HC Deb 06 June 1887 vol 315 cc1184-203

Order for Second Beading read.

Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Chancellor of the Exchequer.)


This Bill and the Bill that follows—the National Debt Bill—practically go together. The arrangements made under the Customs and Inland Revenue Bill as to the diminution of taxation really involve the provisions made with reference to the Debt in the Bill which will immediately follow. Now, I am perfectly well aware that when the Chancellor of the Exchequer proposes a reduction of taxation he is certain to carry his Bill, whatever it may be. Therefore, it is not with the least hope of successfully opposing this Bill, or even with the intention of opposing it, that I propose to make some remarks on the arrangements which the Chancellor of the Exchequer has laid before the House and the country. The only proposal of the right hon. Gentleman to which I mean to call attention is his proposal to diminish the annual provision for the reduction of the Debt. I have seen that proposal, I must confess, with great regret and considerable alarm in regard to its effects in the future. I do not know whether the Treasury Minute on this subject has been presented to the House; but, at all events, by the courtesy of the Chancellor of the Exchequer, I have had a copy of it, and I have no doubt that it is either now or soon will be before the House. It is perfectly well known to the House that provision was made in 1875 by Sir Stafford Northcote whereby a sum of £28,000,000 was set apart for the service of the Debt. A portion of that sum, amounting to about £6,000,000 out of the ordinary Revenue, together with an additional £1,000,000 or thereabouts from other sources, was set apart to the amount of something like £7,000,000 annually for the discharge of Debt; the difference between that and £28,000,000 being the sum necessarily paid annually to the public creditors as interest on the Debt. That is to say, about £21,000,000 is what we have to pay for the interest on the Debt; and £7,000,000 would he that which has been appropriated for the purpose of the liquidation of Debt. Now, the Chancellor of the Exchequer, in his speech on the Budget and in the Treasury Minute, has endeavoured to reconcile his present proposal with the scheme of Sir Stafford Northcote, by diving into the financial conscience of Sir Stafford Northcote and saying that his proposal was made in a totally different fiscal condition of things from that which now exists. He says that Sir Stafford Northcote thought that a growth of Revenue might be presumed, and anticipated that the Revenue would increase at a rate at least equal to the rate at which the population was increasing. And the right hon. Gentleman says that in the event of any material alteration in the circumstances of the country Sir Stafford Northcote contemplated a modification of his proposal, which was made on the assumption that he could depend on the growth of the Revenue being maintained. The argument of the Chancellor of the Exchequer, therefore, is that Sir Stafford Northcote anticipated a growth of the Revenue which has not taken place, and that, therefore, under present circumstances, he would not have maintained the proposal he made in 1875, but would have modified it by reducing the sum applicable to the liquidation of Debt. My answer is, that the right hon. Gentleman's hypothesis is absolutely negatived by the conduct of Sir Stafford Northcote himself. Sir Stafford Northcote remained responsible for the finances of the country for five years after 1875—that is to the spring of 1880. Now, the Chancellor of the Exchequer has said that the Revenue—I am now speaking of the Revenue apart from the Income Tax—has not increased according to the rate at which population has increased. It has, however, actually increased. The Revenue, apart from Income Tax is now higher than the Revenue was in the time of Sir Stafford Northcote by nearly £2,000,000. The Chancellor of the Exchequer has left out of his calculations all the sources of Revenue not derived from taxes. But he should not have omitted the Revenue from the Post Office, which is now higher than it was in 1875. That is money which is available for the purposes of the country, and should be taken into the calculation of Revenue. The yield of the taxes, exclusive of Income Tax, is now £1,200,000 higher than it was in 1875. If to this you add £500,000 for the increased receipt from the Postal Service, you have an increased Revenue available for the purposes of the country of £1,700,000. Therefore, you have a higher Revenue than you had in the time of Sir Stafford Northcote when he made his proposals for the reduction of Debt; and now I want to test the theory of the Chancellor of the Exchequer that Sir Stafford Northcote, if he had found the Revenue diminishing and the Expenditure increasing, would have diminished the charge for the reduction of the Debt. Now, in 1880 there was a diminution in the receipts from Excise of £2,000,000. That is to say, the receipts from the Excise had fallen from £27,000,000 to £25,000,000; and, consequently, Sir Stafford Northcote was face to face with the very state of things which the Chancellor of the Exchequer speaks of as a failure in the ordinary Revenue. In 1875, the Customs and Excise together produced £46,846,000. In 1880, they only produced £44,695,000; so that there was a falling off in these two sources of Revenue taken together of £2,000,000. If, then, the Chancellor of the Exchequer's theory of the views of Sir Stafford Northcote were true, Sir Stafford Northcote should have come forward and said that the ordinary Revenue was falling, and that another very important thing had taken place—that in consequence of the Eastern policy of the Government, the Expenditure had increased from £65,000,000 to £75,000,000; that there was, therefore, an increase of Expenditure of £ 10,000,000 between these two periods of 1875 and 1880, and a falling off in the Revenue from Customs and Excise of £2,000,000. And then, according to the Chancellor of the Exchequer, Sir Stafford Northcote should have said—"The circumstances under which I made that proposal for the reduction of Debt in 1875 no longer exist; the fiscal circumstances of the country are changed, and, therefore, I do not think it fit and proper to call on the country to appropriate the same sum to the liquidation of Debt." Well, was that the course which Sir Stafford Northcote actually did take? On the contrary, in 1877, instead of diminishing the fund set apart for the reduction of Debt, he added 1d. to the Income Tax; and in 1880, in the last Budget which he produced under the circumstances to which I have alluded, he added £750,000 to the Tobacco Duty, while obtaining an additional sum of £100,000 from the Dog Licences; and this, together with an increase of £3,600,000 on the Income Tax, made nearly £5,000,000 additional taxation which he imposed, while retaining the £28,000,000 for the liquidation of the Debt. Therefore, I say that in answer to the theory of the Chancellor of the Exchequer that Sir Stafford Northcote would have departed from the rule he laid down, in consequence of the changed fiscal circumstances of the country, we have the practice of Sir Stafford Northcote; for, under circumstances more unfavourable than the circumstances in which the Chancellor of the Exchequer now finds himself, he abided by his figure of £28,000,000 for the liquidation of Debt, and met the demand upon him by increased taxation. Sir Stafford Northcote did this, moreover, at a time when there was accumulated deficits for three years amounting to £8,000,000, which were left to be funded; and yet, in spite of that, he made no diminution in the provision for the liquidation of Debt. His successors adopted his policy, and they loyally adhered to it. They insisted, in spite of adverse circumstances, and both withstanding the growth of the Expenditure, in maintaining the provisions for the liquidation of the Debt. I do not think that, on this side of the House, we have anything to be ashamed of in the course we have taken in reference to the liquidation of Debt. In 1874, the Debt stood, according to the figures given in Sir John Lubbock's Return at £760,000,000. In 1887, it stands at £705,000,000. There has been, therefore, in that period from 1874 to 1887 a reduction of £55,000,000 on the Debt. That period was pretty nearly divided between the Administration of Lord Beaconsfield and the Administration of the right hon. Member for Mid Lothian (Mr. W. E. Gladstone)—giving about six years to each Party—and out of this £55,000,000, £19,000,000 was paid off by the Conservative Administration and £36,000,000 by the Liberal Administration, through the sums appropriated to the reduction of Debt. But it will be said—"In 1885 you suspended the Sinking Fund altogether." No doubt we did, under the pressure of the great demand which the unfortunate Egyptian War brought upon us. There was a proposal then made by my right hon. Friend the Member for Pontefract (Mr. Childers), which was fatal to that Government. I shall, however, always maintain that it was a courageous proposal founded on sound finance. It was a proposal to meet the demands on the Exchequer by a combined appeal to direct and indirect taxation. It afforded, however, a tempting opportunity to overthrow the Government by rejecting the increased taxation of beer and spirits. I said then, and I repeat it now, that in rejecting that proposal a fatal blow was struck at the sources of Revenue; because the adoption of the proposition of the right hon. Member for Bristol (Sir Michael Hicks-Beach), which overthrew the Government of the right hon. Member for Mid Lothian (Mr. W. E. Gladstone), made it almost impossible for any future Chancellor of the Exchequer to make any proposal for the increase of indirect taxation. A still more fatal blow is struck at our fiscal system by the proposal of the present Chancellor of the Exchequer. The first Government of Lord Salisbury struck a blow at indirect taxation. The second has struck a blow at the provision for the reduction of Debt. For 10 years the system inaugurated by Sir Stafford Northcote has been pursued partly by himself and still more extensively by his successors. We were obliged, it is true, in 1885 to suspend the provision for the Sinking Fund for a single year. But in the following year it was my duty to consider what should be done, and I then determined to restore the system in integro and to re-instate the Terminable Annuities. What could have been easier than for me last year to have adopted the view of the Chancellor of the Exchequer, and said, "Times are changed since the time of Sir Stafford Northcote. The Income Tax is much higher. It is perfectly easy by reducing the provision for the Debt by £4,000,000 to take 2d. off the Income Tax;" or I might have gone further and taken 3d. off the Income Tax by using £6,000,000 of the sum set apart for reduction of Debt for that purpose. But I thought this would be unsound finance; and I, therefore, re- sisted the temptation to make any proposal of that kind. It is true I made a temporary provision—there being an apparent deficit at that time in the Budget—to suspend some of the smaller Sinking Funds in order to meet that deficit. I might have made the Bill for that purpose contingent on the necessity arising. As a matter of fact, the necessity did not arise. It was not necessary to divert that money at all. The Revenue fortunately increased, and the Revenue of the year was sufficient to meet the Expenditure of the year without interfering with the provision for the reduction of Debt. The money suspended under the new Sinking Fund came back under the old Sinking Fund in the form of a surplus. Therefore, the whole amount appropriated under Sir Stafford Northcote's system to the liquidation of Debt was actually applied last year to that purpose—at all events, within a few thousand pounds. That was the condition of things which the present Chancellor of the Exchequer had to deal with. But he was more fortunate than I was, for in consequence of the improvement in the Revenue, he was in possession of a surplus; and yet, not having to encounter a deficit as I had in 1886, he has come forward and proposed to diminish by £2,000,000 the provision for the liquidation of the Debt. Let me read a sentence from Sir Stafford Northcote's speech, in which he said that under changed conditions of things a changed policy might be followed. I have shown that under a changed condition of things, more serious than that which the right hon. Gentleman the present Chancellor of the Exchequer has to deal with, Sir Stafford Northcote adhered to his plan. But there was one sentence in the speech to which I have referred of which I will remind the Chancellor of the Exchequer. Sir Stafford Northcote said— I may be told—'Do, please; but you will never be able to bind future Parliaments; and the very first time that a Chancellor of the Exchequer wants to raise an additional Revenue, without increasing taxation, he will put an end to your Sinking Fund, and will shatter all your dreams of reducing the National Debt by some hundreds of millions.' But, said Sir Stafford Northcote— Few Chancellors of the Exchequer would like to come down to this House and propose the repeal of an Act of Parliament establishing a Sinking Fund of this character, on the plea that they did not like to increase the taxation of the country."—(3 Hansard, [223] 1043–4.) He did not contemplate that a Chancellor of the Exchequer would come and propose to suspend the Sinking Fund in order to reduce taxation. Undoubtedly the reasons which the Chancellor of the Exchequer has given for his proposal are not such as would have induced Sir Stafford Northcote, in 1880, to depart from the course he then adopted of increasing the taxation of the country by £5,000,000. When he originally brought forward his proposal for the reduction of the Debt, Sir Stafford Northcote said that we were then only paying £26,000,000 for the service of the Debt. He added that that was the lowest sum ever devoted to this purpose, and he remarked that he thought it unfit, and, indeed, unworthy of this country, that so small a sum should be thus appropriated. He reminded the House, at the same time, that our ancestors, in former days, had paid £28,000,000—or even more. When the Funded Debt, at the end of the great war in 1817, was upwards of £800,000,000, and the long annuities were in existence, the amount paid by this country—with its small population, and its very small wealth compared with that which we now enjoy—for the service of the Debt was £35,000,000. When you consider that the country, then impoverished by war, and with its comparatively small population, was able to devote £35,000,000 to the service of the Debt, the fact that we now shrink from appropriating £28,000,000 to the same object seems to show that we are rather wanting in financial courage. The proposal before us, let it be remembered, is a proposal made by a Chancellor of the Exchequer having a surplus in his hands to deal with. Under those circumstances he comes forward, and, for the purposes of a popular Budget, he throws away the provision for the liquidation of Debt while he is actually in the possession of a surplus. What is the inevitable consequence of that? Why, no future Chancellor of the Exchequer can ever resist following such an example. Every argument the right hon. Gentleman has used in defence of his present proposal is equally applicable to the remaining £5,000,000 still devoted to the reduction of Debt. The right hon. Gentleman can say next year, or any future Chancellor of the Exchequer can say—"The Revenue is not increasing as much as Sir Stafford Northcote expected, therefore, let us take off £2,000,000 more. In the time of Sir Stafford Northcote the Income Tax was 2d. in the pound, it is now 7d., therefore, let us again diminish the taxation imposed for the reduction of Debt. There is no virtue in this £26,000,000 higher than the virtue which applied to the £28,000,000. You have begun a descending scale, where there is no means of stopping. It is like breaking a hole in a dam, through which the water pours, and the breach becomes greater and greater; and it will be absolutely impossible in the future to defend any provision for the liquidation of Debt. The Chancellor of the Exchequer of the future will always be able to use the same arguments which the right hon. Gentleman has employed. The arrangement made by Sir Stafford Northcote has, in my opinion, at once and for ever gone by the board. I have another great objection to this system of finance. I can only describe it as extravagance made easy. I am happy to hear that a single voice—that of the last Chancellor of the Exchequer—is crying in the Tory wilderness for economy; but it meets with no response, least of all from the present Chancellor of the Exchequer. The whole of this arrangement is not due to any deficiency of Revenue. I have shown you that the Revenue of this country has increased since the time of Sir Stafford Northcote. What has, also, increased in a terrible ratio is the Expenditure of the country. I am afraid, moreover, that we have now a Chancellor of the Exchequer who is favourable to an increase in our Expenditure. My right hon. Friend, when he sat behind us, was the advocate of great military and naval establishments, and of the policy which requires great military and naval establishments; and when you have a Chancellor of the Exchequer favourable to a policy which requires great military and naval establishments, and ready to meet their co3t by proposals for cutting down the sum available for the liquidation of Debt, the final result must inevitably be most serious to the finances of the country. A few years will remove the £5,000,000 now remaining for the liquidation of Debt. No future Chancellor of the Exchequer—I care not to what Party he belong—can help following the example of the present Chancellor of the Exchequer; and when you have swallowed up that £5,000,000, what remains? Why, the proposal you have heard from the First Lord of the Admiralty (Lord George Hamilton). The suggestion that you should borrow money on Terminable Annuities to meet your naval and military expenditure will be repeated. Recollect we have already had proposals from the Benches opposite for borrowing £5,000,000 to meet that expenditure. With this policy of large expenditure thus encouraged, you will not only get rid of the provision for the reduction of Debt; but you will have a system of borrowing on Terminable Annuities, in time of peace, in order to meet your increased Expenditure. That is the system which my right hon. Friend has inaugurated. For every reason I deeply regret this proposal. I regret it not merely for the £2,000,000 which it has put an end to, as a provision for the liquidation of Debt. I regret it still more on account of the fatal example which it sets for further progress in the same direction. But I regret it most of all because it is the greatest encouragement yet given to that system of extravagance which we should set our faces against. If the public agree to the suspension of the provision for the reduction of Debt in order to keep up military and naval establishments at their present unnecessary height, and to relieve the people from the inconvenience this may cause in the form of taxation; and if they do this by either cutting down the provision for the discharge of Debt, or by assenting to proposals such as that made by the First Lord of the Admiralty for borrowing money on Terminable Annuities to carry on this expenditure in time of peace, then it is clear that we are creating Debt as much as we should do by borrowing money. It was an established principle, when wars were more frequent than they are at present, that you should in time of peace pay off the Debt which you incurred in time of war. Well, with the unhappy interval of the Crimean War, we have had 70 years of peace since the Great War, How much Debt have you discharged since the close of the Great War? The Debt which then stood at between £800,000,000 and £900,000,000, now stands at £700,000,000. That is to say you have not discharged one-fourth of that Debt in 70 years, which have been years of peace, except for the unfortunate interval of the Crimean War. The debt incurred in the Crimean War has since been discharged; but the efforts we have made in a time of unexampled peace and prosperity to reduce the main body of the National Debt are really insignificant. I have alluded to the sacrifices our ancestors made under very much more unfavourable circumstances. And yet we declare ourselves incapable of making anything like the sacrifices they made. We are now called on to pay £10,000,000 less for the service of the Debt than our ancestors paid in 1817. I do not think that is to the credit of a country with the wealth and the resources of this country. These financial proposals of the Government seem to me to depart altogether from the sound principles of finance established by Sir Stafford Northcote and carried out by his successors, and I am afraid those principles have now been fatally broken down by the present Government.

MR. BARTLEY (Islington, N.)

I should like to say a word on this Bill, and on that which is connected with it. I think it is a grievous mistake to reduce the amount set apart for the liquidation of the National Debt. I think that what the right hon. Gentleman opposite has said is practically correct—that at the period we now have of complete peace, of great riches, and of comparative prosperity, it does seem a great misfortune that we cannot continue to reduce the Debt by the old Sinking Fund amount. We know that if a period of war should arise we should in a few months add to the Debt a very large sum indeed, and this consideration alone, to my mind, is of great weight in pursuing a policy of reduction of debt when we can do so. In reference to the present proposals of the Government for meeting the Expenditure of the country, I would ask first whether these proposals will promote economy? I believe the country demands a very large amount of economy. I would not talk of knocking off £4,000,000 or £5,000,000 at a sweep without knowing the details; but I believe the country demands that there should be an exhaustive and extensive system of complete economy. And I am sure that no Party will remain in favour with the country unless it manages to reduce the enormously increasing taxation of the people. I do not wish to dwell now on the Military and Naval administration. A great deal has been said about that; but I believe that, without doubt, an efficient system of Military and Naval expenditure might reduce considerably the Votes for the Army and Navy. The key-note of economy in the Army and Navy seems, however, to be the policy which the Army and the Navy are employed to carry out. If the Army and Navy are regarded solely as means of protection, and not of defiance, then I believe that a great deal of economy might be exercised; and if this principle is adhered to, as I believe it will be by the present Government, I have no doubt but that, in a year or two, considerable reductions will be made in our Army and Navy expenditure. But there is another source of economy which I should like to speak of, though at this time of night I am not able to go into it at great length. I think, however, that it is necessary we should note the increase in the expense of the different Departments of the country in the present year as compared with previous years. It has been my fortune to spend 20 years of my life in the Public Service, of which I can, therefore, speak with some knowledge; and I am convinced that with care considerable reductions might be made in our Public Establishments. The expenditure, for instance, under the head of Works and Buildings, has increased enormously during the last 30 or 40 years. We have now an expenditure of £1,700,000 on public works and buildings. Twenty years ago it was £900,000; 30 years ago it was £800,000; 40 years ago it was only £500,000; therefore, the expenditure on this Vote has increased more than threefold in 40 years. I will not say that it is unreasonable that there should be some increase under this head of Expenditure. But when we go back to 1848, and see that the Vote for that year included £150,000 for the Houses of Parliament, £100,000 for the Caledonian Canal, and other liabilities that are not now pressing on us, it will be found that the Vote for Public Works for that year was in reality only about one-eighth of what it is now. That does, I think, show that there has, in respect of this Vote, been an undue increase of expenditure. There is, indeed, I fear, in every direction a system of getting more money out of the Imperial Exchequer, and I think we should support the Government in resisting this tendency. Take the Departments of Law and Justice, the expenditure on which has grown so much of recent years that it is now £6,250,000. In 1878 it was only £5,000,000; in 1868 it was £3,000,000; in 1858 it was £2,250,000; and in 1848 it was just over £1,000,000. Therefore, Law and Justice now cost more than six fold as much as they did 40 years ago. Now, I do not say that we do not get a benefit out of this expenditure, on Law and Justice. But the figures I have given show that the whole tendency and tone of expenditure is to increase out of proportion to the benefits derived; and what I regret in the present financial arrangements for the year is that the Budget has not dealt with this great question, but has found money for a reduction of taxation, not by a reduction of expenditure so much as by reducing the Sinking Fund by £2,000,000. Then closely allied to this subject is the increase of local taxation. The Chancellor of the Exchequer proposes in his Budget to give £320,000 from Imperial taxation in aid of local taxation. Now, in my opinion, that money will be practically thrown away. It can do no good to the localities, for when it is worked out it only amounts to 6d. on each acre in the country. The right hon. Gentleman (Mr. Chaplin) who usually sits in this seat expressed gratitude for this donation in the present depressed state of agriculture; but 6d. an acre will not set the farmers on their legs. It is a mere drop in the bucket, and absolutely useless as a means for putting things right. I regret, therefore, that this grant has been made. Grants in aid of local taxation have increased largely of recent years; but local taxation has not been reduced. In fact, it may almost be said that the more you give to localities out of the Imperial Exchequer, the greater the ratio in which local expenditure increases. The system of granting aid to localities impoverishes the Imperial Exchequer, while it tends not to reduce local taxation, but usually to increase it. Then there is the growth of local debt along with the increase of local taxation. We think a great deal of paying off £5,000,000 a-year of the Imperial Debt, but we are adding every year £10,000,000 to the local debt of the country. We ought to consider very carefully the growth of the local debt in regard to the Imperial Debt. It is indeed so closely allied to it that we cannot help considering it in connection with this Budget. The local debt is now growing, as I have said, at the rate of something like £10,000,000 a-year; and in the last 10 years, although the National Debt has decreased, the local debt has so largely increased that the two together have increased since 1875 to the extent of £50,000,000. Taking the National and the local debts together, the total indebtedness of the country was in 1875 £861,000,000, while in 1884 it was £911,000,000. Therefore the Debt of the country has increased in 10 years, as I have already said, by £50,000,000. Of course, some of this increase is for purposes that ought to be remunerative; but still, this increased burden of taxation is growing rapidly, and undoubtedly there was in the present year an opportunity of doing something to reduce this heavy burden by stringent economy. The present Budget is very popular, because it reduces the Income Tax; and although we are all gratified at the Chancellor of the Exchequer reducing the Income Tax by 1d., and, in fact, hoped it would have been more than 1d., yet I think this should have been done without reducing the Sinking Fund, but by promoting economy in the various Departments. I must say that I think that with the present wealthy condition of the country reduction of taxation should not have been secured by reducing the Sinking Fund for the reduction of the National Debt, which I consider ought to be reduced at least as fast in the future as was contemplated by Sir Stafford Northcote's scheme. In my opinion, £7,000,000 is the least we should pay annually for the reduction of Debt. I must say that I think, especially looking to the example of America, we should face with courage the subject of the reduction of the National Debt; and this we can only effectually do by a permanent reduction in the National Expenditure.


Mr. Speaker, I do not at all complain of the speech just made by my hon. Friend the Member for North Islington (Mr. Bartley). I am glad to see that he is an advocate of economy, and that he is one likely to support the Government in resisting the multitudinous attacks which are made on the Treasury, and which, I am bound to say, receive in the abstract much support in this House. It is the duty of those who sit on this Bench—and I am glad to say that in the fulfilment of that duty we have the support of a former Chancellor of the Exchequer (Sir William Harcourt) who sits opposite—to defend the public purse in several directions. My hon. Friend the Member for North Islington has mixed up several questions. He was, however, anxious to bring forward the growing and important question of the increase of the local debt, and I am glad that he has done so, although it is scarcely ad rem in connection with the present subject. There is no doubt it is a matter which deserves the greatest attention. I am glad to hail my hon. Friend as a fellow worker, because I think I was one of the first in this House who called attention to the increase of the local debt, and who warned the public and the House of the great dangers which it involves. It is a very easy way of carrying out local improvement and of meeting other local demands to create local debts; but it is a dangerous tendency which requires to be carefully watched. As my hon. Friend has said, you cannot properly separate the local debt and the National Debt. They must be reckoned together when you deal with the indebtedness of the country. The growing amount of these local debts is a matter of very considerable Imperial as well as local importance; and I am, therefore, glad that my hon. Friend has introduced the subject. But I would point out that there is nothing in the financial plans of the Government which in the slightest degree militates against watchfulness in that respect. We do not touch the local debt. What we touch is merely the indebtedness in respect of advances from Imperial funds for local purposes, such indebtedness having, we think, been advancing with too rapid strides. I have already called attention to the necessity for checking these local loans. It is within the knowledge of the House that pressure is frequently put upon us to increase the assistance given to localities for every possible purpose. In this connection I will recall to my hon. Friend's (Mr. Bartley's) recollection the remarks I made in my Budget speech with reference to the growing expenditure of the Civil Service. My hon. Friend has made a contrast between the Expenditure now and the Expenditure in 1848. I remember that, in a former speech, I drew a comparison between the Expenditure now and that in 1868. I pointed out that the entire increase in the Expenditure was due, not to the increased extravagance of the Government in enlarging establishments, but to the action of the House in passing Resolution after Resolution and law after law, involving additional expenditure in every possible direction. It is of no great service to call attention to the increase of Expenditure unless it is pointed out why and how that increased Expenditure has arisen; and I think that, in my Budget speech, I proved conclusively the mode in which it has arisen, and the circumstances to which it is due. There has been no great increase in the cost of administration. The great Departments are administered at about the same cost now as they were 20 years ago. The increased cost comes from the fresh duties day by day imposed on the Government, frequently against the wish of the Government itself. Again, you cannot entirely leave out of consideration the immense growth of the population since 1848. If the population has grown, of course the cost of education, of the administration of the law, and of many other things, has also increased. Why, in regard to the very service of the Post Office, the cost of which has risen now to £8,000,000, compared with a very much smaller sum in 1848, that is an increase on which the House prides itself as showing the enormous services rendered by the Post Office to the public; and yet my hon. Friend (Mr. Bartley) cited the growth of that expenditure as an instance of the great increases which have taken place. At the same time, I do not complain of the course which has been taken by my hon. Friend. I myself was anxious to call attention to the growing Expenditure of the country in submitting my financial proposals, and I shall certainly not object to the criticisms of any hon. Member in that direction. But I do not think my hon. Friend can fairly say he would have preferred that I should have handled these matters in my Budget proposals, so as to reduce the total of the financial plan which it has been my honour to propose to the House. No doubt, the Chancellor of the Exchequer has, and ought to have, a considerable voice in regard to the Estimates; but still the Estimates are not to the same extent in the hands and on the responsibility of the Chancellor of the Exchequer as those proposals he has to make in order to meet the aggregate amount of Expenditure. It is the duty of the Chancellor of the Exchequer to object to any needless expenditure, and to use his whole influence in cutting down such expenditure; but, at the same time, it cannot be said that in his Budget proposals he can produce a revolution in the whole of the Estimates submitted to the House. I come now to the speech of my right hon. Friend the Member for Derby (Sir William Harcourt) opposite, and I will deal first with that portion of it which resembled the speech of my hon. Friend the Member for North Islington (Mr. Bartley), and which dealt with the Budget in its relation to Expenditure. My right hon. Friend called my proposals, I think, an encouragement to extravagance, and he reminded the House, or suggested to the House, that I had been in favour of large establishments when I sat on those Benches. I do not know whether I understood my right hon. Friend aright.


I have always understood that my right hon. Friend was a great supporter, when he sat behind our Government, of what was called a spirited foreign policy, and what is sometimes called a Jingo policy.


No; my right hon. Friend went further than that. He said I was in favour of great establishments, and that I had not been entrusted by my right hon. Friend the Member for Mid Lothian (Mr. W.E. Gladstone) with great Departments in his Government.


I was speaking of later times.


Well, my right hon. Friend wishes to escape from that point. In a very late time I think that my right hon. Friend the Member for Mid Lothian would not have objected to entrust a large Department to my care. I do not think it is necessary to refer to such a matter, and I have been led to make the remark simply because my right hon. Friend pressed his observation, and said that, even in recent times, I was not to be trusted on the subject of great establishments. I certainly go as far as this. I think that any excessive measures of reduction which lead to a sudden increase of expenditure the moment the first danger arises, is a dangerous policy. We have several times had experience of this. After great reductions have been made, if there has been even a moderate panic, Votes of Credit have been proposed in order to obtain an increase of stores, which have been allowed to sink too low. That, I think, to be an extravagant way of conducting the national finances. But I can assure my right hon. Friend (Sir William Harcourt), that both my right hon. Friend the Secretary of State for War (Mr. E. Stanhope) and my noble Friend the First Lord of the Admiralty (Lord George Hamilton) are, like myself, entirely in accord with him in wishing to make reductions wherever it is possible in the Establishments. My right hon. Friend (Sir William Harcourt) said that there was a solitary voice crying out for economy; but I think my right hon. Friend will see that the attacks which have been made upon the Department have involved, to a great extent, the action, not only of the present Government, but of the Government of which he was himself a Member, and that many of the mistakes alleged to have been committed have been committed, and most of the money alleged to have been wasted has been spent, either for good or for evil, under the auspices of the Cabinet of which my right hon. Friend was a Member, and during part of the existence of which he occupied the position that I hold now. But I do not complain in the slightest degree of my right hon. Friend's remarks in that direction. I certainly wish to do him this justice. I speak as having succeeded him at the Treasury, although not as his immediate Successor. I am perfectly certain that there never has been a more sincere champion of economy than my right hon. Friend (Sir William. Harcourt), and I would not hold him. responsible for any extravagance which has been committed. But when my right hon. Friend sees that the Govern- ment of which he was a Member is itself exposed, to the charges which have been made, and that it is accused of having fallen into several errors and of having spent money which may be proved to have been wasted, I hope he will be a little charitable in judging of those who now occupy the place which he formerly held. In regard to the point my right hon. Friend raised in reference to the suspension of the Sinking Fund, and to the remarks he made with regard to Sir Stafford Northcote's position, I may say that I do not object to criticism which has for its object the strengthening of the hands of the Government with reference to setting aside a large sum for the payment of the National Debt. But I do not think my right hon. Friend was justified in saying that, because the sum has been diminished, we have, therefore, overthrown the whole of the principle. I stated, in making my Budget proposals, that if the Sinking Fund would have been endangered by them, I should have been the last man to bring them forward. My right hon. Friend mentioned the fact that even in 1880 Sir Stafford Northcote did not touch the Sinking Fund. But I will call my right hon. Friend's attention to this point. If this had been an exceptional year; if there had been two or three previous years which showed different symptoms from the present year, I certainly should not have consented to suspend any portion of the Sinking Fund, and I certainly think that Sir Stafford Northcote was quite justified in not suspending it in 1880. He had then had an experience of five years, and it was hoped from year to year that the stagnation of Revenue which was then witnessed was only temporary. We were all lothe to believe that the stagnation was of anything like a permanent character. But seven more years have now passed, and they all tell the same tale, and all teach the same lesson. We have now arrived at a point at which, with the Income Tax at 8d., we are at liberty to contrast the state of things with that which existed when Sir Stafford Northcote made his proposals. My right hon. Friend (Sir William Harcourt) has referred to the statistics I quoted to show that there had been no growth in the Revenue at all paralleled with the growth in the population. My right hon. Friend seemed to be unaware why I had taken a growth of 1 per cent. It was because I believe that the population increases 1 per cent. Instead of there having been a normal growth of the Revenue proportionate to the growth of the population, it is now seen, after an experience of 12 or 13 years, that the elasticity of Revenue which existed in 1875, and which formed the basis of Sir Stafford Northcote's calculation, has entirely disappeared. I quite admit that the Fund ought not to have been touched until ample experience had been gained, and until it had been seen what, looking over a long period of years, might be the expectations as to the situation. Now, we have to face this position. Given the present Revenue, given the present Expenditure, is it right to maintain the Income Tax at 8d. in order to pay off that amount of National Debt which was fixed by Sir Stafford Northcote as the normal amount to be paid off when the Income Tax stood at 2d.? I submit that the case is very strong in favour of an arrangement not for suspending the whole Fund, but for modifying the scheme and bringing it more into accord with the present situation. My right hon. Friend opposite speaks of the sacrifices which were made in 1817, when the population was small, and the wealth of the country was not such as it is now. I would point out that at that time it was far more necessary to make large provision for reducing the National Debt, looking both at the rate of interest paid and the amount of the Debt, than it is now. With the credit of the country in its present position, and with money bearing only 3 per cent interest, I do not think that the provision of £5,000,000 a-year is inadequate. Although it is desirable, and although it is the duty of the country, to pay off a large sum every year, I believe the position of the country to be such that it is not necessary to look at the matter from that point of view. We are now proposing to set aside a sum which will pay off the whole of the Debt in 56 years. I believe that the proposals I have ventured to make are suited to the present circumstances of the Kingdom, and I should deeply regret if my right hon. Friend were justified in saying that the course I had taken had imperilled the Sinking Fund as regards the £5,000,000. If that were my conviction, if I shared that apprehension, I certainly should not have made these proposals. I am glad to see the feeling which has been displayed, because it indicates a determination to maintain the proposals which I have submitted to the House.

Question put, and agreed to.

Bill read a second time, and committed for Thursday.