§ Continuing his speech, Mr. SNOWDEN said:
§ I shall, therefore, refer only briefly to last year. There was a deficit, that is to say, an excess of total expenditure 1396 over total income of £23,250,000; but, as the total expenditure included the very large sum of £66,830,431 for Sinking Fund, the Committee will see that the net result of the year is a surplus applicable to debt reduction of over £43,500,000. Apart from that there was a sum of over £9,000,000 received by us from the proceeds of the German Mobilisation Loan, and this has been applied to debt reduction outside the Budget. The apparent deficit of £23,000,000 is apt to be misleading especially to foreign opinion. On the basis of some foreign Budgets and commercial practice instead of a deficit of £23,000,000, the year would have closed with a, surplus of £43,500,000. The net sum applied to Debt reduction is in reality the surplus of income over expenditure. It says much for the soundness of our national financial position that, in a year of unparalleled industrial depression, we have not only been able to pay our way but to make such a substantial reduction of the Debt. I do not intend to make detailed comparisons with the Budgets of foreign countries, but I should be very much surprised to learn that there is any other country, however sky-scraping its tariff walls may be, which can show an equally good result in such a period of world-wide disaster.
§ The Committee will recollect that in 1928 the fixed debt charge was put at £355,000,000 a year, and that by last year's Finance Act this sum was augmented by £5,000,000, £5,000,000 and £4,500,000 for the years 1930–31, 1931–32 and 1932–33 respectively. The object of this was to pay off the deficit of £14,500,000 of 1929–30. Since that decision was taken we have received, as I have mentioned, over £9,000,000 from the German Mobilisation Loan and applied it to debt reduction outside the Budget. Therefore, the actual net sum applied to debt reduction last year, after deducting the £23,000,000 deficit, was £52,500,000. In the exceptional circumstances of the present time, I feel that I am entitled to propose to the Committee that the last £9,500,000 of the 1929 deficit should be regarded as sufficiently met by this windfall from the German Mobilisation Loan, and that no further burden should be placed on this year's and next year's Budget for this purpose. The first £5,000,000 of the 1929 deficit was duly 1397 provided for last year. That sum is included in and is part of last year's deficit of £23,000,000. It will have been noted that last year I provided £360,000,000 for Debt service, but savings made on the estimated cost of Treasury Bills and Savings Certificate interest enabled an addition to be made to the sum estimated to be available for Debt reduction of £11,500,000. This year I am making a liberal allowance for the cost of Treasury Bills and Savings Certificate interest, and it is not improbable that these items will again make an addition to Debt reduction beyond the sum estimated for in the fixed Debt charge, but in the present state of financial uncertainty I think it best to be on the safe side.
§ I do not think the Committee should expect me or will expect me to make provision by an addition to the fixed Debt charge—that is by an increase of taxation—to meet this shortage of £23,000,000 immediately out of present resources. Moreover, I am confidently expecting that, as the outcome of the recommendations of the Economy Committee set up by the vote of all parties in the House, considerable reductions of expenditure will be made during the year, which will automatically go to Debt reduction. It is also possible that during the year conditions may be favourable for considerable Debt conversion operations, which will in that event reduce the cost of the Debt services, and automatically increase Debt reduction within the fixed Debt charge. In view of these facts, although I am not making any direct addition to the fixed Debt charge, I hope savings will be made which will wipe off a considerable part of the deficit of £23,000,000 during the current financial year. Should this expectation not be realised, it will be the duty of Parliament to deal with the matter when better times return. Although I have always favoured every possible effort at Debt reduction, I have always agreed with Mr. Gladstone's view that, in times of industrial depression and unemployment, it is better to use our resources to stimulate trade than to make undue sacrifices for the reduction of Debt. It is in times of prosperity and abounding revenue and of Budget surpluses that we can afford to lessen the intolerable burden of debt, and to liberate resources for schemes of 1398 economic and social reform. The fixed Debt charge for the current year will, therefore, be the £355,000,000 laid down by the Finance Act of 1928.