HC Deb 27 June 1928 vol 219 cc556-72

The following Amendment stood upon the Order Paper in the name of Mr. LEES-SMITH and other HON. MEMBERS:

In page 11, line 39, to leave out Subsection (1).


With regard to this Amendment, it proposes to leave out a Sub-section that is vital to the whole Clause, and that, by repeated precedents, is out of order. The question may be argued on the Clause itself.

Motion made, and Question proposed, "That the Clause stand part of the Bill."


This Clause introduces a rather important principle once again into our financial structure. The first part of the Clause, that part which we wished to delete, concerns that Section of the Finance Act, 1923, which repealed certain provisions concerning the Sinking Fund that had been passed in previous years and laid down as a principle that there must be a Sinking Fund which, in the first year, 1923–4, was to be £40,000,000, in the next year £45,000,000, and in subsequent years £50,000,000. This amount has been entered in the Budgets since that date, and it has on certain occasions been increased by other funds for the redemption of debt. The Chancellor now proposes to revert to a custom that was brought into the national finance by Sir Stafford Northcote when he instituted the debt charge at £28,000,000 a year, and the right hon. Gentleman proposes that under the altered circumstances a charge for debt purposes of £355,000,000 should be the permanent figure for the years to come, the only exception being that in the present financial year the figure should be £369,000,000.

If we look at the actual charges for interest that were incurred in last year's Budget, we find that the actual sum paid in interest was nearly £314,000,000, and at the same time there was a Sinking Fund of £65,000,000, making a total of £378,000,000. The Chancellor tells us that in the present year he anticipates that the interest charges alone will be reduced from nearly £314,000,000 to £304,000,000, and I gather that it is upon an interest charge of this figure, which he thinks at any rate will be sufficient for the next two or three years, that he is basing the figure of £355,000,000. The first criticism that anyone would have to make is that, of course, the short loan market may disappoint the Chancellor. I acknowledge that at present the outlook would seem to be such as to justify his hopes, I believe that he anticipated a figure of 4 per cent. as being the rate that he would probably be paying for Treasury Bills and the service of the floating debt. The figure at present is somewhat below that, and there might be a possible change as the year goes on.

There has also been another question that has only now obtained the full re- cognition of the Chancellor—it was specially brought to the attention of the House by my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence)—and that is the question of Savings Certificates. The peculiar position in which this kind of debt has been placed by the unexpected claims that it has made upon the finances of the country, the way in which these claims seem to have been ignored almost, one might say, impartially by previous Chancellors, and the sudden accumulation of demands for sums that were larger than the Chancellor had expected, have certainly in the last year been responsible for an increased expenditure in interest charges above what the Chancellor had anticipated. I gather that the Chancellor is really making an estimated allowance of £20,000,000 a year to meet the special demand of the Savings Certificates. The first point that seems to me somewhat doubtful is to how far the Chancellor's estimate is going to be correct—I am now dealing only with the present year—or whether he will be disappointed in the rate of interest he will have to pay for his short loans; also whether he will find the Savings Certificates allowance sufficient for his purpose.

Based on the figures already given, the Chancellor arrives at the sum of £304,000,000, he then adds about £51,000,00 to corespond with the original £50,000,000 that has been set aside for Sinking Fund purposes, and then, in order that he may get the total figure for this year up to a Sinking Fund of £65,000,000, he has introduced the reserve fund that had accumulated from the currercy notes. Now that the currency notes are being handed over to the Bank of England, these securities are no longer required, and I believe the House has already given instructions for them to be sold and for the money to be handed over. It might be argued that the Chancellor of the Exchequer, in one sense, is setting aside £65,000,000 this year for Sinking Fund purposes, but, as a matter of fact, when you come to the practical application, £13,000,000 or £14,000,000 of it is nothing more than a book entry. If he is now going to sell one set of stocks and buy another to liquidate part of the debt, it is only taking the money from one pocket and putting it into the other.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

It reduces the total capital liability.

5.0 p.m.


Technically it does, but, as a matter of fact, in all probability this £13,000,000 was invested in Government stocks before, and although it has not actually been written off the National Debt, as far as the actual spending of the money and the effect that expenditure would have on the money market is concerned, it will exercise no influence upon the price of stocks. However, that is the way in which the Chancellor finally arrives at the figure which he has placed in his Budget estimate as the requirement for debt for this year. For next year, and for the years that are to follow, he is proposing to make arrangements so that the figure shall be £355,000,000. My own view is that in all probability we may find in the next two or three years that we shall hardly be putting £50,000,000 aside for Sinking Fund, because the margin has been made so small that if the estimated figure for interest charges becomes any larger than the Chancellor has expected, the only thing that happens is that the interest charges will be paid out of money that would otherwise have gone to Sinking Fund purposes. Of course, the reverse process is also to hand to help the reduction of the debt, if the interest charges should decrease in the years to come.

The second point that comes up is the question that, supposing the Chancellor's figures are correct, and we find that the money set aside for interest charges is sufficient, we should have a Sinking Fund of £50,000,000, and as interest charges decrease there will be a larger sum for the Sinking Fund. I doubt whether the principle is sound. We set aside this figure of £355,000,000 year after year, so that at the end of 50 years the whole of the debt will have been wiped out. It will only be wiped out if we do not have Chancellors like the present Chancellor, always looking out hungrily and eagerly for some hen-roost to rob. If we find the interest charges are considerably decreased, say by £30,000,000 or £40,000,000, and then we have a right hon. Gentleman sitting in that place with the instinct of the present Chancellor, I cannot imagine that this scheme would go on for very many years. What I want to draw the attention of the Committee to, is that it is not desirable that this principle should be instituted at all. In three or four years we all hope that the position will be such that the value of money will have so altered, that we might hope to see a considerable fall in the rate of interest that we have to pay, and that certain conversion operations will be able to be carried out which will be beneficial to the country. I understand from the figures given in the Minority Report of the Colwyn Committee that if you can convert the present debt on the basis of 4½ per cent., there would be a saving of £15,000,000. If it was converted on the basis of 4 per cent., there would be a saving of about £33,000,000 a year. If that should ever be possible, the members of the Committee point out that there is a very considerable figure that would become available for purposes other than debt purposes, provided the Chancellor's scheme was not in operation.

This really brings us to the question of what is the best way of meeting the debt. The majority of the Colwyn Committee really disagree with the Chancellor; perhaps I should say that the Chancellor's proposal is not in harmony with the recommendations of the majority of the Committee. They said that they thought that as soon as possible, the amount of the Sinking Fund should be increased to £75,000,000. On the other hand, they did say that they did not think it was possible to do it at once. It may be that the Chancellor is counting on such a reduction in the interest charges that he will arrive at their figure, but their idea was that in the next year or two the figure of £50,000,000 ought to be raised to £75,000,000. The first question that comes up is how far debt of this kind is a burden. That is discussed very interestingly by both the Majority and Minority Reports, and views are expressed there which are views held by some of us according to the side of the House on which we sit. We all recognise that an external debt is the most serious kind of debt that we have to face, as it means a distinct drain of goods away from this country year after year for the payment of interest and debt charges. In regard to the internal debt, the question to be considered is what is the effect upon the citizens of this country of taking a large sum of money by taxation in order to pay the service of the debt? The Minority Commissioners considered that a debt of this kind in all probability tended to increase, prejudicially from their standpoint, the difference in the distribution of wealth in this country. The Majority Commissioners expressed no opinion. The most important question is the way in which the money is to be raised. If you impose taxation upon tea and sugar in order to raise an extra £25,000,000 definitely for these purposes, that money is then handed over to those who are holders of Government stock, and in all probability it will mean that you are transferring money from the pockets of the poorer sections of the people to those who are better off. If, on the other hand, you do the reverse process, and to take an extreme example, take the money purely from the Super-taxpayers, it is obvious that it would transfer the money from the pockets of those who were very well off to the pockets of those, a large number of whom belong to that section of the population which is prosperous. The crux of the position in the collection of debt is really the problem of where the money is going to be raised.

There is one other point in connection with the Chancellor's proposal upon which I should like to lay stress, and that is why I object to a fixed amount being set aside. Supposing there were a distinct change in the rate of money. Anything is possible at the present time. The rate of money in this country is much more dependent upon the gold position of the world than the actual position in this country. We may have an alteration in the value of money apart from any increase in prosperity. Suppose it was possible in the next four or five years, to have a conversion loan issued which would reduce the debt charges, so as to give the Chancellor something like 30 or 40 millions of money. I am not desirous at this moment to see that money at once put towards the redemption of the debt. I think that it is very doubtful whether, in view of the great social schemes that are necessary a larger Sinking Fund than £50,000,000 is desirable. I know that I differ in this from the Minority of the Colwyn Committee, some of whom were connected with the party sitting on these benches, and who are in favour of a £100,000,000 Sinking Fund. With the amount of money that is needed for social services, we should not earmark at this time so large an amount of money as is proposed by the Chancellor. The matter is one in which the Chancellor has taken a leaf out of the past. For many years it worked; for many years Chancellors of the Exchequer left the scheme alone. I do not think that we are sufficiently settled to adopt the proposal now, because we are so near to the great upheaval of the War, and we have a vast number of social problems still unsolved. On these grounds I shall vote against the proposal of the Chancellor.


The well-informed speech to which we have just listened has placed the Committee in the middle of this complicated and at the same time interesting subject. I have a difficult situation to face, the seeds of which were sown in the days of my predecessor. In the first place, undoubtedly, we have had to pay a higher rate for Treasury bills in late years than was the case four years ago. In the second place, Savings Certificates, as: I explained when introducing the Budget, which are a most valuable vehicle of public thrift, are now coming back to the Exchequer for encashment, not so much in increasing numbers, but with a much longer period of interest in their mouths, as it were. They return with eight, nine or 10 years' interest, instead of four, five or six years which they carried in the days of my predecessor. In consequence, I have had to face very largely increasing claims for Savings Certificates interest on the annual revenue. That being so, it was necessary to examine the whole position of the Savings Certificates, and, on investigation, it was found that the payment of, I think it is, £21,500,000 a year would be a fair measure of the real liability which we were incurring and had incurred. Obviously, the extent to which that liability was not being provided for has always constituted a deduction from the nominal figure of the New Sinking Fund. We had not in our Budget accounts presented that fact clearly to the world. I think the hon. Gentleman drew attention to it. If was mentioned in several of our Debates and the whole matter was brought before the Colwyn Committee. I will not say that they approved, but they acquiesced in it in all the circumstances. The difference between this sum and the amount actually paid should have been subtracted every year from the nominal amount of the New Sinking Fund. I have now accepted this burden, which was greater than that which my predecessor the right hon. Gentleman the Member for Colne Valley (Mr. Snow-den) was called upon to pay. I was faced with the prospect of encashments carrying interest of between £15,000,000 and £20,000,000, and perhaps larger figures in future years.

That being so, I felt bound to review the whole position of our New Sinking Fund. It was really not worthy of our credit to go on providing a nominal Sinking Fund of £50,000,000 in face of these fresh borrowings each year. I preferred to regularise the proceedings, and to set aside a sum equal to the new liability incurred. At the same time I thought it would be a wise measure, sound in itself, and based upon respectable precedents, while at the same time not imposing too heavy a burden on the taxpayer for the actual debt charge, if we reverted to the old principle of an accumulating fixed debt charge. I find I did more than justice to Mr. Gladstone in the matter in opening the Budget, because Mr. Gladstone, although he had opposed the method of the accumulator, afterwards for many years carried it out. As is so often the case, though he opposed it in Opposition, he for many years subsequently followed the policy when in office.

As far as the principle of the accumulator is concerned, there is no doubt that, after it has run for a certain number of years, the favourable position created is such that, human nature being what it is, there is always a danger of those lapses from financial virtue which have been so properly stigmatised as raids. I cannot myself visualise accurately a situation where the Government in 1978 will be providing £355,000,000 for the service of the debt, while knowing that the Government of 1979 will not have to provide a penny. That is hardly how it will work. But still I believe it will be a very good guide within the lifetime of many of us here if we push ahead with a figure of £355,000,000 a year. That is an impres- sive figure, nearly £1,000,000 a day, and I see, from comments which have reached me from many parts of the world, that the decision to adopt this course in our generation and to make an absolutely sincere effort to rid ourselves of this burden of debt within a period covered by the lifetime of most of us in this Chamber has created a marked impression of the strength and permanent stability of British financial policy.

The hon. Member pointed out, however, that if, for the first time in my experience, any piece of good fortune came my way in the shape of a substantial fall in the rent of money, and we were able to convert our debt from the present basis to a 3½ per cent. basis—that is a contingency which must be looked for, it will almost certainly come as the years pass by—that then this fixed debt charge would absorb the relief which might otherwise have gone to the taxpayer. That certainly is not my intention. I made a specific declaration to the contrary. The £355,000,000 a year wipes out all our indebtedness, external and internal, in a period of 50 years on a 4½ per cent. basis, and nothing is credited to the growing accumulator except the extinction year by year of blocks of debt through the operation of the Sinking Fund. No account has been taken of the possible diminution in the rent of money, and if it should happen that the happy circumstance to which he has referred should arise in the future, I have always contemplated that that would be a windfall which the Chancellor of the Exchequer would be fully justified in devoting to the relief of taxation. There would be a recalculation. What would happen? Supposing we were to convert our debt to a 3½ per cent. basis and save £30,000,000 or £40,000,000. It may be more—£50,000,000 or £60,000,000—I have not the exact figure in my mind. Then a recalculation would be made of the amount necessary to obliterate the total debt within the limits of the original 50 years' period, and the figure of £355,000,000 would be reduced accordingly. I should think that would be the right and proper way of dealing with the situation, supposing we had a windfall. What we are aiming at is the extinction of the debt in 50 years. That is the target, and if a smaller sum sufficed to do it, owing to a fall in the rent of money, that smaller sum would be a perfectly legitimate figure for the Government of the day to fix.

Let us now look at the question of how the accumulator works. The principle of the accumulator is that, first of all, we pay out of the £355,000,000 the interest and the management charges on the debt, apart from Savings Certificates. In the second place, we pay the specific Sinking Funds, which now amount to £50,600,000 a year. In the third place, we pay the interest on the Savings Certificates which are actually encashed in the year. In the fourth place, we pay the Depreciation Fund on 5 per cent. and 4 per cent. War Loans, if any. These are Loans to which a Fund is attached contingent upon their falling below a certain level of prices. It only comes into operation when the price of either loan in the market falls below the appropriate figure. Of course, the Finance Branch of the Treasury so manipulates, if I may use the word, or would always be ready so to manipulate the Fund, as far as they could, to keep the loans up to those figures. They are perfectly entitled to purchase stock to keep up credit and prevent the Treasury incurring further liability. But once that liability has been incurred, then that is the fourth charge upon the £355,000,000. If there is any surplus left over, after all these charges have been met, that is devoted to the general purposes of redeeming debt. Although it begins small, it will grow each year until finally it becomes an immense sum, eating up great chunks—I beg pardon; I must be careful what words I use—great sections of this debt each year.


I have not taken part in the discussion, but may I intervene to ask a question? The Chancellor of the Exchequer is making an extremely interesting and lucid statement, but may I ask him what is included in the figure of £50,600,000? That, I assume, includes the American debt and the sums that are allocated to the debts which have specific Sinking Funds attached.


That is a very-proper question to ask. There are a number of our loans to which specific Sinking Funds are attached, and these, of course, constitute part of the obligation of the Government towards the ser- vice of those loans. Gradually they have increased. In my time, a new 4 per cent. stock has been created to which a £10,000,000 a year Sinking Fund is attached. The £50,000,000 Baldwin Sinking Fund had been largely absorbed by these different Sinking Funds and before I made this recasting of the debt charges, about £47,000,000 was in fact already earmarked to what I may call contractual Sinking Funds. Therefore, we have very little free margin. There was also disclosed in the present Budget what were called invisible Sinking Funds which arise from the interest on the Victory Bonds in the hands of the National Debt Commissioners and repayment of certain Dominion Loans to us. The Victory Bonds, at any rate, when transferred into the public accounts in the new form, also constitute a further lien, as it were, upon the Sinking Fund as the money originally charged to the Budget as interest on these Bonds has in future to be found in the same way as the contractual Sinking Funds. Thus we reach the broken figure, of £50,600,000. Anyhow, that money has to be found and, if it were not found in any year, it might be argued not merely that we were not balancing the Budget, but that we were reducing the security on which the public creditor has relied hitherto.

I was about to say that the accumulator of £355,000,000, reinforced by the £14,000,000 liberated by the amalgamation of the note issues in the present year, is sufficient, over the six-year period up to 1933, to provide an average of £71,750,000 a year for the Sinking Funds and the Savings Certificates together. I take the year 1933 because that year covers a new burden which we shall have to bear. We have to look forward in that year to an additional £5,000,000 payment to the United States of America, and therefore I took a six-year period in order that this adverse factor should come into our calculations. But, in spite of this adverse factor, and overriding this adverse factor, we maintain over the six-year period £71,750,000 for the Sinking Fund and the Savings Certificates. The specific Sinking Funds requires something over £50,000,000, leaving £21,500,000 a year available for interest on the certificates. That figure is slightly in excess of the actuarial requirement. I stated it wrongly a moment ago. It is estimated that the Savings Certificates will require £20,250,000 per annum on the average over the next six years.

Thus we shall be maintaining over that period, a difficult period, and after taking into consideration this impending addition to the American debt charge the strict statutory and specific Sinking Funds and, in addition, providing the whole of the interest on the Savings Certificates. An amount like £355,000,000 is a gigantic sum for the taxpayer to provide year after year, and I am not aware of any country in the world which at any time can show any effort of financial rectitude equal to that. No doubt the right hon. Gentleman the Member for Colne Valley will find fault with me for not making the amount bigger, but it is possible to go too far in those matters at any given time. The average for the period 1928–1933 is £71,750,000. I do not in the slightest degree contrast that in an invidious sense with the provision made by the right hon. Gentleman the Member for Colne Valley, but undoubtedly we are making a greater effort than the right hon. Gentleman was called upon to make in 1924 because the figure this year is £78,500,000 as against £57,000,000. This £57,000,000 is calculated after giving full credit for the invisible sinking funds in his year and it is made up by £45,000,000 New Sinking Fund, £7,000,000 Savings Certificates interest, £3,250,000 for Dominion loan repayments and £1,750,000 for Victory Bonds interest.

I am not in the least attempting to claim any exceptional virtues in this respect, and I shall not do so unless I am attacked. There are people who have endeavoured to confront me with a very awkward argument. They say, on the one hand, that I have not provided enough Sinking Fund, and, on the other hand, when I have increased the Sinking Fund they ask, "Where is all your economy in expenditure?" I have tried to steer a middle course between those two extremes. I think the right hon. Gentleman the Member for Colne Valley in one of his criticisms which he made earlier in our Debates was led into a slip which is quite understandable when one thinks of the complication involved in these propositions and how difficult it is to follow the whole policy which is involved. The right hon. Gentleman sug- gested that the amount of the Sinking Fund in the six years would be reduced by about £20,000,000. His actual figures were £51,000,000 for Sinking Funds, £14,000,000 for Savings Certificates and £304,000,000 for other interest, making a total of £369,000,000. The fallacy, if I may-say so, is that the £304,000,000 includes £13,600,000 for Savings Certificates growing in subsequent years. Consequently £14,000,000 had been counted as an adverse factor twice over, but, making allowance for that, the figures are exactly as I have stated. As a matter of fact, we are paying our full Statutory Sinking Funds, and in addition we are providing the full actuarial charge for Savings Certi-cates interest.


The Chancellor of the Exchequer has defended his proposal in such a mild and conciliatory spirit, that I have a certain amount of compunction in bringing some purely natural criticisms to bear upon some of the facts and figures which he has given. In order that I may come straight away to my main objections, I will put the gravamen of my charge in this form. In the Financial Statement the National Debt Sinking Fund is put at £65,000,000 for the present year. I maintain that when all the real facts are taken into account, the true Sinking Fund for the present year is not £65,000,000, but £38,000,000, and that the figure for next year will be something of the same nature.

Mr. CHURCHILL indicated dissent.


The right hon. Gentleman shakes his head, but I will develop the grounds on which I think the Sinking Fund should be £38,000,000 instead of £65,000,000. The whole finances of the nation have been window-dressed by the Chancellor of the Exchequer in order to produce the favourable effect he wants to create in the minds of the public, and it is our business to pick that window-dressing to pieces in order to disclose the actual facts. How did this £38,000,000 become £65,000,000?—I think the first step taken was, perhaps, the most audacious which it was possible to imagine. It relates to the Savings Certificates. For years the method of accounting has been on an entirely wrong basis. I am not accusing the present Chancellor of the Exchequer of that, because he merely followed the practice of a predecessor, and he now admits that the accounting of the Savings Certificates was on an entirely wrong basis, and he has told us that in the future an entirely different method is going to be followed. The Committee will hardly credit that in calculating this figure of £65,000,000 the Chancellor of the Exchequer does not adopt the new revised and correct method, but he proceeds precisely on the old methods which he now admits to be false. The £65,000,000 is only obtained by taking £13,000,000 as the estimate for the interest on the Savings Certificates for the on-coming year, in place of the figure he now admits to be correct of £20,250,000, and that shows that £7,250,000 has been incorrectly stated.

Now I come to the Chancellor's invisible Sinking Fund with which, he says, we ought to have been credited all the time, when, as a matter of fact, the money has been applied to reduce debts. But, he says, we have been so honest that we have not included them as part of the Sinking Fund. The largest item in this £6,500,000 is for the repayment of some of our Colonial debt. I think on this matter the Chancellor of the Exchequer made a little slip, because he referred to it as payment of interest.


I should have said the repayment of loan.


As a matter of fact, it is repayment of loan. I put it to any hon. Member who has a knowledge of business, supposing they have book debts which are worth so many thousands of pounds, and they have so many debts which they owe, and by the recovery of a certain amount of book debts they can pay off a certain amount of their debts, can that be regarded as a reduction of the liabilities of their business? That is merely a reduction of assets and a reduction of liabilities at the same time, and to say that we reduce our assets by the amount owing to us by our Colonial debtors is a misuse of words. It is simply a cancellation of assets against that liability, and therefore it is wholly improper to count it as part of the Sinking Fund. With regard to the interest on the Victory Bonds, I am not quite so clear, because I am not certain what it means. I know we have taken in discharge of Death Duties a certain amount of Victory Bonds, and as the interest has accrued we have also taken the interest. Now the Chancellor of the Exchequer proposes that we should use that to cancel our debts, and we should take credit to ourselves for that as part of the Sinking Fund. I say that it is nothing of the kind, and that item ought to be deducted from the Chancellor of the Exchequer's view of what it ought to be. These two items together account for £6,500,000, in addition to £7,250,000 on account of the Savings Certificates, or £13,750,000 in all.

I come to the last item, which is the amount added to the provision on account of the change made in the currency. I was glad to hear the Chancellor of the Exchequer admit that this was in fact a bookkeeping transaction. That is what I have maintained from the beginning, although some hon. Members on the Government Bench have stood out against that view, and have contended that it was a real contribution to the Sinking Fund. Now that the Chancellor of the Exchequer has admitted that fact, it is not necessary for me to argue the matter any further. But while the amount cancelled was nominally part of the debt, as the debtor himself held the stocks representing that amount, there is no real gain when the bookkeeping transaction is carried out of cancelling what a men owes to himself. This bookkeeping item amounts to £13,200,000, and including the other items would reach a grand total of £27,000,000. Taking £27,000,000 from £65,000,000, you get £38,000,000, which is the real figure at which the Sinking Fund stands at the present time. When we appreciate this we realise that both for this year and for next year the statutory and specific Sinking Funds are not covered to an amount of several millions. We find that anything up to £12,000,000 for these two years the statutory Sinking Funds are not really being covered at all. They are only being met, theoretically, partly because the full amount required to meet the interest on savings' certificates is not actually paid out in any given year, and partly by other fictitious methods which are not strictly paying off debt at all. What we are really doing is this: we have on paper certain statutory specific Sinking Funds, and we only succeed in carrying out our obligations by fresh borrowing. Our position, therefore, in spite of all the defence of the Chancellor of the Exchequer, is entirely different from that which he professes it is.

He attempts to cover this up by a kind of posthumus virtue. He admits, when he really comes down to the hard facts of the situation, that in these present two years we are not quite meeting what he considers to be necessary, but he throws in four years after his present tenure of office. Whatever hopes he may have—and I would remind him of his own statement in this Chamber that optimism is not the sole requisite of prophecy—whatever hopes he may have of obtaining a further tenure of office, he is simply resting himself on the supposition that his successor will carry out the proposals which he is putting forward, and he only covers the present two years by dragging in these four later years, when, according to his hypothetical estimates, the total may be reached.

I do not like this Clause. I do not like it because it covers up the true facts of the case. It obscures from the eye of the public in this country what is really happening with regard to the national finances, what is really taking place with regard to the provision for reducing debt. On paper, as exhibited by the Financial Statement for the year, we have a Sinking Fund of £65,000,000. Everyone would suppose that that meant that debt was being reduced by that amount. I have shown that the real amount by which the net debt of this country is being decreased is something like £38,000,000, even on the favourable assumption of the Chancellor of the Exchequer that the interest on the floating debt will not reach anything like the figure that it reached last year. If it were otherwise—if, instead of the £304,000,000 estimated for, the figure for last year, namely, close on £,314,000,000, were reached—then the figure of £38,000,000 which I have given would be cut down by an amount that might be a still further £10,000,000. Even on the favourable assumption of the Chancellor of the Exchequer, his boasted £65,000,000 is really £38,000,000.

I do not like that method of finance, and I do not believe that people who are accustomed to straight and clear ac- counting will like it either, when they come to examine the facts. The Chancellor of the Exchequer seems to me to be like a man who is boosting a private business or a company in order to gain credit in the public eye. He starts with a little manipulation of the figures in order to make them more presentable to the public. He goes on, in his confidence and audacity, increasing these manipulations until they become exceedingly questionable, and in private life, if he uses this method for his own private advantage, he ultimately finds himself in prison. The counterpart of that in public finance is to mislead the public as to their true affairs, and when, with increasing audacity, these manipulations have gone to the point of totally misrepresenting the real facts of the situation, I believe that, while the public opinion of this country will not inflict physical imprisonment on the Chancellor of the Exchequer, it will see to it that he is dismissed from the high office which he holds at the present time.