ECONOMY (MISCELLANEOUS PROVISIONS) BILL.

HC Deb 17 March 1926 vol 193 cc457-522

Order read for resuming Adjourned Debate on Amendment to Question [16th, March], "That the Bill be now read a Second time."

Which Amendment was: To leave out the word "now," and, at the end of the Question, to add the words, "upon this day six months."—[Mr. Snowden.]

Question again proposed. "That the word 'now' stand part of the Question."

Captain CAZALET

It is with great diffidence that I rise to offer a few observations on the Bill that is before the House to-day. Just as a hungry man welcomes any crumb that falls to his lot, without being too particular or inquisitive as to its quality, so I think this House and this country will welcome the crumbs of economy which are offered in this Bill by the Chancellor of the Exchequer. But I do not suppose anyone will imagine that it is more than a halfway milestone on the road to economy along which the Chancellor of the Exchequer is leading us, and perhaps the most depressing feature of it is that the measure of relief it affords is a declining factor. This year it is, possibly, £10,000,000, declining next year to an all too probable £7,000,000. Perhaps the details in regard to Health Insurance and Unemployment Insurance are rather too complicated for a pure amateur to criticise, and. if I may say so, I think the leaflet which the Chancellor of the Exchequer was kind enough to send round with the Bill was even more difficult to understand than the Bill itself. I believe, however, that there is a suspicion on the part of those who are cognisant of the facts of the case that, with the reduced contribution on the part-of the Government, it is quite possible that the extended and improved maternity benefits will not be paid. We should like to have an assurance from the Chancellor of the Exchequer that that is not the case.

The other question which, I think, these two first items of the Bill raise is this: In it the House is being asked to dictate to two great insurance companies along these lines: up till now the State has contributed in a certain proportion. Now the House is asked to say that the contributions of the State should be less than they have been in the past. This opens up the whole question of the attitude of Parliament, and especially the Executive, towards the Government Departments. In my humble opinion in the past the whole attitude of Parliament and of the Cabinet towards Government Departments has been, I will not say wrong, but it has not been so forcible as it should be. We in this House are so disciplined that when any Estimates are presented which show no decrease we are so relieved that we positively offer no comment at all. If the Estimates submitted show a definite reduction we are overcome with gratitude and jubilation. Surely, however, the attitude of the Executive Department towards expenditure by the Government Departments should be that of the head of the family distributing the amount of the budget to the various members of the family. I do think that the excuse which is always made that it is due to the War cannot prevail to-day nearly eight-years after the War. If the Departments have not been able to put their house in order during eight years they ought to have done so. I feel that if this House had had proper control of the expenditure of the Government Departments they would never have indulged these extravagances for the curtailment of which they are demanding gratitude on the part of the overtaxed people of this country ! When I read of the economies which they have produced here, to my mind, it only demonstrates the gross extravagances which have been going on in the various Departments ever since the War.

My suggestion is that, when the Estimates are presented in the ordinary course, they should not be considered unless they are at least 5 per cent. less than those same Estimates that have been presented the previous year. We heard yesterday from the Chancellor of the Exchequer that we can only economise on £165,000,000. If that is the case, I think it is one of the most depressing statements that have been made on behalf of the Government. I should like the House to take up a very definite point of view, and quickly to say that no Estimate will be considered unless it shows a reduction of 5 per cent. this year. Though I admit that certain Departments may find it difficult to fulfil that stipulation. In that case, if certain Departments are able to justify every penny of their expenditure, it should be added to the economies being effected in another Department. I cannot believe that the present Chancellor of the Exchequer would be unable to find means in his power to compel the Departments to put this suggestion into effect.

There is one other matter on which I want to make one or two observations. It is a, small matter, I admit, a trivial one perhaps, but one in which I think this House will and can contribute towards economy, namely, the matter of answers to questions. No one wishes to curtail the liberty of Members of this House to ask any questions or demand any information they may require. It is not the questions which give discomfort to the Government that cost the money. The questions to which I refer are those to which the answer given is usually a long one, as for instance:

As the answer to this question is a long one, and contains a number of figures, with my hon. Friend's permission I will have it circulated in the OFFICIAL REPORT. Or, it may be on these lines: I am having a statement prepared on the subject. In the last three weeks there have been no less than five questions of this kind. I admit that not one of the offenders comes from the party opposite. These questions have, in my opinion, entailed unnecessary expense on the various Departments who have to answer them. The answer to one of these questions took up 14 columns of the OFFICIAL REPORT. Three other questions have not yet been answered, because it was necessary in order to prepare the answers to get Treasury sanction for the expenditure of a certain sum of money. I understand, to my surprise, that this Treasury sanction has been given, and the answers will shortly be forthcoming. The last question has not yet been answered. It will not appear in the OFFICIAL REPORT and for the very good reason that the printing authorities of the House have demurred to publish it in full. It would almost entail a special number of the OFFICIAL REPORT if it were to be printed in full.

It is estimated that the answer to this question, without taking into account the typing or the printing, will be anywhere between £6 and £10. The question is, whose duty is it to curtail or discourage questions of this kind? An hon. Member when he asks a question is not aware of the considerable expense to which it may put a Department. Equally so, the Clerk at the Table has no idea of the expenditure that may be entailed. But I do say that some authority should be given to the heads of the various Government Departments when a question of the kind to which I have referred comes along to bring it to the notice of the Minister in question, and to suggest to him that he should see the Member concerned, or write to him, and try to discover whether or not the Member will be satisfied with an answer somewhat shorter than those which I have enumerated.

There is also a habit growing up of hon. Members asking questions of the various Departments the answers to which are already to be found in the various Government publications. There are various Departments whose duty it is to collect and compile certain statistical information and publications. I maintain that it is not the duty of these officials to copy out a long column of figures and statistics when a Member can go and find it for himself if he will only take the trouble to look up the right book. I suggest that the Department should be allowed to answer some of these questions by merely referring the Member to a certain page in a certain volume.

There is another habit which I understand is on the increase to-day, and that is this: the Customs and Revenue Department do answer questions from civilians for the encouragement of employment and trade. What happens, so I am informed, is this: that a certain individual writes to the Customs and Excise and asks for certain information, let us say, regarding cretonne imports between Czechoslovakia and some other State. The reply of the Customs is that they will be delighted to furnish the inquirer with the information required, which will cost him anything from 5s. to 30s., or whatever the cost may be. The individual who receives a letter of that sort is so staggered at being asked to pay for some information he requires from a Government Department that he immediately begins to consider some way of getting round the situation. The way he does it is this: he writes to his worthy Member one of those letters with which all of us are familiar referring to his support, it may be, at the last election, and winding up "I wish you would find out the following facts for me, as it concerns my business considerably." Then he writes the question down for the benefit of the Member. Innocently, the Member comes to this House, writes out the question, puts it, and the overtaxed people of this country once more foot the bill. I admit that this is a small matter, but surely it is in the small matters like this that everyone should be willing to accept a suggestion. I have brought this forward because I am sure that the House would co-operate willingly in making such economies as can be effected in a matter of this kind.

The last observation that I would make is this: I believe that economy can only be effected if the people of this country as a whole demand it. Do they? My own opinion is that the country is behind the Government and the Executive in demanding economy to-day. I agree with what the hon. Member for South Hackney (Capt. Garro-Jones) said yesterday as to opportunities being given to the people to assist in the reduction of the National Debt by voluntary contributions, as is being done in Italy to-day. The whole of the first year's instalment of the Italian debt to the United States was made up of voluntary contributions. As we heard yesterday, you cannot reduce the interest on our National Debt, but you can limit the dividends of private companies to-day without, perhaps, doing very much injustice to the various parties, and you can give further opportunities to various members of the public to contribute voluntarily in the same manner as in Italy.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

I shall be delighted to receive any contributions.

Captain CAZALET

My right hon. Friend says he will be only too delighted to receive any contributions. I wish him to give further opportunities to the public to indulge him in this matter. I should like to see £1 and £5 bonds and upwards on sale in every bank and in every post office throughout the country. There is, too, a very large proportion of American visitors who come to this country in the summer, and I imagine are ashamed of the yearly tribute which their country exacts from this country for taking part in a common business. I think they would contribute generously to such a scheme, for just as the Government of America is extremely parsimonious so they are extremely generous, and I believe they would avail themselves of the opportunity the authorities might give them.

We must also bear in mind at the present time that there are large numbers of working people who are suffering, and who are being asked to take less wages. These requests are being made to them on the ground of economy. Yet at the same time they see every day in the newspapers dividends of increasing amount in many cases being paid. I am willing to admit that there are many cases in which there is no dividend paid at all, but somehow one does not often see them. It may he that probably one's own money is invested in them, and the reading of the account is unpleasant, but the dividends one does see are usually fully up to last year's amount, if not an increase on it At the same time I think I saw the day before yesterday in one of the public journals three columns devoted to discussing what was called the "brilliant season" which was about to descend upon us. Now, a brilliant season, if it means anything, means that money is to be lavished about to a greater degree than ever before. Far be it from me to discourage any foreign or American visitor to this country spending his money here.

But if it is to entail also a flaunting of expenditure and wasteful extravagance, then, I think, it probably does more harm than good. Unless the more fortunate members of the community set an example, you cannot expect others to accept meekly a reduction in their wages. Some months ago I ventured, with much timidity, to make a suggestion that the present Cabinet Ministers should copy their predecessors of 100 years ago and set an example to the country by voluntarily reducing their salaries by, let us say, 5 per cent. I have no doubt that many of them have done this. I am perfectly certain that if they did so their example would be rapidly followed by many Members of Parliament, and by many of the more highly-paid officials in all parts of the country, in industry as well as in Government offices. I believe that example would be widely followed, and that the country, if once given a lead, would demonstrate that it was behind Parliament and the Government and the Chancellor of the Exchequer in demanding both drastic and immediate economies.

Mr. LLOYD GEORGE

My hon. and gallant Friend who has just sat down has made some very interesting suggestions to the Treasury bench, and I hope Ministers will give them due consideration and weight, and that before the Debate is over we may hear from one of the Ministers what their view is upon these reductions of salaries and other methods of arriving at a solution of the difficulties of the Chancellor of the Exchequer. The least hopeful suggestion I thought was that we should open a subscription list among American tourists. I am not one of those who admire the settlement of the American debt, but I do not see a very hopeful way out of that burden in the direction so enthusiastically suggested by my hon. and gallant Friend with all the hopefulness of youth. He has a confidence in human nature which I hope he will retain at least up to my years. During the last two or three months the Chancellor of the Exchequer has been giving us his Budget by instalments—to be continued in the next. Some of these instalments were given to mass meetings in the country. I think we in the House of Commons ought to be grateful that, at last, he has given us one of these instalment. His speech would have been very interesting if it had had anything to do with the Bill before the House. There were two things which the Chancellor did not explain, one being the Measure we were discussing, and the other how it comes that the promise of economy he made in his Budget of last year has not been realised, and how it is that he does not even hope, so far as I can see, to achieve that realisation. The words he used then were very, very careful words. He weighed his words very carefully. He used language which showed that he, really meant it. He said: I believe that we ought to aim at a net reduction in the Supply expenditure of not less than £10,000,000 a year. That is not taking an extravagant figure. It would be easy for me to get a more favourable response by giving a more illusory figure."—[OFFICIAL REPORT, 28th April, 1925; cols. 59 and 60, Vol. 183.] The Chancellor of the Echequer can be very entertaining, and he is a great actor, but he is never more amusing than when he gives himself the airs of a very careful person who likes to err on the side of caution. On this occasion the impression given was "Of course, I am going to get more than £10,000,000, but I am the sort of person who likes to understate my expectations. It will be £20,000,000 or more, but I will say £10,000,000, and that I will stick to." Then my right hon. Friend the Member for Colne Valley (Mr. Snowden) asked a question—when the Chancellor was talking about saving £10,000,000 a year: Mr. SNOWDEN: Each year? Mr. CHURCHILL: Each year, progressively, on Supply services. There should certainly be a saving of £5,000,000 on the debt operations of each year."—[OFFICIAL REPORT, 28th April, 1925; col. 60, Vol. 183.] and he explained that from all those sources, if we were able to achieve that position.

Mr. CHURCHILL

If.!

Mr. LLOYD GEORGE

Do not be in a hurry. My right hon. Friend is like me. he has made so many speeches that he cannot remember everything—and he has had to change them very often. This speech was made only a year ago, let me remind him, and therefore I am entitled to quote him: From all those sources, if we were able to achieve that position—there is no reason at all why a strong and resolute effort should not achieve it. "— [OFFICIAL REPORT, 28th April, 1925; col. 60, Vol. 183.] £10,000,000 was to be saved by a strong and resolute effort. It is £10,000,000 the other way. That is the result of the strong and resolute effort, and we have had no explanation at all of the reason why.

He has been beaten by the Admirals—completely. That is why he is attacking Health Insurance and Unemployment Insurance and the schools. He was beaten by the Admirals—beaten by the right hon. Gentleman the First Lord of the Admiralty. The First Lord has a great advantage in all these controversies, because he is the sort of man you feel you ought not to take advantage of. It is like taking toffee from a child! The right hon. Gentleman the Chancellor of the Exchequer says to himself, "I must not be too hard on him"; but he has been beaten by the wily Salopian, and the result is he is under the impression at this moment that his colleague the First Lord of the Admiralty has reduced the Estimate this year. He said so yesterday. He said yesterday: "Here is the sort of colleague I like. Not only has he reduced the Estimate, but he has reduced it whilst increasing the expenditure. He is actually adding cruisers to the Navy at less expense."

My right hon. Friend is the last man who aught to be taken in by that old dodge, because he practised it on me himself. He knows exactly what it is. The Admiralty, when presenting an estimate for huge construction—for Dreadnoughts and cruisers—compromise by saying, "We will only ask for £3,000,000 this year." They lay the keels—very late in the year. But we are committed, and next year it will be £9,000,000, and the following year it will be £11,000,000, and the year after that £12,000,000 or £13,000,000. And my right hon. Friend thinks he has succeeded in getting a reduction in the Admiralty Estimates! On the contrary, the right hon. Gentleman the First Lord of the Admiralty has secured a programme which will involve a substantial increase in Navy Estimates. I listened with admiration to the speech he made here last week. He said: "As to this £2,000,000 I am saving, I must be open with the House. There is about £150,000 of it which is only postponed expenditure." And we all said, "Look at his honesty in telling us; he need not have done it!" The whole time there was £6,000,000 or £7,000,000 of postponed expenditure in these additional new cruisers.

Mr. CHURCHILL

indicated dissent.

Mr. LLOYD GEORGE

Well, here are the figures. I will give the actual figures. This year it is £3,700,000, next year it will be £8,596,000, the following year £11,997,000, and the year after £12,896,000. That is for a programme of which we are getting only the beginnings this year, and with the expenditure pushed off till the end of the year, so that it should not fall on the present year's Vote.

Mr. CHURCHILL

If the right hon. Gentleman has studied the new construction Vote and forecast as a whole, he will know that the battleship construction has been practically completed and will reduce the Vote in the future.

Mr. LLOYD GEORGE

Yes, but that is no reason why we should spend all this money on cruisers which are not needed at all. [HON. MEMBERS "No, no!"] The right hon. Gentleman knows perfectly well that we are going to have all this increased expenditure, although he fought it—although he fought and resisted it at, the time, and it was made absolutely clear that both he and the Prime Minister were opposed to it. Yet here we are committed to it at the present time. The right hon. Gentleman is up £10,000,000 when he promised to be down £10,000,000; and therefore he is going to attack health insurance and unemployment insurance and the schools.

He is making a desperate effort to pick up another 6d. He has ¾d. from Italy. He is looking out for 1d. or 2d. from France; but the French have discovered a most ingenious new method of avoiding paying their debts, by changing their cashiers whenever the bill is presented. I do not see any prospect of his getting his 6d. there. He is going to raid the Road Fund; he is going to he a highwayman and take away some of the funds allocated for the improvement of the roads and the making of new roads. I think he has chosen the epithets for it rather well. He is a master of words, and he chose a description of the whole of these economies for us when he called them "mean." He is getting £350 from Orkney and Shetland by cutting down the days of polling. Mounted on this Shetland pony, he is going to prance around and raid schools and cottages and the roads, and is going to get £7,000,000 or £8,000,000. Let us look at his proposals. He talked yesterday about the automatic growth of pensions. As a matter of fact, there will be no growth after this year for some years to come. This is the peal year of the pensions—I am taking his own figures, published last year—and afterwards the curve will go sloping downwards for two, three or four years. No doubt afterwards the amount will grow; but it will not trouble him for two, three or four years, and he knows that, and he is depending upon that in his Estimate.

5.0 P.M.

Now he is going to take £1,000,000 from the Army and the Navy. That has not been referred to in this Debate. I was actually and primarily responsible for the proposal to give the same benefits to the soldiers and sailors as you gave to the rest of the community, having regard to the fact that during the years of their service there would be no charge upon them in respect of medical benefit or maintenance, because they would go on receiving their pay. Therefore you only charged three-half-pence for the soldiers and sailors. That was a fund upon which they could draw when they retired from the Army or the Navy. They have had to pay three-half-pence, and that has been deducted during the whole of these years from their pay. The fund to which they contributed has accumulated, and now they have had the same luck with that fund, we are told that it is due to the increased interest. The right hon. Gentleman forgets that the increased interest also means an increase in the cost of living, and therefore a reduction in the value of the benefit which is deprived.

What does the right hon. Gentleman do? He says to them: "You have accumulated too much money." What he ought to do, first of all, is to say to them what was said by him and myself in 1911: "If the fund prospers, if the actuaries have been too cautious, if the fund is well administered, we will either increase your benefits or reduce your contributions." We promised the alternative, but the moment it reaches this figure, what does the Chancellor of the Exchequer do? When it reaches the figure at which they are entitled to the benefit that was promised to them, he takes £1,000,000 of it away, not to make up a deficit because he is not confronted with that, but in order to build up a fund that will enable him to reduce taxation. That is not a fair thing for people who have been paying contributions all these years.

Now I come to another point, that is the raid of about £3,000,000 on that Fund. What happened? In 1911, that scheme was criticised, and criticised largely by hon. Gentlemen opposite, and the party to which they belong. They said, "You are giving too low benefits for what you are charging and you ought to give more or charge less." We said, "There are two difficulties. The first was pointed out by my right hon. and learned Friend the Member for Spen Valley (Sir J. Simon) yesterday, that when you bring a whole population in who have not been contributing at 16 and give them a flat rate of benefit, then at the beginning you are not getting the full advantage of your contribution."The second answer we gave them was," We have no doubt at all that as a, result of a great system of health insurance with improving medical benefits, with the removal of the anxieties that oppress a sick workman when ill, and not able to maintain his household, there will be such an improvement in the health of the people that the benefits will be increased."

All that has turned out to be quite true. What has happened? Many of the approved societies had to be consulted as well as the trade unions, the friendly societies, and the collecting societies, and they had their criticisms to make. Ultimately we made a definite arrangement and bargain with them to accept the terms offered by the Government then. This was referred to by the Minister of Health as a bargain in the reply he gave to the right hon. Gentleman the Member for Hillhead (Sir R. Horne) and it was part of his objection to accepting a reduction of contributions last year because it would interfere with an arrangement made with the approved societies. What happened? That arrangement was submitted to a Cabinet of which the Chancellor of the Exchequer was a member. We said to them, "If it turns out that by efficient administration you will have accumulated funds. and if we have overestimated the risk, we can put in powers that will enable you to increase the benefits." That was the bargain to which my right hon. Friend was a direct party, because he was a Member of the Government that made the bargain, and it was submitted to the House of Commons. An hon. Member opposite has stated that it was only the Liberals that made that bargain, but as a matter of fact it was made by the House of Commons as a whole, and therefore it was made by the nation. As far as I can recollect, that part of the Measure was not opposed by hon. Members opposite.

That was the bargain, and now we are going back upon it. See what it means. You are now paying 15s. instead of 10s. in health insurance. What does it mean? With the cost of living at 170, that is equivalent to 8s. 7d., so that you are really paying less than you paid when the Bill was first introduced. Take the case of unemployment. To a man with a wife and three children, 29s. a week is paid out of the Unemployment Fund, and anybody knows that even with that payment it is a pretty bleak outlook for such a family in the towns where rents are very high. We have had a Royal Commission on this question, and the Chancellor of the Exchequer has not thought it even worth while to let the Report of that Commission be examined by the approved societies. The Report is a very expensive document, and it costs 6s. 6d. It is a document which affects 14,000,000 or 15,000,000 people in this country, and its recommendations affect their daily lives. They affect their prospects in the days of trial, and they ought to have an opportunity of seeing what those recommendations mean.

What did the Royal Commission recommend? My right hon. Friend the Chancellor of the Exchequer never referred to this subject yesterday, and yet it is very germane to the consideration of this Bill, The Royal Commission examined the whole problem of health insurance, and I have every reason to be gratified with the Report they made upon the result of health insurance, and upon its success. That, however, is not what I am coming to. What did they recommend? They said, "We cannot recommend additional benefits at the expense of the State, having regard to the heavy expenditure that is falling upon the taxpayers," and the majority turned down every proposal that would involve additional burdens upon taxpayers. But they said, "We have accumulated money by means of these funds and the contributions which arc now being made; you can grant additional medical benefits and additional benefits in the case of sickness to the contributors. You can give 2s. in respect of every member of the household," and they recommended accordingly. A sick man with a wife and three children would have the sum of 23s., which is 6s. less than an unemployed man in full health would get.

The Chancellor of the Exchequer, with this facing him, and with the pledge which he himself was a party to, now takes away the prospect which has been dangled before these people for years, towards which they have contributed, at the very moment of realisation, and what for? In order to save about a halfpenny in the £ upon the Income Tax, or an amount of £2,800,000. Supposing in a full year this expenditure runs to £4,000,000 or £5,000,000. That would represent a penny on the Income Tax. I am not despising even a penny on the Income Tax. I know what it means, because the burden is very heavy now, but I wish to put this point to the right hon. Gentleman. We are ail Income Tax payers here. There is not one man belonging to any party here, if it were put to him whether he would like to gain a penny in the Income Tax at the expense of taking 8s. a week from the household of a sick workman who would not disdain the offer. Why should we insult our constituents by assuming that they are less humane or less just than we are? The right hon. Gentleman has described the transaction fairly when he used the word "mean" in anticipation of what would be said about this proposal. However hard up you may be, it is a mean way of making money to pluck feathers out of the pillow of a sick man, and this is what this proposal is really tantamount to.

There is another objection to this proposal, and it is that it constitutes a distinet breach of faith with the industrial classes of this country, and that in itself is full of mischief and danger at the present moment. It is the kind of thing which undoubtedly did harm in regard to the relations between trade unionists and employers over piece-work. It has created a feeling of suspicion which has made it impossible to pursue that policy in the future. I know how difficult it was during the War to get workmen to do it, because they had always got in mind that the moment a man made a lot of money by throwing himself into his job, working hard and late, and his wage bill came to a big amount, the price was broken, and the result has created a feeling of suspicion, and this made it impossible during the War to restore that method of increasing production.

The right hon. Gentleman is doing pretty much the same thing now. Here is a bargain with the workers. It has turned out better than anybody anticipated. All our critics said, "You are not going to be able to pay these benefits; this is a bankrupt scheme." Our advisers said, "No, you will be able to pay them, and you may have a small margin." But it has turned out to be much better than anybody expected. The moment it has turned out to be a good bargain for the workers, you say, "We will break that bargain and take the cash away." It is their money. It is the money of the industry, it has been contributed for years, and there has always been a hope in the minds of the approved societies, who represent 14,000,000 workers, that a time would come when you could increase the benefit. The time has come, and the Chancellor of the Exchequer says, "I will take away my contribution, and, therefore, we will postpone your benefit." It is full of mischief, this breaking of a definite pledge. It has been accepted by all parties for, now, 15 years, and, on the Ides of March, 1926, the Chancellor of the Exchequer breaks it.

After all, does the Chancellor of the Exchequer really save money by this transaction? He does not. The burdens of the community will not be lessened by one penny by these transactions. If you had a naval holiday for 10 years, on the assumption, which I am told even the Government are prepared to act upon, that there will be no war at least for 10 years—if you had a naval holiday for 10 years, the money would be saved. You do not save the money by taking it away from this Fund. Why? Does anyone imagine that, where there is a sick man who only gets 8s. 7d. out of the Fund, the local authority will not come to his aid? It simply throws the whole of it upon the rates. There has been a change—and we ought to thank God for that—in the whole temper of the administration of relief in the course of the last few years—a complete change. Many of us remember the old bullying, hectoring days of the guardians, when, in order to get three or four shillings, a working woman had to appear before them and be cross-examined with regard to her means, and what she was going to do with it. All that is gone, and we ought to be proud of the fact. What happens now? 8s 7d. will not keep a family going, and the only result will be that the wife will have to appeal to the guardians to supplement that amount. She will get it. It will he done at the expense of a certain amount of pride, but the Chancellor of the Exchequer cannot cash that pride. The money will be found by the community, and, after all, the rates are weighing more heavily upon the industries of this country than the Income Tax—much more heavily.

The right hon. Gentleman knows that, and I am sure that the Minister of Health, who is sitting beside him, knows it, because I remember his coming in a deputation on the subject, and putting to me the hard case of the industries in areas where they had to pay 20s. in the £ in rates, and even more. They had to pay that when they could hardly make any profit at all. Everybody knows how it is crippling the shipbuilding industry in the North of England, and also housing. All these industries have been very hard hit by it. The right hon. Gentleman's idea of economy is something that will enable him to take a penny or two off the Income Tax, and, on the other hand, increase the burden on those workshops that are quite unable to find the rates at the present moment. That is not economy; it is really a sham and a deceit.

Then the right hon. Gentleman does exactly the same thing with the Road Fund. He seems to me to have given very clear indications about that. I hope I am wrong; I shall he glad if he contradicts me here; I think nothing would be more valuable than an interruption from him on this. The right hon. Gentleman said yesterday that the Road Fund has a surplus. They cannot use it, because they will not use it. What are they doing? There is no doubt that one of the greatest needs of business at the present moment is new roads, new avenues, the widening of old roads, in order to facilitate traffic. The business of this country is losing far more in delays than any burden which you can put upon it by means of a tax on motors. The last attempt at making any new roads of any sort or kind was in 1921. Those roads now are almost completed; I saw them dawdling with one the other day, in order, so to speak, to keep the thing going, and I have no doubt there are hon. Friends of mine who see exactly the same kind of thing going on. But this work ought to be done; it is in the interests of commerce and business that it should be done, to improve traffic. It is one of the great problems of trade, of civilisation. You cannot have improved housing in this country without a great road programme, and the right hon. Gentleman is talking about raiding the Road Fund, the Fund which ought to be there for the purpose of improving the roads. Does be really mean to suggest that that is going to be an economy? It will be a new burden on the community; at any rate, it will prevent the community from relieving one of the greatest of its existing burdens, and a growing burden—the burden of congestion in traffic. That is a miserable form of economy which the right hon. Gentleman is proposing.

Take, again, his unemployment insurance proposal. That is a breach of faith; that penny was promised to industry. What does he do? I remember very well that that was put on to meet an emergency, but it was made quite clear at the time that it was an emergency tax, and that when the emergency was over it would be taken away. The right hon. Gentleman is going to keep it there for another purpose—in order to relieve others; but they are not the same people. Take a man who has 1,000 workmen. If he is paying a penny in respect of each of them, that is about £200 a year. The only relief that would be obtained in Income Tax, by a man who would make the kind of profit that that man would make, would be about £15 to £20. He would be paying£200 on his industry, in order to relieve others to the extent of £15 or £20 of their Income Tax. It is a breach of faith; it is unfair, and it is hitting industry, but it is not economy. Even if it were wise, ii is not economy; it is simply shifting the burden from one shoulder on to the other. This is called an Economy Bill, but economy has nothing whatever to do with these proposals.

I would ask my right hon. Friend, if I may, is it worth his while, is it wise, to attack these social funds at the present moment. I do not believe there is; anything of which this country ought to be prouder than the effort which it has made, and which it has continued to make in spite of these burdens, to relieve distress and privation which were undeserved. The new sentiment which was roused by the War, when classes were drawn together, and got to know each other better, and met in closer contact, raised a sense of social justice which was hardly there before; and great efforts have been made, by the consent of every class of the community, to do something to get rid of privation which everyone accepted before as the decree of Providence. Everyone knows that we have not done all that we ought to do. The Minister of Health, in his reply to my right hon. Friend the Member for Hill-head, said so. He said he looked to further development in that direction. That is a fine sentiment, if I may say so, but it is not the sentiment which the right hon. Gentleman is here defending to-day. He is defending now a going back, and not a going forward. Is it wise to do it now?

I have heard great criticisms as to the money we have been spending on unemployment and social services, but I would ask any man in this House, and I would specially ask men who have had some share in Government during the years after the War, what would have happened during six years of unemployment, running from a million up to 2½millions, if you had not made these efforts to prevent hunger and famine? We have had from a million to 2½ millions walking the streets for six years, and not a drop of blood has been shed—there has been no riot. It would have been absolutely impossible, but that these sacrifices were made. I beg the right hon. Gentleman not, before he is out of trouble, to attack these social funds that have begun to give a kind of sense to the working people that they are beginning, at any rate, to have a fair show in life. There are dangers which attack every country. There are the external dangers. We have had an example of some of those dangers at Geneva during the last few days. I do not believe, in spite of a very discouraging spectacle, that anything grave is going to happen in Europe or in the world for some years to come. It is very discouraging; it is very depressing, but I do not believe that nations will fly at each other's throats, and I think that any Government could wisely decide not to burden its people with armaments without having any fear that there would be an attack upon the integrity of our shores.

The right hon. Gentleman and others have asked, "What is your alternative?" I should say at once that I think the Chancellor of the Exchequer ought to say to the Government that he will only find so much for armaments. Let them settle how it can best be done. Put the Secretary of State for War, the Secretary of State for Air and the First Lord of the Admiralty together; lock them up in a room until they have settled it. I believe the First Lord of the Admiralty is the only one who would come out alive, for he is an armoured cruiser. The Chancellor of the Exchequer should say to them, "It is no use coming to me with little reductions here which are not realities; just cut down by £20,000,000." Let them put their heads together as to the best method of dealing with the defence of this country. Instead, in order to avoid facing those difficulties, in order to avoid bringing pressure to bear upon these Services—which have got their power, have got their influence, have got their prestige—he is cutting down social services, he is attacking the funds for the sick and for the unemployed. I really think that the Chancellor of the Exchequer has, by anticipation, given the only epithets which would justly apply to proposals of this kind, and I hope that the House of Commons this afternoon will reject them with disdain.

Sir JOHN MARRIOTT

The House has listened with great admiration to the right hon. Gentleman's speech. The pith and point of it, summed up in his concluding sentences, was, "Ration the fighting Departments."I have, one amendment to make to that suggestion. I would ration all Departments. Until we do that we shall not get the economy that most of us are seeking. The whole House listened yesterday with, I believe, mingled admiration and disappointment to the speech of the Chancellor of the Exchequer. We all listened with admiration. The right hon. Gentleman touches nothing in the realm of debate that he does not adorn. But many of us felt disappointment because even his supreme art—and as the right hon. Gentleman who has just sat down says there is no greater artist in the House—could not entirely conceal the meagre contents of the cupboard which he had to open to our inspection. So I suggest that the general effect of that brilliant and lengthy speech was profoundly discouraging and disappointing. But, at any rate, I felt that the Chancellor was a good man struggling with adversity. I have not felt the same in regard to either of the brilliant speeches by the two right hen. Gentlemen opposite. I do not say the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) is not a good man, but I do not think he was struggling with adversity.

It seemed to me, on the contrary, that he was gleefully revelling in the adversity of an opponent. But it is not really that opponent in whose adversity he was rejoicing, it is the adversity of the nation as a whole, and I hope the nation as a whole and the taxpayers and the ratepayers will take note of the tone in which the right hon. Gentleman answered the Chancellor of the Exchequer. I do not think that the taxpayers and ratepayers outside will be content that those who take part in this Debate, as important a Debate as has been initiated in this House for a very long time, should indulge only in petty party recrimination. The position of those ratepayers and taxpayers is a great deal too serious for those recriminations, and still more serious is the position of the trade of the country. The burden that rests upon the individual is mainly hurtful because of the impediment it imposes to the recovery of trade.

I want, in the first place, to suggest that in these proposals that are made to the House of Commons the Government have not really exhibited the courage of their convictions. Over and over again in the House and in the country members of the Government have expressed the view that there is only one sovereign remedy for unemployment, and that is the improvement of our regular and legitimate trade. I for one, very cordially share that view. But all parties in the House have insisted that an essential preliminary to that improvement of trade is to be found in the relief of the burden of taxation. Again I cordially agree. But let the House look at that formidable list of additional burdens of expenditure quoted to us yesterday by the Chancellor of the Exchequer, imposed not by the wicked Labour party when they were in office, not by the Coalition Government when they were in power, but by this Government since December, 1924. He said previous Parliaments have added, I think, about £8,000,000 to our expenditure, but this Parliament, since the right hen. Gentleman was in office with an enormous majority behind him has added £24,447,000 to our expenditure, and this after the expression of the conviction that of all the deterrent influences to a recovery of trade the greatest is an addition to our taxation.

If the Government had had the courage of their convictions they ought not to have allowed one penny of that additional expenditure to be accepted. Over and over again from Members of the Front Bench, whatever party was in power, I have heard the taunt to back benchers of preaching but not practising economy. We have been told over and over again that the House of Commons is the most extravagant of the spending Departments. There is not a Member of the House who has not heard that taunt a hundred times. I am far from denying that there is some particle of truth in it, but when I analyse, as I hope the House and the country will analyse, the list the Chancellor of the Exchequer gave us yesterday of increases in expenditure, I find not a, single item that was proposed to the House under the pressure of an irresistible popular or Parliamentary demand. In every single case the initiative came from the Government, or more probably from the Departments over which Ministers respectively preside.

But I do not want to indulge in purely destructive criticism. I do not want to be unhelpful to the Government, and still less unhelpful to the country, therefore I am going to be so bold as to make one or two positive suggestions. The first is to enforce the admirable appeal made by my hon. Friend the Member for Ilford (Sir F. Wise) yesterday. The pith of his speech was, Conserve our capital resources in order to improve our public credit. My hon. Friend pointed, as everyone who seriously considers the present position must point, to the fact that of all the items this House has to meet, by far the most formidable is the interest on the National Debt, and that interest can only be honourably reduced by such an improvement in our public credit as will enable us to undertake a reasonable conversion of the debt. I should like to see the experiment tried, when next year and in the two following years we have to meet maturities of something approaching £1,000,000,000, of a really tax free loan—not like your 4 per cent loan, but a loan which shall really be tax free—at a very low denomination—3 per cent., or, if you like, 2½ per cent. I believe to such a proposition there would be a very considerable response. But in making that suggestion I do not want in any way to divert attention from the real sinners, I mean the executive Departments of the State.

According to the Chancellor of the Exchequer we have only £165,000,000 that we can operate with at all in respect of economy. I am not at all convinced that the whole of the right hon. Gentleman's second category—he divided expenditure into four categories—ought to be removed, as the Chancellor of the Exchequer summarily removed it., from all possibilities of reduction. For example, included in Category 2 were all the housing schemes. There is an Act, which we opposed when it was passing through the House, associated with the name of the late Minister of Health. It is still on the Statute Book. I should like to see it removed, for as long as it remains there will be a persistent temptation to local authorities to adopt it in preference to those which have since been passed, and if my information is at all correct, at this moment the local authorities are tending more and more to rely on the superior terms of the Act associated with the late Minister of Health.

Then I want to urge, with all the earnestness I can command, that there is a very pressing need for a re-classification and a more scientific co-ordination of our public services. This Bill is largely based on the Report of the National Health Commissioners. That is, as it seems to me, an exceedingly able but a terribly disquieting document. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) said, "Do not attack our social funds." That is not a line of attack in which I want to indulge, but as he referred so pointedly to the Report of these Commissioners, I should like to remind the House that the account he gave—I am sure quite unintentionally—does not seem to me to accord completely with the main argu- ment of the Commissioners, for here is their general conclusion. They are talking about social services. It is clearly essential that a balance between the expenditure on these schemes and the productive capacity of the country should from time to time, be struck.…We feel that there may come a time, and, in fact, there has come a time, when the State may justifiably turn from searching its conscience to exploring its purse. That is on page 73 of the Report. I want to commend these words to the House as the general conclusion at which the Commissioners have arrived, that the time has come "to turn from searching our social conscience to exploring our purse." When I turn to the detailed argument on which that conclusion is based, I notice that—I am quoting from page 69—the total of social services in regard to which that conclusion was reached amounts at present to not less than£308,000,000 a year, a charge for social services actually in excess of the debt charge to which my right hon. Friend referred yesterday. I suggest that in our present classification some of the items of these social charges are very misleading. Two or three years ago there sat a very important Committee, under-the chairmanship of Lord Haldane, on the machinery of Government. That Committee very carefully examined what they called the articulation of our administrative functions. The question to which they addressed themselves was whether that articulation should proceed according to the service to be performed or according to the persons and classes to he dealt with. The Committee observed, very properly in my opinion, that neither principle could be applied with absolute or exclusive rigidity, but the Committee did pronounce un-equivocably in favour of differentiation according to services.

Now let the House examine the list a these social services and our expenditure upon them, as contained in the Report of the Commission. The first, at the top of page 69, is Public Education, which is put down at £86,600,000 this year. It is true that the taxpayer and the ratepayer have to find for the Education Office that enormous sum, but I submit that the local education authorities are doing work sonic of which ought properly to fall on the relieving officer and the health officials. I know that a great deal of that work is excellent in character. Take the orthopædic hospitals. Very excellent work is being done in that way, and they are spending large sums upon it. These orthopædic hospitals are largely maintained, or to a considerable extent maintained, out of education funds. I would take that work entirely away from the education authorities and put it into the hands of the people to whom it properly belongs, namely, the health authorities. [An HON. MEMBER: "HOW would you reduce it?"] I do not say that I would diminish it. I said no word about diminishing it. I am talking about classification.

Then again, I believe we shall never get economy in these services until we have a consolidation of social insurance. We have Unemployment Insurance, Health Insurance, Workmen's Compensation, Old Age and Military Pensions, and Poor Law relief. I would bring the whole of these services under one single Department. Until you do that, you will never get rid of that overlapping to the details of which I drew the attention of the House two or three years ago on a private Member's Motion. I am afraid I shall not have the opportunity of doing so a fortnight hence. I then mentioned to the House a number of cases which were causing public scandal in the overlapping of these public services. But it is not the scandalous cases of overlapping which come before the public attention by prosecution and in other ways, it is the thousand little overlappings which never come even to the attention of the Departments concerned.

There is an immense amount of administrative duplication and overlapping. I have again and again urged on the Prime Minister the importance of appointing a Royal Commission to consider this question of overlapping in the public services, but I must admit that I have always received a very discouraging reply. I would again appeal to him to consider whether the time has not come for considering— I do not care what the inquiry is, whether by Royal Commission or inter-Departmental Committee—whether we ought not to bring into a single department of public assistance all the services which I have enumerated. I know perfectly well that I am only working, on the computation of the Chancellor of the Exchequer, on a sum of £165,000,000. On my computation by throwing in categories two and four, I am working on a sum of about£255,000,000. I think the Chancellor of the Exchequer misled the House, not intentionally, by unnecessarily curtailing the possible area of relief by the classifications which he adopted. I conclude with three definite suggestions. First, I would combine two of the Chancellor of the Exchequer's four categories, namely, the second and the fourth categories, which would give a possible area for reduction and relief of £255,000,000 instead of£165,000,000 to work upon. In the second place, I would attack category 1 in the spirit of my hon. Friend the Member for Ilford. In the third place, I would concentrate public assistance services in a single Department, and consolidate social insurance, including workmen's compensation, in one single comprehensive scheme. I do not say that by that or any other means we shall achieve dramatic retrenchment, but I believe we should make an appreciable contribution to the problem of public economy.

Mr. MORGAN JONES

In the Debate this afternoon I think I am right in saying that no one has devoted much attention to that portion of the Bill which relates to educational economies. We have been asked by the previous speaker not to impart into this discussion too-exaggerated partisan considerations. It is fair to point out that the Government itself is to blame if strenuous criticism is directed to its attitude on education in this Bill. I think most hon. Members will agree with me when I say that it is well known that the Government issued during the last General Election a clear, explicit pledge on behalf of their party concerning education. They said, in effect that whatever merits applied to the policy of the previous Government and whatever progressive work they had attempted, the succeeding Tory Government would endeavour to carry on. Not only were we told that during the last election, but we had explicit statements of policy from at least three leading Members of the Cabinet. I take first the Prime Minister. Speaking at Aberdeen, he said: The Government is now scrutinising with the utmost care the Estimates of every Department. Every economy that can be made is going to be made, however unpopular it may be, but we cannot economise to that point to reduce our defensive forces below what we believe to be necessary for the safety of the Empire, nor can we make economies which might touch the education or the health of the people in such a way that the burden of these economies would rest on one class and one alone. I think it can be claimed with truth that, whatever economy may be effected in regard to education through the medium of this Bill, that economy, such as it is, will fall upon the shoulders of one class and one class alone. Not only did the Prime Minister pledge his party, but one of his chief adjutants similarly pledged himself. The Chancellor of the Exchequer, during last June, said of education. it is absolutely necessary that thrift and economy should be practised in every branch of our services. Value for money must be achieved, but the course of education must never be set back. It must roll forward from one generation to another. 6.0 P.M.

All I can say is that the rolling process is in considerable danger of being arrested just now. Not only has the Chancellor or the Exchequer committed himself in this way, but the President, of the Board of Education has similarly committed himself. Not only has he done so by speeches in this Home but on a multitude of platforms up and down the country. We have been told that he has addressed something like 50 odd meetings at which, without exception, he undertook the somewhat difficult task of stimulating and exhorting the laggards, educationally, and encouraging and enthusing the progressives. What has been the result of this Presidential pilgrimage up and down the country? We have received this week an intimation of what the Government proposes. It is not the only indication we have had of the Government's mind concerning education. At the end of his pilgrimage, the right hon. Gentleman published the famous Circular 1371, which evoked a storm of protest up and down the country. After discussion with the local authorities who effected a temporary agreement with him, as I understand, Memorandum 44 was published. and Memorandum 44 very largely superseded Circular 1371. Now we are told that Circular 1371 and Memorandum 44 may he regarded as having been withdrawn. May I quote what the right hon. Gentleman himself said in regard to his general policy on education. Speaking at the Ladies' Carlton Club, as reported in the "Morning Post," the Noble Lord said: At the last Election the Conservative party announced a programme of educational advance, and it was approved by a vast majority of the teaching body and all interested in education. Policies announced in opposition were apt to be more ambitious than practical, but since he had been in office he had seen no reason to withdraw one single word of the policy the Government had put forward. It represented the broad lines on which educational advance must proceed in this country. He had been reminded during the last week of the importance of continuity in educational advance. He felt very deeply his duty to his predecessors at the Board of Education, and he would try to carry out a continuance of the policy with them; but it must be a policy of reality. My submission is this; that the particular proposal in this Bill, far from being in accord with a continuity of policy, is in effect a deliberate breath of faith with the local authorities of this country. Let me give him another quotation. When speaking to local authorities inside the Board of Education on 31st January last year be said: We must proceed on the basis that the grant system is going to remain substantially as at present. We must start from the basis that local authorities are to estimate how far they can go financially under the present arrangements, and not on the hypothesis that the Chancellor of the Exchequer may four years hence be willing to alter these arrangements. We have not had to wait four years for an alteration of the system. We have scarcely survived 12 months before the explicit pledge contained in this paragraph has been torn to shreds. The very basis of the grants which the Noble Lord promised were to be made substantially as they were then are all challenged and threatened by this Bill. The President of the Board of Education has said repeatedly that he has been misunderstood in this matter, and when the great outcry took place concerning the implications of Circular 1371, the Noble Lord issued an explanation and the next day he explained the explanation. He first of all told us that the scheme was one to effect educational economy, then he told us that it was not economy but chiefly education ho had in mind. Since then it has become both. I submit it is neither. There is no economy in this Bill, nor is there any educational progress in it. Indeed it is quite easy to prove that there is no saving in this Bill at all. There is a transference of expenditure from one authority to another, from the central authority to the local authority, but so far from being a real economy and a real saving of money, so long as local authorities carry out their progressive policy there can be no saving whatever.

I should like to ask the Noble Lord the President of the Board of Education one question which has troubled me a good deal in regard to one Clause in this Bill. I looked up the Education Act, 1921, to which this Bill refers. The first Section, as I gather, remains unaffected by this Bill. It states in quite explicit terms what are the legal rights of local authorities concerning grants. I need not repeat the whole of the Section, but the part that is material is this: and nothing in this or any other Act of Parliament shall prevent the Board from paying grants to an authority in respect of any expenditure which the authority may lawfully incur. Therefore, as long as the expenditure is lawful, that Section deprives the Board of the right of withholding a grant in respect of such lawful expenditure. I am open to correction in the matter, but that is how I interpret that particular Section. Then the next Section to which this Bill refers is a Section of the Act of 1921, which dealt with the percentage grant and the deficiency grant. As I interpret it, the first Sub-section places emphasis upon legal expenditure. In this new Bill it is not what is legal, but rather what is deemed by the Noble Lord the President of the Board of Education to be not illegal but excessive expenditure. He is to determine what is excessive and what is not. What is the standard of judgment? It is on this matter that I find the greatest menace in this Bill.

The standard of judgment in this new Bill, as I see it, may very well be not the needs of any particular authority whose estimates are being challenged, but the expenditure of some neighbouring authority. Under this Bill the President has a right to say that he will not approve the expenditure of Authority A because Authority B, whose area is contiguous with that of Authority A, is not embarking upon a like type of expenditure, and there is nothing in this Bill to prevent him, if he thinks fit, depriving the progressive authority of its right to embark on progressive administration because a retrogressive authority in a neighbouring area does not embark on a similar policy. That, is a new standard of judgment. We are now estimating our proper educational expenditure under this Bill, not upon the standard of progressive needs at all, we are to judge progressive people with people of a lower educational standard. And there is nothing in this Bill that deprives the President of the right to act in that way or compel him to bring the more retrogressive authority up to the level of the more progressive. Local authorities surely have a right to know the position in regard to their expenditure in the future. The Noble Lord himself from this Box, some three or four years ago, raised the question of giving arbitrary authority to the then Minister of Education—

The PRESIDENT of the BOARD of EDUCATION (Lord Eustace Percy)

Not from that Box.

Mr. JONES

Well, from this side of the House. Anyway, the speech was made, and he challenged the wisdom of the House in granting to the then Minister of Education arbitrary authority in the sense of giving him the right to determine what should and should not rank for grants on the part of the Board of Education. I know he has made other references which, perhaps, modify that attitude a little, but he raised that general principle in that speech. In this Bill there is no attempt whatever to provide the President with a clear and definite standard whereby he may judge the needs of local authorities, nor is there any clear delineation of the rights of local authorities. The President of the Board of Education becomes the sole arbiter as to what is proper and what is excessive expenditure. He may please himself as to what judgment he may care to give. For the last 12 months local authorities have been confronted with a policy which has been vacillating, changeable and fluctuating, to an extent to which they have not been acquainted for many long years. First of all, the Noble Lord's policy was advance, his next was the abandonment of the percentage grant, his next, not an abandonment of the grants, but a stagnation of expenditure generally.

What his new policy is no one knows and there is nothing in this Bill which enables local authorities to extort from him what his policy is to be. There are something like 665 schools in this country which have been deemed either to be unfit for occupation by children or in such a bad condition of repair that they require immediate attention. The question I want to raise is this. If local authorities are to be called upon to embark upon expenditure in bringing these schools into a fit condition for occupation, how can it be done if the President himself is going to demand at the same time a reduction of their expenditure? It simply cannot be done. You cannot keep your buildings generally in a fit condition to meet the progressive needs of the community and at the same time demand a reduction of educational expenditure. The time has come when, far from demanding from local authorities a reduction of expenditure in that connection, we are entitled to ask for an expansion. Indeed, I find justification for that statement in the White Paper issued in connection with this Bill by the Board itself. On page 3 I find this statement:— In regard to other expenditure, it seems difficult to accept as justifiable an average increase of 15 per cent. over the 1923–24 basis without further information. it is true that during what is known as the Geddes period, expenditure both on hooks, stationery, and on upkeep of buildings and grounds, was abnormally depressed. We are only two years away, at most, from that Geddes period of parsimony. It is impossible to suppose that we have overtaken entirely the arrears in the matter of buildings that accrued during the War and during the further period of depression under the Geddes Committee's recommendations. Therefore, it is clear that we must prepare our minds for a further expense upon educational buildings, rather than a decrease. I submit to. the right hon. Gentleman that this is not the time for introducing a proposal such as this, even within the four corners of a Bill wrongly called an Economy Bill. It is often argued in this House and elsewhere that we do not get value for our money in respect of our expenditure upon education. I wonder how many Members of the House are acquainted with the very remarkable decline in expenditure upon criminals under the age of 16 in this country to-day as compared with the year 1870. I do not argue, of course, that all the decline is due to education; I admit it is not. But no one would say that 50 years of elementary education has had no effect in producing these results.

The results are somewhat staggering. In 1870, of the boys under 16 years of age, there were 8,619 who were convicted. In the year 1910 that figure had been reduced to 48, and in the year 1919 it was reduced to 25. In the year 1870 there were 1,379 girls convicted. In the year 1910 there were only three such girls put into prison, and in the year 1919 there was none. I do not read into those figures more than the figures will legitimately bear. My point is that it has obviously been a wise expenditure on the part of the State to equip the people with education, for it has given in return a tremendous reduction in expenditure upon our gaols and prisons. It has given to our population a finer sense of citizenship, and has removed from society the curse which those 1870 figures indicate.

Mr. DENNIS HERBERT

Will the hon. Gentleman make that statement clear? He referred first t persons "convicted," and afterwards he used the expression "sent to prison." Are they both actually the same? It does not necessarily follow that all those who were convicted went to prison.

Mr. JONES

I think they were convicted.

Mr. HERBERT

In all cases?

Mr. JONES

In all cases. Take the people over 16. There were 107,000 men and 39,604 women convicted in 1870. By 1918 the number had been reduced to 22,000 men and 8,000 women. In fact we have had a real return from our expenditure upon our educational system. The Noble Lord the President of the Board of Education, in his last speech warned a right hon. Friend that those whom the Gods loved died young. The Noble Lord himself is at a. somewhat dangerous age, and it does not, perhaps. become him to issue warnings of that sort. But I will complete his acquaintance with adages concerning the ways of the Gods by telling him that those whom the Gods would destroy politically they first make politically mad. This is the beginning of the political madness to which I have referred. The inevitable consequence must presently be to take the Noble Lord and his colleagues, and if there is anything that I can do in the direction of assisting the removal of those who lay their impious hands on the ark of education, I shall be happy indeed to do it.

Captain STREATFEILD

I rise to support the Bill, and I hope that for a very few moments only I may crave the indulgence of the House while I tread the somewhat thorny way besetting those who have the honour to speak in this House for the first time. Taken as a whole, the Bill is designed as a measure of economy, though one must confess to a certain amount of disappointment at finding that there is a matter of only £8,000,000 to £10,000,000 saved as a result. When one considers national expenditure and the fact that the Estimates next financial year are to be somewhere in the neighbourhood of £800,000,000, that is a very small amount to save. It represents about one or one-and-a-quarter per cent. It is not enough to permit reduced taxation, which is what we want to get. It is riot enough to reduce that taxation burden which is clinging like an old man of the sea around the neck of the Sinbad of industry. The Bill deals with. a certain type of economy. It is a type of economy which is a saving to the Exchequer. It saves money now and it in the future directly to the Exchequer only. But I suggest that there is another type of economy that we want to get as well. The type that I refer to is an arrangement so that, when saviors are made, they are not taken by the Exchequer and kept there, but are passed On. to industry to relieve it from a crushing burden of taxation. That is the type of economy which we want more than the type catered for in this Bill, which simply means that we can only expect alleviation of our burdens at some indefinite and future date, and not at once.

We have to grapple with the immediate problem as well as the future problem, and I must confess that I am sorry to see that there is nothing of the former nature catered for in this Bill. For example, if you take Clauses 1 to 7, which deal with the question of the national health insurance funds, the proposal is to reduce the State contribution. The surpluses there, we have been told, amount to something like £65,000,000. It appears to me as if the employers and the employed had been contributing out of their re- sources really more than was necessary. If, as is proposed in this Bill, the State uses that surplus for reducing its contribution to these funds, that is a type of economy which is a saving to the Exchequer only which gives a benefit, perhaps, at some future date. If, on the other hand, the State passes on the advantage given by that very large surplus to the contributors, the employers and the employed in the shape of requiring reduced contributions from them, that is a type of economy which has an immediate and a very beneficial effect on industry. That applies particularly to the industry of agriculture. There are certain branches of agriculture, at d certain districts, which are just now wobbling on the brink of disaster. An alleviation such as that, the passing on of the advantage of these big funds to industries like that, and to other industries, would go a long way to make the Bill more helpful than it is.

We have had a certain number of suggestions made. I do not want to put forward suggestions. I prefer to leave that task to those sitting on the Front Benches, who have more Parliamentary experience than I have. One or two suggestions which came from the opposite side of the House, I must confess, caused me a certain amount of amazement. If I read his words aright, there was a suggestion from the right hon. Member for Colne Valley (Mr. Snowden)—it was more an invocation than a suggestion— which seemed to indicate that the thing to do was to reduce the interest on the War debt. That seemed to me to be one of the most curious, and, if I may say so with the very greatest respect, one of the most futile suggestions that has come from the opposite side of the House, particularly from a right hon. Gentleman who has occupied the position of Chancellor of the Exchequer. I can just imagine the upheaval that would be caused in the commercial world if such a step were taken. I am not certain whether such a step would have been taken if the right hon. Gentleman had remained in office. If we were compelled, under such an administration, to labour under that idea, the last state of the country would be worse than the first.

There was another suggestion, and a more startling one still, which came from the opposite side of the House. In that I have as little faith as in the suggestion to which I have just referred. It came from the hon. and gallant Member for South Hackney (Captain Garro-Jones). It was a suggestion that the hat should be passed round. We have had in this House more famous hats, perhaps, than that. We had the famous hat of the right hon. Member for Preston (Mr. T. Shaw). The suggestion made yesterday about passing the hat round and gathering voluntary subscriptions to the Exchequer, would have about as much effect as the hat belonging to the right hon. Member for Preston has had. Although I am to a certain extent disappointed with the Bill, for these reasons, I hope that when the Minister of Health replies he may be able to say something about the passing on of the advantages of big Insurance funds directly to the people concerned in industry, and not retaining the advantage to the Exchequer. I trust that the Bill, though it is disappointing to a certain extent, is but the precursor of other similar Measures. Bills of this sort will possibly be unpopular; but I urge the Government, with their enormous majority, to be bold in dealing with the vital subject of economy. I do not think there is any hon. Member on this side who would not be glad to back up the Government to the fullest extent on these Measures, however great the opposition to them may be, if only the Government stick to their gulls, and go ahead on the right lines.

I may cause some surprise to hon. and right hon. Gentlemen opposite if I plead with them that they ought to support this Bill. I put it to them that this Bill, by helping industry, and by assisting eventually, though not immediately, to relieve the crushing burden of taxation, will go a long way towards reducing unemployment. [Laughter.] There are derisive interjections from hon. Members opposite at that statement, as I might have expected, but if they do not support this Bill, I suggest they are recording a vote which will increase and not reduce unemployment; they are letting down those splendid workers whom they claim to represent, and I only hope that if they do so, they will be handed down to posterity as those who lifted not one single finger to help the people in their hour of need.

Mr. HARNEY

May I congratulate the last speaker on a very excellent maiden speech. There are many criticisms which one would wish to pass on this Bill, but, as my time is limited, I desire only to deal with those points which I think have escaped notice so far in this Debate. The hon. Member who has just sat down seems to be under a misapprehension which I think is one of the causes of this attack—made for purposes of economy—upon the National Health Insurance system. The hon. Member said we had £65,000,000 of surpluses scattered over these societies, which indicated that the contributions were too high. That is entirely wrong. The very structure of the Act of 1911, the very machinery of the system involves the necessity for surpluses. When the cooperation of the friendly societies was sought, it was known that there were some friendly societies better off than others, and with members of a more healthy class. A rate of contributions which would keep the average society in a state of solvency, since it was a flat rate, was bound to result in the successful societies accumulating surpluses. Knowing this at the time, the friendly societies refused to bring their organisation into the scheme, unless it was clearly undertaken—as undoubtedly it was—that such of them as were able by efficient management, good fortune, or a good selection of members, to create surpluses would have the full benefit of those surpluses in deferred or additional benefits. Therefore, it is a misapprehension which causes those, who have not gone thoroughly into the matter, to say: "Let us go for these surpluses; they are accumulating and the sums rushing into the Fund are greater than the Fund requires." That is not the case.

The next point which has not been brought out is this. The Chancellor of the Exchequer suggests that this Bill will not cut down benefits and will not lengthen the period within which the sinking fund is to be cleared off. In my submission, the right hon. Gentleman is wrong on both points. The benefits arising under the National Health Insurance Act are three in number. First, there are the minimum benefits or the ordinary maternity and disablement allowances. Secondly, there are the additional or deferred benefits, springing out of the surpluses which are an essential feature of the scheme. These are not problematical benefits, but are actually defined in a Schedule to the Act. Thirdly, there are the benefits which are called "extended benefits" and which arise in this way. When a number of persons come for the first time into an insurance system, each contributing at the same rate and each getting the same benefit, but where they are of different ages, it follows that, unless some provision is made, one person will get more benefit for less payment than another. The provision made in this case was that each person on entering was credited with an amount which represented what his value would have been, had he been contributing from the earliest age. These were paper pledges for which the State was responsible, and in order to pay them off, the State arranged the sinking fund, and, in order to wipe out the sinking fund, it. arranged that there should be an addition to the amount which the contribution would otherwise he. That is how the ninepence is obtained. The ninepence is not the actuarial figure necessary to produce ordinary benefit, but is the figure necessary to produce, firstly, the minimum benefit, secondly, the benefits arising out of the surpluses, and, thirdly, the benefits, arising out of the addition necessary to wipe out the sinking fund, which benefits would come into operation when the sinking fund had been wiped out.

There can be no doubt about it, that this Bill, though it leaves untouched the minimum benefits, cuts down the promised benefits arising out of the surpluses and the extended benefits which would come into operation when the sinking fund has been wiped out. The Chancellor of the Exchequer also seems to suggest, and it certainly is suggested in the White Paper, that although we are diminishing the stream which flows into this fund, out of which we draw the three benefits I have mentioned, the present benefits will remain untouched and still the sinking fund will be wiped out in the same period as if the Bill had never been passed. That is not so, and the fact is obvious from a Clause in the Bill itself. The effect of Clause 3 is very correctly expressed in the marginal note: Application of Reserve Suspense Fund and Central Fund towards making good deficiencies due to the provisions of this Part of the Act. In the first place, the Chancellor of the Exchequer contemplates that while, in the name of economy, he is restricting the source from which the benefits come, that very process will result in the creation of deficiencies which, again, will have to he filled from sonic other source. That is a curious form of economy. What, then, is the source from which these deficiencies created by this Bill are to be filled? It is the Reserve Suspense Fund. It may be asked: What is that Fund? I have explained to the House as briefly as I could the reserve values which are credited to each contributor to make up for differences in age. It was intended, in the first instance, as persons passed out of insurance to help along the benefit fund by these reserve values, and when during the War a great number of insured persons were killed, the question again arose as to the disposal of these reserve values. An Act was passed under which they went into the Reserve Suspense Fund. That Fund was to be used, and has been used, for enabling new entrants into insurance, who by reason of their age, would either have to pay greater contributions or receive less benefit than others, to receive the same benefit by the same contributions. When that had been done, if there was any balance in the Fund, that balance was to go towards wiping out the sinking fund.

The Chancellor of the Exchequer in effect says, "Here is a proposal which will have the result of creating deficiencies "—[HON. MEMBERS: "No ! "] The Bill itself says that if on the valuation of an Approved Society, it appears that a deficiency will be disclosed in consequence of the provisions of this Bill the Minister may cause a sum to be paid out of the balance in the reserve suspense account to wipe out- that deficiency. [HON. MEMBERS: "If!"] Everybody knows that the "if" represents a reality; otherwise for what is the Clause inserted? Is it to be thought that this Clause, containing three Sub-sections, is put into the Bill to deal with a contingency which may never arise? It is puerile to make such a suggestion. The Clause was put in because the actuary had worked out his figures and had found that it must necessarily follow, if you diminish the stream, that parts of the bottom will begin to show. This suspense fund which to-day is used to help poor people over 60 years of age to get the full benefit without increased contribution, is to be taken away. That must be the effect of the Bill. The Chancellor of the Exchequer justifies this raid, not on the Fund itself, but on that which leads to the Fund, on three grounds. The first ground is because under the Pensions Act of last year old age pensions become payable at the age of 65. Therefore, he argues, those responsible for the Approved Societies in respect of Health Insurance. will be saved the liability for the ages between 65 and 70; they will have more in hand and there will be something to take.

That is a fallacy. It is a fallacy on two grounds, the first of which is this: Provision was made in the Pensions Act of last year, on an actuarial basis, for a payment of, I think, 15d. from industry, from both sides, in order to give these new benefits, but that 5d. was reduced to 4½d. or 4d., because it was said: "Since you will have less benefits to give, you, the approved societies, in order to meet the relief thereby given to you, will receive less contributions." It is true that a State contribution was not referred to in the Bill of last year, but it must be remembered that the State contribution to the Health Act is not, as it is to the Unemployment Act, a fixed weekly figure, but two-ninths of the benefits, and, therefore, when you have the benefits that have to be given from 65 to 70 cut down, you have the gross sum less, and two-ninths of a less sum is a less figure, so that the State is relieved from its contribution automatically to that extent. Therefore, it is a complete fallacy for the Chancellor of the Exchequer to put forward, as a justification for this raiding, that by reason of the Pensions Act the approved societies are in a better position. They are not.

Another reason he gives is that the actuarial basis upon which the whole scheme was constructed in 1911 was that the accumulated funds would carry interest at the then rate of 3 per cent., but it has since had interest at a greater rate, and, therefore, the approved societies will have got the advantages of that greater rate. Have they? They have got it no more than all the rest of the community who are in possession of public funds. They all stand alike, and, furthermore, if they have got a slightly increased interest arising after 1911, they have a greater cost of administration to pay by reason of higher wages, so that one wipes out the other. His last reason, which is the worst of all, is this: Since this came into operation, he says, all the advantages that accidentally arose have accrued to the benefit of the approved societies, and all the disadvantages have accrued to the State. It is, in my humble submission, exactly the contrary.

What are the advantages that have accrued? The first was that, by reason of its great success, as my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) pointed out, there were vast surpluses in some societies, and that was an advantage. But who got the benefit of it? A Commission in 1918, the Ryan Commission, took away a large portion of these balances from the approved societies, and took it away on the express promise, then given to them, that what was taken from them would be made up in the additional benefits that they would be able to give. What is the other advantage that arose? It was that persona with reserve values passed away. That was an advantage to the approved societies, but who got it? The State comes along and says: "You will not get it; we will pass it to the suspense account." So that the only two advantages that arose, so far from accruing to the approved societies and being against the State, were taken advantage of by the State to the disadvantage of the approved societies, and now, when this reserve suspense account has been carved out to the disadvantage of the approved societies, the Chancellor of the Exchequer comes along and says: "We will take that." I cannot develop my argument further, as time is up, hut I hope that in Committee we will be able more thoroughly to thrash this out, because it seems to me to be a very contemptible endeavour on the part of the Government to make themselves appear better before the community, to get the credit of being able to say: "We have put on no extra taxation," and to do that at the expense of taking, under camouflage, from the very poorest class of the community the benefits to which they became entitled by the payment of their own money since 1911.

Mr. CLYNES

I hope not to address the House at any undue length, in order to leave to the right hon. Gentleman, who has so much to answer, ample time in which to reply. The Chancellor of the Exchequer must already have divined the verdict and the real Parliamentary opinion on the Bill he has presented, and I hope he has had an opportunity to find out for himself what is both the Press and the public outlook upon his Economy Bill. It would be too much, of coarse, to ask the Chancellor of the Exchequer to withdraw this Bill, but I forecast that, long before we have heard the last of it, the little enthusiasm which has been shown so far in its favour will have been reduced to almost a. chilling indifference for the proposals which are within it. The "Times" of this morning gives, I think, a quite accurate estimate of what relation this Bill bears to the situation which was raised for us by many previous pronouncements on behalf of the Government. Says the "Times": Not even the most astute promoter can make a flyweight succeed in the heavyweight class. The Chancellor of the Exchequer is a skilled Parliamentarian of great resource and almost unlimited gifts. There is nothing which he cannot defend, and very little, if required, that he will not desert, for those who listened to his speech of yesterday felt that he himself harboured the conviction that the Bill was but a poor and contemptible thing at best. For one and a half hours he addressed this House, with variations of information and entertainment which all of us enjoyed, but not 10 minutes of that time did he give either to an exposition or to a support of the Bill which we are called upon to consider, and I am not without hope that his own exhibition of contempt for the Measure will be followed up by a good deal of public disgust which rapidly will be revealed.

Of course, this Government has an abounding faith in public forgetfulness, and the Chancellor of the Exchequer shares that faith, and for that reason he now looks forward to a complete blotting out of memory with regard to that definite promise, given only quite recently —indeed, in the early part of last year— that we may look forward to a. continuous yearly reduction of £10,000,000 in national expenditure. The mention of that figure was given but a moderate reception. Hopes had been raised very much higher, and no doubt hundreds of millions were in the minds of those who heard only ten spoken. But, instead of even this diminution of £10,000,000 in national expenditure, we have an increase of nearly that figure. That is the contrast which the Chancellor of the Exchequer or the right hon. Gentleman the Minister of Health, who, I understand, is to follow me, has to explain. I do not remember to have listened to any two days' Debate in which there has been more repeated and explicit proof of broken promises and indifference towards them than this Debate has revealed, but I do not expect this Government to be any more true to its pledges than this Bill can be true to its Title.

The pledges were given not merely openly in this House, but, as we know, years ago through the medium of repeated conferences and consultations with the representative bodies acting for those who had to be insured, both in regard to unemployment and to conditions of health. There have been no consultations of a similar kind with the same persons or with aggrieved organisations, who now have an increasing right to protest against the way in which the Government proposes to deal with their savings and reserves, and I accordingly describe this Bill, not as a Bill to effect any economy, for apart from a little saving on printing, it will do no such thing, but as a Bill to effect a transference of payments intended for the use of tie poor in their hour of greatest need, and to effect that transference in order to save: a call for further payments from richer people. Nearly all who have addressed the House on this subject have regarded the Bill as being directed to three considerations or covering three questions. The Bill can be reduced, therefore, to one of imposing penalties upon the sick, upon the unemployed, and upon children in relation to their education. I saw a letter in the "Times" a day or two ago from Mr. F. Kershaw, president of the National Association of Trade Union Approved Societies. He is no mean authority, and clearly speaks as a representative voice or questions of health insurance. In his letter I find a statement to which I would like an answer. He writes: The immediate and direct effect of the 'economy' proposal is to deprive an average working class household of eight shillings a week at a time of sickness, when in scores of thousands of households the total income otherwise will be the ordinary sickness benefit of 15s. It is difficult to believe that a saving of about two million pounds a year to the taxpayer at the expense or a stricken household will meet with the approval of Parliament, or that it is economy in any sense of the word. 7.0 P.M.

Perhaps the right hon. Gentleman the Minister of Health does not think much of the opinion of Mr. Kershaw, and, therefore, I would like, in relation to one branch of this Bill, to quote his own opinion. He will recall the discussions in this House, in the middle of last year, on the subject of contributory pensions, and he will recall particularly his answer to a speech made by the right hon. Member for the Hillhead Division (Sir R. Horne), in which he denounced in unqualified terms any suggestion to raid the surpluses of the approved societies. Such a step, he argued, would be a breach of faith involving the societies in ruin. The right hon. Gentleman said something, not on the subject of surpluses, but on the question of reduced contributions. I cannot find in the report of his speech that he distinguished between the contributions of the insured person, of the employer, or of the State. Speaking expressly on that question of contributions, he said: If you reduce the contributions you must add to the number of societies that will be deficient and decrease the number of societies that have surpluses. It is certain that you are going to throw the whole scheme into discredit if you are going to put a large number of societies into deficiency. Finally, he said: Unless you have a sufficient margin of contributions your central fund will disappear altogether." — [OFFICIAL REPORT. 22nd July, 1925; col. 2369, Vol. 186.] I therefore ask whether the right hon. Gentleman has modified in any way that expression of Parliamentary opinion which he uttered on the question of contributions.

Last night, when the right hon. Gentleman the Member for Seaham (Mr. Webb) was addressing the House he had repeated interjections from the Chancellor of the Exchequer, and the Chancellor found a great deal of consolation in what no doubt he deemed to be an admission on the part of my right hon. Friend. The interjections of the Chancellor were to the effect that so far as the Bill proposed to take anything at all, it was only to take what people did not now possess. Well, if we are to push that doctrine to its full conclusion, I invite the Chancellor's attention to the laws of inheritance, and to those questions of the transference of property which arise on the occasion of death. I know, of course, that the Death Duties and Estate Duties are very heavy now, but the dead at any rate can bear them, and I suggest to the Chancellor that if he is really in such dire distress for the few million pounds he is intending to take, he might go further in the matter of these Estate Duties and take that which no one now possesses. Will, therefore, the Chancellor apply the principles of this Bill, not to the poor, who alone are affected by it, but to the richer classes who can well afford the application of principles of this kind?

The Chancellor of the Exchequer was much more candid than most of his colleagues as to the way in which this Bill looks after the unemployed. We have tried to extract an admission from the Minister a Labour that his administrative acts, his tightening up of the Regulations and his instructions to his staffs, have adversely—not in any wrongful sense—affected unemployment benefits. We have never been able to get that admission, but in the course of his speech yesterday the Chancellor explained to the House that we were paying less unemployment benefit now because of stricter administration. At the same rime, there was the quite conflicting and illogical claim that the number of unemployed was decreasing by the process of the workers securing employment. The official number is, in fact, decreasing by this process of the stricter administration of the law and of Regulations which deprive people of benefit, and which, therefore, cause less to be paid. We are entitled to denounce a Measure of this kind as Being in the nature of the worst type of class legislation which could be brought in.

We have often been unjustly charged with some wicked desire somehow in the future to make inroads on the savings of the poor. The Socialist, it is said, would endanger the hard-earned savings of the masses of the people. This is a Bill to legalise the immoral transference of money from the poor to the general Exchequer. I am sorry that the Chancellor of the Exchequer is not in his place, for he is becoming actually the chief Parliamentary marauder of the Government, attempting from time to time by one plan or another to raid whatever fund there may be anywhere for any special purpose and no matter how subscribed. Nothing is safe from him, and he asks us to be consoled with the idea that, after all, this transference of money and all the savings are to be effected at the cost of no money at all. That argument applied to the greater part of his speech—that nobody would be a penny the worse. The Chancellor can do much—but he is far away from the age of miracles, and this transference of money from one quarter to another is bound in the nature of things to inflict penalties that the poor cannot bear.

The Chancellor alleged that we were in enjoyment of growing wealth in this country. I admit that our wealth is growing, but the Chancellor is wrong in his qualification or description of that growth, for he spoke of the general and increasing wealth of the country. If that were true, he would thereby be making a most powerful case against his own Bill, for surely, if there is general and increasing wealth in the country, these penalties ought not to be imposed on one—and that one the poorest—section in the community, when they could be borne by other processes of imposing taxation. Wealth does increase, but its enjoyment is not general. In answer to the Chancellor, I want to adduce to the House the figures supplied to us quite recently by the Minister of Health. A return was lately issued by his Ministry which showed that on the last Saturday of the year in 1925 1,324,000 people were in receipt. of relief of one kind or another, that number being, by the way, about a quarter of a million more than were in receipt of relief when the Labour Government left office in l924. We do not seem to be the richer because of any change in the Government.

The Chancellor told us that as we travelled through the Committee stages of this Bill each Minister would be called upon to define and explain the appropriate Section of it relating to himself. I regret to see that the Minister of War is not present, as I would like to draw his attention to the effect of impoverishment, in spite of the alleged general growth of wealth, which I say is not true. We have had figures supplied to us within the past two weeks by the War Office, and what does this impoverishment mean in terms of recruitment, with its special bearing on the question of physique? This Report of the War Office says: Of the total numbers presenting themselves for enlistment only 36 per cent. were fill ally accepted. We have the country plastered with appeals to men to join the Army—" See life at other people's expense "—and there is a response on the part of men, but so unsuitable are they and unfit physically through their living conditions and lack of nourishment, that only 36 per cent. of those presenting themselves are in a fit condition to be enrolled. The Report further says: It is apparent in all districts that the physique of those presenting themselves for enlistment is comparatively low, and that large numbers of rejections are due to lack of development. During the year a total of 52,207 candidates for enlistment were rejected as unsuitable on physical and medical grounds alone. Can it, therefore, be said, when a test of this kind is applied to the working classes, that they are in that condition of robust health and physique to justify any narrowing of opportunities of medical or health benefits of any kind. I say it is a disgraceful thing to make the poorest pay at a time when they are not in such a position as to be able to do it. The fundamental error of Governments since the end of the War has been the failure to divert for national uses the improper fort Lines of war profiteers. I well remember the appeal we made to, and the sympathetic response of, the late Mr. Bonar Law, when we said there was a margin of wealth which had been improperly acquired by many thousands of people who had neither sacrificed nor served. That was the phsychological time for taking effective Parliamentary action, but a very large number of hon. Gentleman who then occupied seats opposite pitifully protested and begged the Chancellor to do nothing of the kind. In 1919, the Government of the day could easily have compelled those who had secured ill-gotten gains in that way to yield up much of their gains to the nation, just as millions of men had been compelled to yield up their lives.

The Chancellor is capable of big things with great opportunities, but his sphere of movement in this matter of economy, he will find, will remain very much narrowed, for the largest single item of national expenditure is interest on the money that we borrowed and lent for war purposes. Incidentally, the money which we borrowed, and on which we are paying interest, we loaned after borrowing it, and are paying interest on the money that we lent as well, and are not receiving from foreign countries any of the money which everyone would like to secure. Let the right hon. Gentleman face that fact and not commit himself to this mean and petty device to divert the moneys intended for the redress and improvement of the poorer classes.

As I said when I opened my remarks, a good deal has been heard about pledges, and accordingly I would say that those who are the spokesmen of the Government should have proclaimed their pledges on the eve of the last General Election. As honest men they should have said that if the Conservative party is returned to power it will reduce the pay of the unemployed, it will deprive thousands of that benefit for which they have paid, it will invade the funds subscribed for health and unemployment purposes, it will lessen the grants available for education, and throw upon the poorest localities heavier burdens than ever were borne before. That would have been the pronouncement of honest men. They still have their opportunities. This is not a Bill for economy; it is a Bill for impoverishment.

The Government may rely upon its majority with its Whips in its hand, but I venture to say, if only out of respect for hon. Members opposite, that if they felt as keen upon this question as they felt in relation to the proposed grant of £200,000 for fields of play for civil servants, they would make themselves as freely heard as they did on that occasion. It was a small item, proclaimed even with the authority and prestige of a royal name, and yet the Government had to bow before the displeasure which their announcement incurred. The working class, it is said, are behind hon. Gentlemen opposite as well as ourselves, and they claim to he Labour Members, too. I say to them that this Bill alone touches adversely the poorest of the working classes, and if they wish to show themselves in any sense true supporters and representatives of that class, let them do in relation to these proposals what they did in relation to the recent announced grant, or, if not, let them ask for freedom, because this is, perhaps, above all questions, an issue upon which they are entitled to vote as they choose, and I give them the credit of believing that if they had that freedom they would reject this Bill.

The MINISTER of HEALTH (Mr. Neville Chamberlain)

In his opening speech my right hon. Friend divided his observations into two portions. The first part he devoted to a discussion of the Clauses in the Bill, but in the second part he entered upon a wide and comprehensive survey of the whole of our public expenditure. He defined in precise and lucid terms those parts of that expenditure which it is within the power of this or any other Government to control; and, finally, he gathered up the savings which this Government has been able to make in all directions, savings of which those proposals that are contained in this Bill are only a part, and he showed how they were related to that comparatively narrow field with which it is possible for us to deal. Hon. and right hon. Members opposite were not satisfied with the arrangement of my right hon. Friend's speech. Thee said that his statement of the Bill was perfunctory. The right hon. Member for Seaham (Mr. Webb), who has a taste for military metaphors, said he had concealed himself behind a smoke-screen, and the right hon. Member for Spen Valley (Sir J Simon), out of the rich storehouse of his experience of the arts of advocacy, suggested that my right hon. Friend said so little about the Bill because he was aware of the weakness of his case. Hon. Members who have been some time in this House with the Chancellor of the Exchequer, and have seen him in some tight corners, will, I think, at any rate, give him the virtue of courage and they will admit that he is about the last man in this House who can be accused of shirking his fences.

As a matter of fact, in this case there is no very formidable obstacle to cross. I hope before I sit down to show the House that we have no difficulty whatever in justifying the morality as well as the propriety of every Clause in the Bill But I cannot help thinking that those who make this criticism upon my right hon. Friend leave out of account altogether the fact that he is the Chancellor of the Exchequer, and is not concerned in a Debate of this kind with administrative details. What the country is expecting from him is to give it an opportunity of understanding how he is proposing to balance the public revenue and the public expenditure. He is the man who is assailed every day with indignant remonstrance because he has not cut down public expenditure by hundreds of millions of pounds. He very naturally, and, I think, properly, takes what, obviously, is the best opportunity that can be given to him to lay before this House and before the country a full and complete account of the expenditure, to divide that expenditure into different categories, to explain to us all, so that we may see for ourselves, what are the things he can touch. and what are the things he cannot. In doing that, it seems to me he is rendering a service not merely to this House, but to the whole country, which will, perhaps, be able to view what is certainly an obscure situation with a greater perception of the realities of the case than has been possible to them before.

I must confess that I listened to the speech of the right hon. Gentleman who moved the rejection of the Bill with profound disappointment. I did think that from an ex-Chancellor of the Exchequer we were entitled to expect something more than the barest debating points such as we heard yesterday. He had plenty of adjectives, such as "dastardly," "mean," "contemptible"—we know the stock-in-trade of the right hon. Gentleman so well. The ex-Chancellor of the Exchequer had exhausted his vocabulary before he began, but we surely must have something more than that, because, after all, abuse is not argument. As, I think, Dr. Johnson said on one occasion Inherent and radical dullness is seldom invigorated by extrinsic animation. What was the burden of the right hon. Gentleman's speech? It was repeated by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) and again repeated in another form by the right Hon. Member for Platting (Mr. Clynes). But there is a difference between the three to which I would like to draw attention. The right hon. Gentleman said that my right hon. Friend when he was opening his Budget promised this House he would make a reduction of £10,000,000 a year, arid that he did not fulfil his promise.

The right hon. Member for Platting said that he gave a most definite promise to the country that he would reduce the expenditure by £10,000,000 a year. The right hon. Gentleman has been talking about a number of pledges that were broken. It is easy to accuse people of breaking pledges if first of all you alter the words they have used to suit your own argument. I think it is the more in excusable because the right hon. Gentleman, who has had so much experience of quotations, should have taken the precaution of looking up the pages of the OFFICIAL REPORT before he gave it, and have given us the correct version. What did my right hon. Friend say in his speech on he Budget? May I read his words again? The right hon. Gentleman will forgive me if I repeat what he said, because some hon. Members may not have been here. This is what the Chancellor of the Exchequer said: I believe that we ought to aim at a net reduction, in the Supply expenditure of not less than.£10,000,000 a year. "— [OFFICIAL RFPORT.28th April, 1925: cols. 59–60, Vol. 183.] "We ought to aim at." Is that a definite promise to achieve it? Did the right hon. Gentleman opposite and his colleagues always hit the mark when they were in office? If they had, they might have been sitting on these benches to-day. As a matter of fact, he did not confine himself upon that occasion, as he has on this, to mere abuse. He made his own suggestion as to how economy could really be effected. He said there were two ways in which economy could be effected—a reduction of the interest on Debt by conversion and a reduction in the fighting Services, and he went on to say: I believe it is in this direction mainly (that is, Debt conversion) and in the expenditure on the fighting forces that there is any possibility of reduction, because I do not believe it is possible to effect much, if any. indeed, I do not believe it is possible to effect any reduction at all in the aggregate of the Civil Service expenditure." —[OFFICIAL REPORT, 29th April, 1925; col. 178, Vol. 183.] The right hon. Gentleman has turned out to be a false prophet. My right hon. Friend has made a reduction in the Civil Service expenditure, not of £10,000,000 but of £12,500,000. He has done that by aiming at something which the right hon. Gentleman did not think it was worth his attention to consider at all. Then we come to the right hon. Gentleman the Member for Carnarvon Boroughs. I was disappointed there, too, because I thought the right hon. Gentleman would at least have lent his aid to those who were advocating economy. Not only did he find the reasonable proposals for the reduction of expenditure included in the hill wrong, but he seemed to think that we ought not to economise in any other respect except one. When it came to the Road Fund, he said there was an unlimited field for new roads to be constructed now. He spoke with praise and joy of what he described—quite inaccurately, I am glad to say—as the general attitude of boards of guardians to-day, for he said all the ideas that once existed of asking applicants for relief for information about their means had been swept away.

Mr. LLOYD GEORGE

I never like to interrupt, but I must here. What I said was that the old bullying and hectoring method of dealing with applicants had disappeared altogether. I certainly never suggested that boards of guardians should grant indiscriminate relief without any kind of inquiry. If I created that impression, I am very glad of the opportunity of putting it, right.

Mr. CHAMBERLAIN

I am very glad, indeed, that I have been able to afford the opportunity to the right hon. Gentleman to correct a false impression which he certainly made on me, but the only suggestion for economy he gave us was that we should abandon all means of defence, and that we should cease to burden ourselves with armaments, in the hope and belief that we should not have any war. I read in a paper a few days ago a letter from Sir Donald Maclean, in which he stated some of the old principles of economy, and added that it would be interesting to see how many voices would be collected in the House of Commons on Tuesday and Wednesday in support of these unpopular but vital principles. My right hon. Friend, who gave us his account of national expenditure, dealt with various points. I believe and understand that hon. Members, not alone in this quarter of the House, have been disappointed that the field for economy should be. demon- strated to be so small. Yet I cannot but think it right that we should face the facts. I believe their disappointment arises from the fact that until the Chancellor of the Exchequer's speech, and the tables which have been prepared and put before them, they had not fully realised the bearings of these facts, or the tremendous task with which my right hon. Friend has been faced, and with which he has so successfully grappled.

I propose to take the Clauses in the Bill which have been attacked. The attacks have centred around three subjects—education, unemployment insurance, and national health insurance. I will deal with them in that order which, if I may say so, is the reverse order of their importance. Clause 14 of the Bill deals with education. It was represented by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden), and also by the right hon. and learned Gentleman the Member for Spen Valley, as being the re-introduction of the block grant system. The right hon. Gentleman said that it was a replacement of the block grant system. Statements of that kind show how little the speakers have understood either the Clause or the block grant system itself. What is the block grant system? It is the allocation of a definite sum of money which is fixed upon to be paid out of the Exchequer to the local authorities for a definite term of years, that sum not being reduced provided that the local authorities maintain a minimum standard of efficiency. Provided they do that, there is no interference with them by the central authorities.

Mr. BARKER

A minimum standard!

Mr. CHAMBERLAIN

Does the hon. Gentleman object to that? Would he say there is to be no standard for the local authorities to maintain? Would he give this money to them and say, "Here you are; you must not keep up any standard at all?" What is it that this Clause does? It is exactly the opposite of the block grant system. It is, in fact, the inevitable accompaniment of the present percentage system, because if you have a percentage system you must have far more interference, far more checks, and far more restrictions by the central authorities than if you adopt what has been described as the block grant system. When the block grant system is introduced for education, this particular Clause will become obsolete. It will be unnecessary. We shall not want it any more. We are obliged to put it in now. What does it give us? As a matter of fact, this Clause gives the Minister nothing that is not really possessed by him already. That has been admitted by hon. Gentlemen opposite. On 8th February last the right hon. Gentleman the then Member for the English Universities (Mr. Fisher) said: Parliament has confided to the President of the Board of Education the very formidable powers of deciding whether any branch of expenditure shall rank for grant or not."—[OFFICIAL REPORT, 8th February, 1926: col. 740, Vol. 191.] As a matter of fact, grants have been withheld on the very grounds which are put into this Clause—on the ground of extravagance, and on the ground that the money ought to have been expended in a certain way. Why did we put in this Clause? Let me tell the hon. Member for the Wellingborough Division (Mr. Cove) the reason for it. He said that what the educational authorities wanted to know was where they stood. They wanted, he said, to have some certainty as to the relations between them and the central authority. That is just what they have not got now because of doubt about the working of the particular Clause which deals with this matter in the Act of 1918. This present Clause begins with the words: (1) For the purpose of removing doubts‥‥ Clearly, therefore, that is stating in clearer language what has been somewhat confused by the, perhaps, unfortunate wording of the Act of 1918. Therefore this will carry out what my hon. Friend desires and tell local authorities where they are. I think it is only fair to them and to this House that the relations which are to exist between them and the conditions which are attached should be defined in the clearest terms.

There is next the question of unemployment insurance. What is the criticism there? Is it suggested that a single unemployed man is going to be worse off in any respect whatsoever by reason of the proposals in this Bill? [HON. MEMBERS" Yes ! "] I challenge hon. Members opposite to answer that question. The right hon. Member for Platting certainly did so, but no one else has encouraged this idea. Of course, it is perfectly untrue. The benefits of the Unemployment Insurance Act remain absolutely untouched by anything in this Bill. Does it touch employed men? I say it does not injure any employed man. It does not make him any worse off than to-day. It does not affect the contribution which he has got to pay towards unemployment insurance. What is the criticism? There are two criticisms that I have been able to extract from the speeches and questions of hon. and right hon. Gentleman opposite in this Debate.

The right hon. Gentleman opposite used language to which I must say I object. He referred to a breach of faith. Really, a breach of faith ought to be considered as a very serious offence, indeed, and the language will lose its seriousness if we come to apply it to everything we do not like. The use of these words are not justified in this case. What is it the employers are losing? They are losing their chance of getting one penny taken off the amount of their unemployment payment over a certain period of time. Was there a bargain? Was there any agreement? Of course there was not! What happened was that hopes were expressed that as unemployment went down the employers would be able to get this reduction of one penny in their contribution. They gave nothing in return. I will make the right hon. Gentleman a present of this. We plead guilty to the charge of having taken for the Exchequer what at that time we expected to be able to give back to the employers. But what are we doing with the money? We are using it to avoid further taxation, which is the very thing that the employers are pressing us to avoid. Therefore, I say they can have no grievance against us on that ground. That is the first criticism.

The second criticism is this: that we are always changing our minds, that one month we are legislating to increase our contribution to the Unemployment Insurance Fund, and then a few months afterwards we come along and introduce a Bill which is going to reduce it. How inconsistent. How uncertain. What a gamble. It seems to me that the fact is that in all this we are struggling against the petrified fossilisation of the party opposite. We change our plans because conditions change. They want to keep theirs however the conditions change. But what is it we are doing in this matter? We had to make a calculation as to the Exchequer contribution towards the Unemployment Insurance Fund in order to make that Fund solvent within a certain given time. The essential factor in the calculation was what was going to be the average number of unemployed during the period. We made our calculation. We made our legislation to suit the circumstances as they were given to us at that time. Now, however, after a lapse of months, we find that circumstances have altered. We find that unemployment is steadily going down. Should it not be a matter for rejoicing for hon. Members opposite that unemployment is going down? I say this was our calculation as to what the contribution from the Exchequer should be. We are not robbing anybody because the industrial contributions have decreased and unemployment is rapidly disappearing.

But our calculations may be wrong and unemployment may turn out different to what we expect. It may he greater or it may be less. We take the risk. If we find that unemployment is higher than we calculate upon, then we shall have to come back and get sanction for the payment of further contributions. I do not say we shall, but that is one way of doing it. That is one risk. What is the other The other risk is of putting on extra taxation. Nobody wants increased taxation. The proposal here is the correction of a calculation made on information which was the best we could obtain at the time when we made the calculation, and which we are now able to correct in the light of later and more accurate information.

Now let me come to the question of national insurance, a most important item, one in which, I think, the largest number of people are interested, and in respect of which it is necessary to give the House information which will enable it to judge whether or not the criticisms we have heard have been justified. I think I ought to begin by saying what it is the Bill proposes to do, because there is evidently no very clear understanding of that. I think the clearest account of it was given by the right hon. Gentleman the Member for Seaham, and although I would prefer to state it in my own words, I do not quarrel with the substantial accuracy of what he said. Let me say what it does not propose to do. It does not touch any of the normal statutory benefits which are given to insured persons. It does not reduce the value of the benefits received by insured persons to something below the equivalent of the contribution made by the entrants at 16. The right hon. Gentleman the Member for Spen Valley did not seem quite to apprehend this point, but he will find from the Government Actuary's report that the value of the benefits will still always be more than the value of the contributions made by the entrant at 16.

Sir JOHN SIMON

I take it the right hon. Gentleman means the contribution made by the man—or the boy—and his employer, excluding the contribution made by the State?

Mr. CHAMBERLAIN

Precisely. I am talking about the 9d.

Sir J. SIMON

The right hon. Gentleman is surely speaking of 7d. out of the 9d.

Mr. CHAMBERLAIN

No, I am not. That is where, I think, the right hon. Gentleman has made a mistake.

Sir J. SIMON

I shall be glad to be corrected.

Mr. CHAMBERLAIN

I will come again to that point. At the moment all I want to say is that the 9d. the entrant at 16 pays entitles him to benefits worth 9.22 pence; and in the case of women the benefits are more in excess of the contribution. A woman is more costly than a man in insurance.

Viscountess ASTOR

And of more value.

Mr. CHAMBERLAIN

The Bill does not touch the surpluses which are accumulated under the first valuation, surpluses which amounted to something over £17,000,000. The benefits which were decided upon by the various societies as the result of that first valuation will still go on, being unaffected by the Bill. It does not touch the surpluses which have been disclosed, or which will be disclosed, by the second valuation. surpluses much greater than those disclosed in the first valuation, amounting, including the carry forward, to £45,000,000. It does not touch the surplus which has been accumulating since the second valuation was completed up to 31st December, 1925. Therefore, what it does do is only to slow down as from the 1st January this year the accumulation of further surpluses in the funds of the approved societies.

Mr. J. H. THOMAS

May I ask a question on that? Was it contemplated in the original Act that this £2,800,000 which is taken would provide for additional benefits that now cannot be given?

Mr. CHAMBERLAIN

I shall come to that point in the course of my argument, and I have no doubt the right hon. Gentleman will remind me if I fail to do so. Hon. and right hon. Gentlemen opposite seem to think we were trying to engage in some kind of jugglery by which we were going to diminish the State's contribution to the approved societies without the approved societies being any poorer for that diminution. We are not pretending to any such jugglery as that. I want the House to understand exactly what is the effect of our proposals, and not to think, as they might very well think, that we were raiding surpluses, or that we were going to affect anybody in receipt of benefits to-day, or to throw any society into a deficiency by reason of these proposals. That is one more point I wish to bring out—that we are not going to throw any society into deficiency by reason of the diminution of the State grant, because there is a provision, which was contemplated by the Royal Commission, for using the Reserve Suspense Fund for assisting any weak society which may he thrown into a deficiency by these proposals, and making up to it either the amount of the deficiency or else the amount of the loss. That, then, is what this proposal does. It slows down the rate of accumulated surpluses in the future. The House should realise that the benefits declared on the second valuation will he available up to the end of the year 1931, and that any benefits which might have been declared on the third valuation would net have come into operation until after 1931, so that there is still some little time ahead before even the effect of this slowing down will become operative. We are told this is a breach of faith. The right hon. Gentleman opposite says it is a breach of faith.

Mr. THOMAS

A definite breach of faith.

Mr. CHAMBERLAIN

I do not care whether it is definite, or indefinite; if it be a breach of faith, it is wrong. I maintain it is not a breach of faith, and I will try to show that to the House. The hon. Member opposite who laid so much stress on this point, and who had evidently consulted with some care the Report of the Royal Commission, will doubtless respect what they have to say on this point. I would like to read a passage from their Report, which I think is very relevant to this subject. Paragraph 249 in the Report of the Majority Commission says: In the pursuit of our task of reviewing the whole scheme of National Health Insurance, and considering what changes are desirable with a view to making the scheme of the greatest possible benefit to the insured community, we cannot take the view that we are limited by the necessity of adhering to any particular principles on which the scheme was originally set up, or by any statements which were made at the time of the inception of the scheme in explanation or in defence of the provisions contained in the original Bill. On the contrary, we hold that the National Health insurance Scheme was in the nature of a great and novel experiment in the field of social welfare, and that it must now be open to Parliament, untrammelled and unfettered, to review the whole scheme in the light of 13 years' experience of its working and to make such changes, however drastic, as that experience may have shown to be desirable. There, expressed in plain and unmistakable terms, is the opinion of the Royal Commission itself as to this question of a breach of faith. They hold we are free and untrammelled.

Mr. THOMAS

On this question of breach of faith. I only want to ask a question, so that we may be quite clear. I think it was a breach of faith. I ask the right hon. Gentleman to look at Section 37 of the Act, which says: All surpluses shall be applied to the provision of additional benefits.

Mr. CHAMBERLAIN

We are told this was a contractual obligation, a, bargain, an agreement, arrived at after long negotiation between two parties. The right hon. Gentleman the Member for Spen Valley put that case, and I quote him because he did at any rate take note of a circumstance which I think the right hon. Gentleman the Member for Carnar- von Boroughs has forgotten, namely, that there were two parties to this contract. He said the whole scheme depended upon this—that as to the money needed for benefits and administration seven-ninths would be provided by the contributors, whether employers or employed, and two-ninths provided by the State. Seven-ninths would be provided by the contributors. Seven-ninths of what? Seven-ninths of the benefits which were to he payable up to the age of 70. Are they payable up to the age of 70 now? No, there has been a change. By the passing of the Pensions Act last year the societies have been relieved of the cost of people between 65 and 70. They are no longer paying seven-ninths of the benefits up to the age of 70, as implied in the contract and bargain, if we are to take it as such.

Mr. THOMAS

They have got to pay between 65 and 70.

Mr. CHAMBERLAIN

I think, before the right hon. Gentleman interrupts me any more, he had better get a copy of the actuary's report and study it. He may then find an answer to some of the questions which he now thinks it necessary to put to me.

Sir J. SIMON

May I interrupt the right hon. Gentleman? [HON. MEMBERS: "No! "] He has been most courteous in his references to me, and I wish to be equally courteous and equally correct in my questions. I trust I stated accurately that two-ninths of the benefits to be provided would be furnished from State funds. If, in fact, we now only have to provide benefits up to the age of 65, is that any reason why the State should not still bear two-ninths of the lessened charge?

Mr. CHAMBERLAIN

I think the right hon. Gentleman has still not quite appreciated the point. The fact that these people between 65 and 70 were taken off the liabilities of the approved societies reduces the reserve values which are necessary in respect of them: and the actuary has pointed out that in that way the liabilities of the society are relieved of an amount equivalent to £37,000,000. That £37,000,000 does not belong to the contributors in the proportion of seven-ninths to two-ninths. That is due to the action of the State alone. The State would be perfectly entitled to say, "We will not alter the two-ninths, but we will take your £37,000,000." They would have got then the interest on that money, which they could have invested at 5 per cent., and they would get £1,850,000 a year from it. I say that has made a great change in the scheme itself, and that that alone is sufficient absolutely to knock out of the water the argument that the Act of 1911 was a sacrosanct Act which must not be touched in any respect.

8.0 P.M.

There is another point with which I wish to deal. Hon. Members opposite have talked about a breach of faith. They have argued that any alteration in the scheme which was to the advantage of the approved societies but to the disadvantage of the State ought to be ignored; and they contend that if the advantage or disadvantage is the other way round, then they are entitled to say it is a breach of faith. But that will not do, because you must treat both sides alike. What was provided in the original scheme for medical benefit? The amount was 6s. per insured person. That was all that was provided under the original Act for medical benefit. When the Act began to work, it was found that that was not enough even for the cost of the doctors. That cost was found to be 8s., and in one year it. actually went up to 11s.. By an amending Act a new arrangement was made under which the cost of the doctors on the fund could be raised from 6s. to 7s.

That still left a margin to be found? Was it paid by the approved societies? Not a bit of it. They came to the State, and the State paid the difference, and from that time up to 1922 the State has paid for the extra cost of the doctors which was not provided for under the bargain or contract said to have been made in 1911. In this way the State has paid an extra contribution of no less than £19,000,000. In these circumstances, are we not entitled to take that into account? There are other contributions by which, when put together, I estimate there has been paid out of the Exchequer by extra contributions beyond what has been provided for by the Statute to the approved societies since the scheme began, a sum amounting to upwards of£24,000,000. There have been nine Amending Acts since the original Act was passed, and the original scheme has been turned round and altered in all directions. Therefore, it is quite absurd to come to this House at this stage, and say that it is a breach of faith to make any further alterations.

I must say I was surprised that the right hon. Gentleman the Member for Carnarvon Boroughs expended so much of his captivating eloquence upon this subject. I wonder whether he remembers the Act of 1920, which was passed when he was the Prime Minister? The contribution of the State towards the benefits in the original Act was not two-ninths for all insured persons but two-ninths for men and one-fourth for women. In 1920, however, the right hon. Gentleman the Member for Carnarvon Boroughs altered this contribution and brought it down in the case of women from one-fourth to two-ninths. According to this argument, you are quite at liberty to pluck the feathers from the pillows of the women, but you must not pluck them from the pillows of the men. Really that argument will not do, and hon. Members cannot justify the argument about a breach of faith any longer. The real thing is not whether we have failed to carry out a bargain which we are said to have made, but to ask, is it a fair thing to do what we are going to do now and is it justified upon its merits? That is another question altogether, and that is one upon which we may fairly argue. What is it that has brought about this extraordinary prosperity on the part of this fund? It is quite true that they were told, if they managed their affairs well, they would get the benefit of their efficiency and economy.

Mr. THOMAS

If there had been a deficit, they would have had to meet it themselves.

Mr. CHAMBERLAIN

Does anyone contend that these surpluses are due to efficiency of administration? On the contrary, they are due very largely to matters which were never foreseen when the original arrangements were made. Criticisms have been made in regard to the argument used by the Chancellor of the Exchequer in connection with the rate of interest, and it was stated that this was comparable with a repudiation of the Debt. The comparison made was one which in the circumstances was not at all analogous. When the scheme was first founded, the Royal Commission stated it was in the nature of a great experiment. Surely, when we have in the past assisted this scheme so much, we are entitled now, when the Start, is contributing two-ninths, to take into account the fact that the approved societies have not only received a rate of interest of something like 5 per cent. which was only 3 per cent. under the original scheme, but they have accumulated surpluses largely at the expense of the taxpayers. I cannot understand how anybody can justify the statement that a matter of that kind is a repudiation of the contract we have made. Is anyone prepared to say, if at the time the scheme was first brought in it had been realised that the circumstances were going to be what they turned out to be in regard to the rate of interest, that the bargain would have gone through in that form? Of course we must review the situation from time to time, and we have waited for the Report of the Royal Commission in order to see what would be the margin available before attempting to deal with that margin.

With regard to the actual surpluses, I would like to put this to the House. All the schemes for the utilisation of the surpluses in the first two valuations have been based on the assumption that they were going to be applicable to people of all ages up to 70. As I have already pointed out, that will not be the case in the future, because the fund will be relieved in regard to obligations to people between the ages of 65 and 70. The effect of that is that, in future, the sum accumulated by way of surpluses will go much further than the sums which were accumulated in the past, because the fund will only have to provide cash benefits for people up to the age of 65, and I think that is a very important factor.

Mr. THOMAS

The last Royal Commission Report has only been issued since the amending Act establishing the age at 65 became law.

Mr. CHAMBERLAIN

That does not alter the fact that the surplus in future will go much further than it did in the

past, because people between 65 and 70 years of age will not have to be taken care of by Societies in the future. What the House has got to ask itself is: are we not justified, when you consider that these poor people, the poorest of the poor as they have been described, but who nevertheless have got in the aggregate a surplus of over £65,000,000, which they have accumulated largely at the expense of the general taxpayer, in saying that we should slow down the rate at which they are accumulating these surpluses in the future at a time when the taxpayer is so heavily burdened?

I think I have now fairly dealt with all the principal arguments which have been brought forward in this Debate. You may think that this Bill deals with a small thing, but to judge it fairly you must take into consideration the whole of the circumstances which have been brought forward by the Chancellor of the Exchequer, and you must remember how small is the field in which he has had to dig and consider these proposals in relation in the smallness of that field. There has been some expression of anxiety and doubt about our future prosperity, but you cannot expect to make reductions of hundreds of millions at once. Nevertheless, I say do not let us be downhearted about this matter. Do not let us lose faith in our country or make the mistake of measuring our situation by standards which have passed away for ever. We have to measure things now by the future and not by the past. There are always two sides to an account, and while we shall not cease to strive always for a reduction of expenditure, whenever we can do it without inflicting disproportionate damage upon the community, taking the nation as a whole, let us at least spend an equal effort to further the return of prosperity which must come some day, and which may come sooner than we think; and when it does come I think it will enable us to bear even these great loads with ease and equanimity.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes, 322; Noes, 142.

Division No. 95.]	AYES.	[8.12 p.m.
Acland-Troyte, Lieut-Colonel	Albery, Irving James	Allen, J. Sandeman (L'pool, W. Derby)
Agg Gardner, Rt. Hon. sir James T.	Alexander, E. E. (Leyton)	Applln, Colonel R. V. K.
Ainsworth, Major Charles	Alexander, Sir Wm. (Glasgow, Cent'l)	Apsley, Lord
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Elveden, Viscount	Locker-Lampson, G. (Wood Green)
Ashmead-Bartlett, E.	Erskine, Lord (Somerset,Weston-s.-M.)	Locker-Lampson, Com. O.(Handsw'th)
Astor, Maj. Hon. John J.(Kent,Dove-)	Erskine, James Malcolm Monteith	Loder, J. de V.
Astor, Viscountess	Evans, Captain A. (Cardiff, South)	Looker, Herbert William
Atkinson, C.	Everard, W. Lindsay	Lord, Walter Greaves-
Balfour, George (Hampstead)	Fairfax, Captain J. G.	Lougher, L.
Banks, Reginald Mitchell	Falle, Sir Bertram G.	Lucas-Tooth, Sir Hugh Vere
Barclay-Harvey, C. M.	Fanshawe, Commander G. D.	Luce, Major-Gen. Sir Richard Harman
Barnett, Major Sir Richard	Fermoy, Lord	Lumley, L. R.
Barnston, Major Sir Harry	Flelden. E. B.	Macdonald, Capt. P. D. (I. of W.)
Benn, Sir A. S. (Plymouth, Drake)	Flnburgh, S.	Macdonald, R. (Glasgow, Cathcart)
Bennett, A. J.	Foster, Sir Harry S.	Macintyre, Ian
Bethel, A.	Fraser, Captain Ian	McLean, Major A.
Betterton, Henry B.	Fremantle, Lieut.-Colonel Francis E.	Macmillan, Captain H.
Birchall, Major J. Dearman	Gadle, Lieut.-Col. Anthony	Macnaghten, Hon, Sir Malcolm
Bird, E. R. (Yorks, W. R., Skipton)	Galbraith, J. F. W.	McNeill, Rt. Hon. Ronald John
Blades, Sir George Rowland	Ganzoni, Sir John	Macqulsten, F. A.
Blundell, F. N.	Gates, Percy	MacRobert, Alexander M.
Boothby. R. J. G.	Gault, Lieut.-Col. Andrew Hamilton	Maltland, Sir Arthur D. Steel-
Bourne, Captain Robert Croft	Gee, Captain R,	Makins, Brigadier-General E.
Bowater, Sir T. Vanslttart	Gibbs. Col. Rt. Hon. George Abraham	Malone, Major P. B.
Bowyer, Captain G. E. W.	Gilmour, Colonel Rt. Hon. Sir John	Manningham-Buller, Sir Mervyn
Boyd-Carpenter, Major A.	Glyn, Major R. G. C.	Margesson, Captain D.
Brass, Captain W.	Gower, Sir Robert	Marriott, Sir J. A. R.
Brassoy, Sir Leonard	Grattan-Doyle, Sir N.	Mason, Lieut.-Colonel Glyn K.
Bridgeman, Rt. Hon. William Clive	Greene, W. P. Crawford	Meller, R J.
Briggs, J. Harold	Gretton, Colonel John	Merriman. F. B.
Briscoe, Richard George	Grotrian, H. Brent	Meyer, Sir Frank
Brocklebank, C. E. R.	Guest, Capt. Rt. Hon. F. E. (Bristol, N.)	Milne, J. S. Wardlaw
Brooke, Brigadier-General C. R. I.	Guinness, Rt. Hon. Walter E.	Mitchell, S. (Lanark, Lanark)
Broun-Lindsay, Major H.	Gunston, Captain D. W.	Mitchell, W. Foot (Saffron Walden)
Brown, Col. D. C. (N'th'l'd., Hexham)	Hacking, Captain Douglas H.	Mitchell, Sir W. Lane (Streatham)
Brown, Brig.-Gen. H.C.(Berks, Newb'y)	Hall, Lieut.-Col. Sir F. (Dulwich)	Moore-Brabazon, Lieut.-Col. J. T. C.
Buckingham, Sir H.	Hall, Capt. W. D'A. (Brecon & Rad.)	Morrison, H. (Wilts, Salisbury)
Bull, Rt. Hon. Sir William James	Hanbury, C.	Morrison-Bell, Sir Arthur Clive
Bullock, Captain M.	Harland, A.	Murchison, C. K.
Burgoyne, Lieut.-Colonel Sir Alan	Harmsworth, Hon. E. C. (Kent)	Nall, Lieut.-Colonel Sir Joseph
Burman, J. B.	Harrison, G. J. C.	Nelson, Sir Frank
Burton, Colonel H. W.	Harvey, G. (Lambeth, Kennington)	Neville, R. J.
Butler, Sir Geoffrey	Harvey, Major S. E. (Devon, Totnes)	Newman, Sir R. H. S. D. L. (Exeter)
Butt, Sir Alfred	Haslam, Henry C.	Newton, Sir D. G. C. (Cambridge)
Cadogan, Major Hon. Edward	Headlam, Lieut.-Colonel C. M.	Nicholson, O. (Westminster)
Caine, Gordon Hall	Henderson, Capt. R. R (Oxf'd, Henley)	Nicholson. Col. Rt. Hn. W.G. (Ptrsf'ld.)
Cassels, J. D.	Henderson, Lieut.-Col. V. L. (Bootle)	Nuttall, Ellis
Cautley, Sir Henry S.	Heneage, Lieut.-Colonel Arthur P.	Oakley, T.
Cayzer, Sir C. (Chester, City)	Henn, Sir Sydney H.	O'Connor. T. J. (Bedford, Luton)
Cayzer, Maj. Sir Herbt. R. (Prtsmth.S.)	Hennessy, Major J. R. G.	Oman. Sir Charles William C.
Cazalet, Captain Victor A.	Herbert, Dennis (Hertford, Watford)	Pennefather, Sir John
Cecil, Rt. Hon. Sir Evelyn (Aston)	Herberts.(York, N. R. Scar. & Wh'by)	Percy, Lord Eustace (Hastings)
Cecil, Rt. Hon. Lord H. (Ox. Univ.)	Hills, Major John Waller	Perkins, Colonel E. K.
Chadwick, Sir Robert Burton	Hogg, Rt. Hon. Sir D. (St. Marylebone)	Perring, Sir William George
Chamberlain, Rt. Hon. N. (Ladywood)	Hohler, Sir Gerald Fltzroy	Peto, G. (Somerset, Frome)
Charterls; Brigadier-General J.	Holbrook, Sir Arthur Richard	Philipson, Mabel
Chilcott, Sir Warden	Holland, Sir Arthur	Plelou, D. P.
Christie, J. A.	Holt, Captain H. P.	Pilcher, G.
Churchill, Rt. Hon. Winston Spencer	Homan, C. W. J.	Pllditch, Sir Philip
Churchman, Sir Arthur C.	Hope, Capt. A. O. J. (Warw'k, Nun.)	Power, Sir John Cecil
Clayton, G. C.	Hopkins, J. W. W.	Pownall, Lieut.-Colonel Assheton
Cobb, Sir Cyril	Hopkinson, A. (Lancaster, Mossley)	Preston, William
Cochrane, Commander Hon. A. D.	Hopkinson, Sir A. (Eng. Universities)	Radford. E. A.
Cockerill, Brigadier-General G. K.	Horlick, Lieut.-Colonel J. N.	Raine, W.
Cohen. Major J. Brunel	Howard, Captain Hon. Donald	Ramsden, E.
Colfox, Major Wm. Phillips	Hudson, Capt. A. U. M.(Hackney, N.)	Reid, Capt. A. S. C. (Warrington)
Cooper, A. Duff	Hudson, R. S. (Cumberl'nd, Whiteh'n)	Reid, D. D. (County Down)
Cope, Major William	Hume, Sir G. H.	Remnant, Sir James
Couper, J. B.	Hume-Williams, Sir W. Ellis	Rentoul, G. S.
Courthope, Lieut.-Col. Sir George L.	Hunting field, Lord	Rice, Sir Frederick
Cowan, Sir Wm. Henry (Islington. N.)	Hurd, Percy A.	Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Craig, Ernest (Chester, Crewe)	Hurst, Gerald B.	Roberts, E. H. G. (Flint)
Craik, Rt. Hon. Sir Henry	Hutchison, G. A. Clark (Mldl'n & P'bl's)	Roberts, Samuel (Hereford, Hereford)
Crookshank, Col. C. de W. (Berwick)	Hiffe. Sir Edward M.	Ropner, Major L.
Crookshank, Cpt. H.(Lindsey, Galnsbro)	Jackson, Sir H. (Wandsworth, Cen'l)	Ruggles-Brise, Major E. A.
Cunliffe, Sir Herbert	Jacob, A. E.	Russell, Alexander West (Tynemouth)
Curtis-Bennett, Sir Henry	James, Lieut.-Colonel Hon. Cuthbert	Salmon, Major I.
Dalkeith, Earl of	Jephcott, A. R.	Samuel, A. M. (Surrey, Farnham)
Davidson, J.(Hertf'd, Hemel Hempst'd)	Joynson-Hicks, Rt. Hon. Sir William	Samuel, Samuel (W'dsworth, Putney)
Davidson, Major-General Sir J. H.	Kennedy, A. R. (Preston).	Sandeman, A. Stewart
Davies, Dr. Vernon	Kidd, J. (Linlithgow)	Sanders, Sir Robert A.
Davies, Maj. Geo. F. (Somerset, Yeovil)	Kindersley. Major G. M.	Sanderson, Sir Frank
Davies, Sir Thomas (Cirencester)	King, Captain Henry Douglas	Sassoon, Sir Philip Albert Gustave D.
Davison, Sir W. H. (Kensington, S.)	Klnloch-Cooke, Sir Clement	Savery, S. S.
Dawson, Sir Philip	Lamb, J. Q.	Scott, Sir Leslie (Liverp'l, Exchange)
Eden, Captain Anthony	Lane Fox, Col. Rt. Hon. George R.	Shaw, R. G (Yorks, W.R., Sowerby)
Edmondson, Major A. J.	Lister, Cunliffe, Rt. Hon. Sir Philip	Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)
Elliot, Captain Walter E.	Little, Dr. E. Graham	Shaw, Capt. W. W. (Wilts, Westb'y)

Sheffield, Sir Berkeley	Tasker, Major R. Inlgo	Williams, Com. C. (Devon, Torquay)
Shepperson, E. W.	Thompson, Luke (Sunderland)	Williams, Herbert G. (Reading)
Simms, Dr. John M. (Co. Down)	Thomson, F. C. (Aberdeen, South)	Wilson, Sir C. H. (Leeds, Central)
Skelton, A. N.	Thomson, Rt. Hon. Sir W. Mitchell-	Wilson, R. R. (Stafford, Lichfield)
Smith, R. W. (Aberd'n & Klnc'dine, C.)	Tlnne, J. A.	Wlnby, Colonel L. P.
Smith-Carington, Neville W.	Titchfield, Major the Marquess of	Windsor-Clive, Lieut.-Colonel George
Smithers, Waldron	Tryon, Rt. Hon. George Clement	Winterton, Rt. Hon. Earl
Spender-Clay, Colonel H	Turton, Sir Edmund Russborough	Wise, Sir Fredric
Sprot. Sir Alexander	Vaughan-Morgan, Col K. p.	Withers, John James
Stanley, Col. Hon. G. F. (Wlll'sden, E.)	Wallace, Captain D. E.	Wolmer, Viscount
Stanley, Lord (Fylde)	Ward, Lt.-Col. A. L. (Kingston-on-Hull)	Womersley, W. J.
Stanley, Hon. O. F. G. (Westm'eland)	Warner, Brigadier-General W. W.	Wood, Sir H. K. (Woolwich, West)
Steel, Major Samuel Strang	Warrender, Sir Victor	Wood, Sir S. Hill- (High Peak)
Storry-Deans, R.	Waterhouse, Captain Charles	Woodcock, Colonel H. C.
Stott, Lieut.-Colonel W. H.	Watson, Sir F. (Pudsey and Otley)	Worthington-Evans, Rt. Hon. Sir L.
Streatfelld, Captain S. R.	Watson, Rt. Hon. W. (Carlisle)	Wragg, Herbert
Strickland, Sir Gerald	Watts, Dr. T.
Stuart, Crichton-, Lord C.	Wells, S. R.	TELLERS FOR THE AYES—
Stuart, Hon. J. (Moray and Nairn)	Wheler, Major Sir Granville C. H.	Commander B. Eyres Monsell and
Sugden, sir Wllfrid	White, Lieut.-Colonel G; Dalrympte	Captain Viscount Curzon.
Sykes, Major-Gen. Sir Frederick H.	Williams, A. M. (Cornwall, Northern)
NOES.
Adamson, Rt. Hon. W. (Fife, West)	Hardle, George D	Robinson, W. C. (Yorks, W. R., Ellan)
Alexander, A. V. (Sheffield, Hillsbro')	Harney, E. A.	Rose, Frank H.
Ammon, Charles George	Harris, Percy A.	Saklatvala, Shapurji
Attlee, Clement Richard	Hartshorn Rt. Hon. Vernon	Scrymgeour, E.
Barker, G. (Monmouth, Abertillery)	Hastings, Sir Patrick	Scurr, John
Batey, Joseph	Hayes, John Henry	Sexton, James
Beckett, John (Gateshead)	Henderson, Rt. Hon. A. (Burnley)	Shaw, Rt. Hon. Thomas (Preston)
Bowerman, Rt. Hon. Charles W.	Henderson, T. (Glasgow)	Short, Alfred (Wednesbury)
Briant, Frank	Hirst, G. H.	Simon, Rt. Hon. Sir John
Broad, F. A.	Hirst, W. (Bradford, South)	Sltch, Charles H.
Bromfield, William	Hore-Belisha, Leslie	Slesser, Sir Henry H.
Bromley, J	Hudson, J. H. (Huddersfleld)	Smith, H. B. Lees- (Keighley)
Brown, James (Ayr and Bute)	Hutchison, Sir Robert (Montrose)	Smith, Rennle (Penistone)
Buchanan, G.	John, William (Rhondda, West)	Snell, Harry
Buxton, Rt. Hon. Noel	Jones, Henry Haydn (Merioneth)	Snowden, Rt. Hon. Philip
Cape, Thomas	Jones, J. J. (West Ham, Silvertown)	Spencer, George A. (Brextowe)
Charleton, H. C.	Jones, Morgan (Caerphilly)	Stamford, T. W.
Clowes, S.	Jones, T.I. Mardy (Pontypridd)	Stewart, J. (St. Rollox)
Cluse, W. S,	Kelly, W. T.	Taylor, R. A.
Clynes. Rt. Hon. John R.	Kennedy, T.	Thomas, Rt. Hon. James H. (Derby)
Collins, Sir Godfrey (Greenock)	Kenyon, Barnet	Thomas, Sir Robert John (Anglesey)
Connolly, M.	Lansbury, George	Thomson, Trevelyan (Middlesbro W.)
Cove, W. G.	Lawson, John James	Thorne, G. R. (Wolverhampton, E.)
Cowan, D. M. (Scottish Universities)	Lee, F.	Thorne, W. (West Ham, Plalstow)
Crawfurd, H. E.	Lindley, F. W.	Thurtle, E.
Dalton, Hugh	Lowth. T.	Tinker, John Joseph
Davies. Evan (Ebbw Vale)	Lunn, William	Townend, A. E.
Davies, Ellis (Denbigh, Denbigh)	MacDonald, Rt. Hon. J. R.(Aberavon)	Trevelyan, Rt. Hon. C. P.
Davies, Rhys John (Westhoughton)	Macklnder, W,	Varley, Frank B.
Day, Colonel Harry	MacLaren, Andrew	Viant, S. P.
Dennison, R.	March, S.	Wallhead, Richard C.
Duckworth, John	Mitchell, E. Rosslyn (paisley)	Walsh, Rt. Hon. Stephen
Duncan, C.	Montague, Frederick	Watts-Morgan, Lt.-Col. D. (Rhondda)
Dunnico, H.	Morris, R. H.	Webb, Rt. Hon. Sidney
Evans, Capt. Ernest (Welsh Univer.)	Morrison, R. C. (Tottenham, N.)	Wedgwood, Rt. Hon. Joslah
George, Rt. Hon. David Lloyd	Naylor, T. E.	Wheatley, Rt. Hon. J.
Gibbins, Joseph	Oliver, George Harold	Whiteley, W.
Gillett, George M.	Owen, Major G.	Wiggins, William Martin
Gosling, Harry	Palln, John Henry	Wilkinson, Ellen C.
Graham, Rt. Hon. Wm. (Edin., Cent.)	Paling, W.	Williams, Dr. J. H. (Llanelly)
Greenall, T.	Parkinson, John Allen (Wigan)	Wilson, C. H. (Sheffield, Attercliffe)
Grenfell, D. R. (Glamorgan)	Pethlck-Lawrence, F. W.	Wilson, R. J. (Jarrow)
Griffiths, T. (Monmouth, Pontypool)	Ponsonby, Arthur	Windsor, Walter
Groves, T.	Potts, John S.	Wright, W.
Grundy, T. W.	Purcell, A. A.	Young, Robert (Lancaster, Newton)
Guest, J. (York, Hemsworth)	Richardson, R. (Houghton-le-Spring)
Hall, G. H. (Merthyr Tydvil)	Riley, Ben	TELLERS FOR THE NOES.—
Hamilton, Sir R. (Orkney & Shetland)	Ritson, J.	Mr. Charles Edwards and Mr. A. Barnes.

Bill read a Second time, and committed to a Standing Committee.