Holding Government to Account 150 years of the Committee of Public Accounts 1857 – 2007 The Committee of Public Accounts would like to acknowledge the use of a number of sources in the preparation of this document. In particular, it has drawn heavily on “The Control of Public Expenditure: Financial Committees of the House of Commons” by Basil Chubb (Oxford 1952) and made use of “The Accountability and Audit of Governments” by E L Normanton (Manchester University Press 1966), “Harold Wilson’’ by Ben Pimlott (Harper Collins 1993) and ‘‘Westminster: Does Parliament Work?’’ by John Garrett (Victor Gollancz Ltd 1992) and the Oxford Dictionary of National Biography (Oxford University Press, 2007). We are grateful for the assistance of the National Audit Office in preparing this history and the House of Commons Library for supplying invaluable reference material. Holding Government to Account 150 years of the Committee of Public Accounts 1857 – 2007 ‘‘That there shall be a standing Committee to be designated ’’The Committee of Public Accounts’’; for the examination of the Accounts showing the appropriation of sums granted by Parliament to meet the Public Expenditure, to consist of‘‘ nine members, who shall be nominated at the commencement of every Session, and of whom five shall be a quorum. 31 March 1862 Houses of Parliament 1860 As current Chairman of the Committee of Public Accounts, I am delighted to present this short history, which has been prepared to celebrate 150 years of the Committee. History should continue to inform the present. This booklet reminds us of the contemporary relevance of the centuries old desire to strengthen Parliamentary scrutiny over the public finances. It shows how our approach to public accountability has evolved as the nature of government has changed. Edward Leigh Introduction Expectations about the proper stewardship and accountability for public money go back many centuries. Generations of politicians and public officials have recognised the significance of the proper handling of public funds, the need to combat fraud and corruption and the importance of getting the most from tax revenue. Such themes have been at the heart of relations between the Crown and Parliament, and then subsequently have featured in numerous Parliamentary debates. The Committee of Public Accounts is a key part of our accountability arrangements to safeguard public money. One hundred and fifty years ago this year – in 1857 – a select committee of the House of Commons recommended the creation of a committee to oversee government accounts. This was a crucial step in the already long running efforts to secure proper stewardship. In 181, the Committee came into being and continues to this day to examine the use Government makes of public money. Over time, the role of the Committee has changed in line with the needs of the day – for example, widening the type of subjects considered from purely financial matters to broader concerns about the effectiveness of public programmes; increasing the number of hearings held and reports produced; and taking evidence from a wider range of witnesses, including from outside the public sector. At times, there has been resistance to the expansion of the focus of the Committee’s enquiries: in the late nineteenth century, for example, to the consideration of more than just the regularity of expenditure; in the 1940s to the desire for access to public corporations; and in the 1990s to its desire to examine public sector companies. Nevertheless, the mutual interest in the effective use of public money between Government and Parliament is clear and only recently, the Government stated in its response to the Committee’s 17th Report 2005-0 ‘‘Achieving Value for Money in the delivery of public services’’: ‘‘….that it takes the Committee’s recommendations seriously as the fruit of the accountability process. The best proof of this is that, as the report acknowledges, the vast majority of the Committee’s recommendations have been acted upon. The Committee has thus helped the Government ‘‘ to secure financial savings, raise the standards of public services and improve the quality of delivery. This history of the Committee of Public Accounts – once described by Professor Peter Hennessy as “the queen of the select committees… [which]…by its very existence exerted a cleansing effect in all government departments’’ – starts with the creation of the Committee and then charts the expansion of its interests, the challenges of two world wars and the subsequent growth of public expenditure with the development of the welfare state in the 1940s and 1950s. It highlights the Committee’s championing of higher standards of auditing in the late 1970s and 1980s, its concerns for maintaining standards of conduct in public business in the 1990s, and its efforts to modernise audit and accountability arrangements in the 2000s. A lot has changed, but much of the work of today’s Committee of Public Accounts would be very familiar to those who have served on it throughout the last 150 years. 7 8 Creating a lasting structure of accountability – the 1850s and 1860s There is a long history in the United Kingdom of attempts to improve Sir Francis Baring stewardship over money raised through taxes. Often this was stimulated by the consequences of war. In the 1780s, for example, William Pitt The driving force behind the moves that led ultimately to the the Younger took steps to gain control of national finances after creation of the Committee of the American War of Independence, but it was in the middle of the Public Accounts. A grandson of nineteenth century that major changes in public finances began to take Francis Baring, the founder of shape. At the time, the role of Parliament in the process of control was Baring Brothers banking house, limited. Whilst it had, for several centuries, been responsible for raising he was one time Chancellor of revenue and authorising expenditure, its scrutiny of public spending the Exchequer and First Lord of was weak. Intermittent attempts had been made to gain greater the Admiralty. He was involved control, but these were often thwarted by a lack of information. The first in finance committees in the House of Commons for several systematic presentation of accounts to Parliament began at the turn decades, pressed for a committee of the nineteenth century, and in the 1830s accounts showing actual of accounts in the 1850s and expenditure by the Admiralty were introduced, followed subsequently chaired the Select Committee on by the Army and other departments. Public Monies, which made the recommendations which shaped In the eighteenth and early nineteenth centuries, a number of financial the reform of public finances in committees were established in Parliament, but real and permanent the 1860s. He became the first change was slow. Within the House of Commons there existed a Chairman of the Committee of small group of interested Members of Parliament who pressed for Public Accounts. improvements and in 1857 one of them, Sir Francis Baring, successfully called for a Select Committee on Public Monies. The Committee, which Baring was to chair, secured the support of Gladstone (page 12) and Palmerston, and was set up to inquire into “the Receipt, Issue and Audit of Public Monies in the Exchequer, the Pay Office, and the 9 Audit Department”. The Committee’s efforts formed the basis for the financial reforms of the next decade, and it was described by a Head of the Treasury a generation or more later as “having practically decided the form in which Parliamentary control over expenditure should be established”. It recommended that the system of appropriation accounts in use for the services was extended to other civil departments, with accounts to be compiled annually and considered by a committee of the House of Commons nominated by The Speaker. Despite this development, progress in implementing the recommendations was slow, with Disraeli, as Chancellor of the Exchequer, not minded to act. Only in 1859, with William Gladstone in this post, did the idea of a Committee of Public Accounts receive the necessary support, and in April 181, Gladstone moved for a committee and the motion was carried to create the Committee of Public Accounts.The following year, the House of Commons passed a Standing Order, which read: “That there shall be a Standing Committee of Public Accounts; for the examination of the Accounts showing the appropriation of sums George Ward Hunt, the granted by Parliament to meet the Public Expenditure, to consist of Committee’s chair between 1870 nine members, who shall be nominated at the commencement of and 1871, later became Chancellor every Session, and of whom five shall be a quorum.” of the Exchequer. By repute, when he presented his one and only Budget speech to Parliament he discovered that he had left the ministerial Red Dispatch Box containing it at home in Northamptonshire. This is said to be the start of the tradition that, when a Chancellor leaves for the House of Commons on Budget Day, he shows the assembled crowd his box by holding it aloft. 10 Lord Frederick Cavendish, who chaired the Committee of Public Accounts from 1877 to 1880, was murdered in Ireland in1882 – along with the Permanent Under Secretary, Thomas Henry Burke – on the day of his appointment as Chief Secretary for Ireland by several men from an Irish nationalist group known as the Irish National Invincibles. The event became known as the Phoenix Park Murders. Burke, not Cavendish, was the target of the assassins. 11 Sir John Eldon Gorst – chair of the Committee of Public Accounts in 188 – was entrusted by Disraeli with the reorganisation of the Conservative Party, following its defeat at the general election of 188. The Conservative success at the general election of 1874 is widely attributed to his efforts.