That the whole or any part of the sums required in the current financial year for the purposes mentioned in paragraph (a) or paragraph (b) of sub-section (4) of section twenty-three of the Finance Act, 1928, as amended by any subsequent enactment, may be provided out of money borrowed for the purpose under section one of the War Loan Act, 1919, instead of out of the permanent annual charge for the National Debt.
§ Motion made, and Question proposed, "That this House cloth agree with the Committee in the said Resolution."
§ 6.19 p.m.
§ Mr. MABANE
It is appropriate that the House should have some short explanation from the Chancellor of the Exchequer of the reason why he thinks 427 it necessary to ask the House to adopt this Resolution. It is an important power for which he is asking. He is asking for power to borrow a sum, which in the accounts for last year was £9,060,000, to provide for the statutory sinking funds under the Finance Act, 1928. That power was asked for and granted last year and the year before. In those years there was some reason to suppose that the cost of the interest and management of the National Debt would so so high that it would not allow a margin between the cost and the amount budgeted to provide for the various statutory sinking funds. To-day, the House is entitled to ask the Chancellor of the Exchequer to say why he considers it necessary this year to ask for powers to borrow this larger amount. This year he has budgeted for a sum of £224,000,000 as the cost of interest and management of the National Debt. Last year the actual outgoings to provide for the interest and management of the National Debt was £211,657,000. The Chancellor of the Exchequer made certain conversions last year which meant economies to the extent of £1,650,000. That means to say that on the same basis as last year the cost of the interest and management of the National Debt in the current financial year ought to be £210,000,000. The Chancellor of the Exchequer, however, budgeted for £224,000,000, which leaves a margin of £14,000,000 out of which he can provide for those statutory sinking funds which cost £9,060,000 last year.
There is only one thing that can happen to make the cost of the interest and management of the National Debt higher than the £210,000,000, and that is that the cost of the floating debt will increase. Last year and the year before the average rate of interest on the floating debt was very low—12s. 6d. per cent. Last year the Chancellor of the Exchequer, in providing for the cost of the National Debt, suggested that the rate might rise, but it did not. This year, with some diffidence, he suggested that in the current year the cost of the floating debt might rise. So far as I can see there is nothing in the financial prospects that lead us to suppose that the cost of the floating debt will increase substantially. Would it be really so serious if the rate of interest on the floating debt did increase? I think I 428 am correct in saying that if last year's rate of 12s. 6d. per cent. were doubled to 25s. per cent., it would mean only an additional cost of £5,000,000. That is to say, the cost would be £215,000,000 instead of £210,000,000. That would still leave the Chancellor of the Exchequer with £9,000,000 with which to provide for his statutory sinking fund.
I have no objection in principle to borrowing for the statutory sinking funds, but I think I am right in saying that it is the first function of this House to resist the demands of the executive for excessive supplies and to resist the demands of the Chancellors of the Exchequer for power to borrow money when that money is not necessary. If the Chancellor of the Exchequer could show that he will need to get this money by borrowing in the current year I should not object, but if the House of Commons is to preserve its pristine function of looking after the taxpayers' money, we might on this occasion ask the Chancellor to justify the request that he is making in this Resolution that he should be given power to borrow this large sum of money to meet the statutory sinking funds, and he ought to show why the House ought to believe him when he suggests that by some possibility the amount that he has provided, £224,000,000, for the cost of interest and management of the National Debt will not be sufficient to provide for the statutory sinking funds.
§ 6.25 p.m.
I understand from the observations of my hon. Friend that he put down his Amendment—in line 4, to leave out from "enactment," to the end, and to addshall be provided out of the permanent annual charge for the National Debt"—with a view to drawing from me some explanation rather than with a desire that I should follow the particular procedure which he indicates. If that be so, let me say at once that I tried to make it clear in my Budget speech that in fixing the sum of £224,000,000 as the fixed debt charge, I was fixing a sum which I anticipated might leave something for redemption of debt at the end of the year; in other words that that sum would be higher than would be required to meet the cost of interest and management. But there is no certainty in these matters, and I must provide for 429 the possible contingency that events, which neither I nor my hon. Friend can foresee, may raise the rate of interest on Treasury Bills to a sufficient extent to require for the series of interest and these sinking funds together, the whole sum allowed for in the fixed debt charge, and more, so that there would be a deficit to be met. It is to meet that contingency, which my hon. Friend cannot deny is conceivable, that I ask the House to give me this power to borrow.