§ For the purpose of calculating the old sinking fund for the financial year ending the thirty-first day of March, nineteen hundred and eleven, Sections four and five of 862 the Sinking Fund Act, 1875, shall have effect as if the income and expenditure therein referred to were the aggregate income and aggregate expenditure respectively for the two financial years ending the thirty-first day of March, nineteen hundred and ten, and the thirty-first day of March nineteen hundred and eleven.
§ Mr. COURTHOPEI beg to move, to leave out the Clause.
In doing so I hope the right hon. Gentleman opposite will not suspect me in anyway of trying to prevent this surplus to the 863 end of the financial year going to the object for which it was intended. I have no such intention, but I think the pooling of two financial years, as proposed under this Clause 13, is a very dangerous precedent for the Committee to set up. Let me point out what it might lead to. It is not beyond the ingenuity of the Government—I do not say this Government, but any Government—to arrange two probable surpluses for one year. It would enable any future Government deliberately to arrange for a large surplus in a year which they anticipated would be the last before a General Election, and to propose a pooling arrangement so as to be able to start that last year with £8,000,000 or £10,000,000 in hand to enable them to remit a great deal of unpopular taxation for election purposes. It is absolutely un-sound from a national point of view, especially when either that Government or their opponents, whichever succeeded in getting back to power, would have to replace the unpopular taxation just remitted. That would be placing in the hands of Government a great power which they might use for election purposes and election purposes only. If a difficulty has arisen in carrying out the usual statutory sinking funds arrangements with regard to the services of the year that came to an end in April last, two separate Clauses should have been put in, and the two years should not be grouped together. It is not that I object to the money going to the Sinking Fund, but I object to the pooling arrangement by which the sums for the two years are put together.
§ Mr. HOBHOUSEThe reason why this Clause is necessary is because circumstances necessitate some recurrence to the events of last year. Owing to the fact that there was no regular Budget for 1910–11 there was a certain amount of expenditure incurred, amounting, I think, to something like £20,000,000 or £30,000,000. There was a corresponding want of revenue to meet that expenditure, and the result, briefly, was this, that at the end of the year 1910–11 there was a deficit of something like £26,000,000. At the end of the year 1911–12, there will be a very large surplus. In order to meet the deficit of £26,000,000 the Treasury brought in a measure called the Temporary Borrowing Powers Bill which authorised borrowing up to the extent of the deficit as covered by the Appropriation Act of that year. We raised the £21,000,000, and £17,000,000 of that was raised by Treasury Bills, and the other by 864 deficiency advances. The whole of that money has been repaid, and the result is that there is a very large surplus in the second of the two years mentioned here. It is quite clear that the repayment of the Treasury Bills and the deficiency advances have to be met this year, but unless we pass this Bill you will have to go through the whole process of raising the money again. That would be going through a very useless and needless form of raising money and cancelling your borrowings at a time when you have a large surplus which you are paying over to the old Sinking Fund. I am sure that is a proceeding which will not commend itself to any man of common sense on either side of the House. When the hon. Member opposite looks at it from that point of view I think he will agree that it is necessary to put the whole of these Budgets together and get the power which the Government seek to obtain in order to divert the money which would otherwise go to the repayment of debt and cancellation of bonds.
Mr. BALFOURI think my hon. Friend's objection was that he thought it was a precedent, and the first step in establishing the general system by which the two years might be pooled together, no doubt with confusing and possibly dangerous results to the finances of the country. I understand the explanation is that this is purely an ad hoc arrangement made because the Budget of 1909–10 was not passed until 1910–11. This is one of the singular results of that very singular operation. It is singular because it was perfectly unneccessary. The Government in power at the early part of last year, as they themselves frankly admit, would not have had the slightest difficulty in passing the Budget in the year to which it belonged. This is the policy which is getting us into all the trouble of next week. One of the results has been an extraordinary confusion in regard to the old Sinking Fund due to the fact that there was an unreal deficit in one year and an unreal surplus the next. No doubt that is a very unfortunate state of things, and this may be the best way of getting out of the difficulty. Now that my hon. Friend understands that this is a temporary ad hoc arrangement to meet a temporary crisis, perhaps he will not think it necessary to follow up his speech by asking the Committee to divide.
Question, "That the Clause stand part of the Bill," put, and agreed to.