HL Deb 05 May 1926 vol 64 cc64-101

Order of the Day for the Second Reading read.


My Lords, it must, of course, be obvious to your Lordships that this Bill is introduced into your Lordships' House under conditions very different from those which prevailed when it was passing through another place. It must also be obvious that, owing to the present lamentable circumstances in the country, some of its provisions will be rendered, if not nugatory, at least inoperative, and that circumstances may play havoc with others. Since, however, it is impossible at the present time to estimate what those changes may be, I think it is essential that I should move the Bill in its present form. I want to make one general observation about the Bill Before I deal with its provisions. Those of your Lordships who have read the Bill will be aware that it is a somewhat intricate measure, but it is provided with a commentary which, I trust, has made it clear to your Lordships, and I think that if there is any obscurity in the Bill it arises just as much from the difficulty of the subject as from the ingenuity of the draftsman.

I should like to make this further observation, that this Bill does not pretend in any way to cover the whole field of economy that has been dealt with by the Government this year. Special attention is directed to legislation, and the more valuable administrative changes and reductions are less noted than a Bill which has to run the gauntlet of both houses of Parliament. I want to make it quite clear that the economies and reductions of expenditure that may result from this Bill are a comparatively small portion of the deductions that have been made throughout the entire field of administration by the Present Government. I may mention that I myself am one of the sufferers from these deductions. In my own Estimates, for instance, which normally amount to something like £5,000,000, I have had to make reductions of something like £750,000. Considering the large portion of those Estimates which are practically fixed charges, your Lordships will be able to estimate the ex tent of the sacrifice that has been made in those particular Estimates.

I will give your Lordships a general sketch of the different clauses in this Bill, although I shall be quite ready to give a more intimate and fuller explanation when we come to deal with the clauses separately in Committee. I should like to say also that it is a rather remarkable circumstance that this Bill passed through the House of Commons without any amendment whatever, although I do not think that your Lordships ought to draw from that fact a conclusion that it altogether escaped criticism in its passage through the other House. As regards the first clause, which deals with the National Health Insurance, as you will see from the Paper which has been circulated, the general proposal there is that the contribution of the Government towards benefits is to be reduced from two-ninths to one-seventh of the benefits in the case of men, and one-fifth of the benefits in the ease of women. May I say a word or two as to the justification for the action there taken by the Government? Since the Fund was originally established in 1911 very great changes have, of course, resulted, which have enured generally very greatly to the advantage of the approved societies and of the insured generally. Marty advantages have, of course, resulted from the 'War, many of them due to the direct action of different Governments in power during the fourteen or fifteen years which have elapsed.

First of all, and I am speaking from a financial point of view, heavy costs have fallen upon the State for the dependents of those who fell in the War, while on the other hand the reserve values of those who were killed in the War have liberated something like £7,000,000 or £8,000,000 in favour of the funds of the approved societies. Another fact which has contributed to the improvement in the position of the approved societies is of course the rise in the rate of interest. Through the rise in the rate of interest, so familiar to your Lordships, their incomes have improved by something like £2,000,000 a year, but it should lie observed at the same time that while that rise in the rate of interest has strengthened the position of the approved societies, it has, of course, enured to the disadvantage of the State, which has to pay 5 per cent. interest, instead of 3 or 3½ per cent., for the money which it raises. Further than that there is the increase in the rate of interest, which has enabled in so many cases approved societies to pay higher additional benefit, and that additional benefit itself attracts the State contribution of two-ninths, and therefore lays a heavier charge upon the finances of the State. Then again, the general health of the community, certainly amongst men, has largely improved during those fourteen or fifteen years. The result again is that a smaller charge as regards health benefits falls upon the approved societies. I think it not unfair to say that a good deal of that improved health may be attributed to large sums spent by the Government on health, housing and other activities which have contributed to the improvement of health, which has itself strengthened the position of the approved societies.

It has been said that the State is not entitled to reduce its two-ninths contribution. I shall deal with that question in a moment, but quite outside this contribution to benefits of two-ninths the State has contributed, during the last fourteen or fifteen years, large sums which are quite outside any obligation under which it might have been placed by the Act of 1911. Those sums were very largely in connection with medical benefit and amount to something like £24,000,000, and if you were to argue strictly that this was a purely legal contract it might be argued, as some have argued, flat the State has given this £24,000,000 only upon loan, and is entitled to recover it from the approved societies. But again, and perhaps stronger than all, you have the Act of last year—the provision of the Widows and Old Age Pensions Act—which removes from the shoulders of the approved societies that immense liability which falls upon them for persons between 65 and 70 years of age—a time when the provision for sickness and so on would be the heaviest. Treating that as a capital sum, it is estimated that it has liberated or reduced the necessity for making provision by the approved societies, to the extent of no less than £37,000,000. So you have all these benefits—£37,000,000 and £24,000,000—enuring to the advantage of the societies, and due entirely to action of the State entirely outside the provisions of the Act of 1911, and not due at all to any action or good administration on the part of the societies.

Quite apart from other advantages I have mentioned, which have benefited the funds of the societies—the increase in the rate of interest and the deaths of those who fell in the War—the funds of the societies are in a far better position than could have been expected when the Fund was established. Again, as against the reduction of the Government contribution—and I am not giving the exact savings because they are all set out very clearly at the end of the Report—it is found that through the satisfactory position of these societies it has been possible to reduce the percentages of a penny taken from the contributions of the insured persons and put into the Reserve Values Fund. That has liberated £600,000 a year for the societies, which, of course, can be spent in extra benefits.

It has been said that this is all very well as a justification, but that there exists some definite pledge on the part of the Government that they would retain that two-ninths contribution for the benefit of insured persons during the whole time in which the Fund is in existence, and that therefore, although it may be quite well to argue on general grounds that societies are in such a good position that you are entitled to take something back, as it were, for all the great extra benefits conferred upon societies, yet if it is a breach of a pledge that of course cannot be tolerated. I want to deal for a moment with the charge of a breach of pledge. First of all, there is no record anywhere produced that there was any pledge given that the State contribution would run for all time in the proportion originally fixed, and after all that is contradicted by the facts of the case, because already there has been a change in the proportions originally fixed in 1911. The State grant was originally two-ninths of the benefits in the case of men and one-quarter in the case of women. But in 1920, when Mr. Lloyd George was Prime Minister, the proportion in the case of women was reduced from one-fourth to two-ninths. It is perfectly obvious that no one can know better than Mr. Lloyd George himself, who was the main author of that scheme, whether or not such a pledge had been given, and if such a pledge had been given it is incredible that the author of that scheme could himself have broken that pledge, as he would have clone by reducing the contribution in the case of women from one-fourth to two-ninths


Is it not the case that the arrangement was one which was mutually agreed to, and that therefore the noble Viscount's remarks have no point at all?


It does not in the least matter whether it was mutually agreed to or not. If there was a definite pledge that would have been a breach of the pledge. What the State actually undertook to do in 1911 was to make such contributions from the Exchequer as to ensure that in the case of persons entering insurance at the age of sixteen the value of the benefits should be fully the value of the contributions payable by the insured person and his employer, and that the seine benefit should be payable at the flat rate of contribution to all persons entering insurance at the age of sixteen. This arrangement was secured by the State grant, and it will be more than maintained under the changes in the Bill. If your Lordships wish confirmation of that, you have only to look at the Actuary's Report, where that case is fully stated. So there is nothing magical about the two-ninths. The two-ninths at that time was taken to be merely the expression in words, or in a fraction, of the amount which was necessary to be contributed by the State in order to secure that everybody, whether entering at the age of sixteen or at a later age, would get benefits larger than the contributions. Under subsection (2) some arrears of grant amounting to £190,000 a year for the next five years will still he paid or carry benefits on the two-ninths basis.

The next larger point is on Clause 2, and that is the question of the charges for medical benefit. The effect of that clause is to throw foe full charge for medical benefit, 13s. per person, upon the funds of the societies. The total of that is £2,300,000, and of this the Exchequer contribution is £400,000. The charge under the Act was 10s., including administration for medical benefit, the difference between the actual cost and the cost of 10s. was borne by being thrown upon a fund containing the receipts from unclaimed stamps and other sources under the Act of 1924. This Act comes to an end in 1926. I believe the Fund has been very seriously depleted by these heavy charges, and therefore, as is only fair, the charges now come on the funds of the societies. You may say, indeed, that the funds of the societies were rather fortunate that for that period of years that difference between 10s. and 13s. has been thrown upon another fund, and not upon the funds of the societies.

I come to Clause 3, which deals with the positions of the weaker societies. As your Lordships know, this scheme, though in one sense a national scheme, is also in another sense a scheme as between separate societies. Each of the different societies, of which there are no less than 8,000, I believe, has its separate account, its separate surplus or deficiency, and in some cases, owing to the fact, that very bad lives are insured in some of the societies, as, for instance, in the case of the glass-blowers and other unhealthy trades, the position of the societies is far less satisfactory. Something like five per cent. of them, I believe, if they are not in a deficiency, find a difficulty in paying the statutory benefits, and, in consequence of the further charges that may fall upon them, partly through the reduction of Government grant, and partly through the charge thrown upon them for medical benefit, which I have already explained, another five per cent., or up to another five per cent., may find themselves in some difficulty when the next investigation takes place into the funds of those societies, and the question of the surpluses to be declared is examined.

In these cases a special provision had to be made, and a sum estimated at about £1,000,000 during the quinquennial period 1926–31, that is to say, about £200,000 a year, to supplement their funds, is to he drawn from the Reserve Suspense Fund. The Reserve Suspense Fund is made up of the reserve values of those persons who have been once insured, and who have passed out of insurance and have gone into non-insurable trades. It is not a fund that was hitherto regarded as one that could be drawn upon by the societies in aid of benefits. It is thought that this fund will he quite adequate to bear this charge of £200,000 a year for five years, but, if it should not prove adequate, it is decided that the central funds should bear the burden of any amount which cannot be paid out of the Reserve Suspense Fund. Much has been, said about the surpluses of the societies. I should like to say that the surpluses of the societies now amount to about £65,000,000, and not one penny of those surpluses is to be touched. They will remain entirely in the hands of the societies, quite unaffected by the provisions of the present Bill.

Under Clause 4 there are one or two rather technical details. The general costs of central administration, valuation, audit and inspection are borne by the State, and I believe they amount to something like £750,000. Under the provisions of this clause the cost of providing insurance stamps, and other business connected therewith, amounting to about £200,000 a year, is to be taken from the interest on the sums in the Stamps Sales Account. This represents interest on the money between the time the stamps, we will say, are paid for by the employers, and the time when these stamps are affixed to the cards and the cards are handed in and the amounts credited to the societies. As the Bill is at present drawn the first charge is going to be for the State for this £200,000 a year, and other balances in the fund will be used for assisting those who have fallen out of health insurance owing to unemployment, and also for making up some deficiencies in the Drugs Fund; but, by an Amendment which I shall propose on the Committee Stage I wish to reverse the order, to give priority to the Unemployed Persons and the Drugs Fund, and to place the Government last.

The next large question that arises, I think, is in connection with the treatment to be applied to the surplus of the Services Insurance Fund; that is to say, the Army, Navy, and Air Force Insurance Fund. Your Lordships may remember that this fund is established for insuring persons serving in the Services who do not join approved societies. If these men, when they have left the Services, cannot join approved societies they remain on the fund and it is in connection with that fund and its surpluses that I wish to explain the Government proposals. These surpluses now amount to about £1,500,000, and the Government proposes to apply £100,000 in a particular way for the benefit of those on the fund and to take for the Exchequer £1,100,000. That sum of £400,000 is to be expended in this way. It is to secure the average additional benefits paid by the societies to those men who remain on the fund after they leave the Services.

I should say that the Government really would be fully entitled to take the whole of the £1,500,000 because this fund is in a totally different position from the approved societies. If approved societies make a deficiency they have to pay for it either by lowering their benefits or charging their members more in contributions. There is no analogy between this fund and the approved societies because in this case the Government itself guarantees the benefits. Therefore, if there is a surplus it is entitled to take it, and it is entitled, if it likes, to reduce its contributions because whatever it does is merely a book-keeping entry, and the Government itself is responsible that these benefits shall be paid to the men on the fund. After all, if it required any more justification I could easily show that these surpluses are not earned in any way by the men at present on the fund but are due to the fact that a good many people joined this fund during the War who did not take the trouble to explain that they were not insurable and passed out of the fund when they entered civilian life afterwards and their amounts have been credited to the fund.

Another important point in regard to that clause is this. At the present time those who pass out of the Army and join approved societies have to wait five years before they get the advantage of the additional benefits. Owing to the substantial margin that exists because of the amount of the Government contribution, it has been found possible to increase their transfer value so that they can enjoy those additional benefits in their approved societies and be treated, in fact, as if they had been members of those approved societies during the time they had been on the fund while they were serving as soldiers. So that these two substantial benefits are conferred both on the men who are in approved societies and those who remain on the fund after they leave the Army.

The next point of substance has reference to the question of unemployment. Here the contributions paid by the Government to the Unemployed Fund per man until the end of the extended period are to be reduced from 6¾d. to 6d., with corresponding alterations for boys and women. Fewer controversial points arise on this than are raised in connection with health insurance or the fund for sailors and soldiers. Unfortunately, the effects of this clause may be much altered by the circumstances through which we are now passing. The reason why—I am looking now to the past—it is possible for the Government to make this reduction in contribution and make the fund solvent is merely that they estimated in June last that the number of persons on the fund would be 1,300,000, and those calculations, fortunately, up to the end of April at any rate, have been proved to be false. There has been a large reduction in unemployment, and in spite of the fact that the contributions were reduced in the case of the men by 2d., it was possible, owing to that large reduction of unemployment, to reduce the Government contribution from 6¾d to 6d. I should like to point out these two things—the provisions named in the Ace of last year under certain circumstances to increase the Government contribution to 8d. or even 9d. and the extent to which the unemployment funds have improved during eight or nine months through the reduction in unemployment.

I ought to mention two further points upon that. One is that the employers might have a grievance in that they did not have the first penny taken off their contributions instead of reduction being made in the Government contribution. They may have that claim. At the same time, though not granted at the moment, that claim has only been postponed, and it is hoped ultimately to bring down the contribution of employers, employed, and the Government to 6d. each. The Fund, generally, has been in a satisfactory condition and it is fortunate, perhaps, that it has been. Their borrowing powers are £30,000,000. The largest amount to which those borrowing powers have been exercised is £17,500,000. They have now been reduced by the end of the month to £7,500,000; so that with an income of £50,000,000 a year a debt of £7,500,000 cannot be regarded as anything very considerable.

Those points really exhaust the larger proposals in the Bill, and I think I can deal very quickly with the subsequent clauses. Clause 9 provides for one register of electors only in the year instead of two, and in order not to disfranchise electors the period of qualification is reduced from six to three months and £250,000 are saved which are shared between the Exchequer and the local authorities. I pass rather lightly over Clauses 10 and 11, which deal with the division of the issue of ballot papers and the reduction in the number of presiding officers and also with the stamping of the papers before they are handed to presid- ing officers in polling booths. I understand that these clauses are now under consideration, and it is possible I may have to withdraw them when we come to the Committee stage. Nor need I dwell upon the re-arrangement of the polling arrangements for Orkney and Shetland.

Under Clause 14, which deals with the powers of the Board of Education to refuse to recognise expenditure by the authorities for the purposes of grant earning, doubt s, I understand, have arisen as to the areas and the limits within which the Government can utilise its power of reducing grants. There has been a good deal of criticism of this clause and I propose to introduce some Amendments in Committee. I deal with it, therefore, quite shortly. On the latter part of the clause, the Government can recover, by deduction from the grants paid to local authorities which have not training colleges, the amount of the extra grant of £70,000 given to local authorities which have training colleges.

Clauses 15 to 18 deal with the bankruptcy and companies winding up fees. Those fees are to be amalgamated and the surplus, leaving a good working balance, is to be handed over to the Exchequer. I understand that there is a surplus on the companies account and a deficiency on the bankruptcy account. In Clause 19 it is made clear that the Postmaster-General can have advertisements fixed by way of postmark on to letters and payment can be collected. I believe the estimate of the amount to be derived by the Exchequer from this is about £250,000 a year. Coming to Clause 20, as regards merchants' shipping fees, a running account is kept from April 1, 1923, and the fees are to be adjusted so as to cover one half of the fee paid services and no more. It is obvious that without a running account it would be very difficult to estimate the exact amount to be demanded in order to meet exactly one half of the services. That is a general description of the clauses, and I shall be very glad in Committee to go much more fully, if necessary, into some of the more intricate points therein dealt with.

I notice that two Motions are on the Paper, one representing the Labour Party and the other by the head of the Liberal Party, for the rejection of this Bill. I confess that I was not very much sur- prised to see this Motion on the Paper in the name of the Labour Party, because this is an economy Bill and I do not think any body ever accused the leaders of the Labour Party of showing any undue or passionate enthusiasm for the cause of economy. But I was rather more surprised to see a Motion of this kind put down by the Liberal Party, because I understood that retrenchment was one of the most notable lines of their policy I should very much regret—indeed, I think we should all regret—if that device was to be erased from their banner and some new and sinister design was to take its place. I am not going to speculate as to what political importance is to be attached to the combination of the Labour and the Liberal Parties in an attack on this measure at this time, in this House, but I should like to make it quite clear to your Lordships that if this Bill is rejected, as these two Parties wish it to be, there will be thrown upon the taxes of this country something like £7,000,000 or £8,000,000 more than they hear at present. I submit to your Lordships that it is not a prudent thing at this time to add another burden to the overwhelming expenditure which we have to hear. I beg to move.

Moved, That the Bill be now read 2a.—(Viscount Peel.)

THE EARL OF OXFORD AND ASQUITH had given Notice to move, That the Bill be read 2a this day six months. The noble Earl said: My Lords, I am sure I shall be expressing the opinion of the limited number of members of your Lordships' House who have listened, as I have, to the whole speech of the noble Viscount when I venture to assure him that those who have listened to it are under a great debt of gratitude to him for his lucid and comprehensive survey. The noble Viscount has threaded his way, as far as I could judge, warily and adroitly through an unusually complicated jungle of technicalities. I do not, I confess at once, notwithstanding the somewhat pretentious title of this Bill—an Economy Bill as it is called—regard it, as a measure of first-class importance. I cannot speak, of course, for the Labour Party, but as regards the rest of us we are all in these days almost trumpet-tongued in our praises of economy. The noble Viscount expressed some kindly solicitude as to whether the Liberal Party was going to erase from its banner the word "Retrenchment." Let me set him at ease on that score. We have no such intention and if we thought that the economies, or so-called economics, proposed by this Bill were the right or legitimate way of reducing public Expenditure, or of adding to public Revenue, we should be the first and among the most hearty of its supporters. But it is one thing to use the word economy, and indeed to profess an honest zeal for economy, and it is an entirely different thing to approve the steps which, under the guise and name of of economy, pursue that goal by what some of us at any rate regard as an illegitimate and a misleading road.

I am not going to detain your Lordships for more than a very short time, and I shall not attempt to traverse a large part of the ground which the noble Viscount has so ably and comprehensively covered. My objection to this Bill, and which seems to me to justify the suggestion made in my Motion that your Lordships should not proceed further with it, is founded upon one simple consideration, that for the most part the economies, or so-called economies, which are here proposed, are invasions upon the provision made by the State under the existing law for indispensable social services I am not going into the question of Orkney and Shetland, which the noble Viscount, I think may be wisely, reserved for consideration in Committee, nor am I going to deal with what seem to me very questionable provisions in regard to education, but I shall confine what I have to say, and it can be very briefly stated, to that which is in the forefront of the Bill in the early clauses, and which constitutes to my mind its really objectionable feature. I mean the dealing by the Bill with the State contribution—the proposed reduction of the State contribution to health insurance as regards both the two classes involved, civilians and members of the fighting Services.

As the noble Viscount says, they stand in different categories and I shall very briefly deal with them both. First of all, as regards the civilians. As your Lordships are aware, and as the noble Viscount has made clear in his survey of the past history of these matters, under the Insurance Act of 1911 there are three contributory sources to health insurance. the employers, the employed—their contributions are left untouched by this measure—and the State, whose contribution will be substantially diminished. I cannot go into the distinction between men and women, but, roughly speaking, that contribution which has since the Act of 1911 been two-ninths—twopence out of ninepence is now, I think, reduced by this Bill to one-seventh. That is the net effect. I shall not go into the difference between the two sexes. It is substantially reduced from two-ninths to one-seventh.

Let me remind your Lordships that, during the long controversies which took place over the Act of 1911 while it was still a Bill being discussed in the House of Commons, that figure of 9d. and the relative contributions to that figure of the three, different parties, and particularly the contribution by the State, were the subject of acute and prolonged discussion, not only in Parliament, but between the Government of the day and those societies outside which go by the name of approved societies and whose support and co-operation both when the Bill was first launched and in all its subsequent stages will, I am certain be acknowledged to be of inestimable and indeed indispensable value. The figure arrived at, and in particular the contribution to the aggregate which should be made by the State, was fixed after many controversies, discussions and negotiations of every sort and kind between the Government and the approved societies.

I think that one of the great defects in the scheme which is now proposed by the Government is that they did not take the pains which we certainly did in 1911 to obtain by previous consultation and conference the assent, or at any rate the acquiesence, of those societies in the change which is now proposed. I dare say many of your Lordships have received, as I have received, communications from all parts of the country from people representing those bodies, and so far as I have been informed and to the best of my knowledge they are one and all unitedly opposed to the suggested reduction in the amount of the State contribution. I do not say that is conclusive, but it is a very material fact when you are changing a system which has been in operation some fifteen years.

The noble Viscount has referred to the change made by the Government of which Mr. Lloyd George was the head in the contribution as regards women. There was no change made then in the State contribution as regards men. That change was accompanied by other provisions. I will read from the Report of the Government Actuary on the financial provisions of the 1920 Bill:— Under the Act of 1911 the State proportion of benefits (including expenses of administration) is fixed at two-ninths in the case of men and one-quarter in the case of women. A uniform grant, in future, of two-ninths (22.2 per cent.), applicable to both men and women, is proposed by the Bill …and in the case of women the effect of adding the Women's Equalisation Fund, which was created by the Act of 1918 and is now to be augmented, will be to make the State grant 26.5 per cent. of the benefits. So really the effect of the change made in 1920 was not to diminish but to increase the proportion which the State contributed to the total sum. I may be reciting facts which are familiar to your Lordships, but they had to be brought into view. This 2d. out of 9d. contributed by the State was to be paid into a sinking fund which was in time to provide the same benefits as were given to young entrants into the scheme from the beginning, to provide for older people who would other wise have been uninsured. That, of course, would disappear in time and it was computed that this sinking fund would be paid off in about twenty years.

What was to happen to the 2d. which was originally contributed by the Government to provide for the accumulation of this fund when the fund and the purpose which it was intended to serve had ceased to exist? Was it contemplated that the Government contribution, I will not say should cease but should be diminished in amount? I do not make any allegation of bad faith, because I do not think allegations of that kind ought to be made unless they can be very clearly substantiated, nor was there anything in the nature of a conscious or even undesigned breach of faith. I hold very strongly to the view that in financial matters no Parliament can bind its successors. When I see proposals which I know this House will not have the opportunity of discussing or revising because they are part of the finance of the year, when I see suggestions that you can stabilise particular taxes in terms of five or ten or fifteen years they simply excite in me a sensation of pure and absolute ridicule. Nobody can stabilise the finance of this country for two years, let alone for ten or twenty. Unless some definite assurance has been given and some vested interest created which it would be confiscation to disturb, every House of Commons must have the absolute right to revise from time to time, according to its own judgment of the altered circumstances, the provisions made by its predecessor.

But, while I am not making any charge of breach of faith, I think it is undoubted that it was contemplated that this Government contribution of 2d. should be continued after the sinking fund had played its part and been exhausted. It was to be continued in order that it might be made available for what are called in the Act, additional benefits that is to say, benefits additional to the medical and other assistance given to all the insured persons. These additional benefits are of very great value. I will not enumerate them because they are set out in the Schedule to the Act, but I think the noble Viscount will agree when I say that they may be comprehensively and accurately described as meeting the cost of preventive measures to reduce the amount of sickness, to supplement the actual provision of medical care where cases of sickness have arisen. I am not suggesting, nor do I think any one suggests, that by the result of the change people will be deprived of any benefits which they now enjoy. There are, of course, many cases in which the funds of the society are such that additional benefits are given. On the other hand, there are a large number of cases in which they are not. I am glad to think that probably the majority of these, societies are not only solvent but have assets largely in excess of what might have been expected, but a very considerable number of the societies are not in that position and cannot provide these additional benefits.

The prospective advantage in the shape of additional benefits which the continuance of the 2d. contribution by the Government would give will he, if not taken away, very seriously impaired by the reduction in that contribution. That is a point which I think your Lordships may consider well worthy of attention. The total amount which is to be secured to the Exchequer by this reduction, so far as the civilian population is concerned, amounts, I think, to £2,800,000—a substantial sum, no doubt, though in the calculus which we have now adopted and which we are apparently invited to continue of regarding an £800,000,000 Budget as a legitimate amount for a normal year, this is a mere drop in the bucket. I submit to your Lordships that it was not worth while to alter this settled contribution that has gone on for all these years and which may, if it is continued, really tend largely to ameliorate the condition of the most necessitous of our people, for such a relatively trumpery addition to the Revenue of the year.

The other aspect of the case, although the amount involved is considerably smaller, is one to which, I confess, I attach even greater importance, and that is the method by which the Government proposes to deal with the sailors and the soldiers. This is a very serious matter. The amount involved, as I have said is not great. I think the noble Viscount told us that the accumulated fund with which he is here dealing amounts to £1,500,000, of which £400,000 is going to be applied in the manner that he described, so that the sum which, if the Government proposals are carried out, will actually accrue to the Exchequer is very little over £1,000,000.


It is £1,100,000.


Call it £1,100,000. What is the case for these soldiers and sailors? For every good reasons they were not brought within the scope of the machinery of the general scheme of national insurance. In the first place, they got their doctoring free as long as they were in the Service. They did not require medical benefit and therefore they had to be specially dealt with. They obtained, of course, a great many other advantages. Accordingly a different plan was adopted in regard to them. A certain amount of money was stopped from their pay, and the remainder of the fund was contributed by the State. In that way this fund, which now, after the deduction of £400,000, represents a little over £1,000,000, was built up and its real object and, so far as I know, its sole object (apart from maternity benefit, on which a certain amount has been expended) was to provide that when these men left the services there should be enough to enable them to be accepted by the approved societies and to enter into the national scheme. That, I think, was the object of this special provision.

The fund has now accumulated to this figure, and it comes from the sources which I have described. To what is due the figure that it has at present attained? It is due, not to miscalculation by actuaries, but to the fact that so many of these men laid down their lives in the War, the result being, of course, that every man over the age of, say, twenty-one, twenty-two or twenty-three who lost his life in the field automatically by his death released the reserve value which would have been allotted to him, had he lived, when he left the Service and came to thirty or forty years of age. Here again I do not want to make exaggerated, still less any distorted, representation of what is proposed. That is the source from which this fund is derived and that is the reason why it has swollen to its present dimensions. It is, one may say, the result of the War and of the casualties sustained in the war.

It is perfectly true that there is now no one who has any legal title to the fund. It belongs to the State, and, without this Bill, it might technically and legally have been handed over to the Exchequer. I do not know that any statutory authority was needed for the purpose. But the question that your Lordships have to consider is whether this is a right—still more, whether it is a worthy and generous thing to do. What is the situation? As I have said, there is no legal claim, but there is a body of men who, it seems to me, have a moral and an equitable claim to be considered. There are over 20,000 men of the Navy and the Army who have contributed to this fund out of their pay in days gone by and who, owing to the condition of their health, due largely to that which happaned to them the War, cannot get into any friendly society; they will not be accepted. On the other hand, they do not receive pensions in the ordinary sense because, owing to the terms and conditions of the Pensions Warrant, which I am not for a moment criticising, their ill- health—it may be tuberculosis or some other disease—cannot be proved to be directly due to service at any specific time in the War. These men are in this unhappy position. They are, for the most part, living in great poverty and with no possibility of any further assistance, except from some Form of charity.

I do make a very strong appeal to your Lordships on behalf of these men. Is it worth while to appropriate to the Exchequer, in order to patch up an artificial surplus for the Chancellor of the Exchequer who, whether from improvidence or from misfortune (I do not say which) has outrun his income—is it worth while, is it a worthy thing, is it consistent with all our best traditions to take this small sum of £1,000,000 and put it into the Exchequer for that purpose when you might by reappropriating it—as I have said, there is no legal claim of any sort or kind—bring relief to these men who served you in the War and whose present condition is due, it may be not directly, to wounds not. traceable to any specific cause in their service in the War? These men upon every moral ground are entitled not only to consideration but to generous treatment, and ought not to be left dependent upon private charity.

I make this appeal most earnestly to the Government. Whatever they may do with the other parts of this Bill, they Should reconsider this part. I am perfectly certain, and I shall secure the assent of every member of this house when I say so, that if the Government had brought in a Bill—and legislation would of course be required—to appropriate this £1,000,000 or £1,100,000, lying loose at the disposal of the State, for the relief of these men, that Bill would have passed unanimously in both Houses of Parliament. Cannot your Lordships, having regard to the facts which are undisputed, definitely say that so far as this House is concerned these men shall not be left without the provision which this sum will give them—a sum modest I agree, but the mere expenditure of which in the way I have described will materially relieve their necessities, and give them some scanty independent provision for the future—instead of letting it swell the surplus in the Exchequer. I have moved the rejection of the Bill mainly because I feel so strongly that these clauses are not justified either by our national necessities or, still less, by those large considerations of humane policy which ought to govern legislation in tins matter. I shall be very glad if we can receive some assurance from the Government upon this point, and if they can give that assurance I need not say that I should not press my hostility to the Bill.

Amendment moved— Leave out ("now") and at end of Motion insert ("this day six months").—(The Earl of Oxford and Asquith.)


My Lords, the noble Earl has subjected certain parts of this measure to severe criticism, and on behalf of myself and my colleagues on this Bench I should like to associate myself with what he has said. When this Bill came up for Second Reading in another place, the Chancellor of the Exchequer spoke for nearly two hours, not only upon the Bill, but for the major portion of the time upon the whole problem of national Expenditure. He was, of course, perfectly entitled to do that. He was seeking to justify the Bill, and although I myself am not going to make a long speech, I should like, before coming to the provisions of the Bill, to make a few observations upon the question of economy, and upon the lamentable, and indeed almost incredible, failure of the Government with regard to it. Indeed, it is my duty to do that in view of the remarks of the noble Viscount at the conclusion of his speech in moving the Second Reading of the Bill, with regard to the Labour party and economy. I will come to those remarks in a moment.

I begin by saying that this Government ought to be the last Government to talk about economy or to use the word economy. It is easily the most extravagant Government since the War. Every other Government, including the Labour Government, since the War has reduced national Expenditure. It was left to this Conservative Government to reverse that beneficial process and to begin once again the upward curve. Last year, their first year of office, they spent many millions more than the Labour Government had spent, and I cannot help thinking that it would be rather an advantage if, before making his remarks, the noble Viscount had acquainted himself with some of the elementary facts about national finance. This year—I will leave out of account the coal subsidy; I wish to be perfectly fair and my case is so overwhelmingly strong that I do not need to refer to the coal subsidy—the Government in their Estimates are proposing to spend £9,000,000 more than the Estimates of last year. Let me give you one more figure, and I am not going to give you many, but I think this is one which certainly ought to receive some reply from the Government, if they are going to make charges as they have done.

Leaving out of account the coal subsidy, and also increases of expenditure due to the decisions of previous Parliaments—apart from those two things this Government has increased national Expenditure by about £15,000,000, and have done so very largely on their own initiative and not because of strong Parliamentary pressure or great popular demand. It is customary for a Government to defend itself upon those grounds—namely, that Parliament is making them spend. The present Government cannot do it in this instance. They have done it themselves and without countervailing retrenchments, and the Government cannot blame Parliament. On the contrary, it is for Parliament to blame the Government, and I am entitled to blame them. I am entitled to do so all the more because of the wholly unjustifiable remissions of taxation which the Government have given to the wealthy classes, and which have increased our financial embarrassments.

Last January the Chancellor of the Exchequer went to Leeds and made a speech about economy. He used there very strong and studied words. He told his audience what the Government were going to do in their economy plans. Every Department, he said, would he affected, and everybody would be called upon to make sacrifices. Anybody who has more than an elementary knowledge of the national finances knows that any-talk of that kind, although it may evoke cheers from audiences at Conservative meetings, and may call forth commendation in the Government Press, is really mere rhetoric and has no relation to the facts as they are. None whatever, and the Chancellor found that out when he came to face the problem. He then discovered that in present circumstances three-quarters of the national Expenditure is not susceptible of any important reduction at all, and therefore for the purposes of retrenchment, he found himself driven back upon a sum of £165,000,000, which he said was the potential area for retrenchment. I do not like to refer to back speeches, and do not often refer to my own, but I think am entitled to point out that that figure corresponds almost exactly with what I said last year during our economy debate. The position was perfectly evident to anybody who took the trouble to analyse the national accounts, and I think it is surprising that the Chancellor of the Exchequer did not do that before going to Leeds.

Of this £165,000,000, nearly £50,000,000, broadly speaking, is for the cost of administration, and that, owing to the way in which the axe has been applied, does not admit of any great reduction, arid so we are left with about £16,000,000, the cost of the fighting Services. That is where the Government have so signally failed. If they had made, or started making, a large reduction in the cost of the fighting Services this Bill would have been unnecessary, and if they would adopt that policy consider what an easy path they would have. They would be supported by the Labour Party. I have no claim to speak for the Liberal Party, but I think I am right in saying that they also would support any reduction of armaments. And therefore the Government have a perfectly clear path. The Opposition would not oppose, they would help, and if the Government would only do this they would go a very long way to get out of the present financial embarrassments of the country.

Last year, in one of the debates upon the Finance Bill, the noble Earl who has just spoken suggested as a means of effecting economy what is called rationing. If he meant rationing in regard to the fighting Services I should most heartily agree with him, though, even here, it could scarcely, I suppose, be applied pro rate, and in default of any qualification rationing has very often been understood to mean pro rata reduction. Rut I am sure the noble Earl could not have meant that rationing should be applied to education or the health services or the beneficial activities of the Minister of Labour. In the last resort rationing can only be applied in any considerable and effective way to the fighting Services.

I am sorry the noble Marquess the Leader of the House is not here, because I have to refer to something which he said. The fact is that the Government have no scientific or consistent policy with regard to economy at all. They flounder about, now saying one thing and now doing another, and I really must say a word about the extraordinary spectacle which they exhibited in regard to the promised grant of £200,000 for the Civil Service sports grounds. It is quite true that in view of the way in which they are cutting clown social services it would not be consistent for them to make this grant now, but they should have thought of that before. The noble Marquess is a consenting party to this Bill, which is going to affect so adversely many of our poorer classes. He went to Birmingham on February 19, and, speaking at a dinner there—this was, of course, before the Government withdrew this promised grant—he is reported to have used these words:— He thought the old country could still bear the weight of providing proper amenities for the civil servants. A promise was a promise, and that sum was not promised for the first time this year, hut it was promised some time ago. Suddenly the country had wakened up to it. Of course it must he fulfilled. That was too much for the stern economists of Birmingham. A very strong Press agitation was raging against this grant at the time, and they interjected cries of "No, no."

But the noble Marquess was not deflected from the path of strict virtue by these economists. Not at all. In fact, he reproved them. He said: He was afraid the very foundation of that uncertainty of which he spoke was that everybody should keep their word. Thus reproved, the economists of Birmingham changed their minds and interjected, "Hear, hear." That was on February 19. Within one short week of that the noble Marquess, as a member of the Cabinet, was a consenting party to breaking this promise and to withdrawing this grant. The point is that, owing to their mismanagement of the national finances, the Government has been led to break its promises and to perpetrate all kinds of inconsistencies, and it has certainly been led into a breach of faith. The noble Earl who has just spoken said he would not use that expression "breach of faith." Be seemed to think it was going rather far.


Hear, hear.


I am sorry the noble Viscount said that, because I shall prove to him, from one of his own colleagues last year, that the Government then took the view that what they are doing now was a breach of faith. Moreover, Mr. Lloyd George, his principal colleague in the House of Commons, was by no means so lenient as the noble Earl in his language. He did not content himself with describing this Bill as a breach of faith. He used the word "robbery."


That is his favourite word.


That may be, but it only shows the difference in language used by various members of the Liberal Party. I say deliberately that it is a breach of faith, and a breach of faith with some of the thriftiest and the most hardworking of our poorer classes. It is really scarcely necessary for me to elaborate that point at this juncture, though next week in the Committee Stage I shall have various quotations to give, of a very intricate character I admit, but to my mind they make it perfectly clear that this was a breach of faith. It was a very strange thing for the noble Viscount to say that there had been a change made in the Act before, and therefore there could be no breach of faith. He knows that that change made in the Act before was made by mutual consent, and if a change is made by mutual consent no one would be afterwards justified in charging a breach of faith.

Last year the Government already was very hard up for money, and a proposal had been made for raiding the surpluses of the health societies. Sir Robert Horne had already cast a predatory eye upon those surpluses, and it was expected that he would put before the Government a definite proposal for raiding them, but his courage failed him the more he went into it apparently. At any rate, when the debate came on he did not actually put forward such a proposal, and the Minister of Health, Mr. Neville Chamberlain, in replying to him, said this. This was only a year ago. He said: I am very glad to hear my right hon. friend"— that was Sir Robert Horne— disclaim any idea of raiding these surpluses. That, in my view, would be interpreted, and I think with some justification, as a breach of pledges which had been given to approved societies. That, I venture to say, is what I think the noble Earl rather left out of account in his observations. This is a breach of faith with the approved societies. That is one of the serious things about this Bill.

The Minister of Health went on to say: It has been expected that the reward of efficiency of administration on their part would be the power to use these surpluses in order to give additional benefits to their members, and to say to those who have exercised efficiency in their administration in the hope of obtaining these additional benefits, 'We are going to take away that which you have by your thrift and care accumulated,' would, it seems to me, he an unjustifiable procedure. That is precisely what the Government is doing in this case, and what has happened in the meantime to make what was wrong last year right this year? Nothing whatever has happened, except that the Government is hard up for money, but that would be a very poor defence on a charge of breach of faith in a court of law. And whatever specious arguments may be used this is something which is not only mean and shabby but is a definite breach of faith.

The main defence of the Government in this matter is that the Pension Bill of last year justifies this Bill. That is their main contention. The Pension Bill of last year gave to the persons who are insured persons between the ages of 65 and 70 10s. a week, and it relieved the health societies of the obligation to pay cash benefits to those persons between 65 and 70. Therefore, the Government say, there is no real case for complaint.


It is only one of the points.


It is the main one.


No, there are many other points.


I am trying to be as fair as I can, but cannot say every thing all at once. I have looked though the debates in another place, and I think I am putting it fairly when I say that that was their main defence. I think that is absolutely true; at any rate, it is one of their chief defences, so that there is nothing to justify the interruption, although I do not complain of it. Let us see what the position is. It is true that the. Pensions Act relieves the health insurance societies of paying, from 65 to 70, cash benefits which otherwise they would have paid. But the converse applies. If they are relieved it means that insured persons would not be entitled if they became ill to receive the benefits which otherwise they would have got. If your Lordships will go into the matter you will find in the case of certain unmarried men and widowers that what they will receive under the Pensions Bill is less than they would have got under the Health Insurance Act. That is a serious matter. By an Act of Parliament people are deliberately put in a worse position than they would have been in under a contract which in effect they had made with the state. That is what is conies to. I have no hesitation in saying that if any such proposal were brought forward in your Lordships' House in regard to certain matters which I could name it would be condemned in the strongest language permitted by the limits of Parliamentary expression.

Let me take another aspect of the case. The Chancellor of the Exchequer said: "After all, they have not very much to complain of because the rate of interest has gone up." And the noble Viscount said that they are much better off than they expected to lie. It is true that the rate of interest has gone up, but that argument must not he used apart from its corollary, which is that the cost of living has gone up as well. Therefore, these people, as a matter of fact, are not better off, but worse off, than they expected to be. And even if that were not true, what a dangerous doctrine this is for a Conservative Chancellor of the Exchequer to use! Let us apply the same argument to interest on the 5 per cent. War Loan. At the time that Loan was issued those who applied for or bought it had no expectation whatever that prices would be such that the value of their investment would in effect be increased as much as it has been. Owing to the fall in prices, even if the War Loan interest were reduced in the direction of 3 per cent., some of these people would be better off than they expected to be. But would your Lordships consider that a sufficient justification for the suggestion that the rate of War Loan interest should be reduced? I heard a noble Lord say "No." Then why do it in one case, and if you do it in the one case why not in others? In this matter the Government has set an extremely dangerous precedent.

I pass from that matter to the clause dealing with unemployment insurance. I will not discuss this clause at any length, but it virtually amounts to a breach of faith. At any rate, the Minister of Health used language which seemed to show that the Government were guilty of something very like that, because they are taking for the Exchequer money which the employers had a right to expect That is the position. This money was, in effect, promised last year to the employers. The Government is now taking it Indeed the Minister of Health pleaded guilty to the charge, but argued that, after all, what the Government are doing is done to avoid further taxation and, therefore, the employers have no grievance. Let us consider for a moment what those words imply. They imply—do they not?—that taxation is just as much a burden upon industry as a definite charge like the unemployment insurance payment. Indeed, I suppose that is the position of the Government. Again and again during the debates on the Finance Bill of last year words to that effect were used, words which implied that whatever the charges were, whether taxation, or rates, or wages, they were all equally injurious to industry. I should like to ask whether that is really the view of the Government. If it is their view, can they produce a single economist of note who agrees with that view? I should have no hesitation in challenging them to do that because I know that they cannot do anything of the kind. I will not, go into the unemployment figures to-day, but when the time comes I shall be willing and able to challenge some of the calculations upon which this particular clause is based.

The last clause about which I wish to speak and to which the noble Earl referred is that for taking money from the Army, Navy and Air Force Fund. The noble Earl covered the ground so fully that I need say no more than a word or two about it on this occasion. It is an extraordinary thing when all is said and done. Consider the position. Here you have a surplus of £1,500,000 and simply because the Government are hard up for money—nobody suggests for a moment that they would have done this had they not been hard up for money—they say: "We will leave you £400,000 and take £1,100,000, and because we are leaving you £400,000 you really have no cause for grievance." It is like giving a small boy a penny bar of chocolate while you steal his money-box containing sixpence. That is what it comes to. The Government have no moral right to this money.

As a matter of fact, when the noble Earl said that the money came owing to the deaths which had taken place during the War he rather under-stated the case. That, no doubt, is one of the chief causes, but there are others. There are five causes mentioned in the Actuary's Report as to why this money has accumulated, and I certainly feel that for the Government to take the money is absolutely unjustifiable even if it could be argued that the whole of it could not be used for the original purposes for which it was intended. No doubt, owing to those deaths a lot of it cannot be so used, and this is a clear case for applying the doctrine of cy-près mentioned by the noble Earl. In another place some of the Conservative Back Benchers supported the proposal that this money should be used for some of the men whose cases have been described by the noble Earl, particularly for the consumptives. But the Government would have nothing to do with it. They swept it aside simply because they wanted money owing to their mismanagement of the national finances.

In the course of his observations the noble Viscount rather prided himself on the fact that in another place no Amendment had been inserted in this Bill. That is an astounding statement to make. No Amendment was inserted, of course, because the Government would not permit it, and with their huge majority they can, if they wish, always ride down any opposition. As a matter of fact, they had put down an Amendment themselves, but when the time came to move it they dared not do so. Why? Because they wanted to avoid a Report stage. The Bill had been subjected to such devastating criticism, to which there had been scarcely any adequate reply, that they meant at all costs to avoid a Report stage. Your Lordships know that even if only one Amendment is inserted in a Bill in another place there must be a Report stage. So they took the extraordinary course of intimating that Hey would not move their own Amendment, but that when the Bill came to your Lordships' House this particular clause would be struck out by your Lordships, or words to that effect. From what the noble Viscount said and in view of the criticisms made upon this proposal, I gather that almost implies, if it implies anything at all, that your Lordships' House is in the pocket of the Government and will do whatever the Government wishes. If it does not mean that, what does it mean? I rather gather that the Government hesitated about this course, because the noble Viscount did not say that they were going to do it, but that they might do it.


What is it that the Government are hesitating about?


The Government in another place intimated that when this Bill came to your Lordships' House two clauses would be deleted.


And I have hinted what those clauses were.


Exactly. If the noble Viscount will be good enough to give me his attention he will see that I am not disputing that at all. The point is that he did not say definitely to-clay that this was going to be done. He said it might he done.


I am always cautious.


I see. Then it is not that the Government are hesitating, at least presumably not it is that the noble Viscount wishes to protect himself against every possible contingency that may arise. It is the fact that what happened in another place was that the Government withdrew their own Amendment in order to avoid having a Report stage, and it is an extraordinary thing, in view of those circumstances, that the noble Viscount should plume himself on the fact that no Amendment was inserted in another place. I cannot remember a Bill, as far as a somewhat long Parliamentary experience goes, which received less support from the followers of the Government in another place than this Bill. Hardly any speeches were made in its favour from the back Benches. The noble Earl is perfectly right. It is not really an Economy Bill. You are not helping, the country by this Bill, Taking a large view, you cannot help the country by cutting down the already small allowance which the poor have to help them when they are ill and to ward off illness. Nearly everyone recognises that that is not economy. The Government's followers in another place recognised that, and, as far as we are concerned, though we cannot stop the Bill passing, we shall vote against it. I honestly believe it is one of the most unjust Bills that has ever been placed before Parliament.


My Lords, it is evident that the absence of so many members of your Lordships' House shows that the thoughts of most of us are elsewhere and, in those circumstances, I shall not detain your Lordships very long in stating the reasons why it is that I dislike this Bill. It is, I confess, with a very real regret that I find myself opposing any Bill which is called an economy Bill. I have often said in this House that I am only too anxious to give His Majesty's Government support when they propose measures directed towards true economy anal when they have been asked to abstain from various economic measures even from the Benches behind me, I have refrained from giving my support to that because I thought the Government deserved my support in those circumstances. But here, in this measure, there is so little which is really concerned with economy, except the name, that I find myself unable to support them.

We know the anxiety with which His Majesty's Government have stated their desire for economy. The Prime Minister, in Brighton last year, said that the Cabinet, Committee over which he intended to preside himself would labour insistently in order to get economy, but the result of the insistent labours of this Cabinet Committee is that the figures show an unfortunate increase. I will give the figures for the last three years, and will include those of the Labour Government. I will not deal with Estimates but with actual Expenditure, which is, I think, the fairest way, because it includes Supplementary Estimates, In 1923–24 the Expenditure was £788,000,000; in 1924–25, when the Labour Government were in office, the actual money expended was £795,000,000—no such diminution as the noble Lord who spoke last intimated had occurred. Facts are more important than words. In the year 1925-26 the actual Expenditure, including, of course, the coal subsidy, amounted to £826,000,000. I see no economy in this direction, and neither, I must confess, do I see that here is any tendency towards economy on the part of His Majesty's Government. I am entirely surprised that His Majesty's Government, have followed the bad example which was set them by the Government which preceded them. We do not expect that there should be great economy either from the Benches on my left or from His Majesty's Conservative Government.

In passing, I may say that nothing surprised me more in the speech to which we have just listened than the constant reiteration by the noble Lord that His Majesty's Government were making a breach of faith. I should have thought that the noble Lord and his colleagues were the last people to talk about a breach of faith so long as they give their tacit approval to the greatest instance of breach of faith in the constitutional history of this country. How can they talk to this House of a breach of faith and expect us to take them seriously? When we come to the Committee stage I do hope that the noble Lord will refrain from advancing an argument which certainly seems to me of the utmost hypocrisy coming from either him or from any one of his colleagues who are sitting upon that Bench at the present moment.


What is this all about?


If the noble Viscount wishes to know what the breach of faith is it is that so many trade unionists have left work without giving those notices which they were obliged to give. It is one of the gravest and most important cases of a breach of faith in the constitutional history of this country. Unfortunately, the noble Viscount gives it his tacit approval. I will return to my own condemnation of the Bill. I understand that the noble Lord does not care for me to refer to his Party's criticisms of the Bill. We have three matters which are specially affected by this Bill—education, health insurance and unemployment insurance. They are all matters which are particularly interesting to noble Lords sitting on this Bench. After all, it is education which is very largely connected in people's minds with the admirable work that was done by Mr. Fisher, the Warden of New College, while he was Minister for Education. Health insurance is for ever connected with the name of Mr. Lloyd George and unemployment insurance with the name of my noble friend Lord Buxton, who unfortunately is not in this House to-night.

I would ask His Majesty's Government, when they speak of economy, why they go in this matter to unemployment. Does my noble friend really say that there is true economy if it is merely taken off from the Unemployment Insurance Fund and put instead upon the rates? If these people, instead of getting it from one source are obliged to get it from the rates, it does not seem to me that there is any real economy for the people of this country. There is another question that I would like to put to the noble Viscount. We understand that last year there was a Committee appointed to go into the question of expenditure I think only upon the defence forces. It was presided over by Lord Colwyn. I wonder if the noble Viscount could give us any informaion in regard to the Committee's Report? Is there any chance that it will be published, or, if not, will the noble Viscount give us any reason why it should not be published? It was a very strong Committee. It consisted, I think, of Lord Colwyn, Lord Bradbury, and Lord Chalmers. We should all like to know what economies they thought were possible and desirable in the Public Services. It would be of so much value that I do hope His Majesty's Government may give us some intimation that this Report may be made public. So long as we see this large increase in the total Expenditure of this country we have very little hope of those large economies which we wish to see in the total Expenditure of the country. We Liberals have always stated that we thought it very much better that money should remain in the pockets of the people of this country. Mr. Gladstone used the famous words that it was far better that it should fructify in the pockets of the people of this country and that they should be able to spend it as they liked. That is a sound principle to which we still adhere. We would far rather have it there than spent in taxes.

I can imagine that the noble Viscount might quite fairly taunt us with not making alternative suggestions of our own. Quite briefly, I would venture to say that I do think there are several directions, quite apart from armaments, in which something might be done. Your Lordships probably do not realise that at the instigation of the late Government no less than £2,750,000 is going to be given as a subsidy to beet sugar. We have lately learned how bad a thing a subsidy on coal may be, but this year a sum of £2,750,000—and it may be even greater in subsequent years—is going to be given to beet sugar, There are a number of new Departments which I think really might be subject to some consideration, new Departments which in the old clays were subject to the larger Departments of State and which now, having become independent, have naturally become larger. I need not go through the list of them—they will probably occur to the noble Viscount—but I think there are members of His Majesty's Government who might well consider a self-denying ordinance and ask themselves whether their existence as an independent organisation is still necessary.

So long as you have a Minister with his secretaries and assistant secretaries, with their typists, clerks, experts and messengers you have an almost unending source of expense. Your Lordships will remember the old saying, Great fleas have little fleas upon their backs to bite 'em, And little fleas have lesser fleas, and so ad infinitum. When you have these independent Departments existing you find increasing sources of expenditure. To take only one item, the rooms they have to occupy, you will find that a considerable sum of money might be saved to the State if some of these offices were returned to the larger Departments of which at one time they formed part. These economies would appeal to me more if they had been accompanied by larger economies in ocher directions, if we could have saved, for instance, in armaments and there had been some real attempt to secure a larger economy. I recognise the fact that armaments to-day show a slight drop upon last year, but there is an increase upon the Estimates of the year before. In view of these facts, although my noble friend and I will not challenge the Bill or proceed to a Division, we do wish to take this opportunity of registering our disapproval of the measure.


My Lords, there is one point in connection with the Bill to which I wish to refer. The noble Viscount in charge of the Bill alluded to an Amendment which he would propose at the Committee stage in connection with Clause 14. I am aware that there is a very strong feeling in the country in regard to the attitude of the Government in connection with expenditure, but what I do feel is that the views of local education authorities ought to be taken very carefully into account before the Amendment is: placed upon the Paper. I am hopeful that the Government will realise that the policy indicated by Circular 1371, which has been withdrawn, ought not to be perpetuated in a veiled way by Clause 14 as it is at present drawn.

Those of us who have done our utmost to encourage local education authorities to spend money in order to enable children to be properly educated and to see that their little ailments are attended to, feel that there is real danger of that work being restrained by the Board of Education under the powers conferred by this Bill. It is absolutely essential if money is not to be wasted on the children that their comparatively slight ailments should be attended to. Otherwise money will be wasted in trying to educate them. There are little illnesses, due often to dental troubles, adenoids and occasionally other ailments upon which I need not dwell, which really cause a waste of public money. It is necessary that local education authorities should be encouraged to deal with these ailments with a view to securing true economy.

There is a good deal more I might say, but in present circumstances I desire to give the Government as much support as I can I hope they will take into account the views of education authorities before introducing their Amendment.


My Lords, I will not detain your Lordships more than a few minutes. I think that probably you would not thank me if I discussed the much wider question raised during the discussion of the whole financial policy of the Government. If I am asked to do so I shall be glad to deal with it on a proper occasion. The many points raised by the noble Earl, Lord Beauchamp, might be dealt with, I think, on a, general Motion. I will just answer very shortly a few of the points raised in the course of the debate. I must express my thanks to the noble Earl, Lord Oxford, for so fairly and so definitely putting an end to the idea that there was any sort of breach of pledge in the dealings of the Government with Clause 1. I thought the point would he settled by the great authority of the Earl of Oxford, but it was revived by Lord Arnold. I think lie will pardon roe for saying that if I had to consider weight of authority I should prefer to rely on the great experience and authority of the Earl of Oxford.


I quoted your own Minister of Health.


I will deal with that point. The noble Lord quoted the Minister of Health, but did not say it was wholly irrelevant to the present Bill. He talked about raiding surpluses, but if he had only read this Bill and, if I may add, had listened to my speech, he would have seen that no surplus is raided. The whole of the surplus of £65,000,000, as I thought I stated definitely, will not he touched at all. Again I rely upon the great authority of the Earl of Oxford.

The Earl of Oxford made one or two points with regard to which I should like to say a word or two. With regard to the sinking fund which he said was built up partly by Government contributions and partly, I think, from the contributions of the people themselves under the provisions of the original Act of 1911, he said that when these reserve values had been paid off, or the sinking fund built up, the Government contribution, what- ever it might be, would go towards the grant of further benefits. That is so and it is not altered by the Bill at all. On the contrary, when this period is over the Government contribution will still be paid and will still go to additional benefits. The only alteration is this reduction which is sufficient to meet all the original demands and fulfils, as it were, the conditions and provisions of the original Act. I rather regretted to hear the noble Earl say that £2,800,000 was a puny sum. That is not much encouragement to a Government that is trying to economise. I myself, with a humbler notion of finance, thought that £2,800,000 was really a substantial sum to be handed to the Exchequer.

I must thank the noble Earl also for the great fairness with which he stated the case against the Government on the two points of health and soldiers' pensions. There was only one point on which I think he may possibly have given a wrong impression to the House, although the matter was stated by him with fairness and accuracy. He referred to the number of men who are on the soldiers and sailors fund as 20,000. I think it is 23,000.




Let that pass. He stated that there were many of these men who were getting disability and other pensions as a result of their sufferings in the War or of illnesses contracted during the War, but I think the House might have gathered from his observations the impression that these 22,000 men really had nothing to live on except the benefit they might get as members of the fund. But we must make a considerable deduction from this amount because a large proportion of that 23,000 are unfortunately men who have suffered owing to the effects of the War and who, in addition to what they are getting under these benefits, are also getting different classes of disability pension.

Let me make one further observation. The noble Earl in a very strong and moving argument, said that these surpluses have been built up out of the reserved values by these men who fell in the War and that they should be handed over to the men who are now on the fund. I quite admit that you might build up a very strong argument on this basis, but I should like to point out that this surplus, though partially due to the reserved values of the men who fell in the War, is also due to a great many other causes, of which I stated one when I pointed out that those who entered the Army during the War and did not say that they belonged to uninsured businesses or occupations passed out and left their reserved values for the benefit of the fund. I am advised that, if you take the amount of the reserved values liberated by those men who died in the War, that sum is less than the £400,000 that is going to be reserved by the Government in order to increase the benefits and give additional benefits to those men who are already on the fund. I state that because I think that the noble Earl may possibly have given a slightly wrong impression.


I did not intend to do so.


I am quite certain that it was not intentional, but I thought that it might have given that wrong impression. I think I need deal only with two points made by the noble Lord opposite, Lord Arnold, because he says he will raise the matter again on Tuesday and if I do not answer any technical points now I will do so then. But the noble Lord made one point to which I do want to reply at once. He said that we were relying upon the £37,000,000 set free by the people between 65 and 70 years of age being put upon the Old Age Pensions and taken out of this insurance as a reason for making the reduction of £2,800,000, and he further remarked how hard it was that these people who were taken off one fund and put under the Old Age Pensions scheme should actually get less than they would have got if they had remained.


I said "in some cases."


I am rather glad to hear that already, before I have answered the point, the noble Lord has made a considerable—


Will the noble Viscount do me the courtesy of letting me say that I made it perfectly plain. I used the words "in some cases" and I went on to refer to the case of unmarried men and widowers. The point was put quite fairly.


I am very glad to hear it, because I was merely going to state broadly that the benefits granted by the Pensions Act to insured persons between the ages of 65 and 70 are three and a half times the total amount that they would have had under both health and unemployment benefits combined. That is the Actuary's Report, and certainly I think that the statement of the noble Lord opposite would have led the House to think that in going from one fund to another they were going to suffer I will not speak of the one or two particular eases that he mentioned but, broadly speaking, these people get three and a half times the benefit that they would have got if they had remained. I think that I have dealt with the specific points that were raised and I dare say that your Lordships will at this time of the evening excuse me if I do not go into the broad question of the whole financial policy of the Government.

On Question, Amendment negatived. Bill read 2a accordingly and committed to a Committee of the Whole House.