HC Deb 13 August 1913 vol 56 cc2531-56

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the third time."


I do not propose, and I do not think it would be actually in accordance with the convenience of the House if I attempted to make any lengthy review of our financial situation on this occasion, or at this period of the Session, but I rise to record a protest against the general conduct of the financial business of the Government. The Chancellor of the Exchequer has said, on more than one occasion in the course of our recent Debates, that the House this year had unusual opportunities of discussing finance. I confess that I am wholly at a loss to know what he means thereby. He has not submitted to the House any calculation of the number of days occupied in such discussion. I have not attempted to make it out, and I cannot call to mind the exact number of days which on one occasion or another have been devoted to finance, but what I do think will be in the minds of all the House, and of the Chancellor of the Exchequer himself, is that the real opportunities for the House to consider, and if it desires to make amendments in our financial law, have not occurred until the very close of the Session. So late in the year have such opportunities occurred that the moment any differences have arisen in the House itself, even though they were not on ordinary party lines, and did not divide the House at all, one of the great financial measures had to be dropped, and the other has to go through without any attempt at any adequate or useful exami- nation of our national position. are accustomed under the present Government to the deferment of the Finance Bill of the year to the very latest stages of the Session. and this has often been prolonged into the autumn and the winter. This has meant not merely that we have taken the Third Reading of the Finance Bill, as we are doing to-day, in the month of August, but that we have dealt with it as late as December, or even, I think, in the early months of the next year. Ten years ago such a procedure on the part of the Government would have been regarded in all quarters of the House as an outrage, and by no one would it have been denounced more strongly than by the Gentlemen who now sit on that bench, and the party who support them. Yet that has not been due to any accident of their tenure of office, but it is their constant practice, and this year, when our legislative programme consists chiefly of twice-chewed meals, passed under the swiftest and severest application of the Closure that has even been known in this House, and when no new great contentious measure has occupied our time, the Government could not take the Committee stage of this and the other financial measure into which they divided their Budget until the last week but one of the Session.

4.0 P.M.

To complete the picture, I must remind the House that under the legislation carried by this Government, this House has now not merely a special control and interest in, but it has the undivided power over all moneys. This House deprived the other House of any voice in this legislation, and is now deprived itself of any effective power to make its feelings known or convert them into action. That is a grave constitutional innovation; that is a change so obviously for the convenience of any Government that a precedent of this kind once set is likely to be constantly appealed to to justify similar actions in the future, and the House, which then thought that it was asserting its own unquestioned right and unquestionable right over the whole realm of finance, now finds itself more restricted within the sphere of finance than it has ever been in her whole Parliamentary history. The right hon. Gentleman and the Government have never dealt frankly with the House on this question. They have never laid all their cards upon the table. They have let us see their hand little by little, but not a hint of all these things was given at the time the Parliament Act was passed. When, owing to the interposition of Mr. Bowles, the practice which the Government had abused, and grossly abused, of collecting revenue without legislative sanction, was checked, and the Chancellor of the Exchequer found himself in consequence forced to produce the Collection of Taxes Bill, not a hint was given, until we had parted with the control of that Bill, of the procedure which he must have already contemplated as that which he would adopt in the present Session. It was not until the House of Commons had parted with those Bills in succession that the Chancellor of the Exchequer thought it necessary to inform us that, as a consequence of what had happened, he proposed to divide what we have been accustomed, in my Parliamentary experience, to know as the Budget into two—to take in the Finance Bill only. the renewal of annual taxes or the introduction of new ones that might be, thought necessary, and to relegate to the Revenue Bill the general amendment of the law which alone gives Members in this House any opportunity of questioning or amending the general system of finance which prevails in this country. The House of Commons has been ridden in blindness, and now we see the result. These two Bills, which we were told were separated in order that we might have more ample opportunities for discussion, and in order that the Finance Bill itself might be dealt with early, are brought up in the Committee stage in the last week but one of the Session.

The one Bill is sacrificed, though the great bulk of Members in every quarter provisions, and because at this period of cause a little knot of Members in one quarter alone on the Government side below the Gangway object to some of its provisions, and because at this period of the Session the most insignificant minority, without the least shadow of popular support behind it, can hold up the whole business of the. House of Commons and destroy the Government's programme. When we come to the Finance Bill let us see what, is the opportunity the House has had of dealing with it. The Government waited so late before they themselves considered the problems with which they had to deal that they find themselves prevented by a well-known and a long-standing rule of the House from carrying out the Amendments which they had promised and which they were expecting to carry unless the Session is to be prolonged into another week or more. Under those circumstances, what is the position of the House of Commons? It is reduced in those matters to absolute impotence, at the very moment when it claimed sole and uncontrolled power. I think that is a serious situation. I am not one of those who have ever pretended to look with any liking or sympathy on the Parliament Act, and the whole procedure to which it has given birth. I am not distressed if the Government, by their own procedure make that Act ridiculous, and if, indeed, they make it so monstrous an abuse that many who were content to see it passed will be eager to see it repealed; but I do say that for the Government, whose existence in the country, and whose reputation were concerned in its establishment, to have so treated the House of Commons that Members cannot act, is to stultify themselves and to destroy their own legislation. I say no more on this subject. I promised that I would not be long, and though that is difficult when one rises to speak, I mean to keep that promise.

I think I said, also, that I would not enter into any lengthy survey of our financial position, and I do not mean to do so. I think it would be useless in a House constituted like this, with the knowledge that we are going to prorogue the day after to-morrow, and that is the only point in the whole Session probably that any of us will look back upon with any pleasure. It has been the dullest, the most uninteresting, and deadest Session that we have ever known. I do not believe that any Member will say otherwise. I think it would be useless to attempt a reasoned examination of our financial position, or of the monetary conditions which prevail in the country at the present moment, serious though they are, and much material as they give for anxious reflection. But in a few sentences I do desire to recall to the House the situation as I see it, and as I have already more than once presented it to their judgment. We have had a series of extraordinarily prosperous years—a prosperity so abundant that even acute industrial disturbances at home, of a kind more widespread and more serious than any hitherto seen, and acute disturbances in the field of foreign affairs, bringing anxiety, I do not say greater, but as great as any that we have known, have neither one nor the other been able seriously to check or disturb it. It is an amazing situation for which everyone of us—I am talking now as a citizen; I do not mean Members of this House—may be thankful. But it is not a condition of affairs upon the continuance of which anyone of us can build or count for the future. We are aware that there is already great stringency in the Money market, that there is felt in the City of London and elsewhere to be need for the husbanding of our monetary resources, and for a check to be placed on the enormous issues of new capital which we have had in recent years. And when you come to our domestic trade, though already acquired orders are keeping us busy, new orders are not, I think, coming in the volume to which we have been accustomed, and there are signs of tightness in the Money market, and general uncertainty and anxiety are causing everyone to draw in their horns. I do not want to prophesy the moment at which we may cease to ride on the crest of the wave, but we cannot hope to avoid the trough altogether.

It behoves the Government, charged with the management of the finance of the nation, not to live in good years as if bad years would never come, but in the time when revenue is abundant, when trade is booming, they should try to make some provision for the bad future that we all know must come in its turn. The Government, I regret to say, have made no such provision. Our taxes stand at a very high figure, our Sinking Fund has been reduced by, I think, £3,500,000 from what it was when they came into office; and whilst the National Debt has been reduced by a figure for which the Government often take credit and which I do not grudge them except—[An HON. MEMBER: "Hear, hear"]—I will be frank and qualify what I have said, for I think I should be contradicting myself if I left that statement alone. I would rather say that I congratulate the Government on their good fortune than that I can give them credit for any efforts they have made. They have made no efforts. They have not set any additional sum aside out of those good years. On the contrary, they have withdrawn a sum which was allocated in much more difficult and less prosperous years by their predecessors to the redemption of the debt, and turned it into the general revenue of the country. I congratulate them on their good fortune. Let them take all the credit they can get in any quarter for the results of that good fortune, but what is there to be set against it? Against it there is to be set annual charges which have passed out of the control of this House, which cannot be reduced by the House, which will grow even if the House takes no steps to increase them—annual charges which, capitalised, far exceed the amount of debt which they have reduced. Is that a procedure that the Government, looking back on the prosperity which they have enjoyed, and looking forward to the lean years which must come in their time or somebody else's, can congratulate themselves upon, not as party men, but as guardians for the time being of the national finance, the national credit and the stability of our whole industrial and commercial situation? For my part, I think that the House might well have devoted—as I had, indeed, hoped and arranged with Friends of mine—at least a day for serious debate of the financial situation as we see it to-day, and as it has been created alike by the financial measures, the social measures, and the Budget of the Government. It is idle to attempt a discussion of that kind two days before the Session closes. I can do no more than call the attention of the House, and the attention of those who follow these matters in the country—indeed, it scarcely needs any words of mine to call their attention to it—to the situation in which we stand, to the enormous liabilities which the Government have piled up, and to the anxious prospect which awaits us in the years which immediately follow.

Our taxes are high, many of them higher than we like to see, but there is no chance of taxation being reduced. Expenditure on the Navy must grow. The Chancellor of the Exchequer has been one of the most hopeful of those who believed that the state of Europe might permit us not merely to check but to reduce that expenditure. I do not doubt that he is as anxious to-day that that should be the the case as he was when he first entered office. So are we all, but I do not believe that he any longer thinks that is possible or believes that with a due regard to his duty to the country he, or any successor of his in that office, can within the years which we can usefully forecast count upon providing less for the Navy. Indeed, we must count upon having to provide more. If you turn to the Army, the hope that we had found a satis- factory, permanent, and economical Army scheme, if it were ever cherished by anyone, even by Lord Haldane himself, fades even more and more from our vision, and I do not believe that the Chancellor of the Exchequer believes for one moment that naval expenditure can be reduced if national defence is to be secured, or that he or his successors will not be obliged to find more money for national defence in that respect also. Then you come to those two enormous measures of social reform—the Old Age Pension Act and the National Insurance Act—which have already burdened our resources with an annual payment of £20,000,000 and which must in the future, as I have already said, by the mere growth of population and by their automatic working, apart from any efforts we may make to modify hostility, to obviate defects, or to relieve injustice, grow a still heavier charge in the future. The Chancellor of the Exchequer, in his Budget speech, boasted, as he and the Prime Minister have boasted before, of the relief that they have given on one or two taxes, and of the amount of debt which they have reduced, but, when you strike a balance over the whole of their financial administration. I say that they themselves have to face if they continue in office, and they leave to their successors if they go out of office, a heavier burden of responsibility and a greater financial anxiety than we have known in the lifetime of any Member of this House.


It is, as my right hon. Friend has said, rather in the nature of a sham fight at this time in August to discuss the financial arrangements for the year, and it is especially difficult to discuss the financial arrangements of the Chancellor of the Exchequer this year, because they do not depend upon facts and figures which we can ascertain and criticise, but upon guesswork and prophecy as to the future which nobody can foretell, and it would be mere waste of the time of the House for me to speculate whether the rosy visions of the Chancellor of the Exchequer for the future will come off or not. Personally, I venture to think, although he does not deserve it, that he may pull off his great gamble, and that the trade boom will continue long enough to allow him to meet his £6,000,000 deficit without resort to further taxation. After all, the trade boom still continues, and every sign as to the tightness of money, the lowness of securities, and the height of loans and acceptances in the Clearing 'Banks all point to the goodness of trade, though, of course, it is a matter for consideration whether this tightness of money, which no doubt has been caused by the goodness of trade, will not in the end pull down the goodness of trade. It is a question whether trade can continue to expand if monetary conditions are very stringent. I should like to remind the House of the very great pride the right hon. Gentleman took in his Budget speech as to the amount of debt he had reduced. He said:— By this time next year we shall have reduced the national indebtedness by a sum of £102,000,000. This is not a paper reduction; it is not an ingenious manipulation of figures. I think my right hon. Friend has shown very clearly that is exactly what it is. It is a very ingenious manipulation of figures and does not by any means show the real position of our accounts. Take, first of all, two items which my right hon. Friend mentioned—Old Age Pensions and the National Insurance Act. It is not my business now to say whether those Acts are good or bad, but the fact remains that they do represent charges in perpetuity, and, if you are going to strike an accurate national balance sheet, you must capitalise those two sums, and, if you do so, I think you will find that far from this Government having made a very large reduction of debt they have made somewhat of an addition. There is another liability which is never disclosed, and which, I think, ought to be mentioned in our national balance sheet, and that is the large deficit which there is on the Savings Bank deposits. Everybody knows that during the last fifteen years Consols have fallen about thirty points, and up to a few years ago the whole of the deposits in the Savings Bank were held in Consols, and to-day, I think, as much as £61,500,000 are so held. It is quite obvious that there must be a huge difference, I cannot tell how much, between the deposits in the Savings Bank and the selling value of the securities in which they are held. That is to say, if there were a run on the Savings Bank to-morrow the deposits would not be able to be paid by the sale of securities. Of course, I do not mean to insinuate for one moment that the Post Office Savings Bank is not solvent. So long as the British Empire is a going concern, of course it is solvent., but this difference does represent a very large liability which I think ought to be published and shown, and, if I might make a suggestion, I would ask the Chan- cellor of the Exchequer why the Government do a thing which no business in the world does and hold their own securities. Why, when the Treasury buys Consols for a Government Department, do they not cancel those Consols instead of holding them, and pay to the public Department, in this case the Savings Bank, the interest which is necessary on the deposits? That would be a sounder method of bookkeeping, and besides, with Consols at their present price, it would afford the Chancellor of the Exchequer a most excellent means of making an automatic reduction of debt.

If you really examine our liabilities you will find that this Government, perhaps not entirely through their fault, have very considerably added to them instead of reducing them. You must at the same time realise that they have reduced our annual power of redemption by £3,500,000 by their reduction of the New Sinking Fund. All the time this Government have been in office there has been wonderful trade prosperity, and we have lived right up to the top of our income without making any provision for the inevitable rainy day. I believe so great has been our commercial prosperity that people have not yet fully realised the great strain that is being put upon our resources, and I would beg the Chancellor of the Exchequer, to think for a moment whether by his very high Income Tax, and more especially, by his very high Death Duties, he is not defeating his own object and making it more difficult for those people who have got to pay the revenue of the future and have got to be responsible for the prosperity of the country and everybody in it, to carry on and expand their business and create further wealth. Last year, during the course of the Budget, I drew the attention of the Chancellor of the Exchequer to the abnormal height of the Exchequer balances. At that time they were about £12,000,000, while he had £8,100,000 Treasury Bills outstanding. Under the Finance Act of 1906, he had power to issue £6,000,000 more Treasury Bills before 30th June without coming to the House for their consent. It is quite obvious that with balances of £12,000,000, a great deal higher than they had ever been before, he could not require a further £6,000,000, at all events, for a considerable period of time, and yet he issued the whole £6,000,000 before 30th June, and that money remained on the balances till well on towards the end of September. I reckon that transaction cost the country about £50,000. I know that is a small sum when dealing with these immense figures, but I contend that money was simply wasted. The Chancellor of the Exchequer was so busy with his Home Rule Bill, with his Welsh Church Bill, and with Bills of that sort that lie had not time to come down to the House and get power to issue these Bills more nearly to the time that they would be wanted. The Chancellor of the Exchequer might explain it; perhaps he made a miscalculation and thought that the money might be wanted at once; but it. seems to me, if this House of Commons is the guardian of the national finances, that it is rather ridiculous £50,000 should go in that way without anybody asking any question about it, or any answer being given.

In his Budget speech of 1912, the Chancellor of the Exchequer showed a surplus of £5,000,000 odd, which of course ought to have gone entirely to the Old Sinking Fund. He explained to the House that. £1,500,000 of that surplus was not really represented by savings, but was due to underspending in the Naval Department, and he put it to the House that the money could not rightly be put to the Old Sinking Fund. The House allowed him to put £1,000,000 to his balance for the coming year to provide for the naval expenditure for which that money had been voted, and it also allowed him to put £500,000 from that surplus to his balance to provide for a loan to Uganda during the coming year. This year in his Budget speech he said that both these two items, the £1,000,000 for the Navy and the £500,000 for Uganda, had been met out of current revenue. Therefore, instead of showing at the end of the year a surplus of £200,000, he ought to have shown a balance of £1,500,000. He explained that he did not want to put all this money to the Old Sinking Fund, because it was wanted for the Navy. That is financially improper, but it is a very intelligible argument, and the House allowed him to spend the money on the Navy. But nothing has been said about the £500,000 for Uganda. What has happened to that? It did not appear on the surplus for this year; we are told it was met out of the revenue for the year before; therefore, I suppose that half a million must be on the right hon. Gentleman's balances to-day. Surely, if he has still got 'it on the balances, it ought to appear in the surplus of this year! Under present arrangements this half a million has passed absolutely out of the control of the House of Commons. The Chancellor of the Exchequer can bring it up at any moment to finance some scheme of his, and show his admirers how he can produce money out of thin air without having to impose extra taxation. I think the House ought to have some explanation of this transaction. At a time when this House, although it has sole control of finance, is not allowed to discuss financial arrangements with any adequacy, the right hon. Gentleman ought to be especially careful that all his financial proceedings are strictly constitutional and regular. But ever since he has been in office he has tried as much as he can to evade the control of the House of Commons. It is conduct such as this which has caused grave uneasiness as to the Chancellor of the Exchequer's policy amongst those who are intimately concerned in the finance of the country.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George) (who was very indistinctly heard)

The proceeding with regard to the £500,000 for Uganda has been explained to the House, when perhaps the hon. Gentleman was not present. It is rather hard on me that it should be suggested that the city does not approve of my finance simply because the hon. Gentleman is not here to know what is going on. The explanation was very simple, if the hon. Gentleman had only taken the trouble to look up the OFFICIAL REPORT before he made his peroration. I was rather struck by the hon. Gentleman's remark that he thought I should probably get my cash. That is rather remarkable. There seemed to be a note of regret, as if the hon. Gentleman was rather afraid that the forecast I made of the prospects of the year might come off. That is rather a change from the criticisms which were directed against the Budget at the time I made my Budget Statement. I have been very much struck by the speech of the right hon. Gentleman (Mr. Austen Chamberlain) in that respect. There were very severe criticisms when I made my Budget statement about it not being realised. It was said that I was gambling and so forth. I do not hear very much of that now.


I only prophesy once a year.


I think there is a very much better explanation than that. Some months have elapsed since then. The right hon. Gentleman is not going to back up the prophecy which he made in April when what has happened since shows that that prophecy is not likely to be realised. He has been examining the revenue returns, and everything that has happened up to the present rather indicates that I was justified in the prospects which I laid before Parliament as to the revenue of the year. So far my estimates have been completely justified. I am not going to say that there may not be a collapse. No Chancellor of the Exchequer would ever venture to say that in the course of twelve months something might not happen and the finance of the year be disturbed. But I cannot help noting the great difference between the criticisms directed against my forecast in April and the language used about it four months later, when we have had at least some experience of how the revenue is coming in. With regard to the issue of Exchequer Bills, there is a good deal to be said for extending the period. The difficulty is that we are limited in the issue of those Bills, and, therefore, we have to renew them. Otherwise we might not be in a position, when we needed them in June, to raise the cash in March. But there is a good deal to be said for extending the period until September, and that is a point we are considering. But I should not like to say anything definite on that without a great deal more advice than I have at present. It is a very old practice. Sometimes we lose money by it, sometimes we make money. It happens this year we had all these heavy balances; we had to renew these Bills when we had plenty of money in the Exchequer, and, therefore, we lost money. Next year it might be the other way about, and we might save money.

Now I come to the speech in which the right hon. Gentleman opened the discussion. With regard to what he said about the late period of the Session at which this discussion comes on, I do not think his criticism was altogether fair. There are two reasons why the finance of the year has been thrown back to the month of August, and we are not altogether responsible for either. The first is the Gibson Bowles decision, which we had to set right. The right hon. Gentleman himself, if he had been Chancellor of the Exchequer, would have had to do exactly the same. His Bill might have taken a different form, but he would have had instantly to set aside everything else in order to legalise the collection of Income Tax for a certain period. We occupied about a fortnight of Parliamentary time in regularising what had been the practice of Parliament for at least 100 years, and, as far as Income Tax is concerned, for sixty or seventy years. That fortnight might very well have been occupied in introducing the Finance Bill and pressing it through Parliament, but during the whole of that time we were at work upon financial matters. The discussions were not confined to technical considerations, but constitutional questions were raised, and the Debates were very wide and far-reaching in many of the considerations that came before Parliament. After that we had a discussion of six or seven days upon finance. I am not sure that I have seen Parliament devote itself so exclusively to the consideration of purely financial questions as it did during that period. There were some subsidiary matters raised, but on at least three or four of those days general questions of finance were ranged over, and I think Parliament discussed them with a greater freedom from party considerations than I have ever seen before. There was a real attempt to face the financial situation. It is the first time in my recollection that Parliament has discussed financial questions in that spirit, and I should have thought that this year was of all years the one when there was least reason to complain from the point of view of the House of Commons being able seriously to consider the financial situation. No one would be better pleased than the Chancellor of the Exchequer if the House of Commons were always to take that line.

The right hon. Gentleman knows how difficult it. is to resist claims for expenditure. Every Chancellor of the Exchequer has perhaps half a dozen claims, all with merits, and all with very* powerful influences supporting them. I had one yesterday. I received an influential deputation who wanted £300,000 or £400,000 for a most meritorious object. If it were purely a question of merit it would be difficult to resist the demand. Every day you have demands of that kind. The reason why Chancellors of the Exchequer do not resist demands which they certainly would resist if they considered only the resources at their disposal, is that there is no support in the House of Commons, or in public opinion, for resisting those demands if they have any merits at all. The whole pressure is the other way. I think the hon. Baronet (Sir F. Banbury) is about the only Member who ever votes on these questions, I will not say without regard to the merits, but with a single eye to the financial position. That is the difficulty of the Chancellor of the Exchequer. The nation curses taxes. If you impose a tax, the parties who have to pay it complain. They are very angry with the Government, and especially with the particular Member who takes a leading part in imposing the tax. But you never get any consideration about expenditure. Until the country realises that expenditure and taxes mean the same thing, you will never get economy.


Did the right hon. Gentleman protest when he was on this side of the House?


We always do it when the other party is in power with, of course, the exception of the hon. Baronet. But all this occurs because the country has firmly fixed in its mind the idea that expenditure and taxation mean exactly the same thing. They do not. There is great pressure for expenditure from every section of the community. The right hon. Gentleman examined the expenditure of the country. He said, "Look at the Navy." Can you anticipate any deduction of expenditure of the Navy? I wish I could. Can you anticipate any reduction of expenditure on the Army? I do not think so. The right hon. Gentleman went on to say, "Look at old age pensions and insurance." Does he anticipate any reduction there




There you are. That is what I mean.


I always said that there would be a burden on the Exchequer in respect of insurance.


All I want to point out was the increase of expenditure. I saw the right. hon. Gentleman was talking without notes and extemporarily. He was not making a party point, but simply calling attention to the very alarming growth of expenditure in this country. I was very glad to hear it from him. Take all these varied items. Who is there who will take the responsibility of cutting down any of them? I do not mean what individual, but what section of the House of Commons, or certainly what party? Parties are afraid to stand up when they are in power to limit the expenditure of money. Take the matter of old age pensions. Would you reduce them? I am merely putting this for the purpose of illustration. Who would cut down the expenditure on the Navy? Parties are afraid to stand up, because they are afraid of their action being misunderstood. They are afraid of being dubbed anti-patriots and Little Englanders, when they are genuinely alarmed about the growth of expenditure on armaments. The same thing applies to the Army. The Press are really, on the whole, hounding us on to expenditure there. Certainly most of the newspapers of the country have bad articles which encouraged expenditure in that direction. It is no use blaming the Chancellor of the Exchequer or the Government. Public opinion, for the moment, is in all directions in favour of spending money on every conceivable object. It has not devoted its thought—it has not been sufficiently alarmed to do so—towards economy and the reduction of expenditure. The only reduction of expenditure I ever heard of was a reduction which if effected would result in a decimal of a penny off the Income Tax. These are little things; of little account when we have regard to the expenditure in all the other great matters. In great matters nobody bas set his heart on economy in any direction. Perhaps I should not say anybody, but no great body of opinion. Opinion is perfectly apathetic on the question of expenditure. Hon. Members wish the Government to spend upon various items, doubtless meritorious; everybody wants money spent upon the object that he has an interest in. If you want cheap economy you must put the merits of the case to one side.


Hear, hear!


Yes, that is the one thing the country have not done up till the present. I am genuinely alarmed about the expenditure on armaments, but I am entitled to say, I think, to my hon. Friend behind me (Sir W. Byles), that I cannot see in any direction that there is the slightest prospect of reduction.


Why not?


My hon. Friend says "Why not" The prospect is all the other way. It is because every country in the world for the moment is somehow or other, I will not say bound to expenditure, but it is being lured on to expenditure—


By us.


It is not for me to apportion the blame. I do not know that we need blame ourselves or blame others, any more than they should blame us. There is no great public opinion in any great country in the world that somehow or other has the courage to stand up and say to the people responsible for the expenditure that it has got to stop. I believe it will end in great disaster—I will not say to this country—it may do so. The protest will not come about the expenditure. The protest will come about the consequences of the expenditure. I do not believe that you will ever get in any great country in Europe any revolution because of what the Government are spending on armaments. But the inevitable consequences of the expenditure is that a state of things will be produced that will goad the people into a revolutionary protest. Enormous expenditure is taking place on the Continent in a time of profound peace, so far as most of the countries are concerned, in extending armaments. One country spends money. The next country says, "Oh, very well, we have got to spend because our neighbours are doing it." The first country replies to that, "You notice what our neighbours are doing, and we shall have to spend still more." I have got here before me a most interesting document which I should like to circulate if it were possible. It deals with the new German Tax Laws. It is very interesting to those who want to study what a real Increment Tax means and what a real Property Tax means. They are raising huge sums of money in Germany, and I think they are going to do the same in France.

Whoever is responsible, that is what is happening in the countries, and I do not think until there is a complete understanding amongst the countries, and complete co-operation between them to arrest it, that you can stop it. I do not see bow it is to be stopped. One country dare not stop it. I would never assent to the doctrine that one country can stop it to the point of danger. It cannot. It would be much too perilous a thing to do, because once you stop it to the point of danger and something happens, disaster is inevitable, We cannot run the risk. I am not at all sure but that international co-operation somehow might not do something, especially with the events of last year fresh in the minds of the people as to what a horrible thing war is, and how very ruinous it is to the commercial, industrial, and the social life of the countries which have been subject to its ravages. Until that is done there is nothing to confront us but an increase of expenditure, and increased expenditure means increased taxation. It is no use going to Governments and saying, "Here you are destroying capital." It is not the Governments that do it at all. It is this sort of mad humour which is eating out their very vitals. The situation has a temperature in which the people cannot judge the situation rationally. Take the temperature at one moment; it is high. Take it at another moment; it is low. It is never normal. People who are subject to this sort of disease, which is coursing through their blood, are not healthy, and they cannot judge the international situation healthily. They cannot judge it like sensible, calm, cool people should do. The result is that wars, suspicions, and so on are generated, and eventually the whole thing may end in a terrible disaster.

Few people realise how very near we have been to it within the last twelve months. I agree with the right hon. Gentleman that the minds of people are concentrated on armaments and weapons of destruction, and this does involve a frame of mind such as I have indicated. The right hon. Gentleman went on to speak about the expenditure upon social reform. No one has been more responsible for the education of public opinion on these questions than the distinguished relative of the right hon. Gentleman. Public opinion has been created. No Government can stop it. If we left this place and the right hon. Gentleman and his Friends came here they would inevitably have to carry out, I will not say our policy, but a policy started long before, which comes from the needs of the people, from the greater education of the people, and on account of the national discontent with the conditions under which they live. You cannot educate the people and at the same time ask them to live under the conditions which they lived under in the earlier time; which they allowed when they were thoroughly 'uneducated. So far as social reform is concerned, I do not agree that whoever sits here will not have to spend money—and more money. They will have to spend more money upon housing and upon those reforms which will improve the conditions of the people and redeem them from the state in which millions live now and which is a shame to a great and wealthy country like this. I regard expenditure on armaments as not merely waste, but as a thing which in itself paralyses the very forces that create wealth. There is nothing that has done more to create money stringency and fears, and what the right hon. Gentleman pointed out, the arrest of new orders. It is not merely the war in the Near East. There has been a feverish activity in expenditure upon armaments of France, and Germany and Russia. There is no doubt at all about it. It has terrified for the moment the sources of activity. That is exactly what happened six months ago so far as orders are concerned. It chilled the heart of trade for the time being.

5.0. P.M

You do not put social reform in the same category. The right hon. Gentleman talks about striking a balance, but he really does not strike a balance. When you talk about expenditure on armaments, you are not striking a balance when you regard it as an asset, you are not striking a balance when you regard it as expenditure. You have got to do something more than that. You have got to remember that for every additional pound spent on armaments you are destroying the credit and confidence which creates activity and energy and wealth in trade and commerce. When you come to social refrom, you improve the conditions of the people, you improve the conditions under which the people live you improve their health and their efficiency, purely as machines for the production of wealth. They are better men. There is no doubt that one reason why the British workman is the better for the money which you pay him when you pay him more than the foreigner, who lives at a lower rate, and under inferior conditions, is that you make him more efficient as an industrial machine. We are not striking a balance by saying that we are spending £20,000,000 upon insurance and old age pensions, because we have got to look at the better side of the ledger. The other side of the ledger is worth a good deal more than £20,000,000 a year. You may say it is not worth £20,000,000 a year to-day, but it will certainly be worth a good deal more than that in another ten, fifteen, or twenty years, exactly as the great sanitary laws of Mr. Disraeli and others have added enormously to the efficiency and health of this country. The same thing applies to other kinds of social reform, which improves the health and adds to the strength of the people. Therefore I do not look upon expenditure on social reform in the same light, nor do I put it in the same category as money squandered, not only in this country, but in the other countries of the world, upon these great and terrible armaments. You have got the ingenuity of some of the ablest men of the world applied day and night to the problem as to how they will devise something not merely more destructive, but more expensive, and, therefore, there is no limit to the expenditure, and I see nothing in the outlook before this country, or in the outlook of the world, except increased taxation until the nations cry "stop." I think now I have dealt with all the points the right hon. Gentleman has put before the House except one. He complained that the Parliament Act was responsible to a very large extent for the congestion of business. It is not the Parliament Act which is responsible; it is the conditions which make the Parliament Act necessary. The right hon. Gentleman, I will not say lectured the House, but he did lecture the Government upon the state of their business; but he must remember when he was Chancellor of the Exchequer he was Member of a Government that had absolute command. They made their arrangements for the Session; they decided what laws they should pass.


But you upset that.


I did my best to upset it. Had I been born a peer I should have been infinitely more powerful than a mere Member chosen by thousands of electors in this country. A peer coming from any part of the country at that time counted for much more than a representative of the people; but that is by the way. What I wanted to point out is that the right hon. Gentleman was Member of a Government that had most complete command of its business. The Government had only to accommodate the physical needs of their supporters, and to meet the limits, I will not say of their gullibility, but they had simply to gauge what they would swallow, and how much they would stand. All they had to consider was whether it was possible to get through a long or a short programme. The moment their legislation passed out of the House of Commons every sort of anxiety was off their minds, and nothing that happened anywhere else, dislocated their programme for the next year. They knew when they met in the autumn to prepare their programme for the following year, exactly what they wanted. There was nothing that happened elsewhere which had to be taken into account at all. It is all very well for those who have been Members of a Government of that kind to come and lecture Governments who cannot so arrange their business. We sit long and late, and pass Bills; but they are sent back to us once, twice until the third time. And, therefore, when they are thrown out, we have got to arrange our programme in reference to conditions and needs which the right hon. Gentleman and his colleagues were never subjected to. It is all very well to criticise us and say, "You are not arranging your programme for the Session as beautifully as you might." If we had as complacent a House of Lords, as the right hon. Gentleman and his Government had, we would not be here now in the month of August passing our Finance Bill.

The speech which the right hon. Gentleman delivered is one he ought to deliver in the House of Lords, although I hope it will be a long time before he goes there, and all my Friends behind me are of the same opinion. Still, if he could get someone who would deliver that speech in the House of Lords, I should be exceedingly grateful to him, and if it has the effect it ought to have, then I promise him that next year the Finance Bill will get through as early as any Finance Bill introduced by the right hon. Gentleman opposite or any of his colleagues. Now that is a fair bargain, and I make him that offer. I agree with him that the Parliament Act is responsible, but it is the only way we can get legislation through. I do not say it is a perfect machine; I should like to see it very much improved, and it will be improved, and when it is improved the right hon. Gentleman will have no reason to complain of a Radical Government, because they put their Finance Bill off till late in the year. I hope next year to introduce the Revenue Bill and the Finance Bill, and to get discussion on them early in the year. We have got to get our legislation through, otherwise Liberal Governments would become impossible, and I do not think the right hon. Gentleman in his heart would wish to see a condition of things in which it would be only possible for one party to be dominant in the State. Of course, he knows too much about his own party for that. Therefore, I am very glad the right hon. Gentleman has taken the line he has with regard to the criticism on expenditure, and I hope he will take into account the representations I have made.


We heard a very interesting, but a very unsatisfying, speech about expenditure, and specially expenditure upon armaments. I had not the slightest idea of taking any part in this Debate, but seeing that the right hon. Gentleman has gone so far as to say no one objects to this expenditure, I think it is my duty to get up and say, "I object to it, at all events." He says nobody dares challenge the expenditure on armaments, nobody dare face the danger that might arise, nobody could begin to reduce national expenditure upon munitions of war unless all began together. I regard that as a counsel of despair. It is bitterly disappointing to me especially that a Government which came into power full of professions for reducing expenditure, and especially expenditure on armaments, should not only be unable to make any reduction at all in accordance with the promises which got them their positions and their seats, but that they should actually have increased the expenditure on armaments every year, and gone on increasing it, until those of us who do not believe in it are reduced to despair, and not only that, but that my right hon. Friend the Chancellor of the Exchequer himself should regard any attempt to deal with this terrible national problem as hopeless and useless. He comes down here and tells us this is leading to national disaster. The right hon. Gentleman the Foreign Secretary warned us two or three years ago, in solemn and impressive tones, that if we went on a year or two longer with this expenditure we should be reduced to national bankruptcy, and that the tendency of such a policy was to sub-merge civilisation. Only yesterday another Member of the Cabinet the President of the Local Government Board, addressing the Medical Congress, concluded with some observations on this subject. We are told it is madness, and so it is madness, but we are told so long as other people do it we must do it. I say it is because we do it other people do it. That a Government of such power as ours, that a nation so prominent as ours, should say, "This is all folly, but it is perfectly impossible to stop it. We must go on being fools and being mad; we know it will lead to disaster, but we must go on," is deplorable. "It is not only waste," says my right hon. Friend, "but it is paralysis." What an extraordinary position to take up! We are wasting national money; we are paralysing trade. We know it is folly; we know it is madness, but we can do nothing whatever to stop it.

We want money for social reform and for other things. The Treasury is supposed to be very hard in its dealings with those Ministers and those organisations of the country, and in allowing expenditure on various useful directions, but the right hon. Gentleman the First Lord of the Admiralty gets everything he wants. The great spendthrift of the Government has only to ask and to receive. I am speaking quite spontaneously, but from the very bottom of my heart, and with the deepest conviction. I would very much like to deal with this question more fully. One other aspect of it I will only deal with now. The right hon. Gentleman said no one cares, no one objects, but I say there is a growing feeling in the country against it. You have only got to read the newspapers, and you will find how everybody is protesting against it. I remember the time when, standing on a public platform, one was almost afraid to hint at such a thing as reduction of naval expenditure. I hope I was not afraid to do it, but what I mean is that one was apprehensive of a wide dissent from one's views. Now it is very different. You have only to say, "I am for reduced expenditure upon the Navy," and you will get a cheer, and a big cheer, and you will find men in every constituency who are nearly despairing for this Government because they will not attack this question after all the Debates we have had here, and after all we read about the Anglo-German relations, and so on. There are organisations going on in Germany and in this country to promote a state of better things, and there have been important utterances from German statesmen in the direction of grasping England by the hand, and thereby bringing about a reduction of this mutually menacing expenditure. Does it all mean nothing? If this can only be done unitedly, and if it is impossible for this Government to act by itself, then why do we not try and act unitedly? What is the Concert of Europe for?

Only yesterday we had an important declaration from the Foreign Secretary as to the way in which the Concert had been able to keep together and attain some of the objects it had in view. Why cannot the Concert of Europe address itself to this subject, and what is it for if it cannot put an end to what every hon. Member of this House avows to be mad folly, paralysis and waste? The position is an impossible one. I have been amazed to hear Ministers, and last of all the Minister who has just addressed the House, acknowledge themselves converts to that hopeless and impossible position. We have now cordial and friendly relations with France, and it would never occur to the Government of this country to arm against France. We are on friendly terms with America, and we do not want to arm against America, and why cannot we have the same friendly relations with Germany That is as possible to any Government that wishes to address itself to that question as any other policy, and I still hope that some Minister will arise to take away this stain from the Liberal Government of this country. I believe that by the operation of the Concert of Europe, and by a real determination on the part of the Government, a beginning might be made in the direction of getting rid of this huge, menacing, destructive instrument which keeps us from being on cordial terms and destroys the friendly feelings which ought to exist between nations. Every new ship we build against one another is a new menace and a new allegation of emnity instead of friendship. As somebody once said quite truly in regard to this matter, only one ship is wanted, and that is friendship.


I feel it is my duty, in response to this sort of challenge thrown out by the Chancellor of the Exchequer, to say that there are a great many more hon. Members than he thinks who feel very deeply and are ready to speak very strongly against our continually increasing expenditure on armaments. I am one of them, and I have been ready to address the House and the Committee on more than one occasion on this subject. I believe with my hon. Friend the Member for Salford (Sir W. Byles) who has spoken spontaneously but very truly and sincerely, that there is a very large number of people, and an increasing number, who are opposed to our increasing naval and military expenditure. One fact which leads me to think we are right is that we are taking our stand upon the principles, assertions and promises of Ministers themselves. I wonder whether there are any hon. Members present who remember the Debate of the 15th March, 1906. On that occasion one of the present occupants of the Treasury Bench moved to reduce the Vote for the Army by over £1,000,000, and he was supported in the Lobby by several hon. Members who are now colleagues of the Chancellor of the Exchequer, in fact, the two hon. Members who told in the Division against the Government, and in favour of the Amendment condemning military expenditure, are now both sitting on the Treasury Bench. Those very Ministers who come forward year after year asking for increased expenditure and increased Estimates for armaments used words like these:— Exaggerated Estimates and bloated establishments. They spoke like that seven years ago, and they are now forgetting the principles upon which they have established their reputation in this House. I ask them to turn back to their earlier records and better principles, and have the courage now which they had then to protest against this ever-increasing military expenditure. I feel it my duty to call attention to the words which the Chancellor of the Exchequer himself used only two years ago. Speaking on the 16th May, 1911, in his Budget Statement, the Chancellor of the Exchequer used these words:— Naval expenditure is up this year by £1,000000, and that represents a total increase in three years of £12,200,000. This expenditure has now reached the gigantic figure of£44,000,000. When the Unionist Government left office in 1892 the naval expenditure was £14,750,000, and in the course of twenty years it has gone up from £14,000,000 to £44,000,000, but I hope and believe that the climax has now been reached. Very shortly after that the First Lord of the Admiralty used these words:— I think the Prime Minister and the Chancellor of the Exchequer have already indicated that we have reached the climax in our naval expenditure, and next year we may look forward to a substantial reduction to be followed in succeeding years by still greater reductions. Those words were used by the present First Lord of the Admiralty, and he makes no excuse now when he comes down here and asks for an increase in the Navy Estimates. My own view of the matter is that we require less money now, because we are certainly on better terms with all the nations of Europe than we were then, and undoubtedly we are on better terms with our great competitor, the hegemony of Europe, I mean Germany. Why we should go on increasing our expenditure on armaments in view of the improved political outlook I do not know. I wish to allude in this connection to what I believe is one of the most serious and menacing aspects of our naval and military expenditure at the present time, and that is the way in which the Government is falling into the hands of companies, rings, and combines. Some few years ago we built far more than half of our great ships of war in our own yards, and the Government knew perfectly well then that they were getting value for their money. They concluded that this process could be performed more cheaply in private yards, but are we getting value for our money? Under the new system more than two-thirds of our great ships are being built in private yards, and we do not know whether we are getting value for our money.


I would like to ask you, Mr. Speaker, whether this review of the expenditure of the Navy by contract or in Government yards is really pertinent to a discussion upon the Finance Bill, which only raises the money, and I would like to ask whether it would not be better to bring up that question on the Appropriation Bill?


The Chancellor of the Exchequer, in his speech, seemed rather to open up that topic, and therefore I did not feel it was my duty to prevent the hon. Member from taking it up.


Yes, Mr. Speaker, that was just my feeling. The challenge was thrown out, and it was only right that it should be taken up if only by such an humble Member as myself. I was trying to put it that our present system means that we do not get value for our money in our naval expenditure, and that we are throwing millions away on private companies which are making huge profits. I wish to call attention to the way in which members of our Civil Service who have held high positions in the War Office and in the Admiralty have accepted positions in connection with our great armament firms. I hold in my hand a list of gentlemen who are no doubt men of high integrity and honour, and I have nothing whatever to say against them, but I urge that when a man who has been, for example, the director of Ordnance in the War Office, or has been a director of naval intelligence in the Admiralty is pensioned off, the Government ought not to allow those gentlemen to take directorships in armament firms.


I do not see any relevance between the remarks the hon. Member is making and the Bill now before the House. What he has just stated is a criticism upon the Department of the Army and the Navy, and that would be more relevant to the discussion to-morrow.


It seems to me that we are throwing our money into the hands of men who do not give us value for it. I hope I shall be in order in approaching this question from another point of view. The building of our warships is now thrown into the hands of great firms who form rings, and we do not know—


That, again, is a question of naval administration, and the Navy Votes will be in the Appropriation Bill to-morrow


Then I will defer the rest of my speech until to-morrow.

Question, "That the Bill be now read the third time," put, and agreed to.

Bill read the third time, and passed.