GOVERNMENT WAR OBLIGATIONS BILL. (Hansard, 24 July 1918)

§ Mr. BALDWIN (Joint Financial Secretary to the Treasury)
I beg to move, "That the Bill be now read a second time."
It will be within the memory of the House that Bills of this nature were passed in 1914, 1915, and 1916, and in each case they contained an undertaking that certain liabilities which had been incurred should be secured for the future. In the first Section of the first Clause of this Bill we continue the guarantee given in the three preceding Acts. With regard to the amount of the guarantee, I may point out that in the early part of the War we guaranteed to the holders of 1848 bills—discounters and acceptors—an amount which totalled up originally to a liability of something like £150,000,000. The House will be interested to hear today that that amount has been reduced to under £30,000,000, and there is no further charge now, because there has been no further obligation incurred since the year 1915, and whatever comes in now comes in in the nature of repayment. There was also an amount guaranteed in connection with bills of exchange drawn by traders having foreign debts, and amounting to something over £500,000. Only £180,000 of that is now outstanding. The money is being collected slowly, and in the event of any sum out of the total being irrecoverable, the liability of the State is limited to 75 per cent., so that if nothing more comes in under that guarantee the total liability of the State will not exceed £135,000. Beyond that, there were insurances given to shipping cargoes, and that, of course, is a figure which cannot be made public at present for obvious reasons. The next item, which is a continuing item, is money advanced in connection with the food supply of this country. That money, of course, has to be advanced regularly in large sums, but as it is advanced other sums come back. The policy of the Government throughout has been to try and control prices, with the object that the ultimate loss to the State on this account shall be at least negligible. There are other certain obligations impossible to estimate, but of a considerably less amount than those to which I have hitherto referred. There are also payments that have been or may be made for plant in connection with the production of munitions. In 1915 we incurred obligations for the relief of and compensation to fishermen and sailors of the mercantile marine, and in connection with insurances for these two classes of the community. Again, it is not possible at present to give any figure connected with that expenditure, because it would mean giving valuable information to the enemy as to the losses we have sustained by submarine warfare. But I am quite confident that whatever charge there may be on the Exchequer for purposes of that kind, it will be borne gladly both by the House and the country.
The only other additional obligations incurred in the Bill of that year were expenses connected with the restriction of supplies to the enemy, and the expenses incurred in connection with foreign 1849 exchanges under the Treasury scheme for the deposit of securities. In 1916 there was a fresh obligation in the form of a guarantee for a Bank loan for £123,000 to Scarborough in connection with the bombardment, and a guarantee of £50,000 for ten years to the British-Italian Corporation, the money to be repayable by that corporation. That matter was debated at length in the year 1916 in this House. The Bill this year merely continues in force, the first Section of the first Clause of each of the preceding Acts, with a continuation, so far as is necessary, of the obligations to which I have referred. We have only one new obligation this year, and that, I am glad to think, will not involve any charge on the Exchequer. It is contained in the second Section, and it is a guarantee to indemnify the Portuguese Government for any claim that may arise on British-owned cargoes in interned enemy vessels, whether by shipowners, captains, or third parties. In each case we are secured by a corresponding indemnity given to us by the cargo owners, which indemnity in its turn is guaranteed by a British bank of substantial standing. I think this brief résume of the provisions of the Bill will show the House the nature and extent of the obligations contained in it, and I trust hon. Members will agree that the progress made in the liquidation of some of the earlier obligations incurred at the beginning of the War is satisfactory. It will also be a source of satisfaction, I think, that the only obligation we have incurred this year is one that will throw no ultimate loss on the Exchequer. I am reminded of one guarantee I have omitted, and that is the guarantee in connection with the scheme of flax pro-Suction in Ireland. It is limited to £600,000, and will only be called upon in case of need. It concerns an article which is absolutely necessary for the prosecution of the War, and, incidentally, we all of us may hope that the cultivation of the article will bring some prosperity to Ireland.

§ Sir W. ESSEX
I should like to ask a question with regard to the taking over by the Government of the whole of the corn supply of the country, and with reference to their dealing with it at a profit. As to the monopoly established by the Government in this and other matters, a question arises which I think the House has not taken sufficient notice of up to the present. Certain articles are being dealt with 1850 wholesale by the Government, and the whole supply is being taken over. Army wants are supplied therefrom, and the balance is handed over for civilian uses. The price to civilians is controlled primarily by the Government. What I want to get at is whether the net profits are handed over, as has been the immemorial custom of this country, to the Exchequer, or whether the various Departments dealing with these monopolised articles are allowed to dissipate for the purpose of paying their own working expenses certain portions of the profits so accruing by the prices being fixed by the Government, and that only the balance, if any at all, is handed back to the Exchequer? My contention is that the proper method in accordance with precedent would be that the total difference between the cost to the Government—that is, the net cost irrespective of working cost, departmental charges, or what not—should be on the debit side, and the Exchequer should receive all that accrues between that and the price the public pay, and any expenses arising from distribution or other charges, departmental or otherwise, should be separate charges ascertainable by this House, and we should know how we stand and where the money is going.
There is a very deep-rooted conviction that the making of these gigantic profits by Government Departments is having a serious effect in this way: It is said that it is making the Departments accumulating the profits careless in their distribution, and enabling them to be slovenly in their methods, whereas if the figures were clearly disclosed, their genesis and exodus alike set out in clear and distinct form, we should find in the result the public would have every reason to be satisfied. The public does not mind some margin of profit, but they want to know that those profits are not being dissipated by clumsy departmental handling or other means. Whatever price a civilian pays for these articles controlled by the Government they have to bear to other succeeding persons through whose hands in the course of trade or manufacture they pass additional profit, so that there arises by the time the goods or material gets to the consumer a steadily accruing profit upon profit, and the whole arises from an undisclosed difference between the original cost and the final charge. I did not know that this question was arising to-day and I stated my case baldly, but before the discussion closes, as 1851 I have addressed questions on this matter to the Under-Secretary for War, I hope the right hon. Gentleman may give the House some very explicit and clear guidance as to the policy of the Government with regard to these gigantic undertakings, which are making it to-day the greatest trading corporation in the whole world.

§ Mr. WATT
I wish to ask a question of the Minister in charge of this Bill before he replies to the discussion. Sub-section (2) of Clause 1 extends the Schedule of Government war obligations, and it provides that obligations incurred in connection with the present War in respect of undertakings given to any foreign State for the purpose of obtaining the release of cargoes on board enemy-vessels interned in the harbours of that State. I would like to know if that applies to the past or to the future?

§ Mr. BALDWIN
I explained that point in my speech.

§ Mr. WATT
I am sorry I did not follow this explanation, but that being so, I need not proceed further with my objection.

§ Mr. D. MASON
I would like the right hon. Gentleman in his reply to make some reference to foreign exchange. Does he propose to do so or does he think it is not in the public interest?