§ LORD RAGLAN had given Notice to ask His Majesty's Government whether they have been approached by the Palestine Government with a view to their guaranteeing a loan of £3,000,000; what liabilities have been incurred by the Palestine Government in anticipation of such a loan, and whether they will state in detail all the liabilities of the Palestine-Government: and to move for Papers.
§ The noble Lord said: My Lords, about a fortnight ago there appeared in the Press a statement concerning the Budget of Palestine, in which the revenue was shown as exceeding the expenditure by a small sum of, I think, about £2,000. If my information is correct, that statement was a misleading one. I am told, in the first place, that although the Palestine Government owes the British Government £2,000,000 for railways, there is no provision in the Palestine Budget for the payment of interest on this sum. In other words, the British taxpayer is now subsidising the Palestine railways to the extent of £100,000 a year. My second point is connected with the Ottoman Public Debt. I an informed that not only is the Palestine Government annexing its own contributions to the Ottoman Public Debt, but that it is also annexing the contribution of Trans-Jordania, which is collected through the Customs. The third point upon which I have information is that the Palestine Government has already borrowed and spent £1,500,000.
§ I should like to ask the noble Lord, (1), from whom this money has been borrowed; (2), upon what authority it was borrowed; and (3), upon what it has been spent. If my information is correct, as I have very good reason to believe, it will follow that the £3,000,000 which I understand the Palestine Government proposes to borrow is not so much for the purpose of constructing profitable and beneficial public works as for paying the debts of the Palestine Government and indemnifying that Government from the consequences of its own extravagance.
§ THE UNDER-SECRETARY OF STATE FOR THE COLONIES (LORD ARNOLD)My Lords, the High Commissioner for Palestine has requested the Secretary of State for the Colonies to arrange for a guarantee by the Imperial Government of a loan to be issued by Palestine. The 151 question has been considered by His Majesty's Government, who have decided in principle that such a guarantee shall be arranged. A guarantee cannot be given without the authority of an Act of Parliament, and there will be an opportunity for discussion when the necessary measure is introduced. At the present time no decision has been reached as to the amount of the proposed loan, and the figure of £3,000,000 which the noble Lord suggests must not be taken as authoritative.
Coming to the points upon which the noble Lord touched in detail, I will reply, at any rate in the first instance, somewhat generally, but I think he will see that what I say has a bearing upon the particular question which he wishes to be answered. Up to December 31, 1923, expenditure amounting to £El,861,000 had been incurred upon services which it is proposed should ultimately be made chargeable to loan funds. The details of this figure—and I am here speaking in Egyptian pounds—are as follows:—Railway capital improvements, £El,178,000; Compensation to Jaffa-Jerusalem Railway Company for acquisition of their line, £E299,000; Government buildings, £E42,000, roads and bridges, £El04,000; telegraphs and telephones, £El23,000; other works and development, £E115,000. Some part of the money expended on these services has been provided from various balances; all the remainder has been advanced to Palestine by the Crown Agents for the Colonies. The total amount of the advances made by the Crown Agents at present amounts to £1,583,000.
The noble Lord asks me to state in detail all the liabilities of the Palestine Government. I am afraid that I cannot give him all the details, as the figure of certain liabilities cannot be finally stated until a decision has been reached upon a variety of matters which are still forming the subject of discussions between the High Commissioner and His Majesty's Government. A number of Imperial assets in Palestine—and this, no doubt, is what the noble Lord had in mind—have been handed over to the Palestine Government, and a valuation of these assets was made and an approximate figure of £2.190,000 was reached. This represents the value of railways, roads, telegraphs and telephones and other services carried out during the war and the immediate 152 post-war period at the expense of His Majesty's Government. The intention has been that this amount should be entered against Palestine as a book debt, and that so soon as the finances of Palestine admit, payments by way of interest and sinking fund on this book debt should be made by Palestine to His Majesty's Government. The actual figure which I have given must not be taken as a figure finally accepted by both parties. The High Commissioner has represented to us that a considerably lower figure should be accepted, and the matter is still under discussion. It will be seen that under the arrangement which I have described, although the book debt represents a liability of the Palestine Government, it does not at the present moment entail any charge upon the finances of the country.
I will now allude to another liability to which the noble Lord made specific reference. Under the terms of the Treaty of Lausanne Palestine will become liable to pay interest and repay the capital of a proportionate part of the Ottomon Public Debt. This liability takes effect from March 1, 1920, but the amount falling due in respect of the period from that date to the date of the entry into force of the Treaty will not be paid forthwith, but will be paid in twenty equal annuities without interest extending over the twenty years following the latter date. The actual assessment of the Palestine Ottoman Public Debt annuity has not yet been made by the Council of the Debt in accordance with the terms of the Treaty, and the Treaty has not yet entered into force, so at present Palestine has no actual immediate liability under this head, but provision is being made on the Palestine Estimates for the current year to meet the charge to which they become liable in this respect during the period covered by those Estimates.
LORD RAGLANCan the noble Lord say whether the Palestine Government has spent the Ottoman Public Debt contribution during the past four years?
§ LORD ARNOLDIf the noble Lord wishes to have a specific reply to that question, I should be glad if he will put another Question down, because I would wish to give him a definite reply in regard to the exact position. I think that is a fair request. In regard to Trans-Jordania, 153 the share in the Ottoman Public Debt will be assessed separately. An arrangement is in contemplation by which the Trans-Jordanian annuity will be actually paid to the Debt Council by Palestine, which will recoup itself by retaining an equivalent sum out of the amount payable to Trans-Jordania in respect of the Customs receipts collected in Palestine on goods whose ultimate destination is Trans-Jordania. A sum of money estimated to cover the Trans-Jordanian annuity for the period from March 1, 1920, was accumulated by the Palestine Government to meet the contingency of this allowance becoming immediately payable to the Ottoman Public Debt Administration upon the entry into force of the Treaty. As this contingency, however, will not now arise, the sum so collected will be available to meet the expenditure of the Trans-Jordanian Government in the course of the current year.
The noble Lord suggested that Palestine has run into debt to the amount of about £1,500,000, apart from extraordinary expenditure. That, however, is not the case, because leaving out of account, as it is only fair to do, extraordinary or capital expenditure, there is no such debit balance as £1,500,000. The position is that, in fact, last year the normal Budget slightly more than balanced, in spite of bad trade conditions, and in previous years since the Mandate what I call the normal Budget has not only balanced but there has been a slight surplus. That really is the position.
LORD RAGLANI thank the noble Lord very much for the answer that he has given. I do not propose to move for Papers, but I should like to say that, so far as I know, the Palestine Government, although it has expended something on roads and railways, has incurred no expenditure which in other countries has not formed part of the normal Budget.