MISCELLANEOUS FINANCIAL PROVISIONS BILL

HC Deb 01 March 1946 vol 419 cc2257-96

Order for Second Reading read.

11.5 a.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I beg to move, "That the Bill be now read a Second time." This Bill, as the Title indicates, covers a number of financial provisions, varied in character, for which it is essential that we should have the approval of the House. Most of the provisions are, I think, fairly clearly set forth in the finan- cial and explanatory memorandum, and I hope that will lessen the amount of explanation which it is necessary to give from this Box. Some of these provisions, of course, arise out of the fact that we have just emerged from six years of desolating war, and there are a number of things to be tidied up. This Bill provides for the tidying up of some of them. Clause I gives additional powers essential to carry out the provisions of the Bill, and partly continues and partly extends the borrowing powers of the Government. As to the continuation of the powers which already exist, the House will remember that each year from 1939 onwards it has been necessary to pass a National Loans Act to give the Treasury power to borrow sums necessary to meet the Supply which this House has granted to the Government. That, of course, was necessary at that time to meet, in effect, the Budget deficit. Subsection (I, a), of Clause I gives these powers for the next financial year, that is, 1946– 47, and, as in previous years, the power is to borrow up to the amount of the Supply granted for the financial year. We shall not, of course, require the whole of the money, but, as in years gone by, these powers have been taken, if necessary, to raise the whole of the sum voted in the Committee of Supply. The actual figure to be borrowed will be disclosed by the Chancellor of the Exchequer when he opens his Budget in April next. Also, as in previous years, we desire to take power to borrow an additional–250,000,000 in order to cover any possible gap that might occur between the end of the financial year 1946– 47 and the next National Loans Bill, of whatever Bill is introduced in order to meet the need. Subsection (2) of Clause I is necessary for technical reasons.

As the House is aware, when the discussions took place in Washington last autumn a settlement was reached between the two Governments as to claims in respect of Lend-Lease and reciprocal aid and other matters which arose out of the joint running of the war. Under that settlement, as the House will remember, the United Kingdom undertook the liability to pay a sum approximating to about 650,000,000 dollars spread over a period. Although that particular form of liability— payment over a period for goods and services received— is clearly in 'the nature of borrowing, it is not tech- nically covered by the existing National Loans Acts, and, therefore, this Subsection is thought necessary to give the Treasury power to meet the liability in the same way as it would meet any liability on cash borrowing under those Acts. Then it is also possible that some similar arrangement may be made with the Canadian Government. In fact, we have people over there now discussing the matter, and, therefore, this Subsection will not only cover Lend-Lease arrangements come to with the United States, but it will cover also any arrangement with the Canadian Government and, in fact, with any other Government should similar settlements be made.

Coming to Clause 2, which deals with war damage payments to be made out of the Consolidated Fund, may I say to begin with that this Clause does not in any way affect the amounts or conditions of such payments in individual cases. As the House knows, under the War Damage Act, 1943, powers are taken and schemes laid down, and the powers taken in Clause 2 do not in any way affect or alter those schemes or the financial basis of those schemes. They remain unaltered. The present Clause merely alters the source from which war damage payments' can be made. The Act of 1943 provided that they should be paid from the annual Votes, and in fact, they have, during the war in so far as they have been paid, been paid out of Votes of Credit. That was in the circumstances a reasonable and convenient way to deal with such payments as had to be made during the war, when 50 per cent. at least of the amount of our annual expenditure had to be met by borrowing. In the years to come it is hoped. that we shall attain more nearly to balance or approximately balanced Budgets over at any rate a fairly narrow period of years, and I think the House will, therefore, agree that it would be unfair to try to meet out of Revenue the very large payments which will fall to be paid for war damage of one kind or another. I think the House will agree that it is in the nature of capital expenditure. That being so, it will be appropriate and reasonable that the very large sums we shall have to raise during the coming years shall be met from borrowing and not from annual Votes. This Clause gives power to make that change and to borrow in that way. I might perhaps add that this fact will in no way diminish the power or the right of the House to query or discuss the administration of the War Damage Act. This can still be done on the various Votes dealing with the Board of Trade, and the War Damage Commission.

Subsections (2) and (3) of Clause 2 provide, as the House will see, that full accounts of war damage payments shall be prepared and audited and presented to Parliament in the usual way. Clause 3 deals with the Civil Contingencies Fund, and it may well be that the House would like to have a fairly full explanation of what we intend by the amount asked for today, and why we should ask for a sum of£ 250,000,000 under this Clause for this Fund. The primary object of this Fund is to meet temporarily any urgent unforeseen needs in anticipation of Parliamentary authority for the expenditure. The Government must come to Parliament, even though it may be after the event, for a Vote to repay such expenditure to the Fund. In other cases in the past, the Fund has been used to meet expenditure which, in due course, came under the authority already given by Parliament for recovery out of receipts of one kind or another.

The amount of the Fund is at present limited to£1,500,000, and in the conditions of the next year or so such a sum is quite inadequate to meet the demands which may be made on the Fund. After the 1914–18 war—in 1919—statutory authority, in the same way as we are asking for it now, was given to increase this Fund to£120,000,000 for about½ years. This time we think that£120,000,000 might not be sufficient, as the needs of the Fund, under present conditions, are very different from what they were at the end of that war. We are, therefore, asking the House to give us powers to borrow up to£250,000,000, so long as such increases are repaid to the Exchequer by 31st December, 1950. This power, of course will be used only when it is absolutely necessary, and there is no question of setting aside the whole of the£250,000,000 at once.

The purposes for which this Fund, when so increased, may be used are set out fairly clearly in the Clause. They fall under three heads. As from 1st April, Parliament will be asked to grant all supplies on ordinary Votes, and it will do so for some services for which, frankly, it is difficult, in the present disturbed conditions, to estimate requirements a year ahead. Some such Estimates are large. For instance, the Ministry of Food Estimate is£ 248,000,000, and that for the Control Office for Germany and Austria, is£80,000,000. The money for these services and others may be agreed on the original Estimate, but may fall short of the actual need as the year proceeds. Therefore, it has been thought appropriate—and we hope the House will agree—that we should have, as it were, a margin which can be used, although, of course, Parliament will keep full control of how that money has been used, and it will be essential for the Government to come back to the House and explain, and get authority for, what they had spent.

In addition, the Fund will, in effect, provide working capital for those Departments which, under statutory or other powers, already carry on trading activities. Examples are the Ministry of Food, again, the Ministry of Supply, and the Board of Trade. For any such Department Parliament may be asked, on an ordinary Vote, to vote a net sum for their activities during any year. This sum will represent the estimated excess of the Department's trading outgoings over their trading receipts. But at any given date during the year a Department may have to lock up in stocks a much larger amount than the net amount of its Vote for the year, because its receipts will only come in slowly as the stocks are actually sold. Departments must have some source from which they can draw some temporary working capital, and the Civil Contingencies Fund, in our view, is the appropriate source. If, over the whole year, as the months go by, Departments need to invest in their trading a net sum greater than has been voted by Parliament, the Government will have to come to the House and seek authority for a further grant. I would emphasise here that the Clause does not confer any new authority on any Department to engage in trading activities. They will have to work within the limits laid down by Parliament, (or which the activities have already been agreed.

Sir Arnold Gridley (Stockport)

Can the hon. Gentleman say whether capital expenditure contemplated by the Ministry of Fuel and Power on mechanisation— £150,000,000 to£300,000,000—when the coal industry is nationalised, will come under this Clause?

Mr. Glenvil Hall

No, for one thing the Coal Industry Nationalisation Bill is not yet through the House and we cannot legislate in advance for something which may never happen. As I understand it, the financial structure underlying the Coal Board which is to be set up will work in a rather different way from the trading activity of Departments like the Ministry of Food and the Ministry of Supply, and the Board's activities will not, in the same sense, be direct Government trading. In any case, we are not contemplating making advances to the National Coal Board from the Civil Contingencies Fund.

As I have just said, this Clause confers no new powers on a Department to engage in new trading activities other than those for which the House has already given its sanction. This Fund 'Will help to provide large working balances which some Departments necessarily have to keep in all parts of the world. Those balances, in our view, are much likely to be higher during the coining year than they were in the years before the war. Any expenditure under these heads will be brought to account in the Appropriation Accounts, in due course. It is very difficult to estimate the global sum that we may need under these three heads.

Mr. Oliver Stanley (Bristol, West)

Can the hon. Gentleman give some examples of the Departments which want large working balances, apart from the trading Departments?

Mr. Glenvil Hall

We have troops all over the world and trading missions, or we did have. We had a mission in Cairo, of which the late Lord Moyne was the head. Working balances will be wanted in India, and in other places. In the early post-war years there has to be a good deal of bulk buying of one kind and another, owing to the food situation. Without going into too great detail, I am sure the House will agree that these contingencies arise all over the world, and that it is essential that the Government should have working balances in order to meet the outgoings which may occur from time to time. Although under these three heads it is difficult to estimate just how much will be needed, we feel that the£250,000,000 asked for will be enough. But if it proves to be insufficient the Government will have to come to the House, and explain the circumstances and ask for an increase. As I have said, any moneys advanced in this way must be repaid by December 1950.

Clause 4 deals with the Defence Loans Acts, passed just before the war. Those who were Members of the House at that time will recollect that moneys borrowed for defence purposes were borrowed under what I may perhaps term somewhat unusual conditions. For instance, it was agreed that the moneys borrowed should be repaid to the Exchequer in the shape of annuities, spread over 30 years. It is felt by the Government that it would be rather illogical if now, having spent vast sums on the prosecution of the war, these Defence Votes continued to be liable to repay the relatively small sums borrowed under the Defence Loans Acts passed before the war. Therefore, we propose to relieve the Defence Votes of this liability, and I trust the House will think that it is reasonable, and agree to the change.

Clause 5 deals with a very different matter—the salary of the Comptroller and Auditor-General. The position of this officer is particular and peculiar. His salary is borne not on an annual Vote, as is the case with the salaries of most other officers and officials of the Civil Service, but directly on the Consolidated Fund. For many years his salary has been similar to that of the permanent head of a first class administrative Department. Recently, it was decided that the salaries of some of the higher officials in the Civil Service should be increased to£3,500. The salary of the Comptroller and Auditor-General was fixed, in 1921, at£3,000. It is felt that it is only right and proper that his salary should be brought up to the same level as that which the House agreed should be accorded to the permanent heads of Departments. Clause 5 will permit that to be done.

11.27 a.m.

Mr. Oliver Stanley (Bristol, West)

This is a complicated Bill which it is not easy to understand. We are grateful to the Financial Secretary to the Treasury for his explanations. I had hoped that perhaps he would feel himself able to deal with some of the wider issues raised by the Bill. This is, I think, the first time the hon. Gentleman has conducted a Bill through the House without having the threatening shadow of the Chancellor of the Exchequer beside him, and I hope that today he will be able to give a free run to his natural inclination to give the House as much information as possible on these financial matters. I hope that, in his reply, he will be able to deal with some of the wider implications of the Bill, which we intend to raise.

With regard to the general principles, if one can talk about general principles in a Bill which collects together a number of miscellaneous provisions—in regard to the trend of the Bill, hon. Members on this side of the House recognise the necessity of the Measure and certainly will not feel called upon to vote against it, but we are not so happy about some of the details, and even after the hon. Gentleman's explanation, we still feel a certain amount of anxiety. As the hon. Gentleman told us, Subsection (1, a) of Clause 1 repeats what has been common form annually during the war, although before the war it would have been regarded as a terrible financial heresy. It gives unrestricted power to the Government to borrow up to the full amount of the services needed for Supply. During the war, obviously it was impossible, when the House was asked for that authority, to give any estimate of how much they were being committed to, because, although theoretically this is for the whole amount of the Supply Services, of course, the sum is reduced by that amount which is raised by taxation. But, surely, in the first financial year after the war, it is a great deal to come to the House and ask hon. Members, in advance of any Budget statement, to provide unrestricted authority to borrow up to the full amount for the Supply Services.

Once this Bill has been passed, it would be possible for the Chancellor to come to the House in April and say, "I propose for this year to suspend all taxation altogether." The result would be that the whole of the£4,000,000,000 represented by these Estimates for the Supply Services would then, on the authority of the House, given in the Bill, be raised by loan. Now that we have passed into peace-time, it is a great deal to ask the House to part with powers on so little information. I hope that the hon. Gentleman, when he replies to the Debate, will be able to give some indication of the sort of proportion of the sums needed for Supply which it is proposd to raise by taxation and which, therefore, will reduce the liability which the House is incurring by the passage of this Clause. I am sure the hon. Gentleman will not think that his right hon. Friend the Chancellor will have any petty feelings, and will not in the least mind his anticipating a statement which his right hon. Friend may be making two months later, because it will always be possible to tell the Chancellor that the House really feels that the moment it is passing his authority is the more appropriate moment for a general survey of that kind.

I am not happy about the excess of£250,000,000. We have been told, as is true, that it has been included in every Bill during the war, but, of course, the hon. Gentleman will not bow to a precedent. He belongs to an iconoclastic Government. He has only to see a precedent to want to smash it. Surely he will give us some better explanation of the need for putting in£250,000,000 than the statement that it has appeared in previous Measures brought forward by previous Governments. He told us it has to be put in. because there may be an overlap. We have already dealt with the whole of the money that can possibly be required up to the end of this financial year. This amount of£250,000,000, which in the old days would have been considered a pretty substantial sum—between one-third and one-half of the total Budget with which we dealt when I first came to the House— is thrown in as a makeweight because, the hon Gentleman says, it may not be possible, before the end of the financial year, for the Government to make up their mind on what they want to do during next year and to come to Parliament for the necessary authority. I think that is really throwing about a little loosely an enormous sum of money. Surely, it is not too much to say, when dealing with a matter of this magnitude, that the Government should and must make up their mind, and come to the House again before the end of the financial year and before the other money voted in this programme has been expended.

I agree that in time of war the Government could never be quite certain. There might have been some terrible catastrophe involving the destruction of life and buildings which might have made impossible the sitting of the House at the time when it was proposed to ask for this money. But that, we hope, is a thing of the past, and surely the greatest danger we have to envisage in the next years is that either the Chancellor or his able deputy might suffer from influenza. Therefore, I feel that the Government are asking the House for a great deal when they ask it to vote£250,000,000 simply in case they cannot make up their mind before next April on the financial proposals they wish to make for the following year.

With regard to Clause 1 (2), I have no comments to make on the necessity for such a Clause. I should like to know whether any financial arrangements which might be necessary if we were granted the American loan would come under this Subsection? The hon. Gentleman referred to the American settlement of lend-lease, but that, of course, was an agreement made before the passing of this Measure. This Clause also deals with agreements that may be made after the passing of the Act.

Mr. Glenvil Hall

It does not deal with the American loan at all, but simply with the arrangement for the settlement of Lend-Lease which, as the hon. Gentleman knows, is quite distinct from the actual loan, which may or may not be granted.

Mr. Stanley

The only thing which aroused my doubt was that the settlement of Lend-Lease was made before the passing of the Act, whereas Clause 2, Subsection (2), refers to any agreement whether it is made before or after the passing of the Act, and we on this side should like to know what were the reasons for putting in the words "after the passing of this Act" which must presuppose that it will apply to some agreement other than the one to which the hon. Gentleman has referred.

Clause 2 deals with war damage payments both for property and for capital. It is perhaps fair that any future payments under this head should be regarded as capita] expenditure, certainly as far as house property is concerned. I am not sure whether it is equally fair to regard payments under the chattels damage scheme for the replacement of furniture as capital expenditure, but we were certainly delighted to hear, in view of some of the things we have heard occasionally from hon. Members who sit behind the right hon. Gentleman, the Chancellor of the Exchequer, that the Budget is to be balanced, and that after what I think he called "a very narrow period of time." It will give a great deal of comfort to people who fed that, if we are not going to try to balance the Budget now, in times of full employment—as we were told in the Debate yesterday—then the whole basis of the suggestion made in the White Paper on Employment of the late Government of a balanced Budget during good times in order to have an unbalanced Budget and borrowing to stimulate industry in bad times, falls to the ground. If we balance the Budget in good times, we are left with the leeway on which to relax when times become bad, and we are very glad to get that pledge of financial orthodoxy from the hon. Gentleman.

Next we come to the most difficult— though not the most important—of the Clauses of this Bill, Clause 3, dealing with the Civil Contingencies Fund. All of us have been familiar for years with the very useful though comparatively small work done by this Fund. It was limited to£1,500,000 and gave Departments an opportunity for immediate expenditure of money on a service which had not been covered by Estimate on the understanding, of course, that it would eventually be covered by a Supplementary Estimate. The sort of thing I have in mind where the Fund proves so useful relates to the Colonial Office. If there was, for example, a hurricane which did a great deal of damage in the Colonies, and it was desired to give immediate relief, there was no parliamentary authority for it, and to have awaited the vicissitudes of parliamentary time might have meant that it would have been a month, six weeks, or even two months before parliamentary authority could have been obtained, and by that time the relief would have been too late. This provision undoubtedly was of very great value. But when we look at the difference between the£1,500,000, which was all that was necessary to cover this kind of useful provision in the past, and the£250,000,000 which is being asked for now, it is clear that a wholly new character has come over the Fund and my hon. Friends and I wish to inquire whether it is really necessary to deal with all the matters to which the hon. Gentleman referred by an overall provision of this kind, where the House has to part with authority in ad- vance although, ex post facto, its authority has to be obtained.

The hon. Gentleman gave three classes under which these new amounts were going to be found necessary. The first was that of certain Government Departments who found estimating now very difficult. He mentioned the Ministry of Food, and, I think, the controls in general, and said that because the estimating was very difficult. then they ought to be able to make use of this Clause. Frankly, with that kind of case, I do not see any need for the use of this procedure. It may well be that in the years after the war certain Departments will find estimating very difficult, and none of us can expect to return immediately to the extraordinary standard of estimating by Government Departments to which we were used before the war. But if a Department has estimated wrongly at the beginning of the year, the fact becomes apparent inside that Department long before the expenditure authorised by Parliament has been exhausted, and it is perfectly simple for it then to come back to the House with a Supplementary Estimate. In this way the House will have the opportunity of looking at the difference in the Estimates before the money is voted, instead of voting the money first and only having an opportunity of looking at the difference afterwards. I cannot see that in that kind of case the Government Department would be handicapped in anyway, and I think that it would preserve to the House the power over Estimates and Supplementary Estimates of which it has rightly been so jealous.

The second kind of case to which the hon. Gentleman referred was that of the trading Departments. This was not a question of bad estimating or of spending more during the year than they thought at the beginning, but a case similar to that occurring in other businesses where, from time to time, more working capital has to be locked up than anticipated. This capital is not locked up permanently, and does not appear finally as a debit; a time will come when it will be liquidated again. We agree that that kind of case is certainly one that should be dealt with by this means. The method that I have suggested for the other case, that of Supplementary Estimates, would be wholly inappropriate to this case because the Supplementary Estimate or increase of working. capital can be made in the knowledge that in a month or two the extra money will again become redundant. Therefore, I have no complaint to make on the proposal that if there are to be Government trading departments they should be able to obtain excess of working capital by these means.

There are one or two other points in connection with this which I would like to put and which perhaps relate in a way to all three Clauses. Some of my hon. Friends will have something to. say on the question of whether indeed it is wise to continue on such a scale the activities of the trading Departments for which this provision is made, but I will leave that to them. I will say, however, that if we are to give this power to trading Departments, as I think we must, in return the House of Commons is entitled to ask that in future, as in the past, we should be given at the end of the year appropriate trading accounts of the Departments concerned. It could not be done, for security reasons, during the war. If the trading account of the Ministry of Food, for example, had been published, it might have conveyed very valuable information to the enemy. I cannot see any other reason than that of security for not publishing these accounts. That security reason has now gone, and we are entitled to ask that annual accounts should be presented to Parliament in future.

The third case to which the hon. Gentleman referred was that of Government Departments which had to carry unusually heavy balances abroad. This case is quite different from the last one, because these balances have ultimately to be expended. These are not trading Departments. The hon. Gentleman put them in quite a different category. They are spending Departments. Their extra balances will ultimately be expended, and will have to be voted by this House. I feel the same about these Departments as I did about the first lot. I cannot see why it is not possible to anticipate in time the exhausion of the balances. If the amount has been wrongly estimated, the Department could come to the House in plenty of time for a Supplementary Estimate, as in the old days.

Covering all these three together, 1 would like to ask why it is necessary to put in a repayment date as far ahead as five years. It is obviously unnecessary for the first case, in which a wrong estimate was made at some time during the war. The Departments will have to come back here with a Supplementary Estimate, to enable the money to be repaid from some other source. It is quite unnecessary for the third case because there again, sooner or later, there must be a Supplementary Estimate and the money must be repaid. Nor can 1 see that it is appropriate for the case which the hon. Gentleman made in the second category of the trading Departments. He spoke of the locking up of capital in stock. and the sudden need for more capital, a need which liquidated itself. Surely, he is not expecting that these trading Departments are to expend exra working capital by locking it up in stock which will not Le liquidated for five years. We are entitled to some explanation of why it is necessary to have such a very long repayment date. With regard to Clause 4, we have no complaint to make. The provisions which are to be repealed by the Clause were a salutary financial check at the time they were made. They provided for certain definite periods of repayment, but they became submerged, of course, in the enormous munition expenditure of subsequent years. I agree with the hon. Gentleman it would be a bit of financial pedantry to retain the Clause, however valuable it was at the time it was passed.

Finally, I think all of us agree most heartily with Clause 5. Not only do we feel that this gentleman had the right to share in the increases of salary which were given to other civil servants of similar grade—I gather that the only reason it is put down in this way is that his is the only salary which does not appear upon a Vote—but he will be the man who has to look after and report to the country on the finances of hon. and right hon. Gentlemen opposite. We feel that he is in for a very heavy time.

We shall be very glad if, in the course of the Debate the hon. Gentleman can answer some of the questions which have been put to him. We are prepared to allow the general principle of the Bill to pass without challenge.

11.50 a.m..

Mr. Tolley (Kidderminster)

I agree with the right hon. Member for West Bristol (Mr. Stanley) that it was obvious during the war that we should be able to make more effort than has been possible since the war. 1 have to confess that this period of time is not very stable, and that many difficulties lie ahead which it will not be easy for the Government to estimate during the next 12 months, or perhaps even longer. The Government are justified in asking for this Measure, in view of the obligations, seen and unseen, which will confront them in the immediate future. I was very interested in the question of war damage. Here again I agree with the right hon. Gentleman that war damage to property should be related to compensation. It is very difficult to estimate in the immediate future the exact amount of war damage ' compensation which has to be paid. It would be harder to endeavour to budget when an assessment can be obtained. It is not so difficult in regard to goods and chattels. Here again, as the market expands, people will make heavier demands for goods and chattels. Because of that we shall be unable to budget in advance.

I was also interested to hear the hon. Gentleman refer to our commitments in relation to services abroad. I do not know whether we should fix our attention upon waiting for Budget Estimates in this respect. I rather feel there are circumstances which have to be provided for, because difficulties have arisen which will have to be met, even before we can estimate them. Despite the fact that these things have been looked upon rather as in the nature of war measures, we are justified in suggesting that, in view of the uncertainty and in order to tide us over the difficult period, the House would do well to give a Second Reading to the Bill. The House should support it because it is necessary that the Government should be in a position to meet their liabilities. The Bill is only a continuation of the policy of the past few years.

11.54 a.m.

Lieut-Commander Gurney Braithwaite (Holderness)

At first blush this Bill appears to provide us with a purely technical piece of accountancy machinery. Hon. Members will, I think, however agree that the longer we study the Bill—and, may I add, the longer we listened to the Minister's introductory remarks today—the more we realise that there is something a good deal wider than that involved in this piece of legislation. The Financial Secretary was mildly revealing in one or two interesting directions. First of all came the observations, to which my right hon. Friend the Member for West Bristol (Mr. Stanley)has already referred, respecting an early return to balanced Budgets. I thought I detected a somewhat wistful smile on the countenance of the hon. Gentleman when he made that statement. I could not help recalling that in connection with the Interim Budget in October last year, the Chancellor of the Exchequer declared himself in favour of a policy of balanced Budgets over a period of years. The hon Member may recall that on these benches we endeavoured to discover over what period of years the right hon. Gentleman would achieve that balance, and that we were unsuccessful in our investigations However, the hon. Gentleman has lifted perhaps one corner of the curtain concealing the Budget proposals which we shall be discussing in a few weeks' time.

The hon. Gentleman said something else which interested me, and I thought it caused a certain raising of eyebrows on benches opposite, namely, when my hon. Friend the.Member for Stockport (Sir A. Gridley) asked him whether the financial arrangements of the National Coal Board would be covered by the machinery of this Bill, and the hon. Gentleman replied to my astonishment, "One cannot legislate for contingencies which may never happen." I do not know what has been going on inside the Cabinet, but I imagine that when hon. Members representing mining constituencies face their weekend audiences, who have read this declaration, there may be some questions asked.

The more I listen to the hon. Gentleman—I have done so now for a number of years—the more I admire his many qualities, and the more I become convinced that he is engaged in preparing to understudy Miss Jean Capra in the role of "Naive " in that excellent entertainment "Itma" which frequently cheers me on Sunday evenings. The hon. Gentleman has an ingenuous manner which I am bound to say is beginning to arouse some suspicion on this side of the House. He skated lightly, I thought, over the main reasons why the Government require this power. He did not have much to say to us on the general subject of bulk purchase which, of course, will be financed to a large extent under this Measure. He referred to the trading activities of the Ministry of Food very briefly and it is rather important that, when we are going in for State trading in a big way, as we are now in many directions and particularly in food, this House and the country in general shall have a perfectly clear picture of what the financial consequences are as we go along the road. When all has been said and done, food may hot be the end of the matter. One does not like to cast too much gloom over the House, even on a Friday, but if the Minister of Fuel continues on his downward course, who knows when we may not be importing coal in large quantities as a further piece of Government machinery?

I gathered from the hon. Gentleman that he is not going to deal with the financing of the nationalised industries when they come into being under this Bill. I am not so pessimistic about this Government as he is. I believe they will hold together long enough to get some nationalisation legislation on the Statute Book, but the financing is not to be done in that way, but it is rather important, when we are in the market for such commodities as wheat, that the Government should not pay too high a price. We are badly off for dollars anyhow. This House should have at its disposal information showing whether our State purchases are being conducted efficiently or not. May I put it this way? So far, to my.mind, there is every indication that this much vaunted planned economy is, in fact, being interpreted in terms of planned extravagance. That is my view having watched hon. Members opposite in operation now for the past seven months.

May I add my support to what was said by the hon. Gentleman the Member for Kidderminster (Mr. Tolley) about war damage? I think we shall all be pleased to see, at any rate, the apparatus being set up for war damage payments to those people who have been waiting so wearily for them. I hope they will not have to wait very much longer. I agree with him as to the accounting method of doing it, that the war damage payments should be a capital charge, and I agree with my right hon. Friend that chattels raise rather a different matter and should be dealt with otherwise.

I am. glad to see that the Auditor-General is to get a rise, for I think he is a very overworked official. As my right hon. Friend has just remarked. he is likely to put in a great deal of overtime during the coming months but, as we have a Socialist Government now in office, what about his staff? Is anything to be done for them? Are they getting an increase, or does the Socialist Government merely cater for the higher income levels? I am hoping to enlist the support of hon. Gentlemen opposite when I suggest that civil servants are not overpaid. I do not know whether they will be overpaid as many more of them come into the Service but, at any rate, as we heard on the Prayer last night, many of them are very anxious to escape from the Civil Service. May I put in a plea that the Financial Secretary should not Harden his heart too much towards the lower grade workers who are reputed to have put this Government in office?

Finally, I am sorry the Chancellor is not here as 1 should have liked to say this to him: The Treasury are at present busily engaged in what they describe as "cleaning up the City." It provides material for a number of excellent week-end speeches—not always well informed, if I may say so—by hon. Members opposite.. One thing which is being dealt with under another Measure is the question of the borrowing powers of private individuals. I think the Government should, to a certain extent, set an example in these matters. They are anxious to see that ordinary businesses are run on proper financial lines. that a proper control is kept over malpractices. Yet this Bill does not set a particularly good example by His Majesty's Government. Here they are asking the House of Commons for huge borrowing powers in advance of the approval of Parliament.

I suppose the hon. Gentleman is relying, having taken action on these lines of borrowing in a big way, on coming down to the House of Commons perhaps late at night or on a Friday, and if any voices of disapproval are raised from these benches, he will immediately ring the bell and fetch in his huge battering ram of a majority from the smoking room and the terrace bar. That is not my view of the proper way in which our national finance should be conducted at this grave moment. If we are to be told that there must be the most careful supervision of the financial conduct of private firms and huge businesses, let there also be no concealment of the nation's trading operations, and let us have the strictest accuracy in the national accountancy.

12.3 p.m.

Viscount Hinchingbrooke (Dorset, Southern)

I would like to start by endorsing what my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) said about the staff of the Comptroller and Auditor-General. I must not reveal what is going on upstairs in the Select Committee on Procedure, but I can give my own opinion, which is that the result of nationalisation on a large scale will mean that a very large organisation associated with the House of Commons will have to be set up to deal, in extenso, with public and semi-public accounts, something very much more elaborate than we have had at any previous time. Therefore, I ask the hon. Gentleman whether he will not consider the question of increased salaries for the staff of the Comptroller and Auditor-General in anticipation of the setting up of this organisation.

I would like to ask a question about the Clause which deals with war damage. I do not know whether it would be proper here to ask the Financial Secretary whether he can tell us whether an Amendment to the War Damage Act is intended. I have had many cases raised in my constituency by people who find that the value payments made are quite insufficient, at present prices, to enable them to rebuild their houses. Those people who have got a cost of works payment are in a much better position. Subject to a building licence, such people can get their houses rebuilt, but those who have been given a value payment, which is based on the 1939 figure, are not in a comparable position. I hope that in winding up this Debate, the hon. Gentleman will say that some amending Bill is at any rate in contemplation by the Treasury.

Like my right hon. Friend, I feel that the Clause which deals with the Civil Contingencies Fund needs some further consideration and explanation by the Financial Secretary. This Clause will obviously be used by the great spending Departments as a kind of well, out of which they will draw to reimburse them- selves against the adverse balances which they will have incurred at the end of their trading year. Surely it is not proper to use a capital fund of this kind, set up under a non-recurring Act, in order to adjust the expenditures of Departments at the end of the year.

Mr. John R. Thomas (Dover)

What does the hon. Member mean by adverse balances?

Viscount Hinchingbrooke

Losses: The Ministry of Works, for example, is going in for State trading to a considerable extent. The Financial Secretary said that this Clause did not give any power to extend State trading. I quite agree with that, but at least it gives power to Departments to call upon the Contingencies Fund to meet their losses at the end of the financial year.

Mr. Thomas

With all due respect, an adverse balance cannot be interpreted as a loss on trading. If the hon. Member is referring to a loss on trading he should say so. We should know precisely to what he is referring.

Viscount Hinchingbrooke

I mean an adverse balance on trading, and also an adverse balance on capital account. In so far as the Ministry of Works fails to meet its expenditure at the end of the financial year whether on capital or income account it will, as I understand it, among other Departments, have recourse to this Fund. I do not think it is proper to set up a Civil Contingencies Fund of£250 million and expect Departments to draw on it to meet their current expenditure.

Clause 1 embodies the most important feature of the whole Bill. Is it the case that we are now abandoning the procedure, which applied during the war years, and extending the National Loans Act annually by a Resolution at the end of the Budget? Could the Financial Secretary answer that question now? It has been the practice during the war years to extend the provisions of the National Loans Act annually by a resolution, coming at the end of the Budget Resolutions Can I take it that this Bill abrogates the whole of that procedure, and that no such Resolution will be put in the forthcoming Budget?

Mr. Glenvil Hall

Perhaps I might deal with this matter a little more if, by per- mission of the House, I am allowed to reply to the Debate. Shortly, the answer is "Yes."

Viscount Hinchingbrooke

In that case it really means that this House is today taking a decision which will result in powers being given to the Government to borrow, without further debate in this House, an enormous sum up to the end of the financial year 1947.

I suggest that we have got into an extraordinary position with regard to these financial matters. We spend days and days upon the Budget. The Chancellor comes down and makes an important speech to a full House, the Budget Resolutions follow, and the Finance Bill follows upon that. The question of taxation, the ways and means of getting revenue for the State are discussed in the greatest possible detail, and the Budget itself is a grand national occasion. Yet almost as much as what the Budget provides for is now taken by the State in borrowing, and that is going through, this morning, in the course of a few hours' Debate in a thinly attended House, with only a Financial Secretary in charge. The figures are startling. The last financial White Paper shows that central Government net borrowing total£2,760 million. That is the sum which, though it is not mentioned in this Bill, is, in fact, what we are providing for this morning, together with an additional£250 million to cover contingencies. As against that the Budget, which we debate at the greatest possible length, amounts to£3,154 million.

The Debate this morning ought to have been treated by the Government as an occasion of equal importance to the Budget. The Chancellor ought to have come to the House and made a wide survey of the picture of the national finances to a fully attended House. There ought to be an extensive Committee stage on this Bill, with every opportunity for members of all parties to call for a detailed explanation as to why Government expenditure is not being cut down. All that should be done before the House grants these powers. I do not quarrel with anything that has been said on this side of the House about not voting against this Bill this morning because there are some provisions in the Bill which we endorse, but I suggest that we have got our financial arrangements altogether out of line, and by way of protest at what is taking place I should hope that. Members on this side would be prepared to vote in the Committee stage against Clause 1, in order that the whole issue may be raised.

12.14 p.m.

Sir Arnold Gridley (Stockport)

I should like to congratulate the Financial Secretary on the lucidity with which he explained this Bill in a very short time. When he was dealing with the salary of the Comptroller and Auditor-General, I thought that the House ought to consider whether the Financial Secretary is under paid, having regard to the vast amount of work he is called upon to do, and which is likely to increase substantially during the next two years. I wish to test his capacity a little further.

I would like to refer to the short speech made by the hon. Member for Kidderminster (Mr. Trolley), who is no longer in his place, in which he referred to the War Damage Act and the treatment of war damage as capital. The Financial Secretary will know that those who have had to make contributions annually to the war damage fund have never been allowed, in their trading accounts, to treat that item of cost as other than capital. It has not been allowed as a working expense to be included as one of the annual costs of running one's business, but has had to be taken out of that account altogether. Therefore, it has been recognised as a capital item. If industrial undertakings have had to deal with the matter in that way, I think the Government are bound in their turn to do likewise.

In considering particularly Clause 3 of this Bill, I was a little surprised at the answer the Financial Secretary gave to my brief intervention, when he said that, of course, one could not take into account the position of an industry the ownership of which was to be altered under a Bill yet to be passed. I do not know what has happened in Standing Committees upstairs which have been attended by the Financial Secretary, but I can enlighten him by telling him that Amendments to the Coal Bill for the protection of the railways, gas and electricity undertakings, in order to ensure that they shall get their proper supplies of coal of the right quality in the future, have been dismissed airily by the Minister—

Mr. Speaker

What happens in Committee is entirely unknown to this House, and may not be mentioned until the Committee have reported to the House. One cannot quote from a Committee upstairs.

Sir A. Gridley

I entirely misunderstood the position, Mr. Speaker. HANSARD reports every day the proceedings of Standing Committees. Therefore, I thought I was entitled to refer to them. Am I still out of Order?

Mr. Speaker

I am afraid until the Committee has reported to the House we officially have no knowledge at all, even though it may be reported in HANSARD for the information of Members of the Committee only.

Sir A. Gridley

Well, Sir, then we have to shut our eyes to what is reported in that way. I must plead guilty to having misunderstood the position. I am not sorry I have raised the matter, because I think probably a good many Members of the House were as ignorant as I was of the disorder for which I have been responsible. I will, of course, leave that point.

I come now to what the Financial Secretary said about trading. Various Departments of the Government already have very widespread trading powers. For example, we were' told, I think yesterday, or the day before, at Question Time, that the Ministry of Supply was now embarking on the manufacture of house fittings in Government factories. I think few of us were aware of that fact until it emerged at Question Time.

That may result in grave interference with private enterprise engaged in similar industries. The Financial Secretary also referred to the contracts being made by the Ministry of Food. During the work of the Select Committee on National Expenditure in recent Governments—I hope I am not out of Order in referring to the work of that Committee—it was the duty of some of us to examine the activities of the Ministry of Food. We found that the Ministry was engaged, quite rightly in time of war, in immense bulk purchases. For example, if my memory is accurate, I think at one time the Ministry of Food was purchasing the whole of the tea produced throughout the world. That arrangement may still be in operation. By agreement with other Governments that Ministry was parcelling out these tea supplies, so many million pounds going to Russia, so many million pounds going to the U.S.A., and so on. That may have been all right in time of war, but ought not the House to have more information now in time of peace as to the activities of the Ministry of Food in such matters?

Again, they were buying oil seed in immense quantities, sometimes at very high prices which doubtless they could not avoid then. We ought to know what these trading departments of the Government are doing at the present time, and what they contemplate doing as a result of which they may have to be assisted by the provisions of this Bill.

We are told nowadays that the main priorities are food, work and homes. With that we all agree. Frequently we are also told that every one of us in the future is to be taken care of from the cradle to the grave. I, for one, do not want to see the time when Government Departments will feel it is necessary to provide cradles and bassinets for the newly born, prams for them to be carried about in, such as we heard of yesterday and for which the President of the Board of Trade took great credit because there had been an enormous increase in production. He was very careful not to tell us about the very poor quality of these perambulators about which mothers of today are complaining very bitterly. Our children may be riding about, when they get a little older, on Government-produced bicycles. We may have, as they planned in Germany, a national car to be brought within the reach of everybody When we have finished our work here we may be put into a Government hearse and eventually our ashes may be scattered in national crematoria.

All these activities may be possible it we give the Government such wide powers as are asked for in Bills like this. We were told in great speeches yesterday from the opposite side of the House that what the nation wanted above everything else was to have up-to-date facts constantly presented before them. It was said we could never be too fully informed. Here is an opportunity for the Financial Secretary to give us to-day further information for which we are asking now so that, although we do not oppose this Bill today, we shall have facts and information which will enable us to study carefully what Amendments it would be right, or wrong, to move when this Bill comes before Committee.

12.23 p.m.

Mr. Howard (Westminster, St. George's)

I think all of us on both sides of this House recognise the inevitable but none the less deplorable effects which war always has on accepted methods of financial control. We all hope that this Bill may be the last of this nature which it will be necessary to bring before this House. Because of the time at which it comes forward and the magnitude of the provision which it makes, it is important and desirable that the spokesmen of His Majesty's Government should make it perfectly clear that it is their desire and intention to return to the more normal methods of financial control at the earliest possible moment. Bearing that in mind, I would venture with some diffidence to suggest three propositions to the Financial Secretary with which I hope he will be able to tell the House he agrees.

The first is that close estimating is a very useful check on the' efficiency of financial management. Therefore, we should aim to get the closest possible estimate at the earliest possible date. The. second proposition is that sound. financial administration, although its effects may not be immediately apparent to all the individuals directly or indirectly affected, does in fact confer real benefits on all the members of the community. My third proposition is that borrowing inevitably adds to the total and final costs of any project, and should be avoided wherever possible. If the Financial Secretary feels that these are sound propositions, and His Majesty's Government will at the earliest moment try to come back to the practices of an earlier day, I think that will have a very valuable effect on the country. The Government should give a lead to industry in this matter of financial control. Unfortunately there has been a measure of careless and rather extravagant expenditure during wartime because in one way or another it has often been possible to set off some particular expenditure. We perhaps did not have to pay ourselves, and consequently there was not the same care which all should desire.

As to the Bill, obviously we Private Members cannot assess the actual amount of the provision which the Government must make, but I am surprised at the size of the amount which is set out in Clause 1. I hoped it would have been possible to make a smaller provision with reasonable safety. On Clause 2, I am not very impressed with the excuses made for the difficulty in estimating the amount that will have to be paid in respect of war damage. I agree that some difficult cases will occur, but we hope that all the war damage is now a matter of the past. Assessing the amounts which will have to be paid should not cause unnecessary delay. We have got into the habit during the war of accepting excuses for not doing what could be done simply because we were able to make out a case that there was something more urgent to be done first. That is not a very good excuse at any time. It is an extremely bad excuse when there are hundreds of thousands of people in this country who may suffer quite a considerable degree of hardship if there is unnecessary or unavoidable delay in assessing war damage claims. As a result of the provision now being made for borrowing in regard to war damage claims I hope it will also be found possible to speed up actual payments of smaller claims which bear very hardly on individuals.

I admit I do not like Clause 3, which deals with the Civil Contingency Fund. The contingency item in our private lives, or in local government finance, is always one of which we are rather suspicious. If we happen to be the parties who are putting estimates forward, we usually try to put in as large a contingency item as possible to cover ourselves for what we have not foreseen. It surprises me that such a large sum as£250 million is needed compared with the one and half million pounds of prewar days. The Financial Secretary has given a partial explanation of this, but if he could be a bit clearer, I would be grateful.

When the Financial Secretary was speaking about the control of moneys which might be paid out under the borrowing power granted by Clause3, unless I took down his words wrongly, he said: ''Parliament will maintain full control of how the money has been used." Once the money has been used, how can one maintain full control of it? That puzzles me a little. In the happier days before the war it may be that even you, Mr. Speaker, or other hon. Members had the experience of a wife coming home with a new hat. The expenditure had been incurred. Theoretically the provider had full control over that financial transaction and I agree that theoretically the husband had full control of how the money had been used. Whether that control was really effective or not, perhaps the Financial Secretary will explain to us when he replies.

12.32 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I rise only for the purpose of reinforcing in a few sentences, what my hon. Friend the Member for Stockport (Sir A. Gridley) said in regard to the question of war damage payments. 1 am sure the Financial Secretary will agree that it is manifestly unfair to treat war damage as a capital debt. I would like to put in a plea that these payments should be hastened as much as possible. People are suffering in their industries and in their lives from the failure of the Government to make payment in respect of war damage. I put in an urgent plea for greater speed in this matter. I do not think the argument that it would involve some measure of inflation holds good any more. It is time these people, who deserve their money, got their money, and I ask the hon. Gentleman for an assurance on that point.

My second point is, again, one which was made by the hon. Member for Stock-port, that we should be given more information about State trading. I was Parliamentary Secretary of the Ministry of Food when the whole of this policy of buying up food supplies on a world wide scale was initiated. I think it can. be claimed that during the war it was, on- the whole, a great success. Why was it such a success? First, because we got the food, and, secondly, because we got it at remarkably economic prices in the circumstances. But that is not necessarily going to hold good in times of peace. Vast purchases on Government account in the absence of ordinary commodity markets are not necessarily going to mean that we are going to get food as cheaply as we otherwise could do in peacetime. I am not in principle opposed to bulk purchase by the State, especially when it is from our own Empire, and especially when it is part of a reciprocal trading agreement. We know there are export boards in Australia and other parts of the Empire and it may be convenient to establish corresponding boards in this country. But we must know all about it in this country and we must know what prices are being paid.

The whole future of the commodity markets is bound up with this and, of course, as I said just now, with the policy of His Majesty's Government with regard to import boards. When the Government come and ask for£250,000,000 to meet contingencies which may arise, they ought to give us some rather more authoritative pronouncement than that forthcoming with regard to their intentions both in respect of the ordinary peacetime commodity markets and in respect to the possibility of setting up import boards in this country. We on this side of the House are not in opposition to all forms of direct bulk purchase. Indeed, if we are going to make satisfactory arrangements with our Dominions and Colonies in the future, despite the American Loan, some form of bulk purchase is essential. The time has arrived when the House should know the intentions of the Government in this matter—what they propose to do with regard to ordinary markets, and, above all, the basis on which they propose to buy and have bought these commodities.

12.36 p.m.

Mr. I. J. Pitman (Bath)

I have two small points to which I would like to draw the attention of the Financial Secretary and to which I would like him to give an answer. The first refers to the question of war damage. May I say, in passing, that I support very strongly what my hon. Friend the Member for East Aberdeen (Mr. Boothby) has said about the importance of the Government paying quickly, and paying partially in some cases, the money due to our constituents in that respect. I can assure the Financial Secretary that I get a great deal of evidence that this matter is causing hardship among people, particularly those who are not at all well off. The point I wish to draw his attention to is particularly well exemplified by a city like Bath which has two factors which are special to it. First, there is the great and grievous war damage it has suffered and, second, it is a city which, above all, owes its beauty to a sound plan. It has carried that plan a stage further, and Sir Patrick Abercrombie has drawn up an extremely fine long term plan for the development of the city. This trouble about the difference between value payments and cost of works payments is particularly difficult in cases of that kind, because the Bath plan has clearly shown that, ultimately. there will be radical changes in areas which have been badly blitzed. The Bath City Corporation is faced with the dilemma that if it refuses cost of works payments for rebuilding, it is imposing a great hardship on the owners and occupiers of land, and, on the other hand, if it decides that it must let that. go through, it is imposing on the community, in the long term view, a most extravagant demand, because it means, ultimately, pulling down what is rebuilt as the result of cost of works payments. I hope the Financial Secretary will tell us that he will go into that question sympathetically and will try to meet what is a very serious problem for my constituents.

I would also ask the Financial Secretary to have a careful look at what I regard as a most important letter by Mr. Napier Baliol Scott which has recently appeared in "The Times" on efficiency audits for these new organisations which we have inherited from the war and which we are hard at work creating at the moment. One hon. Member opposite, during the Bank of England Bill Second Reading Debate, made the point that we should all be very interested to hear, from time to time, about what is, in effect, an efficiency audit of that organisation Similarly, in all these enterprises there will be, as well as need for a financial audit, a need for efficiency audits of some kind. I would like the Financial Secretary to say whether he will be considering the whole question of efficiency audits in such cases and will give the House the opportunity to discuss whatever new technique is desirable for meeting these new changed circumstances.

12.41 p.m.

Mr. Assheton (City of London)

I would like to congratulate the Financial Secretary on being in charge of such a very important Bill. As my right hon. Friend the Member for West Bristol (Mr. Stanley) and my hon. Friend the Member for South Dorset (Viscount Hinching-brooke) said, this is an important and a major Bill, We on this side of the House are very alive to the anxieties of the financial situation, and we wish that there was more sign that hon. Members opposite, and particularly Members of His Majesty's Government, were equally alive to it. We feel that the Government are giving less attention than they should to finance and that some of the speeches made in the Debate yesterday and the day before showed lack of appreciation of the need to economise. We did not get any satisfactory reply to the suggestion that there were nearly two million people engaged in making munitions. That is involving the State in a great loss of money. It may be that there are difficulties in the way of a reduction of expenditure, but I could suggest many possibilities which might be explored, particularly the cancellation of wartime contracts which are still going on. Provision has been made in nearly all those contracts for their cancellation, but the matter is not being dealt with as quickly as it ought.

Mr. John R. Thomas

Do I understand that the right hon. Gentleman is suggesting the cancellation of war contracts without indemnity?

Mr. Assheton

I was not suggesting anything of the kind.

Mr. Thomas

There would be no economy if there was an indemnity to be paid.

Mr. Assheton

There can be a great economy even if there is an indemnity. Each of these contracts has had a clause inserted in it to deal with this possibility, and advantage should be taken of those clauses. In any event, there is a great wastage of material and labour even where there is no considerable financial saving possible. I would ask the Financial Secretary to be quite sure to remember to answer the questions which my right hon. Friend the Member for West Bristol addressed to him. We are anxious to have some idea as to how much of next year's expenditure is to come out of borrowing. We are being asked to pass this Bill now, in advance of the Budget. Had this Bill come along a month or two later, one could have understood more exactly what the need was. I know that the Financial Secretary caanot give an exact figure, but he can give some indication and that, I think, we are entitled to have.

I would like to say a word in particular about Clause 3, the title of which is "Temporary Increase of Civil Contingencies Fund." I am very happy that it is temporary because it is clear that this method of finance would not do as a permanent arrangement, and I feel sure the Financial Secretary will tell us that the Treasury has no intention of using this particular method as a permanent means of financing State trading if State trading has to be indulged in. In connection with the money which is being asked for under this Clause, I want to make another appeal to the Government and to support what has been said by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) in the House this week. He stressed the need for a restoration of the terminal markets. We on this side of the House attach great importance to that. There are many reasons why that should be done as quickly as possible. In his speech winding up the Debate last night, the right hon. Gentleman the President of the Board of Trade said Where the real trouble comes, of course, is that deficit was made up in 1938, by invisible exports and those, as we all know, have Very largely disappeared today. That is the task, so far as exports are concerned, that we have to discharge—to make good the invisible exports by visible exports today."— [OFFICIAL REPORT, 28th February, 1946; Vol. 419, c. 2218.] I suggest that what we ought to do is to get back the invisible exports which we have lost, and there is no reason why we should not. Of course, we want to increase visible exports, but there is every reason why we should also get back our invisible exports. That would give great assistance to the Financial Secretary in balancing not only the Budget but in balancing what is even more difficult— the foreign exchange account.

There are other reasons besides the dollar position which make it desirable to consider the restoration of terminal markets. I do not know whether the Financial Secretary has considered the damage to the general structure of our economy by the non-functioning of those markets. I think it is more than possible—and I throw out the suggestion to the House— that the present food shortage would not be what it is if the terminal markets of this country had been properly working. We are asked in this Clause to find a great deal of money to meet contingencies which will involve the con- tinuance of State trading over a very considerable period. I do not know whether the Financial Secretary has a favourable or an unfavourable view of the commodity markets, but I do think the country is entitled to know what the view of the Government is. I think my hon. Friend the Member for East Aberdeen (Mr. Boothby) was quite right about that. We want to know what the Government's position is.

I suggest to the Financial Secretary that if he were able and willing to consult the right people, he would be able to find a means of restoring these markets and, none the less, maintaining for the time-being, at any rate, a considerable amount of the control which the present Government consider to be necessary. If these markets are not allowed to exist, there is a great danger that the facts of the situation are not clearly known. When there is no futures market, it is not at all surprising that great miscalculations are made with regard to the wheat supply in the world. All the various factors which come to the notice of dealers and traders in markets all over the world bring about a price, both for the present time and for the futures market, which gives an indication of the trend of supplies. No amount of statistical information accumulated in an office in Whitehall can be half as valuable as the information obtained in that way.

I suggest that there are likely to be serious world shortages of every kind until we restore our terminal markets. It may be that the Financial Secretary will tell us that the time has not yet come, but I think the time has come for him to make some announcement to the country of what the Government have in mind. We have other anxieties in these matters, because we know how necessary it is for the Treasury to maintain a strong dollar position. Anxiety has been expressed in this House once or twice about rubber, which is very germane to this, discussion, and we are anxious to know why the price of rubber sold in Malaya is only 10d. whereas the price of rubber sold in Ceylon is 1s. 6d. There may be some very good reasons, but, on the face of it, there is a very great loss of dollars which might be accumulated in this country. I do not wish to express a final view. I can think of reasons which might tempt His Majesty's Gov- ernment to fix a different price for rubber sold in Malaya than that sold in Ceylon. But we need an explanation of these things.

We on this side of the House, as my right hon. Friend has said, share the view of the Government with regard to Clause 5. None of us who has seen the work of the Comptroller and Auditor-General can doubt that there is every justification that his salary should be as high as those of the permanent principal officials of the great Departments of State. He is a servant of his House and not of the Executive, and it is our duty to see that he is properly looked after. On this occasion today, as my right hon. Friend has said, we do not intend to divide the House, but we do not want anyone to think that, because we do not vote against this Bill, we have not grave anxieties about the financial situation of the country. With that clearly understood, we will be glad to let the Second Reading of this Bill go through unopposed.

12.51 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I speak again by leave of the House, and I will try to be brief. I think there has been a good deal of substance in some of the criticism made from the other side of the House this morning. We are asking for very large sums, and we do realise that fact very acutely, but I ask the House to believe that it is essential at this time, when we are clearing up after the greatest war the world has ever seen, that financial commitments of this kind, unforeseen in their totality, have to be accepted, and provision has, accordingly, to be made to meet them.

One of the troubles—I think the right hon. Gentleman the Member for West Bristol (Mr. Stanley) pointed this out— is that we usually pass the National Loans Bill after the Budget, and this year we are asking the House to reverse the process. We are today asking the House to give us the authorities set forth in this Bill, before the House knows what the Budget may contain. That is a difficulty, but it is an unavoidable difficulty since this time in Clauses 2 and 3 we are asking for additional powers and provisions which it is essential this House should pass before 31st March. That is the prime reason why we are coming to the House now, instead of later on in April, when far more will be known of the financial outlook than I am able to tell the House today. The right hon. Gentleman the Member for West Bristol asked for some indication of the extent to which the powers asked for are going to be used. He, and none better, will recognise that it is impossible for me to anticipate what the Chancellor of the Exchequer will say when he opens his Budget If I did attempt—other hon. and right hon. Gentlemen asked this question, and perhaps 1 may answer them now—to give any estimate of what the gap next year is anticipated to be, it would be not only a guess but it would be taken as some indication of the actual deficit which may be, and probably will be, disclosed by the Chancellor in April. Therefore, it is impossible for me to give that. approximation, much as I would like to do so if that were possible.

Mr. Stanley

I see the hon. Gentleman's difficulty, but I hope he also sees the difficulty in which we are placed. For the first time we are given no indication. We do not want to press it now, but I think in Committee we shall have to return to this point.

. Glenvil Hall

That, of course, is for Members opposite to decide for themselves. The House today is in a dilemma. I recognise that it is not usual to anticipate the Chancellor's Budget statement, or for a Bill to be put through in this fashion before that statement is made. I realise the difficulties, but I am unable to say more than that, and I hope the House will accept the position. With regard to what the hon. Member for the St. George's Division of Westminster (Mr. Howard) said, it is always possible for this House to stop supply if, when the Chancellor opens his Budget, the House comes to the conclusion that it is unsatisfactory. I do not say it is likely, but it is possible for the House, if dissatisfied with what the Chancellor had to say about his Budget, and its provisions, to stop Supply. That would be a check which some Members opposite seem to have overlooked.

Mr. Stanley

Is that so? If we refuse to pass the Budget Resolutions, having already passed this Bill, would not the remedy of the Chancellor be to fall back on the borrowing powers we have already given him?

Mr. Glenvil Hall

My advice is that that would not be so. Final control must, and does, inevitably rest with this House. During the coming year we are not going to get away from Supply Days. There will still be Estimates and Votes which will come before us, and the House will have full power to decide, as it should, how much money should be voted, and whether a particular Estimate is or is not correct.

Viscount Hinchingbrooke

Does the hon. Gentleman suggest that under the procedure in connection with Votes of Credit the House will have an opportunity of turning them down?

Mr. Glenvil Hall

I thought it was generally known in every quarter of the House that Votes of Credit, which were essential during the war, will come to an end, and that we shall return to the normal method, which prevailed before the war. An Estimates Committee is to be set up, and Votes of Credit will cease.

The right hon. Gentleman the Member for West Bristol raised further points, with which I would like briefly to deal. He asked the meaning of the words in Clause 1, Subsection (2): … whether before or after the passing of this Act.… The explanation is that at the moment negotiations are proceeding with Canada, and it is possible that negotiations may be opened—I do not say they will—with other States. Nevertheless, the contingency has to be provided for. In addition to the settlement which has already been arrived at with the United States, negotiations are now proceeding, as I have just said, with Canada. That is why that form of words is used in the Clause. The right hon. Gentleman also asked why the increase in the Civil Contingencies Fund is to continue until 31st December, 1950. The short answer is that the period of five years has been taken as the limiting period during which many of the difficulties we are now suffering, because of the war, may continue, but during which, we hope, most of them will be cleared up. The Supplies and Services (Transitional Powers) Act, for instance, provides for a five year period.

Mr. Howard

Are not the payments out of the Fund for short-term borrowings, to carry over? Why cannot the repayment date be earlier?

Mr. Glenvil Hall

Before the war the amount that could be borrowed was£1½million. The capital of the Fund was set at that figure. That is completely inadequate for the difficulties which will face us during the next four years. At the end of the last war when the Fund was increased powers to borrow were increased to£120 million. It might well have been that the Government should have said they wanted£120 million this time, and have assumed that that would be enough. But in our view it will not be enough, because of the greater difficulties we have to face now, as compared with 1919-20. It does not mean that the whole of this money will be borrowed at once; it may well be that the -total will not be reached. The power, however, is permissive, and is sought in order to assist the Government.

Mr. Howard

That is not quite my point.

Mr. Glenvil Hall

These extended powers to borrow up to£250 million must cease by the end of 1950, at the latest. I think that is a reasonable date to fix.

I was asked about trading accounts, whether they were to be published, and whether the House would have an opportunity, from time to time, of looking at them, considering them, discussing them and, if necessary, voting upon them. The answer is, "Yes" We hope that full publication of the accounts may be resumed at a fairly early date. But there are difficulties of manpower and other kinds, with which the House is very familiar.

Mr. Boothby

Can the hon. Gentleman say in what form the accounts will be presented to the House—as Estimates. or in a separate form?

Mr. Glenvil Hall

It is expected that we shall go back to the system which existed before the war

Sir A. Gridley

The hon. Gentleman says that the accounts will be presented if the facilities are available, and there are no staff difficulties. Is he not aware that public companies have to present their accounts annually, whether they are short of staff or not?

Mr. Glenvil Hall

I did not want to be pinned down to an exact date. Now the war is over the accounts will be published, but the Civil Service, as everyone knows, is grossly understaffed at any rate, in some directions. Nevertheless, we have no desire to keep information from the House; that is the last thing we desire to do. As soon as it is physically possible and things become normal the accounts will be presented in the ordinary way, as they were before the war broke out.

The right hon. Member for West Bristol and others raised a quite pertinent point about the War Damage Clause, and asked whether anything was to be done to meet the undoubted criticism in the country about the working of the 1943 Act. I do not want to answer in detail many of these questions, but it is quite true that there has been a great deal of criticism about some of the provisions of that Act. We have to remember, however, that it was an Act passed with the consent of the parties in the House during the war. It was, in some ways. a shot in the dark. We did not know how some of the provisions would work out. It may well be that in the next few years the feeling of the country and this House will be that some Amendment is necessary; however, it is not for me today to give any indication as to what the Government's policy on that is. All I can say is that they are aware of these difficulties and that a solution of them is by no means easy. The difficulties between the value payment and the cost of works payment and the difficulties. of the differences in cost to many people is something which has caused many headaches, but a solution is difficult. It is one thing to rebuild a house which will cost far more than the builder is ever likely to get under the 1943 Act, but, on the other hand, there might be some feeling displayed if it were discovered—as undoubtedly it would be if the wording were altered drastically—that a person was getting a new house at the public expense for a building which was nearing the end of its days. These are points which I think it unwise to enter upon this morning, and they are questions which can be dealt with on another occasion.

Viscount Hinchingbrooke

I can appreciate the hon Gentleman not being in a position to give details as to what is taking place, but can he say categorically whether or not the Government are considering the introduction of an amending Bill?

Mr. Glenvil Hall

That is not a question that should be directed to me, but the Government are contemplating the introduction of an amending Bill. It is not, if I might hasten to add, a Bill which deals with this point. Utility companies are not yet covered by war damage legislation, and obviously a Bill will have to be introduced to cover that field. Whether or not it will be possible at an early date to deal with the outstanding difficulties under the 1943 Act which time has brought to light is frankly impossible for me to say this morning. The point was also raised by the right hon. Member for West Bristol as to whether it would not be better as far as chattels are concerned to pay the war damage out of revenue rather than out of capital. The short answer to him is I think that it is all war damage, whether building, furniture or plant, and that being so it does seem best to regard it all as capital expenditure, rather than meet part of it out of revenue and the rest out of capital. As the Financial Memorandum says the expenditure for the plant and chattels' scheme is about£100 million as against£400 million for building.

The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) was anxious about the prices paid for the purchase of goods. The accounts are going to be published, and the hon. and gallant Member will be delighted to know that the Comptroller and Auditor-General goes through these accounts. It is always open to him at any time to criticise anything he thinks should be criticised, whether it is prices paid or anything else, and he would naturally, as he has done during the war, draw the attention of the Public Accounts Committee to the matter. I think the Noble Lord the Member for South Dorset (Viscount Hinchingbrooke) hoped that the Contingencies Fund would not be used to cover loss of trade. He may perhaps be satisfied when I remind him that the net loss must in any case be voted by Parliament, and that it will come before Parliament in any case during the year to be commented on. The hon. Member for Stockport (Sir A. Gridley) asked me for information about what the trading Departments were doing; he will be glad to know that it is proposed in the 1946 Estimates to show the net amount required for each group of commodities, and then the public and the House will have an opportunity of asking questions, while hon. Members can debate the matter when the Estimates are taken. The hon. Member for the Westminster, St. George's (Mr. Howard) put three propositions to me and suggested that I might be able to give an indication whether the Government think them sound. I cannot speak for the Government, but they certainly appear to me to be sound premises on which to go, and I hope this Government, like past Governments, will generally like them. I think that has covered the main points that were made.

Mr. Boothby

What about the terminal markets?

Mr. Glenvil Hall

It is suggested to me that I should answer the right hon. Member for West Bristol, and I hope I have tried to do that accurately. He put to me a question whether it would be a good thing to restore the terminal markets, and what information it will be possible to publish when dealings in future are reintroduced. I certainly agree with him that that is normally a very good guide as to what is going on, and perhaps to some people it is much better than statistics, which may be gathered from the four corners of the earth. The answer is that we are living in a period when that kind of thing is largely, if not entirely, impossible. Perhaps I go too far if I say entirely impossible, but there are difficulties which he knows only too well to prevent a return to the normal methods of prewar days. We do realise perhaps that one day—and we hope that it is not in the too far distant future—many of these things will be possible, and that being so I trust he, with the rest of us, will look forward to that time, and in the meantime will possess his soul in patience.

Lieut.-Commander Braithwaite

Before the Financial Secretary resumes his seat perhaps he will deal very briefly with the point regarding the salaries of the staff of the Comptroller and Auditor-General?

Mr. Hall

It is only the salary of the Comptroller and Auditor-General which is borne on the Consolidated Fund. The reason for that is I think, as the right hon. Member for the City of London (Mr. Assheton) said, that the Comptroller and Auditor-General should be in a special position as far as money voted by Parliament is concerned. His staff, however, are in a very different position. Their salaries are borne on the usual Votes, and such increases as are being given to other members of the Civil Service in their grades will naturally also apply to the members of his staff in the usual way.

Mr. Assheton

May I thank the hon. Gentleman for his promise that the Government have in mind the restoration of the terminal markets, and may I also remind him that I attach as much importance to the dollar position, if not more, than I attach to the estimating of the future food position.

Mr. Hall

I did not say that the Government had in mind to restore the terminal markets. What I did say was I hoped something of that kind might in the not too distant future be restored, but that was merely a hope on my part as an ordinary Member of this House.

Question put, and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the Whole House for Wednesday next.— [Mr. Mathers.]