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SECRET

C.P. (49) 228

8TH NOVEMBER, 1949

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CABINET

COPY NO. 31

PUBLIC EXPENDITURE

Memorandum by the Chancellor of the Exchequer

It may assist my colleagues in their consideration of the helpful memorandum by the Lord President of the Council (C.P.(49) 221) if they have before them my comments on some of the points which the memorandum makes and a description of the instructions which I had already given for carrying forward the process of securing economics under Treasury administration reinforced by the Prime Minister's instructions of 4th August (C.P.(49) 170) and 26th October (C.P.(49) 216).

2.

In paragraphs 6 and 7 of his memorandun the Lord President proposes that I should bring before the Economic Policy Committee a list of Departments and problems which merit high level investigation with a view to more economical administration. As my colleagues know, the whole of the administrative machine is under constant scrutiny by the Establishment side of the Treasury, which has just put into force new arrangements for control of numbers and for staff inspection. The Organisation and Methods branches are engaged in reviewing the whole organisation of each Department, in many cases under the guidance of a Committee which, like the French Committee on the cost of Home Information Services, includes members from outside Government Service. Examples are the quig Committee which has reviewed the whole structure and organisation of the Air Ministry and a similar body which is at work in the Inland. Revenue.

3.

These arrangements which are already in operation should ensure that we secure such economies as are possible in the field or administration. But they do not go beyond that; and given what has already been done, we cannot expect them to achieve big savings. It is essential, if it is desired to secure big additional economies, that investigation should go beyond administration and examine policies. The French Committee in some degree did this. But it was operating in a quite peculiar field; it had to study the scope and proper cost of an administrative service rendered centrally to a large number of Ministers. Other fields of policy involving large expenditure are generally the responsibility of a single Minister, and indeed form the essence of his duty. If I were to list, with a view to further study of economy, such activities as education, defence, housing, town planning, health, civil aviation (these are only examples), I imagine that my colleagues would all take the view that the policies involved were quite inappropriate for remission to bodies onerly which included "outsiders" and could indegn Page 570 of 10970s Ministers themselvesd indepage370 of 888zly

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