§ Order for Third Reading, read.
§ SIR HENRY WILLOUGHBY
said, the Bill was one of those which had passed the House very quietly, having only been delivered to Members the day preceding, when it was also read a second time, though it proposed to add 7,000,000l. to the unfunded debt of this country. He (Sir H. Willoughby) was opposed to such a course, as well as to the Bill, for which he saw no necessity, and he hoped, therefore, the right hon. Gentleman the Chancellor of the Exchequer would explain its object and causes. The unfunded debt of the country now stood higher than it did at any period since the last war, with the exception of the years from 1812 to 1820, when it was 56,000,000l., which in 1829 was reduced to 24,000,000l. But in that time the state of the country was very different from what it was at present, for cash payments had been suspended, and the state of things which then existed had always been considered to be a blot upon our system of finance. The creation of a great mass of unfunded debt was only a postponement of the funded debt; and the funding would probably be attended with great disadvantages in consequence. In the last two years the unfunded debt had been nearly doubled. In 1853 it stood at 17,000,000l.; in 1854 it stood at 23,000,000l.; and now it was somewhere about 30,000,000l., or would be at the end of the financial year. The unfunded debt, thus added to the national burden, also was of a different character from the former unfunded debt, inasmuch as it consisted partly of Exchequer bonds redeemable at the rate of 2,000,000l. a year every successive year after two years—namely, 1857, 1858, 1859. The income of the country up to that period was, therefore, forestalled. That was his (Sir H. Willoughby's) objection to the scheme of the right hon. Member for the University of Oxford (Mr. Gladstone) when he introduced this system of finance, and he had foretold that it would give rise to considerable embarrassment to introduce a plan of repayment every two years. At the end of this year, therefore, the unfunded debt would stand at 30,000,000l., with the inconvenience of being composed in part of Exchequer bonds, which could only lead to great disadvantage in future. He did not believe that there was any absolute necessity for the full amount of 7,000,000l. proposed to be taken by the present 1926 Bill. The House had granted supply in the most handsome and liberal manner; it had voted in one shape or in another 92,000,000l. of supply—critically 91,500,000l.—but he (Sir H. Willoughby) would take it at 91,000,000l. That Vote consisted of three items—namely, 69,000,000l. raised by taxes, 16,000,000l. taken as loan, and the present addition to the unfunded debt of 7,000,000l. He would say 69,000,000l. of taxes, because last year 59,500,000l. had been brought to account by the right hon. Member for the University of Oxford; but 5,200,000l. were stated to be outstanding—making in all 64,750,000l. The right hon. Gentleman opposite proposed to increase the taxes 5,250,000l., 1,000,000l. of which was not to be levied this year; this brought the sum absolutely levied and raised up to between 68,000,000l. and 69,000,000l.; add to this the 7,000,000l. of Exchequer bills, and the loan of 16,000,000l., and it would give a sum of 91,500,000l. Looking at all the papers before the House on the subject, however, he (Sir H. Willoughby) could not find the expenditure in either No. 1 or No. 2 Estimates to be more in the aggregate than 88,500,000l. Taking the expenses of the debt and the charges on the Consolidated Fund at 29,500,000l., and the civil service at the enormous sum of 6,500,000l.; and the packet service at 730,000l., and the two war estimates at 49,750,000l., it gave an expenditure of 88,500,000l. The Estimate (No. 1) were about 81,750,000l., leaving a margin of 4,440,000l. or, say 4,500,000. The Estimates (No. 2) were 6,125,440l., which added to the first Estimates made a total of 88,000,000l. or rather more. These second Estimates, deducting the 4,440,000l.—or rather 4,240,000l., for 200,000l. had been lost in the skirmish about bankers' cheques—and there would be a deficiency of about 1,900,000. For this deficiency it was not necessary to raise Exchequer bills or bonds to the extent of 4,000,000l. Did the House know exactly what it was about in the matter? So extraordinary were the calculations of the right hon. Gentleman, that he (Sir H. Willoughby) greatly doubted if it did. All wars were doubtless expensive; but taking into consideration the enormous amount of supply, and the enormous estimates, he was bound to say that it did not meet the whole case; 49,722,000 was the most formidable supply ever granted, even 1927 in the wars with France. No doubt the Government then resorted extensively to the system of loaning, but yet that sum, he believed, was not the whole that was granted. He understood the right hon. Gentleman to say, that 1,750,000l. Ways and Means bills had been issued before the loan had been made, and that these absorbed the assumed surplus. But supposing that to be the case, why were not these bills, which formed a part of the current expenditure, paid for out of the proceeds of the loan? Was the House to understand that the expenditure of the country required the loan and the Ways and Means bills also? Nothing was more reasonable than to raise money for current expenses by Ways and Means bills; but was it also right to pay them out of a loan? Were these bills, he would therefore ask, to remain outstanding, or were they to be paid out of the loan? If they were not, it gave another character to the question. The system of Exchequer bonds led to an involved system of finance. He (Sir H. Willoughby) was, therefore, opposed to them. In conclusion, he would ask the right hon. Gentleman if he had drawn any stock from the savings-banks fund, and if it was his intention to resort to such a mode of raising money? He should be glad to learn what was the actual estimate of the Ways and Means, and the expenditure for the year ending March 31, 1856, and whether any real necessity existed for an increase of 7,000,000l. to the unfunded debt of the country. An increase of that debt, especially at the present moment, was to be viewed with jealousy by the House.
THE CHANCELLOR OF THE EXCHEQUER
With regard to the question of the hon. Baronet, as to the increase of the unfunded debt, I would merely refer him to the facts which I mentioned on a former occasion, and which showed that the amount at which the unfunded debt would stand, even if increased to the full extent which is proposed by this Bill, would not be so very considerable when compared with the amount at which it stood not only during the late war, but for a considerable period after the termination of that war. No doubt a sum of 17,000,000l. of Exchequer bills, and the sum of 6,000,000l. of Exchequer bonds, together with the further sum of 7,000,000l. of Exchequer bills which it is proposed to raise by this measure, will produce a sum of 30,000,000l. sterling. That, I admit, is a large sum to constitute an unfunded debt. It is 1928 larger than any person would wish it to stand at, if there were any option; but it is not a larger amount than that at which it stood, not only during, but since the termination of the late war. There is one point to which I would particularly call the attention of the House, and that is, that the interest on the last issue of Exchequer bills was only 2d. per diem, whereas during the last war the interest, instead of being 2d., was 3d. per diem. There is another matter which the House ought also to bear in mind—which is, that during the late war there was a considerable amount of Government bills in circulation, issued by various departments and under various names—such, for instance, as Ordnance bills, Navy bills, and so on; but which, practically, were all a part of the unfunded debt in circulation. No such bills exist now. The whole unfunded debt consists either of Exchequer bills or of Exchequer bonds. With regard to another part of the speech of the hon. Baronet, I own it would give me great satisfaction if he were right, and could prove that my calculations were wrong, as the effect would be to show that the nation is two or three millions richer than I believe it to be. The hon. Baronet says, that the amount to be raised by taxation in the present year is 68,500,000l., whereas I stated in my budget that the amount raised last year was only 63,000,000l. Now, what I did state was this—that the revenue derived from taxes last year amounted to 63,339,000l.; and retaining that amount of revenue for this year, I added to it 4,000,000l. of new taxes to be received in the present year, making the total amount of taxes 67,339,000l. Then there was the loan of 16,000,000l.; and I also estimated the prospective power of issuing Exchequer bills to the extent of 3,000,000l. sterling, thus making altogether a sum of 86,339,000l. That was the amount of revenue which I calculated for the current year in the month of April last. Since then, I have proposed to add a further amount of 4,000,000l. of Exchequer bills, thereby producing a sum of 90,339,000l. That is the sum (including the addition made on Friday last) which I estimated to be the amount of revenue for the present year. The hon. Baronet has stated the amount to be 91,500,000l. The difference in amount between us is not great, and I am not able to understand how it is that he considers that there is any real difference in his mode of calculation and that 1929 which I submitted to the House. From the sum of 86,339,000l., which I estimated to be the amount of revenue in April last, 1 have since deducted 200,000l., being the amount I thought likely to be produced by a stamp on bankers' cheques, but which I have since abandoned. The real amount, therefore, will be 86,139,000l. The expenditure was estimated at 81,899,000l., which left, as the hon. Baronet correctly stated, a margin of 4,240,000l. That is the statement I made in April last. The additional amount of 4,000,000l. of Exchequer bills, which I proposed on Thursday last, and which the House voted, will produce a sum of 8,240,000l. From that is to be deducted the supplementary estimate, which has since been voted, amounting to 6,135,000l., leaving a margin of 2,105,000l. That is shown in my last statement to the House, and the hon. Baronet will, I am sure, see that there can exist no doubt as to the correctness of that statement. The hon. Baronet has asked me a question as to Ways and Means bills having been issued to the extent of 1,750,000l. since the commencement of the year. The issue of those bills was to pay a large demand on the Exchequer at the very beginning of the financial year, and before the loan was available. The payment was made in anticipation of the revenue of the current year, and a considerable portion of the amount has been paid out of the produce of the loan; but it is unnecessary to take account of this particular mode of anticipation of the revenue, as the result must be the same whether the bills were paid out of the produce of the loan or out of the taxes. In either case the effects must be to diminish the available amount of the margin for the service of the year. I have now, I believe, answered every question put by the hon. Baronet, and I think he will find, on consideration of the matter, and on a re-examination of the figures, that there is no ground to suppose that there has been any error in my calculations, or that there is a difference between the Ways and Means and the Estimates to the amount which he seems to imagine. With regard to the deposits of savings-banks, no advance has been made from that money since the loan was obtained; and it is not my intention at present to resort to this source of supply.
§ Bill read 3o, and passed.