§ The Chairman
Before I put this Vote, perhaps I should suggest to the Committee that as there are two Votes, one for £900,000,000 and one for £1,000,000,000, both covering the same subjects, the discussion should take place on the first Vote and the second should be purely formal.
Motion made, and Question proposed,
That a Supplementary sum, not exceeding £900,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred daring the year ending on the 31st day of March, 1943, for general Navy, Army and Air services and supplies 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.
§ The Chancellor of the Exchequer (Sir Kingsley Wood)
I have to ask the Committee for a further Vote of Credit of £900,000,000, which I hope will be sufficient to carry us until the end of the financial year. When I asked for the last Vote of £1,000,000,000, on 20th October, making £4,000,000,000 in all, I said that our daily average expenditure on the war was just under £12,750,000, made up of £10,500,000 on the Fighting Services and £2,250,000 on miscellaneous war services. Over recent weeks the total war expenditure has been at the rate of about £14,000,000 a day, an increase of £1,250,000, of which about £500,000 has occurred on the Fighting Services and £750,000 on the miscellaneous war services. The information available suggests that expenditure overseas in North Africa, Libya and other parts of the world has 394 probably now taken the place of rising production at home as the main factor determining the rate of increase in our Vote of Credit expenditure, though, as the Minister of Production indicated the other day, there will still be some expansion in our war production at home in the coming year. Moreover, we are now incurring substantial expenditure in this country by way of reciprocal aid to our Allies. We have reached a stage in the war when it is particularly difficult to say with any precision what our requirements are likely to be in the limited period to the end of March. The unspent balance of the existing Vote was £171,000,000 on 23rd January, and the Vote for £900,000,000 for which I ask will allow a margin for some further expansion by 31st March. I am also asking the Committee in accordance with the usual procedure, to vote a separate sum of £1,000,000,000 on account of the Vote of Credit provision required for the next financial year.
When I speak of these large sums and all that they mean to us and the taxpayer, I would like to assure the Committee again that we are mindful of ensuring so far as we can that these sums involving such heavy sacrifices by our people, are not wastefully spent, but that full value is obtained for their expenditure. The Treasury, I need hardly say, in conjunction with the Departments, is steadily continuing its efforts in this connection, and in all the activities of the Departments the need to find more man-power for the Fighting Services is itself enforcing economy in staffs. Apart from that, the Departments have well in mind the need for economical spending, and it can fairly be said that they are now profiting by the experience and lessons of over three years at war. I know that they would desire me to say on their behalf that they recognise the help that has, been given by the two Select Committees of the House which are concerned with monetary expenditure. The Public Accounts Committee, under the chairmanship of my right hon. and gallant Friend the Member for Kelvingrove (Lieut.-Colonel Elliot), whose enforced absence from the House we so much regret, makes a close examination of departmental expenditure which is of the greatest assistance in discouraging carelessness in finance and in securing that the financial relations between the State and its contractors are 395 on a basis which is reasonable for all parties. The Select Committee on National Expenditure, which is presided over by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne), approaches the same problem, as we all know, from a different angle. The surveys which it has made of the different types of war expenditure have been of much value to the Departments, and we are indebted to the members of both Committees for their considerable and arduous labours.
Expenditure of the order which I have just indicated, involving a total vote of Credit provision of £4,900,000,000 as against a Budget estimate of £4,500,000,000, will mean that my Budget figures of expenditure will be exceeded. In the excess is included the amount of expenditure on war damage equal to the receipts from contributions in premiums during the year, which, as the Committee will remember, was excluded from both sides of my Budget estimates. There is also a sum of about £50,000,000 which has to be voted for technical reasons, although it does not involve the provision of cash. That is because funds to that amount which accrued to Departments last year were not spent in that year, but in accordance with our normal procedure they must be formally covered by a Vote this year as they have been used to meet this year's expenditure. The estimate also contains a margin against contingencies.
Taking the year as a whole and in view of the difficulties of estimating this very varied expenditure, the Committee will, I think and hope, agree that an effective excess of the order of five per cent. or so on so large an original estimate as £4,500,000,000 is not unsatisfactory. I must obviously leave until my Budget speech any general review of the extent to which we have realised my anticipations that the amount of expenditure requiring domestic finance would be adequately covered by revenue, Savings and other resources. In the case of the Customs and Excise the published figures make it clear that the out-turn of revenue under this head will show a surplus on my Budget estimates. The duties on liquor, tobacco and entertainment, together with the Purchase Tax, are mainly responsible for that prospect. As regards the Inland Revenue, about 40 per 396 cent. of the Income Tax and a good deal of the Excess Profits Tax has yet to come in, and I can make no prophecies. I feel however that I can rely upon a continuance of the help which I have already received. I am confident that the taxpayers will continue to show the same public spirit as in the past and, recognising our vital needs, will pay their taxes promptly. I should like to add a word about the published figures of receipts from the Excess Profits Tax. The figures for the first nine months of the last financial year include substantial sums—
§ The Chairman
I would point out to the right hon. Gentleman that he appears to be raising a matter which is for Committee of Ways and Means, and that we are now in Committee of Supply.
§ Mr. Benson (Chesterfield)
On a point of Order. On your own suggestion, Colonel Clifton Brown, we are taking these two Votes in one Debate. Surely that tends to extend the scope of the discussion.
§ Sir K. Wood
I can take the opportunity of making a statement on the Excess Profits Tax side of the matter, perhaps in answer to a Question at a later date, if that is necessary. I understand that the Committee wants to proceed to other Business, but before concluding I would like to stress again that the main effect of our war expenditure is to increase purchasing power particularly in the lower ranges of income. It is not only that the total of such purchasing power has been increased; the incomes of many millions of individuals has risen appreciably, on the average. I would recall to the Committee that we have now for a long time stabilised the cost of living and that the prices of many goods and services which do not enter into the cost of living index, have been controlled. In this House and outside attention is often called to the further field of uncontrolled goods, the prices of which have certainly risen appreciably. I think it would be a misuse of language to suggest that these cases of higher prices mean that we are suffering from an advanced stage of that disease which is generally referred to as inflation. Some of these uncontrolled goods are, certainly, things which most 397 people must buy at one time or another and a rise in price is a matter for regret.
It may well be that there will be some extension of the field of price control, but in any case I do not think we must exaggerate the importance of these particular high prices in comparison with the much larger and more important field in which price control is already operative. As regards some of the uncontrolled goods, so far from high prices being a matter for anxiety, they have the positive advantage of being a deterrent of unnecessary expenditure. I would add that in such cases everybody has the remedy in his or her own hands, that is, to refrain from buying, and that applies both to the larger and the smaller income. We are precluded by our Standing Orders from discussing on this Vote the matter of Savings, otherwise I would have said something about it. But I would appeal to everybody who is concerned in this matter to regard it as a high duty at any rate to refrain from unnecessary expenditure at this particular time.
Looking at our war expenditure as a whole, I am reminded of a comment made by a biographer of one of my famous predecessors in office. He referred tothe enormous truth that Budgets are not merely affairs of arithmetic but, in a thousand ways, go to the root of the prosperity of individuals, the relations of classes and the strength of kingdoms.Times have changed since then, and the great questions of the day are not what they were, but Lord Morley's comment is, in essence, even truer of our war-time financial arrangements than it was of any Budget of the 19th century. The measures which we have taken against inflation are safeguarding the well-being of all our citizens. The universal and ready acceptance of sacrifices has drawn our people closer together than ever before; and I would say that in this great struggle for freedom, the general soundness of our finance is definitely adding material and moral strength to this Kingdom.
§ Mr. Pethick-Lawrence (Edinburgh, East)
The Committee has listened with great interest, as it has shown by its attention, to the Chancellor's speech and to the facts which he has been able to give us. There was one subject which I think would have come well within your Ruling, Colonel Clifton Brown, and which perhaps the right hon. Gentleman might at 398 some future time see fit to make some remarks upon—I refer to the subject of Lend-Lease. We heard with great interest the remarks which Mr. Stettinius made in the United States on this subject. He pointed out that Lend-Lease was now a two-way arrangement, and that America owed to us a considerable debt for the services which we were rendering to them, and that although, by the terms of Lend-Lease, no money debt was incurred, that was an obligation to set on the other side. Perhaps at some future time the Chancellor of the Exchequer will tell us how far the services we are rendering to the United States, and probably to other countries, constitute a substantial increase in expenditure, which will affect the daily figure which he gave us in one part of his speech.
I do not propose to say very much, because I know it is the wish of the Committee to conclude this part of our business quickly, but we cannot let this opportunity go by without noting the revolutionary change in the outlook of the war since the last Vote of Credit was moved and carried. Not only have there been the great military successes in North Africa and in Russia, but perhaps even more significant is the change of tone in the comments upon the war inside Germany and Italy. There they have begun to speak in terms of a war of survival, instead of a war of victorious conquest. We may be sure that they are not making those statements to their own people without good cause. But I hope that neither the country not the House, nor the Chancellor of the Exchequer, will be lulled into any false sense of security thereby.
Great hunters have told me that their moment of greatest danger is when they await the charge of the wounded beast. At that moment all the timidity, caution, and prudence of the beast are thrown aside, and unless the hunter is wary he may in a moment of success meet grave injury, or even death. Our position is somewhat the same. Germany is wounded, but Germany is still full of vigour and capacity to fight. Her war machine, mishandled though it has been by the intuitions of Hitler, is nevertheless exceedingly powerful. Her people at home and her soldiers in the field are still prepared to make incalculable sacrifices to meet their obligations, as they see it, to their Fuehrer. We know quite well— 399 we have been told officially—that the U-boat menace, instead of being overcome, is increasing.
This is therefore the time for the peak of our sustained effort to be reached. I trust that the Chancellor, although relaxing none of his vigilance against waste or misuse of the money which the nation has entrusted to his care, will stint nothing in order to secure victory and to accelerate its achievement. Our people in these islands are heavily burdened; they have great toil to do in the factories, they have large burdens of taxation which the Chancellor of the Exchequer has put upon them; but I am convinced that they realise, as we do, that their hardships are light compared with the grave perils on the battlefield, on the sea, and in the air, and with the tortures to which subject Europe is having to submit. They will respond to the lead which this House and the Chancellor give them, and they will work and bear sacrifices in order to achieve an early end of the world misfortunes with which we are confronted.
§ Sir Frank Sanderson (Ealing)
I rise to make one point for the consideration of my right hon. Friend the Chancellor of the Exchequer. As always, he has given us interesting and comprehensive figures relating to what I would term the National profit and loss account. He has described the income which he has received and the expenditure which is likely to be incurred. I would suggest that the time has arrived when we might reasonably expect some form of comprehensive balance-sheet. It is wrong to assume that the figures which we have heard to-day represent expenditure which has no asset side to it. In a time of war my right hon. Friend uses a considerable amount of that expenditure on what are real assets. He purchases land and buildings and machinery, and he also purchases and finances other industries. He purchases raw material and hands that raw material to our great industrialists, to be converted into manufactured commodities for war purposes. But we never see any set of figures showing the value of these assets, which in the aggregate amount to a vast sum. Only to-day my right hon. Friend stated that in regard to the War Damage Insurance Fund, he shows the total amount paid out to the owners of properties that have sustained 400 damage but he does not present to this House a balance-sheet showing the amount of money which he has received in the form of premiums for the insurance, and whether the transaction to any given period of time shows a profit or a loss. Merely to show the amount my right hon. Friend has paid out is very misleading. I believe that the right hon. Gentleman has received more money in War Damage Contributions than he has paid out, but, as I have stated, we see only one side of the transaction. Will my right hon. Friend consider presenting to the House some form of balance-sheet, even though it be a balance showing only those assets which he knows at some time or other he will be able to liquidate, the proceeds of which he can offset against the total cost of the war? This figure might conceivably be several thousand millions of pounds. We have no idea of the amount which has been expended to date upon what will remain a tangible asset which at some time or other can and will be liquidated by my right hon. Friend. In the light of what I have said I will ask him to consider giving some form of balance-sheet in addition to his analysis of the cost of the war, in his next Budget statement.
§ Mr. Lewis (Colchester)
We vote these immense sums of money not only for the purpose of bringing the war to a successful conclusion but of winning it as quickly as may be, but it seems to me that in one respect we are neglecting our opportunities. I refer to the bases in French territory being used by the Germans for furthering their submarine campaign. I fear that, from natural reluctance to destroy French property and take French lives, we are failing effectively to prevent the Germans from using those bases. It may be true that when a submarine goes into Lorient, for example, it goes into a concrete emplacement where it cannot be got at, but what would be the use of it if we had converted Lorient into a heap of rubble?
§ Mr. Stokes (Ipswich)
Is the hon. Member aware that several very severe attacks have been made on Lorient in the last few weeks?
§ Mr. Lewis
Certainly I am, but my complaint is that these raids have not been serious, continuous, or frequent enough either on Lorient or on other bases. It may be true that the result 401 would be a loss of many French lives, but it is in French interests that the war should be made shorter. I urge that we should take that means of shortening it. Nothing is more likely to prolong the war than even partial success for the submarine campaign. The opportunity is there, and I hope that the Government will not hesitate, despite the incredible loss that it will bring upon the French people, to make those bases useless for the Germans.
§ Mr. Stokes
To-day is a splendid opportunity to reproach the Government for their waste of public funds, and I had intended to launch an attack on the whole question of tank production and designs because of the inefficiency of tank boards, past, present and, as it looks like, future; but I understand that a day is to be allotted for this very purpose, so that there shall be a full-dress Debate. In view of that fact, I do not propose to detain the Committee. One fact ought to be made known as widely as possible. It is that, certainly until six weeks ago—I do not know the exact position to-day—nobody on this Tank Board, which is responsible for approving the design and production of tanks, had any experience of tank usage in the field of modern war. It seems a perfectly staggering example of Governmental inefficiency. The trouble is that the people in possession are afraid to have anybody alongside them who really knows the facts, and that is not good enough when the lives of our soldiers are at stake. As I propose to defer further comment until another occasion, I would merely ask the Chancellor of the Exchequer to make representations in the right quarter so that this glaring inadequacy shall be put right at the earliest possible date and somebody shall be appointed on the Tank Board who has used tanks in the field and will see that our public funds are not wasted.
§ Sir Adam Maitland (Faversham)
It would be unfortunate if the remarks just made by my hon. Friend were not reinforced from some other quarter of the Committee—although he raises many hares on many occasions. I do not necessarily support all his observations with regard to the production of tanks. The Chancellor of the Exchequer indicated that there had been some improvement in the condition of our financial affairs in recent months but it would be entirely fallacious to assume that everything is as 402 good and economical as it might be. The House of Commons is the traditional custodian of the public purse, and should insist upon the importance of the Government exercising the greatest prudence and caution in the expenditure of public money. Money is a very important weapon of war, and there will be important consequences if money is now wasted. I sometimes think we are so accustomed to talking in terms of millions that we do not get a comprehension of what they really involve.
To some extent to-day, our national finances are being run as something like Mr. Macawber finance. It can be no satisfaction to us that we are trying to balance the Budget by the assistance in the balancing of a tremendous amount of borrowings or Savings. We are in fact spending capital and are building up a tremendous number of I.O.U's which sooner or later will have to be honoured. I would tell my right hon. Friend that there are still serious matters which ought to be remedied in our war expenditure. If they are not remedied, they will affect our post-war conditions as well as the present position. I understand that 1943 is to be a peak year in production and output as well as in expenditure; there are many matters to-day on which greater Government action should be exercised. Let me give one illustration. The Minister of Labour has announced that we are to have a great transfer of labour; one of his difficulties will be accentuated by the great differences in the wages being paid, some of them adding unnecessarily to the cost of war production and indeed to wasteful expenditure. The task of the Ministry of Labour will be a particularly arduous if not an impossible one if such difficulties are not dealt with. These are practical matters the Government have to face, and they should seriously consider with greater courage than hitherto shown the stabilisation of wages. Hon. Gentlemen opposite the Government may not like to hear it, but wages are one of the most important factors in our costs, and excessive wages in war production lead to unrest and disturbance in many important industries.
I would ask the Chancellor of the Exchequer to consider whether it is possible, in connection with the next statement which he makes, to present something in the nature of a statement of the nation's wealth. I believe it would be a colossal 403 figure and would show that in spite of our great losses during the war we still have enormous resources. It should cover a larger field than that of capital expenditure on war, as suggested by my hon. Friend the Member for Baling (Sir F. Sanderson) and would be a welcome addition to the statements which the Chancellor of the Exchequer makes from time to time. It would be of great assistance in relation to post-war problems and in demonstrating to the world generally our ability to face post-war problems.
§ Mr. A. Edwards (Middlesbrough, East)
The hon. Gentleman has stated that wages are the most important factor in costs and rather suggested that they cause the increased cost of materials. Would he say whether wages are actually caught up in cost in the increase in cost of living, and, if so, by how much?
§ Sir A. Maitland
I would not like to answer that specific question without consideration but would like to answer the question by giving an indication of what is in my mind. In regard to one particular industry, the bonus rates are something like 450 per cent. over the basic rates, and when attention was called to the fact the answer was that it was not possible to do anything because of an agreement between the master federation and the trade union whereby a rate, once fixed, could not be altered. In my mind was the thought that such a case called for Government intervention.
§ Mr. Benson (Chesterfield)
I should like to ask the Chancellor one question relating to the reorganisation of the Central Office of the National Savings Committee. I do not propose to raise any question about national Savings, but purely the question of the organisation itself. As the Committee will remember, the right hon. and gallant Gentleman the Member for Westmorland (Colonel Stanley) was some little time ago appointed to the chairmanship of the Committee, and rumour had it that the purpose was to overhaul the machine and to try to stimulate the somewhat medieval pace with which that office worked. Unfortunately, after the right hon. and gallant Gentleman had been there about six or seven weeks, he was appointed to another position. I say "unfortunately" from the point of view of the National Savings Committee. I would like to know, first of all, whether 404 he has made any report to the Chancellor and, secondly, whether the Chancellor proposes to appoint someone in his place to continue this work of stimulation.
§ Mr. Wootton-Davies (Heywood and Radcliffe)
I would like to follow for one moment my hon. Friend the Member for Faversham (Sir A. Maitland), who spoke about the danger of wages. This is not a popular topic. The country supplies this money to the Chancellor and will supply him in unlimited amount. It is one munition of war which nobody will restrict, but a time is coming when there will be competition for a commodity which we cannot increase, and that is labour. My hon. Friend has pointed out that if the amount paid for labour is not regulated in some way, inflation or something like it is bound to ensue. I had a little thing brought to my notice. It is an advertisement for labour from a firm who describe themselves as Filter Media Manufacturers. It offers boys straight from school 1s. an hour to learn a trade; a labourer 3s. 2½d. an hour; and a millwright 5s. an hour, for a 44-hour week. It says that it is necessary Government work and that these positions are permanent now and in peace-time, that workers of between 40 and 50 years of age are required, and that applicants must now be in receipt of 50 per cent. above Union rates. I am not attempting to say that these wages are too high or too low at this moment, but I do want to draw the Chancellor's attention to this matter. If this is allowed to go on and people on necessary work are allowed to compete in a market which is limited, it will start a spiral which will be difficult to control.
§ Mr. Molson (The High Peak)
I should like to support what has been said by my hon. Friend behind me and by the hon. Member for Faversham (Sir A. Maitland). I think the Chancellor of the Exchequer will probably have studied the very remarkable speech of my right hon. Friend the Minister of Labour when he replied to the Debate on the stabilisation of wages. In that speech he argued from his great experience of the very great difficulty of stabilising wages because he was afraid it would involve interfering with the long established machinery of negotiation between the trade unions and the employers' organisations. Those of us in this House who have argued in favour of the need for 405 some stabilisation of wages have not wanted in any way to break up the existing system of negotiating them in detail, but in view of the fact that more than 54 per cent. of the total production of the country is now being paid for by the Exchequer, we argued that it would be proper for the Exchequer to have representation in any negotiations which did take place, and that the general policy should be accepted that as long as the cost of living was stabilised at 30 per cent. above the pre-war level wages should also be restricted. No one has argued on economic grounds in favour of a policy of that kind more than the hon. Gentleman the Member for Chesterfield (Mr. Benson), although he did put forward certain conditions which I think any fair-minded man would say carry very great weight. I hope the Chancellor will consider again whether it would be possible for him, as the guardian of the public purse, to reopen the matter with the Minister of Labour.
In the whole of that speech by the Minister of Labour he never answered the economic argument which had been used in the Debate, which was, put in two sentences, just this, that at a time when the President of the Board of Trade is reducing the consumption of production goods for the civilian population and when there is therefore so much less available to be purchased, if the purchasing medium in the pockets of the people is increasing all the time, there is an almost uncontrollable force making in the direction of inflation.
§ Mr. Woodburn (Stirling and Clackmannan, Eastern)
Would the hon. Member agree that if this money is being paid to the population and they cannot or do not spend it, actually it is in effect a promise that they will be paid after the war is over and that in fact it does not interfere with production at the moment?
§ Mr. Molson
That is so, providing it works entirely satisfactorily. That is why I have no objection to payment in a form encashable after the war. Anything which will encourage the purchase of goods after the war is extremely desirable.
Would the Chancellor give an answer to this point? Shortly before Christmas he came before the House and obtained authority for the further large increase in the fiduciary note issue. He expressed 406 the opinion that it was not a symptom of inflation and that when the Christmas period was over it would be possible to reduce the fiduciary note issue by that amount. I have not seen that that reduction has taken place. If it has not taken place, it would seem to indicate that we have taken another substantial step in the direction of inflation.
§ Mr. Woods (Finsbury)
I may be grossly out of Order, Colonel Clifton Brown, but I would rather like to express the appreciation of the back benchers in your appointment and in your showing us that even the Chancellor of the Exchequer can be out of Order. We greatly appreciate it.
The latest speeches have most concentrated on the vigilance of the Chancellor with regard to expenditure on wages. I think it is an item which can be grossly exaggerated, and very often quite exceptional isolated cases come to the attention of Members of the House which may perhaps or may not be justified. I think it is these exceptional cases which provoke most dissatisfaction. For example, I heard recently of a couple of schoolboys who had left school going back to see their headmaster and boasting of wages higher than their teachers were receiving. Cases like that are quite exceptional, I think, and might be dealt with in the interest of standardisation of wages. In the question of the circulation of money the volume of circulation is a matter of vital interest to the Chancellor of the country. Perhaps the full benefit of it cannot be taken advantage of as in former times, when firms were advising us to buy this or that which we might or might not have wanted. Firms are now advising us to cut down expenditure. I can conceive in relation to the post-war problems that the volume of the purchasing power of the people will be the most vital factor in meeting the problem of unemployment, and I hope that in his vigilance in this connection, the Chancellor will not be too much led astray by the enthusiasm of the representatives of the employers.
An hon. Member raised one point which should receive the Chancellor's close consideration, namely, the whole form of the presentation of his figures. It does not arise so much on a mere Vote such as we are dealing with to-day, but when it comes to the Budget figures I think that the 407 Chancellor and the Treasury should look at the whole question of national finance much more in terms of a business undertaking than as a mere spending of public wealth. I am satisfied that vast potential assets are being built up which should be taken into consideration even now in the assessment of his demands oh the public for money.
I have two more points to make. One is that while I appreciate what my right hon. Friend in front here said in expressing appreciation for the vigilance of the Treasury in proper economies, I still feel that there is a considerable scope for cutting down expenditure. It is easy for us here in Committee to assume that the main burden is the burden of wages, but a vast proportion of the expenditure is not just wages, and if economies are to be achieved, it seems to me we have to set ourselves a much higher standard of getting value for money in the Service Departments. It is there where the bulk of this expenditure is going. I have had experience and observation of the working of the military machine, and I have come to the conclusion that in some commands at any rate if there are alternative ways of doing things the officer in charge who has the deciding voice has a very simple process of deciding which is the best way. He decides that that which costs the most money must be the best. That is ridiculous.
There are many ways by which we could get much more out of our expenditure. I will give one example. A vast airfield was taken over which was an airfield in the last war. It has only been party used in this. Therefore, it had to have a number of blocks. There were many trees with vast spreading branches, and it would have improved them if these had been removed and would have given a job to a number of men stationed there. Instead of doing it in that way, vast expediture has been incured in buying secondhand and derelict cars and putting them all over the field, while on the awnings close by are notices urging the necessity for scrap iron and so forth. It is obviously a subject for a humourous cartoonist I suggest to the Chancellor in this connection that he should consider the relative value for money which is secured in different countries. I am not asking him to take America as a model, 408 but I think he might with some advantage get into closer touch with the Russian authorities, for I am satisfied from the reports we get and the actual financial strength of Russia before the war that what they have done is simply miraculous. They have not the vast resources we have financially and so forth, demonstrating that it is possible to achieve satisfactory results with a lower expenditure.
On the whole, the Admiralty have a much better record, but even there there are marginal cases where there might be a fuller use of personnel and some discouragement given to extravagance. Only last night I travelled down from the North in a compartment full of Service boys, and among them were a few naval ratings returning to a certain depot. There was one of five years' service, and his "grouse" was that he was doing nothing. They go into a certain yard and are supposed to do things, and they muck about and pass the time away and make tea and knock off in the afternoon. He was fed up to the teeth. In present circumstances it may be that there are reasons for it, and I would not take notice of it if it were an individual case, but in the discussion which transpired that was the view of what was happening at that depot. Although it may be a small thing, it is something which requires careful consideration. It would perhaps not achieve much economy, but it would help public morale and people would feel some satisfaction in making their contributions to the Exchequer if they had the feeling that every effort was being made to see that full value was got for the expenditure.
I suggest to the Chancellor of the Exchequer that it would be a good thing if the impression was given that he looked upon the Select Committee on National Expenditure as a real ally. It is obvious from some of the publications that some of the Service Departments that have been investigated rather resent the attentions of this Committee. The Committee are doing a very valuable work indeed, and all strength to their elbow. It is not an easy thing in war-time to stand up against a Service Department, but we are satisfied as Members of this House that the members of that Committee are representative of public opinion and are justified in the work they are doing, and the results amply justify them. If the Chancellor 409 could make it clear to all and sundry that he looks upon that Committee as a sort of watch dog and that his relationships with them are harmonious, they would be encouraged to be even bolder in their investigations.
§ Mr. Woods
If they are outside the terms of reference, it is up to the Chancellor of the Exchequer to put them inside so that he gets full benefit from their activities. I would suggest, if I am in Order, that the expenditure is now so colossal—and nobody knows what its duration is likely to be—that many of us feel that the whole of our orthodox financial system, which necessitates Votes of Credit and immense taxation, is being stretched to the limit. I have an indication that I am on the borderline of Order, but I have said enough for the Chancellor of the Exchequer to appreciate that it is up to him to give a lead in the introduction of any innovations necessary to strengthen his hand and enable the country to carry this great campaign to a successful conclusion.
§ Mr Cecil Wilson (Sheffield, Attercliffe)
A good deal has been said with regard to waste, and there are cases continually occurring in which that is emphasised. A short time ago I was seeing one of my friends in Sheffield, and he was complaining of an enormous amount of waste going on. He proceeded to say, "You know, I am not a teetotaller. I frequently go into a licensed house, because I like a drink of beer, but I cannot go into a licensed house at all without seeing men pull handfuls of notes out of their pockets and treat everybody all round." That may be a very good thing for the Chancellor of the Exchequer; it is a very bad thing for the morals and future of the country. There ought to be some means found for dealing with the matter, not from the total abstinence point of view, but from a really rational and reasonable point of view.
There is another case to which I would like to refer, dealing with waste. A month or rather more ago I received a letter from a large firm in Sheffield doing something like 100 per cent. of war work, and the complaint they made was that for some months they had been trying to get a reply from the Ministry of Supply in regard to 410 a machine which they wanted and had been unable to get. I went through the correspondence and found that, on the side of the firm, over a period of months there had been continual letters sent asking for a reply to their first letter, and on the other side there were four letters, and three of these were simply a repetition, asking for information which had been supplied again and again. I wrote to the gentleman at the Ministry of Supply who was responsible, and I put before him three alternatives. I said, "Do you wish me to raise this matter with Sir Andrew Duncan, or to raise it in the House, or can the firm have some reply?" The matter has been settled. The machine they want is to be supplied. But you cannot allow that kind of thing, with repeated letters being addressed and firms, anxious to do the best they can, being held up in that connection.
There is one other point I want to raise, and in that I am possibly finding myself entirely alone. The Chancellor of the Exchequer will get his money, there is no doubt about that. He said at the close of his speech that what he was doing was for the prosperity of the individual and for the well-being of all citizens. A good many on both sides of the House have protested from time to time in certain directions and have expressed a very strong view that something ought to be done on the question of pensions and allowances in various directions and nothing is done. We had the answer to-day to a series of Questions simply showing that, while we can spend £1,900,000,000 upon war, we cannot spend any adequate sum for the relief of the people in our country who have borne the burden and heat of the day for a long series of years. I do not want to discuss that at all, because I should probably find that I was not quite in Order. When you are talking about spending £1,900,000,000 do realise, if you can—I am not quite sure you can—that there are people, who are not perhaps very vocal throughout the country, who are increasingly coming to feel that you do not mean a word of what you say—I am not referring to any particular part of the House—when you say they ought to have more money. We owe a debt to them which ought to be paid, and which we ought to be able to pay when we are spending such enormous sums of money as we are doing to-day.
§ Sir K. Wood
Perhaps it would be convenient for me to answer a few points that have been raised; it will not necessarily terminate the Debate, and my hon. Friend the Financial Secretary will deal with any further points. It will, however, be convenient for me if I say a word or two now. The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) referred to the important and very interesting statement that appears in our public Press this morning about "reciprocal aid." In that statement, which I am sure we all read with exceptional interest, Mr. Stettinius, who is concerned with this in America, made a statement of the help which had been given by this country. The right hon. Gentleman the Member for East Edinburgh invited me on some occasion—not now—to amplify that statement and to inform the House of Commons what has been done, perhaps in more detail that has yet been presented. I will give consideration to that request and see whether there will be a convenient opportunity when I may say something further.
My hon. Friend the Member for Ealing (Sir F. Sanderson) suggested that I might perhaps present a more comprehensive balance-sheet, and I will consider that, although the matter is not without its difficulties. It is very difficult indeed to estimate the value of some of the capital equipment that we are acquiring at this time, and I would not care to be asked to put a value to many of the things upon which we have had to expend large sums of money in connection with the war. I only say that by way of a hint as to the difficulties immediately you begin to approach this matter. I suppose that no one has given such full statements and particulars to the House of our financial affairs than I have done during the last two or three years and I am sure the Committee will give me credit for this. I hope to be able to continue that information in my forthcoming Budget.
My hon. Friend the Member for Colchester (Mr. Lewis) made reference to the conduct of the war in connection with submarine bases, and so did the hon. Gentleman the Member for Ipswich (Mr. Stokes), who returned to his familiar theme of tanks. In reply to my hon. Friend the Member for Colchester, I will convey his suggestion to my right hon. Friend the First Lord. I am very grateful to all my hon. Friends and the hon. Member 412 for Faversham (Sir A. Maitland), the hon. Member for Heywood and Radcliffe (Mr. Wootton-Davies), and the hon. Member for Finsbury (Mr. Woods) in calling attention to instances of waste and extravagance. It is right that these matters should constantly be brought before the House of Commons and the public; tremendous sums of money are being spent, and one cannot help being suspicious that a certain amount of money must be wasted. Anything which in a proper and careful way calls attention to such cases of waste and inefficiency will certainly be helpful to me. The hon. Member for Finsbury need be in no doubt as to where I stand with respect to the representations of the Select Committee on National Expenditure. I hope to make some reference to them on the third Sitting Day; I consider that in many respects they are being very helpful in connection with the Civil Service. I regard them as strong allies in the war against inefficiency and waste, and I always approach their reports, particularly from my own point of view, in that spirit.
The hon. Member for Chesterfield (Mr. Benson) referred to the organisation of the National Savings Committee and to the fact that my right hon. Friend, now the Secretary of State for the Colonies, occupied the position of Chairman of that organisation. I am not permitted under the rules of Order to talk about Savings, but as regards the chairmanship of the Movement, I intend to fill that vacancy. I want to have a little time for consideration, however, because it is an important position, and it is necessary for the future of the Movement that I should get a first-class, efficient man to take this post. I may say that I had several conversations with my right hon. and gallant Friend the Secretary of State for the Colonies before he took his present office, and I have no doubt that I and the Movement will benefit from the suggestions which were made. I was, of course, disappointed on one count that my right hon. and gallant Friend had to relinquish that post, but, on the other, I was gratified that he was becoming a Minister of the Crown.
Several hon. Members raised the question of wages and the effect they have upon our social economy. I do not think I can add very much to what I have previously said, but I shall have something to say when I present my Budget. The Government's policy remains as stated in 413 their White Papers. I think my right hon. Friend the Minister of Labour made a very powerful and convincing defence of the present policy of the Government. It is true that one could raise objections and criticisms, but on the other hand, you have to take into account its general effect and counter-balance what could be a disadvantage with the tremendous advantages to the nation of the policy which has been adopted. I would, however, say again that our stabilisation policy is dependent upon everybody acting reasonably—employers and employed alike. What has weighed very much with me in adhering to this policy has been the tremendous advantage that has accrued to the nation as a result of the peace and good will in industry which have existed during these three years. This has been of inestimable value to the nation. Stabilisation policy, with all its advantages, would have to be abandoned if there was a breakdown on the wages side.
One hon. Member raised the question of the fiduciary note issue. I do not think he will find that I gave an undertaking that there would be any reduction, but it is true that a great deal of the extra currency which went out before Christmas has returned from circulation. I think it is unlikely that we shall actually reduce the fiduciary note issue itself. I am of the opinion, which I have expressed on several occasions, that I do not think an increase in the fiduciary issue is direct or tangible evidence of inflation. It is largely occasioned by a change in the habits of people. A great deal more money is being paid out in cash to-day and what is unfortunate—and I have endeavoured on public platforms and in this House to counteract it—is that large sums of money are being kept by people in their pockets, hidden away in tea chests, and such like. It would be far better if this money was placed somewhere else.
I will carefully study all the suggestions which have been made to see if I can profit by any of them. If I can do so, I will. These large sums necessary for war expenditure are a considerable strain on the national economy. I will not argue with the hon. Member who said that the longer the war lasts the better it is for everybody. That is an impression which I cannot for one moment accept and which others would not accept. It is obvious 414 that the most expensive war in history is a serious drain on the finances of the country, and we shall have to take account of that in our future policy. I hope the Committee will now give me this Vote, because I understand that some Members are anxious to get on to the next Business.
§ Mr. Stokes
I understand that in the early part of the right hon. Gentleman's reply he did not deal with the specific point that I put to him.
§ Mr. Stokes
No, the Tank Board. The Chancellor is responsible for the control of money, and I want to ask whether, in view of the fact that this national scandal still obtains—that no competent person with experience of tanks in the field is on the Board—he will withhold from the Ministry of Supply the money he provides until a competent person is found? Will he undertake to do that?
§ Mr. A. Edwards
I want to raise with the Chancellor the question of stabilisation. He tells us repeatedly that the Government have a policy of stabilisation but I put it to him that they are, on the contrary, deliberately following a policy of inflation. On this point of wages, I would like the Chancellor to keep this fact in mind. We are told that the cost of manufactured goods is constantly increasing mainly because wages are increasing. I do not think that is true; there is nothing to support the suggestion that wages have ever caught up with the increased cost of living. The Chancellor's policy has increased the cost of manufactured goods and, incidentally, the cost of living. Wages have followed that increase, but, in fact, have never passed it. It is only recently that they have caught up with it. When hon. Members talk about the effect of men working over-time 415 and getting more money, I ask the Chancellor to keep in mind the fact that other interests are asking him for special attention and concessions to wasting assets. When a man works over-time there is a wasting asset and he is entitled to extra earnings. While earnings have increased, basic wages have not increased and it is an entirely wrong impression that increased wages are responsible for the increased cost of manufactured goods. In fact, it is not true.
I would draw the Chancellor's attention to a simple example. Last week the price of coke was increased by 1s. 6d. per ton. The Chancellor has to find practically all the money for all the goods that are manufactured in steel in this country. Instead of absorbing the increased cost of coal or coke himself the Chancellor allows it to be put on and there is not a single thing manufactured in this country that will not have to be increased in price as a direct result. In the end the Chancellor pays it. Some of the officials of his Department smile at me when I complain and indicate that inflation is rather a good thing for the Chancellor. Let the Chancellor tell us that he profits by inflation and wants it; not warn us against its dangers while deliberately encouraging it. There is one other point I want to mention—I have left it to the last because I shall probably be ruled out of Order upon it. The Chancellor said that people have money in tea chests. Well, those who have it in tea chests or in their stockings are the most patriotic of people, because they are lending to the Chancellor free of charge—
§ The Chairman
I failed to stop the Chancellor of the Exchequer dealing with that matter because I did not catch what he was saying, but it is out of Order on this occasion.
§ Mr. Edwards
Then I must pass on. I will ask the Chancellor to take steps to stop the manufacture of certain goods so that people who have extra money will not be able to purchase and will thus, automatically, save. It is nonsense to allow people to advertise a wide range of goods, in newspapers and magazines—which, incidentally, must be making a fortune—while the Chancellor, on the same pages, is appealing to people not to spend their money. It is a waste of paper and man-power. The Chancellor 416 has all kinds of control and he should discourage manufacturers from making these goods.
§ Question put, and agreed to.
That a Supplementary sum, not exceeding £900,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1943, for General Navy, Army and Air Services and supplies 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.