HC Deb 16 December 1941 vol 376 cc1837-68

Motion made, and Question proposed, That a Supplementary sum, not exceeding £1,000,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1942, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made there for by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war.

The Chancellor of the Exchequer (Sir Kingsley Wood)

This is the fourth occasion on which I have had to ask the Committee to approve a Vote of Credit of £1,000,000,000 for the financial year. Out of the £3,000,000,000 already voted, we had about £252,000,000 left on 13th December, and if expenditure continues at the same rate as in recent weeks, that balance, together with the Vote now asked for, will suffice until approximately the end of the financial year. Even in the circumstances of, say, a fortnight ago, however, it would not have been possible for me to estimate fully the rate of expenditure likely to obtain in the next three and a half months. With the considerable extension of the war into the Far East, it is obviously less practicable to advise the Committee just how long the new Vote will last. If further sums are required, I shall have to come to the Committee again in March, and I know that such demands will be readily granted.

The Committee will no doubt desire to be informed of the analysis of our current war expenditure. We have recently been spending at the rate of nearly £83,000,000 a week, or £11,750,000 a day. Of that, £9,000,000 was attributable to the Fighting Services and £2,750,000 to miscellaneous war services. When the last Vote of Credit was before the House, I explained the relation between our Vote of Credit expenditure and the figure of £3,500,000,000 which I assumed for the purposes of my Budget speech. The Budget figure of £3,500,000,000 excluded whatever might have to be spent in the United States on the purchase of goods not covered by the Lease-Lend Act arrangements. This exclusion was made, as the Committee will appreciate, because I was then concerned primarily with such of our expenditure as would require domestic finance. The expenditure in the United States must, however, be charged to the Vote of Credit, and may be estimated—though the estimate must necessarily be very tentative at this time of the year—at about £300,000,000 for the whole year. If therefore we seem likely to spend about £4,000,000,000 on war services during the year, that figure must be compared with an estimate of something like £3,800,000,000 at the time of the Budget. In other words, our total expenditure may be some £200,000,000 greater than was anticipated at the time of the Budget. It should not, however, be assumed that the so-called "gap" has necessarily been increased by £200,000,000. We have to take into account a number of other important factors before the balance to be met out of new savings can be calculated, in particular the amount of our expenditure financed overseas, the amount provided from domestic capital sources, from extra-Budgetary sources and the out-turn of the Revenue compared with the Budgetary estimates. It would appear likely that the final balance to be met from new savings may be somewhat greater than I estimated at the time of the Budget, but it seems unlikely that the difference will be large in relation to the dimensions of the figures involved.

On the domestic side of our finance, namely, revenue and savings, I would first like to say a few words on the vital question of savings. On this occasion I will not quote figures to the Committee; I have done it so frequently before. In the first place, no figures are yet available which show the whole of our present great savings effort—because that is how we must regard it—in all its forms. It is perfectly true that we have figures which show the rate at which the smaller savings of individuals are being put, for instance, into Savings Certificates and the savings banks. We have also figures for investments in the larger securities, National War Bonds and Savings Bonds, not all of which, of course, will represent savings out of current income. On the other hand, it is important to note that much individual saving goes on which is not necessarily lent to the Government through any of these securities, large or small. Some takes the form of regular payments to insurance companies or building societies, and may be lent to the Government by those institutions. Other savings accumulate in the banks, and help the banks to lend to the Government. Still other savings may remain, although, as I have already said, I wish they did not, as notes in tea-pots, under mattresses, and in all other kinds of receptacles. We cannot to-day put figures of all these forms of saving, though I hope later it will be possible to furnish the Committee with some estimate. But I think everyone will agree that the total amount of savings which has so far been achieved, and particularly in small sums, has been very impressive, and far greater than many at one time thought likely or possible. But it holds good of savings, as it does for the battlefield and the factory, that the only thing we can foretell with certainty is that still greater and more intensive effort will be necessary before victory is achieved, and that the effort will not be the country's best until everyone—I emphasise that, until everyone— pulls his or her weight. And we have not yet reached that high objective.

Out of many present incomes, and particularly out of the greatly increased incomes which are now being enjoyed by large numbers of our people, a great deal more can undoubtedly be saved and lent to the State. I have heard it said, for example, that perhaps a third of our people are saving on a scale that is fully adequate, that another third are saving on a moderately reasonable scale but might well save more, and that a third are either not saving at all or saving very small sums indeed. Whether these precise proportions are correct is, no doubt, a matter of opinion, but the direct evidence of observers does confirm that there are still large numbers who are not sharing in, or who are taking an inadequate share in, the. great savings effort which their fellow citizens are making.

Mr. Cove (Aberavon)

What sections of the community?

Sir K. Wood

I do not wish to particularise. I would appeal to all who influence public opinion—Members of this Committee, leaders in our local life, employers and trade union representatives— to continue to do their utmost to drive home this paramount need for saving and lending to our country. We all want our war effort to be the effort of a people united in the firm will to work and produce to their utmost, secure in the knowledge that while they do so their standard of living will not be filched away from them by rising prices. Inflation is not an economists' bogy; it is a danger which, if allowed to develop, may threaten the very basis of the material welfare and the peace of mind of all of us. If it does that, it will also threaten the effectiveness of the war effort. To help to keep such consequences at bay is surely worth the really small effort, but a really important and a vital one, involved in refraining from spending what it is not absolutely necessary to spend. In this connection, I would again venture to refer the Committee to two matters I have so often emphasised. Our total expenditure during this war has now reached the colossal figure of some £8,300,000,000. We have a long and a hard war before us. It is more imperative than ever, first, that all waste and extravagance should be avoided, and, secondly, that all plans and projects not directly connected with the war effort, but involving appreciable extension of Government expenditure, should be considered in relation to the vital necessity of husbanding our resources and maintaining our financial strength.

As regards revenue, I cannot forecast the year's out-turn, but it is clear that, thanks mainly to the buoyancy of the Customs and Excise, the Budget Estimates will be appreciably exceeded. On the Customs side, the bulk of the increase so far has been provided by the Tobacco. Duties, while as regards Excise Duties, the increase is due mainly to the Purchase Tax and to the Beer Duties, though the Spirit Duties and Entertainments Duty have also helped that increase over the estimate. I am glad to inform the Committee that the main. Inland Revenue taxes are also doing will, but as the bulk of Income Tax and Surtax is payable later in the year, it is too early for me to venture on a prophecy under those heads, or in relation to Excess Profits Tax.

In connection with direct taxation, I have an announcement to make which I think will interest the Committee. High taxation means that extra care has to be exercised in making provision against the time when it falls due. It also means that in so far as such provision is made gradually in advance, large sums of money accumulate in the banks and are in due course paid to the Treasury, much of them in the last quarter of the financial year. I have been considering whether I could not offer some machinery which would help taxpayers who have material sums to meet by direct payment to set aside those sums as their profits or income accrue. Some such assistance would be specially helpful, I think, to companies liable to Excess Profits Tax. It is, at the same time, desirable, if possible, to avoid the piling up of tax moneys in the banks, and to encourage their more even flow into the Exchequer. With this triple object in view, I have decided to issue a new special security which can be taken up for such amounts and at such times as any taxpayer finds most convenient. He will be able to tender it during a limited period in payment of certain taxes, and if it is so tendered, it will earn interest. The taxes in question will be Income Tax (other than Schedule E), Surtax, National Defence Contributions, Excess Profits Tax, Land Tax and War Damage Contributions.

Mr. Graham White (Birkenhead, East)

Will this security be issued at a discount?

Sir K. Wood

I will say a word about that later. Schedule E tax will not enter into the scheme in view of the existing arrangements for deduction of Income Tax at the source from salaries and wages. The security will be issued in units of £25 and multiples thereof. The scheme is practically complete and I hope to announce full details before the end of the month. This will answer the query of my hon. Friend the Member for East Birkenhead (Mr. Graham White). From the many requests which I have had and the communications which I have received, I have every confidence that the scheme will, for a large body of taxpayers, definitely ease the task of providing for the taxation which they now have to bear and will also be of considerable advantage to the State.

As we are approaching the period when the major part of the Income Tax will be collected, it is perhaps appropriate for me again to speak of the vital part which taxation plays in our war economy. Taxation to-day is such as to demand many sacrifices, but I know that these will be willingly borne. From the highest to the lowest incomes, we shall bo taking those contributions which, will certainly bring home to our people more than ever the financial implications of our stupendous war effort. Some millions of wage-earners will soon be paying Income Tax for the first time. Others of them will, like all other Income-Tax payers, be paying more this year than last. The necessity is plain. Our war taxation has not been imposed for its own sake. It is an integral part of the whole plan by which the country has been put on a war footing. War conditions necessarily mean that the money incomes of the community largely exceed the supply of goods and services on which those incomes can be spent. The greater our success in directing an ever-increasing proportion of our productive power to the war effort, the greater does that excess become, or, more accurately, the greater it would become if it were not corrected by, among other things, increased taxation. High taxation is indispensable in order to prevent the shortage of goods in war time leading to inflation.

It is not the only instrument on which we rely for this purpose. As the Committee is aware, we continue to take many steps through an elaborate system of controls and rationing to see that the limited supplies of essential goods are distributed fairly and made available at reasonable prices. But I would remind my hon. Friends that these measures will all fail to achieve their purpose if we neglect, on the financial side, to correct the excess of purchasing power. That we do, first by severe taxation, and, secondly, by the savings movement, and as the momentum of war production has increased, we have been bound to intensify our efforts in both those directions. Each of them has greatly contributed to the fact that in the midst of all our difficulties, we have been able, so far, to keep our finances and general economy on an even keel. The most striking proofs of this are to be seen in the low rate of interest at which we have borrowed, in our maintenance of peace-time social services and in the steadiness of the cost of living.

Everyone in the country has benefited from these achievements, but just as the price of our liberty is eternal vigilance, so the price of our economic security is unrelenting sacrifice. There can be no faltering, either in our ready acceptance of taxation or in our firm determination to save. We may have little choice in the payment of our taxes, but the decision whether to save or spend is mainly ours alone, and in our private lives there is probably no daily question in which the taking of the right decision means so much for the welfare of our fellow-citizens, the maintenance of our firm financial front and the ultimate triumph of our cause.

Mr. Pethick-Lawrence (Edinburgh, East)

The Chancellor of the Exchequer has, with lucidity and comprehensiveness, put before us the financial position of the country to-day, and in the brief remarks which I propose to address to the Committee I should like, in the first place, to welcome most heartily the new scheme which the right hon. Gentleman has adumbrated. I think that when amounts have to be paid, in taxation, of such dimensions as those now being demanded, both in the figures themselves and in their proportion to the incomes on which they are imposed, the existing system of payment may present great difficulties, and a scheme of the kind which the Chancellor of the Exchequer is now proposing, by which these amounts will, in effect, be payable in instalments should be a relief and should prove of great advantage both to the taxpayer and to the Revenue. Of course, we shall await the details and in particular the rate of discount if there is to be any, before we can express final approval, but it seems to me that the scheme is one Which will be welcome and which is, I might almost say, overdue, and I am glad that the right hon. Gentleman has taken a step in that direction.

There is no doubt whatever that these decisions which the House of Commons makes from time to time to put another £1,000,000,000 to the credit of the Government for the prosecution of the war are of supreme importance, but we take them now so much for granted that it is not necessary to go into great detail in Debate in this Chamber. There are, however, one or two things which may be said with advantage. In the first place, with regard to the prospects for the future and the question of how much the Chancellor will be called on to pay out during the remainder of the financial year, I notice that the right hon. Gentleman was somewhat cautious. I do not wonder that that should be so, in view of what is happening not only in those Continents where war had already been raging, but in those in which it has now started to rage and may rage in the future. We now see nearly the whole world brought into the conflict. The areas which are still outside it are so small that we may speak of the war to-day as a world war in the literal sense.

The public, I think, want to know how far the new developments are likely to increase the actual war costs. It seems to me that there are three possible directions in which the actual cost of war might be increased. We might he involved in additional direct expenditure. We might be compelled to make good a certain withdrawal of help from the United States. We might be compelled to increase our aid to Russia, to make up for help which in other ways might be withdrawn. I gather from what the Chancellor of the Exchequer has said, that although in one or in all of these elements the cost might be augmented, he does not seriously expect that it will be on a very large scale, comparatively to the vast expenditure to which we are already committed. That may seem strange to some people, and I think to the country generally, because this war in the East is not a little matter—it may be a very large matter. I suppose that the real answer is that when you are engaged in total war, the fact that your total war is obliged to take place in more than two continents does not necessarily, and, indeed, cannot, add very much to your total war effort or your total war expenditure. I suppose we may take it as more or less true, therefore, that our war expenditure, short of any inflationary process, if it has not exactly reached what you might call a peak, has, at any rate, reached nearly the maximum which it will reach during the remaining period. We have to face the fact that, for whatever time the war continues, somewhat in excess of £4,000,000,000 a year is the sum that the country will have to face. I had already looked at the progress of Revenue; and my impression was confirmed by what the Chancellor has said, that we may certainly hope to reach the estimated Revenue, and probably some quite useful and substantial additions thereto.

But that will not take away in any degree the tremendous importance of saving, because, if once saving were inadequate to fill the gap between taxation and Revenue, inflation would begin, with disastrous consequences. I would like to join my voice with that of the Chancellor of the Exchequer in urging that everything possible be done to avoid inflation. The Chancellor of the Exchequer made some interesting observations with regard to the fact that the public as a whole were divided between those who were doing their best and really saving manfully, those who were saving half-heartedly, and those who were not doing it at all. My hon. Friend the Member for Aberavon (Mr. Cove) asked how that was divided up between the different sections of the community. I have been thinking about that, not only while the Chancellor was speaking, but even before he began. This is my conclusion. I think that it affects all classes of the community except the very poor, who cannot in any circumstances save with advantage either to themselves or to the community, because if they were to try to do so, on their very meagre incomes, they would fall so far below the poverty line that not only would they suffer themselves, but the community would suffer through their malnutrition.

Let me begin with the well-to-do. When the war began, and Lord Simon, who was then Chancellor of the Exchequer, brought in his first Budget, I was of opinion that the taxation which he imposed was as much as could be borne in the earlier stages, because I knew quite well that, particularly among the very well-to-do, if there were to be any very large burden of new taxes imposed, they could not in a short period so readjust their living economy as to pay those taxes out of income. Since then, two and a quarter years have gone by, and I think the position is now very different. Many of the expenses of the very well-to-do consisted in payments to their staffs. Many of those staffs have been called up or have gone into munitions work, and the cost of paying their wages has been relieved. In the second place, it has been possible to cut down commitments in various other ways. Many of the well-to-do who at the beginning of the war could not pay their way except by withdrawing capital—which is, of course, negative saving—ought now to have so far pulled in their method of life that they can not only meet the whole of their expenditure out of their income, and pay the whole of the very heavy taxation imposed upon them, but have money to save. Some may not have money to save after paying all that, but just to the extent that they are able, if not to save, at any rate to live within their income, they are making a considerable contribution to the war. If they sell their capital to pay their outgoings, thinking that it does not matter, they are doing a serious injury to the war effort, because not only are they not saving, but they are increasing the gap by the negative saving which comes from expenditure on current necessities out of capital.

When we come to what are called the middle income class, there it must be, I think, largely a matter of one individual against another. There are some individuals in that section of income range who have had their incomes very seriously diminished, quite apart from the effect of taxation, and when increased rates of taxation have fallen upon them as well it has become impossible for them to save. On the other hand, some members of that class may be retaining their full income, or even increasing it. They can meet their taxes, and they have been able to cut down their expenditure very considerably; therefore, they ought to be able to hand over substantial sums to the Chancellor of the Exchequer.

Then we come to the manual working class—those above the poverty line, whom I have already written out of the picture. Here again, there are great differences between one family and another. I would say of these, as of the poorest section, that to sacrifice the standard of life which makes for the full health and efficiency of themselves and their families would be a grave blunder, which would injure not only them but the country which they have to serve. If they took it from their children, again, they would be injuring the future of the country for which this war, above everything, is being conducted. But, on the other hand, there may well be in certain families those who regard the extra income which they get not in the way that will be most beneficial to the State, and therefore, in that class, as well as in the others, this admonition to save all that is possible over and above what is really needed for efficient and healthy life is applicable.

That is my answer to my hon. Friend the Member for Aberavon (Mr. Cove). It depends upon circumstances. I think that in every class of the community there are many people who do not save but who could and should save. It only remains to answer the question, What would be the addition to the savings totals if all those who could save did so on the scale that the most worthy are already doing? As far as I can see at the moment there would be something like double the savings which are being put aside at the present time, and that would be amply sufficient to make sure of non-inflation. I do not think that we ought to rest content until every individual who can save to his own advantage and that of the community comes into line with those who are so faithfully bearing the burden at the present time.

I think that the Chancellor of the Exchequer has helped in this respect, and I want him to continue to help by keeping down the cost of living and preventing any inflationary tendencies from letting the cost of living up. As long as he can do that, and do it successfully, then the appeal to save can be made and should be made to every section of the community. It should be brought home to the people that, if they want to win the war, and if they want to win it most rapidly and want to protect those who are in a weaker financial position than themselves from suffering privation as a result of financing the war, they should spare no effort and consider no sacrifice not involving their own health and efficiency too great, to achieve these ends.

Mr. Graham White (Birkenhead, East)

The Chancellor of the Exchequer has brought us up to and beyond the fourth milestone of our financial year, and in his survey to-day he has been fortunate in that he has been able to recall, since he addressed the House on this subject in September, that there has been no substantial adverse circumstance develop in our national finances. In fact, the position, has been, in the main, favourable and encouraging. If we look into the road ahead the green light is showing, but in the distance there is one red light beginning to gleam, and there are many matters to which we shall have to give very close attention. His statement to-day has been reassuring. The so-called gap—why it is always referred to like that I do not know, because it is a very genuine thing—when he last addressed us, seemed likely to be of the order of £400,000,000 greater, than the Budget estimate. To-day he tells us that it is likely to be of the order of £200,000,000. I hope that that may be correct.

The right hon. Gentleman devoted most of his remarks to the matter of saving, and I propose to make one or two observations in that direction myself. I would like, however, to refer to the new proposal that he has made for facilitating the collection of taxes. I think that that proposal is well conceived. It is, in the amounts involved, rather a technical matter than a matter of the greatest financial scope. If it facilitates—and I think it will— the even flow of revenue it will be a great convenience, but whether it will actually save any money to the State, I am not quite convinced. I thought that if these funds were accumulating in the bank they would be available to the State indirectly, but I do see the convenience of the suggested arrangement. I asked my right hon. Friend whether the security which is to be issued in relation to the taxation to be paid would be issued at a discount. He said that this might be of particular help to companies liable to Excess Profits Duty. Therefore, I presume that the security to be issued will be issued at a discount. If it were to receive direct interest payment that would in time become subject to Excess Profits Duty, it might be of no great help to the company. Otherwise I am not convinced of the advantage to the. company of this arrangement, although I regard it as one making for convenience and the easier control of finance.

I turn now to the vital matter of War Savings. Some influences coming into play now which may alter the general course of savings, and the rate, and the volume in which they will accrue to the State. Does my right hon, Friend seek to foretell what effect the spread of the war in the East may have upon the course of economy in this country? It is a fairly safe prediction to say that it will not increase the amount of consumable goods in this country, and to that extent may help the War Savings Movement. On the other hand, the general tightening-up in the demands upon man-power and the calling up of large numbers of individuals throughout the country are going to have an effect upon War Savings. What that may be I find it very difficult to forecast. If individuals are withdrawn exclusively from the class who up to the present have not been doing their duty in saving, it will not make much difference. If, on the other hand, it falls upon those who are making the maximum effort in that connection, War Savings will not be very much stimulated. I am inclined to take the view that the time has come when, having had a review of the man-power resources of this country and having tightened up the machine and made it more effective, we ought to look into the financial aspect of affairs and see whether a review there might not be helpful in bringing about a change of emphasis which may be desirable to help the effort in the War Savings Campaign, which has already been so extraordinarily successful. My right hon. Friend the Chancellor, if I remember rightly, said that the amount of small savings in this country would shortly reach the £1,000,000,000 mark—

Sir K. Wood

It has passed that.

Mr. White

It has also passed that figure in Germany where there has been no savings movement and no expenditure of money on a great advertising campaign. I feel that we should now look at our War Savings Campaign effort and make up our minds whether or not in some directions the emphasis should not be changed, with, perhaps, even greater success to the effort. I am very doubtful about the effect of some of our War Savings Campaign methods. As I went through Piccadilly Circus to-day I saw from a bus, in an inverted pyramid, the letters "U.S.S.R.", "U.S.A.", "U.S.", and on the bottom the letter "U", and I wondered Whether there was any individual, of the thousands passing through there, whose patriotic duty was stimulated of whose purse-strings were loosened by reading a display of that kind. Again, there is the slogan, "You can't lose if you lend." That perhaps may touch an answering cord in the minds of some individuals because it is contrary to all human experience. It suggests the possibility that State security is of such a character that it requires to be reinforced by assurances. It rather recalls the criticism of a young lady Who, speaking with great temerity of the Ten Commandments said, "They are not a constructive policy; they only put ideas into your head." I am by no means sure that a slogan of that kind does not put the idea into the mind of would-be investors that there is a certain amount of insecurity. Maybe the alliterative exhortations which bespatter our walls bring some return, but I wonder whether they do.

I think there are other aspects of the war effort which might well be advertised to bring a greater sense of responsibility, in relation to these matters, into the mind of the individual who reads them. I think the note in our War Savings Campaign henceforth should be this: The citizen of this country has had impressed upon him, as never before, that he is tremendously important for what he can do. The War Savings Department must say, "You are tremendously important to this country and to the needs of Russia, not only for what you can do but also for what you can do without." That is a slogan which I should suggest might be developed. Wherever we look, we see the need for decreased consumption. Whether it comes from the new threat in the Far East or from the needs of Russia, it is clearly the case that the citizens of this country are very important for what they can do without.

I would like if I may to draw attention for a moment or two to a very remarkable change that has been made quite recently in regard to savings in Germany. The German method of saving money has been the inverse one to that adopted in this country. They have not had a great war savings campaign with expensive advertising, and they have said that the German citizen knows his duty so clearly that he does not need to be hustled into it by methods of that kind. In fact, however, the Germans have arranged to stop expenditure by complete rationing, by price fixing and by wage stoppage over the whole field from the very out- set. From their last figures it appears that their small savings groups have reached a total of £1,100,000,000. approximately the same amount as we have achieved in this country by efforts of a different kind. It is a remarkable thing that they should have done that in that way and should have carried on without such a drastic increase in taxation as we have had in this country. Although this scheme and these methods have been to carry Germany through two years of very costly war, they have within the last three months had to make special concessions and arrangements which seem to indicate apprehensions of something they were not quite so happy about. Now a scheme has been brought in whereby wage and salary earners can contribute a certain amount every month, for a period of not less than three months, which is free of taxation. It is estimated that by that means £600,000,000 per annum will be accumulated, in addition to the efforts already made, and that it will cost them something like £120,000,000 in loss of revenue.

I want to draw attention to the reason why this has been done. It is due to the rising discrepancy between the immense amount of unspendable income in the pockets of those in Germany and the decreasing amount of consumable goods. It is clear that the stage has been reached where, in spite of all control, there is great danger of that mass of spending money breaking through all obstacles and being thrown into speculation, black markets and practices of one kind or another, to the great danger of Germany's war finances. In passing, I would like to refer to the fact that this new inducement of saving is free of taxation, not only in capital amount which is saved but also in the interest. That is a matter of great consequence. It is open to several members in one family to open one of these iron savings accounts. As the interest is not taxable, there is great inducement to the married woman to take up work. I am not so sure that there ought not to be something like it to the great advantage of this country. Of course, the merging of the incomes of man and wife is an old complaint in this country, from which there is no escape except divorce. That is still a matter which we might well consider in order to induce and encourage married women to take up work.

Is there any lesson for us in this, or is there not? Is there any danger in this country that we may, with increasing earnings and incomes, reach a point when there will be set in motion such a rise in costs and prices that we shall find ourselves suddenly in the midst of an inflation which will seriously disturb the whole course of our war finance? It may well be that these things are a mirage before my eyes and not before those of other people; if so, I shall be very pleased. I notice that my right hon. Friend the Minister of Agriculture has opportunely arrived in the Chamber to lend point to my argument, for my right hon. Friend has said that we must expect dearer food in this country. I notice that in many directions there are increasing demands for increased remuneration. Those demands are very important. I do not want to discuss them; I merely state that they exist. These great matters which will affect the whole financial policy of this country in the midst of this war are not determined by the Government, but are left to tribunals, outside bodies, which are set up for other purposes. It is not right that these matters, which might carry us, if the circumstances were such that they got out of control, into a state of financial uncertainty, with the possibilities of trouble and disaster, should be left to these bodies. If there is anything in the House of Commons on which we are unanimous, it is upon the dangers of inflation and the necessity of avoiding it. There is no set of people of which I know who are not in agreement about that. The question I want to ask is whether it is not about time that steps were taken to reach an agreement on what is necessary to prevent inflation. I ask hon. Members to direct their minds to that question, because although it may be that I am taking a pessimistic view-if so, I shall be glad to be told so-of the possibilities of the situation, it seems to me that there are tendencies on foot to which we should give very careful attention, not in any spirit of controversy, but with a desire to stop this process at the outset.

Our situation is better than anybody could have anticipated it would be when we were thrust into this great war. I agree that there are many who do their utmost to help on the financial side, but there are others who, up to now, have not realised what is possible. It does not occur to many people that if they refrained from listening to one news bulletin in the course of the day, they would make a saving in their demands upon electricity supply. I think that now the slogan of Lord Kindersley and his colleagues should be, "You are important for what you can do; you are just as important for what you can do without." People should remember that they must make no demand upon public services of any kind—travel, heat, light, or whatever it may be—if they can avoid it; that they must not buy anything they can do without, that they must review the whole course of all their transactions, large and small, and make sure that they are not making a demand for something that is needed in Russia or somewhere else. I think that—rather than the alliterative eccentricities which bespatter our hoardings—should be the note which the War Savings Campaign should take.

Sir Adam Maitland (Faversham)

The hon. Member for East Birkenhead (Mr. Graham White) referred, in complimentary terms, to the manner in which Germany has raised war savings from her workpeople. The hon. Member's observations reminded me of an opportunity I had, about six months before the outbreak of the war, of inspecting the wages books of a very large industrial concern in Germany. I found that, in accordance with the usual practice in Germany, the workpeople had been induced or coerced to accept many things, both in regard to wages and other matters, which would not have been accepted in this country. The hon. Member will be aware, I am sure, that long before the war there were many stoppages from wages in Germany that would not have been tolerated here.

Mr. White

And in Russia.

Sir A. Maitland

The hon. Member referred to Germany, and as I happen to have had an opportunity of seeing something of this matter in Germany before the war, I will confine my observations to Germany. The hon. Member's remarks also reminded me that in pre-war days the Germans accepted another thing which certainly would not have been considered. as a matter of practical politics in this country. The policy of fixed wages for all workers in all industries was instituted in Germany long before the war. It was done by the central authority. The fixing of wages was a very important matter because it meant getting right down to the first basis of costs. Having fixed wages, the leaders of Germany found that, as time went on, prices of goods tended to increase, and it was impossible, with the wages that had been fixed, for the wage earners to buy the things they desired to buy. A second step was then taken, and quite consistently and sensibly, selling prices were fixed. It seems to me that in this country we have done things in the inverse order. We talk about the control of prices and have indeed introduced a certain degree of control, but there has certainly not been so far any very serious attempt to control wages. May I say in this connection that some of the most important steps, and some which have been most harmful, have unfortunately been instituted by Government Departments of one kind and another? I commend that to the notice of my right hon. Friend the Chancellor of the Exchequer.

No Member would for one moment think of opposing this Vote of Credit which the Committee are asked to pass, but perhaps this is not an inopportune moment to emphasise once more how important it is, in giving extensions of credit for such huge sums, for the Chancellor of the Exchequer to see that money is wisely expended. In spite of the enormous demands which are being made upon all sections of the community, and in spite of the colossal financial burdens falling upon this country, there is one thing which is outstanding; I would ask those who at times are tempted to condemn our present economic and financial structure to dwell upon this point. Other countries which have experienced financial and industrial crises, and difficulties arising internally and externally, have had a run on the banks, and chaotic confusion has resulted. On the other hand, we have had our ups and downs, and our problems during the last 10 years, but no Member has had suggested to him the slightest shadow of doubt in regard to the stability of our banking institutions. That is a tribute to our financial and economic structure, however much we may criticise it. I do not, of course, suggest for one moment that no improvements could be made to our existing system of finance and industry.

I think that the Chancellor of the Exchequer—and perhaps this is the only bouquet I shall give him—is to be congratulated upon the way in which the money has been raised to meet the cost of the war. It is a great tribute to the stability and solidarity of our British institutions, and to the common sense of our people, that in such a tremendous war, involving such astronomical figures, my right hon. Friend is able to come to the Committee and report that it is possible for him to continue to borrow money act such cheap rates. My hon. Friend the Member for East Birkenhead referred to wasteful expenditure. I believe that the greatest impetus which could be given to the War Savings Movement would be the conviction that the House of Commons is determined to stamp out and eradicate anything in the nature of wasteful expenditure. In this connection I wish to make a suggestion to my right hon. Friend. I do hot believe that Ministers, either during war or in peace, have sufficient time to devote to the question of expenditure—they are so busy with high policy and with other matters that it is impossible for them to get down to questions affecting the administration of expenditure. I suggest that in every Government Department someone should be specifically charged With the duty to examine details of administration and to see that expenditure incurred by the Department concerned is wisely and efficiently made. In the case of a small local authority, a county authority, and a national authority there is a definite and practicable limit to the amount of money which in any given period can be wisely spent. That is specially true during a war. Then there is an expansion of organisation, and people are brought in who have not the knowledge and experience—I am not criticising their willingness or their desire to help—to see that a Department's duties are performed in the most economical, efficient and effective way.

At a time when rationing is regarded with favour, and when we have had two and a half years' experience of war, I suggest that a review should be made of the amount of money which a Department Can spend with real efficiency and with due regard to the needs of the nation. I know this is difficult, especially in Service Departments, when some new strategy may be in the offing which would upset calculations; but there are many other Departments which are not affected by strategy and the variations of war where such a scheme could be adopted. If this suggestion cannot be adopted in the case of the Fighting Services, I suggest that it might be applicable in the case of the other Departments which are also spending considerable sums of money. To see that expenditure is wisely administered, some departmental body, charged with the specific responsibility of administering the expenditure of the funds of that Department, should be set up. Hon. Members may suggest that we already have the Select Committee on National Expenditure, but that Committee is limited in its scope and is limited in the kind of work it can do. It is not an executive body, but in reporting to the House completes one of its main functions. The sort of body I am suggesting would be charged with the specific duty and would be capable of exercising some authority in regard to departmental expenditure. I hope that my right hon. Friend will be good enough to consider that suggestion.

None of us would wish to say anything to destroy confidence in our national financial arrangements, but I must point out that I cannot for one moment accept the suggestion that borrowing and taxation can be put in the same category. Borrowing is something the State undertakes to repay to the lender, be it soon or late. Taxation is imposed by the State with no hope of repayment to the taxpayer. There is some suggestion with regard to discount for taxes paid in advance. This is perhaps the first official recognition of the anxiety that is felt in regard to the practicability of collecting taxation at the very high existing rates. It is a warning to the right hon. Gentleman that he is getting to the limit in the practicality of raising and collecting taxation at the present high rates. It is further evidence that the never-ceasing need of greater vigilance in regard to the expenditure of the money is of vital importance

Dr. Russell Thomas (Southampton)

I should like to say a few words arising out of the Chancellor's reference to National Savings. He was careful to explain that he was not merely referring to small savings but that there are considerable savings made, for instance, by insurance companies. He expressed himself on the whole—or that is the impression he gave me—as pretty satisfied that. National Savings were going on just as they should and that, as they gathered force, they would probably go a long way to fill up the gap that we all have in mind. But I am not so sure. I do not believe that National Savings are as great as is imagined when you take certain factors into consideration. Even before the National Savings Movement national savings were considerable. Have they risen at the rate that they should when we consider the general expansion of employment? This has increased enormously. Have National Savings gone up pro rata? Also wages are constantly rising and have increased enormously. Not only are there more people employed, but a great many are getting extra wages. Is the Chancellor extracting sufficient of these in National Savings? Are National Savings growing pro rata with the increased wages? I am not so sure about it.

There is also a lack of outlets for investment. Before the war people had considerable scope. There were building societies and that kind of thing, but I do not believe that building societies are taking people's money to-day to any extent. Is the Chancellor extracting the money that would have been invested in building societies and so on, for his own use? I very much doubt whether he is extracting as much as he should. I doubt very much whether people are making greater savings in the direction of insurance policies than before the war. I think they are probably less. People are not able to spend so much to-day on their food and clothes as they used to on account of rationing. Is the Chancellor getting in sufficient in that direction? He referred rightly to the fact of limitation of goods available, indeed regarding a limitation of goods and increased purchasing power as inevitable during a great war.

Although the right hon. Gentleman deplored the fact that people had too much purchasing power, there are increases of wages going on almost weekly. I stated in a supplementary question the other day that the bodies which get these increased wages are those belonging to powerful interests, and they are able to get more of the limited quantity of goods available. But there are also large numbers of people who cannot save at all, who are on the existence line and no more. They have no one whatever to look after their interests and they cannot come in and get hold of more of these very limited goods. It is high time that these matters were considered with greater severity and sternness. The Government has to consider whether some sort of wage policy could not be hammered out which would help to stabilise the conditions we are going through. It would present enormous difficulties, but I think it should be borne in mind. These are just points that occurred to me while the Chancellor was speaking. I am sure we all wish him well in the great difficulties that lie ahead.

Mr. Loftus (Lowestoft)

I congratulate the Chancellor on the new proposals by which people will be enabled to buy securities wherewith later on to pay their taxes. I think it will be an immense convenience, and I look forward to studying the details with great interest. I do not know whether these securities will bear a very small rate of interest or will be issued at a discount. If either of these things was to happen, it would, of course, amount to giving a slight discount for payment of taxes in advance. I take it that the rate would vary from month to month as the time for paying the tax got nearer. We have listened in a remarkably thin House to some very interesting speeches, which I should like to comment upon. My hon. Friend the Member for Faversham (Sir A. Maitland) pointed out that examples of waste of Government money have a deterrent effect on the whole Savings Movement. I was reading in a local paper the other day about a rural district council which with great enthusiasm was working up a warship week, and several members pointed out really bad cases of Government extravagance in the near neighbourhood which might have a great effect on the willingness of people to subscribe as they hoped.

My hon. Friend the Member for East Birkenhead (Mr. Graham White), speaking for the Liberal party, said that if we are to avoid inflation he felt it would be necessary to have a wages and prices policy. I think that Members in all parts of the Committee who have thought over the problem of inflation are in general agreement that it is desirable if it can be done to have a policy which would more or less stabilise wages and prices. The difficulty has been to know how to do it. I have thought a great deal about it and that has been the difficulty which I have had to face. I am glad to say that the difficulty is solved for me by the example given to us by the Government of the Dominion of Canada. I do not know whether hon. Members know what has been done in Canada.

The Temporary Chairman (Mr. Charles Williams)

This Debate does not include anything that has been done in Canada.

Mr. Loftus

Can the Debate include the question which has been referred to by nearly every speaker—the danger of inflation?

The Temporary Chairman

I am not quite sure what the hon. Member means.

Dr. Peters (Huntingdon)

We have had references to what has been done in Germany. Cannot we have references to what has been done in Canada?

The Temporary Chairman

Only as an example, but we cannot go into anything that has to do with Canadian policy.

Mr. Loftus

I submit that when another country, whether a Dominion or not, has passed legislation which would give an indication of the way to solve a problem which we are facing, I might be allowed to mention it.

The Temporary Chairman

Only if the hon. Gentleman mentions it as a short illustration and not as involving a separate Debate.

Mr. Loftus

It is not my intention to begin a separate Debate. I was going to ask my right hon. Friend the Chancellor to issue a White Paper showing what has been done so that hon. Members could see in detail the legislation that has been passed. The general principle, which I advocate to-day, is to fix prices at a certain level as they were, say, in the first week in November. The prices of all goods and services have to remain at that level. Then wages are stabilised subject to the condition that if there is a rise in the cost of living every employer has to pay 25 cents a week extra for every one point rise. This alteration takes place every three months. I commend that to my hon. Friend because I feel that we could work on those lines in this country and stabilise the prices of goods and services so that no one in any shop could sell at a greater price than, say, in the first week of November, and so that the charges of rents, railways, water and similar companies could not be more than in November, subject, however, to an appeal to a Government tribunal which could allow an exceptional increase in charges. I appeal to my right hon. Friend to issue a White Paper showing what the Canadian Government have done.

My hon. Friend the Member for Faversham congratulated my right hon. Friend on raising these vast amounts of money at a low rate of interest. I cannot support those congratulations with quite as much enthusiasm because I realise that the Treasury has complete control over the rates of interest to-day, that a considerable proportion of the money raised is created by the banking system at a cost not exceeding 1 per cent., and that, therefore, when we pay 2½ per cent. on that money we are paying far too much. Looking at this huge amount of £1,000,000,000, I again, for the fourth or fifth time, urge my right hon. Friend to follow the warning and advice given him by the "Economist" two or three years ago that for all these moneys created to fill the gap at a cost of about 1 per cent. the State should pay not more than 1 per cent. We are passing a vote of credit for £1,000,000,000. The Chancellor has told us that the total war expenditure is £8,100,000,000. Let us look ahead. The total National Debt left after the last war was in the nature of £7,000,000,000. We all know the immense burden that that was on the nation and how it hindered desirable national expenditure in many ways. The money was raised at an average of 5 per cent. It was a crushing burden on the nation. We have already spent £8,100,000,000—not all, of course, from loans, but partly from taxation. Surely it is not pessimistic to suggest that we may end this war with an additional National Debt of probably well over £10,000,000,000 and possibly £14,000,000,000 at an average rate of 2½ to 3 per cent. Then the burden of this war will be the same as the terrible burden of 5 per cent. on £7,000,000,000 after the last war. I must confess that I view with apprehension this colossal piling up of debt. I agree that it is necessary under the orthodox financial system. Whether that system is necessary, whether it can continue under the strain of the war, is another question. After all, we are passing a vote of credit for £1,000,000,000.

What is credit? Credit is the capacity of an individual, or a group of individuals, or a nation to supply goods and services, and that capacity to supply is financed by the creation of monetary means. Therefore, this £1,000,000,000 is a draft, as it were, on the national capacity to supply goods and services for war use, and in due course that national credit will be converted into the monetary means to produce the goods—by the various methods of taxation, war savings, and filling the gap by created money. It is almost a tragic paradox that, drawing as we are on our national credit, the nation should not create its own national credit practically without cost, and I feel that if we go on spending these vast and yet vaster sums we shall have so to adapt our technique as to avoid piling up this colossal burden of debt at comparatively high rates of interest.

I am not going to deal with the actual technique by which this £1,000,000,000 will be converted into purchasing power for the Government. I know there are great difficulties in modifying the technique, because the machinery by which the technique is worked consists of the Bank of England working in co-operation with the Treasury. My right hon. Friend, when we ask him about the Bank of England, always informs us that it is a private company, and turns aside questions in that way, but in actual fact we know that the Chancellor of the Exchequer and the Governor of the Bank of England are really in partnership, though we are never quite certain which of them is the senior partner. We hope that he will persuade the various authorities, the Treasury, the Governor of the Bank and others, to consider with an unprejudiced mind a new technique for reducing this appalling burden of debt interest. I make no attack on the integrity of those who direct the Bank of England and the Treasury, above all not on the Governor of the Bank of England, but he is a fanatical adherent of the old orthodox system. He is the stem undeviating Calvin of the dogma of deflation, prepared to condemn the great majority of mankind to the hell of economic depression for the sake of the small body of the elect, the rentiers and the moneylenders. I feel that we must break down all those ideas of the past, as we are facing to-day conditions which the men who created the old financial system of the last century could not possibly imagine and could not possibly face to-day, and which we cannot face in the future if we adhere rigidly to an outworn financial method.

Mr. Henderson Stewart (Fife, East)

I have not long in which to speak, and I would summarise my ideas in two or three short questions to the right hon. and gallant Gentleman who is to reply to the Debate. I will say no more about the need for economy, because that has been sufficiently dealt with. Although, as has been observed, the Chancellor of the Exchequer did not say anything about it in his speech I think my right hon. and gallant Friend will appreciate that the country attaches great importance to this question and realise how much the prevalent waste is undermining the War Savings movement. If my right hon. and gallant Friend will deal with that I think he will be satisfying a demand which is heard throughout the country. Secondly, I think he must deal with the problem of wages and prices. I do not agree with my hon. Friend the Member for Lowestoft (Mr. Loftus) that any one period should be fixed, and prices and wages determined at that point. There is in to-day's "Times" an interesting letter dealing with farm servants. It is written by a farmer who points out the disparity between the wages of farm servants even to-day and those of road men and other people working in the same neighbourhoods. He says, referring to farm workers: There are men in this neighbourhood who until now have been working to the old 48s. maximum. They would be worth anything they like to ask if they thought they could work out of farming, driving a lorry or doing mechanical work. Therefore, on the question of wages, in addition to preventing a rise in costs we have got somehow to readjust the ill balance which is now appearing. Thirdly, I invite my right hon. and gallant Friend to say something about War Savings Certificates. I think the whole country had rather looked forward to a statement by the Chancellor of the Exchequer to the effect that the limit of 500 certificates per holder would be extended. The Chancellor did mention the desirability of in-creasing savings on the part of wage earners and one way by which a great increase could be brought about would be by extending that limit.

This may not be the occasion for my right hon. and gallant Friend to deal with the fourth point which I make, but he knows that throughout the country there is the strongest possible objection, based upon the strongest case, to the present system of levying the Excess Profits Tax. Something must be done about that, and it would be interesting to hear that the Treasury are considering the matter. My last point refers to the banks. My hon. Friend the Member for Faversham (Sir A. Maitland) paid a well deserved tribute to the banks, and my hon. Friend the Member for Lowestoft (Mr. Loftus) has just spoken of the great increase in the National Debt. The Chancellor of the Exchequer must know that in the City to-day there are many people, including some of the wisest heads in the City, who believe that we ought to revert to the system of a Sinking Fund, even in the middle of war and even with the great increase in expenditure. It is the view of the wisest people in the City that a Sinking Fund ought to be re-established. If that were done it would have a considerable psychological effect, and would give a certain feeling of confidence. I have promised not to speak longer, and I invite my right hon. and gallant Friend to deal with the points I have made.

The Financial Secretary to the Treasury (Captain Crookshank)

I am not intending to speak long, and if I were to answer all the points put by the hon. Member for East Fife (Mr. Henderson Stewart), each one of which would provide adequate material for a long speech, I am afraid we should not get on with the other business on which he also wants to speak. I should like to thank the hon. Members who have spoken for their reception of this Vote of Credit, and more particularly for the anticipatory welcome which they have given to the new certificates to which my right hon. Friend the Chancellor made reference. I have not much to add to what he has already said, but I will comment on one or two of the remarks which have been made in the Debate. When these Vote of Credit papers come along I always feel a paternal interest in them, because they are over my signature. That piece of caligraphy is now attached to Votes of Credit for £7,800,000,000 which have been presented in ray name in this House. I think that the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) must have been extremely pleased that the hon. Member for Aberavon (Mr. Cove) should have interrupted him, because it enabled him to give us a most interesting analysis of what he considers the way in which savings are coming in. On reflection, I am not at all sure that most of us would not agree with what he said. It was a very brilliant, and, I think, it must have been an impromptu, description of what is going on.

Perhaps a little more emphasis might be put, in the savings talk that goes on, upon the non-spending aspect of it, because that is fundamentally the most important. I hope that hon. Gentlemen who are helping the various campaigns will make a special point of that aspect in their speeches, and will try to encourage people to refrain from spending the money which is in their pockets. It may truly be said that the very rich find it difficult to do much direct saving in these days, and that some are fortunate if they can meet their tax obligations without having to liquidate any of their capital. The hon. Gentleman suggested that the campaign as a whole would be helped very much if the limitation of 500 on holdings of National Savings Certificates were removed. My right hon. Friend answered a Question on that point in the House recently and stated that he had no evidence of any real necessity for such a step. Such analyses as can be made of the figures show that the number of people who actually hold 500 certificates is not very great. War Savings Certificates are intended largely for the small saver among the poorer sections of the community, although it is true that the Surtax payer can take out 500 of these certificates, which happen to be exceedingly profitable from the point of view of interest, compared with other securities which are available. However, the primary object of the certificates is to encourage small savings, and there is no evidence as yet of appreciable holdings of as many as 500 certificates by individuals. There is no reason why every member of a family in the section of the community for which these certificates are intended should not have certificates, and the average family might hold quite a lot of them in that way.

The hon. Member for East Birkenhead (Mr. G. White)—he is not here at the moment—referred to the national expenditure. I would remind him, in case he reads what I say, that the Chancellor of the Exchequer did not specifically say in his speech that expenditure being up by £200,000,000 over his Budget estimate necessarily meant that the gap would be increased by that amount. My right hon. Friend gave as his reason the fact that the size of the gap depends not only upon expenditure but also upon revenue and other factors. No doubt Lord Kindersley and the organisation which he directs will take note of the criticisms made by the hon. Member about War Savings posters, but as the hon. Gentleman himself has noticed the posters of which he complained, it is evident that those posters have had some effect. If posters are noticed, I imagine that they have already achieved one object for which they are put up.

The hon. Member said something, which was countered by the hon. Member for Faversham (Sir A. Maitland), about what was going on in Germany in regard to methods of saving. I say instinctively that I wonder whether what one gets out of Germany to-day in any direction has any relation to the facts. Probably even in the field of savings that is true. After all, the greatest swindle ever perpetrated on a nation was a scheme of saving, invented by the Germans—the buying by instalments of the people's car. It may be that there are other snags of that kind about schemes which are now going on, and I think I should treat them with some reserve.

My hon. Friend the Member for Faversham also said that my right hon. Friend should be very careful to see that Departmental control was instituted over expenditure within the Departments. He suggested, as I understood it, the appointment inside the Departments of someone, not being the permanent head of the Department, to control such expenditure and to see that it was wisely carried out. It is of vital importance to make sure that these vast sums of money are wisely spent, and it is the duty of all of us to ensure that the maximum economy is achieved, but we are always fortified in that regard by the reports of the Select Committee of this House, which makes such valuable directions to that end. My hon. Friend overlooked the fact that it is already the function of a special financial officer in the Departments to examine what my hon. Friend has in mind. The business of these officers is to criticise proposals for new expenditure and to watch expenditure made on behalf of the heads of the Departments. My hon. Friend can rest assured that we shall try our very best to see that expenditure is kept under constant review.

Another thing he said was in relation to what my right hon. Friend said about tax collection. My hon. Friend thought that doubts were being expressed by my right hon. Friend as to the practicability of collecting taxes at the present high rate, but I must repudiate that interpretation. There are no doubts of the practicability of collecting taxes. What my right hon. Friend has in mind is to devise some way of making it more convenient for the taxes to be paid. The prudent man is supposed to be he who puts aside week by week and month by month during the year something towards what he knows he will have to pay next year or, in the case of the Surtax payer, the year after; but such persons are all too few. Usually taxpayers are somewhat hard pressed when the demands come in and they see exactly what they have to pay. My right hon. Friend has come to the conclusion that some inducement in the way of a certificate which could be bought, and which would have a certain apparent value later on, might be helpful to taxpayers.

Mr. Pethick-Lawrence

May I ask the right hon. and gallant Gentleman whether we are to have the particulars of the scheme before the House rises for the Recess, or before the end of the year?

Captain Crookshank

I do not think they will be forthcoming before the end of the year. On the other matters raised, my hon. Friend the Member for Lowestoft (Mr. Loftus) as usual told us that we were too orthodox, but on the whole we have not done too badly out of our orthodoxy in our war finance so far. We have raised these vast sums, we have collected large sums in taxation, and I am afraid the fact remains that, from the very glib way in which we are now used to talk of millions, tens of millions and hundreds of millions—and in these Votes, thousands of millions—very few people in this country realise how big these sums are. I am always trying to find some way in which I can put it to people. One very vivid form is this: If we cast our minds back over the Great War, the Napoleonic wars, Marlborough's wars, the Elizabethan wars, the Wars of the Roses, the Crusades, if in fact we take a review of military history back to the Conquest and beyond to Julius Ceasar, the Punic wars and the Persian wars, we have covered the whole field of recorded European warfare, and even then we have to skip back to the reputed date of King Solomon, somewhere about 700 B.C., before reaching a stage in human history from which we can count 1,000,000 days up to the present. If you like to imagine that King Solomon were still alive, and that every day of his life he had spent £1 providing sweets for some of his ladies, he still would not have spent £1,000,000, even though he had spent a pound a day from the time of his birth. That is the meaning of £1,000,000. Here we are talking about £1,000,000,000, and it is the fourth time this year that we have asked for that sum. So we really are dealing with a financial problem of the greatest magnitude. With the present demeanour of the people, the way in which they are paying their taxes and the enthusiasm they have shown in refraining from spending their higher incomes and are investing them in one form or another of Government security, we have every hope that in the future we shall surmount our difficulties as we have been able to up to now, and do the best we can on the financial front towards winning the war.

Question put, and agreed to.

Resolved, That a Supplementary sum, not exceeding £1,000,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1942, for general Navy, Army and Air Services arid for the Ministry of Supply in so far as specific provision is not made therefor by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war.

Resolution to be reported upon the next Sitting Day; Committee to sit again upon the next Sitting Day.