EXPENDITURE ARISING OUT OF THE WAR. (Hansard, 24 June 1941)

§ The Chancellor of the Exchequer (Sir Kingsley Wood)

The Committee may recall that on 6th February last, before the close of the last financial year, I moved two Votes of Credit: a Supplementary Vote for £600,000,000 for 1940–41, and a Vote for £1,000,000,000 as a first instalment of the provision to be made for war expenditure during the present year. As that Vote is now approaching exhaustion, I have to ask for a further grant. For reasons which I will give, I suggest that the Committee should again vote a sum of £1,000,000,000. There is, of course, nothing magical, or necessary, about the figure of £1,000,000,000. It is a convenient one, because, at the current rate of expenditure, it would last about three months. I have also on past occasions referred to it as the highest figure for which I thought it right to ask at one time. If conditions alter and a different sum seems more appropriate, I shall ask the House for whatever sum the occasion demands. In any event, it will be necessary to come to the Committee again in the autumn for a further grant.

I told the Committee in February that I could not then forecast the rate of expenditure in the early months of 1941. The position is that up to Saturday last, 21st June, we had issued some £810,000,000 of that sum. If expenditure goes on at its recent rate, the Vote will be exhausted in the early part of July. Over the five weeks up to 21st June, our average rate of war expenditure has been about £72,000,000 a week, which is equivalent to a daily rate of about £10,250,000. That figure is slightly less than the figure of £10,500,000 which I gave to the Committee in February as the then current expenditure. I should make it clear that the small reduction has occurred, not on the Fighting Services, but on the Miscellaneous War Services, such as the Ministry of War Transport, the Ministry of Food and the Ministry of Home Security, and the cost of evacuation and emergency hospitals, financial assistance to our Allies, and payments in respect of war damage, which account for £2,250,000 a day, as compared with £2,500,000 a day in February.

The Committee will realise, of course, that expenditure on this group of services must vary considerably from week to week, and the fact that it has been 1008 recently on a lower scale does not mean that it will not have to be increased at some future time. It is also important to note that the figures that I have given mean, when compared with those that I gave in February, a further increase in the rate of expenditure on the war effort at home. Our foreign expenditure has fallen, but domestic expenditure has increased sufficiently to counterbalance that reduction. The supplies which the United States Government so generously send us are now available under the Lease and Lend Act, and, of course, they fall outside this figure of our expenditure. Thus, the expenditure on our war effort must be reckoned as £10,250,000 a day together with the invaluable and increasing help which we are receiving from the United States Government. I say "increasing help," because as the Committee will realise, it has taken a little time to get the machinery working under the Lease-Lend Act, and some further time inevittably elapses before orders placed are converted into actual supplies and brought to account.

This Vote of Credit is available only for our war services. If we include the other services of the State—the service of the Debt and the Civil Votes, including our social services—we are spending approximately at the rate of rather over £12,000,000 a day, or about £4,400,000,000 a year. It is sums like these, and the fact that since the beginning of the war this country has had to find in all— and we do not shrink from it— over £6,000,000,000, that justify the hard course we have recently taken in the Budget. It is imperative that such huge sums should be wisely spent and that not a penny should be wasted. On this aspect I do not think I can add anything to the fairly full explanation I gave on the Second Reading of the Finance Bill, on 22nd May, except to reiterate my hope that all Departments will realise, and act on, the constant necessity for the avoidance of waste and extravagance. It is also imperative that private civilian consumption should be cut to the limit, and that every penny possible should be saved and lent to the State. It is too early in the financial year to attempt any full comparison of the out-turn of the year with the estimates that I made on both sides of the account in my Budget speech. On the expenditure side, we shall, of 1009 course, provide without stint whatever sums are necessary to support the provision of munitions and other war services, and the question will be, as hitherto, not what amount of money we shall provide, but how we shall provide what is necessary.

Taxation for the year is settled by the Budget. As to the balance which has to be borrowed, the methods by which it is raised and its cost to the State are matters which arc always very present to my mind. We shall strenuously endeavour to continue to borrow only by such methods as are consistent with a sound financial and economic basis for our war economy, and we shall continue to borrow as cheaply as possible. I think I can say that, so far this year, our borrowing policy has been successful. During the weeks succeeding those for which I gave figures when I opened my Budget, the larger investors have subscribed on an average £25,000,000 a week and the small investors £14,300,000 a week to the various forms of loans now on issue. This average weekly total of £39,300,000 is over 30 per cent. higher than the corresponding figure for the months preceding the Budget, and no less than 82 per cent. higher than the weekly average during the first year of the War Savings Campaign.

I realise that this increase is in some measure due to the fine response made to London's War Weapons Week, and that it affords no ground for complacency, which certainly does not exist among those who are responsible for the War Savings Campaign. Nevertheless, it is indeed right to remember that, with the exception of London, every large centre of population in England had held its war weapons week by the beginning of April and before the period to which these figures relate. Further, even if we are not able to avoid a drop, for the time being, from the recent high level of subscriptions, I am still confident that we shall be able to achieve an increase in our rate of genuine savings which will fulfil the expectations upon which I based my Budget. War weapons weeks are perforce coming to the end of their successful career, as by the end of the month there will hardly be a town or village in the Kingdom which has not held one. The savings movement is not allowing the enthusiasm which they have 1010 raised to grow cool as it is about to launch a new drive designed this time to strengthen and expand the net-work of national savings groups with which it has covered the country and to increase the rate of savings by individuals.

We have so recently fully discussed these matters and kindred subjects that I will add nothing further to-day, but I hope brevity on this occasion will not be taken as any sign that these matters are not vital to our war effort. This further vast sum will, I know, willingly be voted. It is indeed, one more earnest of our determination to make any sacrifice and to bear burdens, however heavy, until victory is assured.

§ Mr. Pethick-Lawrence (Edinburgh, East)

We have listened to the Chancellor of the Exchequer with attention, and, I think I may say on behalf of the whole House, support. It will be reflected by a unanimous decision in favour of this Vote of Credit. There are only two things that it is necessary for me to say. In the first place, I am not sure that we all fully realise that what has happened in the last two or three days, so far from reducing in any way our need to spend to the utmost in the national effort—which is bound to be reflected in national finance—has made it all the more imperative that we should use every ounce of our energy in fighting the foe at the moment. The time when Hitler is engaged in war in the East is obviously the time when we should strike most fiercely both in the West or in any other field of campaign where we can hit him, because he will be more embarrassed to-day than he has been in the past. We do not know what the future may bring forth, but certainly this is the psychological moment at which to put forward every effort in order to destroy his war campaign.

The second point relates to the finances of the Scheme. The Chancellor of the Exchequer in his Budget told us that he was reckoning upon an extra £300,000,000 out of genuine savings, and the statement which he has made to-day, so far as it goes, is satisfactory. But that, again, would be a very poor thing if it meant that we rested content upon the achievements we have already reached. I hope that everything possible will be done to induce the average man, and not only the 1011 average man, but every man and woman who can possibly save, to invest in some form of War Loan or Savings Certificates to-day. At this juncture it is essential, if these finances are to be carried through to the end, that genuine saving should be at its maximum amount I am happy to be able to say this, speaking with a knowledge of three places with which I am associated. My own constituency is in two different places. It is partly in the City of Edinburgh and partly in the County of Midlothian and both in Edinburgh and Midlothian the people have done exceedingly well in their war weapons weeks. The place in which I live in Surrey has also rendered a good account of itself during the last two or three weeks. I know what my hon Friend the Member for Chesterfield (Mr. Benson) sometimes says about war weapons weeks, and there is something in his pont of view with which the Chancellor will agree, to the effect that what is of importance is the amount of genuine savings rather than the total, which may be, I will not say inflated, but at any rate swollen by figures which are not wholly genuine savings. I feel certain that the Committee will do what if can to encourage genuine savings and make people feel that to spend money wastefully on themselves, money which they could possibly do without spending, is a crime against the prosecution of the war, the liberties of the people of this country and against unanimity. To-day is the time when we have to put forward our maximum war effort to bring this terrible and wicked slaughter of mankind to an early end. That can only be brought about by bringing down the Hitler Government and making the world safe again from a menace of that kind for years.