§ Resolution reported,
§ "That it is expedient—
§ (1) To authorise the Treasury to borrow any sums which they have power to borrow under the Consolidated Fund (No. 2) Act, 1909, and the Appropriation Act, 1909, and any sums which may be required for the payment of Treasury bills already 752 issued under those Acts, or hereafter issued, by the issue of Treasury bills, the date of the payment of which shall be a date not later than the thirtieth day of September, nineteen hundred and ten, instead of the thirty-first day of March, nineteen hundred and ten.
§ (2) To authorise the suspension in part of the New Sinking Fund for the financial year ending the thirty-first day of March, nineteen hundred and ten."
§ Resolution read a second time.
§ Sir F. BANBURYmoved, as an Amendment, to add at the end of the Resolution the words, "provided that such suspension does not exceed the sum of £3,500,000."
This Resolution authorises the Government to borrow large sums of money, and to suspend the Sinking Fund, or, rather, part of it. I am glad the Prime Minister is in his place, because I am anxious to refer to the inexplicable confusion to which four and a-half years of his Government have brought the finances of this country. When the Prime Minister was Chancellor of the Exchequer in 1906 he told the late House of Commons that the one thing the Radical party would not do was to borrow, and further, that the one thing the Radical party considered as paramount in finance was that the expenditure of the year should be met out of the revenue of the year. Has the Prime Minister met the expenditure of this year out of the revenue of the year? He has done nothing of the sort, because this Resolution provides that the expenditure of the year is to be met out of borrowing, and that the Sinking Fund shall be suspended. With regard to the question of borrowing, it may be said it would have been utterly impossible to provide for the collection of the taxes this year, and that the only way to meet the revenue is by borrowing. We might have met a fortnight earlier, or the General Election might have taken place a fortnight or three weeks or a month earlier, and we might have had an opportunity of arranging for carrying out the Radical doctrine that the expenditure of the year should be met out of the revenue of the year. But in order to meet the exigencies of the Radical party we have sacrificed all this high principle, as the party opposite have sacrificed many other principles which, a few years ago, they told us were vital to the interests of the country.
753 I am glad to see the hon. Member for King's Lynn (Mr. Gibson Bowles) in his place. The matter of the suspension of the Sinking Fund is rather an awkward one for him, because I have provided myself with some of his utterances, given expression to a short time ago, objecting to the suspension of the Sinking Fund by the Unionist party when in power. What were we told by the Prime Minister when he first took up the office of Chancellor of the Exchequer? That the first thing a Chancellor of the Exchequer ought to do was to provide for the redemption of the National Debt, and he took great credit to himself for having in two or three years provided for the redemption of debt to the extent of about £40,000,000. I will not go into the question as to how that money was found, but I would point out that the new Chancellor of the Exchequer is absolutely stultifying the principle laid down by his predecessor, the Prime Minister, because he is actually going to suspend, not a part of the Sinking Fund, such as the hon. Member for King's Lynn objected to in 1899, when £2,000,000 were suspended, but actually the whole of the Sinking Fund with the exception of £1,000,000. The Secretary to the Treasury told us last night that the amount suspended was £5,500,000. I think the right hon. Gentleman must have made a mistake, because, unless I am very much misinformed, the amount of the Sinking Fund is about £9,000,000, and, therefore, to suspend it, with the exception of about £1,000,000, would mean suspending £8,000,000.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)I think there was some confusion in the figures due to my fault. The total amount payable for Sinking Fund for the reduction of debt is £7,300,000. Take from that £1,000,000 for the loan raised by the right hon. Gentleman the Member for East Worcester (Mr. Austen Chamberlain), and that leaves available a total sum of £6,300,000, and that is the sum which is in question at this moment.
§ 4.0 P.M.
§ Sir F. BANBURYI am very much obliged to the right hon. Gentleman. I was only speaking from memory, and I thought the amount was larger; but it is really a minor point, because what the House is concerned in at the present moment is the proposal to abolish the whole of the Sinking Fund with the exception of £1,000,000. It may be urged that at a moment when the Government is borrowing, and when it is necessary in the 754 interests of the finances of the country to do so, it is not wise to pay off debt with one hand and to borrow with another. That was the argument used by the right hon. Gentleman last night. When Mr. Pitt had to find very large sums of money in very different circumstances from the present, when the existence of the country was at stake, he continued at the same time to pay off National Debt. He was no mean authority, and if I may say so without offence, I think the Chancellor of the Exchequer might do worse than follow the example of Mr. Pitt. But even supposing that Mr. Pitt was wrong, it is not contended by hon. Gentlemen opposite that the borrowing is going to be permanent. If they were to say the position of the finances are such that for nine and ten years it is absolutely necessary, in order to carry on the Government of the country, to borrow large sums every year, and in face of that it is hardly wise to pay off with one hand while borrowing with the other. But I do not think that will be suggested, though I am sure that if the party opposite continue much longer in office that would be the result, but we hope they will not continue much longer in office. They may say this is only a temporary borrowing. The Resolution, I think, only sanctions borrowing for a period of six months, and therefore, I venture to say, the argument that they should not pay off debt because they are borrowing falls to the ground. Let us see what the result will be if this Resolution passes and the Bill founded upon it becomes law. There will be six or seven millions from the Sinking Fund, and by that amount the borrowing will be decreased, and there-Fore people will not know how much the Government are really borrowing. Further, a policy like this, once entered upon, may go on, and we may find Chancellors of the Exchequer in the future getting up and saying, "It is quite true that the Sinking Fund ought to be maintained, but last year we had to borrow money; we want to borrow money again this year, and therefore we shall suspend Sinking Fund." I have not had time to look up Sir Stafford Northcote's speeches, made when he introduced, in 1874, the new Sinking Fund, but I know he introduced a fixed charge for the debt in order that the Chancellor of the Exchequer might be free from the temptation to tamper with that portion of the finances of the country which ought to 755 be set aside for the reduction of debt. Consequently an absolutely fixed amount was instituted which was always to be devoted to the service of the debt. I find on 13th April, 1899, when Lord St. Aldwyn suspended £2,000,000 of the Sinking Fund, Sir William Harcourt said:—
That the time of the largest revenue and the greatest prosperity, from a fiscal point of view, which this country has ever known, should be the occasion chosen for what I can only call a repudiation of the obligations under which this country has placed itself with regard to the extinction of the debt is, I confess, one of the most serious, and I will call it, one of the most disastrous proposals that has ever been made.The present Lord Wolverhampton said much the same thing, and Sir William Harcourt further stated that:—The right hon. Gentleman has muddled away his income.Those are very good words, and I think I may say that the right hon. Gentleman has "muddled away" his income. Sir William Harcourt proceeded:—I have always held that this provision is one of the greatest sources of strength to the British nation because that gives you credit at home and character abroad.[An HON. MEMBER: "What do the Government care about that?"] Well, I do not think the Government have sunk so low as that. Then there was Mr. Pease, who said practically the same thing, and the hon. Member for King's Lynn also made an impassioned speech in the same direction, not to mention a speech made by Lord Swaythling. Those were the opinions of hon. Gentlemen opposite when they were sitting on this side of the House. To show I am not prejudiced myself I do not mind admitting that on that occasion I was in favour of the proposition brought forward by Lord St. Aldwyn, but I was in favour of it on sound grounds. Consols were then at 113, and Lord St. Aldwyn was redeeming the National Debt, and I thought he was throwing away £13 on each £100. I think there was a great deal to justify Lord St. Aldwyn not paying off debt so rapidly at that time, but the whole thing has changed now, and the finances of the country are not in the same position they were at that time, and the credit of the country is not in the same state. I think everything should be done to improve and strengthen that credit instead of bringing forward measures which, though nominally are only temporary, must prove destructive to the credit of the country. I propose to limit the amount to £3,500,000. The Chancellor of the Exchequer last Session told us he proposed to reduce the 756 Sinking Fund by £3,000,000, but finding that his new taxes did not yield the amount he anticipated, he proposes to increase the amount by half a million. I think the Government might be content with the amount they proposed a few months ago. I do not see on what ground the Government make this proposal, because in November they thought £3,500,000 would be sufficient, and why is it not sufficient now? What has happened during the last few months? I have been looking about for an answer to that question, and the only answer I can find is that in November last the Government thought they were going to raise the whole amount from the Income Tax, but whose fault is that? [An HON. MEMBER: "The Lords."] It is the duty of the Government to see that the taxes are raised and the revenue obtained. What they are doing now is actually saying to the taxpayer, "You owe us a certain sum of money on account of the Income Tax, which has not been collected. We will not collect it, but we will borrow it from you and pay you interest on it." Consequently they are borrowing their own money and paying interest on it. From a financial point of view that seems the most foolish thing that can possibly be done, and I do not think any wise financier will agree with a thing of that sort. It is only because the Government have been driven into these particular straits that they have been obliged to throw over all their financial principles, as well as other principles, in order to introduce this Resolution.
§ Mr. GEORGE FABERseconded the Amendment.
§ The PRIME MINISTERI should not have intervened in this Debate but for the appeal which the hon. Baronet has made to me. Out of respect to him I must say a word or two, but I shall leave my two-right hon. Friends to deal with the question in detail. I understand the hon. Baronet finds, or thinks he finds, some inconsistency in the present proceedings of the Government to the principles of finance which I laid down and practised when I was Chancellor of the Exchequer. What were those principles? In the first place, I quite agree that the revenue of the year ought to suffice for the expenditure of the year. That is an elementary principle of finance not peculiar to me and not enunciated for the first time by me, but I believe it is the common property of all sound financiers in every country in the civilised world. If the financial arrangements proposed by the Government 757 during the present year had been allowed to pass into law there is no doubt that that principle would have been observed. The whole of the hon. Baronet's speech and the whole of his objections are founded upon the assumption that the Government is responsible for the fact that in the month of November last the full financial provision of the year was, for the first time in our history, rejected by another place. I will come in a moment to the question of the Sinking Fund. If the financial provision proposed by the Chancellor of the Exchequer and embodied in the Budget Bill sent to the House of Lords had passed into law I do not think there is any reason to suppose that my right hon. Friend would have been under any necessity of applying to this House for borrowing powers; therefore the whole responsibility for the introduction of this Bill, the whole cause and necessity out of which the Bill has arisen, lies not upon the shoulders of the Government, but upon a totally different authority.
It has to be admitted—and everybody does admit it—that inasmuch as the financial provisions made by the Budget Bill were rejected, although a certain number of taxes proposed by that Bill have been voluntarily paid, yet with regard to a large number of ethers there has been no payment, or only a very inadequate payment during the last three months. The Income Tax speaks for itself. It is not, however, only a question of the Income Tax, but also a question of the Death Duties under the new scale, which are not legally exigible, and there are the Licence Duties, the Stamp Duties, and various other duties in the Finance Bill which in consequence of the failure of that Bill to pass into law are no longer a fruitful source to the Exchequer. That is why we find ourselves under the necessity of this proposal to borrow at all. The facts speak for themselves. The hon. Baronet referred to the question whether admitting there is the necessity for borrowing, which he cannot dispute, it is a proper and ancillary provision of the operation to suspend the whole of the Sinking Fund with the exception of the£1,000,000, which is necessary for the lottery bonds. I can honestly say that there has been no more strenuous advocate for maintaining the Sinking Fund in a condition of efficiency and applying it to the payment of debt than I have been during the time I have been in office. We have paid off by the operation of the old and the new Sinking Fund a very considerable 758 amount of the National Debt, and I was certainly of opinion, and I said so to the House when I introduced the scheme for Old Age Pensions, that our operations in that respect had been carried on so effectively and on so large a scale that we might without any injury to the public credit look to the reduction of the annual amount of taxes appropriated to the reduction of that debt as a perfectly legitimate thing. The right hon. Gentleman when he introduced his Budget this year admitted that there must be a substantial reduction in the amount applied to the reduction of debt. When the Budget left this House the figure was £3,500,000, the sum at which I understand the hon. Baronet wishes to replace it. I think £3,500,000 was by general consent not an excessive sum by which to reduce the provision in the special circumstances in which we were placed for the reduction of the debt during the present financial year. Now what has happened since? The necessary shortage in the estimated receipts of revenue is due to the fact that we are not legally in a position to exact taxes imposed by the Budget. The question is whether under those circumstances it is not prudent and sound finance to still further reduce the amount of the Sinking Fund, and for myself I think it is. The hon. Baronet has cited the example of Mr. Pitt, who was in many respects a Financial Minister. There is, however, another authority commanding our highest respect. The one point in Mr. Pitt's finance which I think has been almost universally condemned by every well-founded economic critic from that day to this was the very point the hon. Baronet has singled out, namely, the fact that Mr. Pitt went on applying to the Sinking Fund for the reduction of debt of a certain amount of national Revenue, while simultaneously he was borrowing for the purposes of revenue. That is imprudent and slack finance, and although it has the sanction of that great name it reminds me of what Mr. Canning once said in a celebrated speech speaking to Mr. Pitt, who was his great exemplar and master in politics:—
There are some savage tribes who do not reverence the sun when shining in its mid-day glory, but who only fall down prostrate before it when it is in a state of eclipse.Mr. Pitt's financial genius was in a state of eclipse when he resorted to this particular provision. If you are in such an unhappy position, as I admit we are at the moment, through no fault of our own, that the Revenue of the year will not make 759 good the expenditure of the year, and that therefore you have got to borrow money, you do not go through the farce of pretending that you are paying off debt by the application of a certain amount of your Sinking Fund while borrowing in the market to make good the deficiency. My right hon. Friend the Chancellor of the Exchequer, under coercion and necessity and not of his own choice, has devised not only the most equitable, but the most prudent and common-sense method of dealing with the situation in which we stand.
§ Mr. AUSTEN CHAMBERLAINThe right hon. Gentleman divided the subject, and rightly divided it, into two questions—the question whether it is necessary this suspension of the Sinking Fund should take place, and the extent to which it should take place, and the question who is responsible for the necessity arising at all. On one of those two issues there is a very sharp conflict of opinion between the right hon. Gentleman and his friends and those who sit on this side of the House. I and my hon. Friend behind me are much less divided. I take first the issue which divides us. The right hon. Gentleman said our whole trouble arises because the Budget was not passed by the House of Lords. That is true as far as it goes, but it is not the whole truth, and it does not absolve the Government of its particular and special responsibility. The Government had the opportunity—they had the promise of support from this side of the House and they had the knowledge of the promise that such a Bill would pass in another place—they had the opportunity of bringing in and of passing the Bill, which would have legalised for the year the collection of those taxes, from the non-collection of which they are now placed in this difficulty. That is common ground. It is not disputed by the right hon. Gentleman himself, but he says, "Can any man expect that we, as a Government or as a party, would submit to an indignity of that kind?" Very well, then where does the responsibility lie? It lies with the right hon. Gentleman and his colleagues, who prefer their dignity, or their supposed dignity, to the interests of the country.
If they had considered only how the King's Government could best be carried on, how the business of the country could best be done with least disturbance to trade, least injustice to taxpayers, and with least cost to the Government, they 760 would have legalised those taxes and collected the money, and neither they nor the House would have been in the difficulties in which they are to-day. There is more to be said than that. Even if they have refused to take that course, because they supposed it was irreconcilable with their dignity, they had other alternatives open. Let me say in passing that I do not myself perceive that it involves a greater sacrifice of dignity to send up to the House of Lords, for instance, a Bill authorising the collection of the Income Tax after the Budget as a whole has been rejected than it does to send up to the House of Lords a Bill authorising the Government to borrow money in lieu of collecting the Income Tax. You cannot do the one nor the other without the permission of the House of Lords. You have got to put your dignity in your pocket sooner or later and recognise the facts of the Constitution, and I really do not see that even that tender plant—and I admit it requires careful nursing—that tender plant, the dignity of the Government, gains anything by the methods they have adopted. They should have pressed all steps forward with the utmost celerity in order again to bring in their Budget at the earliest possible moment. They should have hastened the election instead of delaying it, because they thought a little delay was in their electoral interest, and, having hastened the election, they should have hastened the meeting of Parliament, and, having hastened the meeting of Parliament, they should have carried out the statement of their intentions made in the most definite and clear terms by the Prime Minister in the very speech in which he was moving a Resolution condemnatory of the action of the House of Lords—that the first business of the new House would be to pass the old Budget. They refused to pass legislation in the last Parliament in order to prevent these difficulties arising. Having met the new Parliament, they refused to bring forward their Budget for reasons which are palpable to everybody both inside the House and outside it, and they prefer to borrow money from individual taxpayers, as the hon. Member for King's Lynn (Mr. Gibson Bowles) says, and to pay those individual taxpayers interest at the cost of the community at large rather than set about to collect the debt which is due and secure payment by all the taxpayers who are liable. That is a most unbusinesslike proceeding. It is one which would never have occurred to any Government who are 761 seeking only to serve the interests of the country, or, if it had occurred to them, it would at once have been rejected by them. It is only adopted by the Government because party exigencies compel them to take this method for staving off defeat.
Having said so much for the responsibility, for the position, and for the extent of the necessity, I admit at the same times given the course which the Government have followed, and even if they were to alter it at this moment, that some such measure as this would in any case be necessary. The matter has been left so long that you could not recover the whole of your unpaid Income Tax, and that being so, and it being necessary to borrow, I cannot resist the conclusion to which the Prime Minister has come, that it really serves no useful purpose to act to the contrary and to pretend to pay off debt on one side whilst borrowing money perhaps at a higher rate of interest on the other. I do want, however, to know a little more about the intentions of the Government. I want, in the first place, to really ascertain what is the amount of the Sinking Fund which they are suspending. I ventured last night to interrupt the Financial Secretary to the Treasury (Mr. Hobhouse) across the floor of the House, but I really could not understand his figures. He said there could be no doubt whatever about those figures, and there certainly ought to be none, but if I understood him rightly the total amount available for the Sinking Fund is £7,000,000.
§ Mr. HOBHOUSEIn this respect, leaving out of account the terminable annuities.
§ Mr. AUSTEN CHAMBERLAINPerhaps that is the explanation. I am glad to have it now. The statement made by the Financial Secretary last night was to the effect that the Government were suspending everything except the £1,000,000 they could not suspend owing to the character and the conditions of what are called the Lottery bonds, for the issue of which I was responsible. I understand they could not suspend that million, but I do not quite understand that statement. Not in vain have I lived. I put something beyond their reach, but that is the only thing I put beyond their reach. I now understand they do not suspend the annuities. Am I right, therefore, in assuming that the amount of those annuities explains the discrepancy between the figure I will give to 762 the House in a moment and the figure given by the right hon. Gentleman. The right hon. Gentleman said there were £7,000,000 in round figures. I suppose it will be £6,880,000. One million pounds of that is attached to the Ten Year Bonds with their annnual drawings. Therefore, that leaves, in round figures, £6,000,000. The figure, however, given by the Chancellor of the Exchequer in his Budget statement of the amount available for the repayment of capital—that is to say, the amount of the Sinking Fund—was not £7,000,000, but £9,880,000. There are £3,000,000 of annuities—
§ Mr. HOBHOUSEAbout £3,500,000.
§ Mr. AUSTEN CHAMBERLAINThree and a half millions payable annually on account of the annuities? I wish the Government would give us a clear statement. It cannot be done by question and answer across the floor of the House, and I think it will be for the convenience of the Government themselves and the whole House if a full statement were made. What has; appeared to some of my Friends is that the Government are now suspending £6,000,000 additional to the £3,000,000 which they proposed to suspend in their original Budget statement, and that the amount, therefore, of Sinking Fund which is actually concerned by this Resolution is not £6,000,000, but £9,000,000. I understand that statement to be disputed by the Government. Under those circumstances, I should like to have an exact account from them of what the £9,880,000 of new Sinking Fund is—how much of it is applicable to the payment of these annuities which are not to be suspended, and what is the actual balance which will be suspended in consequence of these Resolutions? Be it remembered, of course, the Budget is dead, and the proposal contained in that Budget to suspend three millions of the Sinking Fund is dead with it. We are not therefore suspending something additional, we are now making a suspension of the whole sum, whatever it may be. While I am on this subject asking for information, I should be much obliged if the Chancellor of the Exchequer would give me some information as to what was done with the Sinking Fund of the previous year. I confess I was somewhat surprised to find how much of the War Loan was still outstanding to be dealt with. It will be remembered that when the last financial 763 year was closed it was found that the Chancellor of the Exchequer had unexpended a quite unusual amount of Sinking Fund money. Rumours were rife in the City that the Chancellor of the Exchequer, or the Treasury officials, had not been in the Consol market immediately before the introduction of the Budget, but had been very active in that market immediately after. Those rumours were, in answer to questions put in this House, directly contradicted by the Chancellor of the Exchequer, and I, of course, have accepted his denial. I think there was some unusual abstention before the Budget, but I accept the statement that there was no exceptional activity after. The Chancellor of the Exchequer at a later stage explained the cause. He pointed out it was due to the fact that the War Loan was maturing, and the nearer we got to the date of maturity the better were the terms on which the Government could purchase, and it was added that the right hon. Gentleman wished to use the Sinking Fund money for the purchase of that War Loan. May I ask, have they done so, and to what extent, if any, they have done it? There was a sum of six millions involved. Have they, since the 1st April last, redeemed anything like six millions of the War Loan? If not, what was done, after all, with the old Sinking Fund money?
There are two further question which I hope I may be permitted to put before I conclude my observations. The first again has reference to the proposed suspension of the Sinking Fund. Ordinarily, and I say that with this qualification, because a Sinking Fund is never suspended in ordinary times but only on exceptional occasion, and those occasions have usually—indeed, they have invariably been when the country was engaged in war and money has been actually required for the expenditure of the year because the revenue of the year was not sufficient. That is not the case at the present time. The difficulty arises from the collected revenue being insufficient, and not from its being an insufficient revenue. If you have authority to collect the taxes, of course it is your intention to collect the whole of these taxes.
§ The PRIME MINISTEREventually.
§ Mr. AUSTEN CHAMBERLAINYes, I believe it is the intention of the Government to collect them eventually, but very eventually.
§ Mr. LLOYD-GEORGENo.
§ Mr. AUSTEN CHAMBERLAINWhen, then? Not before Easter. You do not seek authority to do that. It must therefore be after Easter. Is it to be immediately after? No, it will not be until the various Resolutions dealing with the House of Lords have all been discussed—each and every one of them—and the discussions concluded in this House. It will be a Committee discussion. [An HON. MEMBER: "And carried in both Houses."] I really do not know to whose observations on this subject I should pay attention, whether to the right hon. Gentlemen on the Treasury Bench or to hon. Members behind them. We have, of course, seen the tail-wagging of the dog a good deal, and it is quite possible that the wishes of the right hon. Gentleman the Member for Islington (Mr. Lough) may have a greater effect on our ultimate proceedings than perhaps the intentions of His Majesty's Ministers. At any rate, their present intentions are to postpone the Budget only until the Resolutions have passed this House, and after that period they expect to collect their taxes. They may collect them eventually, but it will be very eventually. The time is a long way off. These Resolutions in Committee will prove highly controversial. They deal with a subject obviously very complicated. You cannot therefore expect to get them through in a day or in a week, and probably it will be May or June before you begin to collect your taxes for the past year. The Government seem to think nothing about the taxation for the coming year, but, at any rate, you eventually intend to collect the whole of these taxes. When you have collected them you will have got the revenue you expected on account on the year which has expired. "Do you then intend to restore this amount to the Sinking Fund? Your necessity, if I make my point clear, will have gone. It is simply a temporary necessity, unlike previous necessities arising from inability to get money to meet your expenditure in any other way. It is only a necessity for a few months before the collection of your revenue, but that revenue you will eventually collect. Will the Government tell us what they intend to do? Do they mean to replace the millions which they have withdrawn from the Sinking Fund, or, at any rate, so much as is in excess of the draft which they originally proposed by the Budget to make on the Sinking Fund, or do they, having once taken it out of the 765 Sinking Fund, propose that it shall never go back to the reduction of debt, but provide material for financing some future schemes at some future time? These are questions which are directly germane to the proceedings on which we are engaged.
There is another question of importance about which, perhaps, the Chancellor of the Exchequer may be willing to take the House into his confidence. Many Members of the House were no doubt aware of the financial necessities with which they were to be confronted at the beginning of this April, but to many they came as a surprise. Looking forward, there is another great financial claim which is beginning to loom large in front of the Government. It is, I think, at the beginning of next year that the Government have to take over the National Telephone Company's plant. Have they considered how they are going to meet that obligation, and are they making preparations for it? Are they prepared to inform the House and the country what their intentions are? It is not directly germane, I admit, to the immediate proposals of the Government, but when we are borrowing for emergency, borrowing because debt is falling due, I think it is well we should cast our eyes forward a little and see what other obligations will come upon us before long, under circumstances which may be as difficult as they are at the present time, and we should know from the Government now what steps they are taking to prepare for this occasion, and how they propose, if they have yet made up their minds, to meet the obligations that will then fall due.
The House will see that, on the main proposal of the Government, I am not, under all the circumstances, a hostile or unfriendly critic. I cannot vote for the Amendment of my hon. Friend the Member for the City of London. I do not desire to pose as a hostile critic of the Motion before the House, but I desire to have further information as to the intentions of the Government. Where I am their critic is not in regard to what they are doing now, but in regard to what they are leaving undone, and what they have left undone, to minimise the disorder which has been occasioned by—[An HON. MEMBER: "The House of Lords."] No; by the reference of the Budget to the people, and by the very unfavourable opinion which the people have expressed upon it. Nobody contends there is a majority in this House for the Budget on its merits. If there were, the Prime 766 Minister would have, I will not say kept his pledge, but he would have fulfilled the statement of his intentions to make it the first business of the Government, if only to mark his triumph. The reason for his failure to do so is, I think, that the people have expressed so unfavourable an opinion upon it.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)The right hon. Gentleman has expressed his inability to associate himself with the hon. Baronet the Member for the City of London in suggesting we should go through the farce of borrowing money to pay our debts. Therefore, in substance, on this Debate the right hon. Gentleman finds himself supporting rather than opposing the proposals of the Government. He has administered a series of interrogatories to the Government, which I shall be happy to answer. Some were quite friendly, with a view to eliciting information; others were in a more hostile spirit, with a view to placing the Government, I should imagine, in a difficulty. But I think the right hon. Gentleman will find in regard to both categories of questions that there will be no difficulty in answering them. The first is with regard to the actual sum of money which we are appropriating under this Bill and how it is made up. The right hon. Gentleman is perfectly right in his statement that the sum allocated for the purpose of reducing debt amounts to something like £9,800,000. He wants to know where the annuities come in there. There is something like £3,500,000 payable in respect of terminable annuities which we do not propose to interfere with at all. Out of the £3,500,000 £1,000,000 goes in interest, so that there are only £2,500,000 which go in reduction of debt. If the right hon. Gentleman will take £2,500,000 out of £9,800,000 he will find that leaves the £7,300,000 referred to by my right hon. Friend. We deduct another £1,000,000 which is earmarked for redemption of Exchequer Bonds, and that leaves £6,300,000. In our Budget proposals we reduced the amount for the payment of debt by £3,500,000, and I think the hon. Baronet, the Member for the City, agrees that that sum should be allocated in that way to the general expenditure of the year. That leaves £2,800,000, and what we are doing now is: we are asking the sanction of the House to devote that £2,800,000 rather to the general expenditure of the year than to the payment of debt.
§ Mr. AUSTEN CHAMBERLAINAnd the £3,500,000?
§ Mr. LLOYD-GEORGEThe £3,500,000 are not in dispute at all.
§ Mr. LLOYD-GEORGEThe hon. Baronet for the City is now, at any rate, perfectly willing that we should use the money, not in the reduction of debt, but for the purpose of the general expenditure of the year. What he objects to is our taking the balance, and the balance is £2,800,000, and that is the point in dispute. I think I have made it clear what the position is.
§ Mr. GIBSON BOWLESDo you propose to stop the terminable annuities?
§ Mr. LLOYD-GEORGENo. It is perfectly clear that we intend to keep up the annuities, and the only sum which we divert from the Sinking Fund is £6,300,000. One million earmarked by the hon. Member for Worcestershire (Mr. Austen Chamberlain) goes in reduction of debt; £2,500,000 out of the terminable annuities also goes in the reduction of debt. So there is only £6,300,000 which we take away from reduction of debt. I hope that is clear to the right hon. Gentleman. The next note that I have is in regard to the point put to me about the War Loan. The right hon. Gentleman said that it had been the policy of my predecessor to utilise the money at his disposal rather in the reduction of the War Loan than by buying of Consols. That is not altogether correct. It has been a matter of price. At one stage the War Loan was considerably above par, and then we had necessarily to change our policy, since we found it cheaper to purchase Consols than to buy War Loan Stock. That occurred, not in last year, but in the previous year. We have only devoted £2,000,000 to the purchase of War Loans Stock during the last two years. Last year we devoted only £500,000, and this year £1,500,000. So that really we have devoted more money for the purpose of the War Loan this year than in the previous year. Therefore the impression of the right hon. Gentleman that there has been any change in our policy during the present year is erroneous.
§ Mr. AUSTEN CHAMBERLAINI am afraid I did not make myself clear. I only referred to the rumours in the City in 768 order to recall to the Chancellor of the Exchequer the anwser which he gave at the time. He told me, in fact, that I ought to be ashamed of myself for giving any credence to those rumours at the time, that the Government were borrowing upon Consols in order to produce the appearance of a good effect in their Budget, and he subsequently explained that the reason why they held so large a sum of Sinking Fund money as £6,000,000 was in order to purchase more Consuls. Now I understand that of this £6,000,000 only £1,500,000 has been employed in purchasing Wax Loans in this financial year.
§ Mr. LLOYD-GEORGEThat is exactly what I am putting to the right hon. Gentleman. I am putting it that this year we applied three times as much money to the extinction of the War Loan as we had in the previous year, when the purchase was only £500,000. This year, however, as a matter of fact, we had purchased three times as much War Stock as in the previous year. We found that if we carried our operations much further we should be putting up the War Loan Stock to such a point that it would not have paid us to go on. We should have been increasing the value of the stock as against ourselves, but we did apply three times as much money to the operation as we had previously. That does not apply to the purchase of Consols, but in regard to the War Loan Stock we acted on the advice of the broker, and if the right hon. Gentleman had been in my place I am perfectly certain that he would not have purchased more than we did.
§ Mr. AUSTEN CHAMBERLAINI am not criticising what the right hon. Gentleman does. It may be right.
§ Mr. LLOYD-GEORGEIt was the only thing which could be done; if we had gone on beyond that it would be to merely increase the value of the stock in order to-pay for it ourselves, and we found that the operation would not be a profitable one, and we thought it much cheaper to buy Consols. I come to the question whether the borrowing is a temporary one or not. There are some taxes which will be irrecoverable; for instance, stamps. These duties can only come into operation after the Budget passes into law, and we shall never be able to recover those sums of money, and, therefore, the borrowing must not only be temporary but permanent. The same thing will apply to the Land Taxes, but how far it will apply to 769 the balances will depend upon the extent to which the financial chaos which has been created goes. I do not enter into the question of who is responsible, but whoever is responsible the result will not be known until the effect of the chaos which has been created, and which will have the effect of causing a serious permanent loss to the Treasury, is ascertained. The right hon. Gentleman will realise that it may go on for months, but whoever is responsible for the financial chaos is also responsible for causing a permanent loss to the Treasury to a substantial extent in regard to the Income Tax and other taxes which might have been collected easily if collected in the ordinary course. What will permanently be lost it is quite impossible for me to say at the present moment, because I cannot say to what extent we shall be able to recover the amount. The whole of the amount we shall not be able to recover, but the extent of the loss it is quite impossible for me at the present moment, or anyone else, to express an opinion upon which would be reliable. I naturally sought the advice of the experts, and they can only tell me what I am telling the House, that it is impossible to say what the loss will be. They have never dealt with a situation of this kind before, and probably they will never deal with it again, because it is quite clear that an end must be made of the possibility of a deadlock of this kind again. They cannot tell me, and how can they possibly tell me what the permanent loss is going to be; and when the right hon. Gentleman asks me whether this borrowing is permanent or purely temporary, my answer is that he is in just as good a position to express an opinion upon that as I am, because no one can tell the extent of the loss which will ensue to the Treasury, and which will occur owing to the delay in the collection of these taxes. I think that is the best answer I can give the right hon. Gentleman. With regard to the development of the national telephone system I understand the total operation is about £14,000,000.
§ Mr. AUSTEN CHAMBERLAINYes.
§ Mr. LLOYD-GEORGEOf that I think about £10,000,000 has already been spent, and we have got, I think, about a couple of years to spend the balance. The right hon. Gentleman may depend upon it that we shall make arrangements, but we know that it is inadvisable for us to indicate the way in which we shall raise that amount in the course of that period. I think I have 770 answered all the interrogatories which the right hon. Gentleman has addressed to me on this subject; but with regard to his very interesting criticisms I do not think they are altogether relevant to the Motion before the House, but when the time comes we shall be delighted to meet him on that particular ground. Of course, naturally he desires to cast the responsibility upon us, but I do not think he has been very successful in that operation, because he knows that the whole of this chaos is the result of the unprecedented action of the House of Lords in throwing out the provisions for the national expenditure of the year contained in the Budget.
§ Mr. LLOYD-GEORGEThat may be the case, but there have been bad Budgets sent up to the House of Lords before which they have never thrown out. It is the first time upon which they have undertaken that responsibility, and, for better or worse, it is entirely their doing. The right hon. Gentleman complains that we are not putting through the Resolutions. I do not know when we could have done it. We certainly could not have put them through before 24th March.
§ Lord HUGH CECILdissented.
§ Mr. LLOYD-GEORGEThe Noble Lord is the only one to take the responsibility of saying that, but the point is how does the Noble Lord suggest that we could have put them through without a moment's discussion?
§ Lord HUGH CECILThe less contentious Resolutions could be put through without any discussion, or with very slight discussion.
§ Mr. LLOYD-GEORGEWhat the Noble Lord suggests is that we should cut up the Budget and put it in a particular order which would suit him; but, after all, the Income Tax is not the only tax, and I think the Government are entitled to say that whatever their financial scheme is, it must be considered as a whole, and, really, I think things have come to a pretty pass if the House of Lords should really dictate to the House of Commons not merely what their Budget should be, but the order in which they should discuss it, and thus interfere not merely with our legislation, but even our procedure. I do not want to use any strong language; I should be the last to use it; but I do think that that 771 is arrogating to the other House a position of predominance which I think no one except the Noble Lord will even advocate. After all, the Government must in a matter of this kind interpret the will of the House of Commons, and they must be in a position to propose the taxes in their own way and in the order which they consider would suit the House of Commons, and I do not think that it is natural or would suit the House of Commons to take them in that way.
5.0 P.M.
It is not merely the Income Tax. There is the Tea Duty, and there are other duties, and I think the House of Commons is perfectly entitled to say it is not going to put a duty on tea which is paid by the poor people of this country unless the land values of this country bear their share of taxation. What the Noble Lord wishes is that the taxes which he approves of shall go through, but that the taxes which he does not approve of shall be suspended until some indefinite time. We cannot assent to dictation of that kind. At any rate, it is only a question of a few weeks one way or the other. Before 24th March we could not spare a moment to discuss these taxes, and after Easter it is purely a question of a few weeks one way or the other.
§ Sir F. BANBURYYou may be out.
§ Mr. LLOYD-GEORGEIf we are out, then the hon. Baronet will be responsible for the taxes of the country, and of course he knows it will then be all right. That is the position. The confusion which has been created is not going to be aggravated to that extent, anyway, owing to the fact that there is a difference of a fortnight or three weeks between the submission and the carrying of certain Resolutions, and for that reason the Government are standing by the order of business which, I think, meets not merely the views of the House of Commons, but the general convenience of the public.
§ Lord HUGH CECILI only rise to offer the Government a little instruction since they seem not to be able to follow how very easily they might have got out of the financial difficulties which press so heavily upon them. There is no greater financial inconvenience arising from the rejection of the Budget in the House of Lords than from the rejection of the Budget in the House of Commons, which has often happened. The financial effect, of course, is 772 exactly the same. It is true that in this particular case the Budget only reached the House of Lords very late in the year, and, consequently, we came much nearer the new financial year, which is a special cause of inconvenience. That, of course, was due to the Government management of the business during the last Session and to the circumstance of this being an unprecedentedly controversial Budget. Whatever may have been the cause in the last Session, now they are faced with the financial situation as it is. I threw out the interjection that they might very easily pass before Easter the less controversial Resolutions on which their Budget is founded. They could suspend the Eleven o'clock Rule if necessary. There would not be the smallest difficulty about that. The right hon. Gentleman seems to suggest that we are rather reluctant to see them produce their controversial Resolutions, but no one would be better pleased than I if they could find time to bring in the most controversial parts of their Budget. The reason they do not is perfectly well known. It is because they would not pass those Resolutions. The right hon. Gentleman has the assurance to suggest that it is we who are shrinking from this controversy, which we are only too anxious to provoke in order that the unstable equilibrium on which the Government depends may be finally overthrown. The non-controversial parts of the Budget may perfectly well pass, but it is not consistent with the dignity of the Government or the House of Commons, and yet in this very Bill there is a financial provision taken from last year's Budget, namely, the suspension of £3,500,000 of the Sinking Fund, with which they are going to deal. The susceptibilities of the Government and the House of Commons are not in the least ruffled by taking out of the Budget of last year the provision for suspending the Sinking Fund, but are ruffled by proposing the Income Tax Resolution. We ought to have a new manual of etiquette for the Government: "Manners for the House of Lords; Manners for the House of Commons, and Manners for the Cabinet," compiled by the Chancellor of the Exchequer. To the plain man, it will be apparent that the Government are needlessly and vexatiously increasing the financial embarrassments of the country in order to subserve the purposes of the party game.
§ Mr. JOHN DILLONThe speeches to which we have just listened from the Noble 773 Lord and from the right hon. Gentleman (Mr. Austen Chamberlain) are exceedingly instructive as to the real character of the present situation. They are both extremely solicitous that the present Government should clear up the financial muddle. To use the words of the leading article in "The Times" to-day, they want this Government to clear up the financial muddle and set the finances in order, and provide the incoming Government with a good revenue. The Noble Lord is a man of extraordinary innocence. We heard from him in the old days many speeches full of eloquence and full of simplicity. He asked us what is the difference between the defeat of the Budget in the House of Commons and the defeat of the Budget in the House of Lords. That is a very significant question. The defeat of the Budget in the House of Commons means the resignation of the Government. The Noble Lord thinks the defeat of a Budget in the House of Lords ought to have the same effect.
§ Lord HUGH CECILIt makes no financial difference.
§ Mr. DILLONI will tell the Noble Lord the financial difference. When the House of Commons defeats a Budget it calls in another set of Ministers to clear up the muddle, and the Noble Lord thinks there is no difference. I think there is still some difference. I have no doubt that if the Noble Lord was in office for some time there would be no difference, because it is part of the doctrine of Lord Milner, and I daresay of the Noble Lord, that the House of Lords ought to have co-ordinate authority in all respects with the House of Commons, and that if the Government is defeated in the House of Lords it ought to walk the plank just as much as if it was defeated in the House of Commons, and that is really the doctrine that underlies the whole of the speeches of Members of the Opposition. Why, said the late Chancellor of Exchequer, does not the Government pass the non-controversial taxes—in other words, why does not this House hand over to the House of Lords the duty of levying the taxes on the people, because that is what it amounts to? The House of Commons is to settle the taxes and the House of Lords is to strike out certain of the taxes, and then the obedient and chastened House of Commons is to pass the non-controversial taxes which the House of Lords is pleased to allow. But, says the late Chancellor of 774 Exchequer, the Government ought, when they were defeated last winter, as true patriots, to have hurried on the election and brought on their Budget at the earliest possible moment this year in order to save the country from loss. No, I do not think they ought. But I think the great mistake they made was dissolving Parliament at all. They ought to have denied the right of the House of Lords to force the dissolution, and they ought to have brought in their Budget again in February and sent it up to the House of Lords again, and let the House of Lords reject it if they dared, and they would not have dared.
§ Lord HUGH CECILWould you have voted for it? [OPPOSITION laughter.]
§ Mr. DILLONThe laugh is premature. I am perfectly prepared to answer that question. We should have done exactly what we did last December. We should have abstained. [OPPOSITION laughter.] Is not that a perfectly fair answer? We would not have assisted the House of Lords in killing the Budget. We have never concealed our position towards that Budget, and I, personally, have never had the slightest difficulty in stating what my feelings towards it are. I think it is an excellent Budget for England. [OPPOSITION laughter.] Hon. Members who laugh at that must be new Members, because we said that at every stage of the Budget—that the social circumstances of our country are so different that what is a very good Budget for England is a bad Budget for Ireland. That may seem exceedingly funny, but it is none the less true. We should have abstained, and the Government would have had a majority, as they had last December, of 200 or 220. Suppose that had been done, what would the House of Lords have done? Would they have taken the responsibility of rejecting the Budget again, and, if they did, what would have been the condition of this country? That would have been, in my opinion, the true policy instead of hastening an election and cleaning up the financial muddle for the convenience of the House of Lords and relieving the House of Lords from the disgrace which they have brought upon themselves by all the loss they have inflicted upon this country.
Then comes the extraordinary position taken up by hon. Gentlemen on the Front Opposition Bench. They want the Government to bring on the Budget and to pass the non-controversial taxes. This question has never been asked or answered. What 775 real security has the Government that if they were to pass the Budget to-morrow the Lords would not reject it again? There is nobody qualified to answer for the backwoodsmen in the House of Lords, and if the Government were, in my opinion, foolish enough, and weak enough, to get the Budget through the House with the approval of hon. Members above the Gangway and sent it up to the House of Lords, if it suited the leaders or the backwoodsmen in the House of Lords to reject the Budget again, there is no security whatever that they would not do it. They would do whatever they thought best in the interests of their party. In my opinion the Government are pledged never to subject themselves again to such a rebuff and such a humiliation. I think one of the most instructive features of the present situation is the extraordinary anxiety, the paternal anxiety, exhibited by the right hon. Gentlemen on the Front Opposition Bench for the financial reputation of the Ministers who are now in office, and for the good of the country. You will all be in office now in about four months, and you can attend to the good of the country much more than hon. Members opposite. Would it not be a great deal better to leave the future financial arrangements of the country in the hands of capable men like the hon. Baronet (Sir F. Banbury)? I appeal now to any reasonable men in any quarter of the House, the question of two or three months more or less weighs not as a feather in the balance compared with the financial genius which will be brought to bear on this question after the next General Election; and if these men are really actuated only by a patriotic desire for the benefit of the country, they would rather leave the financial muddle till they could apply their great intellects to clearing it up. There is another thought that puzzles me throughout all these Debates more than anything has ever puzzled me, though I have been a long time listening to the Debates of this House. For months and months last year we heard these benches ringing with denunciations of the Budget. We were told it was Socialism. We were told by that great authority on finance, Lord Rosebery, that it was the beginning of the end of all things—country, home, the sanctity of home life, everything was gone if the Budget was passed into law. But now, although they did, in their judgment, so well at the election, these Gentlemen appear to be intensely anxious to get the Budget passed into law.
§ Lord HUGH CECILWe are anxious to have it discussed, and the hon. Gentleman is afraid to have it discussed.
§ Mr. DILLONBut I thought you were anxious, in the interests of the country, to clear up the financial muddle and provide revenue. How can the revenue be provided unless the Budget is passed? Is it for the purpose of defeating the Budget that you want to talk on it, or for the purpose of passing it? That is a plain question. If it is for the purpose of defeating the Budget, where do the interests of the country come in? Why are hon. and right hon. Gentlemen on the Opposition Benches silent now? That is a plain question which could be easily answered, but all their patriotism evaporates when that question is asked, and their great anxiety to save the country and clear up the finances of the country disappears. I know what is in the minds of hon. Members perfectly well. They imagine that they are going to win at next election. [An HON. MEMBER: "No."] Yes, they do, and they would very much like to get rid of the deficit before coming into office. I would rather see these hon. Gentlemen, who are such great financiers, face to face with a deficit of £20,000,000, and see how they would deal with it. If they have such faith in Tariff Reform, what greater opportunity could be provided for their policy than that they should have to provide £20,000,000 at one swoop by Tariff Reform? Those Gentlemen who are burning with anxiety to put Tariff Reform into operation could not, I think, have a more splendid opportunity. Do not, I pray you, be in a hurry about the Budget, because it would be possibly better for the country and better for you that it should be postponed, and that you should have an early opportunity, a really good chance, of putting into operation what I should call the experimentum crucis—the great principle of Tariff Reform, because you would be obliged to raise the deficit of £20,000,000 and commence your own career by adding that amount to the taxation of the country.
§ Mr. GIBSON BOWLESIn one respect it is fortunate that a purely financial question should be complicated by a political and party question. Finance is a dull subject, and when finance alone is being treated it empties the House, but since you began to attach to the fringe of this great Imperial question questions as to who are to be upon this bench and who are to be upon that bench the House fills, and 777 there is an attentive audience for hon. Gentlemen on both sides of the House. I would rather keep finance separate from party politics if that were possible. Certainly on this occasion I think it is possible, and I very much regret that party politics should have been introduced into it. I admit that all these questions which have been raised—the question of the House of Lords, and the question of the merits of the present Government, and of the incoming Government, whichever it may be—are important, but they will keep. It is 700 years since the House of Lords got Magna Charta signed. Surely you can give them seven weeks before you abolish them. I hope that hon. Gentlemen on this side of the House will have some little patience and enable the Government to free themselves from the difficult and embarrassing position in which they find themselves. Some hon. Members insist that they should first of all proceed to throw the Constitution into a new form. The question of finance is more pressing and most important not only in respect of the taxes that are not being levied and which ought to be levied, but also on account of the taxes which are being levied illegally. I saw from an afternoon paper that the Bank of England, the virtuous old lady of Threadneedle Street, is going, without the semblance of authority under any Act of Parliament or Resolution of this House, to deduct from every £100 she pays in dividends on Consols 1s. 2d. in the £. There is no 1s. 2d. tax in existence. The figure is to be found in no Act of Parliament or Resolution carried in this House, but the Bank of England is going to deduct it, and it says it is going to do so on the suggestion of the Commissioners of Inland Revenue, acting under the authority of the Treasury. I do not know whether the situation could be met by sending the directors of the Bank of England to the Tower or by imposing the penalties of præmunire. I would remind the House that the Bank of England gets a commission from the Government on every halfpenny of Income Tax it deducts, and therefore it is not entirely disinterested in making what I consider to be a scandalous breach of the law, or, in acting in this way, without law. What I consider to be the most pressing necessity of all is to cover with some semblance of authority the action of the Empsom of the Inland Revenue and the Dudley of the Customs. I think they should be withdrawn from their perilous position, 778 and that their action should be covered by legal sanction.
What we are asked to do is not to make provision for revenue, but to make provision for debt to tide over a difficulty. Debt is a confession of your inability to pay for what you are yet determined to have. The National Debt is the same as private debt. The Sinking Fund is the expression of a pious opinion that you desire to pay off your debt. You can only pay off your debt when your income exceeds your expenditure. That is the purpose of the old Sinking Fund, and that is the only true Sinking Fund. The new Sinking Fund was set up by Sir Stafford Northcote, no doubt as a sort of temple in which he hoped the Sinking Fund would be found. It consists, as the House knows, of a fixed sum of £28,000,000, out of which you are to pay, first of all, the interest on the National Debt, the unfunded debt, and the terminable annuities, and for the management of the debt, and whatever remains over after these charges are paid constitutes the new Sinking Fund. In reality the new Sinking Fund never has been, and never can be, more than the balance of the pious opinion of Sir Stafford Northcote, who is long since gone and deceased. It has been raided constantly, and nobody raided it more than hon. and right hon. Gentlemen on the front Opposition Bench. They raided the old and the new Sinking Funds, and even put their hands on the terminable annuities which are the very Ark of the Covenant. It is not for them to complain of a similar proceeding in a greater emergency, and indeed the right hon. Gentleman the Member for East Worcestershire, who was lately Chancellor of the Exchequer, has the great grace and modesty not to complain of this Government for stopping the Sinking Fund, for he had a fellow-feeling about it. But he asked whether this raid upon the Sinking Fund was to be permanent, or whether when the Government have got this £6,000,000, or whatever it may be, and spent it, they are going to return it to the Sinking Fund. Has he forgotten his experience as Chancellor of the Exchequer? Surely he must know that when from the permanent charge of £28,000,000 you have taken that balance, it can never again go back to the Fund. The year is ended, and the charge is concluded. It is impossible, physically and financially, to restore it, and I am astonished that the right hon. Gentleman, with his experience and great financial wisdom, should ask such a question as that. 779 Once you have taken away that balance from the permanent fixed charge which includes the new Sinking Fund, it can never again go back to that or to any other Sinking Fund.
§ Mr. AUSTEN CHAMBERLAINOf course it can, if you like to put it back.
§ Mr. GIBSON BOWLESReally, Sir, it cannot. The new Sinking Fund is the balance of the permanent fixed charge. When you have taken away that and spent it, never again can you put it back there. The year is ended.
§ Mr. AUSTEN CHAMBERLAINThe year has nothing to do with it.
§ Mr. BOWLESI beg the right hon. Gentleman's pardon; it has everything to do with it.
§ Mr. AUSTEN CHAMBERLAINmade a remark which was inaudible in the Press Gallery.
§ Mr. GIBSON BOWLESThe right hon. Gentleman asked whether it would be put back into the Sinking Fund, and I reply that it is absolutely impossible to do such a thing. The right hon. Gentleman ought to know it if he does not. We have had some learned finance spoken by the hon. Baronet the Member for the City (Sir Frederick Banbury). I thought he made a mistake about Mr. Pitt's Sinking Fund. Mr. Pitt's method was to borrow money to pay off debt and thus to create an illusory Sinking Fund. I thought every one knew that that was a disastrous failure, and I think the right hon. Gentleman the Member for East Worcestershire acknowledged that that was not the way to reduce debt. I do certainly regret the necessity that the Government find themselves in of asking that the Sinking Fund should be suspended, or that any part of it should be applied in the way they propose. But why is it that they have to do that? It is because the Budget has been suspended. It is because the House of Lords has really for the first time stopped the whole finance of the year. In my opinion, the House of Lords, had they attempted to amend the Budget would have been within their rights, and at all events they would have been attempting to perform the natural duty of a Second Chamber, but their sentence was that of the Jacobins concerning Louis XVI., "La mort sans phrase." They rejected the Budget, and hence all the difficulties we are in. It would be absurd to borrow money with one hand and to pay off debt with the other. The operation 780 would come to the same thing in the end. I regret the necessity the Government find themselves in, but it is a necessity, and I think this House should look upon it tenderly. I am not prepared to resist the Motion or to diminish the amount which the Government propose to take from the Sinking Fund. We private Members are in great difficulty. We have not, like the hon. Member for the City of London, full information. Such information as we have is extracted from official documents or from officials themselves, by a process resembling the drawing of back teeth, and still we cannot get all the information we ought to have. The Chancellor of the Exchequer and the First Lord of the Treasury alone can know the whole of the financial situation. What we do know is that it is very bad, and that it approaches something like desperation. Under these circumstances, I think this House cannot refuse its assent to devoting part of the new Sinking Fund, not to the payment of debt, but to the expenditure of the year.
§ Mr. THOMAS LOUGHThe precise question before us is the Amendment proposed by the hon. Baronet the Member for the City of London. That Amendment seems to me part of the tactics which we have had from the Opposition ever since this Parliament assembled. Everything said and done on that side seems to have the same object in view. That object is simply to induce the Government to restore the normal state of things in this House at the present time. The whole argument of the hon. Baronet was that it would be quite easy to avoid this borrowing and avoid suspension of the Sinking Fund if only the Chancellor of the Exchequer would commence to collect the taxes. This is what we have heard in a variety of speeches. "Put through your Budget, pass your Resolutions, collect your taxes," is what we have heard ever since the House met. The question is how far it is practicable to do this. I think it ought to be perfectly clear to the Government that such a course, whatever my hon. Friend below me (Mr. Gibson Bowles) may say, is totally impracticable in the unique position in which we have now been placed in this long-standing quarrel with the House of Lords. They have thrown out the Finance Bill. Whatever its faults or merits, I maintain it should have been passed as it was sent by this House to that Second Chamber. In saying this I would like to admit that I have a most exaggerated 781 sense of the inconvenience in which the country is being placed by the action of the Government, which is quite inevitable. A great deal is being said, for instance, about the Income Tax; but all the other duties are in a far more precarious position than even the Income Tax is.I noticed that my right hon. Friend the Prime Minister, when he was alluding to the other taxes and duties, said that these duties were being paid. That word has been used on both Front Benches several times. This is a mistake. The duties are not being paid.
Every man who has advanced any of these duties since 3rd December holds a little document which the Government have circulated stating that the amounts of the duties are only deposits. It is a very remarkable document, and I think perhaps should have received a little more consideration from this House than it has received. The document declared that the Government had no right to levy the duties, and that anybody can proceed to remove goods from the care of the Customs without paying any duty upon them. We do not know at this moment how much goods, spirits, tobacco, tea or beer has been removed without this duty being paid. The inconvenience is much greater, perhaps, than Members of this House may think. The document goes on to state that if the trader taking out the goods cares to deposit with the Government the amount that should have been levied in the ordinary course, the Government will receive it and give a pledge that if Resolutions are not passed by this House, or if the Budget is not passed into law, all the moneys which have been so paid will be returned to the people who have advanced them. There is no collection of taxes at all. They are only being deposited and they are hung up in this extraordinary way. I mention that to show that I am as fully seized with the difficulties of the financial situation as either the hon. Bart, or my hon. Friend who sits below me. But for all that, I entirely disagree with the advice which both of them have given to the House. I do not think that this situation can be regularised apart from the consideration of other matters. We have had to submit to too much of this contemptuous treatment by the House of Lords in this House. I notice now that the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) appealed to the Government on this point. He said: "Do not stand upon your dignity. What is the dignity of a Government?" 782 It is not a question of the dignity of the Government; it is the question of the Dignity of the House of Commons that is at stake. I do not wish to say that the Finance Bill, even in its final shape, may not be capable of improvement.
§ Mr. SPEAKERThe hon Gentleman started very well by stating what the Amendment was before the House. He is not discussing it now. The Amendment is simply as to what extent the Sinking Fund is to be suspended. That is really the only matter before the House.
§ Mr. LOUGHI quite see that perhaps I did digress a little more than I should have done, but I had in mind the arguments which the Mover of the Amendment and other speakers have advanced. However excellent these apparently simple expedients may be to get over the difficulty, the difficulty is too great to be bridged in that way. I do not believe that the Government would be able to accept the Amendment of the hon. Member or any of the expedients recommended from the opposite side of the House. They would not have a party behind them to enable them to do it. A great issue has been raised, and that issue must be fought out to the finish.
§ Question put, "That those words be there added," put, and negatived.
§ Main Question put, and agreed to.
§ Bill ordered to be brought in.
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- TREASURY (TEMPORARY BORROWING) BILL. 28 words