Select Committee on Procedure Sixth Report


The Procedure Committee has agreed to the following Report:—



1. In our Second Report of Session 1997-98 we drew the attention of the House to the need for fundamental reform of the House's financial procedures, and the shortcomings of the current system.[1] Following the Government Response to our Second Report,[2] we have taken forward our investigation into the financial procedures of the House. We have taken formal evidence from Margaret Beckett MP, the Leader of the House, Mr Bruce George MP, Chairman of the Defence Committee, and Mr Paul Evans, the Clerk of the Committee, Mr David Davis MP, Chairman of the Committee of Public Accounts, Mr Peter Luff MP, Chairman of the Agriculture Committee, and Mr Nick Walker, the Clerk of the Committee, Mr Martin O'Neill MP, Chairman of the Trade and Industry Committee, and Mr David Natzler, the Clerk of the Committee, and Mr W R McKay, the Clerk of the House of Commons, Mr George Cubie, the Clerk Assistant and Mr Paul Silk, the then Clerk of Supply. In addition we were supplied with written evidence by HM Treasury, the Comptroller and Auditor General and many of our colleagues who chair select committees. We are most grateful to all those who gave evidence in connection with this inquiry.

2. It is a fundamental constitutional principle that it is for the Crown to make proposals about expenditure and taxation; it is for the Commons to examine them and grant them. The House's control over expenditure is buttressed by a series of formal requirements, such as that new expenditure entailed by legislation must be authorised by a separate money resolution. As we shall describe, the requirements around the Estimates are the most rigorous of these; indeed, the Bank of England releases money to the Government from the Consolidated Fund only on the authority of an official of the National Audit Office who is charged with certifying that the release does not exceed the amount voted by the House.

3. The House has long attempted to improve its scrutiny and control of public expenditure both through improvement of the documents concerning expenditure available to the House, and through changes to its own committee system. Not only have the Committee of Public Accounts and the Treasury Committee been concerned about the financial documents the Government presents to Parliament, in the early 1980s the Select Committee on Procedure (Supply) and the Select Committee on Procedure (Finance)[3] were established to examine financial procedure. There have long been attempts to use the committee system to ensure that the Government's expenditure plans are thoroughly scrutinised. In 1968-69 the Select Committee on Procedure recommended replacing the Estimates Committee by a Select Committee on Public Expenditure with sub-committees examining individual departments to enable the House to examine expenditure and associated matters more effectively.[4] The existing departmental select committees, the continuation of this evolution, were given the responsibility to monitor expenditure as the first item in their remit. The time first set aside for debates on select committee reports was that allocated by Standing Orders for the consideration of the Estimates.[5]

4. Yet, in spite of the House's attempts to establish the systems necessary for the effective scrutiny of expenditure, and the considerable work done by select committees, the voting of the Estimates is almost a formality, and the Estimates Days debates are likely to focus on policy, rather than expenditure. As we noted in our previous report, the House's power over expenditure is "if not a constitutional myth, very close to one".[6] The House and the Government would both gain from a system in which the House could engage directly in identifying priorities and examining the effectiveness of spending. The House would have an opportunity to influence the Government's plans; the Government would have the opportunity to explain those plans to Members and ensure that the House understood the constraints in which they worked.

5. This kind of constructive engagement is most likely to take place if party considerations are not paramount. Select committees, in which Members of different parties have long worked together, should be ideal bodies to consider expenditure plans and make proposals for their alteration. The departmental select committees also have the advantage of in-depth knowledge of the department concerned, and their Members often have long experience of the subject matter. It is no wonder that the reforms proposed over the years have attempted to build on their role or that the formal procedures for considering select committee reports, including any reports on the government's spending plans, at the time for public business, are intimately connected to the House's approval of the Estimates themselves.

6. However, although this close relationship between debate on select committee reports and the voting of the Estimates recognises the role committees play, and should play, in examining expenditure, it has serious disadvantages. The need to tie debate on a report to a particular Estimate has meant the House's intervention is placed too late in the government's expenditure planning process cycle to be effective. The Estimates relate to expenditure for the current financial year, or that immediately about to begin. They reflect policy decisions already made, and expenditure already committed, or even already incurred. The loss of a vote on the Estimates themselves would, at the least, present the administration with severe practical difficulties. In fact, it is hard to imagine a case in which it would not be taken as a matter of confidence since it would deprive a Government of the finances needed to implement its current programmes. In such circumstances, few select committees would seriously expect proposals for changes to financial plans to succeed, and fewer governments would countenance such changes.

7. There is a further problem in that, as we shall describe, the forms of motion available on Estimates Days are very limited and rarely provide more than a mere peg on which to hang a debate. The House is rarely able to identify the focus of the debate through the motion before it; that identification must rest on the select committee reports "tagged" to the debate. There is no reason why a committee should not "tag" a report relating to policy rather than expenditure, and given the limited time currently available for debates on select committee reports[7], and the practical impossibility of making any change to the Government's spending plans, every incentive for it to do so.

8. In 1978 the Expenditure Committee noted:

    "Estimates in their present form, whatever their value to Departments, are of little use as an instrument of either parliamentary scrutiny or parliamentary control, as they do not set out the basic information needed to show whether the expenditure requested is justified; nor is this information shown anywhere else. Furthermore, over the years Estimates heads have tended to be reduced in number by the Treasury. ... Thus, even if Estimates were once satisfactory for Parliament's purposes, there has been a great diminution in their value to Parliament".[8]

Almost all these criticisms could be made today. The single exception is that there is now an extensive range of financial information available to Parliament, in addition to the Estimates themselves. But because financial information is available elsewhere, the Estimates themselves have been simplified and contain even less information than that deemed inadequate thirty years ago.

9. The Estimates have, and will always have, an important role in the system by which the House exercises formal control over government expenditure. We do not propose any changes to the system by which expenditure is controlled by Estimates voted by the House. We consider the need to appropriate the money granted by Parliament to specific votes imposes valuable discipline on the Government. But there is a difference between the use of the Estimates, Consolidated Fund Bills and Appropriation Acts to ensure both that expenditure is authorised by Parliament, and that limits to expenditure set by Parliament are not exceeded, and the use of the Estimates as the only means for debate on the government's expenditure plans.

10. The select committees should remain the principal bodies through which the House scrutinises the Government's expenditure plans; their role is not in question. Expenditure will most usefully be debated in an atmosphere which is not dominated by party political considerations. However, we believe the House should debate long term expenditure plans on substantive, amendable, motions, rather than, as at present, being forced by procedure to intervene at a point when no change can be made. The House will be better able to focus on expenditure issues if committees are able to table a wider range of motions relating to the Government's expenditure plans.

11. There have been concerns that making the House's scrutiny of expenditure more effective would give more power to select committees, which would in turn increase the influence upon them exerted by the Whips. These concerns were shared by the Leader of the House.[9] Any reform of financial procedure should have the aim of enabling committees to ensure better and more informed debate on the Government's plans. Even so, it is hard to see why select committees' increased ability to comment effectively on spending plans should concern the party managers. Committees frequently produce reports which criticise some aspect of Government policy; any threats to their independence as a result are rebuffed.[10] There is no reason why the Government should be more sensitive to reports on expenditure than it is to reports on policy.

12. Our proposals would mean that the House might be invited to vote on substantive motions to alter a Government's long term expenditure plans put forward by select committees as a result of reports on expenditure. However, even if such motions were agreed to, they would have far less immediate impact than would a vote against an Estimate, or a vote in favour of a motion to reduce. These two alternatives, on which all debate must now be based, are far more powerful, and although withholding of Supply is extremely unlikely when the Government is drawn from the majority in the House, the need to vote on a particular Estimate presents the Opposition with opportunities when a Government is weak. Successive Governments have managed to ensure that they are granted the Supply they need without needing to interfere with the work of select committees; our proposals would not alter this.

13. "No Supply before redress of grievance" is an important historic principle, but the grant of Supply for the current year is not necessarily the best focus for collective consideration of long term expenditure plans or for the cross-party discussion which should result from a select committee report. The challenge is to change the procedures of the House in ways which will increase committees' ability to put public expenditure issues before the House; increase the House's ability to engage with the Government's expenditure plans in a constructive way, but nonetheless ensure that the Government can expect the Supply needed for current expenditure to be granted with no less certainty than at present.

1  Resource Accounting and Budgeting, HC(1997-98)438, paragraph 11. Back

2  First Special Report of Session 1997-98, Resource Accounting and Budgeting: Government Response to the Second Report from the Committee, HC773. Back

3  See First Report from the Select Committee on Procedure (Supply) HC(1980-81)118-I and First Report from the Select Committee on Procedure (Finance), HC(1982-83)24-I. Back

4  First Report from the Select Committee on Procedure, Session 1968-69, Scrutiny of Public Expenditure and Administration, HC410, paragraphs 30-37. Back

5  Since 1995 three Wednesday morning sittings a session have also been set aside for debates on select committee reports (S.O. No. 10). Back

6  HC(1997-98)438, paragraph 10. Back

7  This will change with the introduction of sittings in Westminster Hall, which is discussed in paragraphs 33 and 38 below. Back

8  Fourteenth Report from the Expenditure Committee, Session 1977-78, Financial Accountability to Parliament, HC661, paragraph 10. Back

9  QQ 12-13. See also Q 6, Evidence, pp 50, 52.  Back

10  Q 30. Back

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