Committee Reports::Interim and Final Report - Appropriation Accounts 1938 - 1939::29 February, 1940::Appendix



Clerk of the Committee of Public Accounts,

Dáil Office,

Leinster House.

Adverting to the proceedings of the Public Accounts Committee on the 2nd March last in connection with paragraph 25 of the Report of the Comptroller and Auditor-General on the Appropriation Accounts for 1937/38, I am to submit, as requested by the Committee, a memorandum setting out the views of the Department of Finance, from the standpoint of administration, on the question of extending the scope of Supplementary Estimates.

An endeavour has been made to confine the Memorandum to principles, applicable generally.

The case which gave rise to the discussion at the Committee has a peculiar feature in that Finance sanction was conditional. I suggest that, if it is accepted that on general principles the express authority of the Dáil was not required to cover the sum of £32 involved, the matter can be regularised by the substitution of an unconditional sanction in respect of the sum of £30.


Assistant Secretary,

30 Meitheamh, 1939. Department of Finance.

The Scope of a Supplementary Estimate.

The question has been raised whether a Supplementary Estimate, taken for any special purpose or purposes, should also make provision for every Subhead under which excess expenditure is known at the time to have arisen or is anticipated to arise before the end of the financial year.

This question, though seemingly simple, really raises the more fundamental question of the sphere of Supplementary Estimates in financial control and so necessitates an attempt to secure a proper perspective.

The Ambit (Part I) of a Vote, describing in general terms its purposes and mentioning the sum granted by the Dáil therefor, is embodied in the annual Appropriation Act and is consequently statutorily binding. A larger sum than the grant specified (as a single amount) in Part I cannot properly be expended. If any excess expenditure is incurred, the matter cannot be set right by administrative action but is dealt with by a Vote of the Dáil. Further, administrative action cannot regularise expenditure not within the purpose of a Vote, as defined in its Ambit: that can only be done by securing the approval of the Dáil to an amended or expanded Ambit.

Considerations of administration rather than of legal enactment arise, however, when the likelihood or actuality of excess expenditure occurs under one of the subheads defined in Part II and explained in Part III of an Estimate and there is no likelihood of an excess on the Vote as a whole. Responsibility for the number and definition of these subheads and the explanation of each of them rests by statute upon the Minister for Finance and they form the basis of the Appropriation Accounts. No important departure from the established form of an Estimate would be made by the Minister without first acquainting the P.A.C. with the proposed change; but, subject to that qualification, the suppression and amalgamation of existing subheads and the opening of new subheads are matters of administration within the statutory sphere of the Minister, the main objects being to supply clear information to the Dáil and to facilitate financial control by the Dáil and the Minister.

In these circumstances, the normal procedure when expenditure arises (or is likely to arise) which is within the Ambit of a Vote (Part I) and yet is not expressly or adequately provided in the details (Parts II and III) is to exercise Virement, i.e., the discretionary power of the Minister to authorise the application of savings on subheads to meet excesses on other subheads and to new classes of expenditure within the Ambit of the Vote. The P.A.C. has explicitly approved of the exercise of this power, as resulting in economy and the avoidance of swollen estimates. Its exercise is, however, subject to the agreement reached between the Committee and the Minister that a Supplementary Estimate shall be introduced “if a service is of a novel character, or even remote from anything shown in the original Estimate, or if a considerable sum is involved.” No formal restriction is placed upon the amount of savings which may be diverted to meet excess expenditure under a subhead.

At its meeting on the 2nd March, 1939, the P.A.C. had under consideration a case, arising on the Appropriation Account of the Vote for Local Government and Public Health for 1937-38, in which the Minister for Finance had authorised the re-opening of a subhead in continuation of the same subhead of the previous year, in order to show expenditure, amounting to £32, which had been unforeseen when the Estimate for 1937-38 was being framed. Objection was raised that, as a Supplementary Estimate was taken at a date later in the year than that on which the Minister’s sanction was given, this expenditure should have been included therein.

In the considered view of the Minister for Finance, such a course was not required under agreed procedure and its adoption would be administratively undesirable.

Taken by itself, the expenditure of £32—made up of two items of £2 and £30 respectively—would not require covering by a Supplementary Estimate. It came within the Ambit of the Vote; it was not novel, seeing that during 1936-37 the Dáil had voted £350 for the service and the Minister had authorised, by the exercise of Virement, an additional £129 0s. 10d.; the re-opened Subhead (F. 3) was akin to Subheads F. 1 and F. 2; and the total sum was obviously not considerable.

Similarly any other inconsiderable amount of unforeseen expenditure arising in connection with a Vote would not require a special Supplementary Estimate to regularise it, if it were within the Ambit and were non-novel.

This being common and established ground, it is not obvious, on the one hand, why the fact of a Supplementary Estimate being required to regularise some proposed expenditure for quite different purposes should necessitate the regularisation by the Dáil of expenditure which is normally regularised by administrative action on agreed lines.

On the other hand, the inclusion of such items in Supplementary Estimates would involve disadvantages of a more or less serious character, viz.:—

(i) Whether the ordinary instances of excess expenditure would or would not be covered by a Supplementary Estimate would be a matter of chance, not principle. It would depend in each case on whether a Supplementary Estimate was required for some other service in connection with the same Vote, under the existing arrangements about Supplementary Estimates. The inconsistencies which would arise may be illustrated by reference to this Department’s minute on Virement, addressed to the Public Accounts Committee on the 26th June, 1928, which mentioned that excess expenditure had been incurred on 448 subheads during the four years 1923/24 to 1926/27. But the Supplementary Estimates approved by the Dáil during that period, numbering 61, comprise only 161 subheads; and of the remaining 287 subheads, the excesses on which were dealt with administratively by the exercise of Virement, a maximum of only 92 could have been included in Supplementary Estimates if the suggestion now under consideration had been in force.

(ii) The inclusion in a Supplementary Estimate of an additional number of subheads which would normally be dealt with by Virement would tend to divert attention from the subheads providing for the services for which the Supplementary Estimate was essentially required. The consequent weakening of the control of the Dáil would indirectly tend to weaken the administrative control of the Minister for Finance.

(iii) A comprehensive Supplementary Estimate of the nature indicated would frequently be unavoidably inaccurate and therefore misleading. It would contain provision for anticipated excesses which, in the event, would not materialise by the end of the financial year and would omit provision for other excesses which would unexpectedly materialise after the Supplementary Estimate had been framed. It is the experience of the Department of Finance that, until close to the end of a year, it is extremely difficult at a given moment to forecast with any real degree of certainty what the actual expenditure for the year will be under subheads which are not of the nature of fixed grants.

(iv) The disadvantages mentioned in the last two paragraphs would only be partially removed if the comprehensive Supplementary Estimate were not required to cover excesses which, at the time of its being framed, were only probable or possible, not actual. The essential purpose for which the Estimate was required would still tend to be obscured and a forecast made by combining the original Estimate and the Supplementary Estimate would still, in many cases, show considerable divergence from the actual outturn under subheads as finally shown in the Appropriation Accounts.

(v) The expansion of the compass of Supplementary Estimates in the direction indicated would inevitably result in inflation of original Estimates by Departments. Slight proportionate augmentation of the provisions under subheads would be difficult of detection by the Department of Finance and in cases of doubt the benefit would have to be given to the Departments, as the administrative power of easement through Virement could not be exercised on the present basis; and both the Public Accounts Committee and the Minister for Finance would find their efforts to keep within closer limits the evil of over-estimation hampered.

(vi) Inconsistencies in administration would arise between Votes on which no Supplementary Estimate arose and those on which Supplementary Estimates were taken. In the former group excess expenditure incurred on services which had received the approval of the Dáil would be dealt with by Virement, on the basis agreed to between the Committee and the Minister. In the latter group the application of Virement would be fortuitously restricted.

In view of these considerations, it is suggested that if a Supplementary Estimate has to be introduced under the agreement which qualifies the exercise of Virement the contents of that Estimate should follow the general lines of that agreement and should not include comparatively trifling sums unless they relate to novel services or to existing services which are being expanded in new ways or unless savings on the Vote are likely to be insufficient to cover the sums. The manner in which the Department of Finance interpreted in practice the phrase “comparatively trifling” would of course be subject, as in the case of the phrase “considerable sum” in the agreement regarding Virement, to review by the Comptroller and Auditor-General and the Public Accounts Committee, if it appeared to have been unreasonable.

Roinn Airgeadais.

Meitheamh, 1939.