Britain: An official handbook > 1977

FINANCE
Cash Limits
Treasury Control
The
Comptroller
and Auditor
General
35i
session on which the choice of subject for debate rests with the Opposition
and on which estimates can be debated. Broad issues of policy are normally
discussed.
Certain expenditures are not approved annually, but are covered by Acts
of Parliament allowing payments to continue from one year to another and are
paid direct from the Consolidated Fund. These include the financial provision
for members of the royal family, and salaries and pensions of judges. The
Consolidated Fund, into which tax revenue and other receipts are paid,
finances most of the Government’s expenditure; its balance is held in the
Exchequer account at the Bank of England. The National Loans Fund covers
most of the Government’s domestic lending and borrowing, and is operated
as an official account at the Bank of England. The two funds deal only with
sterling receipts and payments; official dealings in foreign exchange are carried
out by the Exchange Equalisation Account (see p. 359).
Cash limits are being greatly extended in 1976-77 to all public spending
where they can impose greater financial discipline. They are an important
part of the Government’s policy for reducing inflation and will help in fore¬
casting the Government’s financing requirements. About half of public
expenditure is covered by cash limits. Certain services such as social security
payments are excluded because, once policy and rates of payment have been
determined, cash spending in the short term depends on factors outside the
Government’s direct control. Cash limits are also placed on the financial
assistance given to local authorities by central Government and on local
authority capital expenditure except new house building and community
ownership of development land. The estimates of the financing requirements
of the nationalised industries (and the regional water authorities) are being
used as a form of cash limit.
Spending departments and authorities are required to provide within their
cash limits for any increase in costs due to pay and price changes. The cash
limits were published in April 1976 (see Bibliography, p. 469).
The Treasury’s authority is required for any new item of expenditure, for any
increase in expenditure beyond that originally authorised, for any change in
policy which means an increase in expenditure, and for extra-statutory pay¬
ments. This requirement is, however, subject to any delegated authority
which may be given to departments to deal with particular types of expendi¬
ture. Treasury control does not imply final sanction by the Treasury—in the
last resort the decision is taken by the Government as a whole, and carried
out subject to Parliamentary consent.
The Comptroller and Auditor General is appointed by the Crown and his
independence of the Executive is secured by specific statutory provisions.
Since 1866 he has had two functions: as Comptroller he ensures that all
revenues and other public money payable to and from the Consolidated Fund
and the National Loans Fund are duly paid over and that all issues are
authorised by statute, and as Auditor General he audits departmental and
other accounts and, as required by statute, submits his reports on Appro¬
priation Accounts and other accounts to Parliament. For many years and with
the encouragement of the Public Accounts Committee (see below) his
statutory audit functions have been extended to include general financial
administration, cost-effectiveness and cases of apparent waste or extravagance.