§ Considered in Committee.
§ (In the Committee.)
§ [Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]
§ *SIR M. HICKS BEACH
In proposing the resolution which I have placed in your hands, Mr. Lowther, I think my first duty is to remind the Committee of the statement which I made on the 6th of April last in regard to the expenditure and revenue of the country during the present financial year. On that occasion I stated that the estimated expenditure for the current financial year would be £150,061,000 and that the revenue would amount to £127,520,000, showing a deficit for the year of £22,541,000. That, added to the deficit of £13,882,000 for the previous year, made a total sum of£36,423,000, and I proposed to provide for that sum by borrowing, as I have already done, through Treasury bills to the extent of £8,000,000 and through the War Loan of £30,000,000, issued at a price of 98½, yielding a net proceed of £29,550,000. In all, therefore, I borrowed £37,550,000, as against a deficit of £36,423,000, so that the deficit was more than covered by £1,127,000. That was the statement which I placed before the House on the 6th of April last. I need not detain the Committee to-day with any fresh remarks as to the revenue of the country. I stated then that owing to the large anticipatory payments, under the heads of Customs and Excise, in the last quarter of last year there must necessarily be a very heavy falling off in the earlier part of the present year as compared with a similar period of the year preceding. My anticipations were realised, as hon. Members are aware who have seen the return of the yield of the first quarter, but they were not more than realised, and the process of recovery is now going on. I see no reason to anticipate that the yield of this year's revenue will be less than I anticipated last April. But, of course, there is another tale to tell with regard to the expenditure. Hon. Members are aware that since the original Estimates of the year were laid on the Table large Supplementary Estimates have been presented and voted by the House. I do not propose this evening to say anything 53 about some of the minor Supplementary Estimates. They would not in the ordinary course necessitate the provision of Ways and Means to meet them. But I have to remind the Committee that the House has voted £3,000,000 towards the expenditure that may be required in China, £200,000 towards the Ashanti Expedition, £1,250,000 Supplementary Navy Estimates, £7,440,000 for purposes connected directly with the war in South Africa, and £1.060,000 for other military purposes, a total in round numbers of £13,000,000. Of course, of those items the Chinese and Ashanti expenditure could not be anticipated in March last, when our original Estimates were framed, and I warned the House at that time, in introducing the Budget of the year, that some provision would have to be made for the additional reserves of guns and ammunition which form a very large part of the Supplementary Naval Estimates. The £7,440,000 for what I may call strictly South African purposes is due, of course, to the unhappy prolongation of the war in South Africa. In March last we advisedly took nothing in our Estimates on account of that war for the return transport of troops, or for the gratuities to be given to them at the end of the war. We omitted to do so for two reasons—in the first place because it was impossible to tell what might be the duration of the war, and I do not think we could at that time have come down to the House and asked Parliament to make provision for such purposes as that. In the second place it was possible that the war might terminate earlier than it has done, and that some of the funds which Parliament had provided for carrying it on might have been devoted to the return transport of troops and to the gratuities to be given to them at the end of the war. So that, in that case, any further provision would not have been required. But all this was explained fully to Parliament at the time, and there was no concealment whatever in regard to it. Of course it is now clear, in the first place, that more will be required for the South African war than we anticipated last March. My hon. friend the Under Secretary for War on Friday last fully explained the nature of the requirements—how the Vote included provision for contingencies as well as for certain special services, which had not been provided for 54 in the original Estimates. I do not think I need dwell upon that subject, except, perhaps, to say that, so far as I have been able to ascertain—and it is, of course, no easy matter when a war is carried on on the other side of the world—I believe, having due regard to the number of troops employed, that the rate of weekly or monthly expenditure on the war has certainly not been more, and has probably been less, than we anticipated when our Estimates were made. Therefore, what I have to ask the Committee to consider to-day is a sum of £13,000,000. Now, how much of that do we require to provide in Ways and Mean? I have already reminded the Committee that my borrowings through the War Loan left me with something more than £1,000,000 beyond the Estimates that were laid on the Table in March, and I may also remind the Committee that at the same time I took further borrowing powers to the extent of £5,000,000 beyond the provision necessary for these Estimates, so that I have a margin of £6,000,000 towards the £13,000,000 now required. According to the Estimates laid on the Table then, £7,000,000 has still to be provided. I do not propose, and I think hon. Members will not be surprised to hear it, to ask Parliament for additional taxation towards providing it. I take that course for precisely the same reasons that weighed with me, and were, I think, accepted by the House and the country last autumn. I do not think that the middle of the financial year is a convenient time to increase taxation, having regard to the interests of trade. I propose to ask powers to borrow the sum which I require, but I will ask the Committee to confide in me to a larger extent than the £7,000,000 to which I have referred—I will ask them, in fact, to allow me a considerable margin, as I asked for a considerable margin in March last. Of course, if happily it should not be required it will not be borrowed. I shall do so for two reasons. In the first place, hon. Members are aware that under our financial system in an ordinary year the yield of the last quarter is more prolific than that of any of the preceding three quarters. The great bulk of the income-tax comes in then, and it is especially the case when, as in the present year, a great part of our additional taxation will arise from the addition to the income-tax. The result 55 is that in an ordinary year the Chancellor of the Exchequer of the clay has always to provide, by temporary borrowings from the bank on Ways and Means, or on deficiency advances, for the financial requirements of the country while the revenue is accruing during the first three quarters of the year. That has been, of course, more necessary this year than in an ordinary year, because the war expenditure so far has been very heavy, and our present indebtedness to the bank is as much as £8,500,000. They have taken £3,000,000 of Treasury bills, half of which fall due on 30th September, and the remaining half on 30th December, and have lent us £3,000,000 on deficiency advances, and £2,500,000 on Ways and Means. Therefore I want a margin of borrowing power by which I may be able to go to the market to relieve the financial exigencies of the moment, through some form of borrowing that would not increase my indebtedness to the bank, which I do not think in the general interest ought to be increased beyond what I have named, and which would provide for temporary requirements pending the falling in of the revenue in the latter part of the year. But I have a still stronger reason for making this request for a large margin to the Committee. As I have told the Committee, throe millions of the Supplementary Estimates are for purposes connected with China. Well, what is happening or may happen there, or even what is past, is absolutely uncertain. We cannot tell what expenditure it may be necessary for us to incur on account of events that have happened or may happen in China. We do not yet know as an absolute certainty—though I fear there is very little reason to doubt—that the terrible outrage which is alleged to have been committed at Peking has actually occurred; but, if so, of course it is our duty, together with other Powers whose representatives have suffered in that terrible tragedy, to exact reparation from China for that outrage, because that is the only way to obtain security for the future. I think we may expect that the sum of three millions, already voted by the House, will suffice for operations that may be necessary in regard to this matter. With regard to our general policy towards China, I am sure there will be general agreement with that policy in the House and in the country when I 56 say it is not one of territorial conquest. But we must remember that our main interests in China are not in the north of that Empire. We have great and most important interests in other parts, and, although the three millions already voted will probably be twice what is likely to be the cost of the expedition now on its way, or under orders, yet I do think Parliament would desire not to separate without entrusting to the Government of this country, in the circumstances before us, ample provision to protect our interests in China generally in whatever circumstances may occur. Therefore, on this ground, even more than on the ground of the temporary financial exigencies already alluded to, I ask the Committee to concede to me an extra margin of borrowing power. What I propose is that I should be authorised to borrow up to the extent of thirteen millions. I would ask the Committee, as they did in regard to the War Loan, to grant me the option of deciding the best mode of placing that sum on the market, in the way and at the time which may seem to mo most convenient. In the War Loan Act, I was empowered to borrow by bonds, stock, or Treasury Bills. The bonds and stock under the War Loan, the Committee will remember, were not to exceed in duration a term- of ten years. I do not propose to ask for any permanent borrowing powers; I desire to adhere to the principle established by the War Loan Act, that we should, as far as possible, ear-mark our borrowing for the purposes of this war as temporary borrowing, and that it should automatically almost point out to the Chancellor of the Exchequer of the day—whether I occupy the position or it is occupied by anybody else—that it is his duty at the earliest possible time to make provision for the redemption of the loan. I do not say anything now, I cannot say anything now, as to the mode in which provision should be made; that must form part of the first financial statement after the war in South Africa is happily concluded and we see what the total cost of the war has been to us and how much we are able to recover from the Transvaal. As to that latter point, our Estimate will become more definite as time goes on, but we may already note one important particular, that the mines in the Transvaal have escaped material injury. I ask the Committee to give me 57 another option on this occasion besides the issue of War Loan or Treasury bills. It may not be convenient at present to add to the War Loan. On the other hand, we have outstanding eighteen millions in Treasury bills, including the £8,000,000, which may be considered the normal issue, and the market for Treasury bills might well be overstocked. I therefore ask for powers in this resolution to raise the money either by further issue of War Loan or issue of Exchequer bonds for three or five years or by further issue of Treasury bills. I think it is extremely probable that the issue of Exchequer bonds might commend itself to those who might not be desirous of taking Treasury bills, and, on the other hand, I should be glad, I confess, if my loan were for a shorter term than the ten years War Loan. I think I have concluded all that is necessary for me on this occasion to state to the Committee in regard to the resolution. I am afraid it is not an agreeable statement to the Committee; I am certain it is not agreeable to myself. It is much pleasanter to announce a surplus, but I have to ask the Committee to provide for a deficit, and they are well aware of the reasons for that deficit. They have without objection or opposition voted the Supplementary Estimates the Government have proposed, and therefore I cannot anticipate there will be objection to making provision in Ways and Means for those Estimates. I think my proposals to-day will have been generally expected, and I commend my resolution to the Committee.
§ Motion made, and Question proposed—
§ "1. That towards making good the Supply granted to Her Majesty for the service of the year ending on the thirty-first day of March, nineteen hundred and one, sums not exceeding thirteen million pounds may be raised (in addition to any sums already authorised to be raised in the present session) by all or any of the following methods—
- (a) by means of the issue of further war stock or war bonds under the War Loan Act, 1900; or
- (b) by means of the issue of Treasury bills; or
- (c) by means of the issue of Exchequer bonds;
§ "2. That all expenses incurred in connection with raising the said sums, including any additional remuneration to the Banks of England and Ireland, be charged on the Consolidated Fund."—(Mr. Chancellor of the Exchequer.)
§ SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)
The right hon. Gentleman has made a most clear and at the same time a most important statement to the Committee. But I gathered early in the evening that the House generally agreed with the proposals of the Leader of the House that the discussion which will be necessary on the policy of the Government should be deferred until we come to a later stage—until we come to the discussion of the Bill itself; and as that is to be taken on Wednesday I think it the general desire of those on this side of the House is to content ourselves with expressing our gratitude to the right hon. Gentleman for the lucidity of his statement, and reserving to ourselves the liberty to discuss the policy upon the next occasion.
§ *SIR M. HICKS BEACH
In reply to the right hon. Gentleman I should like to say, what I ought to have added before, that I have very carefully considered the matter, and it is my decided belief that the borrowing powers asked for will suffice until the end of the current financial year.
§ MR. LLOYD-GEORGE (Carnarvon Boroughs)
said he did not rise to continue the discussion, but merely to ask one or two questions. The right hon. Gentleman in his statement said he had provided for a sum of £61,000,000 up to the 31st of September, and ho anticipated that that would be sufficient for the cost of the war to that date. It was a rather curious fact that although by the resolution before the House another £7,000,000 or £8,000,000 had been added, and there had been a further live months war, necessitating the movement of some 40,000 or 50,000 more troops than it was anticipated would be necessary, the amount now asked to be voted was still £61,000,000 only. He thought some explanation was necessary.
§ *SIR M. HICKS BEACH
said the Under Secretary for War explained on Friday that the original Estimates made a considerable provision for a continuation of the war beyond the 59 date of the 30th September. The latest news received encouraged the hope that the war would lie over by the end of September.
§ MR. LABOUCHERE (Northampton)
Will the right hon. Gentleman be good enough to make clear what will be the exact amount of the £61,000,000 which he estimates will be thrown on the taxes of the present year?
§ *SIR M. HICKS BEACH
I gave the original Estimate in March, but owing to circumstances which were not then anticipated, another Estimate was given which the lion. Member will find in my statement of the 6th April.
§ MR. PICKERSGILL (Bethnal Green, S.W.)
The right hon. Gentleman told us a moment ago that he estimated that £3,000,000 would be sufficient in respect of the expedition to Peking, but we have learned from the Paper just circulated that a financial guarantee was offered to Japan in respect of the part Japan was to take in the prospective expedition. My question is whether the £3,000,000 covers only the cost of our own troops in the expedition to Peking, or whether it also covers the financial guarantee which we understand is to be given to Japan.
§ *SIR M. HICKS BEACH
Financial assistance was offered to Japan, as appears in the Papers laid on the Table of the House, provided that Japan sent a much larger number of troops than she had already sent at an earlier date. Time was the essence of the offer; that offer was not accepted, and there is no liability with regard to Japan.
§ Resolution to be reported To-morrow; Committee to sit again upon Wednesday.