Irregu

larities

constitu

maintained by the power of suspending or refusing the grant of credit to the Treasury until, in the words of the Act 4 & 5 Will. IV. c. 15, sec. 11, the comptrollergeneral shall have first satisfied himself that the royal order has been made in conformity with, and has not exceeded, the amount of the grant of Parliament.'

On one occasion in 1794, George III. refused to sign a warrant for the issue of a sum of money authorised to be paid by an Act of Parliament, for the carrying out of a certain contract with Mr. Jeremy Bentham. But seventeen years afterwards, another Act was passed for the issue of the money, and directing compensation to be made to Mr. Bentham for the breach of contract."

Nor is this a mere fiction. The control of the Exchequer was exercised in upwards of one hundred cases, between 1834 and 1857, and has proved effectual for the purposes designed."

There is a difference in regard to Supply charges and Consolidated Fund charges. The actual amounts of the former are specified in the votes, and in the Appropriation Act. The amounts of the latter are not specified in the Act, and must be made up by the Treasury. Before the Exchequer permits the insertion of any new charge on the Consolidated Fund, the warrant or other instrument creating the office, or making the grant, is called for, examined, and recorded. If found correct, the charge is allowed; if not, its amount would be deducted from the total, and not issued."

The grave irregularities which were brought to light caused by by the Committee of Public Accounts in 1873, in the neglect of expenditure of enormous sums of money for telegraphic tional re- purposes, in anticipation of the parliamentary grant, strictions. could not have taken place but for the unwise neglect of Parliament in Acts passed in 1869 and 1871, to

u Hearn, Govt. of England, p. 61. See Mem. on Financial Control, pp. 78, 80, 84, 114, Com. Pap. 1866, v. 7. And see Lord Monteagle's Ev. before Com. on Pub. Moneys, Com.

Pap. 1856, v. 15.

Mem. Financial Control, p. 78; Rep. Com. Pub. Accts. (Excheq. Bill), Com. Pap. 1866, v. 7, Evid. 173-180.

impose the usual constitutional restrictions in respect to moneys raised by way of loan, or by annuities, that the proceeds should be paid to the account of the Exchequer (see ante, vol. 1, p. 733). Instead of this, the amounts borrowed under these Acts were made payable direct to the National Debt Office, and subject to the orders of the Post Office, thus completely ignoring the constitutional functions of the authorities responsible to Parliament for the custody and regular issue of moneys from her Majesty's Exchequer.*

applied to

sanc

Parlia

ment.

The Exchequer and Audit Act of 1866 expressly for- Money bids the Treasury, or any subordinate authority, from only to be directing the payment of expenditure which has not services been sanctioned either by an Act whereby services are tioned by or may be charged on the Consolidated Fund, or by vote of the House of Commons. The ways and means are general, and may be applied to any services voted. But no money voted can be issued until the Ways and Means Act is passed; and the amount of supply voted is limited in the issue by the amount of ways and means. It is only by authority of the Ways and Means Act— which always contains a clause stating that the ways and means therein granted may be applied to any services voted by the House of Commons-that the resolutions of supply can be acted upon."

Bills.

In case of a deficiency of funds to meet the perma- Deficiency nent charges on the Consolidated Fund, the Act of 1866 empowers the Treasury to apply to the Bank of England to make advances to the extent of that deficiency, the principal and interest of which are chargeable upon the growing revenue of the quarter. A similar provision is contained in the Ways and Means Acts, in respect to services to be provided for by those Acts. The only

Sir W. Dunbar's Evid. p. 63, and pp. 72, 216, Com. Pap. 1873, v. 7. Act 29 & 30 Vict. c. 39, sec.

11.

Rep.Com. Pub. Accts. (Excheq. and Audit Bill), Com. Pap. 1866, v. 7, Evid. 50-61.

Exche

quer control over issue of money will not prevent

point wherein this differs from the old practice is, that
formerly Deficiency Bills were issued by the Exchequer
to the bank for this purpose.
Under no circumstances
would the comptroller of the exchequer grant a credit
in excess of his balance at the bank."

To revert, however, to the control which is exercised by the department of the Exchequer over the issue of public money. After all, that control is only effective in guarding against issues contrary to the exillegal ex- pressed will of Parliament, or in excess of the total penditure. amount of the ways and means granted to make good the supplies voted. It cannot follow the amount authorised to be advanced under the Treasury warrant, and guard against the future misapplication thereof. If such misapplication does occur, it is evidently the department by whom the money is received, and not the comptroller-general, who is responsible for the same. In the opinion of the law officers of the crown, the Exchequer check, even before the Act of 1866, was distinctly limited to the great heads of expenditure, such as army, navy, works, &c., and did not extend to their subsidiary votes; which is a matter resting between the Treasury and the departments charged with the details of public expenditure. For example, it would be impossible for the Exchequer to keep a check upon the appropriation of the separate naval votes, in which a large portion of the expenditure is incurred abroad, and upon imprests (i.e. advances) which cannot be assigned to a vote at the time of issue."

Funds in the hands of the

Once the public money has been formally transferred from the credit of the Exchequer to that of the paymaster-general, it is the usual practice, authorised by

a Com. Pap. 1866, v. 7, p. 527. Evid. 68-78, 83. See Com. Pap. 1868-9, v. 35, p. 1003.

b Com. Pap. 1866, v. 7, p. 529. Evid. 92, 93. See Rep. of Com". on Pub. Accts. Com.Pap. 1862, v.11, Min.

с

of Evid. 199; Rep. Com. Pub. Accts. Com. Pap. 1865, v. 10, pp. 125, 126. Rep. Com. Pub. Accts. Com. Pap. 1862, v. 11, Evid. 1740; Rep. of said Com. on Excheq. Bill, Com. Pap. 1866, v. 7. Evid. 127, 128.

master

used as

balance.

the Treasury, and in conformity with the recommenda- paytions of the Public Moneys Committee' of 1857, for the general Pay Office to apply the moneys in the hands of the are all paymaster to the general expenditure, without reference one to the Exchequer credits from which the moneys have been transferred, provided the service had been voted by Parliament, and the vote was not exceeded'; in other words, for the paymaster-general 'to use all his balances as one balance,' re-distributing the whole of the aggregate sum in his exchequer credit account, according to the demands of the different departments of the public service, irrespective of the particular titles under which the sums may have been assigned to his credit in the books of the bank.' This arrangement has been formally approved of by the Committee on Public Accounts, and it is attended with the great advantage that it prevents the loss that would be occasioned by having useless balances lying at the Bank of England."

6

By the 11th clause of the Exchequer Act of 1866, this practice has been distinctly legalised. But though the paymaster is at liberty to use all the money that comes into his hands as one fund, it is a mere matter of account, and by way of an advance. The purpose for which the money is issued will be that to which it is to be finally appropriated, and it will be so appropriated in his books. With the safeguard which will be hereafter afforded to Parliament by the universal operation of the appropriation audit, there can be no objection to make the moneys at the disposal of the paymastergeneral applicable to defray all the services which have been voted by Parliament. To prevent abuses, however, the suggestion of the Public Moneys Committee

Second Rep. Pub. Accts. Come. Com. Pap. 1863, v. 7, pp. 495, 496, 507; Rep. Com. Pub. Accts. Com. Pap. 1865, v. 10, App. p. 139. But the cash balance should not be used to make payments not authorised by

Parliament. Rep. Com. Pub. Accts.
pp. xvii., xviii., 68-75, Com. Pap.
1877, v. 8.

e

Rep. Com. Pub. Accts. (Excheq. Bill), Com. Pap. 1866, v. 7, Evid. 79-86, 127–131.

Exchequer con

has been followed, and an adjustment of accounts takes place at the pay office at the end of every month, when a statement of balances, showing the credit standing to each separate vote and account, is forwarded to the Treasury.

Nevertheless, the system of Exchequer control, while trols issue it effectually prevents the unauthorised issue of public of money money, is powerless of itself to prevent irregular expendi

but not ex

penditure. ture.

Principle of Exche

quer control over issue of money.

The control of the Exchequer over the issues of public money is based upon an admitted principle of our constitutional system, that no money is legally available for public purposes but that which has been placed at the disposal of government by Parliament. The government, in fact, are unable, under the laws now in force, to obtain from the Exchequer any money but what is drawn against some specific parliamentary grant. The issue of money by the comptroller of the exchequer is, moreover, accompanied by what is substantially an authoritative direction to the proper officers to apply such money to the particular service for which it was granted by Parliament, and the annual Appropriation Acts have always strictly forbidden any misapplication of the funds granted therein. But these stringent requirements, though they have undoubtedly served to restrain unauthorised expenditure, have not sufficed to prevent it altogether. The systematic misappropriation' of funds. granted by Parliament for specific purposes is an abuse which has existed for centuries, and which has continued to be practised to some extent even in our own day, notwithstanding frequent resolutions of the House of Commons, and penalties imposed by legislative enactment upon all public officers who should presume to divert or misapply the public revenues to any other

Second Rep. Pub. Accts. Com". Com. Pap. 1863, v. 7. pp. 7, 15.