§ Mr. CHURCHILL
There is nothing in the workings of our financial policy since the War which should discourage us from persevering steadfastly in debt redemption. I have been advised from various quarters, some of them both responsible and instructed, to meet the deficit in 1927 by the partial suspension of the £50,000,000 Sinking Fund established four years ago by my right hon. Friend the Prime Minister when he held this office. I have never dreamed of doing such a thing. To shirk the unpopularity involved in putting on a moderate amount of new taxes at the expense of our settled policy of debt repayment would be cowardly and wrong. It would also be deeply injurious to the national interest. Britain cannot afford to fly the signal of distress, and there is neither the need nor the excuse to-day for flying it. We have seen in a neighbouring country the immense and immediate effects produced upon public credit by confidence and financial 81 prestige. There never has been any community in the world to whom financial reputation and proofs of strength were more vital than to Great Britain; and there never has been any time in our history when, with great and continuous conversion operations and possibilities marching upon us, financial prestige was more vital to Great Britain than it is now. For what is the dominant fact in our finance? It is the great possibilities of conversion which are forced upon us, or are open to us, in the next two or three years. In October of this year, £112,000,000 of 4 per cent. and 5 per cent. War Bonds fall due. Next Spring, £66,000,000 of 3½ per cent. War Loan and 4½ per cent. Treasury Bonds fall due. In 1928, over £443,000,000 of 4 per cent. and 5 per cent. National War Bonds fall due. In 1929, £46,000,000 of Treasury and Exchequer Bonds; and above all there looms the option which is open, in 1929 and later years, to deal with over £2,000,000,000 of the 5 per cent. War Loan. This is the great position that is open, and this is the opportunity which is to be seized or marred in the next few years. The repayment of debt is only one of the factors necessary to produce favourable conditions. I am well aware of that; but it is a very important factor, and it is a factor which is within our control, and which we must labour to provide. I have cast about and searched in all directions for means of avoiding the imposition of crippling taxes upon industry. I am deeply anxious to do nothing that would check the revival of trade and employment, of which at last from many quarters there are flickering promises; but I have not even considered at any moment, in the circumstances in which we stand, the possibility of a raid upon the £50,000,000 Sinking Fund.
That, however, is not the end of the story. This Parliament set before itself from the beginning the aim of maintaining a Sinking Fund of £50,000,000 a year. Accordingly, last year, being through the Coal Subsidy about £10,000,000 short, I abstained from giving any remission of taxation, and raised the new Sinking Fund for 1926 to £60,000,000. On that £60,000,000, we now have a deficit of £36,500,000. We have not only paid our way, but, even in this last year of misfortune, we have paid off £23,500,000 of debt. In no other country would such a situation be viewed with disquiet, but 82 the fact remains that we are at this moment more than £36,000,000 behind-hand in our programme of debt repayment, and we have failed to that extent in carrying out the policy deliberately adopted with the assent of all parties. I do not pledge myself to any rigid programme of repayment of arrears, but I cannot remain indifferent to that shortfall. We cannot leave the dead to bury their dead, and go on our way rejoicing. I conceive myself bound to pay off in the present year, 1927, at least a substantial part of the inroad upon the £50,000,000 Sinking Fund made by the coal troubles of 1925 and 1926. Therefore, it is my duty to warn the Committee, at this stage in the argument, that it is not merely with a £21,500,000 deficit that we are confronted, but with something—I win state the precise figure in its proper place—between £35,000,000 and £40,000,000, that is to say, the prospective deficit and a substantial part of the old deficit.