THE PROBLEM OF ECONOMY.
ONE of the foremost, if not the foremost, of the problems which the new Government must face is the con- dition of the national finances. We, do not mean to imply that economy is in itself a substantive policy. It repre- sents rather the frame of mind in which policies should be conceived and carried. out. In the matter of expenditure on the Services, for example, the first aim must be, not to save money, but to secure an efficient defence ; but in the back- ground must remain the permanent duty to avoid. all needless and purposeless extravagance. But there are certain questions, concerned mainly with the machinery of government, where economy may almost be counted an end. in itself. Administrative, waste is so great an evil that in matters such as the machinery of raising and. spending revenue economy ceases to be a mere duty in the background, and becomes the cardinal obliga- tion.. An auditor's business is not to advise on the policy of a company, but to see that there is no leakage. So also it is the business of those concerned with the financial machinery of the nation to keep their attention fixed. on methods, and, leaving all the larger questions out ef account, to consider whether, on the data provided for them,.the machine is working well. A very able article in the current number of the Quarterly Review deals in a broad; statesmanlike Manner with the cost of government. The writer does not touch on questions of national policy, but confines himself to the methods employed. to give effect to whatever course the nation decides upon. And his con- clusions do not make pleasant reading. The traditional organ of Conservatism is as emphatic in its condemnation of our present practice as any Liberal pamphleteer. It is worth while to examine some of the main criticisms.
The first point is that under the system now in vogue much of our expenditure is removed from the efficient control of Parliament. The annual "Return of Public Income and Expenditure" is faulty from a bookkeeping point of view, since certain items, such as Post Office re- ceipts and expenditure, grants in aid of local taxation, and many of the charges for the National Debt and the Civil Service, do not appear at all. Again, the habit of present- ing Supplementary Estimates has grown to an alarming extent. In the last financial year they amounted to £4,610,000, as against .Z655,189 in 1894-95. These are hastily passed. long after the proper Budget debates are over. Again, Votes of. Credit, which used to be for small sums and for short periods, now amount often to twenty: millions to cover periods extending to half-a-year. Many items of expenditure are also made a permanent charge upon the Consolidated Fund, and an increasing pro- portion of the revenue is levied and expended. under specific Acts of Parliament. The subsequent ratification of Parliament has to be obtained for such appropriations, but "the condoning resolution is never submitted until twelve or more months have elapsed, and then usually at the close of a session, when many members have left, and those who remain are impatient to get away." The net result of the system into which we seem to have drifted. can only be extravagance. We give too much authority to officials and. to subordinate bodies, who naturally evaggerate the importance of their special provinces, and. attempt to secure the maximum for them. For this they are not to blame ; but none the less the tendency is fatal to any policy of retrenchment. If figures are not clearly put before Parlia- ment, Parliament can exercise no proper supervision; and any impulse towards economy must, let it be remembered, come from Parliament, and cannot reasonably be looked. for from the Departments. We would, therefore, urge upon the Government the desirability of reforming the practice of withdrawing from discussion and revision large portions of the public revenue, and of restoring to the .House of Commons its full financial control. We see no merit in the system of earmarking certain items of revenue for a specific purpose, as in the case of the grants to local authorities. It complicates bookkeeping, and prevents the Returns from showing the true financial position of the 'Wien. All Imperial finance transactions should be pay- anents into and out of the Exchequer. We are no enemy to the delegation of wide executive powers, but first and foremost must come the financial control of Parliament, for it is the only true guarantee of economy.
The second of the Quarterly's contentions is concerned with the enormous increase of local expenditure. To-day it exceeds national, and a. generation ago it was less than half. In many, places municipal debts have become two or three times the assessable value of the municipal property ; and the total has grown fivefold in thirty years, and is now nearly half the National Debt. The rates have enormously increased in spite of the fact that the rateable value on which they are levied has advanced by over fifty per cent. in the last twenty-five years. Two grave facts appear on such a survey. One is that there is no serious check upon the extravagance of local authorities. If this debt were incurred and these high rates levied for public purposes of undoubted utility, and if the ratepayer were certain that his contributions were properly administered, there might be little objection to the outlay. But few can seriously urge that this is the case. Public bodies, composed often of incompetent or interested people, embark cheerfully on vast expenditure because they know that they have not to pay the piper themselves. The repayment of loans being postponed till a period far ahead, the borrowing authority arrange that the redemption charges shall not bear hardly on the rate- payers during their tenure of office, while the real burden falls on a later generation, who may get no benefit from the work in question, since in all likelihood it will have been superseded by a more up-to-date concern. There is much wasteful expenditure on experiments in municipal trading, which from the vcy nature of the undertaking cannot be successful in public hands. The writer in the Quarterly ascribes much of this mischief to the inefficient control of certain central authorities like the Local Government Board. But we should have thought that the root of the mischief lay in the special Acts of the local authorities, which, in spite of all our Parliamentary safeguards, follow no clear principle in this matter. The evil is increased by the second fact,—that this expenditure is largely authorised by people who do not pay rates, and falls upon people who have no voice in its management. No small part of the electorate are compound-house- holders and lodgers ; and large sums are contributed in rates by companies which have no means of repre- sentation. In Holborn, for example, last year 28-3 per cent. of the rates were paid in respect of the premises of companies, for which no names appeared on the voting-lists.
"Legislation," in Lord Avebury's words, "may transfer the spending power from the individual to the State or to the local authority ; but it is an incontrovertible truth, elementary, indeed, but too often forgotten, that for every pound more spent by public authorities a pound less must be spent by private individuals." Public extravagance can in' the long run only mean private impoverishment, and this fact is not recognised by those who regard the local or national exchequer as a milch-cow to be drawn upon at will for indefinite supplies. It is the State's duty as well as the individual's to spend in proportion to its income, and the point we wish to make is that in many Departments there is no simple means to know what relation the two bear to each other and to keep the balance steady. It is not a question of policy, but of machinery. It may be right to make large outlays on reforms, but the liabilities incurred must be clear, the oversight of the expenditure must be rigorous, and the whole must be subject to the control of Parliament. Otherwise we shall have a bureaucracy, which, masquerading in the guise of democratic institutions, will land the country in a maze of extravagance and misgovernment. Before we can have economy we must have the machinery to make economy effective. We-trust that the Government, which is more deeply pledged to this principle than to any other, Will allow nothing to stand in the way of thorough in- vestigation and reform.
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