HL Deb 07 July 1920 vol 41 cc31-69

THE EARL OF MIDLETON rose to call attention to the great increase in the estimated "normal" expenditure of the country, and to move— That it is incumbent on the Government to reduce the present undue strain on the resources of the country, and to appoint Special Commissioners with power to wind up existing Departments for special War Service, and to reduce other inflated Establishments to a normal level. The noble Earl said: My Lords, this subject has been under discussion in this House on several occasions in the last two years, and I think it is due to those who have brought it forward—to Lord Inchcape, Lord Faringdon and Lord Buckmaster—to say that I think it would be difficult to find in any of their speeches anything which the Government could now say had been falsely prophesied. Indeed, the prophecies they made have become facts, and we are at this moment in a difficulty because each successive White Paper issued by the Treasury goes further to substantiate the figures given to us by speakers and critics in this House, and gets further from the expectation of the Government, as advanced by the Chancellor of the Exchequer. I hope I am not saying anything which will in any way annoy any member of the Government, but it is now universally admitted that Government Departments are being run on an extravagant scale, and that the Government itself seems to have no power to check extravagance.

I have no doubt of the academic desire of the Government in that particular, but the members of the Government themselves, and more especially the members of the Cabinet, are so overworked and over-occupied with other affairs that their control over expenditure has absolutely been abandoned. Indeed, the Chancellor of the Exchequer practically admitted it last night, for, in answer to a question, he said they were attempting to form seven Committees to investigate seven Departments. Of course, he would not take that step unless he were persuaded that there was abundant reason for economy. I submit that that procedure will be wholly inadequate, and will produce nothing. I have myself been a member of the Retrenchment Committee formed after the Motion in. this House in 1915. It sat for three months; it had the then Chancellor of the Exchequer, Mr. McKenna, for its Chairman; it had picked representatives, both of the Government and of business; and yet the majority of its recommendations were wholly set aside. My first point is that no Committee which is simply to investigate is of the smallest advantage. Any of your Lordships who would take the Papers which are put before you could carry out that investigation.

The reason why I think it is now urgent to trouble this House again is that the reaction which was particularly foretold by Lord Inchcape in a speech made, I think, nearly two years ago, has already set in. Some of the advantages which were hoped for at the close of the war have been realised. The hours of workmen are shorter, and wages are infinitely higher, but output is infinitely less, prices have become exorbitant and there is now a congestion of supply because people, under the increased taxation and the enormous prices, are unable to buy. The result of that must be seen very shortly in large losses to those who are holding great stocks, and ultimately in a fall in wages, unless there is to be great unemployment in the coming winter. Those facts alone, I think, constitute a case of urgency for our immediate demand on the Government for a decrease of the national expenditure.

I am not by any means charging against the Government the whole of what is taking place, but I submit two points. The first is that in every single case in which they have been either forced to interfere or have interfered with the ordinary laws of supply and demand, and have undertaken, as national services, services which could be well carried out by ordinary endeavour, they have added to the difficulties of the country. The second point is that there is no genuine action in the direction of economy of expenditure. Neither Lord Milner nor Lord Peel, who have answered us on previous occasions, is present. But I wish to say, in reply to Lord Milner's statement, twice made in this House, that we ought not to be afraid of spending in these days in order to create fresh wealth—in proof of which he cited the instance of Lord Cromer in Egypt—that I think those citations are not worth repeating to this House unless they are accompanied by the conditions which Lord Cromer imposed in Egypt, which Lord Kitchener and Sir Reginald Wingate imposed in the Sudan, and which have been imposed by countless Finance Ministers in India—namely, that if you are to spend to create fresh wealth, you can only do it if you insist on the utmost economy in every Department. That is exactly what the Government are not doing. If you will spend to create fresh wealth, and you do not enforce economy in any Department, you come to the position which has brought all the South American Republics in succession to confusion, and almost to bankruptcy.

I cannot help asking whether this is not a dangerous situation. I apprehend that the danger of the situation at this moment is that the manufacturers of the country in a great many trades are leading public opinion to believe—what is no doubt their awn conviction—that it is the continuance of the Excess Profits Duty which is really handicapping output, and keeping up prices. The Excess Profits Duty is a large subject into which I shall not go, except to say that it is admitted on all hands that the sooner the Government are in a position to pay their way by reducing it the better. But what is really handicapping industry at this moment is the immense pressure of ordinary taxation. Take the receipts of the Exchequer in the last three months. In that period in 1919 the revenue was £186,000,000; in the last three months, to June 30, 1920, the corresponding period, the revenue was £315,000,000. That is a very blessed position for the Chancellor of the Exchequer. But what does it mean in common English? It means that £130,000,000 more has been taken out of the pockets of the people in three months, and that, as the law of supply and demand enforces a buyer as well as a seller, buyers are reduced in this country by £130,000,000. You cannot have it both ways; and, of course, there will be a scarcity of purchasers and a scarcity of employers if you insist upon taking into the Exchequer a very much larger portion of the annual income of every man.

One other point. Before the war taxation in the United Kingdom was £3 10s. per head. It is now £21 6s. In France taxation has gone up four times; in Italy about two and a half times; here it has gone up nearly six times. There is only one remedy for this state of affairs—you must stop spending. It is impossible to continue at the present rate. I will trouble the House with as few figures as possible, but what do we find as compared with the period when we were discussing this question last year? In those days we had before us the Budget Estimate of the Chancellor of the Exchequer for a normal year, and the figures are most instructive. We have had a fresh normal year Estimate published three or four days ago. Mr. Chamberlain estimated last year for Consolidated Fund Charges, £400,000,000; this year, £372,000,000. But, further down, he gives a balance for Debt redemption. His estimate for the fighting Forces was £110,000,000; he now estimates them at £135,000,000. lie estimated the Revenue Services—the Post Office, Customs and Excise—at £53,000,000, he now estimates them at £68,000,000. With the fullest knowledge he estimated the Civil Services at £190,000,000; he now estimates them at £305,000,000. That is an increase of £115,000,000 in one year in his view of what the normal expenditure of the country will be practically for all time. That Estimate in itself would justify the House of Commons giving up the whole month to this question and your Lordships any time which is necessary.

I now propose to examine, in as little detail as I can, the Civil Service Estimates. I may say that even those figures are not final because a fresh Paper was issued on June 30 giving some gross totals which seem even to inflate that large total; but for my purpose you will, perhaps, allow me to take the figures as I have them. With regard to all the other figures I will submit only one observation—namely that the sum of £135,000,000 for the fighting Forces, as against a sum of £110,000,000, will not nearly suffice if we are to continue to police practically the whole of the Near East. I do not want to go back on what was said when the matter was amply discussed on the Motion of Lord Islington a few days ago; but, unquestionably, that figure will be enormously increased unless the Government can see their way to make fresh arrangements in the Near East. But when we come to the Civil Service Estimates I am not going to trouble you with any trifling figures. I regard as an entire fallacy the method of argument by which some people, on behalf of the Government, have said, "When you are talking in all of £1,000,000,000, what is the use of telling us how we can save a million here and a million there; it is a question of £50,000,000 or £100,000,000." You will never get to the £50,000,000 unless you begin with the £1,000,000 or £2,000,000.

What are the facts? The Civil Service, at the moment the war was over, comprised, without counting the Post Office, about 69,000 persons. It now has 158,000 persons. There are 90,000 more civil servants to-day than there were at the time of the Armistice. No wonder the expenditure has gone up by £100,000,000. In London alone there are at this moment 77,000 civil servants within five miles of this place, as against 30,000 before the war. And remember that the whole of those extra 47,000, if you maintain them, have to be housed. At present they are in wooden buildings; and, as a fore-runner, we see an item in the Estimates for £425,000 for a site at Bloomsbury for putting up public buildings, on which I have no doubt, if we allow this number to go in, we shall have to expend £20,000,000 or £30,000,000. Therefore, it is not a trifling question.

There are three classes with regard to which I would ask your Lordships to listen to an instance or two. There is the class of merely inflated public offices which have simply, owing to the war, become much larger without many fresh duties, and which want pruning down. There are the ambitious schemes which the Government have entered into as part of their reconstruction and of which I complain that, however desirable each may be individually, the nation must cut its coat according to its cloth and cannot enter into all of them at once. There are the War Ministries which, I submit, ought to have been brought to a close before now. As an instance of the first class, the Home Office has gone up from 248,000 to 467,000. The Revenue Buildings have gone up from 640,000 before the war to 1,631,000; and the Irish Land Commission, which has practically nothing whatever to do at this moment, has gone up from 671,000 to 1,118,000. The only commentary I would make on those subjects is that the expert Committee, of which the late Chancellor of the Exchequer was Chairman, condemned every one of those cases of expenditure, and every one of those increases has been entered into in the face of the recommendations of that Committee. That makes your Lordships see what is likely to be the value of the Committees which Mr. Chamberlain last evening proposed to set up.

Then there are other questions on which, if we only had someone in this House who had the time or who was specially connected with these subjects, we might well ask for an explanation. The Admiralty Staff has gone up from 4,400 before the war to 12,800 in the present Estimate, while the number of men voted has gone down from 149,000 to 132,000; so that, although there is less work to be done, there are more than twice as many people to do it. About the Army I say less, because, although the number of men is supposed to be only a little more than double what it was before, immense work is being carried on in all parts of the world, and the staff is four times as great. The Labour Department has doubled its staff since the Armistice. On that I venture to submit that, if we are to have labour exchanges all over the country at the present high rate of wages, a very small fee, paid by employers and employees in each case, would seem to me to show what is the value of a particular exchange—of which there are far too many—and would, in cases where exchanges are really needed, amply cover the expense of setting them up. An old friend of mine crops up here in the same category—the Stationery Department. We used to have £1,000,000 worth of stationery before the war; now very nearly £5,000,000 worth is used every year. These increases are beyond human possibility to cope with, unless they are drastically dealt with. The mere making of a report upon them will carry you very little further.

But they are put into the shade when you come to the second class. The Ministry of Health have, at the same time, an ambitious health policy, an ambitious housing policy, and an ambitious education policy. In addition, there are great policies for transport, for labour exchanges, for railways, and for coal mines. They cannot drive all those omnibuses abreast through Temple Bar without causing a complete dislocation of what is the real traffic, in finance—namely, what people are able to afford to spend; and they are heading direct to a crisis, I submit, by attempting it. Even so, I suggest two or three cases in which there might be reductions. Take agriculture. Agriculture has gone up from £264,000 in 1913 to over £4,000,000 in 1920. The training and land settlement of ex-service men cost £2,000,000. In addition to having to do that, we are now spending on agriculture and fisheries research £325,000, and on dairy education another £325,000. It is absolutely impossible to undertake every service at the same time, when you have to settle all these men upon the land. Then education, which cost £18,000,000 in 1913, is costing the country £55,000,000 now, and the normal expenditure is put at £73,000,000. I know that I shall bring an avalanche about me if I say a word about education, and, therefore, I only state that if we have progressed to the extent of 200 per cent. in our expenditure in the course of five years, we might well rest on our oars until we have further money to spend.

As regards transport I can only congratulate, your Lordships that every word that was spoken in this House last July has already come true. A large body of members of this House voted for dividing the Transport Bill and for postponing the inordinate expenditure which was proposed under it. We were met by the Government by a clear statement that they would take the opinion of the country if we stood in the way. There is not one man in the House of Commons, outside the Government, who stands up now for the expenditure which has been incurred by the Ministry of Transport, and I do not think I am mis-stating that case.

One word on the Services which ought to die out. I am sorry to intrude so many figures into these remarks, but it is difficult otherwise to deal with the subject. Take the Ministry of Shipping. I have had to deal with a good many Estimates in another place, but I never saw such an Estimate as that for the Ministry of Shipping. The Ministry of Shipping turned over—and this is the only way in which you can really estimate commercial results—this year £26,500,000 worth of stuff in sales, purchases and the conduct of the business. Last year that Ministry turned over 1118,000,000. The staff last year was close upon 200,000, but the staff this year, when they are doing one-sixth of the work, is 18,00) higher. It is absolutely impossible, and any business house would have to close its doors in a couple of years if it went on in that way. If you want a contrast take the sale of ships. The noble Lord, Lord Inchcape, came forward, as we saw in the papers, for the purpose of relieving the Government of the great difficulty of getting rid of £35,000,000 worth of ships, and he concluded the whole of that business, without attempting to take money from anybody, at an expenditure, not of £200,000 a year, but of £850. The debt which the country owes the noble Lord is very great in other respects, but honestly I think he has shown what can be done by private endeavour, which really encourages us to hope that in regard to the Disposals Board to which I come next, the Government will yet see wisdom.

The Munitions Department is still costing us £27,000,000 a year, although all munitions provisions should have been closed up in the last eighteen months. It is true that the 3,000 persons, each of whom is drawing over £350 a year in the Munitions Department, have been reduced by half; but immediately 650 of them have been taken on by the Disposals Board, which is now costing £413,000 a year. I have no time to do it, or I would like to give your Lordships instances of how, in France, dumps are deteriorating by thousands of pounds daily whilst the Government will keep them and will wait for a period before selling, instead of clearing them out and relieving themselves of expenses which run up in three or four months to more than the whole value of the articles.

I hope it will be considered that I have made some case regarding the first object of the Government—to attack these inflated Estimates. They are by no means finished. We have not got to the end. Each time that a Budget comes out, it is full of fresh charges. I think in the last ten days we have heard of the following. First £26,000,000 extra to finance overseas trade. Secondly, I was in the House of Commons a few days ago and heard a proposal to vote £1,750,000 a year for pre-war pensioners to raise them to a higher scale. Thirdly, £250,000 for Civil Aviation, against which, I understand, the military aviation authorities have strongly protested. What nest week will bring forth we cannot tell, but it seems to me that we are heading for a position in which, in order that no one shall suffer, everyone will be suffering.

My reason for moving the motion is that this nation has shown itself most willing and capable of making great efforts in the national cause. When I was listening to the debate which took place on ecclesiastical rates I could not help thinking of the number of men of moderate means who are at this moment tilling their own land without assistance and whose wives are doing the whole of their own cooking; of the number of men of superior means who are at this moment reduced to absolute poverty and unable to keep open the houses in which they live; and I submit that men will not grind and save and struggle in order to keep this horde, this army, of civil servants engaged in labour which they had much better give up for more productive work.

When the Chancellor of the Exchequer says that he will propose to form Seven committees in order to investigate I would like to use the old House of Commons form with which we were familiar for many years and move that this army of civil servants be reduced by 50,000 men. It can be done, and the country would have the advantage of their having to find productive employment. I dare not go so far as that to-night, but I urge your Lordships to pronounce unhesitatingly, not that there should be committees to investigate but that the Government itself—the members are too busy to come down to listen to this debate—should appoint three persons in whom they have confidence, with power to act and reduce before the winter these exaggerated numbers. I am actuated by no hostile spirit to the Chancellor of the Exchequer. I recognise the high purpose and courage, and to a large extent the foresight, which have been shown by Mr. Chamberlain in doing what every financier who has spoken from this side of the House in the past declared was absolutely essential—namely, that we should incur high taxation. But that must be tempered by a most inflexible purpose—to reduce expenditure. I am convinced that when the time of trial comes, as it will very shortly, when reduced power of purchasing and reduced output is followed by reduced wages, and possibly by a good deal of suffering, the one salvation of the Government will be that they can come here with clean hands and tell us that, while obliged to make these large demands on the country, they have administered the national resources with vigilance and with prudence.

Moved, to resolve "That it is incumbent on the Government to reduce the present undue strain on the resources of the country, and to appoint Special Commissioners with power to wind up existing Departments for special War Service, and to reduce other inflated Establishments to a normal level."—(The Earl of Midleton.)


My Lords, on August 5, 1918, your Lordships were good enough to listen to some remarks I made in your Lordships' House, when I ventured to strike a note of warning as to what would happen in the event of our embarking in all sorts of schemes involving expenditure which had nothing to do with the war. I raised no objection to spreading ourselves out to win the war; that was our objective. At any cost we had to win—and we have won. But now that we have won, we ought to look our finanical position fairly in the face. In speaking two years ago, I estimated that if the war came to an end in March, 1919, we should be left with a national debt of not less than £6,000,000,000, and that our annual expenditure would be not less than £700,000,000. I ventured to say we should have difficulty in getting rid of our floating debt. A noble Lord who followed me said I was pessimistic; also that the floating debt could be funded. Some months later he was generous enough to say that I had not overstated my case. I tried to avoid overstating it, and I will endeavour not to overstate it to-day.

We have a national debt now not of £6,000,000,000 but of £8,000,000,000, on which the interest alone, of £345,000,000, is about double our whole national expenditure of seven years ago. The Chancellor of the Exchequer estimates that in a normal year our expenditure will amount to £1,000,000,000, or five times what it was in 1913. He may be able to raise it. I hope he will. I do not want to see the country having to repudiate its obligations. But I cannot help thinking the day is not far distant when the revenue from Income Tax, Super-Tax, Corporation Tax and Excess Profit Duty (even if it is continued at 60 per cent.) will shrink in its yield. There are not wanting signs that the trade boom is collapsing. Income Tax, Super-Tax and Death Duties are now bringing in £432,000,000 a year. This is a large figure upon which to rely. Big incomes are paying, including their proportion of death duties, 16s. in the £. They cannot pay very much more.

If the revenue from direct taxation falls away, what is to take its place? It may be said that there are always general Import Duties to fall back upon, and that there is a revenue in reserve in these. Import Duties were advocated at one time in certain quarters because it was hoped they might lessen direct taxation. If they have to be put on in addition to the direct taxation now imposed, I am not sure that they will have quite the same welcome. My Lords, we ought to realise that as a, nation we are £7,000,000,000 poorer than we were six years ago; that our expenditure in a normal year will be £800,000,000 more than it was before the war; and that we cannot afford to embark on grandiose schemes or fling money about. Of all the questions that are crowding the political stage this one of finance is by far the most important. Nothing can be right with a country if its finance is wrong; the evil effects of Government prodigality, of excessive taxation and of a deranged credit system are felt, sooner or later, in every home and every industry in the land.

Do these phenomena obtain in Great Britain at this moment? Are we spending more money than is necessary? Are we for this purpose raising more by taxation than industry can afford to pay or than the social wellbeing and contentment of the people can fairly support? I agree with every word the noble Earl has said on that subject. And are our methods of taxation and our administrative policies such as to discourage that spirit of enterprise which, when all is said and done, is the only thing that can keep this or any other country commercially prosperous? I am afraid that all these questions have to be answered in the affirmative. We had from the Chancellor of the Exchequer the other day a revised forecast of the national balance-sheet for a "normal" year—a year in which the Excess Profits Duty and Governmental trading and control in foodstuffs and shipping and all subsidies and donations will have ceased, and we shall all have returned to a state of economic sanity. He did not mention the precise year in which this recovery may be expected. There are, so far, very few signs of its approaching advent, and unless we radically change our present procedure—and above all, the spirit in which we approach these grave problems—I fancy it will be a close thing between a "normal" year and the Greek Kalends.

But I would ask your Lordships to note that even. in this hypothetical year, when the fiscal débris of the war has been swept away and a thrifty Government and a reduced bureaucracy are once more resuming acquaintance with the elements of sound economics—even in this halcyon period the amount to be raised in revenue is put at over £1,000,000,000. That is to say, one quarter of the entire income of the nation is to be taken and spent by the Government. Before the war the amount so claimed was not put, I believe, by any economist, at more than one-twelfth. The first fruits of "normality," therefore, will be that we shall be required to devote to the service of the State a percentage of the national income three times as great as was demanded of us before the war. You may say that the change in the value of money vitiates this comparison. I do not agree, though I admit at once that it affects it. If pre-war standards of expenditure were to govern the "normal" year, then 15 per cent. of the national income, certainly not more, might properly be seized by the tax-gatherer.

There is one other point in the Chancellor's forecast that I would ask your Lordships to note. It is over £70,000,000 higher than his Estimate of eight months ago. I am afraid of two things—first, that the "normal" year will still be a visionary "perhaps"; and, secondly, that the amount needed to finance it' will have to undergo another enlargement. I am afraid I distrust these problematical balance sheets, drawn up for an undated year of unforeseeable circumstances. I think they are apt to distract us from the immediate and imperative duty of fighting extravagance here all now. They make people think that extravagance will diminish of its own accord, if only we say nothing about it and fix our minds resolutely on some nebulous future period, about the proximity and character of which we know nothing at all. But what is it that actually happens? Why is it that with all the present outcry against reckless public expenditure there would seem to be no power strong enough to check it? Your Lordships know how the thing is worked. A Minister in charge of a Department brings forward some scheme for which there might be a good deal to be said if only the country were in a position to afford it. Despite the protests of the Chancellor of the Exchequer, he gets the Cabinet's blessing for it. It goes before the House of Commons with the Government's imprimatur; the Whips are put on, and the country is saddled with another huge burden of expenditure.

This way of doing things is bound to lead to a catastrophe. We have got to realise that, though we won the war, it has been at the cost of something very like a financial breakdown; that the national resources have been heavily mortgaged; that our financial reserve has pretty well disappeared; that the debt is thirteen times greater to-day than it was six years ago; that our currency is debased and our circulating medium is at a severe discount in gold-using countries. These are the facts that should govern our financial conduct. We must, as a nation, do what under similar circumstances each individual would do if he were honourable and desired to avoid bankruptcy—we must retrench. We must get clear away from the spending atmosphere that has prevailed throughout the war. We must revive what I may call the old Gladstonian conscience in regard to the public purse. Short work should be made of the new war-born bureaucracy, and the Offices of State should be reduced to something like their pre-war proportions. We should not tolerate the presence of thousands of men and women in the Public Departments, who, to a great extent, are compiling statistics and doing similar ornamental work that adds nothing to the productive power of the nation. We ought to recognise that the sense of prosperity, engendered by our borrowing and spending lavishly for the war, was never anything but a mere hallucination, and that now, when credit is drying up beneath our eyes and when the mainsprings of industry are becoming clogged, the salvation of the country and its commerce depends on a rigid and relentless economy.

Yet the spectacle we are actually witnessing is hardly one that suggests economy. The Government is launching out into new Departments, giving doles and subsidies all round, as though the people of these Islands had a bottomless purse. To take one instance—the work that was previously done by a Secretary in the Railway Department of the Board of Trade is now done by a full-blown Ministry, which will cost the country many hundreds of thousands a year. And, incidentally, did your Lordships notice what happened the other day? It was typical and suggestive. This new Ministry submitted some Estimates of its administrative expenses. They were so staggering, the outcry against them was so loud and instantaneous, that they were withdrawn, revised, and sent in again with a saving of some £70,000. At that rate they would only have to be returned to the Ministry four or five times for the discovery to be made that the country could get along quite well without it. What good the Ministry is to do I honestly do not know. The head of it is probably one of the ablest railway men in the country. The Ministry is really his creation, in the sense that if he had not happened to be on hand no one would have thought of establishing it. But how long he will retain his present position is a matter of complete uncertainty. He has done great public service. Within the last few years he has been a railway manager, a Major-General, an Admiral, and he even aspired to be a shipbuilder. He "collared" for the Government what was to be a national shipyard at Chepstow. Your Lordships will forgive me if I speak with some feeling here. He ousted the shipbuilders who really knew something about their business, and, after millions of public money were spent on the yard, the undertaking has been sold, if I am rightly informed, for, comparatively speaking, "an old song," and report goes that even the old song will never be sung.

The omen is not an auspicious one. Sir Eric Geddes is undoubtedly a most capable man, but even with the assistance of his numerous and many-titled Directors-General and lieutenants, it is no disparagement to ask, what can he teach the managers of our great trunk railways about their business? What can he teach Lord Ash-field about the management of the Underground? No more, I am afraid, than he could teach the shipbuilders at Chepstow what they did not know about shipbuilding. This huge and expensive Ministry of Transport, in my judgment, will prove in the end to be little more than a mere Post Office through which the Government and the railways will conduct an ever-lengthening correspondence on all railway questions. I am credibly informed that the statistics already required to be furnished by the Railways to the Ministry of Transport are costing £1,000,000 a year to supply. This £1,000,000 a year will not drop from the heavens, nor will it well up from the earth. It will come from the pockets of the public who use the railways. We got along quite well before the war without these statistics, when railway managers were free to attend to their proper business instead of being called upon to dance attendance at Whitehall, as they now have to do. We had a railway system then that was cheap, expeditious, solvent, and in no need of subsidies. To-day, solely as the result of State management, and State interference, we have a system that is expensive, congested, and very far from paying its way.

What is true of the railways is equally trite of the mining industry. Five years of Government control have brought it to chaos. Bunker coal is costing £5 a ton, and our magnificent export trade in coal is a thing of the past. Take the case of the Land Valuation Department. The taxation of land values has gone by the board, and rightly so, and with it the Department should have been thrown overboard too. But nothing of the kind. It is to be kept in existence at a great annual cost, because it will, forsooth, be able to collect information which it is thought may possibly be of some service a hundred years hereafter. We cannot at the present time afford to indulge in such luxuries as these. Look at the labour exchanges with their great buildings and huge staffs. They have proved, with their burdensome mechanism, to be a superfluous futility, and they should be scrapped.

We used in this country to have a large trade that was interested in building houses. If we had left it alone we should to-day have had twice as many houses built, or in course of erection, without any subsidies, and at one-half the cost, as we have under the force of the State Housing scheme. As a business man, I am free to say that I do not know a single principle of business and common sense that has not been violated by the Government from the first fatal moment when it thought it could build houses better or more quickly, or at less expense, than the men in the trade. Both the taxpayers and the ratepayers will have to pay through the nose for this supreme example of Departmental megalomania. We want to get rid of the excrescences in St. James's Park, which are making ducks and drakes of the people's earnings, and we want to see the water inhabited again by live birds, which are much more ornamental and less expensive to feed than the present occupants.

I have complete confidence in the recuperative capacity of these Islands, in the powers of organisation of the captains of industry, in the skill, the energy and the law-abiding disposition of 99 per cent. of the people, knowing as they do that the avenues of advancement are open to all, but unless we get the industries of the country free from the sterilising and damaging effects of bureaucratic control and interference, unless we get rid of the functionaries and parasites who are feeding on the public and holding all enterprise in check, we will never recover that prosperity which enabled us to forge ahead and to build up the wealth of the people, which is the wealth of the country, and which provided us with the Empire's first line of efence—and that is solvency. I have spoken more strongly than is customary in your Lordships' House, but I have spoken from earnest conviction. I have endeavoured to avoid saying anything disagreeable and I hope I have succeeded. I must apologise for having intruded at such length on your Lordships' time, and I thank you for the courteous hearing you have given me.


My Lords, I have so often trespassed upon your patience in discussing the financial position of this country that I might well hesitate this afternoon before I repeated the offence, but I cannot refrain from the temptation afforded by the Motion of the noble Earl who sits by me to beg your Lordships once more to consider how serious is the financial position in which we stand, and how completely unable the Government appear to be to realise its result. Industrial discontent is due to financial disorder, and you will never still it by merely providing from time to time that the increased difficulty of the situation in which labour stands should be met by the provision of a larger wage. The only means by which it can ever be properly and successfully attacked will be by restoring stability to industries, reducing the inflated currency, and establishing our financial position upon such a basis that people may have some reasonable prospect of looking forward to reduced instead of to increased taxation.

I believe that to be of enormous consequence, for this reason. Taxation at the present, moment is being met to a large extent by the use of capital assets. There are numbers of people who are quite unable to meet the burden of the expense that is thrown upon them by the existing system of taxation without using the resources that they have accumulated in better years, and as that goes on it follows that the resources from which taxation can be drawn will dwindle and grow less and less, and the productivity of the taxation of this country will be seriously menaced. But if that happens, how are the expenses to which the Government are committed to be met, unless instantly a close and rigorous system of economy is established? I ventured, more than eighteen months ago, to urge the Government to what I believed then, and believe now, to he the only course of safety—to obtain an exact return from a body of people competent to advise as to the amount of taxation that this country could bear without injury to its industries, and, having provided that, to compel all the Departments to come within the allotted share of that amount for their annual expenditure. It is quite useless to proceed the other way. If you are going to ask each Department what they want to spend and then add up the total, you will reach a sum which will be far in excess of the ultimate taxable capacity of this country.

The Government never appear to me to give any serious attention to this matter at all unless they are stimulated, not by discussion in this House, or even by discussion in another place, but by a discussion in the newspapers. It is the only thing that ever seems to bring home to their minds the knowledge of the grave position in which, as I think, we stand. And when that does occur you find an inspired paragraph stating that the Prime Minister is giving this matter his personal consideration, and the next thing you hear is that he has sent round a letter to all the Departments telling them that they must spend less. And then the matter ends, unless, indeed, a debate is raised in this House, and then any person who attempts to point out the gravity of the position in which we stand is invariably chidden by the representative of the Government, who points out that we ought to feel great regret for having expressed such views on the matter.

This is what happened in the last debate which took place in this House in March of this year. That was a debate instituted by myself, in which I asked your Lordships to agree, among other things, that it was essential in the national interest "that the expenditure for the ensuing financial year should be brought within the compass of the year's revenue." The Government accepted the Resolution—accepted it without putting it to a Division. Having done that, within a week or two weeks they bring forward their Budget, which shows on the face of it that the revenue is £72,000,000 short of the expenditure. It is obvious that the Government paid no attention at all. It did not matter to them. They had got over the accident of a Division in which there would have appeared a hostile majority against them. They accepted the Resolution and let it pass.

There is one other view which is equally possible, and that is that really the financial advisers of the Government do not know where they stand. That appears to me to be a very possible explanation of what they do. In March of last year a normal Budget sheet was brought forward by the Chancellor of the Exchequer, making the total of our annual expenditure £766,000,000. In October of last year that Estimate was revised and the total was brought forward at £808,000,000. It was that figure, that I questioned, and I pointed out—and was subjected to some reproof—that it was inadequate, and that nothing short of £1,000,000,000 would really meet the situation. And within little more than six months that is the new revised Estimate. If the Government's expenditure is to be conducted on the footing that they are unable to estimate what is to be the normal annual expenditure of this country, without making a mistake of £230,000,000 a year in one twelve months, what trust or confidence can we possibly have in the judgment which they put forward in the figures which we are now asked to accept?

The matter appears to me to be even more serious than that, because there are numbers of these figures which you would have thought, they would have recognised could not possibly be at the amount at which they brought them forward. Let me take one example. In October, 1919, a figure was brought forward as the Estimate for public health, and it was set down at £11,000,000. A further Estimate of £10,000,000 was brought forward for housing, making a total of £23,000,000. At the present moment the Estimate for these figures, as brought forward, is, I think, no less than £34,000,000. All that has happened in the space of little over six months. What justification can the Government have for under-estimating an expenditure connected with public health—which was then started, and the matter was therefore well understood—to such an alarming extent? The thing becomes more striking still when we consider the Estimate for a matter like education. Education was originally estimated at, I think, £35,000,000. It then came forward in the present Budget at £56,000,000, and to-day it is to be £70,000,000. That has happened within the passage of a few weeks. And you can take one figure after another—and it is not an uninteresting occupation, though it has rather melancholy consequences—and you can find figures upon which all the information ought to have been in possession of the Government at the time that they introduced the Budget, which are now enormously increased in the Estimate for the normal year. In truth, these succeeding Estimates for the "normal" years arc nothing but milestones that mark the progress of the Government along the road which leads to disaster.

There are other things in the present figures which certainly require investigation. I should like to ask whoever will answer on behalf of the Government a question, which is apparent on the. very face of the final balance-sheet published for the year. The National Debt services are brought forward at £345,000,000, or roughly £24,000,000 inside the fixed Debt charge, and £320,000,000 outside. Is there included in them the interest that is payable on the loans owing to America? Is there any member of the Government who can answer that? Apparently it cannot be answered.


I do not think so. An effort will be made.


I would like to know one or two things about it. if it is not included, it is obvious that this Return is £60,000,000 a year wrong. If it is included, is it not true that an arrangement has been made by which that interest is foregone for three years, and accumulated? And, if so, how is it shown there at all, and why? And, if it is not introduced because it is kept outside, the only meaning of that is that you are increasing your capital liability by £60,000,000 a year, and the Budget does not show it. I am inclined to think that is probably true. It is a very important matter, because, if you are going to upset your annual expenditure by £60,000,000 a year at the outset, your ultimate figures will be dislocated throughout.

And the same thing is true with regard to another item to which I invite attention. There is £302,000,000 brought in here as representing the sums that we shall receive from reliable capital assets. I should like to know whether that is the gross figure or the net, or whether that is the figure after further sums have been received and have been carried to the credit of some of the expenditure accounts; because, again, if that is the case, the Estimates of expenditure in this Budget are all inaccurate; and it looks to me, from the last Paper published, that this is probably what occurred. I notice that while the Ministry of Munitions is down as £21,000,000 in this account, it is down in the last account as £65,000,000. It seems to me the only explanation of this is that in the first it was introduced as a net figure and in the last as a gross figure. The difference will not appear in any balance sheet at all, and certainly not in the £302,000,000.

Supposing we accept the inevitable and take £1,000,000,000 as the Budget which we have annually to meet, I have said before, and I repeat, that I do not believe that this country can continue permanently to pay such a sum. It is a much easier thing to raise the money at a moment like the present when industry is beginning to prosper, when trade is beginning to grow brisk, and money is comparatively plentiful, than it will be in the days which are most certainly coming when industry will begin to flag, when trade will cease to prosper, and when money will begin once more to grow scarce. Unless we take this opportunity for compressing our expenditure within the limit that we shall be able to reach in times of difficulty as well as in times of success, the day will come when the Chancellor of the Exchequer will be bound to meet the House of Commons and say that he knows no means by which he can raise the revenue to meet the expenses to which he is committed.


My Lords, there is one great question which, perhaps, is not sufficiently considered in this matter of cost and that is that every excess of expenditure that is not productive must be reckoned in the death-rate of the population. So nearly is this balanced that from 1870 to 1910 a fluctuation of 6 per cent. in the production of any country was followed by a similar fluctuation in its population. Example is always better than precept. So long as the Government are practising unheard of extravagance in regard to employment that is not productive of the absolute necessities of life, you cannot expect the mass of the people to study economy in the absolute necessities of life. In ten or twelve years this extravagant expenditure in connection with official bureaucratic work will react upon the people by leaving us with a few millions of the population doomed to starvation for want of employment. If we cannot keep control in Ireland at the present time, when there is no such poverty and no such want of employment, I ask, What power on earth is going to keep order and prevent civil war in England ten years hence if we do not study economy now and ensure that we have not then a large number of starving people? When it comes to an impossibility to produce, or to get sufficient employment to keep the population alive trouble is bound to happen.

Throughout the whole course of the world's history, a starving man has always been found to fight before he will lie down and starve. Such questions as distribution by wages or profits or prices are immaterial. They do not affect the average wealth-giving power of the community in the least. But when want of employment reduces the position of the community things will right themselves, because a man will always take a lower rate of wage rather than die of starvation. But expenditure in unproductive ways must be reckoned in the death-rate: and when a large number are reduced to living below the standard which will keep them in the necessary state of health wholesale disease passes through the country as it has done in centuries gone by: just as the poverty which the people voluntarily accepted during the war brought about the epidemic of influenza after the war. We may be willing to take such burdens on our shoulders in order to preserve our national greatness and to win a war; but the nation is not willing to take a like extravagance on its head simply to create a bureaucracy which is not a necessity or a requirement.

We are again nearing in the course of history what happened between 300 and 500 A.D. when the Roman Empire bureaucracy grew to such an extent that in 200 years it broke up, accompanied by starvation throughout the whole of Western Europe. The same thing is before us in the next 200 years if we do not economise to the utmost extent of our ability. In the whole of my life I have never found that you are able to re-establish your capital or your trade by increasing your expenditure when you are living above your income. That is the state in which we are at the present moment: and the sooner we begin to retrench the less chance there is of our finding ourselves in a few years with a large number of the population. in bankruptcy and without any means of livelihood.


My Lords, I very greatly regret that public engagements have made it impossible for my noble friend Lord Milner, who is so great a master of this subject, to undertake the heavy burden of replying to the criticisms which have this afternoon been directed at the policy of the Government. He would have been able to give your Lordships a larger degree of assistance than I can hope to do. But I will attempt, after making one or two general observations, to reply to such specific complaints or criticisms as have been made.

I commence by saying that I welcome every debate on this subject which takes place in this House. I heard my noble and learned friend Lord Buckmaster say a few moments ago that the invariable progress of such debates was that those who raised them were scolded by the spokesman of the Government. My noble and learned friend must allow me to say that he can take pretty good care of himself in these matters and, if there have been scolding in the course of these debates, it has most assuredly not all, or even the very great proportion of it, proceeded from that side of the House opposite to my noble and learned friend. I am not conscious in any debate of any spokesman of the Government who has not replied with courtesy and respect according to the measure of his capacity, to the very drastic and unsparing criticisms in which the noble and learned Lord has from time to time indulged. I remember reading in the old Dialogues of Plato of one who was very harshly rebuked, turning round to him who so rebuked him and saying; "Teach me a little more gently, O my friend." I am not at all sure that my noble and learned friend's admonitions, valuable as they often are, would not bear a richer harvest of fruit if occasionally he remembered that, after all, it is human to err. In reply to the noble Earl, let me say that too frequent debates cannot take place, either in this House or in the House of Commons, on the necessity of economy. But I feel that there is a tendency on the part of some of those who have spoken in this debate to talk as if Ministers were resolutely determined, either through megalomania or through some other form of mania, to plunge the country down a slope which will inevitably conduct it to financial ruin, and that they are doing this with vivacity. I should like to point out that you must not put Ministers on the one side and all the rest of the population on the other. It certainly is not reasonable to assume that the whole of the common sense, the whole of the caution, and the whole of the prudence is to be found amongst those, who, at the moment, do not happen to be Ministers of the Crown. Ministers of the Crown themselves are, unfortunately, liable to pay income tax. Most of them are comparatively poor men. Taking the majority of them, and excluding exceptional cases, there is no class of the population on whom this burden of taxation presses very much heavier than it presses on Ministers themselves.

I do not wish to be guilty of the fault of talking about myself, but there are circumstances in my own position in relation to that of my predecessors which, I assure your Lordships, lead me, at every Cabinet meeting at which finance is discussed, to be as vigilant a custodian of every pound that is spent as any one of your Lordships who has been so forward in criticising the Government to-night. We do not, when we meet together in the Cabinet, vigilantly examine the whole field of political action in order to ask ourselves the question: "Cannot we spend another million here? Cannot we throw away ten millions there?" We meet together in Cabinet when these financial matters are discussed, as a body of anxious, harassed men who are as deeply concerned in trying to reduce the expenditure of this country as any equal number of men coming from any quarter of your Lordships' House would be in discussing these financial matters. It will be said:— "You have not been, by any means, extraordinarily successful." That may very likely be the case, but in listening most carefully to what has been said in this House to-night, I missed from the criticisms which have been made—I missed most particularly from the criticisms offered by my noble and learned friend, Lord Buck- master—the slightest appreciation of the difficulties with which the Government have been faced during the time which has succeeded the Armistice.

I wish to make one other observation of a general character before I approach the particular subject of this debate in its details. All his colleagues most deeply resent the personal attack which a section of the Press has made upon the Chancellor of the Exchequer.


Hear, hear.


If he has been wrong, and so far as he has been wrong, we have been wrong too. His responsibility is our responsibility. I hope I do not betray a single Cabinet secret. when I tell your Lordships that the, principal picture which I have in my mind of the Chancellor of the Exchequer in the last twelve months is that of a man resisting, and always resisting, proposals for expenditure made by his colleagues. in the Cabinet. When I say proposals made by his colleagues in the Cabinet, I am not blaming any particular colleague Each Department has occasion for expenditure which is considered to be of great importance in that Department alone, and the Minister who is at the head of that Department brings it forward to the Cabinet and attempts to procure Cabinet sanction. I can think of fifty occasions in which I can see the Chancellor of the Exchequer resisting, and very often successfully resisting, such proposals, even where one has found it difficult to give him support, because the immediate proposal seemed to have such strong reasons behind it. I think that your Lordships will most generously realise that the fault, so far as there has been a fault, is not an individual fault but one for which the whole of the Government must be criticised, and by which the whole Government must he judged.

Lord Midleton has based his arguments, as other speakers have done, on the current Estimates for 1920–21, and on the tentative Estimates for the normal year, which were contained in the Command Paper issued last week. I shall have a word to say, if I may, upon those Estimates, but before I do so I would call attention to a very important document, the further White Paper which was issued on Monday to both Houses of Parliament, entitled "A Memorandum upon the Present and Pre-War Expenditure." Your Lordships, I think, have seen that Paper, which at least entitles me to found upon it a claim that we are doing our best in this matter to take the whole country into our confidence as to the actual situation. The first table in that Memorandum deals with gross expenditure over a series of years. This table shows, in the first place, that the increase of expenditure in the war years was gradual, and that it reached its maximum in the year 1918–19. It is very important, for those who wish to judge of the position fairly, to remember that in many branches the full development of output had not even been reached at the end of the year 1919. To reverse this process must inevitably take time and involve expenditure of a very important character.

The noble Lord spoke with great animation about the staff that was maintained at the Admiralty. Let me tell your Lordships the reason for the increase of the staff at the Admiralty. On a moment's reflection it will be seen that it is very easy for the noble Earl to create indignation among your Lordships by pointing out that there has been an increase of staff at the Admiralty although the war is over. Your Lordships need not be surprised at that increase. The whole of the increase in the Admiralty staff is due to necessary efforts to wind up. They have discharged many men of the 304,000 who, during the war emergency, joined the Navy. That means paying gratuities, and arranging discharges on an enormous scale. The Admiralty have to scrap ships which are on the Estimates; they have to arrange the disposal of vessels which are saleable and, if the noble Earl will go to Southampton, he will see hundreds, almost thousands, of vessels with the disposal of which the Admiralty is charged. If they fail in their prudent stewardship the cost to the ratepayers would be enormous. I do not know whether the noble Earl has thought of the number of factories on the most elaborate scale which the Admiralty have to scrap; and they have also to liquidate an enormous number of war contracts.

All this means a large temporary staff, and if such a staff were not employed the loss to the taxpayers would be very great. Indeed, I marvel that any one of the experience in these matters of the noble Earl should believe that any Government is so wicked or stupid—and they are alter- natives—at the moment when the Navy has happily ceased to be belligerent because the war has come to an end, as wantonly to increase the staff of the Navy or wantonly to retain persons who have no right to be employed there. I select this as a particular illustration because the noble Earl dealt with it in great detail and it is, believe me, typical of every one of the War Services. The work of liquidating our commitments and obligations, of extricating us from circumstances under which the whole activities of the nation were harnessed for war purposes, is one which has necessitated, and will continue to necessitate for a considerable time, an undue inflation of these particular Departments.

The noble Earl knows, though in the criticisms which are made in the Press the circumstance is almost invariably overlooked, that a very large reduction has in fact taken place in spite of the fact that certain charges—Debt Charges and War Pensions—must increase. In 1918–19 the gross expenditure, in round figures, was £3,146,000,000. In 1919–20 it was estimated at £2,103,000,000, and in the present year, 1920–21, it is estimated at £1,282,000,000. Your Lordships who are interested in this subject—and who is not? —who will be good enough, now or hereafter, to look at Table II of the White Paper to which I have referred, will be rewarded. It deals particularly with the Civil Service Estimates, comparing the pre-war Estimates of 1914–15 with those of the present year, 1920–21. Observations have been made on these contrasts and I shall ask leave to recur to them later.

I want to make an observation first on Table III of the White Paper because that has been the principal subject of the indictment to-night. It gives particulars of the personnel of the Army, Navy and Air Force, and of the clerical staffs of Government Departments. Let me give your Lordships some figures on that. The fighting Forces have decreased from 4,075,000 at the Armistice to 565,000 now. Departmental staffs have decreased from 418,000 at the Armistice to 369,000 now, of which the Post Office accounts for 210,000. That represents a decrease of 49,000, in spite of the inevitable increase in the Post Office and Inland Revenue and Customs, which were very much below strength during the war. Your Lordships will not forget that an entirely new Department, the Ministry of Pensions, is at the present moment engaged in permanently fixing pensions which hitherto have been fixed on a temporary basis, and I cannot exaggerate the financial misfortune which would result to this country if the extraordinarily competent and experienced people who have been dealing with pensions were dissipated at the moment when this critical and anxious process is being adjusted. I do not think any one who has given any attention to this subject would suggest, until this process is completed, that any reduction at all should be made in the personnel of the Ministry of Pensions which is responsible for much that has been criticised in the matter of Departmental personnel.

The noble Earl spoke of reducing the strength of our Civil Service by 30,000. I did not gather in the whole of his speech any recognition at all of the prodigious and changed situation which has been caused by the obligations and the commitments of the Ministry of Pensions. It should also be observed that the Ministry of Munitions staff has decreased by 55,000 since the Armistice, in spite of the very large transactions in connection with disposals with which they still have to deal. The noble Earl said that he knew, or others knew, of enormous dumps in France in which material was being ruined day by day, week by week, and month by month, because no effort was made to dispose of them; apparently, they were overlooked. If there are such cases I profoundly regret it, and I confess I should he filled with indignation and, so far as my influence is concerned, I would attempt to make the proper person responsible for what on that hypothesis is a most wanton and wicked squandering of the nation's resources. I ask the noble Earl to inform me of any specific cases which are within his own knowledge and I assure him I will bring them to the knowledge of the Cabinet and attempt to make whoever is responsible for it so responsible.


If the noble and learned Lord will only send across to the War Office and ask, for his own personal information, for the suggestions made by General Officers commanding in France in the last year he would get more information than I could give him.


The noble Earl is inviting me to embark on a vague inquiry, but, nevertheless, I will prosecute it. I gathered that there were cases known to the noble Earl, or to some other person, but I will certainly undertake such an inquiry though couched in general terms. I turn to the Civil Service Estimates around which so much criticism has settled. The net Civil Service Estimates for 1920–21 are £497,000,000, and, as has been pointed out, there is a considerable difference between this sum and the Estimates for a normal year of £305,000,000. It is quite true that the difference between the two figures is enormous, and the difference is almost unspeakable between these figures and the pre-war Estimates for 1914–15 which amounted to £57,000,000 only.

The noble Earl approves of my exhibiting these figures in contrast. The very fact that I do so exhibit them is designed to make it perfectly plain that there is no Minister who does not desire that the House of Commons and the whole country should realise them, and no Minister who does not desire to take the opportunity, when it offers, of pointing out that nearly every proposal in the direction of increasing expenditure proceeds from Parliament itself. Your Lordships are not great offenders in this respect, though I could give a few illustrations, during the short time I have occupied my present office, of proposals embodying considerable expense being pressed on the Government by your Lordships. But the House of Commons is a grave offender in this respect, and you will find Members, instead of pressing economy on the Government, rather advocating schemes which involve expenditure. This circumstance, undoubted as it is, ought not to be made a subject of special indictment against this House of Commons. I see noble Lords sitting on the Benches here who sat with me for some years in other Houses of Commons, and it is equally true of them that the private Member of the House of Commons is never an economist, except in general. He is never an economist when concerned in any scheme in which he or his constituents take an interest. Then, again, it is a circumstance to be steadily borne in mind, that when people speak of the Civil Service Estimates they mean the Estimates for all the civil activities of the State, as distinguished from the Naval and Military Services. It does not mean Estimates for Civil Service officials, and only a relatively small part is composed of the salaries of officials. Yet any one who listened to the indictment of the noble Earl would think that these enormous sums were largely explained by the salaries paid to Civil Servants.

Now, my Lords, let me ask you to pay attention to what really are the formidable items, and to see how far those items are capable of being dealt with by the greatest economist in this House. There is, in the first place, War Pensions, £123,000,000. That is an item which does not seem to me to be likely to be much extinguished or diminished, except by the ordinary process of nature. Then there are the grants for the education and settlement of ex-soldiers. That, I think, does not call for much comment. Loans to Allies and for relief, £36,000,000. Those who have investigated this item know how exceptional were the circumstances in which loans have been made since the Armistice. The next item is Railway Agreements, £23,000,000. That sum of £23,000,000 does not represent a subsidy to the railways, but it is a sum expressive of the war liabilities under the Agreement with the companies for maintenance, and which was deferred during the war period. Now I have been present at many interviews between the Government and the railway directors, and the noble Lord who spoke second in the debate, and who brings a vast authority when dealing with financial problems, spoke strongly of the evil consequences of the connection of the State with the railways and mines, but I did not gather from his speech, which he had evidently prepared with great care, that the noble Lord means to suggest that in the actual circumstances of the war the Government were wrong to assume control over all the railways and mines. The noble Lord most candidly intimates to me that that was not his meaning. This is a commitment which springs out of that war association, which the noble Lord who has examined this question will admit to be entirely necessary.

The next time is the bread subsidy, £45,000,000. Now, my Lords, that question raises an issue of the greatest difficulty and of the greatest delicacy. It is one which cannot very conveniently be fully discussed in public at this moment, for reasons which may be conjectured, but the arguments on the matter have been examined, and, indeed, re-examined, by the Government, and I cannot exaggerate the attention and care and expenditure of time given to this question. I may safely assert that I have among my colleagues many men of great experience, and your Lordships may take it from me that the arguments in relation to the retention of the bread subsidy, at the time when the decision was reached by the Cabinet, were such that a number of sensible, well-intentioned and not wholly inexperienced men found to be overwhelming. I may add that it is not the intention of the Government, under any circumstances which we may foresee, to act on that subsidy, and that the matter, I will not say is receiving the constant attention of the Cabinet, but is being re-examined at such times as seem convenient and desirable.

Now I pass to the item of the housing subsidies, including the £250 subsidy to the private builders. The figure is nearly £16,000,000. The noble Lord, with the approval of many of your Lordships, said that if the matter had been left to private enterprise the housing problem would have been much nearer solution. He touches on an extraordinarily obscure and difficult subject, and I am not convinced that the noble Lord is altogether prudent in announcing so dogmatic a conclusion. I am not sure that the noble Lord brings to the housing question such admittedly expert knowledge as he does to many other subjects. I have attended Cabinet meeting after Cabinet meeting, at which we have had the advantage of considering, discussing and weighing the opinions of the greatest experts in this country upon the question of housing, and I can only tell your Lordships quite plainly, that while there was profound difference of opinion as to where the original responsibility rested for the decay of initiative which preceded the outbreak of war, I do not recall that there was the slightest difference of opinion as to the completeness of the process which had taken place, partly owing to conditions operative in pre-war days, and partly to the cumulative arrears which had arisen in the course of the war. There was a complete consensus of opinion as to the chaos with which we were confronted after the Armsitice. I tell the noble Lord quite plainly that unless he has some real reason, founded upon expert opinion, for supposing that the matter would have been dealt with by private enterprise, I wholly reject that view, and I believe that if the matter had been left, under existing conditions, to private enterprise, we should have had neither a house nor even the prospect of a house.

The next matter is Old Age Pensions, £20,000,000, and I do not think I am expected to deal with that. Then there are Grants for Education, which amount, for the year which is contemplated, to £53,000,000. Now, much has been said about the education question. Here again I was, I confess, astonished that this should be put forward for the purpose of censure, and that at least it should not apparently have been mastered, or that it should not have been thought necessary to expound to those who had not given special attention to this individual item, that there were allowances and qualifications which would be made by any fair-minded man. The increase in education represented by this item is not a very large one, and it is almost entirely explained by the enormous increases which have proved to be necessary in the salaries of the teachers, and in the outgoings and expenses in the general change that has taken place in valuation since 1914.

I spoke to my right hon. friend who is the President of the Board of Education in relation to these figures and I asked him what was the explanation that he gave of them. I have carefully considered the proportion of this sum which has been the subject of so much indignation to-night, and I assure your Lordships that there is nothing left which you would think it worth while to spend an hour in debating. The provision for the actual salaries of officials, which looms so largely in the speeches of critics probably does not exceed £20,000,000 out of the whole total of £497,000,000, and I will undertake to say that any one who reads the speeches or who reads the newspaper Press, could fail to derive the conclusion that the swollen hoards of unnecessary officials who could be usefully at any moment be diverted to productive work for the benefit of their own health and the interests of the country are accounted for by the sum of £2,000,000 out of this immense total. Let me make an observation upon the criticism—which sounds appalling when one states the figures plainly—that the Government are spending £497,000,000 this year against a pre-war expenditure of £97,000,000. I will prefacé my observations by saying that this is an appalling circumstance; it is a circumstance which should be in our minds by day and by night, which should be as constantly in our thoughts as is our anxiety with regard to our own private affairs. No one would suggest a contrary view. But analysis is required here, and it is very necessary that those who address themselves to that analysis should be specially careful to retain their sense of proportion. What is the reason for this great increase? There are, of course, two main reasons. First, the Estimates for this year—and no one has made any reference to this—include a very large amount of what we may call expenditure arising out of the war which will not, of course, be permanent. Omitting the large item of £123,000,000 for War Pensions, the greater part of which will obviously be payable for many years, the total war items in the amount of £497,000,000 are not less than £250,000,000. I regard that as a very significant circumstance, and one that ought to be brought into somewhat greater prominence.

Tedious as figures are, I feel that tonight at the end of this debate, having been liberally pelted with figures, I may be allowed, if only in self-defence, to give the items which make up this £220,000,000. The figures are startling. They are:—Ex-soldiers' grants for training, etc., £27,000,000; loans to Allies and for relief, £36,000,000; railway agreements, £23,000,000; canals, etc., £2,500,000—this sum, I agree, might be criticised as coming under what is known as the grandiose Ministry—bread subsidy,£45,000,000; housing, £11,500,000; Ministries of Munitions, Ships and Food, £15,000,000; coal mines advances, £15,000,000; minor Services, such as the Treasury Securities scheme, Foreign Office war services, war hospitals and Trading Services, £15,000,000. Those items make up a total of £220,000,000. That is the first serious qualification which has to be borne in mind.

The second is that the index figure of retail prices, with which all are now familiar, shows that those prices have gone up since July, 1914, by approximately 150 per cent. The Government is no more exempt from the consequences of such prices than are private persons. It must pay more for its supplies; it must pay more to its employees. Is it unreasonable, with such an increase in prices, that Parliament should have raised Old Age Pensions from 5s. to 10s. a week? Will noble Lords tell us that, however praiseworthy an object may be, we cannot afford it, and we are not to carry it out? Will they say that now, under the conditions of the moment, it would have been right to refuse to increase the Old Age Pensions from 5s. to 10s.? I should be astonished if that view were taken, or at least if it were generally taken. In the next place, is it unreasonable. that the educational grants should have been given in order to enable local authorities to increase the salaries of elementary school teachers? I may ask further, can it be expected that civil servants are to do their work with the real value of their salaries diminished by over 100 per cent.? I may make this observation in that connection. The result of more direct contact between civil servants and the business world during the war hardly supports the view that civil servants before the war were overpaid.

I made an observation at an earlier stage on the subject of Table II of the Memorandum, and if any noble Lord who has the tables in front of him will glance at Table II, or will be so good as to do so hereafter, he will see that the increased expenditure on all the items which are properly comparable with the pre-war £57,000,000 is a sum of £98,000,000. That is a most striking figure, and I think I can make it good. If it be so, your Lordships see how much of the case that is made so forcibly against us completely disappears. I think I can show your Lordships, within £1,000,000, that the comparable figures are £57,000,000 and £98,000,000, and that is an increase which any man who has experience in these matters would a priori have predicted as the automatic result of the increase that has taken place in the cost of living.

Owing to changes in policy between 1914 and now largely increased grants have been given for the police. The expenditure in 1914 in Great Britain under this head fell upon the local authorities. The insurance grants and education grants have been extended, and I cannot but think that any one who takes the trouble to go through the processes which I have gone through, or who cares to take the accuracy of the figures that I have attempted to explain, will feel that in these days when Ministers stagger under a burden of anxieties that never seem to disappear, one chasing another over the political stage, they have not deserved to have these charges made against them by those who, after all, have not undergone the anxieties and the responsibilities which fall upon a Minister.

It is right that I should say a word about the question of the normal expenditure. The first observation to be made in regard to that is, that it shows a very considerable reduction in relation to the present year—a reduction of no less than £192,000,000—in spite of the fact that it includes allowances for many items, such as housing and education grants, which have not in 1920 and 1921 reached the full maximum. In the second place, I would call attention to the analysis of the so-called Civil Service expenditure given on page 4 of the Table. From this analysis it is clear that out of £305,000,000 no less than £120,000,000 goes to War Pensions, and £28,000,000 to Old Age Pensions, while nearly £118,000,000 consists of grants for Education, Insurance, Police, and for housing subsidies. Only a very small fraction of the whole is due to the general expenses of administration.

The Motion, and indeed the speech, of the noble Earl referred to the great increase in the estimated normal expenditure of the country. The noble Earl may mean by this the increase over the tentative normal year estimates of last October, and, indeed, he pointed out that the total expenditure, as then estimated, was £808,000,000, as against £880,900,000, an increase of about £70,000,000. As this has been commented upon, I will state what the reasons for this increase are. In the first place, the increased grants to the Road Improvement Fund, consequent upon the new road taxation introduced in this year's Budget, and, in the second place, the various increases in Supply Services set out in the Note that has already been circulated. These increases are the result almost entirely of other legislation—for instance the Old Age Pensions Act, 1919—which has been passed since October last, or of increases resulting from higher prices—for instance, the increased cost of building a house, and the increase in the war bonus. I will also point out that the normal year made no allowance for the special War Departments to which Lord Midleton specially referred, as it is anticipated that they will long since have ceased to exist.

More than one speaker has called attention to individual Ministries, and indicated that the time has come when they ought to disappear, and it is the special object of the noble Earl, Lord Midleton, to provide machinery which, in his judgment, will bring about their disappearance. Let me make an observation on the subject of the Transport Ministry. That was criticised with great severity by the second speaker, and I am not sure that he had very closely present in his mind the necessary changes produced by the Governmental assumption of control which the noble Lord himself has justified in the House to-night. The position is that the control and audit has become necessary as between the Government and the companies of sums of money which must be put, at a moderate estimate, at a figure of about £600,000,000. The actual expenditure of the Ministry on audit may be taken as about £150,000, which is a figure which is not yet reached, but which may be exceeded by the end of the year. Taking the figures, as they must be taken before the thing can be liquidated—before we can, so to speak, do what we should like to do and walk out—the cost works out at £25 per £100,000, or .025 per cent. That is the total charge of all the audit, which is so great a part of the Ministry.

I cannot discuss to-night with the noble Lord, though I will gladly do so on another occasion, the broad and general question as to whether, in all the circumstances of the case, the Ministry was necessary at all. I can only tell him that, when a proper occasion arises, I shall be pleased, according to the measure of my capacity, to attempt, to make plain to him, and to make plain to noble Lords, the reason which led the Government, after very long consideration, to come to the conclusion that this Ministry would justify its existence and, in the end, effect very great economy. Then, I think the noble Lord mentioned the question of the Ministry of Shipping. I think I am not violating any Cabinet secret when a say that so short a time as, I think, a week ago—


I said nothing about the Ministry of Shipping.


I beg pardon. Then some other speaker did. The Ministry of Shipping was discussed by the Cabinet a week ago, and, though I do not know that a final decision was reached, I am quite sure of this, that either the Ministry of Shipping will in the very near future disappear, or we shall be able to state in this House very adequate reasons, and reasons which your Lordships will accept, for its maintenance. Lord Buck-master asked me a question as to whether the figures under the head of munitions were gross or net figures. The figures are gross, the whole amount being paid into the Exchequer, and, though my noble and learned friend is not in the House to near the answer to a question which, he loudly proclaimed, no one was in a position to answer, I may say that normal Debt Charge does not include interest on debt held abroad and that if the noble and learned Lord had carried his researches as far as paragraph 4 of the Memorandum, he could have discovered the information in even an easier fashion. Provision is not made in this year's Budget for the debt owing to the American Government, for reasons which appear to me to be adequate, as the interest is being postponed, and therefore there is no change this year.

I find no difficulty in assenting to the earlier part of the noble Earl's Motion. I rather like its phraseology. It is short and clear. He says: That it is incumbent on the Government to reduce tile present undue strain on the resources of the country. Well, I think it is incumbent upon us to do so, if we can, and I have no objection to take to that part of the Motion. Then he continues: And to appoint Special Commissioners with power to wind up existing Departments for special War Service, and to reduce other inflated Establishments to a normal level.


Hear, hear.


The noble Earl, with the partiality of a parent, cheers the last few lines of the Motion. He will forgive me if I say I do not by any means share his enthusiasm for it. What does this proposal mean? It is put forward in competition with an undertaking given by the Chancellor of the Exchequer to the effect that seven Committees are to be set up, consisting of a business man, a member of Parliament, and an expert, to deal with certain Departments. Your Lordships may care to know what the Departments are the—Board of Trade, the Department of Overseas Trade, the Board of Agriculture and Fisheries, the Ministry of Labour, the Ministry of Munitions, the War Savings Committee, and the Sugar Commission, Such is the proposal made by the Chancellor of the Exchequer. The noble Earl substitutes for that proposal one under which certain Commissioners are to be given power "to wind up existing Departments for special War Service, and to reduce other inflated establishments to a normal level."

I say boldly that not only is this a proposal which this Government cannot entertain, but that it is one which no Government that existed in this country at any period since Cabinet responsibility was understood could possibly, in any circumstance, accept. What does it mean? It means that these Commissioners, who are responsible to nobody, are to usurp and undertake the responsibility of the Cabinet. It is not by those methods that we have arrived at our present understanding of the Constitution of this country. We have arrived at it by the gradual evolution of the theory of the responsibility of Cabinet to Parliament. If a Cabinet commits error, Parliament can withdraw its confidence, and can destroy it. Here it is proposed that a body of men for whom nobody will be answerable in Parliament will be imposed on the Government against their consent, or at any rate without their consent—because their consent will never be given—and this body of men, who are not answerable to this House, and not answerable to another place, for the decisions which they take—for the discretion, or the indiscretion, which they exercise—will be made responsible for the functions which must belong to a Cabinet. I earnestly entreat your Lordships not, for a single moment, to accept the specific proposal contained in the latter part of the Motion.

If the present Cabinet is in all these respects guilty of negligence or incompetence, the sooner they realise that they have not the confidence of this House, or the confidence of another place, and the confidence of the country, the better; and let them be replaced by men who are more competent to discharge the immensely formidable problems which confront us all to-day. But let us be sure that those who offer themselves to undertake these functions, whether they do so under the style of Commissioners or under any other style, will be any more competent than we are to deal with problems which cannot be exaggerated in their gravity. I have detained your Lordships long, but the indictment is a grave one; and I would at least ask you to believe this of me—that I care more for this than for any other point I have taken to-day—there has never been a moment since the Armistice when the Government has not been as deeply alive to the gravity of this question as any one, and the one advocate in the Cabinet who fights greatest in the cause of economy is the Chancellor of the Exchequer, who has been so unfairly and so ignobly attacked.


My Lords, I hope you will pardon me for a moment if I reply to the Lord Chancellor's request that I should truncate this Motion in such a way as to render it absolutely innocuous for any purpose. The Lord Chancellor, in endeavouring to make his case, has mistated—though I am sure without intending it—the whole purpose and object of my Motion. The last part of the Motion declares that it is incumbent, not on the House but on the Government, to appoint special Commissioners for this purpose. There is nothing whatever to prevent the Government from appointing one of themselves as one of these special Commissioners—there is a Minister without Portfolio—with two business men who are competent for the task.

I ask your Lordships to take from the Lord Chancellor's own lips the condemnation of the Government in this matter. We all know how over-worked the members of the Government are. The noble and learned Lord told us that they have the best will in these matters; and he went on to say that he could remember fifty occasions on which the Chancellor of the Exchequer had heartily opposed measures for increased expenditure, in regard to which he did not obtain the support of his colleagues. Either the Chancellor of the Exchequer must have the support of the Prime Minister and his colleagues in this matter or it is his duty to resign; and I say that, in the present temper of public opinion, if he did resign he would be back in a week. Unless some measure of this character is taken—a measure which can be taken perfectly constitutionally by the Government—to appoint one of themselves with certain other persons with full powers to carry out this retrenchment, I cannot gather from the speech of the noble and learned Lord—capable as he is in making good a bad cause—that any steps whatever may be anticipated. He has justified the present condition of affairs and the Estimates which have been submitted to us. As do my noble friends who have also spoken, I regard those Estimates as ruinous to the country; and I hope your Lordships will support me when I ask you to divide on what alone would be a satisfactory and effective means of bringing about what we desire.

Resolved in the affirmative, and Motion agreed to accordingly.