HC Deb 23 April 1940 vol 360 cc56-61

Now I turn to the problems of the new year. Of course, the Committee will at once see that a large part of the usual material for making a Budgetary calculation is not available. In an ordinary year, when the Chancellor of the Exchequer stands here to open his Budget, the details of the precise Estimates for the various Supply Services have been presented—the Army Votes, the Navy Votes, the Air Votes, the Civil Defence Votes, as well as other Civil Votes under various heads. Those figures are all known, and, together with the estimates for Consolidated Fund services, they make up a definite target at which the Chancellor of the Exchequer has to aim. But in the circumstances of war, the main element of outgoing—the various heads of expenditure connected with the war—that element is not capable of being totted up and measured for so long ahead. We are forced to seek authority for such expenditure at intervals during the year by a succession of Votes of Credit. Those Votes of Credit are for round sums with several noughts at the end, but on grounds of public interest, or for other reasons, we do not distinguish completely between one Service and another. None of us wishes the enemy to infer whether we are putting our main exertion into building new ships or increasing the number of aircraft or whatever it may be, and therefore we keep the estimate in a global shape.

The Committee will recall that the first Vote of Credit for this year was for £700,000,000 and was authorised on 13th March in advance of the beginning of the new financial year. I then told the Committee that I estimated that this £700,000,000 Vote of Credit would suffice for rather more than four months of war. Now comes the first of the big conundrums of the present year. It is this: How much should I assume will be needed for 12 months of war? It is an extremely difficult question to answer with confidence, and any answer approaching precision is impossible. In the first seven months of war, which fell into the previous financial year, expenditure for war purposes was £905,000,000. At that rate, something over £1,500,000,000 would be the proportion for 12 months, but that would not be right, because the pace, the rate, of war expansion increases as indeed it ought to increase.

For the first six months of the present fiscal year, I think, from the information I have collected, that our war expenditure will be found to lie in the neighbourhood of £950,000,000. That is for those six months. But I have to take a figure for 12 months, and under present conditions any estimate for so long ahead is bound to partake largely of the nature of a guess, particularly as the actual amount is more affected by the man-power available for production, and by the supply of raw materials, than by any limitations in our plans or any restrictions in the authority for carrying them out. I must take a round figure, and I am going to assume that what will be needed by 31st Match next, for war purposes only, will be £2,000,000,000. The authority for £700,000,000 of that has already been given, and I have reminded the Committee that we shall require to have further Votes of Credit from time to time.

I have said that the public interest would not permit the publication of full details, showing precisely how the total estimated expenditure from Votes of Credit is split up between Departments, but I do not wish to carry that secrecy any further than is necessary. I propose, following a precedent adopted towards the end of the last war, to issue, this evening, a White Paper which will give some particulars of all the Departments concerned. I do not see any reason why we should not publish full details of their staffs, so that the House of Commons may see exactly what they are. It is impossible to give the full Estimates as in peace time, but while it would be prudent strictly to limit some classes of information regarding the Defence Departments, the Ministry of Supply and the Ministry of Shipping, there is no reason why, even in war-time, a fairly complete analysis of the expenditure of other Departments should not be included, and it will be included in the White Paper.

What am I to add to this £2,000,000,000? First, I must add a due provision for the Consolidated Fund Services. I have also to add the total of the Civil Estimates already presented. In the Consolidated Fund Services the most important item is the provision for the service of the Debt. Last year it was £230,000,000. For reasons which I will explain to the Committee, I am able to retain the same figure as last year—£230,000,000. At first sight it may very well seem surprising that that figure should be enough, because we are borrowing more and in view of the large increase in the National Debt the Committee may like to know how the estimate is arrived at. The total sum needed for interest will certainly be appreciably greater, of course, in 1940 than in 1939. There is no doubt about that, although the precise amount of the increase cannot be estimated. It will depend not only on the sums we borrow and the rate at which we borrow, but also on the time of year at which we borrow. As for the rates of interest at which we borrow, it is a very noteworthy fact that we were able to raise the first of our War Loans at a rate of 3 per cent. and I am assuming that in future loans we shall not exceed the levels recently established.

That, however, is not the whole of the explanation in arriving at the amount of the Fixed Debt Charge. There is a set-off which arises under the Defence Loans Acts. The Committee will remember that, when we carried the Defence Loans Acts before the war and thereby made various sums available to the Fighting Services, we insisted that they should each year pay to the Exchequer 3 per cent. on the amount issued in previous years and that the sum so paid to the Exchequer should be used to meet the interest on the National Debt which would otherwise have to be paid out of the Fixed Debt Charge. Owing to the large sums which were issued under the Defence Loans Acts last year, the amount to be made available from the Defence Votes under this arrangement will be nearly £15,000,000 greater than in 1939.To that extent the additional burden of interest in 1940 can be met without increasing the Fixed Debt Charge. I think, therefore, that £230,000,000 should be sufficient provision, and I have put that down as the second part of the sum which we are engaged in adding up. I hope at the end of the year it will be found that the £230,000,000 will contain something available for Debt redemption out of revenue. If so, that would be so much the better, but I shall take the customary powers to borrow for the contractual Sinking Funds should the need arise. For further items in the Consolidated Fund Services, with which I need not delay the Committee, we require £17,000,000—£9,500,000 for payments to Northern Ireland and £7,500,000 for other services. The total, therefore, for Consolidated Fund services in the present year will, I think, be £247,000,000.

We can dispose of the remaining figures very quickly—indeed, in one sentence. The total of ordinary Estimates for Civil Supply Services, excluding the cost of Civil Defence and self-balancing Services, will be £420,000,000. We have to add that £420,000,000 to the £247,000,000 and the £2,000,000,000, and I arrive at the Estimate of £2,667,000,000, as the figure to be provided for expenditure in the present year.

Before discussing how this immense sum, in my judgment, may be raised, I must make, as I am sure the Committee would wish me to make, some observations on a subject which is constantly in the minds of every Member of Parliament, and I am sure in the minds of every serious person in the country, and that is the question of economy in public spending. The people of this country, facing the demands which this Budget is bound to make, will, I am sure, be ready for the sake of victory to accept its burdens, I will not say without complaint but with as little complaint as may be, provided that they are satisfied that every effort is really being made to reduce waste and therefore to secure that we pay no more than we need pay. I must say for my own Department that this has been the constant, the daily pre-occupation of the Treasury. The methods to this end which I explained to the Committee some months ago are in full operation and huge as this sum is which I have to provide, I can assure the Committee that it would have been substantially greater had it not been for the strenuous and largely successful efforts made in the different Departments to keep down the different heads of expenditure.

This is a fair picture of what those Departments are doing, and it does not require much imagination to see that while they have these great responsibilities to discharge, and are therefore bound to be responsible for heavy outlay, they really are trying, in the public interest, and in their own interest too, to save where and when they can. Well-authenticated cases of waste brought to the notice of the appropriate Department are not thrown on one side without examination, and, indeed, I regard it as a valuable contribution towards the financing of the war and therefore the winning of it, that not only Ministers and officials but the public, should continue to do all they can to reduce outlay by these means.

I do not suppose there is any Minister who has not had constant communications on this subject, and I am sure that I am speaking for my colleagues as well as myself when I say that whenever we have had any such information brought forward from a solid source, we have always treated it as requiring investigation with a view to introducing possible correctives. The House has appointed a Select Committee of Members under the chairmanship of my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) which is charged with the function of examining closely the expenditure of the Departments with a view to reporting whether the policy they are carrying out is being carried out with due economy. No private Committee of the House can be expected to criticise policy; that is a matter which the Government must decide, subject to the criticism of the House as a whole; but the task of the Committee is to see whether, in carrying out the defined policy, it is being done with due economy. I have familiarised myself with these matters and I know that the Departments have shown a ready spirit of willingness to help the Committee in its investigations—I am sure Members of the Committee will confirm me when I say so—and to welcome its assistance. The Committee has undertaken its task with the greatest zeal and energy, and I welcome the help it may be able to give.