Magazine article Public Finance

Look Back in Awe

Magazine article Public Finance

Look Back in Awe

Article excerpt

IT WOULD BE a gross understatement to say much has happened since the Corporate Treasurers' and Accountants' Institute held its first meeting in Manchester in December 1885. Six monarchs and 24 prime ministers have been in position in the intervening years. Two world wars have been fought. Innumerable Acts of Parliament have been passed to reform the government of Britain. And, of course, the institute itself developed into the Chartered Institute of Public Finance and Accountancy.

That first meeting took place in the middle of a general election that resulted in a Liberal, William Gladstone, becoming prime minister. Within a year, the Conservatives, led by Lord Salisbury and supported by 'Liberal Unionists', were back in power, suggesting the idea of Tories and Liberals joining together to form a government is nothing new. Indeed, it happened again during the 1930s when Conservative leader Stanley Baldwin managed to tempt a splinter of Liberals into his 'National' government.

The Liberal Unionists included Joseph Chamberlain, the great Birmingham civic leader, among their MPs. Local government itself has been reformed many times during the institute's 125 years. At the end of the nineteenth century, Parliament and the government were predominantly interested in the Empire and ruling the waves. Councils were left to their own devices, responsible for almost all public services. More than 90% of local government spending was funded from the rates.

The need for professionalism in the management of public money predated even the institute's formation. Gladstone, as a reforming chancellor, had passed the Exchequer and Audit Act 1866, requiring all government departments to keep accounts. The comptroller and auditor general was appointed to scrutinise the government's accounts and to report to the Parliamentary Committee of Public Accounts, which had been created in 1861. The District Audit service predated even Gladstone's central government reforms, having been created in 1844.

At a time when the state was very small, each additional pound of public expenditure was viewed as a radical step. Ratepayers and other electors were suspicious of any waste, meaning that those who were responsible for the management of the rates and government grants were important figures in the developing municipalities. Great industrial centres such as Birmingham, Manchester, Liverpool and Glasgow were growing at the kind of pace seen in Chinese and Indian cities today.

Manchester's population rose from about 22,000 in 1758 to 303,000 in 1851. Birmingham grew at broadly the same speed, from 24,000 in 1750 to over 500,000 in 1900. The need for sewers, roads, lighting, police services, tramways and housing in such vast metropolitan areas created major rate-borne budgets. Councils became big business, with some developing municipal enterprises such as electricity and gas companies.

In this, the heyday of local government, probity and professional standards were essential if the public was to be convinced to shoulder an increasing burden of taxation. It is hardly surprising that Manchester Town Hall was chosen as the location for the institute's first meeting. The Manchester Guardian reported: 'For some years past, the treasurers of municipal corporations have felt the necessity for some means of communication for the discussion of questions relating to municipal finance.'

Such communication and discussion has continued through the remarkable 125 years that have elapsed since then. Public services that started in local government have, in many cases, been transferred to nationalised industries, appointed boards, colleges and schools. Thus, water and sewage services are now embedded in previously nationalised industries that have been privatised.

Public sector accountants hare had to cope with many reorganisations of local government and, as they have moved into the health service and elsewhere, reforms and change there, too. …

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