Motion made, and Question proposed,
That a Supplementary sum, not exceeding £1,000,000,000, be granted to His Majesty towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1941, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made therefor by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war.
§ 4.5 P.m.
§ The Chancellor of the Exchequer (Sir Kingsley Wood)
It was on 13th March last that the House passed a Vote of Credit for £700,000,000 as a first instalment of the provision for war expenditure in the present year. That sum is now approaching exhaustion, and it is therefore necessary to ask for a further substantial grant. As regards the Vote of £700,000,000 granted last March, the position is this: Up to Saturday last, 6th July, we had spent some £575,000,000 of that sum, and if expenditure goes on, as it must, at the present or at an increased rate, that Vote will be exhausted in a further two or three weeks. Our present rate of war expenditure is in the neighbourhood of rather more than £50,000,000 a week. Actually, over the last four weeks our average rate of expenditure, directly on the war, has been £54,000,000, which is equivalent to a daily rate of over £7,560,000.
That rate of £7,500,000 is accounted for in respect of about £6,500,000 each day, by the Navy, Army and Air Force and the Ministry of Supply and the Ministry of Aircraft Production. The remaining £1,000,000 per day is the rate of our expenditure on our other war services, including such outlays as those of the Ministry of Shipping, the Ministry 1116 of Food, and the Ministry of Home Security and the cost of such services as evacuation and emergency hospitals. While the other war services which I have mentioned are costing much the same per day as they did in the spring of this year, the cost of the Fighting Services has mounted from £4,000,000 a day, in March last, to £6,500,000 a day, which accounts for the whole of the increase in this total of expenditure.
I think I can rightly describe these figures as striking. They certainly provide real and visible evidence of the great and rapid increase that is being made in our main war effort. They not only represent no mean achievement, but if anyone still doubts, they are a further proof of our fixed determination to spare no effort in money or in any other way to carry on the war until victory is achieved. As far as the future is concerned, it is, of course, impossible to forecast with precision the rate of our expenditure in the next few months or to say how long a particular sum voted now will last. This certainly can be said, however, that we shall not rest until every effort has been made and every step has been taken to secure that those objects for which we have entered the war are attained.
I have decided to ask the Committee to approve a further sum of £1,000,000,000. I think this is the largest sum which I could reasonably ask Parliament to grant at one time, and I do so in the belief that it is right that Parliament, in the autumn, should have before it the facts and figures of the position at that time, before further grants are sanctioned. It is true that the Vote which I am asking the House to sanction is the largest Vote which has been taken at one time during this war or during the last war. It is a vast sum, judged even by modern standards, but I believe neither the Committee nor the country will wish to do otherwise than to provide the necessary sums, so that it may be possible for us to continue to forge, with energy and speed, the weapons necessary for the armament and equipment of our growing forces.
There is one other aspect to which I desire to refer. I feel bound to say this, particularly in my position as Chancellor of the Exchequer. This Vote of Credit is only available for our war services.
1117 There are, as we know, other considerable services of the State, and the cost of these must he added in order to obtain the full total of our national expenditure. There is the service of the Debt, and there are the Civil Votes, including the social services. When we add all that expenditure to our outlay on the war, we are faced with the position that we are at present spending at approximately the rate of no less than £9,500,000 a day. Now these are serious figures, and their implications are not, I feel, always sufficiently realised. The gap between revenue and expenditure is widening. The further contribution from taxation towards the cost of the war must clearly be the very highest possible, must cover the widest possible field and must soon be made. There must also be strict curtailment of unnecessary consumption, and in addition there must be a continuous flow of savings from large and small investors to the Exchequer.
I mention these matters in connection with this Vote, because while we in this country have not failed and never will fail to make full provision for our war effort, it is imperative that we should always keep before us the necessity of maintaining sound financial methods and that we should be ready to make the heavy but necessary sacrifices. This, I am sure, the Committee will feel is vital, not only for the purpose of waging the war, but also because, at the end of it, we want to emerge financially strong and thus ensure some reasonable prospects of decent conditions and tolerable lives for the people of this country.
§ Mr. Stokes (Ipswich)
Before the Chancellor concludes, will he tell the Committee exactly what is included in that figure of expenditure in respect of the Debt service?
§ 4.14 p.m.
§ Mr. Pethick-Lawrence (Edinburgh, East)
I am sure that, in spite of other preoccupations, the Committee has listened with profound interest to the statement of the Chancellor of the Exchequer. The figures to which he has referred exceed any which this country has ever had to face before. I think I 1118 am right in saying that the total of our outgoings on this war at the present time is substantially above anything recorded during the last war. The Committee will have heard with deep attention the explanation which the right hon. Gentleman has given, and hon. Members will, I am sure, from now onwards weigh very carefully the grave and important considerations which he has laid before us. I confess I wish he had gone a little further and told us how far the Government have weighed up and balanced the whole economic and financial situation. His concluding words lead one to hope that at a very early date the right hon. Gentleman will make such a summary as I have suggested, and present it to the House of Commons. We want to know what prospect he foresees in connection with the expenditure of the country; to, what extent he thinks we can raise these vast sums out of taxation; how far there will remain borrowings to be made, and in so far as those two methods do not cover the whole field, whether there are any sums which can be raised otherwise, without bringing upon this country a serious condition of inflation.
When that times comes, and I hope it will be soon, because there is no time to be lost before laying before the country what is required, I believe that the country will respond without hesitation to what is demanded of it. If we are to carry this war to victory, there can be no havering about the means by which it has to he done. I believe that the country will respond, and respond generously, both by meeting the taxation burden which the Government put upon it and by putting aside money from incomes towards loans; but the country does want a whole picture of what it has to face. It wants a picture of how the burden is to be distributed as a whole, and it wants to know how far what is being done now by the lending of money does carry the problem away from the dangerous seas of inflation. I hope that the Chancellor will not delay long before making that statement, and that he will give us the information which the country desires, and give the opportunity to all the people of this country to shoulder the burden which alone can carry us to victory.
§ 4.17 p.m.
§ Mr. Graham White (Birkenhead, East)
The Committee have heard with great 1119 interest the statement of my right hon. Friend the Chancellor of the Exchequer, and heard it with mixed feelings, but I think that it is satisfactory to know that the war expenditure of the country is now running at the rate of somewhere between £3,000,000,000 and £3,500,000,000 a year at least, which represents a very marked increase in the war effort and in potential production from the time when we last reviewed the finances of this country in this House. The Chancellor reminded us, and quite properly, that the difference between the total expenditure and the revenue, particularly the tax revenue, was increasing, and my right hon. Friend the Member for East Edinburgh (Mr. PethickLawrence) said the country would like to know the whole position as soon as possible. I am bound to point out that it is not possible on the information now before the country to do more than make an estimate of what our actual requirements and necessities will be.
As I have said, the expenditure is running at the rate of between £3,000,000,000 and £3,500,000,000 a year, but the tax revenue still remains, as far as we know, at the figure of £1,234,000,000 of the last Budget. We do not know what the total tax revenue will be when the right hon. Gentleman makes an addition for the 100 per cent. Excess Profits Tax and when he lets us into the secret of the rate at which the Purchase Tax is to be levied. If we adopt what seems to be the general estimate with regard to these two items, it would appear that the total tax revenue for this year is likely to be of the order of £1,400,000,000, and that indicates clearly that the right hon. Gentleman will have to make some proposals of a far-reaching character; and even with the magnificent effort of the War Savings Movement, which seems to be going from strength to strength, it seems that there will have to be a considerable diminution and contraction in the consumption of this country if we are to make both ends meet on the expenditure which he has indicated. But I share the belief which he has just expressed that the country will be quite prepared to shoulder any burden which they are asked to undertake.
§ 4.20 p.m.
§ Sir Irving Albery (Gravesend)
The Chancellor has told us how necessary it is that further sums should be subscribed to the National War Loans and has also 1120 —not that we needed telling—implied what heavy burdens of taxation we shall have to bear. I cannot help feeling that in some respects our financial policy recently has caused some anxiety and has made some of us wonder whether all the wisdom which we should desire is being brought to bear upon our problems. The national loans of this country are a first mortgage upon all its assets. One of the country's main assets is the industrial asset. By legislation in this House we have declared that to the same extent that all our man-power is to be available to the State in order to win this victory, so all our property is equally available to the State to win this victory, and it seems to me that some better management, some better direction of our financial policy, could have avoided the very severe fall in values which has recently taken place in the City.
I should like to remark, in passing, that there is sometimes a tendency in this House and outside it to believe that when one speaks of matters in which one is supposed to be interested one is biased. In answer to that, I would say that I have always felt, and still feel, that on many occasions it would be better if criticism came from those persons who are at any rate closely associated with the things they criticise. For example, some people want trade-union reforms. The best people to recommend trade-union reforms are the trade-union leaders. In the same way, I think that if one feels that some different or amended policy is necessary in the City, it is perhaps not to be regretted that those who work there should make that point. At no time in my recollection, within the last 30 years, has there been so small a speculative position—in fact, there practically is none—as there is to-day. So that is not the cause. I also, as I said before, feel convinced that with a policy such as we have to-day, which is definitely a controlled and managed policy, you run a great element of risk if you strictly control one end and take no care to adjust or ease the other end. But that appears to me to be what has happened recently.
There is one other matter to which I desire to refer. There is at present a great deal of criticism of the banks and of our banking system. It is a matter which I do not wish to enter into to-day—there are obviously two sides to the question—but we have in this country 1121 what is regarded in the world at large as probably the best banking system which exists, even if it is not perfect, and it is part, and must be part, of our machinery of victory. Therefore, it is deplorable when one reads in the public Press a most mischievous article which appeared in the "Daily Mirror" on 4th July under the heading of "Cassandra," which was extremely ignorant, extremely ill-informed, and, if one may use that expression with reference to financial matters—and I think one could rightly use it to-day—subversive. I should like to call the attention of the Chancellor of the Exchequer and the Minister of Information to that article.
§ 4.27 p.m
§ Mr. Benson (Chesterfield)
I do not think the Chancellor of the Exchequer will find the Committee raising any difficulties, about granting this credit of £1,000,000,000, but I think we are entitled to ask on what terms a very considerable portion of that sum is likely to be raised. I am referring now to the rate for Treasury bills. It is a matter which has been raised not once but 20 times in the House since the beginning of the war, and it is a matter upon which the House has never as yet had a satisfactory answer from the Chancellor of the Exchequer, either the present Chancellor or his predecessor. We are paying slightly over 1 per cent. for our Treasury bills, whereas before the war Treasury bills were discounted at considerably less than 1 per cent. When the point has been raised before, the previous Chancellor, then Sir John Simon, used to give cloudy, misty answers in which he said that a very large number of factors were involved. As a matter of fact, it is not true. There is one factor and one factor alone involved in the rate we have to pay for Treasury bills, and that is the re-discount rate at which the bill market can get its money from the banks, and that in itself is a purely artificial rate. The re-discount rate is a rate agreed upon between the Treasury and the banks, and I want to know why the Treasury, which agreed to 1122 a re-discount rate of ½ per cent. before the war, has now agreed with the banks to increase it to 1 per cent.
In the first six months of the war the cost of that extra ½ per cent., irrespective of any increased borrowings, was more than £3,000,000, and as we shall he borrowing continuously larger and larger sums on Treasury bills, that £3,000,000 in six months, representing £6,000,000 a year, will grow. After some nine months I think we are entitled to a clear and definite explanation from the Chancellor why the Treasury has agreed with the banks that the re-discount rate shall be 1 per cent., because it means a definite present of ½ per cent. to the banks. The money that the banks utilise is not bank money; it is purely artificial money. It is created money, and the Treasury themselves are the controllers of the amount of that money which is available for re-discount. They can put the banks in funds by open market operations to any extent they like.
The banks are not so much creators of this money as the conduits. The money that we borrow on Treasury bills is, in fact, the credit of the country, and is not a credit of the banks. The banks are merely the machinery that makes it available. The banks themselves can make it available only if the Treasury, by open market operations, puts them in funds. There is no reason at all why the re-discount rate should not go down to A- per cent., or, if our issue of Treasury bills increases beyond a certain point, to ¼ per cent. On this question of Treasury bills, it ought not to be regarded as an interest rate, but as a remuneration for services performed, and that remuneration ought to be cut down to a reasonable limit. We had far fewer Treasury bills before the war, and the banks received only ½ per cent. Now that tender bills amount to between seven and eight hundred million pounds they should not be allowed to charge 1 per cent. We have had no explanation from the Chancellor of the Exchequer so far, and I hope that he will give us one as to why this indefensible bargain has been struck between the Treasury and the banks.
§ 4.32 p.m.
§ Sir Frank Sanderson (Ealing)
I rise to put two points. I would like to support what was said by my hon. Friend the Member for Gravesend (Sir I. Albery). 1123 I believe that much of the depreciation on the Stock Exchange, particularly of railway and industrial stocks, could have been prevented, had the policy of the Government been somewhat different. I make a special point of this matter. When my right hon. Friend's predecessor, Sir John Simon, as he then was, raised the proposal of a Purchase Tax, I firmly believed that the beginning of the depreciation in our securities was caused through the suggestion of that tax. It is important that we should not promote unnecessarily depreciation of our securities, because upon those securities we are able to borrow money from the banks and thereby to raise credits to subscribe to Government loans. I say now that I regard the Purchase Tax as a mistake and that I do not believe it will ever see the light of day. I hope that my right hon. Friend will take the earliest opportunity of clarifying the position, so that the country may know whether or not the proposed tax is likely to be placed on the Statute Book.
I come to my second point. My right hon. Friend made reference to the expenditure with which the country is confronted. We are expending to-day approximately £3,500,000,000 per annum. He has already warned the country that still heavier burdens of taxation must be expected. I cannot help feeling that it is unwise to lead the country to believe that it is possible to raise by taxation an amount very much in excess of that which is being raised to-day. How much will it be possible to raise by further direct taxation? One must bear in mind that, if my right hon. Friend taxes the whole of the income of all the people in our land in excess of £2,000 a year, he will raise only £60,000,000, a very small contribution towards that £3,500,000,000 that we are spending to-day. I reiterate that it is not wise to lead the country to believe that this war expenditure can be raised to any great extent by direct taxation. We know full well that it will have to be raised in the main by loans, and on that account it is essential that we should, by all means at our command, keep the cost of our borrowing at the minimum possible rate of interest.
§ 4.34 p.m.
§ Sir Richard Acland (Barnstaple)
I wish to support the plea put forward by 1124 the hon. Member for Chesterfield (Mr. Benson), and I would impress upon the Chancellor of the Exchequer that he really must produce for us a careful and reasoned answer to the case which has been presented so ably, though briefly, by the hon. Member, one which has been presented over and over again in all parts of the House at Question Time. Although it is a complicated question, it seriously troubles the minds of a great many people who will, perhaps, never be able to understand all its intricacies. This is one of the influences which, I believe, are damaging the morale of this country at the present time. This kind of question goes on being asked, and no answer is being given to it, except elusive answers which arouse interest just because they are so cleverly elusive. No serious answer is given to a case which seems to be absolutely irresistible. We have been asked to sacrifice for democracy; if this were really a 100 per cent. democracy, this kind of thing could not happen. You could not have a case of this kind put forward by hon. Members in this House, never answered, and treated as though it were a matter not requiring an answer.
We are asking that this rate of interest of 1 per cent. should come down to ½ or ¼ per cent. There seems to be no reason why this extraordinary and costly policy should continue, and no serious answer is ever given to us. I believe that one thing is certain; we are determined that in and through this war we shall break the power and the control of the little group of gentlemen who work so harmoniously with the Chancellor of the Exchequer as long as they like him, but over whose comings and goings he expresses himself incompetent to exercise any control; which means that he can arrange anything with them, but that this House and this Committee have no control over the matter at all. It is very strange, but every time a Chancellor of the Exchequer says, "I have no control over them," he is really saying that the people of this country have no control over them. That sort of thing is not to go on at the end of this war. The sooner we show the people of this country that in matters of this kind the policy of this country is to be determined differently after the war, the better it will be for our morale. The longer the arguments which people expect to be 1125 answered are left unanswered, the worse it will be for our morale. May I say one thing to Members of the Labour party who are on the Treasury Bench? If the country sees that their presence in high places in this Government has made no difference to the habits of the Chancellor of the Exchequer and of other Ministers, and no difference to the answers which these Ministers give, we shall begin to wonder what purpose their presence is serving in the machinery of government. I appeal to them to use their influence in putting these points more forcefully to Ministers.
§ 4.42 p.m.
§ Mr. Tinker (Leigh)
We are asked to vote the biggest credit that has ever been known in the history of this country. I do not think that anybody will complain about that. I remember being told that the Government were not spending enough money on the war effort, but evidently they are now spending more money, and no complaint can be made. The Chancellor of the Exchequer mentioned that he could not expect revenue to keep up with that expenditure; I want to say a few words on that subject. As I understand it, the revenue is the result of the reasonable taxation of the people to meet the financial state of the country, but a point comes, in modern war finance, when it is almost impossible to raise taxation sufficient to meet expenditure by that means. Therefore, we pass to another question: Where is the money to come from? Hitherto we have taken the line that loans and payment of interest on them should be the way to get the money, but this method should be swept away altogether. The interest on loans has accumulated until we have at the present time a National Debt of over £8,000,000,000.
We are now proposing to borrow £1,000,000,000. At the end of the war we shall be faced with that enormous mass of debt, and yet, I would remind the Committee, Parliament passed an Emergency Powers Act enabling the Government to conscript, not only all manpower for any purpose, but to conscript wealth. I believe that the Government are afraid to do it. We are going to borrow, and to pay a percentage on the borrowed money to the very rich people who, at the end of a war, are usually far better off than when the war started. 1126 [An HON. MEMBER: "How can they be?"] All right, but I say that the time has come when there is no need to create loans. I propose to make a suggestion, which I hope will be carefully considered by the Chancellor of the Exchequer. The suggestion is that he takes all he reasonably can by way of taxation. In regard to the remainder, he should put it on to the banks, with the money that has been created by the war effort, and get the public to pay it back some time or other. In place of the interest, we should only have to meet the actual money expended. That would simply be a book-keeping transaction. We must face up to this issue firmly, because there is no question but that the country is right behind the war effort, and whatever money is expended there will never be any complaint.
§ Mr. Tinker
No, I want you to listen to me on this matter. The people want to know why we are going on asking for borrowed money. There is no need to borrow this money. The country is behind this war effort. It is not like the last war, when we had to borrow money, buy War Savings Certificates and have different kinds of loans in order to show that the people were behind us. There is no need for that now. The people are behind us 100 per cent. The people are saying that if labour has to be conscripted wealth should be conscripted, and I see no reason why that should not be done. We do not want this silly method of borrowing money with interest, and then paying it all back afterwards, because the burden is on the shoulders of the working class all the time. Mr. Chancellor, you are always orthodox—
§ Mr. Tinker
Through you, Sir Dennis, I wish to address the Chancellor. At the moment he is not enjoying a very good reputation in the country. There is a chance for him now of establishing his name if he will follow the example which I am giving him.
§ 4.47 p.m
§ Mr. Loftus (Lowestoft)
We all realise that we are dealing with a colossal sum. My hon. Friend the Member for Ealing (Sir F. Sanderson) said that taxation has 1127 nearly reached its limit. That means that an immense sum must be borrowed. The point is, Where is the money to come from? It can only come from genuine savings, and as regards genuine savings I would certainly give 2½ per cent. or even 3 per cent. interest, but I doubt whether any hon. Member thinks that genuine savings would actually bridge the gap. There must be created money to bridge the gap. We know that most of the National Debt consisted of created money lent by the banks to customers, who again subscribed that money to the Exchequer. Last November there was on article in the "Economist," headed "The Technique of Inflation," which warned the country that in this war we must not follow the same technique as was followed in the last war. We must not have bank-created money lent to customers and burdening the country with 4 per cent. and 5 per cent. The "Economist" strongly urged the Government to utilise genuine savings with a fair rate of interest. Will the Government do that with the joint stock banks and charge them ½ per cent., which was the figure mentioned by the "Economist"? Something on those lines will have to be used if we are to refrain from burdening the nation with an intolerable debt in future.
§ 4.50 p.m.
Mr. J. J. Davidson (Glasgow, Mary-hill)
I rather hesitated to intervene in this Debate with the financial experts, but I would remind the Committee that there is an old story to the effect that once upon a time the mouse was of assistance to the lion, and if I can place one or two facts before the Chancellor for his consideration, I will have served my purpose. The Chancellor seemed very pleased at being able to state that this was a Vote for £1,000,000,000. He said they were striking figures. But I would say that the Committee and the House in the past have never been so much concerned with how much we were spending on our war effort as to whether that expenditure was wise and safe, whether it was producing the articles necessary for the victory that we all desire. Therefore, as my right hon. Friend on the Front Bench suggested, I would have liked the Chancellor to have expatiated on the measures to be taken by the Treasury in the future with regard to this expenditure.
1128 I think that the right hon. Gentleman will be the first to agree that we want to avoid anything in the nature of wasteful expenditure such as those items of wasteful expenditure which have been brought before the House from time to time. I would like to know, with regard to the present circumstances and with regard to this Vote, whether the Treasury are adopting the same methods of control or whether they have in view any new methods of control with regard to the various War Service Departments, so that they can have not only their own advisers but the expert advice of those concerned with the Departments in order that the expenditure of this national finance will not be wasteful. I say that because the point was raised by the hon. Member for Gravesend (Sir I. Albery) with regard to an article which appeared in the "Daily Mirror," regretting that certain sections of the community were being asked to make terrific sacrifices and stating that they were questioning what exactly the banks were doing in this respect. I read that article. There is only one reply to it, and that reply must come from the Government. They must make it clear to the public what exactly the banks are doing in this national war effort. It is true that reports, rumours and statements are being spread that the workers are being asked to do this and that, and that certain sections of the community have made contributions, and laudatory comments have come from the Front Bench with regard to the sacrifices that are being made by many sections of the community in handing over their savings completely free of interest. It is, therefore, natural that people in many parts of the country should express the desire that the Chancellor should explain exactly what the banks are doing with regard to the national war effort. As long as the Government and the Chancellor hesitate to make that point perfectly clear, so long shall we have those articles—and rightly so—in the public Press, and those opinions, suspicion and hesitancy in the public mind.
I listened to the hon. Member for Ealing (Sir F. Sanderson) when he was dealing with the question of direct taxation, and, as hon. Members know, this party has maintained a particular attitude for many years with regard to the question of indirect taxation. Even now we say that so long as there are sources of taxation 1129 among people who have far greater wealth than they require for the normal comforts of life and for the ease and leisure of ordinary life, there ought not to be any further extension of indirect taxation. The hon. Member for Ealing said that this taxation would amount to merely £60,000,000. I would remind him of the words of the last Chancellor of the Exchequer and the Lord President of the Council when he was Prime Minister, that every penny counts in this war. This is a total war—these are their own words—in which everything that the nation has must be put into the common pool. If this is a total war in which every penny counts, there ought not to be expressions of "merely £60,000,000"; everything—£1,000,000, £500,000, £l0,000,000 or £60,000,000—must be counted as of the utmost importance as a contribution to our effort. Therefore, I would ask the Chancellor of the Exchequer whether any progress has been made upon the lines that I addressed to the last Chancellor and which were answered by the present Financial Secretary to the Treasury.
We have in this country a system of civil, judicial and hereditary pensions, involving hundreds of thousands of pounds. There are many people, such as ex-judges, who have lived in comfort all their lives, who receive what to us has always seemed an adequate salary, a salary which gave them the benefit of everything that can be provided in the way of comfort, leisure and ease, and those men to-day are drawing from the National Exchequer £5,000 a year pension.
May I ask you for your guidance, Sir Dennis? Is it out of order to ask the Chancellor of the Exchequer, with regard to this question, whether he intends to take any steps on those lines to assist in the expenditure necessary for the Service Departments?
§ The Chairman
Yes, it is out of order to discuss pensions which are a charge on the Consolidated Fund.
If that is the case, I can only regret it, and await another opportunity to raise this particular question. I and many others—I could say the country—feel very strongly on this question.
Therefore, I will not pursue it. But I do trust that the right hon. Gentleman will carefully consider those points that I have raised.
§ The Chairman
I have told the hon. Member that what he has been speaking of is out of order. If he persists, in spite of my warnings, in addressing further remarks on that subject to the Chancellor of the Exchequer, I shall have to instruct him to resume his seat.
Sir Dennis, I was not referring to the later words that I used. I was asking the Chancellor to consider the points that I made in the earlier part of my speech, and I trust that I am completely in order with respect to them. I would, therefore, go on to say to the Chancellor of the Exchequer that the people in the country—often termed the common people—the people from my consituency and other constituencies, are whole-heartedly behind the nation, but there is one essential to victory in this war, in regard to our financial position, as in regard to any other effort; that is, complete clarity, a complete statement of the facts, and equality of sacrifice for every section of the nation.
§ 5.0 p.m.
§ Mr. Ellis Smith (Stoke)
We on this side are bound to support this Vote, but there is an aspect about which I and my hon. Friends and other people in the country are much concerned. In order to lead up to the subject, I must remind the Committee that at the beginning of this war this House agreed to forgo a number of Parliamentary rights which vitally affect Private Members' interests. I am not complaining about that; I supported the proposal as strongly as anyone. But we have been made uneasy, on behalf 1131 of the people we represent, about one or two points. There is no longer an opportunity for balloting for Private Members' Motions or for the right to submit Motions on the Civil Votes. We are limited, therefore, to an extent that we never anticipated. Seeing that we are prepared to agree to this Vote, I would ask the Leader of the House whether he would give an undertaking on the question of the Royal Warrant—
§ The Chairman
If the hon. Member were allowed to pursue that sort of argument, he might introduce almost any subject into the Debate which is not relevant to the Motion before the Committee.
§ Mr. Smith
You will see, Sir Dennis, that on that point I am limiting my remarks as narrowly as I can. I have taken advice on the matter, in order to conform to the Standing Orders and the procedure of the House. I have been informed that, providing I limited my remarks to the narrowest limits, I should he in order. All I am asking is that we shall not be forced to express ourselves on this question in a way that we would have—
§ The Chairman
The hon. Member must act in these matters according to the direction of the Chair, and not according to any advice he may get elsewhere.
§ Mr. Smith
If that is so, Sir Dennis, it shows what should have taken place under the normal procedure. I have read up the "Manual of Procedure" and a number of other publications very carefully this week, and I find that it would have been in order to have raised this question before Mr. Speaker left the Chair. But I will not pursue the matter if the Chair thinks that it is not in order. I am limiting it as narrowly as possible, in order to keep within the Rules of Order. Having read the Rules very carefully, I propose to follow this course, unless I am ruled out of order. All I have done up to now is to paint the background; this is the point I want to raise. This is a serious matter. The Committee is in a difficulty with regard to this question, and if we are doing our duty to the people, we are bound to be concerned about it. We were told that this Royal Warrant had been submitted, and I asked the Prime Minister to give an 1132 undertaking that the House would have an opportunity of considering it before it was finally adopted. [HON. MEMBERS: "What Royal Warrant?"]. I asked that before the Royal Warrant submitted to His Majesty by the Minister of Pensions was adopted the House, in view of our past experience, would be given an opportunity of considering it. Hon. and right hon. Gentlemen would not be so ready to smile if they had had to deal with cases arising out of the last war, such as many of us have had to deal with. I want the Leader of the House to undertake that the Government will submit this Royal Warrant to a vote of the House. I want to dissociate myself from it completely in its present form. Although I support the Vote, I think that the Committee, before agreeing to it, should have an assurance that the Government will be prepared to consider the suggestion made in connection with pensions, under this Vote, to the soldiers who are now serving.
§ 5.7 p.m.
§ Sir K. Wood
I need hardly assure the Committee that I will take very careful note of the suggestions that have been made. I am a little confused by some of the advice I have received, especially from my hon. Friends opposite. Apparently they do not want any further taxation, and they are not so keen on borrowing. What course they want me to follow I do not know, but I will study their speeches. I am indebted to the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) for what he said about the Vote. He urged me to make another statement on the position, as I shall have to do when I bring forward further proposals to meet the present situation. I agree that those proposals should be made soon. There are many reasons for doing that. My hon. Friend the Member for Gravesend (Sir I. Albery) spoke about our general financial policy, and criticised it in some respects. So far as I could gather, the only definite point he desired to make, at any rate this afternoon, was with regard to the position of equities. I have had an opportunity of speaking to him and to others about that position, but. as the Committee will have observed from the reply that I gave to a Question to-day, the position has improved since 1133 that matter was first raised; and I hope that it will continue to improve.
The hon. Member for Chesterfield (Mr. Benson) raised again a matter which is very dear to him, and on which he put a number of questions to my predecessor. He put forward, with great force, his argument about the difference between the rate given to the banks before the war and that given now. If he will address a question to me, I will give him a considered reply. I have observed the replies given by my predecessor, and I thought they were explicit, but I will endeavour—not, I am afraid, with much success—to be more explicit still. The fact that ½ per cent. was the rate at which banks lent money to the market before the war does not mean that it would be appropriate now. It does not take into account several other considerations, like the general financial and economic situation, and the fact that the volume of Treasury hills issued to the market is now much greater. The lending rate is, in fact, settled by the banks themselves, but the whole structure of short money rates has to be considered in the light of all present circumstances. That, as I remember it, was the gist of my predecessor's reply. Some statements have been made this afternoon also about the position of the banks in relation to the general financial situation. I will study them, but it is only right that I should say that, at any rate in my belief, the banks have in fact given the fullest assistance, in close cooperation with the Treasury and other Departments, in financing the war effort, and in providing for the needs of the community during the emergency. I do not myself think—and I must testify to what I know—that there is any case for the suggestion that they are not playing their part in the war effort.
The Chancellor has stated that he believes that the banks are playing their part. Does he mean their full part, and, if so, will he expatiate on whether the banks are giving the Treasury any special facilities with regard to percentage rates?
§ Sir K. Wood
No one can say for certain whether a particular institution is playing its full part or not. It is to some extent a matter of opinion. I have given my opinion. That does not mean that 1134 the hon. Gentleman need not hold the contrary opinion. He is as much entitled to his opinion as I am to mine. I will only say that I will carefully study all the observations that have been made this afternoon, and I hope that they will bring me some assistance in the very difficult situation which faces us at the present time. It will be my endeavour in any further efforts which I shall ask the House to sanction, and the country to make, to see that all sections of the community are asked to make a fair financial contribution, and I would express the opinion that it obviously must cover the widest field. I am not in a position to pick and choose. Every possible source that is a reasonable one must be open to us, and it is in that spirit that I shall approach my next task.
§ Mr. Tinker
When are we likely to have the Chancellor's considered opinion as to how the money should be raised—in a month's time, in a fortnight, or when?
§ 5.13 p.m.
§ The Lord Privy Seal (Mr. Attlee)
My hon. Friend the Member for Stoke (Mr. E. Smith) put a question to me. I am bound to say that I do not appreciate its exact relevance to this discussion. It is obvious that there will have to be notice of such a question, as I could not reply to it without notice.
Question,That a Supplementary sum, not exceeding £1,000,000, 000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1941, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made therefor by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war,put, and agreed to.
Ordered, "That the Chairman do report Progress; and ask leave to sit again."—[Captain Margesson.]
Resolution to be reported To-morrow; Committee also report Progress; to sit again To-morrow.