§ It is important that the Committee should recollect that during the first three years of the present administration taxes amounting in the aggregate to something over 7½ millions a year were taken off. In addition to that, provision has been made for a net reduction of deadweight debt to the extent of no less than 47¼ millions, and of our aggregate capital liabilities to the extent of 42¼ millions. This means a saving to the country in respect of interest of over a million pounds a year, which, if it had been directed to relieving the taxpayers' burthens instead of to increasing the Sinking Fund, would 499 have enabled the total remission of taxation to have been raised to 8½ millions—a sum practically equivalent to the annual cost of the Old Age Pensions measure of the Government.
§ Another satisfactory element in our Capital Account is to be found in the fact that under the head of "Other Capital Liabilities" the repayments will, in the present financial year, for the first time since the introduction of the system of naval and military works loans, exceed the new borrowings. The estimated borrowings on capital account for 1908–9 were £2,785,000. The actual borrowings were £2,636,000, of which £1,300,000 was for telephone purposes, £859,000 for naval works, and £270,000 for military works, while the amount applicable in the year to repayment of principal was £2,279,000. The estimated borrowings for the current year are only £1,795,000, of which £1,300,000 will be required for telephone works, while the amount applicable to repayment of principal is estimated at £2,497,000. The borrowings under the Naval and Military Works Acts are now limited to works actually in progress, and have practically come to an end. The proposal which I now have to make was foreshadowed and justified by the Prime Minister when he opened the Budget last year, and I need now scarcely say more than that the amount by which I propose that the fixed debt charge should be reduced is three millions pounds.
The dead-weight debt on the 1st of April last was £702,688,000, a decrease of £8,788,000 as compared with the amount on the 1st of April, 1908. The reduction would have been considerably larger but for the fact that I did not deem it advisable, having regard to the state of the market towards the close of the year, to lay out the whole of the moneys available for debt reduction. The unexpended balance of Sinking Fund moneys in the bands of the National Debt Commissioners at the end of 1908–9 was no less than £7,667,000, as compared with £1,132,000 a year ago. This additional £6,500,000, or £5,750,000, if we assume that the realised deficit is met out of these moneys, represents a debt-redeeming capacity in terms of Consols at current prices amounting to £6,750,000. If we add this amount to the previous figure of £8,788,000 we arrive at the real reduction of dead-weight debt which is properly attributable to the finance of last year—£15,538,000. When this is brought to 500 account the dead-weight debt will stand at approximately £696,000,000, or somewhat less than its amount twenty years ago (£697,043,000), when the late Lord Goschen reduced the debt charge to 25 millions a year. There is, however, an important difference between a fixed debt charge of 25 millions in 1899–90 and a fixed debt charge of the same amount now. The rate of interest on Consols 20 years ago was in process of reduction from 3 to 2¾ per cent., now it is 2½ per cent. While, therefore, in 1889–90 20 millions in round figures of the total provision was applied to the payment of interest and management expenses, leaving little more than 5 millions, or about three-fourths of 1 per cent. of the amount of the debt available for repayment of principal, interest and management will in the current year absorb only about 18 millions, leaving nearly 7 millions (or more than 1 per cent.) for Sinking Fund purposes. This figure is £300,000 more than the average annual provision made for the repayment of principal in the ten years immediately preceding the South African War, and only three quarters of a million less than the amount estimated to be available in 1899–1900, before the adoption of Lord St. Aldwyn's proposal to reduce the fixed debt charge from 25 millions to 23 millions, and whereas in 1899–1900, and the years immediately preceding and following it, we incurred a net increase of our other liabilities in respect of naval, military, and other works by an average of more than £3,500,000, there will this year be a net surplus of moneys applicable to repayment of principal over new borrowings of about £700,000. In view of these facts, and more particularly as we are spending so much out of current revenues upon Naval construction which less provident finance might have found an excuse for charging upon a future generation, I think the time has come when, without any failure in our duty to posterity, we can reduce the fixed debt charge from 28 to 25 million pounds. The adoption of this proposal will mean a reduction of the amount to be found by new taxation from 16½ to 13½ millions.