HC Deb 24 May 1932 vol 266 cc290-324
Mr. LANSBURY

I beg to move, in page 12, line 13, to leave out the word "three," and to insert instead thereof the word "two."

We move this Amendment in order to raise the question of the payments on the National Debt, and we do so because this Budget is defended and explained by its supporters from the one point of view that the resources of the nation must be husbanded and that economy must be exercised in every department of the public service. I am aware, as the Committee is aware, that there are proposals for voluntary conversions of some portion of the National Debt, but while we are waiting for these—and we have been promised them for a very considerable period—the payments continue. No one will deny that the money that was lent both during the War and immediately after the close of the War buys a larger amount of commodities now than it would have done when it was lent. The right hon. Member for South Molton (Mr. Lambert) is never tired of telling us that three sacks of wheat have to be paid now where one sack of wheat used to be paid a few years ago. That puts the case in a nutshell. More commodities have to be given for the same amount of money than were given previously. If any proof of that is needed, you get the further fact, which everyone understands, that in this very Finance Bill, which makes provision for the payments in the Budget, the amount of money that has to be raised is reduced because the State has taken into account the fact that the cost of living has fallen and that, therefore, salaries, wages, and emoluments are brought down.

Economists like Sir Josiah Stamp have put on record that money payments made now for money lent for war purposes are, if considered in relation to prices when the money was lent, very much in excess of what they would have been had prices remained as stable. Figures that have been supplied to me show that the highest figure for the National Debt was in March, 1020, when the annual charge was £347,000,000. The index cost of living figure was then 130 above 1914. This year we are paying £308,000,000, and I understand that the index figure is only 46 to 48 above 1914. If you take present prices, the £347,000,000 paid in 1920 is equivalent to £220,000,000 to-day. Therefore, the National Debt interest receivers will get this year a sum which, at the prices ruling to-day, is £88,000,000 more than it would have been if interest rates had been reduced in the same manner that wages were reduced. That is to say, if interest had fluctuated with the cost of living, the money that we are paying this year is £88,000,000 more than is necessary. Suppose that we call it wages or salaries instead of interest, it is £88,000,000 more than it need be. I am aware that the figure by which we are moving to reduce the amount in the Clause is a little more than the sum which I have mentioned, but we merely put it at that arbitary figure in the same way that a token figure is moved when the Government wishes to get a Resolution for a certain purpose. We move this arbitary figure in order to raise a discussion on the question of the rates of interest.

I know that it will be said that we have contracted to pay this interest and that the honour of the State is concerned. It is quite true that a contract was made under the conditions that prevailed at the time to pay in some cases very heavy rates of interest. It is also true that contracts were made with a large num- ber of workpeople, and these have had to be broken. At the time of the formation of the National Government last autumn, we were told that the exigencies of the situation necessitated the cuts that it was then said must be made. Although many trade unions, co-operative societies and beneficent bodies have money invested in War Loan, we are prepared to face that situation, and if we were in power we should see that neither individuals nor societies really suffered by the cut that we made—

The CHAIRMAN

I called this Amendment partly because I did not quite understand what it meant, and I wanted to give the right hon. Gentleman and his friends a chance of explaining it. Now the right hon. Gentleman has explained it, I think that the point that he wishes to raise cannot be raised on this Amendment, or indeed on this Clause at all. If this Clause were not here, it would make no difference whatever to the payment of the National Debt or the meeting of the obligations into which the country has entered. This Clause merely deals with a certain part of the financial machinery, and the result, I am afraid, is that I cannot allow a discussion on the point which the right hon. Gentleman wishes to raise on this Amendment, or indeed on this Clause at all.

Mr. LANSBURY

The Clause opens by saying: The permanent annual charge for the National Debt for the financial year, and so on. Surely this Clause sets out the amount that shall be paid for interest on the National Debt. If it does not, I do not understand the meaning of words.

The CHAIRMAN

I admit that the matter is not easy except for people who have been accustomed to dealing with national accounts. As I understand it, this is merely a piece of financial machinery in regard to the keeping of accounts, and, as I explained just now, if this Clause were not passed at all, there would still be the national liability for interest and for any loans which mature, and these would have to be paid whether this charge were here or not. This Clause is part of the financial arrangement made some years ago by the right hon. Gentleman the Member for Epping (Mr. Churchill) when he was Chancellor of the Exchequer, whereby a certain sum should be earmarked for certain liabilities, and the amount here is the amount to be set aside in the national accounts for the purpose of meeting obligations which are partly interest and partly sinking fund.

Mr. LANSBURY

I would ask the Committee seriously to consider this Ruling. This sum was put in the Finance Bill, and it was put here, I thought, for us to discuss. I have sat through many Debates on this subject. I would call your attention to the fact that in the margin to the Clause the words are: Provision as to permanent annual charge for National Debt for 1932–33. Then it goes on, Charge of 4 per cent. Consols. and so on.

The CHAIRMAN

That is the next Clause.

Mr. LANSBURY

Yes, but I want to ask you whether the words Provision as to permanent annual charge for National Debt are merely machinery. Surely the question whether we shall vote £308,500,000 instead of £322,000,000 is one for discussion. There is a difference in the sum.

The CHAIRMAN

I am quite satisfied from what the right hon. Gentleman has said that my Ruling is correct. Of course, the marginal note is not part of the Bill. If the right hon. Gentleman reads the note with care, I think he will see that it explains exactly my point. It is not the case that Parliament is being asked in this Clause to vote any money at all. It is merely a question of provision in the accounts for a permanent annual charge, charge which has to be met whether provision is made for it in this way or not.

Mr. LANSBURY

That is my very point.

The CHAIRMAN

—and I am afraid I must, in the absence of any proof to the contrary, maintain my Ruling, because I feel confident that I am right. No doubt the Financial Secretary to the Treasury will be able to tell me that this Clause is not in any way a Clause voting money, but is merely a piece of machinery for the keeping of the national accounts, and that without this Clause at all the interest on War Loans and other Government loans and the debts which mature would have to be paid. In these circumstances the question whether these payments should be made or scaled down is one which obviously does not arise.

Mr. LANSBURY

This is an exceptionally important matter, and I hope you will allow us to argue it a little. This part of the Bill is headed, "National Debt," just as other parts deal with taxes and the provision of certain money for certain purposes. Here we are making provision for a sum of £308,500,000, and surely the House of Commons is entitled to say whether it shall be that amount or a lesser amount.

The CHAIRMAN

The right hon. Gentleman will forgive me for one moment. Of course, he is quite right there, and therefore I am quite prepared to agree that his Amendment is in order, and I called it, though I could not understand the reason for it. I am not complaining that his Amendment is not in order. What I am ruling, and I rule it quite clearly, is that on his Amendment or on this Clause the question of scaling down or reducing the interest on any National Debt cannot be raised.

Mr. LANSBURY

If I am entitled to move my Amendment, which is for the purpose of reducing the sum of £308,500,000 to £208,000,000, surely that is scaling it down in very heavy fashion?

The CHAIRMAN

No. I have explained to the right hon. Gentleman that, even if his Amendment were carried, or if this Clause were not here at all, there would still be the same liability on the Exchequer to pay the interest. I am quite clear about that, unless I can have authority to the contrary, and I maintain that Ruling.

Mr. MORGAN JONES

May I put one further question? Do I understand your Ruling to imply that this House has no power whatsoever to effect in any way whatsoever, at any time whatsoever—

The CHAIRMAN

No.

Mr. JONES

I have not quite finished my sentence—this House has no power to alter in any way whatsoever the rate of interest which past Governments have been committed to pay on the National Debt. Is that the point?

The CHAIRMAN

Most certainly and decidedly not. The hon. Member ought to know by this time—

Mr. JONES

I am trying to find out—

The CHAIRMAN

—that it is one of the absolute theories of the constitution that Parliament is supreme. That it can be done is clear. Whether a thing can be done is quite a different thing from whether it is advisable or not, but that is not the point at all, and I am not for one moment questioning the right of this House on a proper occasion to discuss the question which was raised by the right hon. Gentleman. All I am ruling is that it cannot be raised upon this particular Clause, and about that I have no doubt whatever.

9.0 p.m.

Mr. BUCHANAN

This Clause proposes to alter the sum allocated for the purpose of paying interest on the National Debt. Instead of leaving it as £322,000,000 it seeks to make it £308,500,000. I understand that this Clause gives the Treasury the power to alter the sum. If the right hon. Gentleman's Amendment to make it £208,500,000 instead of £308,500,000 were carried Parliament would then be given authority under this Act to raise only the sum of £208,500,000. Assume that we allowed this Clause to go unopposed, then every one would, in effect, be agreeing to the larger sum being raised, because Parliament has to sanction it being raised. It may be that the right hon. Gentleman is wrong in arguing that the interest should be reduced, but if he could carry his Amendment in favour of the lesser sum then he would throw on the Government the responsibility of taking some means to reduce the sum to that amount. I submit that he is perfectly entitled to move to reduce it. Otherwise, I cannot understand the Clause coming into the Bill.

Major ELLIOT

Further to that point of Order. This matter is a highly technical one, and very difficult to understand, and perhaps my right hon. Friend the Leader of the Opposition will follow me as I understand it. I am not giving any guarantee that I am absolutely accurate in this sequence, any more than he is, because we are both laymen in these matters, and both liable to make mistakes. As I understand it, the position is this. As a matter of accountancy the fixed debt charge was set up by the Finance Act of 1923, which established a permanent annual debt charge of £355,000,000; but that was a mere drawing together for accounting purposes of liabilities which had existed before it was set up and would exist afterwards. The position is that this Clause does not authorise the payment of any sum. If the Leader of the Opposition will read the Clause through he will see that it does not authorise the payment of a single penny.

Mr. LANSBURY

It says, "The permanent annual charge."

Major ELLIOT

That is so, "The permanent annual charge," but there is no word, "issue" in this Clause—there is no authority under this Clause for anybody to issue a single penny.

Mr. COVE

A mere declaration.

Major ELLIOT

It is a very complicated matter, and to laymen like the Leader of the Opposition and myself it appeared at first sight that this would be an appropriate place to raise the whole question of the payment of the interest on War Loan; but I have looked into it myself, because it seemed to me, as it seemed to him, in the first place, that here was an appropriate moment to raise that point. I am now satisfied, however, that not merely is this not the appropriate moment, but that the object the right hon. Gentleman desires could not, in fact, be effected in this Finance Bill. Parliament, of course, could repeal the National Debt, as the Chairman of Ways and Means has said; it is obviously true that Parliament can do anything; but how could Parliament do it? It could do it by the introduction of a special Bill, but it could not do it by altering this Clause, and could not do it by any Clause in this Finance Bill. It is perfectly in order to argue when the general financial provisions for the finance of the year come up for discussion on Second Reading or on Third Reading that too great a burden is being placed on the nation to find these annual sums of interest which the holders of War Loan are entitled to under present enactments.

Mr. BUCHANAN

The right hon. and gallant Gentleman has told us that some time ago the sum of £355,000,000 was fixed for this annual charge, and now we are fixing the sum at £308,000,000. Will he tell us where is the authority of Parliament for the alteration of those sums? If the Government can bring in a Clause to alter the sum from £355,000,000 to £308,000,000, surely the Leader of the Opposition can argue in favour of a lesser sum?

Major ELLIOT

I think I can answer the hon. Member on that point. I have my authority in a letter from the President of the United States of America, showing that there is a liability of £13,500,000 less to the United States, and, as a matter of accountancy, I bring in a Clause showing that that accounting change has been made.

Mr. BUCHANAN

The right hon. and gallant Gentleman says that he has received a letter from the President of the United States. Would it not be open to any holder of War Loan to suggest that the interest should be reduced?

Major ELLIOT

I am not the Chairman of Ways and Means, and I should not think of entrenching upon his privileges, which are to rule what is in order and what is not in order in this House. The hon. Member for Gorbals asked if a permanent charge of £355,000,000 was established by the Finance Act, 1928, as a burden upon the taxpayer. That is not so. What was done was merely as a means of accountancy to bring the various war loans and interest charges into a fixed Debt charge. The various sums are included which fall due to the United States. They gave us a moratorium for a year. Therefore there is a less sum falling into the fixed Debt charge. That is the only thing that alters this charge and that is the only thing which we can discuss upon this Clause. I do not wish to limit the power of the Committee to discuss any financial matter, and I am anxious to meet when occasion offers the argument which has been brought forward by the Leader of the Opposition. I most strongly support the Chairman of Ways and Means that the Amendment which the Leader of the Opposition has moved would not change the effect of the Clause. The actual re- duction of the sums paid in interest on War Loan would require a special Act of Parliament. The reduction of the amount is not outside the power of Parliament and it could be done by an Act of Parliament if the Government desired to do it, but it could not be done by leaving out this Clause or by putting any new Clause into the Finance Bill. It seems paradoxical, but after this explanation I hope I have convinced the Committee of the justice of our contention.

Mr. LANSBURY

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

We have had such an extraordinary Ruling, and the statement which has just been made by the Financial Secretary is so extraordinary, that I think we ought to have a little more time to consider the point. It may well be that what we have been told is accurate, and that you, Sir Dennis, have given a proper Ruling, but, as I see it, there is no sense in having a Clause in the Finance Bill if we are not permitted to discuss it, and even to reject it. Parliament has been asked to consider a Clause of this kind and to debate it, and now we are told that we cannot reject it. That, to me, seems to be reducing the whole of the proceedings of the Committee to a farce.

The CHAIRMAN

I have not said that the right hon. Gentleman cannot move his Amendment, or that he cannot adduce arguments in support of it. What I have said is that he cannot, on this Amendment, discuss the question of reducing the amount of interest on Government loans, because the right hon. Gentleman's Amendment would make no difference to the amount of the National Debt. The right hon. Gentleman has asked me to report Progress in order to discuss my Ruling. I have considered that point very carefully, and I have come to the conclusion that I must refuse to accept such a Motion because my Ruling has already been sufficiently discussed, and the discussion has confirmed in my mind the Ruling which I have given. I should like to make it clear what that Ruling is. It is not a ruling that this Amendment cannot be moved, or that it is beyond the 'Competence of this Committee to alter this Clause or reject it. My Ruling is to the effect that whether this Amendment is passed or not, or whether this Clause be passed or not, would make no difference to the liability of the national Exchequer in regard to the payment of the interest on war loans and other debts and that cannot therefore be discussed now. The liability for those debts arose at the time when the charges were incurred. They are now a charge on the Consolidated Fund which is not altered by the Finance Bill in any way.

Mr. LANSBURY

I cannot accept your Ruling, Sir Dennis.

The CHAIRMAN

The right hon. Gentleman must accept my Ruling.

Mr. LANSBURY

You have given a Ruling, Sir Dennis, which in effect says that the House of Commons once having decided upon a certain thing has not the power to alter it.

The CHAIRMAN

I have tried ray very best to put the limits of my Ruling as clearly as I could, but the right hon. Gentleman is now putting into my mouth something totally different from what I said. I have been most careful to say already, in reply to another hon. Member, that I am placing no limit whatever to the power of Parliament, and that the matter which the right hon. Gentleman wishes to discuss is one which, of course, can quite properly be discussed at the proper time; but I am quite clear that it cannot be discussed on this Amendment. I have allowed a long discussion on this point, because it is a difficult and important point, and I was anxious, for my own satisfaction as well as for the satisfaction of the Committee, that the Financial Secretary to the Treasury should be able to give the Committee and myself any assistance that he could. I think that the matter has now been sufficiently discussed. I am quite confirmed in my view as to the correctness of my Ruling. The matter is not one that can be discussed on a Motion to report Progress; it can only be discussed in the ordinary and proper recognised way by the method of putting down a Motion on the Order Paper. I must adhere to my Ruling and ask the right hon. Gentleman and the Committee to accept it.

Mr. BUCHANAN

May I ask a question? You have said that the Amendment itself would not be out of order, but that the reasons adduced may be out of order—that it would be out of order to argue the question of the rate of interest. It seems to me that, unless we adopt your method of putting down a special Motion, the question of interest cannot be called attention to, because it is a charge on the Consolidated Fund; but I should like to ask whether a Member could not move this lesser sum now, knowing that he could not alter the rate of interest, but as a method of expressing to the Government the fact that certain Members of this Committee have come to the conclusion that it is desirable to reduce the sum?

The CHAIRMAN

No; that is just the point. I have ruled quite definitely that although this is, of course, a fitting subject for discussion at the proper time, it cannot be discussed on this Clause. I must adhere to that Ruling and ask the Committee to follow it.

Mr. LANSBURY

I beg to give notice that we shall raise the question of this Ruling at an appropriate moment. You have refused to accept a Motion to report Progress, as it is your right to do; but we do not accept your Ruling as correct, and we shall take whatever is the proper method for raising that question. I want to give you notice of that. I wish now to try, within the limits of your Ruling— which, I say quite frankly, I do not even now understand—to discuss this Amendment, which you say it is in order to discuss. It proposes a reduction of the sum that is mentioned here, from £308,000,000 to £208,000,000, and I want to give reasons why it should be so reduced. If I move the Amendment, I must be able to adduce reasons for moving it. I wish that this sum shall not be raised for the specific purpose of meeting interest on the National Debt.

The CHAIRMAN

I was going to ask the right hon. Gentleman whether he wished to go on with this Amendment, as, of course, he is perfectly entitled to do; but may I, for his guidance, if it is of any help to him in his argument, explain again that by this Clause Parliament does not raise this money at all, and that therefore, if he deals with the question of voting this money, he will be out of order. I quite appreciate the very great difficulty of arguing in favour of this Amendment, or, for that matter, against it, within the terms of the Ruling that I have given. It is a very intricate matter. I can only adhere to my Ruling, and, if the right hon. Gentleman can adduce in favour of the Amendment any arguments which come within the terms of my Ruling, I shall, of course, admit them.

Mr. LANSBURY

I am not a master of language, and I am not a lawyer, and it is very possible that I shall not be able to argue this point. It is this very point that we intend as early as possible to argue under conditions which will be more free than they are this evening. I should like, however, to read, with your permission, what the Clause says. It reads as follows: The permanent annual charge for the National Debt for the financial year ending on the thirty-first day of March, nineteen hundred and thirty-three, shall be the sum of three hundred and eight million, five hundred thousand pounds, instead of the sum of three hundred and twenty-two million pounds. I want that sum reduced by £100,000,000 to £208,000,000, because I consider that the nation cannot afford to vote, or to give authority, as I understand this Clause does, for raising, that sum of money. My reason for thinking that the nation cannot afford it is—

The CHAIRMAN

I am very sorry, but the right hon. Gentleman is definitely transgressing my Ruling. After this long discussion, I must adhere to it rigidly. I must repeat once more that this Clause does not raise or provide the money.

Mr. LANSBURY

May I ask you, very respectfully, to tell me what the Clause does do? [Interruption.] I ask you again, and I ask you quite respectfully, for what object are these words printed in a Clause which the House is asked to discuss? I understand the Financial Secretary to say that it is only here because the payments for the American Debt are not included this year. That is perfectly true, but are we not entitled, if we want to do so, to say, "We would like to carry this a little further. We would like to make it still less, and to tell the Government that we do not want to pay all this money for the National Debt, but want a less sum fixed"? Are we not entitled to say that? I was in the House when the right hon. Gentleman the Member for Epping (Mr. Churchill) drew all these things together, and when the sum was fixed. Do I understand that, in discussing the Finance Bill, which I think you will find is where the right hon. Gentleman gathered them together on the previous occasion, we are not in a position to alter that figure?

The CHAIRMAN

I repeat again that the Committee has a perfect right to alter this figure, but that it will make not the slightest difference, even if this figure is struck: out altogether, or if it is reduced to £100, to the interest which is paid upon War Loan. I am very sorry to suppress the right hon. Gentleman; he has been very good and patient; but I really must ask him not to discuss this question of my Ruling any further, but to take it as a definite Ruling, right or wrong. The right hon. Gentleman can deal with it later in the ordinary way, but now he and other Members of the Committee must keep within the terms of the Ruling.

Mr. LANSBURY

Look at the position in which you have put us. [Interruption.] I am quite serious about this. I have been on the Government side once in my life, and I know how fine it is to see your opponent just squashed down like this; but this is really a very serious matter. You say to me, "You are perfectly entitled to discuss this; you are perfectly entitled to move a reduction; but you are not allowed to give reasons for doing so, or you must give reasons of a certain sort."

The CHAIRMAN

I am afraid I must tell the right hon. Gentleman now that he is misrepresenting what I have said. I have said that the right hon. Gentleman can give reasons as long as they are reasons which are pertinent; but the reasons which he is trying to give, and which he wishes to give, are not pertinent.

Major ELLIOT

I am anxious to elucidate this matter as far as possible. The Leader of the Opposition put a question, as I understood, to me through you, as to what the purpose of this provision is, and how these words come into the Bill at all; and if they are in the Bill, what is the reason? First of all, the reason is that we are varying the fixed Debt charge. This Clause has to appear in the Finance Bill if the fixed Debt charge has to be varied, but not on any other account.

The CHAIRMAN

I think we must put this matter in order. It is quite clear to me that many hon. Members will wish to discuss this Clause in order to discover what it means. The right hon. Gentleman was moving an Amendment—I understand that he still wishes to move it— and if I may treat it as moved by him, I will put the Question to the Committee, and then the Financial Secretary can go on with his explanation of the matter. The matter will then be discussed in a perfectly orderly way, whereas I venture to think it is now being discussed in a rather disorderly way. If the right hon. Gentleman will allow me to put the Amendment to the Committee—

Mr. LANSBURY

I want to say another word on it.

The CHAIRMAN

The right hon. Gentleman will then complete what he has to say in moving the Amendment, and I will then put it.

Mr. LANSBURY

But I shall not be able to complete what I wanted to say, because you, Sir Dennis, have effectively stopped me. We thought we had taken good legal advice—I am sorry the hon. and learned Gentleman is not here, but even a lawyer has to feed—and we thought we were in order in moving the Amendment and in giving the reasons which were in our minds for supporting it. I understand that to-night, at any rate, we have got to put these on one side, and we shall take our vote when the right hon. and gallant Gentleman has given us his version. But I want quite seriously to say that we feel we shall be obliged to raise the whole question, in whatever form is most convenient, later on. I will not attempt to contravene the Ruling of the Chair again by attempting to make my speech. I will save it up.

9.30 p.m.

Major ELLIOT

I fully realise the difficulty of this technical subject but, as I understand it, the fixed Debt charge was established for accountancy purposes. If the fixed Debt charge is varied, the authority to vary it must appear in the Finance Bill of the year, and for that reason it so appears in this Finance Bill. The reason for varying the charge is that a lesser sum is being demanded of this country, and certain portions of our liability having failed to materialise, we can make a correspondingly lesser provision. If we had not this Clause in the Bill the only effect would be that we should require to find £14,000,000 more for the Sinking Fund, a thing which I am sure the right hon. Gentleman does not desire. Then the further question arises, could the right hon. Gentleman, by this reduction he is moving, bring about the object which he desires, namely, a reduction in War Loan interests? No. Why not?

The CHAIRMAN

I am afraid the right hon. and gallant Gentleman is getting into an argument which is out of order, or into a discussion of my Ruling.

Mr. NEIL MACLEAN

I take it the Ruling lays it down that we are not permitted in this House to discuss the reduction of the rate of interest?

The CHAIRMAN

I do not know whether the hon. Gentleman was in the House and heard my Ruling, but if he did he must have heard me say at least three times that the House is quite entitled to discuss that matter, but not on this occasion.

Major ELLIOT

Without falling out of order again, may I simply say that the Clause is in the Bill because we are varying the fixed Debt charge? We are varying it because our liabilities are not as great as we expected them to be. [HON. MEMBERS: "How do you know?"] Because we have a letter from the President of the United States of America to that effect. That being so, we are not making the provision which would otherwise be necessary because, if we did, that would mean an extra provision for the Sinking Fund, which is not desired. The only other question is what effect this has on the question of the Hoover moratorium as a whole. My right hon. Friend the Chancellor of the Exchequer made that clear in his Second Reading speech where he pointed out that he was not making provision for payment to the United States, or taking credit for the sums which were due to this country from other sources. These two items formed, as it were, a self-balancing budget, and he was taking the two things out of the finances of the year since they were all to be discussed, more particularly the sums we were to get in, at the Lausanne Conference. Therefore, we are not, in this Clause, prejudicing or prejudging one way or the other the question of the payments to the United States under the Hoover moratorium. We are, however, not making provision for an unnecessary payment to the Sinking Fund this year which would, incidentally, have had the effect of causing us to raise another £14,000,000 of taxation, which is not desired in any part of the House. That, I think, does afford very good reasons for this Clause being in the Bill, and for the proposals which we are bringing forward.

Mr. BUCHANAN

I do not want to go against the ruling of the Chair, which was very clearly given to us, but I do think the right hon. and gallant Gentleman has contradicted himself. I could follow the Ruling of the Chair, and I thought I should follow much better what the right hon. and gallant Gentleman said since he comes from the same city, but I could not. He said, in effect, that if we do not pass the Clause, the fixed Debt charge would be the same, and that it is all under the Consolidated Fund. Then he says that if we did not pass the Clause, the payments would not be the same, because you would have to find £322,000,000 instead of £308,000,000. The one thing in the Ruling of the Chair which I clearly grasped was that, no matter what we decided here to-night— whether we rejected this Clause or amended it—the payments would continue to be the same, but now the right hon. and gallant Gentleman says that if we do not pass the Clause, the payments would not be the same, but so many millions more.

Major ELLIOT

I said payments to holders of War Loan would not be altered. Payments to the Sinking Fund would be altered, but these are not payments to any individual and, therefore, the seeming discrepancy in my argument is resolved.

Mr. BUCHANAN

The Sinking Fund is altered, but you cannot alter the interest. That is the reply that I got. Therefore, we should be entitled to argue that this sum should be reduced by £100,000,000 to wipe out the Sinking Fund.

Major ELLIOT

The Sinking Funds are statutory, and cannot be altered.

Mr. BUCHANAN

You say unless you get this Clause, the Sinking Fund will not be altered.

Major ELLIOT

The sums will still have to be raised, but they will not go to individual holders of War Loan, but to the Sinking Fund.

Mr. BUCHANAN

It does not make it any clearer. Let us take it point by point. You say this interest charge is a charge on the Consolidated Fund and it cannot be altered under the Finance Bill. That is the definite ruling which the Chairman has given and which I accept for the time being. But along comes a new proposition and the Financial Secretary says there is a letter from America, the effect of which is to reduce the charge on the Sinking Fund and, if we had not had that letter from America, the Sinking Fund would have been a higher amount. But he says, having got that letter, he now proposes to ask Parliament to alter the sum allocated. You can alter the Sinking Fund, therefore, because you now propose to do it. You have said that, if we did not alter this now, a larger sum would have to be provided for. Without going into the merits of War debt interest, I think this is a cogent point. In effect, we are asked to allow this provision to go by default. It is to some extent a declaration. It may be argued that we have not sanctioned the payment, but the mere fact that we allowed it to go through unchallenegd would seem to imply that the Committee sanctioned this large sum being paid for interest and other charges. The Opposition are perfectly right in safeguarding their interests by challenging this. While it may be a charge on the Consolidated Fund, the language conveys to the great mass of people outside that we are providing the money for interest charges and capital. While we must obey the rules of the House, we are entitled to safeguard the relations between us and our constituents, and for this to be allowed to go unchallenged would convey to the man in the street that the Opposition agreed to this large sum being provided for. We take the view that the country cannot afford it, and, while we cannot discuss it, we think the time has now come to reduce it and we take our stand in the Lobby as the only effective way of saying that we cannot allow even this declaration Clause to pass unchallenged. I admit that, if the Amendment were carried, the charge would still go against the Consolidated Fund, but it would mean in effect an instruction to the Government that they should go on with the work of reducing War debt charges at the earliest possible moment.

Colonel WEDGWOOD

I did not understand all the difficulties about the Amendment. As I read it it seems perfectly in order. It would have a certain definite effect. Obviously it will not affect the payment of interest to bondholders or the payment of funds into the contractual Sinking Fund. It means that these sums will be paid not out of the Consolidated Fund but out of Ways and Means advances. This is a question of so many millions into the Consolidated Fund. If it is not paid into the Consolidated Fund, those charges will still have to be met. When I prepared my case for the Amendment I said, Here is an admirable opportunity of recommending to the Committee the advisability of raising money on Ways and Means advances instead of the Consolidated Fund. We shall run into debt. If the Amendment is carried, it means that the Budget will no longer balance and we shall have to borrow on Ways and Means to meet the charges for these debts and this Sinking Fund. For those of us who want to see an increase in credit and a reasonable fall in sterling, I do not know any better way than for the State, in effect, to purchase War Loan and pay for it either by currency or by Ways and Means advances. There you have the two alternatives. We can go on in the old way, meeting every expenditure of the year out of the revenue of the year, or we can run into debt by borrowing short in order to pay long.

Sir A. M. SAMUEL

Honesty or dishonesty.

Colonel WEDGWOOD

I am merely pointing out that this is a perfectly practical Amendment. I want to show the Committee, and even the ex-Secretary to the Treasury, what it means. I know he is now a pillar of faith in restoring the Gold Standard.

Sir A. M. SAMUEL

Honesty.

Colonel WEDGWOOD

If you call it honesty, I call it tomfoolery. How we are to go on paying £125 for every £100 that we borrow I do not know. Perhaps the hon. Baronet learned it at the Treasury.

Sir A. M. SAMUEL

I learned at my mother's knees, and not at the Treasury, to be an honest man.

Colonel WEDGWOOD

That is why the hon. Baronet voted for the restoration of the Gold Standard in 1925. That is the sort of honesty that appeals to him. It did not appeal to me and I opposed it. He was for forcing people to pay back £125 for every £100 that they borrowed. That is honesty according to him. I think it is dishonesty. I am merely trying to restore honesty to ourselves. This Amendment is not one on which we need differ with any great violence. It is a difference of fact whether we ought to pay these charges out of the Consolidated Fund or run into debt to meet them. The Financial Secretary to the Treasury rather staggered me when he said that we were perfectly right in assuming that we should never have to pay our debt to America any more. Perhaps he did not quite say that, but I mean in this financial year. We have only got, as I understand it, so to speak, a passport for dishonesty until the beginning of December, after which we have to pay it. Is what we have to pay included in the Consolidated Fund or not? But there are other proposals. We have seen the big drive in all the Conservative Press lately in favour of a conversion scheme. Conversion schemes have been, and in fact are generally, accompanied by a big appeal to patriotic sentiment. The patriotic urge has been sufficient in the past to cause holders of War Loan to scrap their bonds and help the country.

The CHAIRMAN

The right hon. and gallant Gentleman is now getting away from the Amendment.

Colonel WEDGWOOD

I think I have kept in order quite long, and I am very grateful to you for pulling me up directly I got over the edge. I think that there is a parallel between patriotic holders of War Bonds in this country who are, or who may be, willing to cancel their War Bonds and the American Government who have allowed us the six months' moratorium on their debt. I think that a definite expression of opinion by this country that the whole amount which we can allow from the Consolidated Fund to pay off the charges is £100,000,000 short of what is required might be an additional urge to the patriotism of the citizens of this country and to the common sense of citizens of other countries who hold our paper to accept less, and to consent more willingly to a conversion scheme even though they do not cancel their bonds. That is a point of view of which, I think, we shall

hear something in the future. If there is a conversion scheme it will not be necessary to take all this money. The statutory demand of the bondholders and the statutory demand of the Sinking Fund will obviously be less directly the conversion scheme goes through.

The CHAIRMAN

The right hon. and gallant Gentleman, I am afraid, is now getting too far away from the Amendment.

Question put, "That the word 'three' stand part of the Clause."

The Committee divided: Ayes, 314; Noes, 36.

Division No. 195.] AYES. [9.49 p.m.
Acland-Troyte, Lieut.-Colonel Clarry, Reginald George Gunston, Captain D. W.
Adams, Samuel Vyvyan T. (Leeds, W.) Clayton, Dr. George C. Guy, J. C. Morrison
Agnew, Lieut.-Com, P. G. Clydesdale, Marquess of Hacking, Rt. Hon. Douglas H.
Ainsworth, Lieut.-Colonel Charles Cobb, Sir Cyril Hamilton, Sir R. W. (Orkney & Zetl'nd)
Alexander, Sir William Cochrane, Commander Hon. A. D. Hammersley, Samuel S.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd.) Colfox, Major William Philip Hanley, Dennis A.
Allen, Lt.-Col. Sir William (Armagh) Colville, John Hannon, Patrick Joseph Henry
Amery, Rt. Hon. Leopold C. M. S. Conant, R. J. E. Harris, Sir Percy
Apsley, Lord Cook, Thomas A. Hartland, George A.
Aske, Sir Robert William Cooke, Douglas Harvey, George (Lambeth, Kenningt'n)
Astbury, Lieut.-Com. Frederick Wolfe Cooper, A. Duff Harvey, Major S. E. (Devon, Totnes)
Atkinson, Cyril Cowan, D. M. Haslam, Sir John (Bolton)
Balley, Eric Alfred George Cranhorne, Viscount Headlam, Lieut.-Col. Cuthbert M.
Balfour, Capt. Harold (I. of Thanet) Crookshank, Col. C. de Windt (Bootle) Hellgers, Captain F. F. A.
Balniel, Lord Crookshank, Capt. H. C. (Gainsb'ro) Henderson, Sir Vivian L. (Cheimsford)
Banks, Sir Reginald Mitchell Croom-Johnson, R. P. Heneage, Lieut.-Colonel Arthur P.
Barclay-Harvey, C. M. Cruddas, Lieut.-Colonel Bernard Hepworth, Joseph
Barton, Capt. Basil Kelsey Culverwell, Cyril Tom Holdsworth, Herbert
Beaumont, M. W. (Bucks., Aylesbury) Davies, Maj. Geo. F. (Somerset, Yeovil) Hope, Sydney (Chester, Stalybridge)
Beaumont, Hon. R. E. B. (Portsm'th, C.) Dawson, Sir Philip Hopkinson, Austin
Belt, Sir Alfred L. Denville, Alfred Hore-Belisha, Leslie
Benn, Sir Arthur Shirley Dickie, John P. Hornby, Frank
Bevan, Stuart James (Hoiborn) Dixey, Arthur C. N. Horne, Rt. Hon. Sir Robert S.
Birchall, Major Sir John Dearman Donner, P. W. Howard, Tom Forrest
Bird, Ernest Roy (Yorks., Skipton) Drewe, Cedric Hudson, Capt. A. U. M. (Hackney, N.)
Bird, Sir Robert B. (Wolverh'pton W.) Duckworth, George A. V. Hudson, Robert Spear (Southport)
Blaker, Sir Reginald Duggan, Hubert John Hume, Sir George Hopwood
Blindell, James Dunglass, Lord Hutchison, Maj.-Gen. Sir R. (Montr'se)
Borodale, Viscount. Eady, George H. Inskip, Rt. Hon. Sir Thomas W. H.
Bossom, A. C. Edmondson, Major A. J. Jackson, Sir Henry (Wandsworih, C.)
Boulton, W. W. Elliot, Major Rt. Hon. Walter E. Jackson, J. C. (Heywood & Radcliffe)
Bowyer, Capt. Sir George E. W. Ellis, Robert Geoffrey James, Wing-Com. A. W. H.
Boyce, H. Leslie Emrys-Evans, P. V. Jamieson, Douglas
Bracken, Brendan Entwistle, Cyril Fullard Janner, Barnett
Braithwaite, J, G. (Hillsborough) Essenhigh, Reginald Clare Jesson, Major Thomas E.
Briant, Frank Evans, Capt. Arthur (Cardiff, S.) Johnston, J. W. (Clackmannan)
Briscoe, Capt. Richard George Evans, R. T. (Carmarthen) Johnstone, Harcourt (S. Shields)
Brockiebank, C. E. R. Everard, W. Lindsay Jones, Sir G. W. H. (Stoke New'gton)
Brown, Col. D. C. (N'th'l'd., Hexham) Fielden, Edward Brocklehurst Jones, Henry Haydn (Merioneth)
Brown, Ernest (Leith) Foot, Dingle (Dundee) Jones, Lewis (Swansea, West)
Brown, Brig.-Gen. H. C. (Berks., Newb'y) Foot, Isaac (Cornwall, Bodmin) Ker, J. Campbell
Browne, Captain A. C. Ford, Sir Patrick J. Kerr, Hamilton W.
Burghley, Lord Fox, Sir Gifford Kirkpatrick, William M.
Burgin, Dr. Edward Leslie Fuller, Captain A. G. Knatchbull, Captain Hon. M. H. R.
Burnett, John George Ganzoni, Sir John Knebworth, Viscount
Butt, Sir Alfred Gibson, Charles Granville Knight, Holford
Campbell, Rear-Adml. G. (Burnley) Gillett, Sir George Masterman Knox, Sir Alfred
Caporn, Arthur Cecil Goff, Sir Park Lamb, Sir Joseph Quinton
Cassels, James Dale Goldie, Noel B. Law, Sir Alfred
Castle Stewart, Earl Goodman, Colonel Albert W. Law, Richard K. (Hull, S. W.)
Cautley, Sir Henry S. Gower, Sir Robert Leckie, J. A.
Cayzer, Sir Charles (Chester, City) Graham, Fergus (Cumberland, N.) Lees-Jones, John
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Grattan-Doyle, Sir Nicholas Leigh, Sir John
Cazalet, Thelma (Islington, E.) Greene, William P. C. Leighton, Major B. E. P.
Chapman, Sir Samuel (Edinburgh, S.) Griffith, F. Kingsley (Middlesbro', W). Lewis, Oswald
Choriton, Alan Ernest Leofric Grimston, R. V. Liddall, Walter S.
Christie, James Archibald Gritten, W. G. Howard Lindsay, Noel Ker
Clarke, Frank Guinness, Thomas L. E. B. Llewellin, Major John J.
Llewellyn-Jones, Frederick Penny, Sir George Somerville, Annesley A. (Windsor)
Lovat-Fraser, James Alexander Percy, Lord Eustace Somerville, D. G. (Willesden, East)
Lumley, Captain Lawrence R. Peters, Dr. Sidney John Soper, Richard
Lyons, Abraham Montagu Peto, Geoffrey K. (W'verh'pt'n, Bilston) Sotheron-Estcourt, Captain T. E.
Mabane, William Pickering, Ernest H. Spencer, Captain Richard A.
MacAndrew, Lieut.-Col. C. G. (Partick) Potter, John Spender-Clay, Rt. Hon. Herbert H.
McEwen, Captain J. H. F. Procter, Major Henry Adam Stanley, Lord (Lancaster, Fylde)
McKie, John Hamilton Pybus, Percy John Stanley, Hon. O. F. G. (Westmorland)
McLean, Major Alan Ralkes, Henry V. A. M. Stevenson, James
McLean, Dr. W. H. (Tradeston) Ramsay, Alexander (W. Bromwich) Stones, James
Magnay, Thomas Ramsbotham, Herwald Stourton, Hon. John J.
Maitland, Adam Rathbone, Eleanor Strauss, Edward A.
Mallalieu, Edward Lancelot Ray, Sir William Strickland, Captain W. F.
Mander, Geoffrey le M. Rea, Walter Russell Stuart, Hon. J. (Moray and Nairn)
Margesson, Capt. Henry David R. Reed, Arthur C. (Exeter) Sueter, Rear-Admiral Murray F.
Marsden, Commander Arthur Reid, Capt. A. Cunningham- Sutcliffe, Harold
Martin, Thomas B. Remer, John R. Taylor, Vice-Admiral E. A. (P'dd'gt'n, S.)
Mason, David M. (Edinburgh, E.) Rentoul, Sir Gervals S. Templeton, William P.
Meller, Richard James Rhys, Hon. Charles Arthur U. Thomas, James P. L. (Hereford)
Merriman, Sir F. Boyd Roberts, Aled (Wrexham) Thompson, Luke
Millar, Sir James Duncan Roberts, Sir Samuel (Ecclesall) Thomson, Sir Frederick Charles
Mills, Sir Frederick (Leyton, E.) Rosbotham, S. T. Thorp, Linton Theodore
Mills, Major J. D. (New Forest) Ross, Ronald D. Titchfield, Major the Marquess of
Milne, Charles Ross Taylor, Walter (Woodbridge) Todd, Capt. A. J. K. (B'wick-on-T.)
Milne, John Sydney Wardlaw- Runge, Norah Cecil Todd, A. L. S. (Kingswinford)
Mitchell, Sir W. Lane (Streatham) Russell, Albert (Kirkcaldy) Touche, Gordon Cosmo
Monsell, Rt. Hon. Sir B. Eyres Russell, Alexander West (Tynemouth) Wallace, Captain D. E. (Hornsey)
Morgan, Robert H. Russell, Hamer Field (Sheffield, B'tside) Wallace, John (Dunfermline)
Morris, John Patrick (Salford, N.) Salmon, Major Isidore Ward, Irene Mary Bawick (Wallsend)
Morris, Owen Temple (Cardiff, E.) Salt, Edward W. Ward, Sarah Adelaide (Cannock)
Moss, Captain H. J. Samuel, Sir Arthur Michael (F'nham) Warrender, Sir Victor A. G.
Muirhead, Major A. J. Samuel, Samuel (W'dsworth, Putney) Wells, Sydney Richard
Munro, Patrick Sandeman, Sir A. N. Stewart Weymouth, Viscount
Nali, Sir Joseph Sanderson, Sir Frank Barnard Williams, Charles (Devon, Torquay)
Nail-Cain, Arthur Ronald N. Savery, Samuel Servington Williams, Herbert G. (Croydon, S.)
Nation, Brigadier-General J. J. H. Scone, Lord Wills, Wilfrid D.
Nicholson, Godfrey (Morpeth) Selley, Harry R. Wilson, Clyde T. (West Toxteth)
Nicholson, O. W. (Westminster) Shakespeare, Geoffrey H. Wilson, G. H. A. (Cambridge U.)
North, Captain Edward T. Shaw, Helen B. (Lanark, Bothwell) Windsor-Clive, Lieut.-Colonel George
Nunn, William Shaw, Captain William T. (Forfar) Womersley, Walter James
O'Connor, Terence James Shepperson, Sir Ernest W. Wood, Sir Murdoch McKenzie (Banff)
O'Donovan, Dr. William James Sinclair, Col. T. (Queen's Unv., Belfast) Worthington, Dr. John V.
O'Neill, Rt. Hon. Sir Hugh Slater, John Wragg, Herbert
Ormiston, Thomas Smiles, Lieut.-Col. Sir Walter D. Young, Rt. Hon. Sir Hilton (S'v'noaks)
Ormsby-Gore, Rt. Hon. William G. A. Smith, Louis W. (Sheffield, Hallam)
Palmer, Francis Noel Smith, R. W. (Aberd'n & Kinc'dine, C.) TELLERS FOR THE AYES.—
Pearson, William G. Smith-Carington, Neville W. Lieut.-Colonel Sir A. Lambert Ward
Peat, Charles U. Smithers, Waldron and Commander Southby.
NOES.
Adams, D. M. (Poplar, South) Griffiths, T. (Monmouth, Pontypool) Maxton, James
Batey, Joseph Grundy, Thomas W. Parkinson, John Allen
Bevan, Aneurin (Ebbw Vale) Hall, F. (York, W. R., Normanton) Price, Gabriel
Brown, C. W. E. (Notts., Mansfield) Hall, George H. (Merthyr Tydvil) Salter, Dr. Alfred
Buchanan, George Hirst, George Henry Tinker, John Joseph
Cape, Thomas Jenkins, Sir William Wedgwood, Rt. Hon. Josiah
Cove, William G. Jones, Morgan (Caerphilly) Williams, David (Swansea, East)
Cripps, Sir Stafford Lansbury, Rt. Hon. George Williams, Edward John (Ogmore)
Daggar, George Lawson, John James Williams, Dr. John H. (Lianelly)
Davies, Rhys John (Westhoughton) Leonard, William Williams, Thomas (York., Don Valley)
Duncan, Charles (Derby, Claycross) Logan, David Gilbert
Edwards, Charles Macdonald, Gordon (Ince) TELLERS FOR THE NOES.—
Grenfell, David Rees (Glamorgan) Maclean, Neil (Glasgow, Govan) Mr. Groves and Mr. Duncan Graham.

Question, "That the Clause stand part of the Bill," put, and agreed to.

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

Sir S. CRIPPS

This Clause seems to raise some rather difficult points as regards procedure on the question of national finance. As I understand it, the object of the Clause is to make due provision from the annual Budget for the purpose of paying sums into the Consolidated Fund, that there they may be used to meet the annual charge for the National Debt, but the Clause proposes to make a reduction in the sum which would ordinarily become payable by virtue of the fact that under the Hoover moratorium certain payments are no longer due to America. That raises a number of interesting questions as regards the national finances. In the first place, we understand from the Financial Secretary that that action is taken on the assumption that that money will not be payable at all in the current financial year, that it is not a question of merely not paying in the first half or the first portion of the year, but a question of eliminating the whole of the payment for the current year up to the 31st March next.

Major ELLIOT

These questions are of great importance and raise great national issues about which none of us wish to have any misunderstanding. I go no further than the position stated most clearly by the Chancellor of the Exchequer on the opening of the Budget, namely, that he was not making provision for payment to America, and he was not taking credit for receipts from Europe. He regarded those two things as balancing each other. The question whether we shall or shall not have to make any payment to the United States in the current financial year does not arise. It is setting two sums against each other and making a self-balancing account. I do not want to be led into discussion as to the payment of sums to America, or under what conditions we shall have to pay those sums. It would be most injudicious and undesirable that we should enter into any detailed discussion on that point.

Sir S. CRIPPS

I am much obliged to the right hon. and gallant Gentleman and I am sure the Committee will be obliged to him for the statement that he has made. I agree that it is very desirable that this matter should be made quite clear. I put the point in the way I did in order that I might elicit a statement as to the exact position. So far as the figures are concerned, a little confusion may have arisen in the minds of the people overseas and in the minds of the people of this country. I understand that the figures are worked out on the basis that they do not take into account any payment from European or Colonial countries as regards War Debts, and that they do not include any payments which we might make ordinarily out of our annual Budget supplies to America. I appreciate what the right hon. Gentleman has said that this does not tie him or the Government either one way or the other and that the matter is left open and will be one entirely for negotiation. In dealing with this Clause, however, one has to deal with it on the basis that there is no provision made for the payment of the American Debt.

The whole object and necessity for the passing of the Clause in this form is in order to make it clear that that provision is at the present moment unnecessary in respect of the American debt. That raises a question as regards the rest of the provision which is here made. This not only provides for paying the American Debt in the ordinary way, but also for the payment of all other debts of this country. It is a provision as to the permanent annual charge for the National Debt and the Committee are concerned to examine this the largest debit item in the Budget to see whether it is really necessary, for the purposes of national finance, that there should be so large a debit item. There are only two ways of reducing this debit item. The first is to pass the Amendment which we have suggested, and upon which the Committee has just voted. The second way is that the Consolidated Fund should be £100,000,000 short of the necessary money for paying the interest on the internal National Debt. If that position eventuated some other provision would have to be made for putting that £100,000,000 into the Consolidated Fund.

Major ELLIOT

This does not provide for a penny going into the Consolidated Fund, which is already full now so far as the Committee stage is concerned with the taxes which the House has voted.

Sir S. CRIPPS

This is a very difficult matter for the ordinary person to understand and it shows how necessary it is to continue the discussion as to the meaning of the Clause. I am sure that many hon. Members do not appreciate its purpose. In the Clause it says that the permanent annual charge for the National Debt shall be so many million pounds. If that is not dealing with money going into the Consolidated Fund is it dealing with money coming out of the Consolidated Fund? It is dealing with some money because it is dealing with over £300,000,000. Perhaps the Financial Secretary will explain what the Clause actually does. It must be an authorisation by this Committee for some transaction. What is that transaction? If the Clause is not necessary that is a good reason for not passing it. But the Financial Secretary is urging the Committee to pass it. What is it going to do when it is passed? Am I right in thinking that the object of the Clause is to provide moneys which will pay the interest on the National Debt? That would appear to be so because in the marginal note it says: Provision as to permanent annual charge for National Debt for 1932–33. I presume that it is intended to provide a sum which shall meet the national indebtedness for interest on the loans which the nation has raised. If that is the case then it is a question as to whether this sum is one which the Committee ought to vote or whether it is a sum which the Committee ought not to vote. Apparently a sum of £308,500,000 is to meet the interest on the internal National Debt. The question arises as to whether the Government can in any way economise on that sum. We have heard a great deal about the urgent necessity for economy. May I ask whether this is not a point where the Government might make an economy? Is there any means by which we can reduce this charge which is going to fall on some fund or another? We believe that the time is opportune to see whether useful economies can be made, and this large sum seems to be one to which the Committee might well turn its attention. The Financial Secretary will tell us no doubt what the effect would be if the Committee decided as they might wish, to make some economy here.

Major ELLIOT

We have had a long discussion and a full explanation on this point, but the hon. and learned Member was away for some time no doubt refreshing the inner man. But these difficult matters were thoroughly gone into a short time ago and the matters discussed were the subject of several Rulings by the Chairman of Committee. I am not quite sure to what extent we are in order in considering these questions. I can only say that no alteration in this Clause would make the slightest difference to the payment of interest on War Loan to the recipients of that interest. That could not be done by any alteration in this Clause. Nor would it be done by omitting the Clause altogether, or by a new Clause in the Finance Bill. It can only be done by a new Finance Bill. Parliament, of course, is competent to do that, but it is not possible in this Clause to vary the interest on War Loan to the recipients.

Sir S. CRIPPS

I am obliged to the Financial Secretary. I am sorry that I was absent during some part of the discussions but I tried to get as much information as I could from my hon. Friends and I gathered that they have not a clear view as to the exact purpose of this Clause, and with the greatest respect to the hon. and gallant Member I have not yet got any idea as to what he thinks the Clause does. He says that it does not control the amount paid in interest to the holders of War Loan. I did not think it did, but I did think that it made a provision for a lump sum which would be used for that purpose. Suppose the Government were to find itself with a smaller lump sum I imagine that they would have to bestir themselves in some way to make up the deficit.

Major ELLIOT

No.

Sir S. CRIPPS

I understand that it does not matter what figure we put in it will have no effect whatever.

Major ELLIOT

We have gone into this matter before. The fixed Debt charge is diminished by a certain sum because we are not making certain payments to the United States. When the fixed Debt charge is varied then the fixed Debt charge has to be varied by a Clause in the Finance Bill of the year. It is varied because the sums payable to the United States are varied. That is why the Clause is in the Bill.

Sir S. CRIPPS

Now I understand that the Clause is in the Bill because the Government want to make an alteration in the amount which is available for the fixed Debt charge. I am suggesting to the Committee that, apart from this matter of America, they may, for some other reason, want to make an alteration in the fixed debt charge. If the Committee thought it was a good thing to do, and made an alteration in the fixed debt charge, I presume that the Government would be put into the difficulty of having somehow or other to find money with which to pay the fixed debt charge. The right hon. Gentleman will tell me that that money is already budgeted for in the annual Budget and that it would not be necessary to do anything further. But the money which was not by this Clause allocated for the purpose of the fixed debt charge might be used out of the Budget for some other purpose; it might be used for useful social services or something of that sort, or in the manner in- dicated by one speaker, for the purpose of raising prices. That is to say, it could be used for inflationary purposes by having an unbalanced Budget and borrowing upon Ways and Means.

Attention ought to be drawn to the fact that this vast sum is being provided in the year 1932–33 for the purpose stated in the Clause. We realise that we are under this very great burden, which has been reduced, as the Clause tells us, by a certain sum in respect of the American debt. How are we to justify reducing that sum, whether it be by way of moratorium or gift from America, unless we ourselves take steps to reduce our own internal indebtedness?

The DEPUTY-CHAIRMAN

The question of our internal debt does not arise on this Clause. The Clause is an Amendment of Section 23 of the Act of 1928, which lays down certain sums for the interest and sinking fund of any given year. We cannot discuss the question of our internal debt on this Clause.

Sir S. CRIPPS

I am obliged, but with great respect you have pointed out exactly what I wanted to state. I am not discussing our internal indebtedness in the air, but am discussing it compared with our American indebtedness. It is the alteration in our American indebtedness which is made here and which is so significant, and I am suggesting that if it stands alone it may well open a great deal of criticism both in America and in this country. If one has a letter from someone who owes one money and one finds that he proposes to cut down what he owes because he says he is too hard up, but at the same time manages to live in exactly the same style as ever and to give big allowances to his own family, one becomes a bit suspicious. I suggest that the very large sum which appears here, which we are to continue for our internal indebtedness, when compared with the comparatively small sum which we are not going to pay America, does bring very forcibly before the country the question whether, if we are going to take advantage of the Americans and their goodness of heart in letting us off this debt of £11,000,000, we should not consider the putting of our own house in order.

Mr. DAVID MASON

If I heard the right hon. and gallant Gentleman correctly he stated that the reduction in this Clause was for the purpose of meeting the debt due to America. I understand that the amount due to America in an ordinary year is something like £30,000,000, and at the present rate of exchange is something like £49,000,000. Therefore, the hon. and learned Member for East Bristol (Sir S. Cripps) is right. How can the Financial Secretary reconcile this reduction which, I think, comes to £13,500,000, with a proposal to offset the amount owing to America? It seems to me absurd. Perhaps the right hon. and gallant Gentleman can explain how he reconciles the reduction proposed in the Clause with the amount due to America. It is absurd to try to delude the Opposition and the rest of the Committee by suggesting that this reduction has been brought about by making provision for the American debt.

I think this is a very grave question and I agree with the hon. and learned Member for East Bristol that if America proposes or contemplates making any reduction we should be the last people to assume it. The proposal surely should come from the United States. To put a provision into our Budget assuming that, because there may have been some indications that the United States would be prepared to make a reduction, the United States will make such a reduction, is, to my mind, calculated to bring about a contrary result. We are not likely to ingratiate ourselves with the United States by assuming that they are bound to make a reduction, and I think it is most unwise to do so. The assumption that this is a provision for a possible reduction in the debt cannot be reconciled with the facts, and I respectfully submit to the Committee that it is a most unwise procedure.

Colonel WEDGWOOD

In the past Chancellors of the Exchequer have made their names often on the amounts which they have provided for the Sinking Fund. The statutory Sinking Fund is a provision which has generally been made upon a promise, badly kept even by the Chancellor of the Exchequer who made it, but that provision has been in the past the test of the honesty of a Budget. The reason why this Clause is in the Finance Bill is not really on account of the American debt, but simply because the Chancellor of the Exchequer of to-day, not being able to carry out the provisions statutorily made by the right hon. Gentleman the Member for Epping (Mr. Churchill)—made by his honest predecessors—has put in another sum, and the Financial Secretary has, naturally, been attempting all the evening to conceal his principal's delinquencies, and has nearly "got away with it." The provision which this country has made in the past for paying off debt year by year in excess of the sinking funds of the specific loans has been one of the main weapons used by successive Governments, by the Treasury, and by the Bank of England, to deflate currency. It is well known that directly a Chancellor of the Exchequer came along and made an exceptionally large provision, so that far more of the taxpayers' money went to paying off debt, that had a deflationary effect. It was the result of that over a course of years that enabled some happy but unfortunate Chancellor of the Exchequer in the past to restore our pound to dollar parity on the Gold Standard. Now we are getting away from that.

Far be it from me to vote against this Clause which is making a smaller provision for the repayment of debt, and therefore to that extent that is more inflationary than similar Clauses or provisions in the past. But why on earth it should be out of order to move that that sum should be still further reduced, I cannot understand. The sum voted here has no direct connection with the amount paid in interest to the bondholders and the statutory provision for sinking funds in connection with each loan. It is a round figure embracing that, and going further still, and therefore it would have been perfectly simple, at any rate, to move that it should have been reduced to a sum just necessary to meet the statutory charges, instead of excessive.

I want, in conclusion, to say that if this had been a case of reducing our provision for meeting debt by cutting off just that one item which we owe to America, I think we should have been very wrong indeed to do it. [An HON. MEMBER: "Why?"] Because I would sooner cease paying debts to my enemies than debts to my friends. There are debts that are debts of honour.

Mr. BRACKEN

Is the American debt a debt of honour?

Colonel WEDGWOOD

I think so, certainly, more than money which we did not use, when we did not need it so much. At any rate, I should be sorry to give our American friends, friends in time of need, the impression—

Dr. MORRIS-JONES

Would the right hon. and gallant Member desire to impose an additional taxation of 9d. in the pound in order to fulfil any obligations which we have towards America?

10.30 p.m.

Colonel WEDGWOOD

I should prefer 1s. in the pound on land values. But we might say, "We have not got gold, but we can pay you in goods." If we put our people to work producing goods for America, it might have its sunny side for a good many people in this country. I think the Committee ought to understand that the Financial Secretary to the Treasury has had no assistance all day long from above, from aloft. This is an exceedingly difficult question to discuss. I do not believe that he has 10.30 p.m. taken even the relaxation that our financial adviser has taken, and I think we need not expect him to be able to explain this very abstruse subject at such a late hour. I hope that the Government, therefore, will not carry on this Debate indefinitely. If we can only have from the Government a clear statement, not from the Financial Secretary to the Treasury but from the Parliamentary Secretary to the Treasury, on how far he intends to go to-night, we really should be able to get through these questions without pestering the overworked Financial Secretary. Let us leave it to the Parliamentary Secretary to settle all our difficulties and to solve our problems, international as well as financial, and at the same time to bring peace between the two sides of the Committee by giving us a time limit, or at any rate a space limit, on this Bill. We ought to be given an opportunity of starting on Clause 21 to-morrow. The questions which that raises hang together, and if we begin on Clause 21 to-day the whole interest of the Debate will be destroyed.

The PARLIAMENTARY SECRETARY to the TREASURY (Captain Margesson)

We have already arranged with the Leader of the Opposition that we shall close down at Clause 20.

Mr. BUCHANAN

The question of the American debt has been raised, and in his reply to the Leader of the Opposition and to myself, the Financial Secretary said that the reason for this amount was the terms of President Hoover's letter to this country. We have not been told the amount that was the outcome of that letter. What is the sum that was involved that lessens the Sinking Fund? Is the sum which is now being asked for only the sum that was asked for by President Hoover? Is the period covered 12 months or only a portion of the year? In this Clause is only the American Debt Sinking Fund allowed for? Suppose that citizens of this country out of public spiritedness decided to relinquish certain Debt holdings and to say that they have no desire to press for Sinking Fund payments, would those amounts be covered in this Clause? I want to ask him if the only sum here covered is the American debt, and if not what proportion of the sum has been allocated as coming from British citizens?

Mr. BOOTHBY

Before the right hon. Gentleman replies may I ask him to give the Committee one assurance which, I think, is rather necessary as a result of this somewhat rambling Debate? The consideration of the American debt has been ruled to be in order in connection with this Clause, and I think it would be very desirable, in view of the fact that this is undoubtedly one of the most critical issues which will come before this House and, indeed, the world in the course of the next few months, that the right hon. Gentleman should make it perfectly clear that whichever way we vote to-night upon this Clause neither the Government nor the House will be committing itself in any way to a final decision upon the matter. I am sure the right hon. Gentleman will agree that this is not a suitable occasion on which to debate so very grave a, matter of public policy, but I think the Committee will be relieved to know that no action it takes will commit itself either to an approval of the continuance of payments next year to the United States or to any other course of policy.

Major ELLIOT

One or two specific questions have been raised which I am anxious to answer. In the first place, it is clear that the Committee to-night is not deciding for or against payments to the United States, as, indeed, was made clear by my right hon. Friend the Chancellor of the Exchequer. Then I was asked by the hon. Member for Gorbals (Mr. Buchanan) what sums are involved in the Hoover moratorium. The Finance Act (No. 2) of 1931 reduced the fixed Debt charge to £322,000,000 for both 1931 and 1932, and that reduction included the December, 1931, payment of interest to the United States, and also the June, 1932, payment for the financial year 1932. Now we are excluding the second half yearly payment which was due in December, 1932. That is the sum which is involved here, and that is the answer to what I thought were the somewhat discourteous or after-dinner remarks of my hon. Friend the resplendent Member for East Edinburgh (Mr. D. M. Mason), who accused me of having tried to mislead the Committee, a charge which I do not think he was entitled to make. This concerns a half-yearly payment, and for him to mix up payments for a half year and a whole year is not what one would expect from the founder and chairman of the Sound Currency Association.

Mr. D. MASON rose—

Major ELLIOT

No, I cannot give way to the hon. Member. I was also asked by the hon. Member for Gorbals whether any other sinking funds are covered by this fixed Debt charge. Yes, the statutory sinking funds of the War Loans are covered. He then asked whether letters had been received from citizens who are forgoing part of the interest on their War Loans, as in the case of the United States. Yes, Sir, thousands, indeed, millions of such letters, are received. They are received in answer to letters from the Treasury stating, "The Income Tax due from you is so much," and thereby they are reducing the sum to that extent.

Mr. BRACKEN

We have had interesting speeches to-night from the hon. Member for East Edinburgh (Mr. D. Mason) and the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood), both of whom have constituted themselves the defenders of the United States. I do not know what title the hon. Member for East Edinburgh has to speak for the American nation, except that he appears to-night attired like the American Ambassador on some ceremonial occasion. [HON. MEMBERS: "Order!"] There is nothing out of order in that remark. As the Financial Secretary told us that we are not in any way committing ourselves tonight upon the question of the payment of debt to the United States of America, I would like to ask him whether there will be any opportunity for us to discuss this question again until after the Lausanne Conference. It is very important to know what the position of the Government will be when the next payment to America becomes due. I think the Financial Secretary to the Treasury should tell the Committee whether the Government have any policy whatever with regard to the American debt.

I would like to know in regard to that point whether we are likely to be placed in a position that while we are receiving no payments from Europe on account of Reparations and War Debts we shall continue to pay our War Debt to America? I think we ought to have a definite statement from the Government on that point. Months go by, and nobody knows what is the policy of the Government with regard to reparations and War debts, and all the time Europe and the world is drifting into the greatest financial disaster which it has ever experienced. We are having conference after conference, all perfectly futile—

The DEPUTY-CHAIRMAN

The hon. Member is now making a Second Reading speech.

Mr. BRACKEN

I thought I was following on the lines adopted by the Financial Secretary to the Treasury. We are making no provision whatever for the American debt in this particular Clause, and it may be that we shall continue in that course. We are drifting into the worst financial crisis in the history of Europe simply because the Government have not the courage to face up to the situation.

Mr. LANSBURY

On the question of the American debt, Reparations, and War Debts generally, we propose—I suppose hon. Members opposite will support us—to devote two of our Supply Days one to discuss the Lausanne Conference, and the other the Ottawa Conference. We are giving the Government full notice so that the appropriate Ministers will be here in order to give us a clear indication of the Government policy in reference to the American and other debts, and with regard to the Ottawa Conference.