in the bud fairly soon. I do not know how big the offices of principal finance officers in Government Departments are, but, obviously, the Ministry of Agriculture, with such an enormous amount of money going out every day, should have a very strong costing department and an accountants department, with comptometers, and the rest, and the job of the finance officer should be to tell the Minister at once if anything goes wrong. If he does not do that, then we in Parliament have no Parliamentary control, because if a Minister does not know when anything is wrong in his Department we cannot know.
I wonder to what extent the Treasury looks at small details. The hon. Member for Kilmarnock mentioned ploughing-up grants. I cannot help feeling that there is some waste in these grants nowadays. They were introduced during the war to further the ploughing up of grass, and they have become a permanent part of the farmer's income every six years, because, after three years of grass, he gets a grant for ploughing up. The same is true of the hedging and ditching grants.
I do not think that we have yet discovered the right link between the 321 nationalised corporations and Parliament. A number of these corporations do not have their accounts discussed every year by the House. I do not want to pull them up by the roots each year—nobody does. If these accounts are not to come before the House as a whole, however, might not it be possible to lay them before the Public Accounts Committee each year, not for a very full examination but so that the Committee can look at them and draw the attention of the House to anything it thinks should be debated? As my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) pointed out, the Atomic Energy Authority can go for years without anybody looking at its accounts, for it is not really responsible to a Minister.
I conclude by making four suggestions, and if my hon. Friend the Financial Secretary would care to comment on them, I would be glad to hear the answers. I think that we ought to strengthen the powers of finance officers in the big Ministries. They should certainly have direct access to Ministers as a right, if they do not already have it. The cost departments under them should be staffed with finance progress men and weekly or monthly reports should be available to the Minister. Lastly, we in the House ought to try to forge a new link between Parliament and the nationalised industries. We must satisfy the public that we have finance under control, because I believe that at present the public believes that Parliament does not truly control public expenditure.
§ 9.56 p.m.
§ Mr. W. A. Wilkins (Bristol, South)
I had thought that I should not have an opportunity of saying a word or two in the debate, but, as the opportunity has arisen, I want to say that this has been one of the happiest days which I have spent in Parliament, not so much for the observations from my own side of the House as for the contributions which have come from the Government back benches.
Two good things have come out of the debate today. The first was the statement from the Chief Secretary to the Treasury who informed us that the Government had accepted the Plowden 322 Report which, I suggest, exposes many of the administrative defects in the Administration as we know it today. That is a welcome change of attitude after the way in which the Government have received—perhaps it would be more correct to say, "acted upon"—the Reports submitted to the House by the Monopolies Commission. I would like to think that the Government will be as wholehearted about their acceptance of those Reports as they have been about the Plowden Report.
The second good thing is that after about forty years of consistent propaganda by the Labour Party, we have now reached the point when we have seen a Tory Government accept a word which in the past they have inflicted on hon. Members in particular and the public in general as a dirty word. They have now accepted that "planning" is an absolute necessity if the country is to survive the economic troubles into which we have been plunged in the course of the past ten years.
This should be a cause for gratitude on the part of all of us who have been in opposition for ten years and who have been trying to persuade the Government to accept planning. The crux of the economic situation in which we find ourselves and which we have to try to rectify is stated on pages 6 and 7 of the Plowden Report. It was mentioned by the Chief Secretary to the Treasury who not only referred to it, but said that this part of the Report was accepted by the Government. If it is, and if it is acted upon, there may be some hope for the country's economy in the days that lie ahead. At this, almost the last moment of the debate, it may be worth while to put the two operative parts of paragraph 12 of the Report on the record again. Sub-paragraph A says:Regular surveys should be made of public expenditure as a whole, over a period of years ahead "—that is almost like the propaganda books which the Labour Party has issued over the last 40 years—and in relation to prospective resources; decisions involving substantial future expenditure should he taken in the light of these surveys.What common sense this is! Why this did not dawn on the Ministers on the Treasury Bench years ago passes my comprehension.
323 Sub-paragraph B says:There should be the greatest practicable stability of decisions on public expenditure when taken, so that long-term economy and efficiency throughout the public sector have the best possible opportunity to develop.
§ Sir E. Boyle
The hon. Gentleman says that the Labour Party has preached this for forty years. I think that Mr. Philip Snowden would have been horrified by that sentence.
§ Mr. Wilkins
If I had known that I was to have the opportunity of speaking in the debate, I would have brought to the Chamber a copy of the handbook published by my party in 1922, and on which the election of that year was fought. The hon. Gentleman will find that what I am saying is incorporated in the policy statement issued by my party in that year. We have been saying this in season and out of season. We have been saying it at the hustings. We have tried to persuade people that if we are to make economic progress we must plan not only the economic and financial but the manpower resources of the country. We have been trying for many years to persuade people that this is the only way to salvation, and at last the Government have accepted this as their policy.
I do not know whether this is unparliamentary language, but if it is, Mr. Deputy-Speaker, no doubt you will call me to order. I sometimes think that this is little short of political thieving. Time and again one sees policies which have been advocated by our party stolen from us, and a pale pink image put before the people, as with the Government's superannuation scheme which they stole from us and whittled down. It was after we published our booklet National Superannuation two years previously that the Government brought out their scheme.
We even had the Chief Secretary to the Treasury using the word "priorities". He brought back the most vivid recollections of my dear friend the late Member for Ebbw Vale, who time and again talked about the language of priorities and urged the House to adopt a system of priorities in the things that we did. This is so plainly true that Members opposite know that they cannot contradict it. This is language that we like to hear, but we are nevertheless 324 surprised to hear it from the benches opposite.
Dealing with the work of the Estimates Committee, although I have sat on this Committee for only a couple of years, I confess that I can see the necessity for the work that we are called upon to do. I call to the attention of the House a Report published by Sub-Committee E. It is a Report on trooping. I do not like using language which is too strong, but one might almost say that the Treasury has been negligent. It almost amounts to that, because ten years ago we agreed to the construction of troopships at a time when it seemed clear beyond doubt that it would be far cheaper, quicker and more efficient to transport our troops by air. This construction work has been going on for ten years, and probably would not have been sorted out now had it not been for the decision of one of the sub-committees to investigate this problem.
My memory is not clear about the details of the previous Report published by Sub-Committee E, but that Report dealt wiht ancient monuments and the preservation and scheduling of them. We had hard things to say about the administration of them in England. For the benefit of my Scottish friends, we had to give Scotland a fairly clean bill of health for her administration of this matter.
§ Mr. Willis
My experience of the Estimates Committee is that Scottish Departments are always far more efficient than English ones.
§ Mr. Wilkins
I have not gathered that from the way in which my hon. Friend attacks the Secretary of State for Scotland.
§ Mr. Willis
It is precisely because we have performed our duties in the House so well that this admirable state of affairs exists.
§ Mr. Wilkins
It is true that almost every Estimates Committee finds defects or flaws in the Administration, particularly in so far as they relate to Treasury scrutiny in these matters. If for no other reason, we can come before the House as Members of the Estimates Committee and claim that we have performed a useful service for the House, 325 the country and probably the Treasury Bench.
I agree with hon. Members on both sides of the House who have complained that perhaps the work of the Estimates Committee is not sufficiently recognised by the House in that insufficient time is given in the House for the consideration of the Reports which the Estimates Committee submits, often after many months of work. I hope that the Government will in future give consideration to providing arrangements whereby all the Reports of the various sub-committees of the Estimates Committee are brought before the House. The hon. and gallant Member for Buckingham (Sir F. Markham) will recollect another report of a sub-committee, on the Libraries, which seemed to disappear into thin air after it had once been put into print—no doubt because of the objection taken by some hon. Members to that report, who thought that we should not have been so critical of the department which they administer.
§ Mr. Wilkins
Surely that was all the more reason that the report should have been debated in the House.
§ Mr. Wilkins
Whether it was a deplorable report or not, it represented the findings of the Estimates Committee of the House, which in all other respects has been applauded for the reports which it has produced, and it was based on the evidence submitted to the Committee. It was based on information submitted to the Committee by members of our own Library staff and by staffs from libraries throughout the country. I do not say whether the Committee was right or wrong or whether this evidence could be disproved. It may well be that it could be disproved, but having laboured all this time and having brought the report before the House, surely the Committee is entitled to say that all hon. Members should have an opportunity of passing judgment on the report and saying whether they agree with it. This 326 is the point which I am arguing. We should not be engaged for months on end in work which eventually proves to be fruitless because literally it comes to nothing.
As a member of the Committee, I have been immensely impressed with the assiduity of hon. Members in the contributions which they make to it. It is not an easy task. It binds one down for meetings week after week after week. It ties one in all sorts of ways, and it involves giving an enormous amount of time to it. After this has been done, the least respect the House can show to these Committees is to see that the Reports are brought into the light of day and debated. I am sure that this would be all to the good of the House and of the Treasury Bench. There is nothing like having a watchdog at one's back if one wishes to be efficient. It is efficiency born of a knowledge that someone is keeping his eye on the work which one is doing, just as I intend to keep my eye on the work of the Chief Secretary to the Treasury.
I think that he is God's gift to the House. He is certainly God's gift to the Opposition. He has given us enough quotations today for us to go out and win any General Election if we could have one on the spot. I hope that he will go on doing this and that my hon. Friends have been making a permanent record of the things which he has said.
§ 9.10 p.m.
§ Major Sir Frank Markham (Buckingham)
The hon. Member for Bristol, South (Mr. Wilkins) said that today was one of the happiest days, if not the happiest day, in his Parliamentary life. We are all delighted to know that, because those of us who have been here for a number of years realise that there are only two happy days in an M.P.'s life. The first is when he gets into Parliament and the second is when he leaves this place for ever. We must congratulate the hon. Member on having a ration of one over the normal.
I intend to be very brief, because most of the points I wished to make have already been made. It would bore the House to the extreme if I went over the ground which has already been so well ploughed with so much assiduity. Of all the watchdogs over public expenditure in this country there is to my mind 327 no better instrument at the moment than the twin Committees of the Public Accounts Committee and the Select Committee on Estimates.
During my Parliamentary life, which has now lasted well over twenty years, I have been tremendously impressed by the devoted work which has been put in on these Committees by hon. Members on both sides. It has been a splendid example of the way in which our party system works on a non-party basis when we get out of the Chamber and up into the Committee rooms. I have served for many years under Labour chairmen of sub-committees who have themselves served under Conservative chairmen of the main committee. I have never once known party politics rear its evil head in these Committees.
There are, however, weaknesses in the system and I want to say a few words about how we could eliminate some of them. The first weakness, as was pointed out by the hon. Member for Edinburgh, East (Mr. Willis), is that the devoted and arduous work put in on these Committees is unrewarded by any sort of public recognition. The Press generally gives very little space to the reports of Select Committees. Apart from the little ripple which is caused at that moment, virtually nothing is said about the Reports in the national Press.
§ Sir S. Summers
To ensure that nobody misinterprets my hon. and gallant Friend, may I ask him to confirm that he means recognition of the work and not of the Members?
§ Sir F. Markham
Recognition of the work of the Committee and of the work put in by individual Members.
As the hon. Member for Edinburgh, East said, an hon. Member can rise in this House and make one or two silly remarks and he gets banner headlines, but another hon. Member can put in years of devoted work upstairs on these Committees and never earn a mention anywhere. His constituency is liable to take the view that the obstreperous interruptor at Question Time is a far more valuable Member than the Member who works in Committee rooms. I support the hon. Member for Edinburgh, East on this point. He made one or two valuable suggestions.
328 What can we do about this? The hon. Member for Bristol, South suggested that the House should give more time for the discussion of the Reports of the Select Committee on Estimates. Every Report of the Committee and its sub-committees should be debated in the House. We listened just now to a sharp exchange of opinion about the Report concerning the Libraries. Strong opinions have been held in all quarters. The House should provide the opportunity for that Report to be debated, if only for two and a half hours, and the same, of course, should apply to other Select Committee Reports as they appear from time to time.
On these occasions we should bring ourselves up-to-date by new Standing Orders. Instead of lordly speeches lasting over half an hour—which we have heard one or two tonight—there should be a rule of self-denial—speeches lasting not more than ten minutes from back benchers and not more than eleven minutes from Ministers. If we could bring ourselves up-to-date in this way, we should have time to discuss these Reports. Far more attention would be given in the country to the work of the Select Committee on Estimates, and the vexed question whether we have been right or wrong on the subject of the Libraries in the House or about the Admiralty or any other subject under the sun could be thoroughly ventilated.
I want to say something about the unfortunate position this country is in vis-à-vis control of Admiralty expenditure. Several of the Reports of the Select Committee on Estimates have stated that the Letters Patent of James II, which literally exempt the Admiralty from Treasury control, are completely and utterly out of date, and we have from time to time urged that this antiquated rule, which conduces to gross financial inefficiency, should be revised.
We have never yet had a sensible answer from either the Admiralty or the Treasury, and I hope that my hon. Friend the Financial Secretary will deal specifically with this matter this evening. We press him to urge the Government to abrogate the Letters Patent of 1688 which relieve the Admiralty of controls that effectively apply to every other Ministry. I press that point very strongly.
329 Further, I want to expose a deplorable practice that has been growing up, not only in the Admiralty, but in other Ministries. The moment it is announced that the Select Committee on Estimates intends to investigate a given subject the Ministry concerned promptly makes it known that it is setting up a working committee on that subject. The result is that when the Ministry sends its top civil servants to give evidence before us, and we put questions to them—wise questions, I hope, but, at any rate, questions—we are met with the reply "We cannot tell you very much about this; a working committee has just been established to go into it."
That is really preposterous. It is something so disgraceful in its operation that I only wish that I had the time to list to the House, one by one, the Departments with alleged working committees which have been set up to counter the Select Committee on Estimates, but which never seem to get into action, and never report. When we back benchers put down Question after Question to the Minister concerned as to when a working party that was set up to flummox or bewilder the Select Committee on Estimates, is to report, the Minister himself does not know, and cannot give any information. We never do get any information from the Department. It is a scandalous practice, and it should be stopped.
To sum up, I suggest that, first we should have time to debate each of the Reports of the Select Committee on Estimates in turn. Secondly, the House should bring its procedure up to date by having short, sharp debates, with time limitations on every one, not excluding Ministers and Privy Councillors—and Privy Councillors are often much worse than Ministers for long speeches I suppose they feel that they have to re-establish their positions. This House suffers far too much from verbal diarrhoea, and we do not want that in debates on the Reports of the Select Committee on Estimates.
Finally, someone—perhaps the Chief Secretary himself—should go into the question of the vicious habit of Ministries setting up working committees in order to fox the Select Committee on Estimates and not to give it the information that it has every right 330 to demand. It is a deplorable practice. Given these improvements I would say that, although today is not the happiest day of my parliamentary career, it may be one on which I can look back with satisfaction in the not too distant future.
§ 9.18 p.m.
§ The Financial Secretary to the Treasury (Sir Edward Boyle)
We have, indeed, had an excellent debate, and I am sure that the whole House listened with the greatest interest and respect to the speech of my hon. Friend the Member for Farnham (Sir G. Nicholson), who introduced it. Except for one very short interval, my hon. Friend has been a Member of the House for thirty years, and I think it is fair to say that nobody on either side has a greater sense of its tradition. We were very fortunate, if I may say so, in that, following my hon. Friend's speech, we had really admirable speeches, first from my right hon. Friend the Chief Secretary to the Treasury, and then from the hon. Member for Cardiff, South-East (Mr. Callaghan), which helped to set the debate off on an extremely happy note that has been retained ever since.
While his speech is still fresh in my mind, I would say to my hon. and gallant Friend the Member for Buckingham (Sir F. Markham) that I agree very much with what he said about the importance of Select Committees; and that the value of their waft is not fully recognised either in the Press or the country. In fact, it is rather regrettable that almost the only occasions on which the Reports of the Select Committee on Estimates do receive a good deal of publicity are when Departments are criticised for not spending enough money. I well recall the Select Committee's Report on the Youth Service which led to the setting up of the Albemarle Committee and I agree with what my hon. and gallant Friend said about that.
May I suggest one rather obvious way in which more time could be spent in discussing Reports? There is obviously no reason why, on any Friday on which Private Members' Motions are being taken, the House should not spend two or three hours discussing these Reports. I suggest that it may, occasionally, be a good idea to do so.
331 I want, at the outset, to say that I do not believe that it is sufficiently widely realised, in the House or outside, just how rapidly public expenditure has been growing during the last few years. I want, therefore, to quote a few figures which seem to me to be very striking. The Plowden Committee, in paragraph 15 of its Report, gave a very useful definition of total public expenditure, That paragraph stated that total public expenditure was the sum of, first, the expenditure of the Central Government above and below the line; secondly, the total expenditure of local authorities; thirdly, the outgoings of the National Insurance Funds; fourthly, the whole investment of nationalised industries.
Under this definition total public expenditure was less than £7,000 million in 1955. By 1960 it had risen to well over £9,000 million and it is now over £10,000 million. As my right hon. Friend the Chief Secretary pointed out earlier, no less than three-sevenths of what we, as a nation, produce each year represents resources used by the public sector of our economy.
Of course, I entirely agree with the hon. Gentleman the Member for Glasgow, Craigton (Mr. Millan) who very rightly said that there are dangers in looking at public expenditure in the round. I shall refer specifically to that later. It is, as I said, important to realise just how rapidly public expenditure has been rising during recent years.
§ Sir S. Summers
Can my hon. Friend indicate how much the rise would be in real terms, because I think these are in depreciating pounds as the years go by?
§ Sir E. Boyle
I do not have the precise figures in real terms with me. I can say, however, that the share of the gross national product taken by public expenditure, which was down to about 37 per cent. as a share of the national product, in the middle fifties after the defence programme had been reduced, has risen as a share of the national product in recent years. This is not merely a rise in money terms but it represents a rising share of the gross national product, and that trend is still upwards at the moment.
I should also like to remind the House of one other set of figures, perhaps even 332 more striking. The Financial Statement published every Budget Day gives an estimate of total above-the-line expenditure by the Central Government—that is to say, Supply and Consolidated Fund services for the financial year just begun. I can remember, though not then a Member of this House, the debate on the Budget in April, 1950, when my right hon. Friend the Member for Woodford (Sir W. Churchill) drew attention to the fact that the House was considering the first peace-time Financial Statement in which the £4,000 million mark was exceeded. The hon. Gentleman the Member for Kilmarnock (Mr. Ross) referred to this earlier.
It was eight years later—in 1958—that this estimate rose above £5,000 million. But it was only three years after 1958—in last year's Financial Statement—that the figure reached £6,000 million. A large Supplementary Estimate has already been presented to Parliament since that date. By any standards this is a very striking, some would even say a startling, rate of increase.
I am not concerned tonight to argue whether, in itself, it is either good or bad. That is not what we are debating now. This is not a discussion on policy. I ventured to say to the House when speaking on the debate on public investment that I thought that these figures showed how completely false is the charge that the present Government have neglected public services. In my view this charge is quite conclusively refuted, whether one considers in real terms the rate of rise in social service expenditure since 1951, the rise in public investment, or the plans for a projected further rise in public investment which have already been announced to the House and the country. But my main point tonight is that public expenditure constitutes a very large and, indeed, growing fraction of our total national economic activity, and we must recognise that the efficiency of our techniques for controlling public expenditure and the wisdom with which they are used are of first-class economic importance to the nation.
I want to dwell a moment longer on the economic situation of today, because I do not believe it is fully realised by many of those who write about 333 economic affairs, and it is also a matter which relates very closely to many of our past economic debates in this House. When my right hon. Friend the Chief Secretary and I were both junior Treasury Ministers together six years ago, it was a common experience on this side of the House for us to be rebuked by the right hon. Member for Huyton (Mr. H. Wilson) for exaggerating the extent to which public expenditure was a factor in total demand. While we on this side certainly did not agree with all the criticisms of the right hon. Gentleman, it is true that in 1955 and 1956 public expenditure, as a proportion of the gross national product, was lower than it had been in 1951 and was also approximately stationary.
But the position has been very different during the past two or three years, as the figures which I have quoted show very clearly. Beyond any shadow of doubt—and I think the House ought to recognise this—the rapidly increasing rate of expenditure by the public sector has contributed to the excessive pressure of demand on our economic resources during 1960 and 1961. It has not been the only factor—as the House knows, there has also been a notable upsurge in private capital investment which we all welcome—but it has been an important factor. To secure a proper relationship for the future between the growth of our public expenditure and the growth of our economic resources must be a matter of central importance to the future development of the British economy.
This leads me to the central doctrine of the Plowden Report. It is an obvious doctrine, but one which is by no means easy to apply in practice; namely, that for all our public expenditure we should seek to work within a planned total. It is easy enough to subscribe to this as a general principle. But it carries the implication, however disagreeable, that within the limits set by our respective resources, if one service or one field of expenditure is to have more, others must have correspondingly less.
My hon. Friend the Member for Farnham rightly drew attention in his speech to the emphasis in the Plowden Report on what have come to be known as "forward looks". But I must say that my hon. Friend went too far when he suggested that the Treasury has not 334 been engaging at all in this kind of activity hitherto. For example, the House will be aware that for some years now it has been the practice to consider public investment as a whale and to take a forward look over a period of years ahead. There have also been important forward look exercises in the field of defence expenditure.
What the Government now intend to do, with the support of the Plowden Committee, is to extend this approach to the whole of public expenditure, current as well as capital. Indeed, it is just because the Treasury has been actively developing techniques in this field for years past that I believe we are now in a position to make further progress.
As the House will recall, my right hon. Friend the Chancellor referred in his Budget speech last year to the study he had commissioned on future public expenditure over the whole field. I beg my hon. Friend the Member for Farnham not to suppose that the Plowden Report came to the Treasury as a sort of unpleasant shock. Actually, the Report embodies a good deal of thought which has become common currency in the Treasury during the last two or three years.
If I may give an analogy—I hope that the House will not think it too frivolous—it is fairly common nowadays, when reading books on contract bridge, to find that the authors do not claim as a merit for their systems that they are quite new. An author will say that his system "reflects the best modern practice". That is an expression I have often seen. In the same way, I think it is fair to say that the Plowden Report was intended in part to reflect the most up-to-date Treasury practice in making forward looks.
§ Sir G. Nicholson
I took that line because the Plowden Report is in such striking contradiction to the Observations of the Treasury in reply to the Committee. I cannot think that both of them can be current Treasury practice. We have heard about the road to Damascus. The Estimates Committee does not arrogate to itself any rôle higher than that of just Estimates Committee, but the scales seem to have fallen from somebody's eyes.
§ Sir E. Boyle
I do not want to enter into controversy with my hon. Friend about this. I have re-read recently, very fully, all three documents, the Report of the Estimates Committee, the Treasury's reply and the Plowden Report. I do not believe that my hon. Friend received such a severe snub as he made out this afternoon. I honestly do not believe that the difference between the Treasury and my hon. Friend was as great as he has said.
What I have said is not to imply for a moment that the Plowden Report merely endorses the Treasury point of view. Of course, the composition of the Plowden Committee and the method of continuous consultation throughout its work led, naturally, to a two-way exchange of ideas and enabled many of the Committee's concepts to be assimilated and acted upon by the Treasury before the Report was published.
We have to recognise that there is one important difference—I emphasise this to the House—between capital and current expenditure which renders the Plowden concept not at all easy to carry out in practice. The point I have in mind is this. Every reduction in public capital expenditure can, if necessary, be regarded not as the cancellation of a project, but simply its postponement. We cannot, in the same way, postpone cash services or payments to individuals. As my right hon. Friend the Chief Secretary pointed out this afternoon, civil servants have to be paid, pensioners must receive their pensions, and those who qualify and apply for National Assistance must receive what is due to them under the regulations currently in force.
This may seem an obvious point to make, but when one reads what is said by some critics of Government expenditure, including Professor Parkinson—whose books do seem sometimes to be quite an exemplification of his own law—one feels that there is a good deal of over-simplification of this problem in the public mind.
However, I do not consider that this difference between capital and current expenditure in any way invalidates the Plowden concept. It simply means that the Government at any given time must fully realise and accept the economic implications of their policies. The Government must never lose sight of the continuing implications for public cur 336 rent expenditure of our public capital programmes. It is all too easy to forget that the link between capital and current expenditure is that decisions on capital projects very often entail continuing current expenditure as a consequence.
If we build a new school, or a new hospital, we must be ready to staff that new school or hospital and maintain and operate it. Thus will be created additional current costs, so far as we have created additional capital assets and not merely replaced old capital assets. Again, the Plowden concept depends on the Government estimating as accurately as possible not merely the initial cost of a new project in the first year of the undertaking, but also the total financial liability likely to be incurred in bringing the project to fruition.
It is of the highest importance that, when major decisions of Government policy are taken, the future cost implications should be estimated as accurately as possible. We have to recognise that this is often very difficult, particularly with projects which are technical and novel. The experts, on whose advice any Government must largely depend, will often admit that they cannot make a fully reliable estimate at the time when a decision must be taken. It is all the more difficult for lay officials and for Ministers themselves who ultimately have to make up their minds.
I emphasise this point because it is, with respect, all too easy for leader writers and the like to exercise the advantages of hindsight without having to ask themselves the question, "What advice would you as an official have given to a Minister in the light of the evidence available at the time when a final decision had to be made?" It always seems to me terribly easy to exercise hindsight when wrong Government decisions have been taken over technical matters. May I mention one with which I was concerned myself, as was my right hon. and learned Friend the Chancellor of the Exchequer? I defy anyone to say that in the early stages of their development when considering the prospects for the Hunter and the Swift aircraft, he would not have opted for the Swift. I am certain that the overwhelming majority of people would have done precisely that.
As I say, it is terribly easy to exercise hindsight in criticising Governments 337 when wrong decisions have been made on technical matters. At the same time, I entirely agree that we must constantly strive to improve our method of estimatting future costs of projects, and Treasury Ministers warmly welcome the fact that under our new procedure the House now has regular opportunities of expressing its opinion on these matters.
I should like to pass to two or three particular points in the speech of my hon. Friend the Member for Farnham. He referred to deficiencies in the scrutiny by the Treasury of continuing expenditure and offered to send me details of a number of cases. I should be delighted if he would send me those details. I will ensure that they are not pigeonholed but are properly and fully investigated by the Treasury divisions concerned. I certainly would not claim for a moment that there is never scope for criticism on the lines of my hon. Friend's speech, but Departments have their own sphere of responsibility, and I just do not believe that it would be either practicable or conducive to good government for the Treasury to attempt to do the work of other Departments as well as its own. I believe that once a project has been approved Treasury scrutiny should not be more than supplementary to the Department's own efforts.
Inevitably, this scrutiny must to some extent be selective, but I can assure the House that continuing expenditure is constantly under the eye both of Treasury officials and of myself as Financial Secretary. This is the third January running in which I have had the task as Financial Secretary of reading the submissions of Treasury divisions on Departmental Estimates. I can assure my hon. Friend the Member for Farnham and the House that these submissions, which are often of considerable length and complexity, suggest to me very strongly that the examination by the Treasury of Departmental Estimates is in no way a routine affair.
§ Mr. Callaghan
May I put this difficulty to the Financial Secretary? I see the strength of his argument, but how does one prevent a Department whose reputation is involved in a project which may be going wrong or which may not be really justified from carrying on with it unless there is some outside look at what it is doing? Is it not a natural 338 tendency of human nature to carry on with what one is doing and to try to redeem it if it is not going right?
§ Sir E. Boyle
There are two stages. First, it is up to officials in the Treasury and up to Treasury Ministers, not least at my own level, to keep a very careful look-out to see whether they think that something may be wrong. That sort of vigilance has to go on all the time. As soon as there is any question of something being wrong one comes to the question of policy and what should be done about it. It is extremely important, and is invariably the case, that the matter should not be debated just by Ministries which have a Departmental interest. It is extremely important that whatever committee of Ministers considers the matter it should include some whose own Departmental interests are not concerned. I think that invariably this would be the practice.
Furthermore, there is regular contact between Treasury officials and their opposite numbers in the spending Departments, not just at Estimate time but all through the year.
§ Sir G. Nicholson
Has my hon. Friend time to allow me to interrupt him? Can he spare a moment or two?
§ Sir G. Nicholson
May I give one or two examples of what I mean? There was this case of the Letters Patent of James H. Then again, no effort was made for nine years to see that the hospital services had a proper set of machinery, with a proper ladder of promotion to secure the best people, such as secretaries and treasurers for hospital boards and hospital management committees. Things like these should have attracted Parliamentary attention. I could cite scores, certainly dozens, of examples. It is no good my hon. Friend saying that he and some of his colleagues keep a close watch. There is room for the friendly lay critic throughout the expenditure of every Department. I beg my hon. Friend not to be complacent.
§ Sir E. Boyle
I certainly will not be complacent. If my hon. Friend will send me details of the cases I give an undertaking to look at them carefully to see that they are examined fully and 339 what lessons, if necessary, can be drawn from them. I cannot answer these matters without preparation, but I hope that my hon. Friend will write to me as he has suggested.
My hon. Friend was critical of the Treasury for dealing with proposals for expenditure, he said, "piecemeal"—a word which recurred several times in the course of his remarks. Of course, it is desirable to plan public expenditure as a whole, but do not let us forget that new proposals for expenditure must of necessity arise piecemeal. As my right hon. Friend the Chief Secretary pointed out in his speech, it is the natural tendency both for this House and for public opinion outside to advocate specific proposals for expenditure in a piecemeal fashion.
Those who work and are interested in a special field of activity are likely in many cases to be enthusiasts for what they are doing. In many cases, they are paid to be enthusiasts and advocates for it. They cannot be expected—it is not their job—to adopt a dispassionate global approach to new ideas involving public expenditure. I recall how my Oxford tutor, Professor Trevor-Roper, rightly remarked in one of his books that the trouble with James I was that he liked to think of himself as an omniscient umpire, but, unfortunately, no one wished to consult him.
The chairman of a local education authority or of a regional hospital board just cannot be expected to behave like a dispassionate umpire where matters of public expenditure are concerned, nor would it be in the public interest that they should do so. On the other hand, it is the all-important duty of the Government to act as a guardian of the public interest. It is for the Government to ensure that we keep a balance in our economy between the total of our resources and the claims made upon them, just as it is also for the Government to act as the guardian of the public interest when trying to ensure that rises in personal incomes do not outstrip the growth of national productivity. The Government cannot, however, carry out their function properly without the support and understanding of Parliament.
340 I assure my hon. Friend that the Treasury is laying more and more emphasis on the need to look at public expenditure as a whole; and the more clearly the underlying issues are understood by right hon. and hon. Members of all parties the better pleased the Government will be.
My hon. Friend the Member for Farnham also commented that the views of the Plowden Committee on stability of expenditure policy would, if accepted, mean that variations of public expenditure could not be used as an instrument of major importance for the regulation of the economy. My hon. Friend seemed to think that Ministers would be embarrassed by this conclusion of the Plowden Committee. I hope that I can set his mind at rest, at least on this point.
It is true that the 1944 White Paper on employment policy was written on the assumption that the main economic problem after the war would be that of maintaining a high and stable level of employment. That was the period when Lord Beveridge could say in his book "Full Employment in a Free Society"—I remember the words:In a society which has achieved full employment exports will only be required to pay for imports "—as though the employment problem was likely to be uppermost after the war and the problem of our balance of payments quite trivial by comparison.
I assure my hon. Friend that Treasury Ministers are not in the least embarrassed by the discovery that one at least of the ideas in the Coalition Government's White Paper cannot be applied without considerable revision to the changed economic conditions of nearly twenty years later. Of course there is room, as my right hon. Friend made clear last November, for some variation of public investment and some flexibility in the interests of managing the economy. In the same way there is nothing in the Plowden Report which rules out all short-term economy drives, but the important point is to ensure that when steps of this kind are taken the economies achieved are both sensible and genuine ones, and that they are not, for example, mere postponements which, in 341 the long run, may result in the expenditure of more public money than that which is temporarily saved.
It is also important to remember, surely, that during the last two or three years we have acquired important new means of regulating the total level of demand in the home economy. I believe that the device of trying to regulate the level of money in active circulation by means of the special deposits scheme has justified itself very well so far, and I would personally say the same of what one might term the Economy Regulator Mark 1, which was introduced by my right hon. and learned Friend last July.
However much one may dislike higher taxes I think that there is a fairly widespread feeling that if taxes have to be raised the fairest thing is to put up taxes on spending by a moderate amount over as wide a field as possible.
I have dealt at some length with the points raised by my hon. Friend the Member for Farnham, because it was he who introduced this debate and I should like now to deal with one or two of the points which have been raised by other hon. Members who have taken part. I shall end with the points which the hon. Member for Cardiff, South-East made about growth and also about the total level of expenditure, but I should like to answer two other points which he raised as well. He asked what the Treasury thought would be the most useful elements of public expenditure for Parliament to attempt to scrutinise.
I have not consulted my right hon. Friend about this but I should have thought that the answer was pretty definite. It is, above all, most of the big spending Departments, and I must say I would think it highly desirable that we should aim to discuss the expenditure of those Departments at any rate once every other Session; not less than that.
I listened with great interest, incidentally, to what my hon. Friend the Member for Eastleigh (Mr. D. Price) had to say about Parliamentary control, and I certainly take note of the suggestion he made, but, in addition to what we can do in the House, there is also, of course, the work of the Select Committees. I believe they do enormously valuable work in taking a more limited field and looking at it really thoroughly. 342 But I would say quite frankly that there is no substitute here for really hard work by hon. Members in acquainting themselves with policy matters and the work of individual Departments, and I can assure them that the Treasury will be only too glad to give hon. Members any help in its power in doing this work.
§ Sir E. Boyle
I am not, in a debate on public expenditure, going to promise increased expenditure on anything, if I may say so with respect to my hon. Friend.
Then the hon. Gentleman the Member for Cardiff, South-East quoted what he thought was rather a difficult sentence from Mrs. Ursula Hicks' article, the sentence beginning,The basis of systems analysis is input-output analysis…I would recommend him to look at a very good book by Professor Stone called "National Income and Expenditure" which I got from home at supper time. Very, very briefly I would say this to the hon. Gentleman. I think her point, if I have got it right, is that it is impossible to get an accurate picture of the national income or any part of it simply by consolidating the production accounts.
The reason is that those production accounts do not allow for what is called in national income analysis "the flows of intermediate products "—[Laughter.] I can explain that. That is to say, the elements in the costs of production of many industries which consists of purchases from other industries and the elements in the revenue from purchases which comes from sales to other industries. We can make allowance for those flows of intermediate products by grouping products into classes. So we have one set of figures for each branch of production, and if we arrange these in a system of rows and columns, so that the elements in a given row relate to the revenues from outputs of a particular industry, and the elements in the corresponding column relate to the costs of the inputs of the same industry, one gets a far more accurate picture of the way in which the national income or any part of it is made up. I thought that in view of what I have just said about homework it would only be proper for me to do a 343 little myself before replying to the debate.
My hon. Friend the Member for Bournemouth, West (Mr. Eden) said that he would like to see more money spent on hospitals and less spent on drugs. I shall not discuss that policy point with him, except to say that I think that he was a little too gloomy about what the Government have achieved in the last ten years with regard to what we believe to be justified reductions in public expenditure. When we consider what the present Government have done in ten years over the food subsidies, health stamps, general need housing subsidies and a number of other items I could list, I think that my hon. Friend could give the Government more credit for unpopular measures, which, I believe, were none the less right and proper, than he gave in his speech.
The hon. Member for Bishop Auckland (Mr. Boyden) said that we ought to have a manpower budget. I think that there are difficulties about this. If a manpower budget were made mandatory, it would involve the direction of labour on a scale never known since the war. If, on the other hand, it were merely to be a best endeavour I do not think that the experience of earlier Economic Surveys is too encouraging.
I refer the hon. Member, speaking from memory, to the statement of Lord Balfour of Burôleigh, who when Chairman of Lloyd's Bank, pointed out that as a result of compulsion in 1948 we got rather more people into the coal industry, but we got a lot more people into the distributive trades whom we did not want at all. This shows that a manpower budget is very hard to make effective without proper control.
§ Mr. Boyden
Surely inducements by way of special grants and that sort of thing could be used to steer the professional grades in one direction rather than another in relation to their training.
§ Sir E. Boyle
Let me say quite clearly, for myself, that I do not believe that manpower budgets are among the most valuable sorts of budgets at this moment, though I have never been an opponent of planning.
I welcome what the hon. Member for Cardiff, South-East said and which I 344 meant to refer to just now. He said to this side of the House, "Publish your forward estimates and forecasts and we will not necessarily hold you to them as a dogmatic statement of Government policy". I am sure that my right hon. and learned Friend the Chancellor of the Exchequer will take note of the hon. Gentleman's point and that this is the sort of matter that will be discussed in the National Economic Development Council.
The hon. Member for Glasgow, Craig-ton (Mr. Millan), who always speaks thoughtfully in these debates, said that he thought that we ought to have more professional competence in Government Departments. I fully recognise the importance of the highest professional standards in all parts of the public service today.
The hon. Member for Edinburgh, East (Mr. Willis) asked about Treasury control over the expenditure of the Admiralty especially in the modernisation and refit of warships, and he referred particularly to the case of H.M.S. "Victorious", which was mentioned in the Select Committee's Report. I am glad to be able to tell the hon. Gentleman that in the light of the Select Committee's Report the Treasury, in consultation with the Admiralty, undertook a review of the arrangements for the control of Admiralty expenditure and that this resulted some time ago in an exchange of official letters setting out a new and revised basis similar to that applying to the other Service Departments. This exchange made it clear, among other things, that the modernisation or conversion of major ships required Treasury control and these arrangements are now in force.
§ Sir E. Boyle
I have not time to give way, but if the hon. Gentleman wants to pursue this matter I will gladly pursue it further with him by correspondence if he wishes.
I want to come back finally to two important points which the hon. Member for Cardiff, South-East made in the debate. First he asked, "Are we not thinking too much about expenditure and not enough about resources and growth?" I would simply say to him that it is of the highest importance that we should all the time in this country 345 be adding to our national capital wealth and extending our capacity to produce, and that we have in fact done so during the past three years.
During the three years 1959, 1960 and still more in 1961 we added very substantially to the capital wealth of this country and to that extent we have certainly strengthened Britain's industrial basis. Surely the extent to which we can use this new capacity must depend on the success of our export trade and I believe that growth in the British economy must always be related to growth in exports. There is no getting away from what Mr. Dow said in the Westminster Bank Review recently, that the balance of payments must inevitably act as a restraint on all of our economic objectives.
Finally, the hon. Member asked whether the present rate of public expenditure really is too high in relation to our resources as a whole. No sensible person will say that a particular figure makes all the difference between success and failure in managing the economy. That would be an extreme view. The fact remains that the size of the public sector has been growing in recent years pretty fast and the trend is still upwards. The House ought to take note of the trend, and the Government and all those responsible for the conduct of policy should take note of it and follow it anxiously. It cannot be right from the point of view of our earning power as a nation that the public sector should pre-empt too high a proportion of our resources.
Do not let us ever forget that as a nation we earn our living in a competitive world. We shall not be able to achieve the raising of living standards and that higher degree not only of wealth but of civilisation at home, and of social advance and all the other things which hon. Members desire unless our balance of payments is secure, and unless we as a country earn our living in world markets that are becoming increasingly more competitive.
§ Sir G. Nicholson
Before I ask leave to withdraw the Amendment, may I say two or three sentences?
346 This has been a most highly satisfactory debate. As Chairman of the Estimates Committee which chose the subject for debate I am thoroughly satisfied that we did what was best for the House and that the House has conducted itself with credit and has added to its reputation. The moral to be drawn from the large number of speakers and the good attendance is that we should have more debates of this nature.
It is extraordinary, as I have already pointed out, that this is the first debate of this sort that has ever taken place. It has been a remarkable debate. There have been excellent speeches, not least the last from my hon. Friend the Financial Secretary to the Treasury. He is always right and I am always wrong, but it is a pleasure to argue with him. This has been a most successful day and I hope that the House will feel that we of the Estimates Committee were right to initiate the debate.
I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Main Question again proposed.
§ Mr. Michael Hughes-Young (Lord Commissioner of the Treasury)
I beg to ask leave to withdraw the Motion.
§ Motion, by leave, withdrawn.
§ Committee Tomorrow.