23. Examination of actual expenditure was on an ad
hoc basis until the nineteenth century. Even the annual accounts
of all receipts into and payments out of the Exchequer (legislated
for in 1802) did not show the actual expenditure made using those
funds. In 1857 the Select Committee on Public Monies recommended
that annual accounts of each civil department or military service
be submitted to Parliament and audited, and that a committee be
appointed to consider the audited accounts. The recommendations
were eventually implemented and gave rise to the system which
continues little changed in its essential features today: the
Committee of Public Accounts (PAC) came into existence in 1861
and the Exchequer and Audit Departments Act was passed in 1866,
establishing the Comptroller and Auditor General (C&AG) and
the Exchequer and Audit Department (the predecessor of the National
Audit Office). The first complete audited accounts of the whole
of the Government were laid before Parliament in 1869. The accounts
were intended to be consistent with the Estimates.
24. The PAC and the C&AG initially concentrated
on the regularity of expenditure, contributing greatly
to improved standards of accounting, but from the late nineteenth
century they were increasingly concerned with the economy and
efficiency of expenditure. However, it was not until the National
Audit Act of 1983 that the C&AG's value for money work was
put on a statutory basis and he was permitted to make such reports
independently of audited accounts. Since then, value for money
studies have formed the basis of most PAC hearings.
25. The National Expenditure Committee noted in 1917
that the system of Estimates and Accounts was inadequate for any
real control of expenditure because they recorded only the cash
actually paid and received in a specific year (the so-called "penny
notebook" system of accounting). This and the way expenditure
was classed under Votes and Subheads made it impossible to determine
what the real total expenditure was or would be for any specific
purpose. The problem noted by the Committee was resolved only
in 2001-02, with the replacement of cash-based Appropriation Accounts
by Resource Accounts, compiled on an accruals basis similar to
that of commercial accounts.
26. Several conclusions can be drawn from this historical
- There was no golden age
in which the House rigorously scrutinised every line of the Government's
Estimates and accounts and routinely rejected or reduced requests
for funding. Not long
after a proper accounting system was established in the second
half of the nineteenth century the House largely abandoned any
attempt to debate Estimates in detail.
- The prerequisites for effective scrutiny are
the same as they have always been, including comprehensive, accurate
and timely accounts.
- The hard-won gains of the past, such as comprehensive,
accurate and timely accounts and formal control by the Commons
over revenue-raising and expenditure, are still fundamental to
an effective scrutiny system and should not be taken for granted.
Ensuring financial integrity and regularity remains a key role
of parliamentary scrutiny.
- Neither scrutiny on the floor of the House
independently of select committees nor scrutiny by select committees
without any link to proceedings on the floor is likely to be as
effective as combining detailed work by select committees with
debate on matters of particular interest on the floor, for example
through select committees choosing financial matters for debate.
The House has never achieved this in the past except to a small
extent with the Estimates Days established in 1982.
- There is a natural tendency for debating opportunities
intended for financial matters to turn into general policy debates,
as with the Committee of Supply before 1896 and to some extent
Estimates Days more recently. In our view this can be countered
by making financial scrutiny less difficult, as discussed in the
next two chapters, and making it as far as possible an integral
part of scrutiny of policy.
- In devising arrangements for financial scrutiny,
it is important to be clear about what the House is seeking to
achieve and about the role which the House and Members can usefully
perform in financial matters.
9 This chapter is based on Paul Einzig, The Control
of the Purse: Progress and Decline of Parliament's Financial Control
(1959); Kenneth Mackenzie, The English Parliament (1951);
Public Bill Office, Supply Procedure and the Work of the Clerk
of Supply (2005), Appendix A. Back
Einzig, Control of the Purse, pp. 266-75 Back
HC (1888) 281, p. iii, quoted in Public Bill Office, Supply
Procedure, p. 227 Back
The successors of these days are the current Opposition Days,
Estimates Days and debates on defence. Back
Standing Order No. 152 Back
See para 27 below. Back
From 2009-10, Resource Accounts will follow international, rather
than UK, financial reporting standards, and a set of "whole
of Government accounts" will be presented for the first time,
bringing together the financial position of central government,
local authorities and the National Health Service. Back
See para 16 above. Back