§ Order of the Day for the Second Reading read.
§ Moved, "That the Bill be now read 2a"—(The Marquess of Lansdowne.)
§ EARL SPENCER
I am afraid I must interrupt the rapid process of passing Bills, for I have a few remarks to make upon the Naval Works Bill. This is a very important Bill, and I feel some responsibility in the matter, having been at the Admiralty when the first of these Bills passed. It seems to me that at this moment, when there is going to be, apparently, a change in the matter, it is right that I should call attention to the Bill. I would take this opportunity of expressing my extreme regret that the noble Earl, the First Lord of the Admiralty, is not able to be in his place on account of illness. We all regret exceedingly that one who is so able in speech and in business has been prevented from being in his place except on very few occasions since his appointment to that high office. But I have thought that notwithstanding the absence of the noble Earl, it is my duty to say a few words on this Bill.
The question of loans for naval works has assumed a very serious condition within the last few years. Side by side with payments into the Sinking Fund for the National Debt we have been running up very considerable expenditure in loans for public works. The first of these Bills was passed, as I have said, in the year 1895, when I had the honour to be at the head of the Board of Admiralty. At that time the arrangements in the harbours and docks struck the Board over which I presided as being in a very unfortunate and disastrous condition. The fact was, public works had not kept pace with the increased number of ships, the increased size of ships, or the different kind of ships that were used in modern war. I need not say that the old-fashioned docks were hardly sufficient to take in the new battleships or large cruisers, and torpedo attack had rendered perfectly dangerous many roads and anchorages which had formerly been used by ships with perfect safety. Every- 906 body who is conversant with old naval history will remember how often the Fleets were anchored and remained at the Downs in perfect safety. The moment torpedo attack began the Downs became perfectly unsafe for ships. That was the cause of the origination of the harbour works at Dover, which are now, I hope, approaching completion.
I would instance another case—that of Portland Harbour. Portland Harbour was considered a safe place of anchorage for our Fleets, but when torpedo attack began it was found that torpedo vessels might in the night creep round the shore and practically destroy any ships that were lying in the harbour. It therefore became necessary to deal with this. This, and other expenditure of the same sort, would have increased enormously the ordinary Naval Votes. Up to that time, I think, with rare exceptions, all the public works connected with the Navy had been paid for out of the annual Votes; but when we considered what we had to do, and the fact that these works were permanent works, we came to the conclusion that it was possible to divide the expenditure and, to a certain extent, raise the money by loan. Of course, this was not simply a matter of arrangement by the Admiralty. It was a matter in which the Chancellor of the Exchequer had a voice. My late lamented friend Sir William Harcourt and the Cabinet agreed to this proposal.
Since that date there have been great changes. An enormous increase has been made in the number of naval works. When we began we estimated that we should probably have to ask for about £9,000,000, though we admitted that that sum would not meet all future requirements. But at the same time we never contemplated the enormous increase that has followed the introduction of this principle. Some financiers assert that the total, which we thought would amount to £9,000,000, has sprung up to £32,000,000, and some put it at even a higher figure. I think this is a serious state of things that needs checking. I hope that the great arrears in public works that existed at the time I speak of, namely, in 1895, have now been almost overtaken—at all events, that they very soon will be overtaken—and 907 that in future we shall not require these enormous sums of money for naval works. I am not going to say that on no possible occasion ought we to borrow, but I do say that the power to borrow ought to be limited to very special occasions, and that the class of works to be paid for out of loan ought to be carefully criticised.
I confess there have been certain works put down in the list which appear to me to be hardly works that ought to have been paid for out of capital sums, and which can hardly be called permanent works. I would instance one—coaling facilities and fuel storage. I cannot help thinking that that is a matter which ought not to have been put under capital head and dealt with by loan. In old days the money for coaling facilities and fuel storage was always met out of the annual Vote. Then there is another matter which I understand has been dealt with under the head of permanent works—namely, dredging. Dredging is a most important and essential work, but I think anybody who has had anything to do with it will know that what you dredge in one year is very often filled up in the next, and it cannot therefore be looked upon as a permanent work. I do not observe that any guns have been included, but in my time it was proposed that guns should be placed under this category. We refused to do that, because obviously guns are always changing and wearing out, and it was not considered right to include them among permanent works.
I should like to ask what is now proposed. The present Bill is a considerable one, and if we look back we find that the whole series of Bills, including this Bill, amount to the enormous total of £34,800,000. That leaves, before this Bill becomes law, £12,700,000 to be passed; £5,800,000 is authorised in this Bill, leaving for the future £6,900,000. I am not clear what His Majesty's Government propose to do in regard to the future. Is the whole of the sum required to complete the works now begun to be put on the Votes or not? Some of it is, no doubt. That has been distinctly stated by His Majesty's Ministers in another place. I should like to know how much of this is to be 908 still paid out of future loans and how much will be paid out of the annual Votes. I rejoice to think that a healthier state of things may be arrived at in the future. I only notice, in passing, that the sounder state of finance which His Majesty's Government foreshadowed for the future has not been announced for this year.
When the first Naval Works Bill was passed the Government of which I had the honour to be a member were very particular in making the Bill an annual one. It was made an annual Bill in order that it should be as nearly as possible as much under the control of Parliament as the ordinary general Votes for the Navy. Now that has been changed, and instead of its being an annual Vote it is made for two years. There is another equally important matter. When we were in office it was certainly our desire that the whole of this money should be repaid within thirty years from the first payment made. That has now been altered, and the thirty years is taken from the time when the work was first begun. I think those are two very important changes, and I do not know exactly how His Majesty's Government can defend them.
I may be allowed just to glance at some of these items. Since we were in office a great many of them have been very largely increased. Take, for instance, the Gibraltar dockyard. The Gibraltar dockyard was, I think, when we first started it, under £500,000; now it has reached the sum of nearly £3,000,000. I do not say that that was an unnecessary work; but if we see these enormous docks there and at other places we expect some diminution in the cost of docks at home. Then take the Hong-Kong dockyard extension. That is a large expenditure— £1,500,000. I have always had a very strong opinion with regard to the Hong-Kong dockyard extension. I held it before I left office, and within a few months afterwards I visited Hong-Kong and tried to master, as far as I could, the situation. I have always maintained that the new dockyard at Hong-Kong was placed in the wrong situation. It is now placed on the island, and one of the reasons why I thought it was wrong was that the town and colony of Hong-Kong were 909 desirous of developing their works and roads, and this dockyard being where it is prevented their doing so. But my great objection was this, that with regard to future developments the site of the dockyard was so confined that it would not be possible to have the accommodation which an increased Fleet in the China Seas required. That accommodation will not be found where the dockyard now is. I have always thought that the proper place was opposite, at Kowloon, which is on the mainland. At that time there might have been some objection because our boundaries were somewhat limited there, but since then we have had a considerable extension of boundaries, and there can now be no doubt that there are ample facilities there for a dockyard. But I fear it is too late. I might mention that there was already a very large private dock there which might have been bought and developed into a great naval yard.
I now come to several additions which have been made. I understand that a very large increase on the Keyham Docks has been caused owing to difficulties in dredging. I do not criticise that. These difficulties must arise, and there is no doubt whatever of the enormous importance of getting an effective dock for our modern Navy in the great and important centre of Plymouth and Devonport. But with regard to Chatham dockyard extension a very remarkable thing has happened. There is no place, probably, in England better suited for a dockyard or for a base for warlike operations than Chatham. It is protected, it is inland, and the approaches to it now, owing to dredging and other things, are very good. It is safe from hostile attack from fleets, and its position strategically with regard to other countries is certainly of the first importance. Last year there was a great proposal to lay out £4,500,000 on increased dock accommodation at Chatham. Now only £70,000 is put down.
The noble Marquess some time ago referred, and I did not like to correct him at the time because I was not quite sure of my facts, to the great reductions in the Navy Estimates as having been caused by the change in policy with regard to a great number of ships. A great number 910 of ships were not thought fit for war, and, therefore, the principle adopted was that they were not to be kept in peace time, costing a large sum of money to maintain and occupying a great deal of room in the dockyards. The noble Marquess was incorrect in what he said, for the real decrease in the Naval Estimates was not due to this particular thing. The amount gained by this change amounted to only a few hundred thousand pounds. I am ready to admit, and I do so with great satisfaction, that this change with regard to works at Chatham does arise in this way. An enormous number of ships which were practically useless, or of very little use, were docked at Chatham and at other places, and the accommodation which their removal has given has overcome the difficulty and the necessity for largely increasing the ship accommodation in that port. But I want to know what is the Government policy in regard to Chatham.
When this large Vote of £4,500,000 was foreshadowed for Chatham, there was also a considerable future expenditure foreshadowed with regard to Rosyth, in the East of Scotland. I should like to know what is going to be done there. Will the "token" Votes of £70,000 for Chatham and £200,000 for Rosyth bind future Governments to larger expenditure? I confess I have always had considerable doubt as to the necessity of this new Scottish naval yard. As I have said before, I value enormously the strategic position of Chatham, and I have considerable doubts whether it is a wise policy to begin a new dockyard at Rosyth rather than develop the old one at Chatham, if more accommodation is required. At all events, I should like to ask the Government whether they intend to do more than foreshadow the possibility of great works at this place in Scotland. They have purchased the land. I imagine that the greater part of the £200,000 goes towards the purchase of land. I should like to know what is the intention of His Majesty's Government with regard to this, and whether they still adhere to the proposal to convert Rosyth into a very large naval establishment rather than develop Chatham to a larger extent.
911 There have no doubt been an enormous number of works added to this list which we never contemplated. I cannot help thinking that the Government have gone too fast with regard to a great many of these works. We considered works at the Cape and other places, and though we quite admitted that probably at Malta and elsewhere works would be necessary in the future, we had no contemplation at all of the enormous developments which have been made since. We admit that naval barracks have been necessary at Portsmouth, Chatham, and other places, but we had begun nearly all those; and I cannot help thinking that the Government have gone almost too rapidly to work in developing those works, and that the system which we began has encouraged them to expend very much larger sums and with less consideration than would have been shown if they had been on the Votes. It is a question whether the whole of the electric lighting should be charged to capital and not to the ordinary annual expenditure.
In my recollection of expenditure at the Admiralty there was no expenditure so great and so continuous as that on coastguard buildings. I see here a large sum with regard to coastguard buildings. Is that to be permanent? In my time coastguard buildings were almost invariably paid for out of annual expenditure. Are we to go on with this expenditure, or is there any other plan with regard to coastguard stations in the future? I quite admit that when a great change is made in policy, which we must all welcome, particularly when the policy not only increases efficiency but is also economical, very often enormous expenditure that has been incurred prior to the change strikes one as having been unnecessary. I quite admit that if there is any very large change we must always face that; but, when we contemplate this, it does make us reflect that a policy of this sort ought to be very thoroughly thought out, and that if large sums of money, amounting to hundreds of thousand and even millions, were voted only a few years ago for a thing which is discontinued now, there is a lamentable absence of stability of policy.
912 I should be glad of some explanation on the points I have raised, particularly with regard to the intentions of His Majesty's Government as to future works of this sort. Are they to be discontinued? Have we come to an end of the naval works? If not, are they in future to be charged on the annual Votes, or are they still to be paid for out of loans? I do not for a moment say that you are never to pay for these things out of loans; but I think the dimensions which these loans have now reached show how enormously important it is on business grounds that the whole question should be most strictly looked into, and that, wherever possible, the expenditure should be placed on the annual Votes rather than on loans.
*THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of LANSDOWNE)
My Lords, I have often during the course of the session regretted the absence of my noble friend Lord Cawdor, and I never regretted it more unfeignedly than I do on the present occasion, for I fear I have not the expert knowledge, which would enable me to reply to the criticisms of the noble Earl, who speaks with all the authority belonging to a former First Lord of the Admiralty.
I can only say with regard to the general principle of this Bill that it is not a Bill which attempts to obtain public money for any new items of expenditure. The works contemplated by this Bill are works which have already been sanctioned in principle by Parliament. They are works resulting from the policy which has been deliberately adopted by the nation and which has been the consequence of those alterations, in the conditions of naval defence to which the noble Earl referred. The number of our ships has increased, their size has increased, new forms of naval attack are invented, and it follows that in order to meet these new circumstances new expenditure on new works has to be incurred. It has hitherto been the accepted policy of both Parties that expenditure of this kind should be provided by means of these comparatively short loans. It has been felt, and I must say felt very naturally, that 913 large increases of expenditure on this account could not be thrown upon the Estimates of the year without considerable hardship. On the other hand, the necessary works are not perhaps of so permanent a character as to justify an addition to the fixed debt of the country in respect of them.
That has been the policy—a policy for which, I think, the noble Earl admitted he and his friends were not less responsible than we are. But we share the noble Earl's opinion that expenditure of this kind does require to be most carefully watched; and I am able to say, in reply to his Question, that, although, no doubt, the Admiralty will certainly not undertake that in no circumstances whatever shall money be borrowed for a purpose of this kind, it is intended that future expenditure under this Act beyond the sums now dealt with is to be paid for out of the current Navy Estimates.
I pass to one or two points to which the noble Earl called special attention. He asked whether it was not the case that in the first instance this period of thirty years ran from the date of the original Bill of 1895, and whether of late we had not been in the habit of calculating the period of thirty years not from that date, but from the later date at which the funds were actually provided. The thirty years period was calculated from 1895 until the year 1903. Eight years had then passed from the date of the original Bill, and it was felt that the period of repayment thus reduced was becoming unfairly short for the present generation of taxpayers; and accordingly the practice was resorted to of dating the thirty years not from the original date of 1895, but from the time of the issue of the money lent.
The noble Lord questioned me with regard to the large sum inserted for works at Hong-Kong, I find that is due to the fact that a large extra expenditure has been necessitated in the execution of the contract in consequence of unforeseen engineering difficulties which presented themselves owing to bad foundations and increased cost of dredging due to rock having been found to a larger extent than was anticipated. The noble Earl expressed some surprise that there should be 914 a charge for coaling facilities and fuel storage; but I am told that for this purpose it has been necessary to acquire land, and to construct engineering works of a permanent nature, works not really differing in character from other works for which we believe money can properly be borrowed under this Bill.
The noble Earl said a word as to the large reduction in the item charged for the Chatham dockyard extension; and I take the opportunity of saying that I think the noble Earl was quite right when he corrected me for a somewhat inaccurate statement which I made the other evening when I attributed the large reduction in the Naval Estimates to getting rid of a number of useless and obsolete ships. That only accounted for a part of the sum. The main saving has been due to a restriction of the shipbuilding programme, but I have no doubt that the reduction in the number of useless and obsolete ships has had a good deal to say to the reduction under this particular head.
The noble Earl made an observation as to the charge on account of coastguard buildings. I am told that it was decided two years ago that it was more economical to build Admiralty stations instead of, as before, leasing the necessary accommodation. It has now been determined that, after the amount in the present Bill is spent, the future expenditure shall appear on the Votes. As to Rosyth, I learn that plans have been got out for a first-class naval base, but the Government are at present only proceeding with that part of the work which is required for the Fleet—namely, a naval yard and a graving dock. These works will be undertaken without prejudice to any further development. I greatly regret not to be in a position to give the noble Earl any fuller information.
§ Standing Order No. XXXIX. having been suspended, Bill read 2a; Committee negatived; Bill read 3a, and passed.