(C. J.)
In 1834 an act was passed abolishing the old offices of the exchequer, and creating a new exchequer under a comptroller-general, the detailed business of payments formerly made at the exchequer being transferred to the paymaster-general, whose office was further enlarged in 1836 and 1848. And in 1866, as the result of a select committee reporting unfavourably on the system of exchequer control as established in 1834, the exchequer was abolished altogether as a distinct department of state, and a new exchequer and audit department established.
The ancient term exchequer now survives mainly as the official title of the national banking account of the United Kingdom. This central account is commonly called the exchequer, and its statutory title is “His Majesty’s Exchequer.” It may also be described with statutory authority as “The Account of the Consolidated Fund of Great Britain and Ireland.” This account is, in fact, divided between the Banks of England and Ireland. At the head office of each of these institutions receipts are accepted and payments made on account of the exchequer; but in published documents the two accounts are consolidated into one, the balances only at the two banks being shown separately.
Operations affecting the exchequer are regulated by the Exchequer and Audit Departments Act 1866. Section 10 prescribes that the gross revenue of the United Kingdom (less drawbacks and repayments, which are not really revenue) is payable, and must sooner or later be paid into the exchequer. Section 11 directs that payments should be made from the fund so formed to meet the current requirements of spending departments. Sections 13, 14, 15 lay down the conditions under which money can be drawn from the exchequer. Drafts on the exchequer require the approval of an officer independent of the executive government, the comptroller and auditor-general. But the description of the formal procedure required by statute cannot adequately express the actual working of the system, or the part it plays in the national finance. The simplicity of the system laid down by the act of 1866 has been disturbed by the diversion of certain branches or portions of revenue from the exchequer to “Local Taxation Accounts,” under a system initiated by the Local Government Act 1888, and much extended since.
While the exchequer is, as already stated, the central account, it is not directly in contact with the details of either revenue or expenditure. As regards revenue, the produce of taxes and other sources of income passes, in the first instance, into the separate accounts of the respective receiving departments—mainly, of course, those of the customs, inland revenue and post office. A not inconsiderable portion is received in the provinces, and remitted to London or Dublin by bills or otherwise, and the ultimate transfers to the exchequer are made (in round sums) from the accounts of the receiving departments in London or in Dublin. Thus, there are always considerable sums due to the exchequer by the revenue departments; on the other hand, as floating balances are (for the sake of economy) used temporarily for current expenses, there are generally amounts due by the exchequer to the receiving departments; such cross claims are adjusted periodically, generally once a month. The finance accounts of the United Kingdom show the gross amounts due to the exchequer from the departments, and likewise the amounts payable out of the gross revenue in priority to the claim of the exchequer. On the expenditure side a similar system prevails. No detailed payments are made direct from the exchequer, but round sums are issued from it to subsidiary accounts, from which the actual drafts for the public services are met. For instance, the interest on the national debt is paid by the Bank of England from a separate account fed by transfers of round sums from the exchequer as required. Similarly, payments for army, navy and most civil services are met by the paymaster-general out of an account of his own, fed by daily transfers from the exchequer.
This system has two noticeable effects. Firstly, it secures the simplicity and finality of the exchequer accounts, and therefore of all ordinary statements of national finance. Every evening the chancellor of the exchequer can tell his position so far as the exchequer is concerned; on the first day of every quarter the press is able to comment on the national income and expenditure up to the evening before. The annual account is closed on the evening of the 31st of March, and there can be no reopening of the budget of a past year such as may occur under other financial systems. The second effect of the system is to introduce a certain artificiality into the financial statements. Actual facts cannot be reduced to the simplicity of exchequer figures; there is always (as already explained) revenue received by government which has not yet reached the exchequer; and there must always be a considerable outstanding liability in the form of cheques issued but not yet cashed. The suggested criticism is, however, met if it can be shown that, on the whole, the differences between the true revenue and the exchequer receipts, or between the true (or audited) expenditure and the exchequer issues, are not, taking one year with another, relatively considerable. The following figures (000’s omitted) illustrate this point:—
Expenditure.
| Year. | Exchequer Issues. | Audited Expenditure. | Difference. |
| 1888-1889 | £85,674 | £86,070 | £+396 |
| 1889-1890 | 86,083 | 86,033 | − 50 |
| 1890-1891 | 87,732 | 87,638 | − 94 |
| 1891-1892 | 89,928 | 90,125 | +197 |
| 1892-1893 | 90,375 | 90,164 | −211 |
| 1893-1894 | 91,303 | 91,530 | +227 |
| 1894-1895 | 93,919 | 93,818 | −101 |
| 1895-1896 | 97,764 | 97,667 | − 97 |
| 1896-1897 | 101,477 | 101,543 | + 66 |
| 1897-1898 | 102,936 | 103,010 | + 74 |
| Total for 10 years | £927,191 | £927,598 | £+407 |
Revenue.
| Year. | Exchequer Receipts. | Actual Revenue. | Difference. |
| 1888-1889 | £88,473 | £88,038 | £−435 |
| 1889-1890 | 89,304 | 89,416 | +112 |
| 1890-1891 | 89,489 | 89,282 | −207 |
| 1891-1892 | 90,995 | 91,428 | +433 |
| 1892-1893 | 90,395 | 90,181 | −214 |
| 1893-1894 | 91,133 | 91,265 | +132 |
| 1894-1895 | 94,684 | 94,873 | +189 |
| 1895-1896 | 101,974 | 102,031 | + 57 |
| 1896-1897 | 103,960 | 104,089 | +129 |
| 1897-1898 | 106,614 | 106,691 | + 77 |
| Total for 10 years | £947,011 | £947,294 | £+273 |