The French Budgetary Process

By Guy Lord

This title is part of UC Press's Voices Revived program, which commemorates University of California Press’s mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1973.

• Language: English
• Publisher: University of California Press
• Release date: Apr 28, 2023
• ISBN: 9780520316614

Guy Lord

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THE FRENCH BUDGETARY PROCESS

The French

Budgetary Process

by

GUY LORD

UNIVERSITY OF CALIFORNIA PRESS

BERKELEY, LOS ANGELES, LONDON

University of California Press

Berkeley and Los Angeles, California

University of California Press, Ltd.

London, England

Copyright © 1973, by

The Regents of the University of California

Library of Congress Catalog Card Number: 70-186113

ISBN: 0-520-02196-7

Printed in the United States of America

To my wife

CONTENTS

CONTENTS

PREFACE

ACKNOWLEDGMENTS

ABBREVIATIONS

1 THE DEVELOPMENT OF FINANCIAL PROCEDURE

2 THE CONSTITUTIONAL AND FINANCIAL FRAMEWORK

3 STAGES AND ACTORS

4 ATTITUDES AND STRATEGIES

5 CONCLUSION

APPENDIX 1 Expenditure of the French Government (in millions of francs)

APPENDIX 2 Calendar of Budgeting in 1966 (1967 Budget) (Detailed Preparation, administrative level mainly)

APPENDIX 3 Calendar of Budgeting in 1966 (1967 Budget) (Global Preparation, Decision-making Mainly at Top Levels)

APPENDIX 4 Setup and Membership of a Typical Interministerial Budgetary Meeting

APPENDIX 5 The Cabinet of Prime Minister Pompidou, January 1966

APPENDIX 6 General Secretariat of the President of the Republic, September 1967

APPENDIX 7 The Agenda of a Parliamentary Committee (Social and Cultural Affairs)

APPENDIX 8 Votes on the First Reading of the 1966 and 1967 Budgets

SELECTED BIBLIOGRAPHY

INDEX

PREFACE

IN FRANCE, the budgetary process has recently attracted far less attention than the national planning machinery,1 and, with a few notable exceptions, students of politics have shown little interest in it.2 The budget is still the preserve of a few experts in the faculties of law, and their research is chiefly concerned with the legal aspects of the process and pays little attention to its administrative and political implications. Some have argued that with the development of a sophisticated planning machinery the budgetary process has lost most of its importance as a process for making crucial economic and political decisions.3 Although it is true that the existence of the National Plan has far-reaching and complex repercussions on budgetary policy—some of which are mentioned in this book—it remains that in France the plan is not a substitute for the budget.4 Indeed, from the point of view of the government, the budget is still the main, and in many cases the only, channel for the enactment of policies at the governmental and parliamentary levels. The plan’s objectives can be achieved only if the policies of the annual budgets are in accord with them. In 1968, the central government’s spending in France amounted to 150,688 million francs. This represents 25.6 percent of the gross national product.5 Hence, when the budget is prepared and discussed, participants are conscious that much is still at stake.

The aim of the book is to describe the French budgetary process as it operates today, and how economic and financial decisions are made within the framework of that process. Who intervenes, when, and for what purpose? The budgetary process needs to be approached as an administrative and governmental decision-making process, rather than a purely legislative or accounting one. I do not neglect the latter aspects, but I believe that in France, as in many other countries, budgeting is more concerned with the question of how to make the right economic and financial decisions than with the question of whether public funds are spent according to appropriations. Hence, my approach differs from that of most French writers, who start with the assumption—legally correct—that the budget is decided in Parlement and then conclude, comparing the Fourth and the Fifth Republics, that Parlement has less decisionmaking power under the fifth than under the previous republic. As a result, they neglect the administrative and governmental parts of the process, which are now, as in most countries, the crucial ones.6 I do not pretend to be in a position to unveil every decision in the administrative and governmental stages, for this is largely an internal process. But, mainly because civil servants and members of Parlement have shown great understanding for my research, I hope to have been able to make some inroads into it. In some cases I have had to rely on a limited amount of information, so some interpretations may well appear tentative. But, as G. Devaux, a former head of the budget division and the author of a revealing book on the French financial administration, has remarked: I run the risk of being accused of interpreting history. But I think that the most important historical mistakes are made by those who refuse to interpret history.⁷

The research on which this study is based was carried out during the first decade of the Fifth Republic, but as far as possible it takes account of the changes that followed the departure of General de Gaulle. No attempt has been made to deal with the PPB system (Rationalisation des choix budgétaires) which has recently been introduced in a few ministries. These budgetary techniques may affect some aspects of the budgetary process as presented in this volume, but, so far, they are in operation only in a limited number of agencies, mainly concerning defence.

Budgeting is a traditional function of the state. It has given rise to well-entrenched rules and habits. The progressive evolution and transformation of the budgetary process, as well as the impact of the reforms of the Fifth Republic, can only be understood in their historical context.

Budgeting takes place within a legal and constitutional framework, for, unlike planning, the budgetary process is traditionally a formal process. For example, decisions must be made within precise constitutional time limits and must be expressed in well-defined words and figures. These rules are known to civil servants, legislators, and interest groups, and their skillful use may put some participants in a better position than others to influence decisions. Moreover, some of these rules (such as annuality and balancing of the budget) are the objects of much controversy and political discussion. Occasionally, I deal with some of these questions, for they deepen an understanding not only of the budgetary process, but also of French politics.

The process, itself, consists of the annual exercise of drafting and voting the budget. It is therefore necessary to follow the budget through its various stages, from the first tentative projections to the final version as approved by Parlement, and to describe the nature and functions of the various bodies which intervene in the making of the budget during its elaboration and vote.

Many jurists and economists tend to forget that budgetary de-, cisions are answers to central political questions—who gets what, when, and how. However, when the budget is prepared and discussed, participants in the process fight hard, either to get the funds they need for the initiation and continuation of policies they are interested in, or, like the Ministry of Finances, to maintain their control over government activities. To see how the process looks from the inside, I have interviewed more than sixty participants in the budgetary process—officers of spending ministries, members of the staffs of various divisions in the Ministry of Finances (particularly in the budget division and the cabinet of the Minister of Finances), officers of the Planning Commission, advisers in the offices of the Prime Minister and the President, parliamentary staff, and members of Parlement—to discover their aims, attitudes, and strategies. I have been provided with interesting data in the division of the budget, in the cabinet of the Minister of Finances, and in the parliamentary committees, some of which is used here.

Finally, since budgeting is an annual process, there is something to be learned from the study of a particular budget. In this respect, some of the results of an analysis of the administrative, governmental, and parliamentary progress of the 1967 budget are used throughout the text, for they show how the system works on a particular budget and illustrate several aspects of my presentation.

I hope, therefore, to have shown how the French budgetary process actually works as an exercise in executive and administrative decision-making, how the institutions of the Fifth Republic really function in this central matter of government, and how it looks to those actively engaged in the process.

1 Under the Fourth Republic the budget was the object of much discussion, but mainly from the point of view of parliamentary control. We find a different pattern in the United States, where in recent years the federal government’s budgetary process has been the object of several interesting studies, such as: A Wildavsky, The Politics of the Budgetary Process; Richard F. Fenno, The Power of the Purse: Appropriations Politics in Congress; Ira Sharkansky, The Politics of Taxing and Spending; Charles E. Lindblom Decision-Making in Taxation and Expenditure.

2 The best introductions to French budgeting are Jean Rivoli, Le Budget de l’Etat, and J. M. Cotteret and C. Emeri, Le Budget de l’Etat. For an interesting and stimulating approach to French public finances, see P. Lalumière, Les Finances Publiques.

3 For example, see, P. Bauchet, Economic Planning: The French Experiment; A. Barrère, La Recherche de compatibilité entre les décisons du budget et les recommandations du Plan, Reflets et perspectives de la vie économique 4 (March 1965): 99-114; and S. Wickham, L’Etat, serviteur du Plan, Le Monde, 27-28 February 1966.

4 J. Meynaud, Planification et politique (Lausanne, 1963), pp. 101-103. For Mey- naud, the budget has a new and more important role in a planned economy.

5 On the basis of a GNP of 574.3 billion francs. For data, see Le Budget de 1968, by the Ministère de 1’Economie et des Finances.

6 Even a book as remarkable as P. Amselek’s Le Budget de VEtat sous la Ve République devotes less than ten pages out of seven hundred to government and administration.

7 La Comptabilité publique, p. 237.

ACKNOWLEDGMENTS

MY GREATEST DEBT of gratitude is to Philip Williams and David Goldey. Without their help, encouragement, and friendship this book would never have seen the light. I am also grateful to the Warden and Fellows of Nuffield College, Oxford, for continuous support. The Warden of Nuffield followed every step in the development of this work. I am very grateful to him. I am also obliged to the late Jean Touchard and his colleagues of the Fondation Nationale des Sciences Politiques for their help when I was doing my research in Paris. This volume owes much to their comments, as well as to their keen interest in this research. In this regard I would particularly like to thank M Gournay and the members of his graduate seminar. I gratefully thank A. Wildavky, R. A. McLarty, Robert Metcalfe, and Guy Bourassa for helpful remarks on the whole or parts of the manuscript. Jacques Levesque and my colleagues of the Université du Québec were also very pleasant and encouraging comrades in the process of writing the final version. In the course of this research I received various financial aids from The Canada Council, the Ministry of Education of Quebec, and Nuffield College.

I had particularly indispensable and generous cooperation from many members of Parlement and French civil servants. Their anonymity must be preserved, but without their help much of this book could not have been written at all.

I also wish to thank Mr. W. J. McClung and Miss Judith Quinn of the University of California Press for their help throughout the publication of this book.

Naturally, I alone am responsible for the opinions expressed in the book and for the errors it may contain.

ABBREVIATIONS

XV

1

THE DEVELOPMENT OF

FINANCIAL PROCEDURE

IN FRANCE the very nature of the political system is a subject of continuing political controversy. Few democracies have shown such a strong tendency to swing from authoritarian to republican or parliamentary political regimes, or vice versa, over relatively short periods of time. This institutional instability has affected the budgetary process in many ways. For one thing, it has hindered the gradual development and improvement of a well-integrated system of budgetary rules. In France, these rules have been unstable and always likely to be changed in periods of political crisis. For another, the shifts in the balance of power usually have resulted in sharp modifications of the roles of the various actors involved in the budgetary process, thus making the process less stable and less effective than similar processes elsewhere.

The development of financial procedure in France varies in many ways from the British model. First, Parlement was established much later in France. Parliamentary control of public finances appeared with the Revolution of i78g. Second, the financial procedure (except for its administrative aspect) did not develop in a continuous and gradual process. It varied sharply, according to the authoritarian or republican nature of each political regime. Third, the lack of a well-entrenched parliamentary tradition and the continuous fear of the executive has meant that Parlement has been— and is still today—in search of its proper role in financial matters.

Should Parlement have the right to initiate expenditure and raise taxes, or should it confine its role to the a posteriori and audit control of public spending? The difference between these two roles is important, for in the first case Parlement is the chief initiator of public policy, while in the second case it is mainly concerned with controlling whether public funds are spent according to the rules of public accounting.

During the authoritarian regimes, Parlement, starting nearly from scratch, struggled to establish rules which would enable it to keep a more or less distant watch on the financial activities of the executive. On the other hand, during republican regimes Parlement aimed at assuring its total supremacy over the executive by stressing the predominance of its role in the elaboration of policy and in the initiation of expenditure. During these republican periods, Parlement showed little concern for a stringent control of public expenditure, thus putting the executive in the difficult position of having to use (and, in fact, erode) its power in order to restrain the assembly’s propensity to spend.¹

Ultimately this role was assumed by the bureaucracy which, on the occasion of the Napoleonic administrative reforms, established its own internal system of administrative and judicial control of public spending. Parlement never resented the loss of the power to exercise this form of control of finances. On the contrary, when strong executives tried to offset Parlements discontent at the loss of its right to initiate expenditure by increasing its powers to audit and control the spending of money, most members of Parlement considered this new function laid upon them with distrust.² In that respect, there are striking similarities between the statements of the comte d’Argout, Minister of Finances under the Restoration, and those of the Fifth Republic’s ministers of finances, in which the importance of a posteriori control is stressed.³

The trends I have just mentioned continuously underlay the adoption of a clear financial procedure in France and hindered the development of a clear set of rules, because each type of system (authoritarian or republican) tended to establish its own rules and principles. However, little by little, rules were established which gradually came to be considered by every regime, whether authoritarian or republican, as the basic principles of financial orthodoxy (les principes classiques, as they are often called in France). 4 These rules evolved under the authoritarian regimes of the nineteenth century in a process of parliamentary pressure on the executive similar to the earlier British model. They were accepted as unchallengeable in the early years of the Third Republic. Then, the wars and new political and economic factors led to the gradual distortion of the system under the Third and the Fourth Republics (the period often called the période anarchique).5 The need for reform was strongly felt by the end of the Fourth Republic. In 1956 an important reform was carried out, which was completed in 1958 and 1959 in the constitution of the Fifth Republic.

THE REVOLUTIONARY PERIOD (1789-1814)

In the early fourteenth century there was much similarity between the French and British financial systems. In both countries, meetings of representatives of the taxpayers were called by the kings, who then requested their consent to the raising of taxes. But, while in England parliaments succeeded in obtaining the right of being the sole grantors of taxes, and thus forged a weapon, the skilful use of which in the course of time converted the humble right of petitioning the King into a control over legislation, in the seventeenth century,6 in France, the états généraux were not summoned after 1614, and until 1789 taxes were raised by the kings without the consent of the taxpayers. The struggle for popular consent to taxes, instead of taking place as in England between the parliament and the king, took place between the disgruntled and sometimes desperate taxpayers and the king’s administrators. When in 1789 the king was forced again to call the états généraux, their basic request was to establish their right to consent annually to the raising of taxes. From then on, the principle that no taxes can be levied without the consent of the nation became the fundamental principle of French budgetary procedure. The principle was acknowledged by all subsequent constitutions and was followed, except in the case of some budgets under the First and Second Empires.

On the expenditure side, however, the Assembly of 1789 was not sure that the right to authorize the levy of taxes implied the right to control the spending of that money by the king and his ministers. The executive would not even discuss the question, thus making impossible a determination of rules which could govern the relations between the executive and the Assembly in this vital sector. Hence, the Assembly asserted its rights over public expenditure by limiting the powers of the king and the functions of the executive in this area.⁷ A committee (comité de trésorerie) was set up and made responsible for the authorization of commitments and for the payment of public money, and the accounts were kept by an accounting bureau which was directly answerable to the Assembly. In 1791, twenty-one permanent parliamentary committees were established to assume the overall control of the administrative agencies. There were no ministers to interfere between the committees and the administration. The executive function had been absorbed by the Assembly, and all financial powers were assigned to the legislature: article 1 of the constitution of 1791 delegated to the Legislature the exclusive right… (1) to establish public expenditure; (2) to levy taxes, to determine their nature, their amount and method of collection; (3) to proceed to the sharing out of the direct contribution among the departments of the Realm, to control the spending of public funds and to see to it that accounts are rendered.⁸

This article was included in the constitution of 1793 and of Year III (1795) but was, in its turn, contested when Napoleon established the First Empire (1804). The Assembly (corps législatif) then lost its right to propose public expenditure or to supervise government spending. The budget was prepared by the imperial administration, implemented by the bureaucracy, and controlled by administrative (the Inspection Générale des Finances) and judicial (Cour des Comptes) bodies instituted by the emperor.

In a period of less than twenty years the pendulum had swung from one extreme to another, from the complete supremacy of the legislature over finance to the complete supremacy of the executive. No effective rules of parliamentary financial procedure had been evolved concerning expenditures—which is extremely important when one considers the state of development achieved in this field in Great Britain at that time. However, the balance sheet had some positive aspects: Parlement’s right to consent to the levy of taxes had been recognized, and the administration, borrowing from both the ancien régime and the revolutionary period, had established its own institutions to enable it to check the legality and propriety of its financial activities.

FROM THE RESTORATION TO THE THIRD REPUBLIC (1814-1871)

The period from 1814 to 1871, except for the brief interlude of the Second Republic (1848-1852), was characterized by the existence of strong executives and weak assemblies (the Restoration, the July Monarchy, and the Second Empire). Parlement’s rights in financial matters were confined to the authorization of taxes. It could not propose expenditure and was even deprived of the right to scrutinize government spending. All powers in this field belonged to the executive. The situation was nearly identical to that of 1789, except that in both the executive and the Assembly there were some people who thought that, while preserving the executive’s rights in financial matters, it was possible and desirable to have some sort of parliamentary control of the government’s financial activities. So, gradually, rules of financial procedure were evolved, public accounting was improved, and members of Parlement, who on the whole supported the executive, devoted a good deal of their time to the scrutiny of the estimates and of the Appropriations Accounts Bills—in fact, the Appropriations Accounts Bills were never so much discussed and analyzed as they were under the Restoration.⁹ The process under the Restoration was quite similar to the early British model, with Parlement struggling to establish rules of accounting which would enable it to supervise the executive in its handling of public money (the vote by chapter, the inclusion of all public expenditure in the budget, and the Appropriations Accounts Bills). The system evolved during the Restoration was swept away when Parlement assumed overall responsibility for the government of the country in 1848, but it was progressively reestablished by a reluctant executive at the end of the Second Empire. In fact, the Second Empire very much improved the accounting system, but Parlement was not really involved in the process of improvement as it had been in the Restoration. The most important reforms of the accounts were made by decree (the whole financial system was codified in 1862) and served administrative much more than parliamentary purposes.

THE THIRD AND FOURTH REPUBLICS (1871-1958)

The reforms, however, made a lasting impact on French public finance and were adopted as basic financial rules by the Third and Fourth Republics and still form the basis of the present-day system. They consisted of the following principles:

1. The budget had to be authorized by Parlement every year (le principe de l’annualité budgétaire). This principle meant, first, that only Parlement could authorize the levy of taxes and the spending of public money and, second, that the authorization had to be renewed every year. The appropriations were annual, and the accounts were kept on a yearly basis (the accounts, however, were closed only when all the financial transactions covered by the financial act had been completed—often, many years later). Parlements could thus exercise a regular check on expenditure.

2. There had to be a single set of budgetary accounts prepared according to the same rules and covering all government resources and expenditure (le principe de Vunité budgétaire). The principle meant that Parlement was opposed to the establishment of extraordinary budgets or of special government accounts which would escape parliamentary control or make it too complex. All government expenditure had to appear in a single document, to enable Parlement to have a clear and global idea of what the government’s intentions were for the coming financial year.

3. Each financial transaction had to be identified (gross accounting), and all revenues had to flow into a single account (a kind of consolidated fund) and not be earmarked for the financing of particular items of expenditure (le principe de l’universalité budgétaire). This principle meant two things. First, it implied a gross accounting system, as opposed to a net accounting system, and, second, it prevented the assignment of receipts to the payment of particular items of expenditure. In the past, the revenue departments had been allowed to deduct the costs of tax collection and then pay the remainder into the treasury without revealing the arithmetic of the process. Napoleon and, later on, the Assembly forced the revenue departments to submit a full (gross) account of their financial activities. Before that, earmarking of receipts had been used frequently by the executive to make sure that projects (very often connected with wars) in which it had particular interest would get sufficient financing. Parlement resented this procedure because it privileged certain kinds of expenditure at the expense of others, and also because it enabled the executive to set up within the ordinary budget special relationships between certain kinds of receipts and certain kinds of expenditure.

4. The budgetary authorization had to be detailed and specific (le principe de la spécialité budgétaire). With the growing influence of Parlement, the budgetary votes became more and more specific. The vote by chapter had been introduced in 1831. Abolished in 1852, it was reintroduced in 1869 and adopted by the Third Republic (article 30 of the law of 19 September 1871: The budget is voted on by chapter.). In the breakdown of government expenditure, the chapter was