FINANCE [ADVANCE TO ROAD FUND]. (Hansard, 17 June 1931)

§ The MINISTER of TRANSPORT (Mr. Herbert Morrison)

Perhaps I ought to explain shortly the purpose of this Money Resolution which is necessary in order that the Committee of the Whole House may deal with Clause 31 of the Finance Bill. The Resolution enables the Treasury to advance to the Road Fund a sum not exceeding £9,000,000 during the current financial year. The Treasury under the 1848 Finance Act, 1928, has power to advance sums to the Road Fund, which must be paid back during the financial year in which they are borrowed—temporary sums, in order to enable the Road Fund to meet its obligations, having regard to the fact that the major part of the income of the Road Fund accrues during the last three months of the financial year, whereas the expenditure is incurred before then. In view of the magnitude of the operations of the Ministry of Transport and the local authorities, in connection with highway and bridge construction this year, it is necessary that additional powers should be sought because it will not be practicable for the Road Fund to repay the entire sum during the current financial year.

The reason why power had to be sought for temporary borrowings was what is usually described as the "raid on the Road Fund" which was conducted by the right hon. Gentleman the Member for Epping (Mr. Churchill) when he was Chancellor of the Exchequer. It will be remembered that he first took £7,000,000 and then took £12,000,000. In view of the fact that the Road Fund would have been in difficulties in that financial year, this power of temporary borrowing had to be given. In fact, that power was given and has been exercised from time to time. It is estimated that during the financial year 1931–32 the existing power under the Finance Act, 1928, for temporary borrowings, to be repaid during the financial year, will have to be exercised to the extent of roughly £14,000,000. That will take place, as I say, under the Finance Act, 1928, as temporary borrowings. The power that we seek by this Money Resolution and by Clause 31 is an additional power to borrow on a more permanent basis up to the sum of £9,000,000, which must be paid back within the prescribed period. That is, of course, on the assumption that the estimates prove correct, and we have every belief that that should be the case.

It will be seen that the expenditure is spread more or less evenly over the whole financial year, whereas the bulk of the income from motor taxation accrues in the last three months of the financial year. As I say, before this temporary borrowing power became necessary, the Road Fund could handle its problems by the sums Carried 1849 forward and accumulations from previous years, and it must be remembered that on the original establishment of the Road Fund it was just this situation which we are now facing that was contemplated. The view then was that an endeavour should be made to husband the resources of the fund in the better times in order that material sums should be available in the times when unemployment was existing or times when additional work required to be done. In fact, Section 18 of the Development and Road Improvement Funds Act, 1909, provides: In approving, executing, or making advances in respect of the execution of any work under this Act involving the employment of labour on a considerable scale, regard shall be had so far as is reasonably practicable to the general state and prospects of employment. Under the two programmes which we are now conducting, the total estimated expenditure on the five years' programme will be £27,500,000 and on the trunk road programme £21,000,000. These works will be spread over a period of years, and it is estimated that, apart from the contribution to the schemes being made from the resources of the local authorities, the Road Fund will be called upon to meet expenditure during the current financial year amounting to £4,000,000 in respect of the five years' programme and £3,000,000 in respect of the trunk road programme, or £7,000,000 in all. The road works concerned are not mere relief works; they are works which are necessary, though they would have been carried out later and over a longer period had it not been for the present depressed state of trade. Then, in addition to these special programmes, substantial assistance continues to be given to the highway authorities for annual construction schemes and improvement schemes, for maintenance and so on, and in addition the Road Fund has to contribute annually, under the Local Government Acts of 1929, nearly £6,500,000 towards the general Exchequer contribution to local revenues. In fact, the earmarked sums for various purposes which lie against the Road Fund leave very little margin for sudden expansions of expenditure from the fund arising from a situation such as that with which we are dealing at the present time.

On this particular loan interest, as I say, will be payable, but it is not payable on the temporary advances. With regard to repayment, it is proposed that 1850 the advances will be repayable between the 1st April, 1936, and the 31st March, 1941. An earlier date is not practicable, but on the best estimates that can be made at present, it is expected that after 1935–6, by which date the bulk of the Road Fund contributions in respect of schemes under the five years' and trunk road programmes will have been paid out, there will be a sufficient margin between revenue and expenditure to enable the loans to be repaid. The total expenditure out of the Road Fund this year is estimated to be in the region of £33,000,000. I think that that explains the purpose of the Money Resolution. The third paragraph of the Resolution is in common form, and gives the borrowings the backing of the Consolidated Fund. With that explanation, I hope the Committee will be clear as to the purpose of the Resolution.

§ Sir WILLIAM MITCHELL-THOMSON

I should like to say at once that we are obliged, and I am sure the whole Committee is obliged, for the very clear explanation which the Minister has given of the purport and intention of the Resolution. None the less, I have to say, and the Committee will understand, that in the circumstances in which we are working it is impossible for us at present to give time to the consideration of this matter. We have two very important definition Clauses and the finance Clause coming in the Finance Bill, and we shall have an opportunity on Clause 31 of returning to this matter again. I do not propose, therefore, to say more now than this, which ought to be said at this stage, that it is quite clear from what the Minister has said that, put shortly, the effect of this provision is to give further facilities to the Road Fund for the purpose of spending money on public works with a view to accelerating construction having regard to the state of employment.

With regard to that, we ought to say at once that we regard this, and this sort of remedy, when considered as a contribution to the solution of the unemployment problem, as being purely derisory. We share that view with the Unemployment Commission, and I would call attention to one sentence of the report of that Commission, which hon. Members will find on page 9. The Commission are dealing with various classes 1851 of industries in which exceptional unemployment is prevalent, and they say: The causes of the depression in the industries of exceptional unemployment are easy to understand. These industries fall into three broad classes…. There is third, a class of industries, which has been expanding rather than contracting and enjoying in some cases, a high degree of prosperity…. To this class belong building and public works contracting, in which a large expenditure of public money has stimulated employment without preventing unemployment. That is our case, and that is all that I desire to say at this stage. We do not propose to oppose the Resolution, but we reserve to ourselves the right to discuss this matter, if possible, on Clause 31.