HC Deb 07 December 1911 vol 32 cc1719-43

Considered in Committee.

(IN THE COMMITTEE.)

[Mr. WHITLEY in the Chair.]

Motion made, and question proposed, "That for the purposes of any Act of the present Session relating to finance it is expedient that the old Sinking Fund for the financial year ending the thirty-first day of March, nineteen hundred and eleven, may be applied—

  1. (a) to the extent of one million five hundred thousand pounds for the purpose of the development fund under the Development and Road Improvement Funds Act, 1909; and
  2. (b) to the extent of one million five hundred thousand pounds for the purpose of the provision of sanatoria and other institutions for the treatment of tuberculosis or such other diseases as the Local Government Board, with the approval of the Treasury, may appoint; and
  3. (c) to the extent of two hundred and fifty thousand pounds for the purpose of an advance to the Government of the East Africa Protectorate;
and that such an advance may be made by the Treasury."—[Mr. Lloyd George.]

Sir F. BANBURY

It is now ten minutes to twelve on 7th December, and we are about to pass a financial Resolution on which to found one of the Clauses of the Budget. In the days of the great Chancellors of the Exchequer, such as Mr. Pitt, Mr. Gladstone, Mr. Disraeli, and others, all the financial Resolutions on which the Budget was founded were taken in April. It is a novel experience that at this hour, after an exhausting day in the House, we should be asked to pass such a Resolution. The Chancellor of the Exchequer is a man of great ability and resource. Why, when at a somewhat belated period in the summer the Resolutions on which the Budget was to be founded were taken, was this Resolution omitted? The result of this Resolution is that about £3,500,000 are taken from the old Sinking Fund and diverted to other purposes, the merits or demerits of which I will not argue. No notice of the Resolution is to be obtained in the Vote Office, and unless you can get the information from one of the clerks you do not in the least know what you are to be asked to do with the Budget at ten minutes to twelve o'clock on December 7th! When the right hon. Gentleman the Chancellor of the Exchequer was in opposition his invective was great upon the want of system that was practised by concealing from the House of Commons the subject matter of what was to be discussed. There was no one in those days more angry with the then Conservative Government for perpetuating this system than the right hon. Gentleman. Now it is the right hon. Gentleman who comes down and asks us, at this late hour, to assist in the destruction of the finances of the country.

I have provided myself with a Paper, dated 11th May, 1911, issued by the late Financial Secretary to the Treasury. I find on page 40 that the Old Sinking Fund with which we are now dealing, has never been touched since the years 1897–8–9. In 1897 the surplus revenue amounted to £4,200,000. This was set apart to be applied by the Treasury for Naval Works, that is, for the defence of the country. In 1898 £2,473,000 was set aside by the Treasury and military works. In 1899 £2,000,000, was set aside for public works and offices. Never since then has any attempt been made to tamper with the old Sinking Fund. Two years ago the right hon. Gentleman brought in a Clause in his Budget, or stated in his Budget statement that he was going to do so, to tamper with the old Sinking Fund, but the outcry in the City and other places was so great that the right hon. Gentleman did not persist with the Clause. Here at the last moment so to speak, of the dying year, this attempt is being made to alter the old Sinking Fund. In the year 1898, the annual expenditure was £102,000,000, and the average price of Consols was, according to "Whitaker's Almanack," over 112. At the present moment the annual expenditure is £182,000,000, and the price of Consols by this evening's paper is, not over 112, but 76¾. And this is the moment that the right hon. Gentleman chooses to take three and a quarter millions, I think it is—and I apologise if I am wrong in my figures, but I cannot see through a piece of wood, and I do not think I am overstating the case—from the old Sinking Fund. That is not all, because the new Sinking Fund is also being tampered with. The new Sinking Fund was instituted in 1875 by Sir Stafford Northcote, and the sum set aside for the service of the debt was £28,000,000.

I have here a Paper issued by the Chancellor of the Exchequer, showing that the sum set aside for the service of this debt for the year 1911–12 is to be £24,500,000. If you take that sum from £28,000,000 you will find that the new Sinking Fund is reduced by a sum equal to £3,500,000, and therefore the Sinking Fund is being tampered with to the extent of £7,000,000. That is not all. We remember the attempt made earlier in the year to induce the railway companies to postpone their payment of Income Tax from March to the 2nd or 3rd of April, but the railway companies, being honourable people, refused for the most part to comply with the request made to them. I think I am correct in saying that had they acceded to the request to postpone payment a sum of about a half a million which should have been given to the old Sinking Fund on the 31st March, 1911, would have been postponed and pushed into this year and spent upon other matters. Let us consider for a moment irrespective of finance. What was the object the House had in ordaining that where there was a surplus over expenditure in any given year it should be spent in the reduction of debt? The object is very clear. There is no particular advantage to be gained in any Department by under-estimating their revenue and over-estimating their expenditure if the surplus is to go to the payment of debt. But if it is not obliged to go to the payment of debt, and can be used for other purposes, it is perfectly clear that any unscrupulous Minister could conspire with the Chancellor of the Exchequer or some other person in high authority upon the Front Bench, and say, "We will overestimate our expenditure and under-estimate our revenue, and we will apply the surplus to a certain object which we do not want to put upon the Estimates to come before Parliament." It was for that reason that Parliament many years ago decreed that when there was a surplus it should be devoted to the extinction of debt. Now we are changing all that. Not so many years ago there were great statesmen sitting on the Treasury Bench who took the view which I am taking at the present moment. I am sorry the right hon. Gentleman the Member for Rossendale is not here, because I am sure he would be interested to know that on the 13th of April, 1899, Sir William Harcourt said:— That the time of the largest revenue and the greatest prosperity from a financial point of view which this country has probably 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 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. That was Sir William Harcourt's view when Consols were 111, and now they are at 76½. Our expenditure was then about 70 per cent. less than it is at the present moment, and of course the burden of debt was very much less. Sir William Harcourt goes on to say:— It is true that there are times when through exceptional burdens the Sinking Fund has been suspended to meet the extreme necessity of the hour. There is an extreme necessity at the present moment. That I think is a very legitimate transaction, but the permanent reduction of the Sinking Fund is a different thing and is fatal to the whole system of finance. The Chancellor of the Exchequer asks are we to benefit the people of the future, but what is the Government's policy doing to these people? Every day you are increasing the liabilities of this country to an extent which you cannot measure and which you are only commencing. You are issuing scrip which they will have to redeem. It is your posterity who will have to bear the enormous burdens of these great liabilities which you are every month creating. I ask the House if these words are not applicable to the present moment, and whether hon. Members ought not, in view of the serious danger pointed out by a great Liberal financier of tampering with the Sinking Fund, to hesitate about doing the same thing when things are very much more dangerous than they were then. Sir William Harcourt proceeded:— The right hon. Gentleman has muddled away his income by not redeeming debt, I have always held that this provision is one of the greatest sources of strength to the British nation, which gives you credit and character abroad. You have not much credit abroad now. When we come to discuss the question I shall ask the House to consider what course was taken by Mr. Gladstone. They treated with scorn the idea that when the British Empire was called upon to make provision against a scare then existing of war they should have to resort to extraordinary measures regarding the debt, and when these passages are recalled to the recollection of the House I think it will be ashamed of this financial degeneracy. I never admired Sir William Harcourt more than when I read these speeches, seeing that what he prophesied has come to pass in these days of financial degeneracy. It is not necessary at this late hour to read more extracts, although I have a great number here. Nearly everybody who sat on the Front Ministerial Bench at that time contributed to the Debate; indeed, I made a contribution myself, and in case it should be the intention of the right hon. Gentleman to quote it I will do so myself. I should not like to give him the trouble at this late hour of ransacking the pages of the "Official Debates" for it.

Mr. LLOYD GEORGE

Oh, I remember it well.

Sir F. BANBURY

I said at that particular time when Consols were 113, and when there was a great attack made upon Sir Michael Hicks-Beach for redeeming debt at over par, when he had been told that Consols were going up to 120—people then did not think we were going to have a Radical Government—that it was a great mistake to redeem debt above par, and that under the circumstances there was very considerable justification for Sir Michael in reducing the amount of the debt which at that time stood at about 585 millions sterling.

I have here too a little passage from a speech by the right hon. the Member for North Islington (Mr. Lough), a great financial economist at that time. I remember saying when the credit of the country was so good there was no very great necessity for redeeming debt. I adhere to that statement.

But the credit of the country is not good now. The debt has increased very much and so too has the expenditure, and what the right hon. Gentleman ought to do is to follow the example, if I may say so, of a wise spendthrift. If he is a wise man he will say, "I will not for the future continue to spend so much annually. I will not for the future continue to draw upon my capital. I will set aside something annually to reduce my debt and knock a reasonable amount annually off my expenditure." I could have enlarged on this subject for a considerable time but as an hon. Member below the gangway, to judge from his interruptions, seems converted by my speech, I will say no more than to express a hope that he will have sufficient strength to support me in the lobby. We have, unfortunately, only three days next week to consider the remaining stages of the Budget—one day for Committee—one for Report and one for the Third Reading, and out of these three days time will have to be found for the Report stage of this Resolution unless it is taken to-morrow. I have felt it my duty under these circumstances to enter this protest. I am afraid I shall not have time to repeat it in better language and at greater length on Monday because there will then be so many other things to take up the time of the House. I believe the right hon. Gentleman has some faint glimmerings of economy in his composition: I judge that from certain actions of his when I have sat beside him at dinner or when he takes wine in the City. On those occasions I have always judged him to be an apostle of economy. I hope that on this occasion he will see the errors of his ways, and even at this last moment withdraw his Resolution, or at least undertake next year to make up the amount which he is now going to take. This is an extremely important matter. The credit of the country is of importance to everybody, and it is far more important to hon. Gentlemen below the gangway opposite than it is to people who are better off in this world's goods. To the latter it may only mean the taking away or a diminution of certain surplus luxuries.

Mr. C. DUNCAN

We have nothing that can be taken away.

Sir F. BANBURY

The hon. Gentleman has his £400 a year. It may be nothing to him at the present moment, but to a very large number of people it would seem a very considerable income. There are large numbers who have invested the savings of their lives in the banks of this country, whose funds are invested in these very securities. If you depreciate the securities you cause loss to these people. I defy anyone who has any knowledge of the City to get up and contradict that. It is because I feel strongly on this matter that I have ventured to say these few words, and I trust that in the interests of the country they will bear good fruit.

Mr. LLOYD GEORGE

The hon. Baronet has complained that we are bringing this Resolution before the House of Commons at a very late period of the year. That we are doing so is not the fault of the Government. It was my earnest wish, and it was the wish of the Government, to dispose of the Finance Bill before we separated in August, and it was at the urgent request of hon. and right hon. Gentlemen opposite that we postponed it until the Autumn Session. The hon. Member for the Tewkesbury Division (Mr. Hicks Beach) shakes his head in contradiction but I repeat that it was with very great reluctance that I consented to postpone it at the urgent request of hon. and right hon Gentlemen opposite. There was no proposal to guillotine. We were entirely in the hands of the House, and if it desired a week or a fortnight there was no method by which we proposed to prevent it. The Bill was postponed till now entirely to meet the convenience of hon. and right hon. Gentlemen opposite. Having done it at their request I do not think it lies in the mouth of the hon. Gentleman to complain that we are disposing of this in December instead of in August. [An HON. MEMBER: "Why not in April?"] For the simple reason that we were discussing this Resolution at the end of May But that is not the point. The question put to me, why are we discussing it in December? My reply is because the Opposition asked us to postpone it from August.

Mr. JAMES HOPE

Did any Member of the Opposition ask for this Resolution to be postponed to this stage?

Mr. LLOYD GEORGE

They asked for the whole Finance Bill to be postponed.

Mr. JAMES HOPE

Why was it not taken before the Second Reading.

Mr. LLOYD GEORGE

That is a totally different point. I am dealing with the question why we are discussing it now instead of earlier in the year. The hon. Baronet has put one or two other questions to me. He complains that the Government have not followed the precedents of Mr. Gladstone and Mr. Disraeli and have not put this Clause on the Paper. But Mr. Gladstone and Mr. Disraeli never did put these motions down on the Paper, they were always read from the Chair. I was the first Chancellor of the Exchequer who ever departed from precedent and gave printed notice of the Resolution to be read out to the House. That was done in the year 1909 for the first time. Every other Chancellor of the Exchequer generally moved the Resolutions, and they were read from the Chair for the first time.

Sir F. BANBURY

I agree to that. The right hon. Gentleman has misunderstood me. What I said was that Mr. Disraeli and Mr. Gladstone brought in their Budgets in April and passed them in Juno. They did not put them off till this time of the year. My other point was that when the- right hon. Gentleman was in Opposition he was very angry at these Resolutions not being printed, and I pointed out that this Resolution has not been printed.

Mr. LLOYD GEORGE

I have a recollection of my having complained of it. If I did complain, at any rate I have the satisfaction of knowing that the complaint I made in Opposition was rectified when I got into office. That is more than generally happens with Members of the Opposition when they get on this side of the House, and I am not so sure that someone will not be making similar complaints about the hon. Baronet when he is sitting on this bench. The hon. Baronet says that I criticised the Government of that day very severely with regard to the Sinking Fund. My recollection is that I got very little sympathy from him at that time, even with regard to the Sinking Fund. He was astute enough to know that there was an awkward and inconvenient speech of his, but with his usual adroitness he preferred to give a summary of it to the Committee to quoting it. On the other hand I prefer the actual words the hon. Baronet used on that occasion.

Sir F. BANBURY

On what occasion?

Mr. LLOYD GEORGE

The very occasion the hon. Baronet referred to when Sir William Harcourt complained of the action of the Government in raiding the then Sinking Fund. He then said: At the present moment our National Debt is £634,000,000, while our population is nearly 40,000,000. Now the population has gone up to 45,000,000. Therefore it is impossible to say that the National Debt does in any way press hardly upon the people of this country. What good purpose does the National Debt serve? It provides a safe investment for the savings of the people. Undoubtedly the only drawback to my mind to the provision made by the last Chancellor of the Exchequer on this side of the House for reducing the interest on the National Debt was that it caused a rise in second-rate securities. If the hon. Baronet looks at that speech he will sea that he was arguing in favour of a National Debt, and he seemed to think it was a good thing in itself. That is the line he took then, although now he has a very belated admiration for Sir William Harcourt's speech. It is rather unfortunate that that admiration took something like ten years to mature. Let me tell the hon. Baronet another thing. He complains that he really does not know what this Resolution is. I think he did. He knows perfectly well that every item in this Resolution has been printed in this Bill since the 22nd May. I stated in my Budget speech what this money was to be spent upon. What are the purposes? I ask the hon. Baronet if there is any one of them to which he objects.

Sir F. BANBURY

That is a different point.

Mr. LLOYD GEORGE

I will tell him. There is £1,500,000 to be spent for the purposes of development. The hon. Baronet seems to think that the money to be spent on the agricultural development of this country would be wasted. I do not think that is the view of the agricultural Members in this House. There is £1,500,000 for the purposes of assisting in the building of sanatoria. The hon. Baronet approves of that. The third is the advancing of £250,000 for the purpose of aiding the development of our East African Protectorate. I think he agrees with that. So far as the three purposes are concerned, I think he and most hon. Gentlemen on that side of the House would agree with the purposes.

Sir F. BANBURY

Not the first.

Mr. LLOYD GEORGE

Then I think I can claim the support of most hon. Members on his own side in spending money for the purpose of agricultural development. The hon. Baronet says what he objects to is not so much the purposes as the fact that the money is taken out of the old Sinking Fund. Let us put it as a matter of business. If you do not take it out of the old Sinking Fund you will have to borrow it for this purpose, because it is capital expenditure. What on earth would be the good of paying £3,500,000 into the old Sinking Fund, and then borrowing a sufficient sum of money for these purposes, having the money in your own hands. [An HON. MEMBER: "Taxes."] You would not use taxes for the purpose of capital expenditure. That is not done in any business enterprise.

Sir F. BANBURY

Pay it out of the revenue of the year.

Mr. LLOYD GEORGE

Does the hon. Baronet really mean to say capital expenditure could legitimately be put on the revenue of the year?

Sir F. BANBURY

I do not say it, but the whole of the party opposite said it on the Naval and Military Works Loan.

Mr. LLOYD GEORGE

They are not at all analogous cases. In that case you were ostensibly borrowing money for capital expenditure, but really borrowing it for the recurrent expenses of the year. You do not raise £1,500,000 every year for the purpose of building sanatoria. It is true as far as development is concerned there is a sum of £400,000 a year put down for capital expenditure, but there is a proportion of that which is in itself capital expenditure. For instance, if you buy land, that is capital expenditure, and you have something which represents it still there—namely, the land. In no business do you treat the purchase of land as if it were an annual expenditure, and therefore it is a capital expenditure. Either you would have to borrow this money or take it out of the Old Sinking Fund. We happen to have £3,500,000 in our hands, and instead of borrowing we have used it for the purpose of these capital expenses. The hon. Baronet has entered into the whole question of Consols and depreciation. He said that they did not foresee that there was going to be a Radical Government. I do not think anyone foresaw that there was going to be an enterprise which would add £150,000,000 to the National Debt. I do not think at that time they quite foresaw what the effect was of introducing Colonial securities into the market. But we have had that over and over again this year. We have had two or three Debates upon it, and I have no doubt we shall have the same Debate on the Third Reading. It is a matter of very considerable importance. These are considerations which we have always got to take into account. As far as Consols are concerned what difference did it make whether you took it out of the old Sinking Fund or went to the market and borrowed it. In my judgement it would have had a much more disturbing effect on the market if you borrowed these sums in driblets. That is the one thing which disturbs the market. It is the one thing which has the most injurious effect on any item of expenditure incurred by the late Government. In another item of expenditure which I did not change it had a very disastrous effect on the stock market, namely, the recurrent borrowing of Irish land stock. That is the effect when you have to go constantly to the market, and when you do not come to the end of your borrowing. That disturbs the market, and the disturbance would be much greater if we had to borrow £1,500,000 for sanatoria, £1,500,000 for development, and £250,000 for our East African Protectorate. I say it is a much more businesslike proposition that, having £3,500,000 to spare, we should get it out of the Old Sinking Fund rather than go to the market to borrow the money from time to time.

Mr. HICKS BEACH

I think there is one point which the Chancellor of the Exchequer has forgotten to explain in connection with this Resolution. If he looks at the Schedule of the Bill he will find that a provision in a previous enactment which is now to be repealed is Section 2, Subsection (2), of the Development and Road Improvement Funds Act of 1909. That Sub-section says:— There shall be charged on, and issued out of, the Consolidated Fund, or the growing produce thereof, in the year ending the thirty-first day of March, nineteen hundred and eleven, and in each of the next succeeding four years, the sum of five hundred thousand pounds. What does that Sub-section mean? It means that out of the revenues of 1910, 1911, 1912, and so on, the sum of £500,000 was to be taken for the purposes of the Development Fund. What is the right hon. Gentleman now doing? He proposes to repeal that Sub-section, and instead of paying for expenditure out of the revenue of the year, he is paying it out of a capital sum which ought to be given to the reduction of debt. The right hon. Gentleman has given no explanation to the House why he is doing that. That is one of the chief reasons which induced my hon. Friend (Sir F. Banbury) to bring the matter to the notice of the House. It is ridiculous for the right hon Gentleman to say that he is doing exactly the same thing as former Governments did. He is not. He is directly repealing by a sidewind the definite operation of his own Act which was passed in 1909, and he is attempting to do it in the early hours of the morning without offering any explanation at all.

Mr. LLOYD GEORGE

Does the hon. I Gentleman suggest that I have never explained to the House what I propose to do? I certainly explained at very great length on the First Reading what was proposed to be done, and not only then but in a subsequent discussion.

Mr. HICKS BEACH

What I really meant was that the right hon. Gentleman has not given a single word of explanation about it to-night. I think it is a very important matter. I had forgotten what the right hon. Gentleman said on former occasions. I really do not think it is fair to the House to pass this Resolution tonight without giving some proper explanation of what is actually being done in the way of repealing by a sidewind a definite provision in an Act of Parliament.

Mr. J. R. CLYNES

Allusion has been made in this Debate to irrelevant remarks, and I wish to make reference to one of them. The hon. Baronet, the Member for the City of London, in quite a playful manner, I admit, made reference to our receiving £400 a year, and considering the way in which that observation was received, and, as I think, vulgarly cheered by his friends behind him, I am entitled to offer some protest against the endeavour to associate merely the Labour members with the payment. It was not money which brought us into this House, a thing which cannot be said of some of the hon. Gentlemen on the other side. [HON. MEMBERS: "Name."] It is not money which keeps us here. I think I may also draw attention to the few instances which have been made public in which hon. Gentlemen on the other side of the House have endeavoured to publicly dispose of the salaries they have received.

The CHAIRMAN

The hon. Member has made his protest. He is entitled to do that, but not to carry the matter further.

Mr. J. R. CLYNES

I regret that these remarks are made inside this House, and even more frequently outside.

Mr. WATSON RUTHERFORD

I just want to make an observation on this very important matter, with regard to the manner in which it has been brought forward. We have not complained that this Resolution was not taken in August. The complaint that the right hon. Gentleman referred to, that we had requested that it should stand over, was made in August, when we were threatened with the Budget, and it was felt on this side that there was not sufficient opportunity then to discuss it. The right hon. Gentleman has given no reply whatever to the complaint which has been made from these benches that the Budget was not dealt with and concluded in May or June at the outside. It is no answer to us to say that we asked him in August to put it off until the autumn. That is no reply to our legitimate complaint that the whole matter was not dealt 'With in June. What is the real reason for the Old Sinking Fund? I have taken the trouble to look up to see how this, was made one of the standing rules of our constitution, and I find that the reason was in order to stop dishonest finance. The words used were those exact words. The intention was to put it out of the power of any Government to indulge in dishonest finance, and dishonest finance as then defined was over-estimating the amount of the expenditure, and under-estimating the revenue in order that the Government of the day might be placed in a position of having considerable funds at their disposal which they could use as they liked without the authority of Parliament. What has been done? The country has been deliberately over-taxed either by the ignorant or dishonest finance of the Chancellor of the Exchequer. If it was not intended dishonestly to create an artificial surplus, then, of course, it arises from his incompetence; but in any case the position to-night that we have got to deal with is that three and a half millions were taken out of the pockets of the taxpayers more than the expenditure of the particular year warranted. How was that done? It was by enormous taxes upon spirits which were sprung upon the country, and which disturbed a very large number of industries. The effect of that was that the Chancellor of the Exchequer got this three and a half millions. What is the rule of our constitution which has been acted upon, with the exception of the three years referred to, for very very many years? It is that whenever a Chancellor of the Exchequer does that, automatically that sum of money which is called the Old Sinking Fund, is obliged to be used for the extinction of debt. If the law had been carried out, that three and a half millions would have been expended in taking off the market that amount of Consols at a profit of 25 per cent., or perhaps a little less, because the price would have risen and to-day we should probably have had Consols at 80 or a little over, instead of at 76¾. I venture to raise my protest against this kind of procedure and I think we are entitled in the House of Commons to do so. I do not think there is any more disquieting fact with regard to the position of this country to day than the price of Consols. It is a terrible thing to think about. It is a menace to the savings banks. It has been a terrible loss to hundreds of concerns, to banks, to financial corporations, to commercial undertakings which have honestly invested portions of their revenue and profits in reserves in the credit of the country. I could give the Chancellor of the Exchequer illustrations—he knows them as well as I do—of the numerous well-founded and well-managed undertakings which have lost large sums of money and some of which have been ruined in this way. What is the excuse? The excuse we have had from the Chancellor of the Exchequer is one of the flimsiest and most fallacious ever made in this House. It is that if the right hon. Gentleman had done what he ought to have done with this money—paid off Consols—he would have had to come to the House now and get authority to borrow an equivalent amount for these three purposes. That is no excuse. If the right hon. Gentleman had come to the House in that way we should have had an opportunity of saying whether the country should be taxed to pay for these various purposes, and we should have had an opportunity of debating all these points in a proper manner. But we are deprived of the proper opportunity by the Chancellor bringing forward this astonishing proposition. Therefore I think we are entitled, whatever may be the date, and however late in the day it may be, to express in the strongest possible language our disapproval, as business men acting in the interests of the country, of the course the Chancellor of the Exchequer has followed.

Mr. JAMES F. HOPE

Will the sums reappear on any kind of Estimate in any kind of way? Very often there is what is known as a token vote, and I suggest that sums of this kind ought to be represented by a token vote, so that the House may know the expenditure they are committed to. I also wish to ask why this Resolution was not passed before the Bill was set up?

Mr. McKINNON WOOD

As to the first of these questions, these items will not appear again as an Estimate. The hon. Member for Birkenhead has suggested that no opportunity had been given to the House to consider this question. But I think he could not seriously have meant that. The three objects for which this money is to be spent are sanatoria, the development fund, and colonial expenditure. They are all matters that have been explained to the House, and were discussed in the month of May.

Mr. WATSON RUTHERFORD

May I be allowed to say that the right hon. Gentleman slightly misrepresents me there. I did not say that those particular objects had not been discussed. What I said was that we had not had an opportunity of discussing them in the same way that we would have had if they had been put on the Estimates, if there had been a proper Bill brought in to borrow this particular money or they had been put on the Estimates of the year.

Mr. McKINNON WOOD

The hon. Member also spoke about this being dishonest finance. Surely that language is rather strong. The hon. Baronet, the Member for the City of London, referred to one or two occasions upon which the same procedure had been adopted by the Government of which the hon. Member for Birkenhead and the hon. Baronet for the City of London were supporters. I believe on one occasion which has been mentioned the hon. Baronet supported this particular procedure. I have looked at the figures to which he referred. There was the case of 1895–1896, when the present Lord St. Aldwyn was Chancellor of the Exchequer. In that year there was a surplus for the Old Sinking Fund of £4,210,000, of which £3,800,000 or more was used in identically the same manner for Naval Works Act expenditure, that left £375,000 which might have been left in the Old Sinking Fund, but it was diverted also. So nothing was left of £4,210,000.

Mr. WATSON RUTHERFORD

Equally dishonest.

Mr. McKINNON WOOD

I am glad the condemnation of the hon. Member for Birkenhead is wholesale and impartial. Then in 1896 nearly 2½ millions might have been used in this way. It was all used for Military Works. Then in the next year, 1897–1898, 2½ millions was used for Public Buildings. Now I find when I examine the five years when there was a surplus for the Old Sinking Fund of the Government, that the hon. Member supported, that out of nearly twelve millions that might have been used for Old Sinking Fund, over 8½ millions were diverted in this way. That is 74 per cent. of the total surplus, whereas during the five years under the present Government the total amount diverted was only 20 per cent. Therefore if we are talking about dishonesty we know where the greater crime lies.

Mr. WATSON RUTHERFORD

No excuse.

Mr. McKINNON WOOD

Another point I want to make, and it is this: Surely the question is how much money is used for the reduction of liabilities and the paying off of debt. That surely is an important consideration. The hon. Member does not think that of any importance. I think the House generally will think otherwise.

Mr. WATSON RUTHERFORD

The point is whether the Government is honest.

Mr. McKINNON WOOD

I find we have paid off £68,000,000 of debt. In the first three years of this Government over £42,000,000 went to repay capital liabilities, and in the next three years £26,000,000, and there is a sum of about £10,000,000 coming this year. I want to make this point: that in no year of the late Unionist Government was any such sum of money set aside for that purpose—I think the largest amount was about £7,000,000. So that if you look at it from the point of view of precedent I do not think the hon. Member can make a very good case; and if you look at it from the point of view of repayment of debt he makes a still worse case. I think his criticism rather fails. I will not keep the House longer at this hour of the night. The Chancellor of the Exchequer has already dealt with the matter fully, and I have answered the questions addressed to me by the hon. Member for Sheffield.

Mr. JAMES HOPE

That is just what the right hon. Gentleman has not done. I want to ask him why this Resolution was not passed before the Bill was set up. The usual rule in a Finance Bill or kindred Bill is to found it upon certain resolutions. My other question was about the token vote. I gather there will be no token vote; therefore we lose entire control of three and a-half millions contained in this Resolution. Parliament will have nothing more to say about it. I suppose the only possible check there will be is that about two years hence the Public Accounts Committee may have something to say to it. There will not be any guarantee whatever even that it will necessarily be spent for the purpose mentioned, since it does not pass through any Appropriation Act at all.

Mr. McKINNON WOOD

May I point out that there is a Clause in the Bill—Clause 8—which deals with these amounts, and which the hon. Baronet has been good enough to promise that he will discuss on the Third Reading of the Bill.

Lord BALCARRES

On a point of Procedure. I understand that one and a-half millions is to be spent on sanatoria. Will Clause 8 of this Bill provide the House of Commons with the only opportunity it will get for discussing the method of structure and the character of these buildings? Normally, I understand—I remember several cases—a taken vote is put upon the Estimates—£10, £2—in order to give the House of Commons a chance of discussing it. Members in all parts of the House know what acute controversy there is as to the right style of consumption sanatorium. Under present conditions it will only be on Monday afternoon that the House of Commons will be able to discuss these problems. Surely that is wrong? It is upon the technical structure of these buildings that their value may depend.

Mr. JAMES HOPE

Really, may I ask for an answer to my questions?

Mr. McKINNON WOOD

I have twice tried to answer them. It is not in accordance with precedent to put down an estimate if the matter is dealt with in this way. There has been an opportunity of discussing sanatoria on the Insurance Bill, and of course it will be open to the House to discuss the question on Clause 8 of this Bill.

Lord BALCARRES

But there are no figures given. We have not the remotest idea whether it is to be £10 or £40 a bed. No plans have been prepared.

Mr. McKINNON WOOD

That figure could not be given if we did bring in an estimate. The Noble Lord cannot think that we could give an estimate of, say, £10 a bed, before the matter has been considered by the insurance committees and so on. We are not in a position to do that.

Lord BALCARRES

Of course the House would not wish me to press it further. This money will be spent, £9 out of £10, in the next financial year. There is no occasion for the Estimates to be presented in the month of April or May. It may be presented as a Supplementary Estimate in the month of March, 1913. Of course we have no Estimates yet, because the Commissioners have only just been appointed. It is clearly impossible that they should devise a scheme at this stage. Therefore we cannot possibly discuss it on Monday next. I submit this is a matter on which the House of Commons should express an opinion. Otherwise you are going to take one of the most critical features of the whole of the Insurance Bill entirely out of the purview of Parliament.

Mr. C. E. PRICE

I should like to support the appeal made by the Noble Lord. In Edinburgh, where there is a very large medical school, I know very great interest is being taken in this question of the expenditure of money for this particular purpose at this moment. Considering the reduction in the death rate from tuberculosis in late years, many think it would be inadvisable to spend an enormous amount of money on these buildings. Edinburgh was the first city in which notification of tuberculosis was established, and I am sure the subject is one worthy of the consideration of the House. I therefore gladly support the appeal of the Noble Lord.

Mr. PETO

The point I want to make arises out of what has been said by the Noble Lord (Lord Balcarres). In 1896, when a sum was taken from the Old Sinking Fund for barracks, it was held by hon. Members opposite that it was a wrong thing to do because it was not a recurrent expenditure. We have now been told that this million and a-half for sanatoria is capital expenditure and that therefore it is legitimate to take it from the Old Sinking Fund. We were told there was to be great elasticity as to how this money for sanatoria was to be spent, that it was not necessarily to be spent on granite buildings of a permanent character, that it might be used for preventive measures and other things of that kind. I want to know if that is so. If we are not confined to spending it on permanent buildings I want to know how this million and a-half can be regarded as capital expenditure or a proper subject for which to take money from the Sinking Fund. Then the Chancellor of the Exchequer mentioned a million and a-half for development—that that also should be regarded as capital expenditure. I think there would not be a single Member of the House who would not agree that a great deal of the expenditure from the Development Fund should not be regarded as capital expenditure at all from a business point of view. Much of it would be that kind of expenditure which, in business practice, you would write off in three years. Therefore the only item that could be legitimately regarded as capital expenditure is the quarter of a million for East Africa, and as I am not familiar with the way in which that is to be spent I will make the Chancellor of the Exchequer a present of it. As regards the other three millions, I do not think any case at all has been made out for regarding that as capital expenditure. As the Chancellor of the Exchequer has now come into the House I may as well repeat what I have said, that there is no evidence that the money for sanatoria is going to be spent on permanent buildings, and if that is so there is no case for taking it out of the Sinking Fund as capital expenditure.

Mr. GRETTON

We have arrived at an important matter of principle. If there is one thing which this House is losing more than another it is control over expenditure. The Budget is drawn up with that very object—so that the House should have the least possible control over expenditure. A vast sum is now to be taken from the Sinking Fund in order to be devoted to certain purposes. One of these purposes is the erection of sanatoria, but what do we know of the details of that expenditure? The Government, I take it, are not going to hand this money over to the local authorities with their eyes shut. There must be some regulations, and the Government will be responsible for the way that money is allotted. Are we to hand over the entire control of this vast sum of money, and the whole of the great question of the prevention of consumption to the absolutely undivided control and discretion of the Government? That is entirely opposed to every constitutional principle, and I, for one, shall raise my voice in the strongest protest against it. I wish to allude to one point made by the Noble Lord on the Front Bench (Lord Balcarres). He proposed that we should have an undertaking from the Government that there should be a total Vote put down in order that this matter may be discussed in the old constitutional way by Members of this House. The Government have taken a course which is unusual in these cases, and that course is going to take everything out of the hands of the House of Commons. The only way we can have a proper and reasonable opportunity for discussion is by putting the total Vote down. I want to urge on the Government that they should give an undertaking that this will be done, and that the matter can be raised either on the Estimates of the year or on a Supplementary Estimate.

Mr. LLOYD GEORGE

I have to apologise to the House for making a second speech on the Resolution, but I understand a suggestion has been made by the Noble Lord opposite (Lord Balcarres) which I think is a reasonable one. The difficulty he finds is that there will be no opportunity of discussing the method of expenditure or the distribution of the money to be spent on sanatoria. First of all there is the method of discussing the Clause in the Bill when we come to it. We also discussed sanatoria at very considerable length on the Insurance Bill. A whole evening was devoted to the discussion of sanatoria, and the Debate did not come to an end until eight or nine o'clock. We also rearranged the "guillotine" in such a way that the second sanatoria Clause should come on first—that it should come on in another compartment so that there should be another discussion upon it. So the sanatoria part of the Bill was very thoroughly discussed. The question now raised by the Noble Lord is a very important one—that is, as to how the method of expenditure is to be debated in the future. It can be debated on the salary of the Minister who is responsible for the distribution. That is the only method provided by the House of Commons for discussing a matter of this kind. The distribution will be by the Local Government Board with the sanction of the Treasury. I take it it can be discussed on the Treasury Vote, on the Commissioners' Vote, or on the Local Government Board Vote—three separate opportunities of discussing the method of distribution.

Lord BALCARRES

Will the House of Commons be provided with an estimate of how it is proposed to spend that money? If so, it will be immaterial whether we discuss it on the Treasury Vote or the Local Government Board Vote. What we want to know is, will the technical, scientific methods be discussed—where the hospitals should be, and all the rest of it?

Mr. LLOYD GEORGE

It is not so much a question of the Estimate: it is rather a question of the method of distribution. There will be a mapping out with regard to sanatoria, and a planting of one here and one in another place. I have no doubt at all that my right hon. Friend the President of the Local Government Board will explain to the House of Commons, after full consideration, the method he proposes to adopt for the distribution of the money. He will adopt some policy after consultation. I think it would be premature just now to debate that, and I am sure that if my right hon. Friend were here he would not undertake to lay down any principle upon which he would distribute the money. It is a question which requires the most careful consideration that the Commissioners and the Local Government Board can give to it. It would be the worst thing in the world to ask the Government at this stage to commit itself, and I think the first thing that they will have to do is to consult medical experts in this matter.

Lord BALCARRES

The President of the Local Government Board said we might debate the matter next Monday.

Mr. LLOYD GEORGE

I am perfectly certain that my right hon. Friend did not invite the House of Commons to discuss something which he could not have possibly made up his own mind with regard to, and cannot until he has had full consultation with all his advisers, and with the Commissioners. A good deal will depend upon local effort. The idea laid down in the discussion was that the money was there very largely to encourage local effort. No one could have thought that the one and a half millions would cover the whole ground, and that all the sanatoria necessary could be provided for that amount. The hon. Member for Rutland (Mr. John Gretton) expressed apprehension that it will be withdrawn from the control of the House of Commons. But it can be discussed upon salaries upon three separate Votes at least.

The CHAIRMAN

I must really intervene. One of the rules of the Committee is that when a particular question is pertinent to a particular Vote, it cannot be discussed also on other votes. I have no doubt the matter can be discussed on one of the three, but not on all of the three.

Mr. LLOYD GEORGE

I am very glad to hear that; but it will be a consolation for the hon. Gentleman to know that he has an option, and can choose any one of three opportunities.

The CHAIRMAN

No, it will have to be decided which of the three is really responsible in the matter, and a Department or Minister will, of course, be responsible.

Mr. LLOYD GEORGE

Then the hon. Gentleman will be assured at any rate that on the particular Vote there will be full opportunity to discuss the matter, and, if the Opposition desire to discuss it, an opportunity is always afforded by putting down the particular Vote upon which the Debate naturally arises.

Mr. WATSON RUTHERFORD

I make no apology for saying a word or two upon this important matter. My hon. Friend has had no reply whatever to the question he has put three times. I presume that the right hon. Gentleman was unable to give it. I think we are driven to that conclusion. We have been told by the Chancellor of the Exchequer that sanatoria have already been discussed. The only thing I know about sanatoria is that it is a benefit. We have had sanatoria benefit banged into us from that side of the House until we are sick of hearing of sanatorium benefit. I am one of those persons who do not want any sanatorium benefit. I should be very sorry indeed to find myself in any danger of wanting it. But what we have not had from the right hon. Gentleman, and what I presume we are not going to get, and what it is the intention of the Government to prevent us getting, is this, we are not going to have provided estimates with details of how the money is going to be spent, placed before us in such a way as they would have to be placed before us if it was upon the Estimates. We object to being simply told that upon some appropriate occasion the matter will arise on the salary of some Minister whose salary no one wants to cut down. The only opportunity we shall have will be to criticise the management of the funds by that right hon. Gentleman. That will not give us an opportunity of eliciting the opinion of this House in Committee upon the exact proposals of the Government with regard to the expenditure of public money. That is what we demand, and we have been asking the Chancellor of the Exchequer to put down a token vote or to give us an assurance of some description that we shall have this privilege of discussing and of going into the merits of the expenditure of this public money, which at present we are being done out of. There is another thing we have been done out of, another privilege, and it is this, we shall be deprived by dealing with the matter in this way, of an opportunity of understanding and of being informed about surpluses. Suppose that this 1½ millions is not expended in sanatoria, suppose that it is not expended at all, suppose that there is something of it left over, then if it was in the Estimates in the proper manner we should see that amount again on the Consolidated Fund Bill and should be able to discuss the matter and have some account of the surplus. But we are not going to have any account of the surplus, and the only time we may hear about it will be in some belated report of the Public Accounts Committee. This is not the way to treat the House of Commons. It is all very fine for the right hon. Gentleman to stump the country and come to the House and bang the table about his sanatorium benefit. But sanatorium benefit is not the answer we want. We want to know what sanatorium benefit. I should like to know whether it is intended to erect granite buildings or mere temporary structures which, when thoroughly impregnated with tuberculosis, can be burnt. That is a very important matter, and I am going to be deprived of my opportunity of debating it. I think that the House of Commons is not being treated with honesty or with fairness, and I protest against this attempt to get sanatorium benefit or any other benefit in this illegitimate manner at this stage of the Session and at this hour of the morning,

by depriving the House of Commons for all time of any opportunity of discussing the manner in which this money is intended to be spent. I say it is dishonest finance, and I am not manufacturing the expression myself, and that it is dishonest finance which the present Liberal Government are repeating. It is no answer to say that you did it—that the party you are supporting did it. If it is dishonest, it is dishonest now. And it is all the more dishonest now, because they ought to know better. I have a great respect for the right hon. Gentleman the Member for Carnarvon Boroughs, but on this occasion I am ashamed of him. I for one will not allow this matter to pass; even if I had only one supporter I would challenge it in the Division Lobby.

Mr. JAMES HOPE

May I have an answer to my question? Why was not this Resolution proposed before the Bill was set up—at the same time as the Income Tax and other Resolutions?

Mr. LLOYD GEORGE

The position is this. All these Resolutions were Resolutions upon which the Bill was founded and without which it could not be produced. This is a Resolution that simply deals with one of the Clauses in Committee, and it is usual to take it just before you get into Committee.

Mr. PETO

Would the Chancellor of the Exchequer be good enough to let me know what is the answer to the point I endeavoured to put before him? The expenditure on sanatoria is left, as he says, entirely a matter to be settled in the future—the way it is to be spent, the sort of structures that are to be erected. How is it that he knows it will be a capital expenditure?

Question put.

The House divided: Ayes, 99; Noes, 58.

Division No. 435.] AYES. [1.15 a.m.
Acland, Francis Dyke Craig, Herbert J. (Tynemouth) Goldstone, Frank
Adamson, William Crawshay-Williams, Eliot Guest, Hon. Frederick E. (Dorset, E.)
Allen, A. A. (Dumbartonshire) Crumley, Patrick Gwynn, Stenhen Lucius (Galway)
Allen, Charles Peter (Stroud) Davies, Timothy (Lincs., Louth) Hackett, John
Barton, William Dawes, James Arthur Hancock, John George
Benn, W. W. (Tower Hamlets, St. Geo.) Denman, Hon. R. D. Harmsworth, Cecil (Luton, Beds.)
Bentham, G. J. Devlin, Joseph Havelock-Allan, Sir Henry
Boland, John Pius Doris, William Hayden, John Patrick
Booth, Frederick Handel Duncan, C. (Barrow-in-Furness) Henry, Sir Charles
Bowerman, C. W. Elibank, Rt. Hon. Master of Higham, John Sharp
Brunner, John F. L. Elverston, Sir Harold Howard, Hon. Geoffrey
Bryce, J. Annan Ffrench, Peter Hunter, William (Lanark, Govan)
Cawley, Harold T. (Heywood) Furness, Stephen John, Edward Thomas
Chapple, Dr. William Allen George, Rt. Hon. D. Lloyd Johnson, W.
Clough, William Gibson, Sir James Puckering Jones, William (Carnarvonshire)
Clynes, John R. Gill, A. H. Jones, W. S. Glyn- (T. H'mts, Stepney)
Condon, Thomas Joseph Gladstone, W. G. C. Keating, Matthew
Kelly, Edward Nolan, Joseph Scanlan, Thomas
King, Joseph Nugent, Sir Walter Richard Seely, Col. Rt. Hon. J. E. B.
Lambert, George (Devon, S. Molton) O'Connor. John (Kildare, N.) Simon, Sir John Allsebrook
Lardner, James Carrige Rushe O'Doherty, Philip Smith, Albert (Lancs., Clitheroe)
Levy, Sir Maurice O'Kelly, Edward P. (Wicklow, W.) Stanley, Albert (Staffs, N. W.)
Lewis, John Herbert O'Shee, James John Sutton, John E.
Lundon, Thomas O'Sullivan, Timothy Tennant, Harold John
Macdonald, J. R. (Leicester) Parker, James (Halifax) Toulmin, Sir George
Maclean, Donald Pearce, Robert (Staffs, Leek) Ure, Rt. Hon Alexander
Macnamara, Rt. Hon. Dr. T. J. Pointer, Joseph Ward, W. Dudley (Southampton)
McKenna, Rt. Hon. Reginald Price, C. E. (Edinburgh, Central) White, J. Dundas (Glas., Tradeston)
Marshall, Arthur Harold Raffan, Peter Wilson Wiles, Thomas
Meehan, Patrick A. (Queen's Co.) Reddy, Michael Wilson, W. T. (Westhoughton)
Montagu, Hon. E. S. Roberts, Charles H. (Lincoln) Wood, Rt. Hon. T. McKinnon (Glasgow)
Munro, Robert Robertson, John M. (Tyneside)
Nannetti, Joseph P. Robinson, Sidney TELLERS FOR THE AYES.—Mr. Illingworth and Mr. Gulland.
Neilson, Francis Samuel, Rt. Hon. H. L. (Cleveland)
NOES.
Archer-Shee, Major M. Dixon, Charles Harvey Pollock, Ernest Murray
Ashley, Wilfrid W. Denniss, E. R. B. Pryce-Jones, Colonel E.
Balcarres, Lord Gibbs, George Abraham Sanders, Robert Arfthur
Banner, John S. Harmood- Gilmour, Captain John Scott, Sir S. (Marylebone, W.)
Barlow, Montague (Salford, S.) Gordon, John (Londonderry, South) Staveley-Hill, Henry (Staffordshire)
Bathurst, Charles (Wilts, Wilton) Greene, Walter Raymond Stewart, Gershom
Beach, Hon. Michael Hugh Hicks Gretton, John Sykes, Mark (Hull, Central)
Benn, Ion Hamilton (Greenwich) Hamilton, Lord C. J. (Kensington) Talbot, Lord Edmund
Bennett-Goldney, Francis Hoare, Samuel John Gurney Touche, George Alexander
Bigland, Alfred Hope, James Fitzalan (Sheffield) Valentia, Viscount
Boyle, W. Lewis (Norfolk, Mid) Horne, Edgar (Surrey, Guildford) Ward, A. S. (Herts, Watford)
Bridgeman, William Clive Horner, Andrew Long White, Major G. D. (Lancs., Southport)
Carlile, Sir Edward Hildred Hunt, Rowland Williams, Col. R. (Dorset, W.)
Cassel, Felix Kyffin-Taylor, G. Willoughby, Major Hon. Claud
Cecil, Lord R. (Herts, Hitchin) Larmor, Sir J. Wolmer, Viscount
Chaloner, Col. R. G. W. Macmaster, Donald Wood, John (Stalybridge)
Cooper, Richard Ashmole M'Neill, Ronald (Kent, St. Augustine)
Courthope, George Loyd Mason, James F. (Windsor) TELLERS FOR THE NOES.—Sir Frederick Banbury and Mr. Watson
Craig, Captain James (Down, E.) Newman, John R. P.
Craig, Norman (Kent, Thanet) O'Neill, Hon. A. E. B. (Antrim, Mid) Rutherford.
Eyres-Monsell, Bolton M. Peto, Basil Edward

Question put, and agreed to.