Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to make provision for authorising the Minister of Transport to undertake the insurance of ships, aircraft and certain other goods against war risks and, in certain circumstances, other risks, it is expedient to authorise—
§ 12 midnight.
§ Mr. Geoffrey Bing (Hornchurch)
This Resolution was, fortunately, on the Order Paper at the time that we had the Second Reading debate. When the original Bill was introduced the late Mr. Oliver Stanley spoke for 1 hour and 10 minutes. On this occasion the debate was, quite properly, brought to a close by moving the Closure after 2 hours and 20 minutes' debate. I say "quite properly," because this Ways and Means Resolution is a Budget Resolution which enables us to discuss the general basis upon which this Bill is built.
It is for that reason that I rise now to renew the discussion we had on Second Reading, which was cut short, but which hon. Members will probably agree it is more convenient to have in Committee, when we can all speak more than once, than to try to discuss it under Second Reading conditions when we are, naturally limited to one speech each.
§ Mr. Bing
One of the difficulties we are in if there are more than seven Members present on the Government side is that the Parliamentary Secretary is unwilling to speak in any detail. Previously, when his hon. Friends came in because there had been a Count the hon. Gentleman said he would not then make his speech.
The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite)
That was not any cause of complaint. My cause of complaint was that I had made notes of the hon. and learned Gentleman's speech and was prepared to answer him, but the hon. and learned Gentleman did me the discourtesy of absenting himself from the Chamber when I was about to reply to him.
§ Mr. Bing
I am sorry that when we discuss this problem the hon. Gentleman's only auditors should be my hon. Friends, but we hoped to be able to bring in some of his hon. Friends from other parts of the building. I am sorry if he feels I was discourteous, and I trust that he will accept my most humble apologies. One of the most interesting things on this was 1475 a question which was not answered on Second Reading, and which is particularly germane to this—
I would call the hon. and learned Gentleman's attention to the Resolution, which merely provides for payment into the Exchequer. I do not think that a discussion on the general principles involved in a Second Reading debate would be in order now.
But this is not a Budget discussion. Discussion of this Resolution is confined to very narrow limits.
§ Mr. Bing
I appreciate that perfectly, but we are, after all, discussing a Resolution in Committee of Ways and Means. What we are discussing is that certain funds should be made available for certain purposes, and that, in fact, we are making provision by way of taxation. Otherwise, there would be no reason for a Ways and Means Resolution at all, and it has been a long-established principle when we are imposing taxation that we are entitled to give the matter some thought and consideration.
The question which I hope I may put the hon. Gentleman without there being any feeling that I am out of order is why is this Resolution necessary? What is the need for it? What is its purpose? I will not go so far as to ask the reason for the Bill for fear of raising points of order, but why should this taxation be imposed at present? What is the urgency of this Measure?
The only explanation we have had so far in the course of the proceedings on the Measure is that it was a Measure which was found by the hon. Gentleman or one of his predecessors in a pigeon hole, and that it was felt it would be a good thing to introduce it. There were a certain number of interruptions on Second Reading, but there was unfortunately, owing to the moving of the Closure, no explanation of the purpose for which the Bill was introduced.
§ Mr. Eric Fletcher (Islington, East)
In order that the Committee may be clear, may I submit, in support of my hon. and learned Friend, that the ambit of discussion on this Resolution is considerably wider than it would be if we were dealing with a Money Resolution.
It is no wider than the Resolution states. The debate must be confined to what the Resolution says.
§ Mr. Bing
In an effort to secure answers to these questions that have been troubling my hon. Friends—and keep in order—may I ask for what purpose is it desired to make these issues? For what purpose is it expedient to authorise payments out of the Consolidated Fund? How is it supposed it is necessary for us to make this sort of provision, and why has it become necessary? What is the change in the situation that has made it necessary to introduce a Motion of this sort? I hope that we shall have some answer from either the Parliamentary Secretary or the Financial Secretary.
§ Mr. Wedgwood Benn (Bristol, South-East)
I feel justified in speaking briefly because I did give warning on Second Reading that I intended to raise these questions of the financial arrangements at the appropriate time which was on Committee of Ways and Means. In paragraph (a) on the Resolution these words occur:the payment into the Exchequer of the amount by which the sum standing at any time to the credit of the fund established under the said Act exceeds the sum which, in the opinion of the Minister of Transport and the Treasury, is likely to be required for the making of payments out of that fund;In effect what the Parliamentary Secretary is asking us to pass is an authorisation for his right hon. Friend and the Treasury to raid this fund if ever it builds up a big enough balance. That is what we are being asked to approve. This, in effect—and that is why it comes in Committee of Ways and Means—is taxation on those who provide the fund and on those people who will pay the premiums under this insurance scheme. I should like to know why the Government regard this insurance fund as a com- 1477 mercial concern—not only a profitable commercial concern, but why they should regard the fund so created as a legitimate object for a Treasury raid.
That, in effect, is what this Money Resolution provides. One well understands that it is likely in time of war that the premiums paid in at some time may be greater than the demands made on the fund, and there may be a very big credit balance. I should have thought in those circumstances that if the Minister found he had £20 million or £30 million which he did not need, he ought to be thinking about reducing the premium. He ought not to be authorising the Chancellor of the Exchequer to use it for debt redemption.
That is why this Money Resolution is very unsatisfactory. It asks this House to approve a scheme in which an insurance proposal—which we cannot discuss on a Money Resolution—creates a great deal of money which at some time may build up a big reserve in the fund, and then the Treasury can simply take that money for debt redemption. It is not good enough, because there must be a possibility that when the fund gets big enough the premium should be reduced.
I should like to know how the previous fund worked—whether, in fact, the Treasury did ever find there was so much in the fund that they were able to take some away for debt redemption.
§ Mr. Benn
I am obliged to you for your intervention, Mr. Hopkin Morris, because I do not want to go outside the rules of order.
Obviously, we are being asked to reenact a Measure and to re-enact, in effect, a Money Resolution which must have been moved when the principal Act was passed in 1939. When I was questioning these arrangements I felt that it might be possible to ask how the old arrangements worked over the last 13 years. There must be some experience of how this has worked, and it would be helpful to know whether the Treasury did ever raid the fund, and if so by how much.
My last point relates to paragraph (b) of the Resolution, which deals with the powers of the Exchequer to raise money 1478 and issue securities for the purpose of providing sums to make good any deficiencies. We now come to the other side of the coin, and we find a very extraordinary situation. I have spoken about the right of the Treasury to raid the fund if the reserves get too big, and we are now asked, in paragraph (b), to authorise the Treasury to raise loans in order to finance it should there be a deficiency in the fund.
This is an extraordinary arrangement. Surely a matter of this kind ought, as far as possible, to be self-balancing. If there is a lot of money in the fund that is not apparently necessary, some of it should be put by in case later on a deficiency arises. I do not see why the Treasury should be authorised to raise money under the Public Works Loans Act, to issue securities to meet a deficiency in the fund and at the same time be able to raid it whenever the fund is profitable. It seems a bad financial arrangement. I do not know if the Financial Secretary could say a word about it. It is an interesting point, and it would help us at this stage if he could say something.
§ 12.15 a.m.
§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
The hon. and learned Member for Horn-church (Mr. Bing) asked what was the need of a Ways and Means Resolution. It is required for two reasons; first of all, because, under Clause 6 of the Bill, authorisation is given for the raising of money by loan, and equally because Clause 5 (3) authorises the payment into the Exchequer of moneys accruing from sources other than taxation. Under the ordinary principles governing these matters the authority of this House on a Ways and Means Resolution is required in respect of both those aspects of the Bill.
In answer to the questions raised, both these powers are purely precautionary. It was the policy under the previous Bill, and would, I understand, be the policy in the event of another war under this Bill, to cover the liabilities of the insurance fund from the premiums. But insurance of this nature is of a very uncertain kind, and it is highly desirable to take powers to provide, if it were necessary, for large sums of money being available without delay in the case of a 1479 sudden rush of claims. If a difficult situation arose, it would be absolutely essential for the credit of this country, and indeed for the defence of the realm, that funds should be available immediately to meet these claims. For that reason, this provision is made to deal with that contingency.
The normal intention is that the money shall be raised by Votes, but in case money might not be available to be voted quickly in the uncertain situation which could exist, perhaps, in the early stages of a war, we have taken the precaution of providing that if money is not available, as it were, from the first line of defence, from Votes, it shall be available by making a charge on the Consolidated Fund. We have carried the precaution further to secure that that money could, if necessary, be raised by loan. That is the reason for one half of this Ways and Means Resolution.
§ Mr. Boyd-Carpenter
I shall deal with both. As it happens—and here I must tread delicately, because you, Mr. Hopkin Morris, pulled up an hon. Member for referring to the last war—so far as the first matter is concerned, the contingency, as I understand it, did not arise; so far as the second contingency was concerned, it did arise.
There may be a large surplus in the event, and that was, in fact, what happened at the end of the last war. It would, quite obviously, be extremely wasteful simply to leave a large fund held in Treasury bills or similar securities idle, and provision is therefore made for its transfer, but for one purpose only—as hon. Members will see from the terms of the Ways and Means resolution—for the redemption of debt. There is, therefore, no question at all of the fund being raided by the Treasury for ordinary revenue purposes. Indeed, the exact converse is the case.
If a large separate fund were to be preserved—far larger than was needed to finance the insurance scheme—it would be a standing temptation to Chancellors 1480 of the Exchequer to raid it. My right hon. Friend the present Chancellor of the Exchequer is completely immune from temptation, but one can never be certain that that would be so in the case of a possible successor.
§ Mr. Boyd-Carpenter
If the fund of the 1939 Act cannot be discussed, I should submit for your ruling, Mr. Hopkin Morris, that it would be difficult to discuss the Road Fund.
It seems to me the whole tenor of the hon. and learned Gentleman's intervention is the desirability of putting such a fund out of the reach of Chancellors of the Exchequer, and that is precisely what this proposal does, by limiting it for use in the redemption of debt. It prevents such a fund remaining available to be raided; and it therefore precisely meets the point of both hon. Gentlemen opposite. It is, of course, a matter of commonsense that it would be ludicrous to keep a large sum of money, say, in Treasury bills, when it could be used to redeem debt and save the National exchequer the interest charge on the debt.
There are, therefore, two sides to this Ways and Means resolution. The first is to provide reserve arrangements in case of a heavy spate of demands on the fund. Hon. Members will agree that it is absolutely essential that in those circumstances the claims should be able to be met and met promptly. Secondly, it is to deal with the more agreeable contingency of a large surplus accumulating, and when it is no longer required for this scheme it will be used for the very proper purpose of reducing debt and thereby incidentally saving any future Chancellor of the Exchequer from the dangers of falling into temptation.
§ Mr. Herbert Butcher (Lord Commissioner of the Treasury) rose in his place, and claimed to move, "That the Question be now put."
§ Resolution to be reported this day.
§ Committee to sit again this day.