§ Mr. Attlee(by Private Notice) asked the Chancellor of the Exchequer whether he can now make any statement as to the financing of Defence expenditure?
Mr. ChamberlainIf the House will bear with me I think that I ought to explain the Government's intention on this important matter in some detail.
In my Budget speech last April I expressed the view that the exceptional nature of the Defence programme made it inequitable that the whole cost of the programme should fall upon the revenue which has to be extracted from the people in the course of a single five-year period. I said that it was clear that in each year we must find out of revenue the rising cost of maintenance of the reorganised Forces together with some part of the emergency expenditure itself, but that some part, the amount of which must be determined from time to time, might properly be met out of loan. I added that if in the meantime we had shown our readiness to bear our proper share of our exceptional burden by utilising for that purpose our expanding revenue and perhaps by submitting to some fresh sacrifices, I was positive that 594 we should neither suffer loss of credit in the present nor incur the reproaches of our successors hereafter.
The general experience of the last 12 months, which has in no way relieved the urgency of our heavy task, nor lightened the cost of raising our Forces to a proper standard of defensive strength, has only confirmed the judgment of the situation which I then formed. The Defence expenditure is growing at a pace which makes it impossible to meet it entirely out of revenue. How much may be made available out of current revenue and in what manner must be left to the statement which I shall be making at a later date. So far, however, as revenue must be supplemented by appropriations from capital it is necessary to ask the House to give a preliminary statutory authority before the Defence Votes can be passed.
The Government therefore propose forthwith to introduce a Bill which will authorise the raising of capital, or, alternatively, the use of any realised Budget surpluses for Defence purposes over a period of time.
For reasons which were made apparent in the White Paper on Defence laid before the House last Spring neither the total amount which must thus be raised nor the total period over which it must be spread can at present be predicted. Flexibility and adaptation to the changing circumstances of the time must be of the essence of our programme. On the other hand, traditional usage requires that upward limits which cannot be exceeded, unless it be by further statutory authority, should be specified in the Bill. In these circumstances the Government propose to ask for general power to raise capital or use realised surpluses for defence expenditure up to a sum not exceeding £400,000,000 spread over a period not exceeding five years. The necessary Financial Resolution with an accompanying White Paper will be tabled without delay.
I wish, however, to make it amply clear that this Bill, which I have described as giving a preliminary statutory authority, will not of itself authorise the Defence Departments to spend any money whatever. It was never more important than it is in the circumstances in which we find ourselves to-day that the control 595 of this House, and, let me also add, the control of the Treasury over expenditure should be maintained unimpaired and in its traditional form. For this reason the whole proposed expenditure of Defence Departments, both normal and exceptional, will continue to be laid before this House in Estimates and sanctioned by Parliament.
It will be indicated on the face of these Estimates to what extent it is proposed to meet the gross expenditure for which they provide by appropriations-in-aid from capital or from realised surpluses. No sums will be applied from capital or from realised surpluses towards meeting expenditure save with the knowledge of Parliament and after the approval of Parliament, which will in this way control in each succeeding year both the total expenditure on Defence and the proportion in which it is to be met from capital.
Provision will be made annually on Defence Votes for interest on the new debt and also after the end of the borrowing period for the redemption of that debt within 30 years. Details of the measure will be found in the White Paper which will be available later this afternoon.
§ Mr. AttleeWe have heard a very serious statement made by the right hon. Gentleman. I understand that he is proposing to take power to raise £400,000,000 by loan for expenditure on Defence. In view of the fact that when £100,000,000 was raised in a similar way for the unemployed, it was regarded as the bankruptcy of the State, I want to put this question to the right hon. Gentleman. Will he, before the House is called upon to consider this proposal, which is quite unprecedented in time of peace, give the House an opportunity of learning the full extent of the Government's proposals? We have been promised a White Paper on the progress of the Defence proposals. Will the right hon. Gentleman, before this House is called upon to come to a decision on this most important matter, give it full opportunity of understanding what is the real international position and what is the Defence position?
Mr. ChamberlainThe right hon. Gentleman's question would be more properly addressed to the Prime Minister.
§ Mr. AttleeMay I, then, ask the Prime Minister, shall we have a White Paper on the Defence proposals before we are asked to come to a decision on this matter?
§ The Prime MinisterI only became aware that the right hon. Gentleman was going to ask this question since I came into the House. If I understand it right, it is very much on the lines of the question which the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) asked two or three days ago. When the right hon. Gentleman asked that question, I was, naturally, in possession of the information which the House has only just had, and it was impossible for me to be more explicit in the reply which I gave. The position at the moment, as I see it, is that there will be a general Debate in this House on Defence as a whole, and I respectfully suggest that that should be made an early matter of discussion by the right hon. Gentleman and his friends, through the usual channels, with a view to coming to some agreement as to the most convenient time for that discussion. It may be that a suitable opportunity would be on the Second Reading of the Bill which would follow the Financial Resolution, but that of course, is a matter which is in Mr. Speaker's hands. I just throw out that suggestion. As soon as, or indeed before these arrangements are made, I, naturally, will give my closest attention to what the right hon. Gentleman has said, and consider whether a White Paper would be the best means of presenting the information that would enable the House to debate this matter. I cannot give him a more definite reply at this moment than that it is engaging my earnest and serious consideration.
§ Mr. AttleeDoes the right hon. Gentleman not consider that it is impossible for us in this House to discuss a Measure which is essentially a war Measure, without being put in possession of the data on which the right hon. Gentleman thinks it necessary to ask the House to consent to such an action as this?
§ The Prime MinisterI realise the point that has been put by the right hon. Gentleman, and of course that is just the kind of question which we have to consider. I see the point and appreciate it.
§ Sir Hugh O'NeillDoes the statement of the Chancellor of the Exchequer mean 597 that soon after this Bill giving authorisation for the raising of a large sum of money is passed, there will, in fact, be an issue of stock for the purpose of raising money for Defence?
Mr. AlexanderDoes the answer of the Prime Minister to my right hon. Friend leave any doubt at all as to whether the Government are going to issue a White Paper?
§ The Prime MinisterI would rather leave it at what I said. It involves a great many considerations.
Mr. H. G. WiliamsHaving regard to the statement of the Leader of the Opposition that this proposal is unprecedented, will the Prime Minister consider including in the White Paper an account of the proceedings that led to the Naval Defence Act of 1888?
§ Mr. E. J. WilliamsDoes not the Prime Minister think that the substance of the statement of the Chancellor of the Exchequer ought to be submitted to the electorate of this country?
Mr. DavidsonIn view of the fact that we are to be asked for further sacrifices, will the Prime Minister depart from the traditional policy of his party and ask for those sacrifices from his own particular friends?