House of Commons - Procedure

Select Committee on Procedure First Report

Annex: Historical background on sessional appropriation

1. The exercise of legislative control over the purposes and extent of public expenditure played a crucial role in the development of Parliamentary control over the Crown and later the Executive. It was recognised that the prohibition on raising taxes without Parliamentary authority—enshrined in the Bill of Rights of 1688—would be ineffective without a matching requirement that the monies so levied could only be spent for the purposes for which Parliament had authorised their levying.[42]

2. Although there are examples of Supply being appropriated for particular purposes before 1688, the systematic use of legislative appropriation dates from the Glorious Revolution. Up to 1762, there were instances of more than one Appropriation Bill being passed in a single Session, but thereafter it was understood that appropriation should be reserved for a single Bill for that purpose towards the end of the Session. In 1841, during proceedings on a Consolidated Fund Bill at an early stage of the Session, the Speaker advised the House against including within that Bill a clause of appropriation, on the grounds that all such appropriation was reserved for "the ordinary appropriation bill at the close of the Session"; the clause was not included in the Bill.[43]

3. The view maintained throughout the nineteenth century that appropriation had to be reserved for a separate Bill at the end of the Session partly arose from the nature of the House's financial procedures at that time. The distinct processes now viewed as falling within "Ways and Means" procedure (the raising of taxes and duties) and within "Supply" procedure (setting the levels and purposes of expenditure) were then much more integrated. The Estimates were referred to a Committee of the whole House known as "Committee of Supply". Each Estimate and details within each Estimate were the subject of Votes in Committee of Supply. Those Votes were reported to the House, which could agree with, disagree with or recommit any Vote. However, these resolutions of the House arising from work of the Committee of Supply were not immediately given statutory form so as to serve as authority for the release of money from the Consolidated Fund.

4. Instead, after the first report of Votes from the Committee of Supply, the House resolved itself into another Committee of the whole House "to consider of ways and means for raising the supply granted", known as the Committee of Ways and Means. In the light of the Votes of the Committee of Supply and the Chancellor of the Exchequer's Budget Statement, the Committee agreed resolutions to authorise taxes and other levies, to authorise release of money from the Consolidated Fund and to authorise loans. The resolutions of the Committee of Ways and Means, having also been agreed to by the House itself, were given statutory effect by what would now be categorised as Finance Bills and Consolidated Fund Bills.

5. This integrated process was intended in part to ensure that taxes were not set at levels that would provide a public revenue in excess of the total of authorised expenditure. At the completion of the work of both Committees, the Appropriation Bill encapsulated both the detailed Votes relating to the levels and purposes of all items of expenditure and the accumulated total of the grants and loans authorised. It was the duty of the Speaker to ensure that the overall amounts authorised for public expenditure by way of grants and loans (Ways and Means) did not exceed the total of the individual amounts voted for items of expenditure (Supply).[44] Appropriation thus involved the coming together of the twin financial processes relating to the authorisation of individual items of expenditure and to the authorisation of funding for such expenditure which had run in parallel during the Session and which could only be combined when both processes had been concluded.

6. In addition, there were wider constitutional grounds why it was considered appropriate for appropriation to await the close of a Session. In the words of a Treasury guide to financial procedure of the 1970s:

"In earlier times Parliament's final confirmation of the grant of Supply, and its act of appropriation, were delayed until the closing days of a session in order that it might retain its constitutional check on the Crown and the Ministry".[45]

By withholding appropriation until the close of the Session, the House of Commons was perceived as erecting a barrier to the premature prorogation or dissolution of Parliament at the behest of the Executive.[46]

7. The House has asserted the illegality of money being released from the Consolidated Fund for purposes covered by votes in a particular Session if that Session has been concluded by prorogation or dissolution without an Appropriation Act having been passed.[47] According to the leading constitutional historian Sir William Anson: "It is not the need of Supply, but of the appropriation of Supply ... which makes it legally necessary for Parliament to sit every year. If Parliament did not appropriate the Supplies of the year to specific purposes, the money which comes in on account of various items of taxation could not legally be paid out to meet the services of the year, except in the case of such charges upon the revenue as are permanently authorised by statute."[48] In any case where money has been voted, but not then appropriated in the same Session, the money has had to be voted again in the ensuing Session and then appropriated in order for the expenditure concerned to be duly authorised.[49]

8. Between 1762 and 1902 there was no instance of more than one Appropriation Bill being passed during a single Session. It was thus widely held that the passage of an Appropriation Bill itself signified the close of a Session's financial business. However, the 7th edition of Erskine May, published in 1873, stated that, once the work of the Committee of Supply had been designedly closed, it could be re-opened, albeit only by a demand for further supplies from the Crown.[50]

9. In 1902, further Supply was sought by the Crown after the passage of an Appropriation Act during the same Session, when the previously unforeseen need for a payment arising from the Treaty concluding the South African War arose. It was maintained by at least one speaker during the paving debate that the Appropriation Act should have represented the final financial act of the Session and that the proposed method of proceeding was unconstitutional. The Chancellor of the Exchequer accepted the absence of a precedent since 1762, but held that the exceptional circumstances justified a departure from established practice. The House agreed to the re-establishment of the Committee of Supply and then agreed to the ensuing Bill that became the Appropriation (No. 2) Act.[51]

10. Since 1902 there have been several other occasions where the authorisation of a further grant of Supply after the passage of the main Appropriation Bill has led to the passing of a second, or even third, Appropriation Bill during a Session.[52]

11. Since 1955 it has also become the practice for two Appropriation Bills to be introduced in the course of a Session if the usual financial cycle (which normally begins in December and concludes in July) has been interrupted by a General Election. Where a Session is to be concluded earlier than expected because of a dissolution for a General Election in the Spring or early Summer, the Supply already voted is appropriated by the passage of an Appropriation Bill before the dissolution. Any remaining Supply resolutions passed in June or July are appropriated in a second Appropriation Act of that calendar year, so that the second Appropriation Bill of the same Session appropriates only the Supply authorised during the next annual Supply cycle, usually beginning in December.[53]

12. An additional Appropriation Bill was also introduced in Session 2002-03 to correct an error in an Appropriation Act of the preceding Session so that the main Appropriation Bill of Session 2002-03 was the second Appropriation Bill.[54] Because the error affected the accounts for the financial year already completed, but was detected after some accounts had been finalised, it could not await the next Sessional Appropriation Bill.

Appendix 3: Letter from Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, to Mr Paul Boateng MP, Chief Secretary to the Treasury

Thank you for the further details of your proposals given in your letter of 13 January 2004.

As I mentioned in my letter of 24 November 2003 signed jointly with the Chairman of the Treasury Select Committee, the Committee of Public Accounts would wish to encourage moves which improve parliamentary accountability and the transparency of Estimates and accounts. The changes you now set out will provide for timely and clearer presentation of accounts. As such, I support your proposals.

The changes to Appropriation Acts in particular will serve to remove some of the barriers to earlier presentation of resource accounts and as a consequence, accountability will benefit from resource accounts that can be available earlier. However, it is clear that departments will need to make further progress in presenting their accounts sooner if the full benefits provided for by these changes are to be realised. The achievement of the earlier presentation of accounts must not be at the expense of their reliability. Otherwise, parliamentary accountability would suffer. In this regard, I welcome the Treasury's initiatives with the support of the NAO and departments to achieve "faster closing" of resource accounts.

The changes to Supply Estimates will go some way to modernise the Estimates process, and in particular will serve to make Estimates and resource accounts easier to understand and particularly where there are machinery of government transfers.

We raised the question of whether the use of "negative" Estimates might be extended to provide for transfers between Requests for Resources in a department's Estimate. While this would be subject to parliamentary authorisation, I appreciate the benefits that this will provide for departments in terms of greater flexibility in managing resources. However, I recognise that at times there might be a need for transfers to be reversed, and welcome assurances given by the Treasury that they will advise departments not to seek reductions unless they are confident that the resources would no longer be required. This guidance to departments might also stress that there is an expectation that transfers will not be sought as a matter of course and that such transfers are not a substitute for robust financial management and forecasting in proposing Estimates and managing expenditure. The guidance might further make it clear that there is an expectation that a reversal of a transfer or additional resources where there has been a reduction will be needed only when a change in circumstances could not have been foreseen, in all but exceptional cases.

I am copying this letter to the Chairman of the Procedure Committee.

4 February 2004

Appendix 4: Letter from Mr Alan Williams MP, Chairman of the Liaison Committee, to Mr Paul Boateng MP, Chief Secretary to the Treasury

Thank you for your letter of 16 January 2004, together with the memorandum explaining the proposed changes to the Supply and Appropriation process. As I indicated in our earlier exchanges of letters, the Liaison Committee is content to leave the detailed response to the proposals to the Procedure and Treasury Committees, and the PAC.

Since, however, your memorandum also deals with the question of the amount of notice Select Committees have to consider the Estimates, which is a matter of concern for the Liaison Committee, I would like briefly to comment on that issue and to seek clarification on a couple of points.

We are grateful to you for agreeing to seek an amendment of Standing Order No. 55 so as to extend from 7 to 14 days the time elapsing between the formal presentation of the Estimates and the ensuing "roll-up". This is a helpful change which we welcome; nothing which follows is intended in any way to detract from that.