HC Deb 19 June 1950 vol 476 cc995-1003

Motion made and Question proposed' "That the Clause stand part of the Bill."

Sir H. Williams

We come to the Clause dealing with the annual Debt charge, and I think we should be given a little more information about this great burden which we have to carry whether we like it or not. Hon. Members who look at this year's Financial Statement will see that the Chancellor has put down £490 million as the sum for the Debt charge. In the earlier part of the document, on page 4, they will see that last year he provided £485 million but that Exchequer issues were £472,206,000 so that there was a shortfall of about £12,800,000. That, of course, is not the total sum provided because there is the following footnote: In addition £27,465,000 for Interest of the National Debt was met from receipts under various Acts authorising such application. Speaking from memory, I think that the bulk of that is in connection with the loan which was raised prior to 1939, when we were engaged in re-armament, and which met a good deal of opposition from hon. Members opposite. I mention that fact in passing because a lot of them have forgotten that. It is just as well to remember that they were mainly pacifists in those days. Thus, the £490 million specified in Clause 39 is not the total. There will be an additional sum which, according to a footnote on page 28 of the Financial Statement is £33 million—a sum for Interest of the National Debt will be met from receipts under various Acts authorising such application. It will be observed that there has been a very substantial increase in the sum which is outside the Debt charge—an increase of about £5½ million—and I think we should be given a little more information about it. It is not the practice on Budget Day to give as much information about the National Debt as we ought to have.

On page 8 of the Financial Statement there is a summary of the whole National Debt under the various headings, and I regret to say that it has now reached the fantastic sum of £25,800 million. Some of it consists of things known as savings certificates, to the amount of £1,712 million. Many hon. Members are possessors of these certificates and they will know that interest is not paid until the certificates are cashed. Interest is added and, therefore, it is not the case that the sum provided for the National Debt charge covers the interest that may be accruing on the saving certificates. All that is taken into account is the interest which is paid out when a certificate is cashed and the amount of accrued interest which is not included in the National Debt amounted, on 31st March, to £399 million. That is a very large sum indeed.

Again, as far as I can see the National Debt does not include a very important item, and no provision is made for it. I refer to those things which are known as war credits—things which people under 65 cannot get back. There is no provision for them.

Mr. Follick (Loughborough)

Post-war credits.

Sir H. Williams

It all means the same thing. They are very post post-war so long as this Government is in office. There is no provision in the National Debt for these post-war credits which, I think, total about £800 million. So far as I can see, there is nothing in the £490 million to cover that liability or to cover any interest on it. Indeed, there is no need to cover interest because no interest is being paid.

I think it would be useful if the Committee could have a little more information about the National Debt and about the £490 million we are providing this year, apart from the £33 million outside the charge. Hon. Members will be able to get a copy of this document from the Vote Office, and from page 8 they will find that there is a very large external debt owing to the United States, a debt which was increased by nearly 50 per cent. in sterling as a result of devaluation.

The Chairman

That question does not arise under the Clause, which merely says what the permanent annual charge shall be. The hon. Gentleman is not entitled on the Question now before the Committee to go into that matter.

10.0 p.m.

Sir H. Williams

I am trying to find out what the £490 million is to be spent on. This is the only reference to it in the Finance Bill. We know that it will be spent upon contractual obligations, and we are entitled to know what those contractual obligations are. Broadly speaking, there are certain sums which are outside this £490 million. I am asking what our liabilities are, and to what extent we are meeting them. I want to have some hint whether our liability next year might not be very much larger. If hon. Members will look at Clause 39 they will see that the permanent annual charge is now £490 million instead of £355 million, and many hon. Members will wonder why £355 million is put in, since it was not £355 million in last year's Finance Act.

This matter goes back to the Finance Act of 1925, when the present Leader of the Opposition was Chancellor of the Exchequer, and thought that £355 million would be enough to wipe out our National Debt within a limited period of time. I do not know why we go on repeating £355 million in every Finance Act. That figure is now completely dead and the Clause might be drafted a little differently in future. There was a time within my lifetime when the sum in the Clause was only £28 million. That was in the bad old days of 1913. It is important from time to time to consider the magnitude of this charge, and this is the only opportunity we have for doing so on the Finance Bill. I agree that we cannot consider all the Acts of Parliament under which the money was raised, but we ought to have a little more information, because there is none in the Financial Statement, as to how this £490 million is to be used for each of the items in the Schedule. It is because I want more information that I have made these brief observations.

Mr. Keenan (Liverpool, Kirkdale)

I have risen because of the opportunity of saying a word on the National Debt. There has been no attempt to put down Amendments on this matter, but I want to point out to those who have accused us of budgeting too much and have asked us to cut down that this National Debt was not accumulated by this Government. It has been built up from the years before this Government. It has been built up from the years before the Napoleonic wars. The fact is that more than £1 out of every £8 collected in revenue goes to pay the National Debt. I should like those who talk about economy and cutting down the social services to remember that fact. We ought to have a look at these items sometimes, because they are so costly and they have been built up over such a long time.

Sir W. Darling

There should not be heat or impatience on this subject. This is the most important Clause in the Finance Bill. We have had very good speeches on many topics, but I should have thought that on this Clause we would have an opportunity of hearing from someone on the Front Bench an exposition of the Clause. This is now a people's Budget. We are all taxpayers, very heavy taxpayers. This is no longer a Budget met by payments of a few people, but by us all. There is a case for some explanation. I am indebted to my hon. Friend the Member for Croydon, East (Sir H. Williams) and to the hon. Member for Liverpool, Kirkdale (Mr. Keenan) for the only information I have about this matter. I am entitled to more information than from those two sources.

I should like to know in some detail how this monstrous figure has reached its astonishing, astronomical height. I am not prepared entirely to accept what was said by the hon. Member for Kirkdale (Mr. Keenan). I am told in a very unreliable print of political character that half the National Debt between the figures of £355 million and £490 million has been accumulated during the last five years—

Sir H. Williams

No, since the Chancellor of the Exchequer has been in Office.

Sir W. Darling

The remark of my hon. Friend shows how much ambiguity there is about this subject. If there is this confusion among well informed business men it will be agreed that this short Clause might well be amplified and further explained. The suggestion that my hon. Friend the Member for Croydon, East and I are among the persons of the lowest intelligence in the Committee is one which cannot be generally substantiated, so I hope that we shall have some explanation of this extraordinary item, the largest finance item, which appears under the heading, "Part V. Miscellaneous."

I shall be finished when I have asked this question. The mandatory verb "shall be" seems to call for some consideration. I will read the context: with the thirty-first day of 'March, nineteen hundred and fifty-one, shall be "— There is no ambiguity about that— the sum of four hundred and ninety million pounds instead of the sum of three hundred and fifty-five million pounds. These are trifling matters, but they are matters about which many members of the public are profoundly concerned. The payers of Purchase Tax and the persons who have been mulcted weekly by Pay-As-You-Earn and by the Minister of Health and the Minister of National Insurance want to know how these large figures are arrived at. They have become finance conscious and they look to the right hon. and learned Gentleman, their financial adviser and leader, to explain them.

The Financial Secretary to the Treasury (Mr. Douglas Jay)

The hon. Member for Croydon, East (Sir H. Williams) asked first of all why the total for post-war credits was not included in the National Debt. Post-war credits do not rank as a debt of the Government; they count as a tax which was paid by the taxpayer and which the Government have undertaken to pay back at some future date. There fore, they do not count as a debt and they are not part of the National Debt. Incidentally, the figure is more like £600 million than the £800 million which the hon. Gentleman mentioned.

Sir H. Williams

Looking at this list, I see an item about a 2¾ per cent. Funding Loan, 1952–57. That is money which the citizens have lent to the State and which the State promises to repay. That is called debt. The post-war credits are sums which the citizens have lent to the State and which the Government have promised to repay. What is the difference morally?

Mr. Jay

They are not sums lent by the citizens to the State; they were sums which were actually paid in taxation. That is the legal status of the post-war credit—

Sir H. Williams

They were a forced loan.

Mr. Jay

I was asked how this charge had risen to the large figure of £490 million compared with the £355 million laid down in the Act of 1928. The answer is that it was due to the very large borrowing during the period of the war which raised the total of the National Debt from something like £8,000 million to £25,000 million, at which it stands today. Indeed, if it were not for the cheap money policy which this Government and the previous Government followed, the interest charged today would be several hundred millions higher than the figure at which it now stands.

I was asked how the figure of £490 million was made up. I can give the main constituents of the 1949 figure of £485 million. Much the biggest item is Interest and Management of National Debt which stood in that year at £445,656,000. The second item is the Statutory Sinking Fund of £12,794,000 which represents the difference between the £472 million he mentioned and £485 million.

Sir H. Williams

No, if that were the case there would have been the appropriate footnote. There is no footnote to it to indicate that. The asterisk refers to the £27,465,000 National Debt in respect of other sources, it does not say anything about the Statutory Sinking Fund.

Mr. Jay

I thought I was correct in supposing that that was the £12 million to which the hon. Gentleman referred, but in any case the figure for the statutory Sinking Fund in that year was £12,794,000. The remaining item was Interest on Savings Certificates which totalled £26,550,000. The total of those figures is set against the annual charge laid down by this Clause of the Finance Bill. If there is a surplus available that is devoted to the free Sinking Fund. If, on the other hand, there is a deficit, some of the Budget surplus available under present conditions is used to meet that deficit.

The hon. Member also asked why we should continue this practice of substituting a figure of a permanent annual charge each year for the original figure of £355 million under the 1928 Act. There may be, and perhaps soon will be, a case for abandoning that procedure and putting this part of our Finance Act on a rather more permanent basis. This method has been continued simply because of the unsettled conditions arising out of the war and uncertainty as to the figure at which the charge would finally settle down. I agree with the hon. Member that after a time there may be a case for putting this arrangement on a more permanent basis.

Lieut.-Commander Braithwaite

This has been a useful little Debate and the Committee is indebted to the hon. Member for Croydon, East (Sir H. Williams) for initiating it. In view of the excellent progress the Committee has made today with the Bill in general, the time has been usefully spent. One feature of great value has emerged from the discussion on this Clause, namely, the present position of the post-war credits. The hon. Member for Edinburgh, South (Sir W. Darling) referred to it and the Financial Secretary has just done so, but of course he has not had an opportunity of explaining to the Committee what are the intentions of the Government in regard to post-war credits. The hon. Gentleman will have the opportunity of doing that under a new Clause which will be reached shortly and I only want to ask—as he made it clear that they are not included in the National Debt figure but are taxation—is there a separate fund in which this £650 million is being carefully retained for the benefit of taxpayers who have subscribed to it?

Mr. Jay

The answer is, no. When they are repaid they will be repaid out of Revenue.

Sir H. Williams

There is one other point with which the Financial Secretary did not deal. I drew attention to the fact that the Estimate last year was £485 million and this year it is £490 million despite the fact that the Chancellor had a surplus last year. Therefore he should have reduced the burden of National Debt interest, instead of which it has gone up £5 million. Could that be explained?

Mr. Jay

The answer is that the figure of £485 million last year proved insufficient for the purpose by about £5 million and that that amount had to be used out of the surplus.

Sir H. Williams

But instead of it being insufficient it was more than sufficient. I think the Financial Secretary ought to understand the figure of his own Department before he gives me an inadequate explanation.

10.15 p.m.

Mr. Harmar Nicholls (Peterborough)

One interesting point appears to emerge from the observations on post-war credits. Are we to understand that if and when the post-war credits are ever repaid, we shall have to—

The Chairman

We cannot go into the details of that, at this stage at any rate.

Clause ordered to stand part of the Bill.