§ I now come, having dealt with economy and the cost of living, to the Debt operations of the present Parliament. [An HON. MEMBER: "What about wages?"] Money wages are equal to those of 1924, taken over the country as a whole. The nominal dead weight Debt has fallen from £7,598,000,000 to £7,501,000,000, or by a total of £97,000,000. But such nominal figures, as I have several times explained, are misleading as a test of the progress made. They fail, for instance, to discriminate between such totally different liabilities as a £100 bond payable next week and a nominal £100 of the old 37 Consols, which need never be repaid, except at the option of the Government, and will in fact never be repaid until some remote date when the interest rates are in the neighbourhood of 2½ per cent. But on a direct actuarial valuation, on the basis of the 4¾ per cent. tables—that is to say, taking every separate stock we have issued and calculating its own actuarial value—on this basis, which is the nearest basis we can get to a true scientific valuation, the obligations imposed on the State by the existing debt contracts have fallen in the last four years by £175,000,000. But this figure of £175,000,000 takes full account of all unpaid Savings Certificates interest. If it were open to me to follow the example of every previous Administration in ignoring that unpaid interest, the reduction in the four years would not be £175,000,000, but over £200,000,000. That is not as much as we had hoped, and it is not as much as eminent Liberal economists, or ex-economists, as I am afraid I must say, like the right hon. Member for West Swansea (Mr. Runciman), have often told us it ought to be, but it represents an immense exertion and sacrifice by the taxpayer and the Exchequer. At any rate, the right hon. Member for Carnarvon Boroughs ought not to cavil at it, because it is almost exactly the sum of £200,000,000 which, in trying to win the General Election, he now proposes to borrow and spend in a couple of years. At least we may console ourselves by feeling that the thrift of a Parliament has provided the raw material for another Yellow Book. We have painfully and toilsomely gathered together our meagre savings, and they are now to be butchered to make a showman's holiday.
§ 4.0 p.m.
§ During this Parliament we have been passing through a period of enormous maturities in respect of the medium term debt consisting principally of National War Bonds, and no less than £1,105,000,000 of debt has fallen due for payment, over and above the ordinary very large transactions upon the Floating Debt. These maturities have come upon us at obligatory moments even in the worst period of 1926, as I said at the time, like Atlantic waves sweeping the deck of a labouring ship, and I have been forced to repay or convert over £1,160,000,000 in four years, that is to 38 say, at an average of £23,000,000 a month during the whole lifetime of the Government, an experience unprecedented. But the greater part of the task is now over. These comparatively short-term bonds have now, been largely replaced by longterm debts, and their volume has shrunk from 17 per cent. to 9 per cent. of our total liabilities. An easier period lies ahead. The total Debt falling due in the next four years, which the Government is under compulsion to redeem, amounts to no more than £321,000,000, or much less than one-third of that we have had to deal with in an equal period, and the removal of this recurrent preoccupation and disturbance undoubtedly simplifies the prospects of dealing with the conversion of the 5 per cent. War Loan, which still remains the greatest and most fruitful financial operation likely to be open to the British people, With one single exception every conversion for which I have been fully responsible has effected a saving to the taxpayer, and the total saving from Conversions has been £1,500,000 a year. The one exception was the £62,000,000 of the 3½ per cent. War Loan. This was issued at the beginning of the War at the low rates of interest then prevailing. It was issued under conditions which made it redeemable at par at a fixed date, which fell in my tenure of office, and, of course, the money had to be reborrowed at the post-War rates. That involved us in an annual addition of £700,000 to the charge for the Debt. But for that, the reduction by conversions in the annual public burdens would not have been £1,500,000, but £2,250,000. In the meanwhile—[Interruption]—in spite of all the help which we were given in 1926—in the meantime, by the constant operation of the Sinking Fund, the interest upon the Debt has been reduced by £9,500,000 a year, and with the saving by conversion, the total reduction in the annual cost of our permanent borrowing is £11,000,000 a year.
§ Why then, it will be asked, has the total snnual charge for the service of the Debt increased? There are two reasons. First of all, the accumulated interest on the Savings Certificates encashed, which, in 1924, was only £7,000,000, was in 1923 nearly £18,000,000. If, throughout, the British Government had faced 39 their obligations on these Certificates as we are now doing, there would be no such difference in the two periods. The increase in the charge on account of Savings Certificates has accounted for £11,000,000, and thus the real reduction effected on the other permanent parts of the Debt Charge has been veiled. The second cause is the Treasury Bill rate. In 1928 that rate, contrary to expectations at the beginning of the year, proved high, and the cost of the floating Debt was £5,000,000 higher than in 1924, although the Debt itself was somewhat smaller. The Treasury Bill rates in the last seven or eight years have fluctuated to such an extent as might easily make a difference of £20,000,000 to the Budget. The Treasury Bill variations are in their nature temporary, and neither the Treasury Bill rate nor the fact that we have faced our obligations on the Savings Certificates should be allowed to obscure the solid and irrefutable fact that the actuarial value of the Debt has been reduced by £175,000,000, and the permanent annual cost by £11,000,000. There is, therefore, no ground for supposing that the exertions of the taxpayer in maintaining the Sinking Fund have not yielded a full proportionate diminution both in lower interest charges and in regard to the aggregate Debt liability.