VOTE OF CREDIT, 1940. (Hansard, 13 March 1940)

§ The Chancellor of the Exchequer (Sir John Simon)

On 1st September last, in view of the emergency then existing, which so quickly involved us in war, the Committee authorised a Vote of Credit for the sum of £500,000,000 to cover the additional outlay likely to be incurred in the near future and that Vote having been approved of by the House, a Consolidated Fund Bill was introduced and carried, which authorised those payments to be made out of the Consolidated Fund. The Committee will appreciate that that authority for £500,000,000 was only to be used in so far as the money fell to be spent in the present financial year. It was an authority in regard to any expenses up to 31st March. It was impossible, of course, at the beginning of September to say with any accuracy how much would really be needed. Indeed, at the end of September when I introduced the emergency Budget I still had to tell the Committee that I did not know and that no one could know, whether this £500,000,000 in the first Vote of Credit could be sufficient to carry us to the end of the present financial year.

I am now able to give some information on that point to the Committee. Taking it up to last Saturday, 9th March, the amount that has been spent out of this £500,000,000 Vote of Credit of last September, is in the neighbourhood 1222 of £300,000,000 and, as far as one can see, if we go up to the end of the present financial year there will probably be a short spending—I should like to regard it as a saving—of something between £70,000,000 and £100,000,000 out of the £500,000,000 that was authorised.

I now have to come forward and ask for a new Vote of Credit which will be available in the new financial year and I am moving a Vote for £700,000,000. That is the same figure as was, more than once, authorised by way of Vote of Credit in the course of the last war. Of course, there is a distinction which the Committee should bear in mind between the way in which the £500,000,000 Vote of Credit of last September is used and the way in which the new £700,000,000 Vote of Credit will be used, if the Committee authorises it and Parliament approves it. In the case of the £500,000,000 Vote of Credit of last September, that was a supplementary sum. We had already authorised great expenditure through the ordinary machinery of voting Estimates. It was only in so far as the regular Supply which had been voted fell short of what was needed in view of the occurrence of the war, that we needed to turn to the £500,000,000Vote of Credit as a secondary source of payments. Now, if the Committee approves of my proposal of a £700,000,000 fresh Vote of Credit, that will be the first and main source out of which payments for war purposes will be made. The Committee may remember that a White Paper was issued the other day—Command 6176—which explained that in the circumstances of war it is not possible, and in some cases it would not be prudent, to have detailed Estimates divided up into particulars, but that the whole business of paying for a war is bound to be transacted through the machinery of Votes of Credit.

I, therefore, am now asking for this Vote really "on account" of the war expenditure of the year which is now coming. I shall be asked, and very properly asked, "How long do you think £700,000,000 will last?" My feeling is that the Committee and the House at large would not think it fair or right that we should attempt now, at a blow, to get a sum so immense as to cover, it may be, a full year of war. Nothing of the sort was done 25 years ago. My right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) will recall 1223 that the general practice was that every three or four months there was a Vote of Credit in order of course that there might be an opportunity of calling the Government to account and of learning what were the facts of the situation. That is the course which I am following.

§ Sir J. Simon

As my right hon. Friend knows, the expenses are increasing rapidly. I can give the Committee two figures which I think are very instructive and interesting. If we take the three Defence Services, the Navy, Army and Air Force and add to them the expenses of the Ministry of Supply—I am not distinguishing between these but I am treating them as a group—at the present time those four Services are spending at the daily rate of nearly £4,000,000. If you then take the other war services which would also be within the scope of this Vote of Credit, for example, air-raid precautions, evacuation, shipping and food, that group is at present responsible for spending nearly £1,000,000 a day. So, if we take the whole of the war expenditure together—all expenditure of such a kind as is covered by this Vote—we are at present incurring a rate of expenditure which is close on £5,000,000 a day and that gives some indication of how long £700,000,000 is to be expected to last.

Of course, the Vote of Credit for £700,000,000 is not available for the other expenses of Government. They must be added in order to get the true total of the national expenditure. There is the service of the Debt, and there are the Civil Votes, including the social services which are outside the Vote of Credit. If you were to take those as well, making a rough calculation but one which is sufficiently accurate for the present purpose, the fact is that altogether, taking everything lumped together, we are at present spending at approximately the rate of £6,500,000 a day. These are very large figures and very serious figures and I think the Committee will feel that it is not unreasonable for us to select the figure of £700,000,000 as the amount of the first Vote of Credit for the new financial year. One may hope that it will last us for something rather more than four months of the year. Of course I shall 1224 have to come forward again to ask, from time to time, for further Votes of Credit.

I have only one other observation to make. The Vote of Credit just now read from the Chair is expressed in wide terms as I think it ought to be, and it covers every sort of expenditure which could fairly be regarded as connected with the war. I think that is better, because these things are very much simpler to apprehend if we lump the whole thing together and appreciate the nature of the total for which we are providing.