NATIONAL LOANS BILL. (Hansard, 23 April 1941)

§ Mr. Ellis Smith (Stoke)
May I ask for your guidance, Colonel Clifton Brown, on this point? My hon. Friends and I have two Amendments down, and it will facilitate discussion if we are allowed to take them together.

The Deputy-Chairman
I am afraid both Amendments are out of Order, being outside the Money Resolution which we have passed.

§ Mr. E. Smith
The Amendments raise a point which, as far as I have been able to find, has not been raised before. In view of your Ruling, Colonel Clifton Brown, I propose to speak on the Question, "That the Clause stand part of the Bill." I shall divide the Committee on this, because it is an important matter. I understand that the 1930 Act is the Act upon which this Bill is based, and I want to draw attention to the 1919 Act upon which in turn the 1930Act was based. It gives the Treasury powers for borrowing similar to those which applied in 1900, 1902 and 1914–18. Great changes have been brought about since that period. We have mechanised and modernised the Army, and, in our view, it is time that our methods of raising finance were modernised. It is for that purpose that we put down the Amendments which have been ruled out of Order, and' for that reason we intend to oppose Clause I. Section I of the principal Act states that the 225 Treasury may borrow as they think fit on the security of the Consolidated Fund. We contend that it is the duty of this Committee as representing the nation to see that the Treasury carry out the powers which the principal Act gives to them. That is not being done now.
Why should the Government, which represents a nation, pay the banks to lend them the nation's own credit? Why cannot the Government raise their own credit on the security of the Consolidated Fund as the Act lays down? Because of what has taken place in the past we on this side feel strongly upon this matter, and many Members on the other side, had they known this question was coming on, would have shown that they felt strongly too. In war time, in order to encourage people to save and to reduce unnecessary consumption, it is sound policy to secure the maximum sale of National Savings Certificates. In that case the payment of interest is justifiable, but there is no justification in these days for the continued payment of interest to the extent of millions of pounds on bank-created credit. Had our Amendments been adopted the nation would have been able to save millions of pounds which are now being paid out in unnecessary interest on bank-created credit. In his Budget statement the Chancellor made reference to the work of the Select Committee on National Expenditure. I have read every report of that Committee and I want to join in paying tribute to the great contribution the Committee has made to the war effort. At the same time, however, we continue to adopt Victorian methods of obtaining our own credit. We say that we ought to obtain it on the security of the Consolidated Fund. The time has arrived when the Government ought to grant themselves credit by vote of Parliament and on the nation's security.
The Lease and Lend Bill is a new idea, and wherever I have gone I have found that people in all walks of life have welcomed it. Surely it is a logical step to take for us to adopt similar unorthodox methods in this country. The situation is so serious that we cannot continue Victorian methods of raising credit. The National Debt is now £11,394,000,000, according to the final statement presented to us in the Budget Debate. The interest alone on that debt will cost the nation £250,000,000 a year. I suggest that as a 226 result of the last Resolution we have passed we shall not be able to ascertain in future what we are really paying out in interest on the National Debt. If I understand the Resolution correctly, it will mean that in future when blue papers are placed before us on Budget Day, we shall not be able to ascertain, to the same extent as in the past, what interest we are paying on the National Debt. The creation of our own credit would be an unorthodox step of a progressive character.
The Government are very gradually mobilising the whole resources of the country, and that provides support for my next point. The minutes of the Macmillan Committee stated that the creation of credit or loans by banks is the creation of power to employ labour, and that, therefore, the only limit is the amount and quality of unemployed labour. As a result of the great effort which is being made by the Ministry of Labour hardly any unemployed are left, and there was never a more opportune moment for introducing the unorthodox progressive step that we suggest, which is of the same kind as that which has been introduced in America. Section 3 (a) of the principal Act contains the words, charging on the Consolidated Fund any remuneration payable to the Bank of England in respect of the management of securities under the Act. I would like to ask what is the total amount that has been paid to the Bank of England for managing these securities since 1939. Why cannot the Treasury themselves manage the securities which have been taken over in order to assist us in financing the war? To borrow the genuine savings of the people is sound in war time, but to pay others to grant us our own credit is out of date and mid-Victorian. We were desirous of moving the Amendments which have been ruled out of Order in order to alter that and to save the nation millions of pounds. As a result of the trade union movement spending thousands of pounds in educating young men, more and more of them are getting a grasp of economic and financial questions. Too long have the people of this country been exploited in this way and too long have we been prepared to accept Victorian ideas. Everything in life is being speeded up and modernised. The Army, Navy and Air Force have been modernised, and we should take the 227 logical step of modernising the methods of raising our own credit. In these serious times the Committee should be prepared to consider a reasonable step of this kind.

§ The Financial Secretary to the Treasury (Capt. Crookshank)
As there are pretty well the same Members here now as when I last spoke, may I be allowed to say that when I said that the last Resolution which we took in the House was concerned with this Bill I was in error. I was looking at the one below on my Paper, which had already been passed, I apologise to the House most humbly for the error which I made. What that Resolution did refer to was borrowing, as my right hon. Friend said in his Budget statement, as regards the Sinking Fund. If any hon. Member was misled by what I said I am very sorry, and I hope he will see my correction now.
On this Clause the hon. Member for Stoke (Mr. Ellis Smith) seems to be raising the whole question of our financial policy and our borrowings both now and in the years since the last war. If I may respectfully say so, it is a very interesting topic, but the Clause itself is a narrower one. It is the one by which we are taking power for borrowing this year. It does not deal with the conditions, but merely makes it possible for us to borrow, and, as I said yesterday, it is limited, as was the first National Loans Act to the amount of Supply which would be granted during the year. You cannot borrow more than the amount of Supply voted, plus, as the last word says, £250,000,000. It is necessary to ask Parliament for a little more than the Supply, because with the difficult system of financing through Votes of Credit as well as taxation one cannot be sure of one's dates with the particularity which is possible in peace-time, and that is why we have to ask for a margin. That is all that this Clause is concerned with, the power to raise money. If at any time hon. Members wish to bring before us various conditions which they think ought to be inserted in our borrowing powers, they can find opportunities for calling attention to their suggestions by means of Questions, or by Debates devoted to that purpose, but this Clause merely enables the Government to borrow this maximum.

§ Mr. Pethick-Lawrence (Edinburgh, East)
We have had a very interesting point raised by my hon. Friend the Member for Stoke (Mr. Ellis Smith), and it is one to which I think we do right to pay attention, but I would submit to him that it would be a little unfortunate if he were to Divide the Committee on this particular Clause, because it says nothing about the raising of the money, nothing about whether it is raised on the credit of the nation or from the banks or individuals, and a vote against this Clause might be construed, really, as a vote against the war effort.

§ Mr. E. Smith
I want to assure my right hon. Friend and the whole Committee that there is no intention of that kind behind my remarks. I want to make that quite clear. In addition to that, may I draw attention to the fact that Section 1 of the principal Act speaks of the power of the Treasury to raise money, and states that it shall include the power to raise any money required for any Supply, and later it adds: and in addition a sum not exceeding £250,000,000. Now surely upon that Section the question of raising money under the principal Act arises, because you cannot construe this Clause without reading the principal Act. I have read the principal Act, and if I understand it correctly it is the principal Act that gives the Treasury power to borrow in the way they are doing; and in my view it is time they borrowed on the basis of the principal Act, that is, on the Consolidated Fund.

§ Mr. Pethick-Lawrence
My hon. Friend has made another speech along the same lines as his earlier speech, but it has not changed my view in the slightest. I was very careful not to suggest for a moment that my hon. Friend was desirous of crippling the war effort. I quite appreciate that, and should not attribute any such improper motive to him. But what I did say, and I think it is correct, is that people who did not know the integrity of my hon. Friend, and people who did not happen to listen to his speech, might construe a vote given against this Clause as a vote given against the war effort. I think that is indisputable, and therefore J think it would be very unfortunate if he decided to Divide the Committee. With regard to his reference to the principal Act, my hon. Friend is not seeking to 229 repeal the original Act and to substitute something else. I do not know whether he could have framed an Amendment that would have conveyed his meaning, but the particular Amendment which he did frame, which no doubt conveys meaning as far as it could, has not passed the Chair, and for that, of course, none of us is responsible.
I would remind my hon. Friend that my hon. Friend the Member for Leigh (Mr. Tinker), whose name was also down to the Amendment, but who has not spoken on the Question of the Clause standing part, succeeded recently in getting a very substantial modification introduced into our legislation dealing with finance. I think the Chancellor of the Exchequer was most forthcoming on that occasion when, in accordance with a proposal made by the hon. Member for Leigh, he did make a very substantial alteration in a Measure which was in time-honoured form. Had my hon. Friend who has raised this matter on the Question of the Clause standing part been able to move his Amendments then, whether one agreed with him or not, at any rate his action could not have been misunderstood. Put, those Amendments being out of Order, to propose to vote against the Clause itself, in which the point really does not arise, would be rather unfortunate, and I hope he will not do it, because—he did not bring the matter to the attention of myself or any of my hon. Friends who are likely to take part in this Debate—I should have to ask those who sit on these benches to vote against him and to ask for the Whips to be put on. I hope my hon. Friends will not put me into that awkward position, because I do not want to quarrel with him on this matter. It would, however, be very unfortunate if any large body of Members were to be counted in the Lobby against the Clause, which simply says that he Treasury shall have power to borrow for the prosecution of the war such sums as may be required plus the extra £250,000,000. Therefore I do hope that this Clause may be carried without our having to go to a Division.

§ Mr. Gordon Macdonald (Ince)
There is no intention to Divide the Committee on the Question of this Clause standing part, that is certain, but my hon. Friend the Member for Stoke (Mr. Ellis Smith) has felt ever since this Budget was introduced that the question which he has brought forward ought in some way to be raised. He himself was advised that it could be raised on this Clause. He asked me whether I would attach my name to his Amendment and I am always willing to help him, because I know he is always seeking to improve things, but when the Chairman decided that the Amendment was not in Order we never had any intention of Dividing the Committee against the Clause itself. That would be utterly ridiculous. At the same time I should like to say to my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) that I feel he might have left some of his remarks to be addressed to us by somebody on the other side of the Committee. After all, we do not wish to act in a ridiculous manner, and he knows that. My hon. Friends the Members for Leigh (Mr. Tinker) and Stoke-on-Trent felt that this matter ought to be brought to the attention of the House as soon as possible. However, if this is the wrong occasion we shall seek some other occasion.