NATIONAL EXPENDITURE.

HL Deb 22 March 1927 vol 66 cc631-82

Debate resumed (according to Order) on the Motion moved by Earl Beauchamp on Wednesday last; namely:—That the need for drastic economies in the national expenditure and for reduction in taxation, with a view to improving trade and diminishing unemployment, is even more imperative than at the close of 1924; and this House therefore regrets that the promises of retrenchment then held out to the country by His Majesty's Government have not been kept, and deplores the continued growth of extravagance in armaments and in the other spending Departments—and the Amendment thereto, moved by the Earl of Midleton, to leave out all the words after the words "this House" and add "calls upon His Majesty's Government to adhere to their undertaking to take immediate steps to curtail national and local expenditure and also to reduce the staffs of the Public Departments."

THE EARL OF OXFORD AND ASQUITH

My Lords, a little less than two years ago, on the Motion for the Second Reading of the Finance Bill, which came to us from another place, I took the opportunity to address to your Lordships a few observations on the then condition and prospects of our national finance. I pointed out that the aggregate Expenditure of this country, Imperial and local, was at that time imposing upon the taxpayers and the ratepayers an annual burden very little short of £1,000,000,000. As compared with the total estimated national income before and after the War, that meant, I suggested, that the contribution paid to the local and Imperial Exchequers had risen from something like one-ninth to something like one-fourth.

I noticed that, in the course of this debate, the noble Lord, Lord Arnold, challenged the correctness of that calculation of mine. All the estimates that I gave of the national income were of necessity, and must always be, highly conjectural, but those which I gave were taken, as I thought, and as I still think, from the best authorities. As regards Expenditure, I took the total amount in the case of each of the two comparable years, which in the year in question was exacted from and contributed by the taxpayers and the ratepayers of the country, and I cannot, with all respect, in the least assent to the suggestion made by Lord Arnold that by far the largest part—I think he computed it at something like nine-tenths of the total of £360,000,000—of what goes to the Debt Service ought not to be treated as an item of expenditure, on the ground that sooner or later, in its ultimate effect, it brings about what is euphemistically called a redistribution of the national income.

It is two years since I spoke in that sense, and the situation in this matter of economy shows, as everybody will admit, no effective improvement. Indeed, our experience during those two years has, in my mind at any rate, almost extinguished the embers of hope. I will not repeat the figures which have been so frequently given in the course of this debate. They must be familiar to your Lordships. The actual position can perhaps be strikingly indicated by another set of figures, very short but very significant. When we compare our situation with that of the richest country in the world, the United States of America, we find in Great Britain the Debt per head of the population to be £168, while in the United States it is £34; and if we look at another significant fact, in Great Britain the taxation per head is £34 and in the United States it is £6. Those are very serious figures.

My noble and learned friend Lord Haldane last week, in the course of this debate, said it filled him with gloom—not the figures but the debate—because, as he said, the points of economy which had been made by my noble friend Earl Beauchamp, and by no one with more effect than by my noble friend, the Earl of Midleton, were all founded on arithmetic. He said, quoting his exact words from the OFFICIAL REPORT, that there is nothing more fallacious than doing sums when you are working out a policy of economy. That was rather unkind to his colleague, Lord Arnold, who, with much industrious research, an hour before had gone through a series of sums more intricate and complicated than any I have ever listened to even in my experience of the House of Commons. That by the way. But I would like to say one word about this question of arithmetic. Unlike my noble and learned friend Lord Haldane, I am not a philosopher nor a man of science. I watch with vague but largely uncomprehending admiration the inroads which these distinguished men, philosophers and scientists, are making decade after decade into what we used to regard as the fundamental conceptions of the universe and life. After this debate I am now getting a little apprehensive about the future and the fortunes of the humble but venerable science of arithmetic itself. I suppose it will be the next victim on the altar of scientific progress, but after all I am old-fashioned enough to think, and I trust my views in that respect will find some acceptance among your Lordships, that when you are debating problems of national finance arithmetic is still a relevant consideration and indeed in many respects one of capital importance.

My noble friend says you must look beyond arithmetic to policy. That is true, but there is one fundamental and governing rule of policy and that is that whatever your ideals may be and however anxious you may be to carry them into practice for the amelioration of social conditions, you ought always to see your way to paying your way. I remember very well when I was Chancellor of the Exchequer, now a great many years ago, that I resolutely refused, in spite of a great deal of pressure, to set on foot a system of Old Age Pensions until I had succeeded, as I did during the first two years of my office, first of all in paying off an unprecedented amount of Debt and next in remitting or reducing taxes which bore hardly upon the common life of the people. It was not until we had laid that foundation that we proposed what proved to be the first in a series of schemes of costly social reform. The real question, and the only important question as I shall submit to you which we have to consider here to-day, is certainly not to distribute and allocate the responsibilities for the past between successive Governments, but to ask whether and how far economy, real economy, is under existing conditions a practical policy. It is to that point and to that point alone that I shall address myself to-day.

Those who demand drastic and all-round reductions in Expenditure are always confronted, as has been the case in this debate, with the argument of the narrowness of the area of possible and immediate retrenchment. It was pressed with great force the other day by Lord Plymouth and it must be admitted with a great deal not only of plausibility but of truth. Let us just see how we stand in that respect. What I may call in the language of the City prior lien charges are of a kind that we cannot get rid of nor indeed reduce. First and foremost there is the Debt Service and the Pensions Service. They absorb about £500,000,000, roughly speaking, which is more than half of our total annual Expenditure. Nor is there any prospect, at any rate for some time to come, of a really substantial reduction in either of them. Reductions will come automatically in the case of Pensions by the falling in of the lives of the pensioners and potentially, as I hope and believe, in the Service of the Debt when the credit of the country enables you to convert at a lower rate of interest without unduly increasing your capital liabilities. But that is not a thing that can be done to-day.

What is the next great head of what I may call for the time being irreducible Expenditure? It is that set of Services which in the financial accounts as they are now presented come under the category of Grant Services. That includes all forms of what we call Social Services, from education and housing down even to the steadily growing beetroot sugar subsidy. That item takes another £100,000,000. Then you have what I for my own part think ought never to have been included in the national balance sheet because it is a most misleading set of items—the expenditure upon the Post Office and the Road Fund. It ought not really to appear in the form in which it does in the national accounts at all and I think my noble friend (Lord Arnold) will agree with me there.

LORD ARNOLD

Hear, hear!

THE EARL OF OXFORD AND ASQUITH

But there it is and it amounts this year to something like £70,000,000. What are you left with? When you have subtracted those items from the gross Expenditure of £800,000,000 or £820,000,000 you are left with not more than about £160,000,000 (I am using round figures) for national Administrative Services, which includes Imperial Defence and the whole cost of civil government. And it is no good blinking the fact that it is upon those items and within those limits that for the present the economist is compelled to confine his surgical operations. It is only fair that those facts should be recognised. Coming to these Administrative Services I shall not go to-day—I have done it before and I expect I shall have to do it again—into the larger questions, and much the most important ones in this branch of the matter, of naval policy, upon a wise decision of which all the possibility of real reduction on an effective scale depends.

I am very glad that His Majesty's Government have seen their way without hesitation, and indeed with cordiality, to respond to the invitation of President Coolidge for the forthcoming Conference. Although it is to be lamented that, at the moment at any rate perhaps, not more than three Powers are committed to take part in those deliberations, even if it is confined to those three, having regard to their relative importance in the naval armaments of the world, if they can come to an agreement, an enormous stride in advance in the direction of economy would be made. I trust also that the proposals which Lord Cecil on behalf of the Government is now making at Geneva—I have not had the time nor have any of us to survey or analyse them in detail—will be found to provide another road to the attainment of the same all-important goal.

In the meantime I would venture to make a strong appeal to His Majesty's Government to call a halt to further commitments in cruiser construction. It seems to me that we can afford to do so. I shall be corrected if my figures are wrong, but so far as I know, according to present programmes at the end of 1930 Great Britain will have seventy-one cruisers to the United States twenty-five and the Japanese thirty-two. So that there is a very considerable margin of security. And I make that appeal for two reasons, different in character but I think equally appropriate and cogent. The first is of course our hope—I trust our well-founded hope—that a limitation by agreement of naval construction will be arrived at between the Powers concerned. The second, which is not less important, is the fact that the whole future of naval construction in all its aspects in matters of type, in matters of function and in all the other material and relevant considerations is, as I think all fair-minded experts will agree, in the melting pot.

We have produced lately two Super-Dreadnoughts, as they are called, which have cost, I suppose, something like £7,000,000 apiece—it must be very nearly that—but happily owing to the Washington Agreement we are not going on, for the time being at any rate, in that line of naval venture. But that is £14,000,000 as to which a great many people, well-informed and expert people, nave the gravest possible doubt as to whether it will ever produce any beneficial or advantageous result. I do not profess to be an expert, although I have had a good deal to do with naval matters in the course of my experience, and I have my doubts as to whether the particular type of cruiser to which you are at present committed may not prove, in view of the constant development of technical improvements, to be at any rate less well fitted for its task than vessels less ambitious in scale and less costly in construction. I express no dogmatic opinion about that. All I am saying is that, our position being such as it seems to me it is at the present time, there should be a halt in new construction in that respect. That again relates to the future.

I come to What, although it is on a much smaller scale, is an actual practical and immediately realisable step in the direction of economy. That is in the administration both of the War Office and the Admiralty. I listened, as all your Lordships did, with the greatest interest to the most cogent and instructive speech which was delivered last week by my noble friend Lord Midleton—cogent and instructive because it did not deal with generalities but, as the lawyers say, condescended to particulars. What is the case of these two Services? I am not criticising for the moment, nor have I any desire to criticise, the reductions which have been made in what I may call the fighting personnel both of the Army and of the Navy as compared with the pre-War figures. It is an admitted fact that those reductions have been on a very considerable scale, yet as Lord Midleton told us, in the War Office the administrative staff has risen as compared with the pre-War standard from 1,300 to 2,000, an addition of 700; and in the Accountant-General's Department of the Admiralty the numbers—it is not a question of cost—employed have increased by no less, I think, than 80 per cent.

My noble and learned friend Lord Haldane did not seem to attach very much significance to these figures, not entirely because of his disregard for what he calls arithmetical methods but for a different reason. He said that the noble Earl (Lord Midleton) told us that the staffs had grown enormously, and added:— So they have. And why have they grown? They have grown because there was the hope that with better staffs, with more searching direction, it would be possible to produce more for less money. In another part of his speech he said:— War, like industry, is a matter of thinking, of planning, of working out things in detail and, therefore, it is necessary to think and to employ skilled thinkers to an extent that was never the case in the old days. With all deference and a most friendly feeling to my old colleague, what does he mean? He is replying to a criticism upon the addition of 700 men to the staff of the War Office and of 80 per cent. to the Department of the Accountant-General in the Navy. I hope the 700 men at the War Office and the 80 per cent. at the Admiralty are what he called "skilled thinkers"; I have no doubt they are; but that is not the purpose for which they have been employed.

It is not to think, it is not to plan, it is not to ruminate upon hypothetical campaigns, it is not to solve what I may call strategic cross-words that they are employed; they are employed for the humdrum duty, a very important one, of looking after the administration of the Army and the Navy day by day. I therefore cannot see how any possible justification can be found in my noble and learned friend's almost idolatrous worship of the staff for this particular expenditure of public money. What has become of the Committee of Imperial Defence? The Committee of Imperial Defence was set up and has been at work for the express object of planning and thinking, and of forecasting strategic and economic problems. I know something about it. I was a member of it for eleven years and during the greater part of that time I was its Chairman. I am sure my noble and learned friend will agree with me when I say that I do not think the country even now realises what an enormous contribution the work of that Committee, carried on during those years, of course with the skilled assistance of all the experts both of the Army and the Navy, made to our preparedness when the War actually broke out.

I refreshed my memory to-day as to what was the staff of the Committee of Imperial Defence. When I was first actively concerned in it, 1906–7, the staff consisted of one secretary, two assistant-secretaries, one confidential clerk and one boy. Four men and a boy were the total staff of the Committee of Imperial Defence who were engaged in thinking and planning and performing all these functions which my noble friend so eloquently described. I have the figures now for 1913—seven years later, and the year before the War broke out. In 1913 the staff had reached the following dimensions:—One secretary, three assistant-secretaries instead of two, one confidential clerk, one military clerk, one assistant clerk (who may have been the boy who by this time had grown up). In other words, we started with four men and a boy, and we finished up with a staff of seven. I have always been a very great supporter of all schemes for improving the Staff in the Army and for creating and developing a Staff for the Navy. That was a matter in which at one time we were rather deficient.

I ask your Lordships to consider the state of things which prevailed then as compared with the state of things which prevails now. There are problems—international problems, strategic problems, economic problems—now at this moment of which I do not in the least degree disparage the importance and which no doubt require, as I have equally little doubt they receive, careful and constant attention. But I do not think they are in any way comparable in number, in complexity, in the disastrous consequences of lack of foresight and of wrong decisions with those which for the twenty years before the War during the lifetime of successive Governments called for the solicitude and anxiety of British statesmanship. How can you therefore in these altered conditions suggest that you can justify an addition—and a large addition—both in the case of the Admiralty and the War Office, with a diminished fighting personnel, to the civil servants whom they employ? We ought really to get down to realities in these matters. You may ask—the question is a perfectly proper one and one which any one who presumes to offer your Lordships advice is bound to answer—what practical steps do you recommend? The area, as I have pointed out, is comparatively narrow. There are redundancies and excrescences, as it seems to me and I believe to the great majority of your Lordships, in the present arrangement which ought to be pared down and indeed entirely removed. So far I should hope we are upon common ground.

But before I go further and conclude with my actual suggestions I must say one word about the Civil Departments. My noble friend Lord Arnold—I think I have his words here—was horrified at the application of a remedy which I suggested two years ago—namely, the rationing by the Chancellor of the Exchequer of the spending Departments of the State, the application of that principle to what he calls, and what I think we may all agree to call, the Social Service Departments. He said it might be applicable to the Defence Services, but not to them. Why not? No one wants—I certainly do not want—to curtail well-guarded and well audited expenditure upon these Social Services. I reminded your Lordships a few moments ago that I, or at least my Government, was the pioneer so far as Old Age Pensions were concerned. That was a very expensive matter, and we followed that up with National Insurance. Lord Arnold seems to think that labour exchanges depend upon the existence of a Ministry of Labour. Nothing of the kind. Labour exchanges were introduced by my Government when the present Chancellor of the Exchequer, Mr. Winston Churchill, was President of the Board of Trade. They were set up by the Board of Trade, they were supervised by the Board of Trade, they were administered by the Board of Trade with universal satisfaction. I do not believe there has been the faintest improvement in the machinery of the labour exchanges by the creation of this Ministry of Labour.

May I say incidentally—the point had for a moment escaped my memory—in regard to Old Age Pensions that I quite agree that our initial Estimate of the expenditure fell short of what it ultimately reached, far short. But why? It was not entirely from lack of foresight or inquiry. It was partly because of the large extensions which the House of Commons gave to the scheme in the course of its passage through that House, and partly, I am bound to add, because through the happy absence—happy for Ireland—of any system for registration in Ireland, no human being could possibly have conceived how many people over the age of seventy would be found in that country. On the other hand, even on the original Estimate, it was a very large sum—between £6,000,000 and £7,000,000, which in those days was regarded as a considerable sum. I do not believe—if noble Lords are curious upon the subject let them examine the national accounts—that a new service upon that scale and involving, as it necessarily must have done and did, a very great deal of detailed work in administration has ever been conducted on such a small percentage of cost. There was no new Department, no new hierarchy set up. We availed ourselves of such machinery as was already in existence. I do not know what is happening now, but so long as I had anything to do with it, it would challenge comparison with any Department of State from the two points of cheapness and efficiency.

Then the War undoubtedly brought about—I do not say that to a large extent it was not inevitable—the creation and multiplication of Departments. Enormous stress and additional and unforeseeable work was cast upon the State and we had these new Ministries which grew up—the Ministry of Labour, the Ministry of Pensions, the Ministry of Transport, the Ministry of Mines, the Overseas Trade Department, and I am sure I have not exhausted the category. They did good and necessary work in their day, but, as one fairly well conversant with administration, I give it as my deliberate opinion that the bulk of them ought to be wound up and allowed completely to disappear.

Several NOBLE LORDS

Hear, hear.

THE EARL OF OXFORD AND ASQUITH

Take the case of the mines for instance. I was Home Secretary thirty-five years ago and I spent three of the most pleasant administrative years of my life in that great Department. We had under us the mines and the factories and workshops as well as a number of other very miscellaneous spheres of activity. I do not believe that there is any evidence whatever to show—and certainly none in the last year—that the creation of a Mines Department has in any way increased, either in the vigilance of the inspectorate or in any other material respect, the efficiency of that old system which was conducted at a fraction of the cost. In the same way I have already referred to the labour exchanges, which were under the Board of Trade. I do not want to exaggerate, but in my deliberate judgment there is hardly one, or if there be one there are not more than two of these Departments—each of which, because when you create a Department you have got to man it, is costing the public at the present time vast sums of money—which might not be cleared out and such duties, some of them very important duties, as they now discharge retransferred to the old Departments which performed them so well. That is a practical suggestion for reform, which I trust will not fall on deaf ears.

I am not going to detain your Lordships more than a minute or two longer, but these are practical matters. I still think, as I said two years ago and as experience since has, as I consider, abundantly proved, that the only effective way of dealing with economy under existing conditions is that the Chancellor of the Exchequer should ration all the Departments. It is a very disagreeable thing to have to do, but he should say to the Minister: "I sympathise with you very much and am all in favour of the development of social reform. We have not nearly yet reached the end of the chapter. I am equally moved for the civil servants, able, honourable men doing their duty, whom you now employ and not a small number of whom would cease to find any such employment, but it must be done. Although it clips your aspirations as a legislator and although it wounds your feelings as the head of a great personnel in the Department, it has to be done." It must be done all round, not only in the War Office and in the Admiralty, but in all the Departments, or such of them as survive the application of the more drastic and summary process which I indicated a few moments ago.

One further suggestion I would add. The effect of this multiplication of new offices and new staffs has necessarily been to increase the number of the civil servants. No one has a higher opinion than I have of that great body of men, who deserve just as much gratitude and admiration as our soldiers, our sailors and our airmen. In fact, without them government in this country would be brought to a standstill or, what is still worse, reduced to the status of a corrupt and inefficient bureaucracy. I have the very greatest regard both for the traditions of the Civil Service and its maintenance in that high position which it has always held and always will hold. But it is redundant, it is in excess of the national demand. I do not say that they are people who make work for themselves. That is not their way. But I say there are more people there than are in any way necessary to perform the duties of government. I should, therefore, be strongly disposed to support the suggestion, which I think has already been countenanced by good authorities, that you should for the moment retard, if you do not altogether stop, the inflow of new entrants into the Civil Service. Once they are there, you have to fulfil your obligations to them in regard to pay, pensions and so on. It seems to me totally unnecessary to continue the old scale of intake of civil servants for whom there is no longer a really effective demand. I believe in that way, although it would not operate of course at once, you would make a substantial reduction in the cost of the government of the country.

I am sorry to have trespassed upon your Lordships' time so long, but I think it will be agreed that I have not discussed this matter in a partisan spirit—as indeed which of us should? There is no difference of opinion amongst us, on that side of the House or this or in any quarter of the House, as to the magnitude of the evil with which we are confronted, as to the difficulties of a substantial and immediate abatement of it, or as to the urgent necessity of a progressively effective remedy. Some speakers already in this debate have referred to the statement of the present Chancellor of the Exchequer, when he first entered office two years ago, that he hoped to bring about a reduction of £10,000,000 a year in the national Expenditure. I agree that that was not a promise. I see that I described it, perhaps rather too rhetorically in the speech which I made and to which I have already referred, as "a vague declamatory assurance of which no one need doubt the sincerity." Nor do I. Those are words which I think on the whole have been fairly well borne out by the result. There is not a man in any quarter of this House who believes that we shall see this year, next year or possibly in the lifetime of the present Government—I do not predict either a short or a long life for the present Government—that declamatory assurance translated into effect. Ten million pounds a year is a good deal. Here you have an opportunity of which men of all Parties would gladly welcome so far as they can to take advantage. Here is a real opportunity, without any diminution in the efficiency of the Public Service in any of those Departments, of taking at any rate the first step to relieve the taxpayers and ratepayers of this country of the burden which, so far as it is inevitable, they are patriotically ready to bear upon their shoulders, but which is being illegitimately enhanced because you are not taking proper pains to see you are getting full value for your money.

VISCOUNT INCHCAPE

My Lords, I seldom venture to address your Lordships' House but I feel compelled to say a few words in this debate, because I feel strongly that we are drifting, and drifting rapidly, into a most serious financial position. I agree with the noble Earl, Lord Beauchamp, in a general way in the forcible speech he delivered last Wednesday, but I cannot go quite as far as the noble Earl did in regard to armaments. His Majesty's Government are very much in the same position as many commercial undertakings are at the present time. Our staffs and their salaries went up by leaps and bounds during the War when expenditure was the last thing to be considered. Immediately after the War there was a temporary boom in trade and I am free to confess that many of us failed to realise that it would not last and that the purchasing power of the world would be very much less than it was before the War. Like all Government Departments many people now find themselves saddled with larger staffs and with expenditure much greater than before the War, and I admit it is extremely difficult to make reductions. But if we are to get back to a sound economic basis the facts must be faced. Day after day we see companies which before the War were in a sound financial position forced either to wind up or reconstruct and to start on an entirely new basis. This involves reductions not only in staffs and salaries but in emoluments of directors and managers.

I submit that the Government Departments are in very much the same position. To meet the interest on what the country has borrowed, together with civil and military expenditure, we are being taxed at a rate which is throttling industry and, instead of adding to our national wealth, which is the wealth of individuals, we are, I am afraid, as a nation, if not growing poorer every year, certainly not growing richer. I do not follow the Chancellor of the Exchequer in that which he said the other day to the effect that the more the population of the country increases the more does our wealth accumulate. According to this theory we may go on adding to our Expenditure with a light heart. I take it that he would not be in favour of birth control. I would not for a moment advocate a reduction in our defences unless other nations agreed to proportionate reductions, but I do urge the Government to set their house in order, to make a wholesale reduction in office staffs and to give orders that from now onwards Departments must so arrange their work that their expenditure will not exceed that which was found necessary in 1913. I am told that Mussolini did this, or something like it, in Italy. If we refrain from taking some such step, the country—and by that I mean the people—will be in a deplorable plight for many a day to come.

I agree with my noble friend Viscount Peel that another Retrenchment Committee will probably do little, if any, good. I served on one and was Chairman of another, and I have certainly no desire or ambition to be, as Viscount Peel described me, a terror to Government Departments. I do not think that I ever was. I should like to say, if I may, in reply to his generous remarks and those of the noble Earl, Lord Midleton, that in India I found all the officials extremely anxious to do everything in their power to reduce Expenditure, and to none of them was I more indebted than to the then Commander-in-Chief, that distinguished soldier and administrator, the late Lord Rawlinson, and to the Financial Member of the Government of India, Sir Basil Blackett. I was supported all through by the Viceroy, the Marquess of Reading, and my thanks are due to the noble Viscount, Lord Peel, who, having ordered me out, consistently encouraged me.

I look back on my six months at Delhi with nothing but the greatest pleasure and satisfaction. I ought to say that any success achieved was mainly due to the co-operation of the members of my Committee and to the generous help of my staff, but beyond everything else to the wholehearted desire of all the officials to effect reductions in Expenditure. In fact, many of the economies were suggested by the officials themselves. I notice that the present Commander-in-Chief, Sir William Birdwood, made a statement in the Legislative Assembly the other day in regard to military expenditure. His words were: Every specific cut recommended by the Inchcape Committee has been loyally carried out. I think it would be well if the spirit displayed in India were manifested here, instead of what I venture to call the lukewarm, inattentive attitude of Whitehall towards economy.

I am convinced that, if His Majesty's Government takes the bull by the horns and insists on reductions in emoluments and staffs in every Department, we shall see a curtailment of many millions a year in the expenditure of our offices. My belief is—and I speak from knowledge acquired in the investigation that it was my lot to make—that there is much superfluous and absolutely unnecessary work put through in Government Departments in this country. Cases come up, notes and counter-notes are made on perfectly simple questions which would be disposed of in two minutes by the head of a business house. These notes run into files which mount up and go round and round till they eventually reach the chief and, in a maze which he has to circumnavigate, he gives a decision which is then put up to him in a draft. The files are bound, shelves have to be found for them, the archives get filled up and additional accommodation has to be provided for accumulations, additional librarians, office keepers and menials to keep the premises clean have to be employed, and so the merry round goes on, all at the taxpayer's expense. Seriously, the time has come when all this circumlocution and unreproductive expenditure should be brought to an end. Let us make a fresh start. Let us get back to the days when the gracious Speech from the Throne thanked the Gentlemen of the House of Commons for moderate supplies.

I should like to put before your Lordships some figures as briefly as I can. I will leave out the interest on the National Debt since 1913–14. From that we cannot get away until we are able to reduce the rate of interest we have to pay by conversion to lower rates, and this we can do only by improving our credit and reducing the burden of taxation. I also leave out the Ministry of Pensions. We must pay these pensions. In 1913–14 the Government contributed £9,734,128 towards local taxation; in 1926–7 they contributed £14,100,000. To the Road Fund in 1913–14 they gave £1,394,951, and, in 1926–7, £19,500,000. Other Consolidated Fund Services in 1913–14 cost us £1,693,890; and, in 1926–7, the Estimate was £7,800,000. Customs and Excise Services in 1913–14 cost us £2,531,665, and, in 1926–7, the Estimate was £5,167,000. Inland Revenue in 1913–14 cost us £2,046,562, and in the current year the Estimate was £6,908,377. Labour and health buildings show an increase of £332,747, and public buildings an increase of £1,043,037.

Rates on Government property are up by £1,063,470, and other works and buildings are up by £259,112. Secret Service is up by £133,160 and other civil Departments by no less than £13,450,543. Police in England and Wales have increased by £6,805,889, Education by £29,944,397, and the Diplomatic and Consular Service by £883,541. The Middle East, which is a new item, now costs £4,444,000, and other Foreign and Colonial Services are up by £1,603,374. The cost of Miscellaneous Civil Services has risen from £1,157,766 to £16,373,432. Old Age Pensions, which in 1913–14 were £12,425,821, are now estimated at £29,845,000. The Ministry of Health has increased by £16,700,067 and the Ministry of Labour by £15,250,726. The cost of the Ministry of Agriculture has gone up by £2,145,941. I wonder how much of this has come back to the farmers by the activities of that Department. There is one Department which, I am bound to admit, is curtailing its expenditure, and that is the Board of Trade.

In the Estimates for the current year the Services and Departments which I have mentioned show an excess of something like £170,000,000 over 1913. I firmly believe that this could be very greatly reduced if the position were seriously tackled, if the lethargy that was mentioned the other night in your Lordships' House gave way to activity and determination, or if the proposals made by the noble Earl, Lord Oxford and Asquith, were carried out and a lot of these Departments were swept by the board. I was greatly interested by what the noble Viscount, Lord Haldane, told your Lordships on Wednesday, as to the action he took when Secretary of State for War. The noble Viscount said he was determined to effect a reduction of £3,000,000 in the expenditure of the War Office, and he thought it could be done. He told us that he summoned the Generals before him, but they said the Estimates, instead of being reduced by £3,000,000 must be increased by that amount. I imagine he is not the first Minister who has been received in that way by his departmental chiefs. He informed your Lordships that he said to the Generals: "We shall never get the thing done in this way. You do not know whether there are possibilities of reduction, not even all the heads of Departments immediately under you know, but set to work, see your heads of Departments individually, take them into your confidence, do not bully them, do not order them about, reason with them and ask them to co-operate in a common policy: they will do the same with the people under them and you will get down at last to surprising economies: at least that is my strong suspicion." As a result the noble Viscount stated that he secured the reduction of £3,000,000 which he had demanded.

To my mind the action taken by the noble Viscount, which secured a material reduction in our expenditure, might well be an example to be followed by many of our Ministers. The noble Viscount was keen on economy, and he got it, and my experience is that unless the head of a business or Government office is himself determined that there shall be no waste or extravagance, then the staffs under him will save nothing. Economy is one of those matters in which the chief has to take the lead and set the pace, and it is only by fighting a daily automatic battle that he can get the spirit of economy instilled into his organisation. I know that in my own office I make a point of keeping an eye on all details, of knowing everything that is going on, and of seeing that when, for instance, a cablegram has to be sent, one hundred words are not used where forty will do. It is only by a relentless attention to small, as well as large, things on the part of the man at the top, that the men at the bottom and the men half way up begin to learn what economy is. A wise increase of expenditure on Social Services, as Lord Oxford and Asquith pointed out, should follow a revival of national prosperity, not precede it. Otherwise the country is being made to spend money which does not exist within its current resources, and this can result only in an increased burden of Debt or taxation, and an aggravation of the position which such expenditure is mistakenly designed to remedy.

I cannot help thinking that it is but cold comfort to our unfortunate Judges, than whom there are no better in the world, whose salaries within the last few years have been reduced by thirty-three per cent., owing to increased taxation, to be told, as the noble Viscount, Lord Haldane, told them the other day, that what they are called upon to sacrifice really goes to make other people richer than before. If we accept this as a general axiom why should we not merrily go on increasing taxation? The doctrine, if I may say so with all respect to the noble Viscount, seems to me to savour very much of Communism, and would bring the country to ruin. I do not know what my shareholders would say if I gave them no dividend, and told them that they would no doubt be satisfied with the knowledge that the income of the company was being dissipated so as to make other people richer than they were before. I do not think I would have any chance, when I came up for re-election, of retaining my seat on the board.

The sands of the Government are rapidly running out. The curtain will shortly rise in the country, and there is nothing more likely to bring the present Administration back to power, which is my fervent hope, than a determined effort and a successful effort to reduce our Expenditure, our dreadful burden of Debt, and our taxation. As I have already remarked, I am in general agreement with what the noble Earl, Lord Beauchamp, said, but while I consider that the office staffs of the Admiralty and the War Office ought to be greatly reduced, I cannot follow him as regards a reduction of armaments at the present time. The world as I see it, is not yet sufficiently settled for that, and we have to consider the protection of the lives of our people and the interests of the Empire all the world over. I shall therefore support the Amendment of my noble friend the Earl of Midleton, if the noble Earl, Lord Beauchamp, goes to a Divivision, which I hope he will not do.

LORD THOMSON

My Lords, I have listened with great care to every word that has fallen from most of the speakers in this interesting debate, and those I have not heard I have read. I confess I should like to have had an opportunity of reading the speech of Lord Oxford and Asquith before attempting to reply to him, but there are a great many points in that speech which were more or less familiar, because they had been brought forward by previous speakers. It appears to me that the question turns really on the old slogan of "Peace, Retrenchment and Reform." Everybody wants peace, but while the Labour Party are accused of not wanting retrenchment but rather reform, the Liberal Party want both retrenchment and reform, which appear to me to be incompatible, because reform is and always will be an expensive thing; and the Conservative Party lay less stress upon reform, but singularly fail to produce retrenchment. Hence this debate. The Conservative Government, so far as I can make out, have taken something off the taxes, but put it on to the rates, and both rates and national Expenditure have gone up.

On one point nearly all the speakers are agreed—an arithmetical point. I am going to take the figures of Lord Arnold, for whose arithmetic I have more respect than Lord Oxford and Asquith appears to have. In point of fact the two do not differ very much. The figures I am taking are that out of an Expenditure of a little over £800,000,000 a year, about £670,000,000 is fixed, and nothing could bring it down—from £650,000,000 to £670,000,000 represent irreducible Expenditure, and we are left with about £160,000,000 with which we are able to play. Of those £160,000,000, £60,000,000 are really irreducible, and so we are finally left with £100,000,000 with which to play. Those £100,000,000 are the millions that we spend on the Defence Forces, sometimes called the Fighting Services, and it is to those particular Services that I propose to address myself this afternoon. I confess I was a little dismayed at the suggestion which fell from Lord Oxford and Asquith about rationing. It seems to me that you can carry rationing, of the Fighting Services anyhow, to an excessive degree. After all expenditure on the Fighting Services is really only an expression of policy. You can pare off a little here and a little there, and you can reduce the staffs and save £100,000—and heaven knows it should be saved if it can be saved—but what really fixes the amount spent on the Fighting Services is policy, and for policy no one but the Government can be responsible. It seems to me to be a very serious proposition that the Chancellor of the Exchequer should say, for example, to the Secretary of State for War, regardless of policy: "You are not going to have more than £30,000,000 for the Army this year, and you have to do your best with that."

Let me apply that to some details of the Fighting Services. We have had comparisons with pre-War years as regards both the Army and the Navy, but I would like to point out that so far as policy is concerned the position of the Army to-day is, if anything, a little more difficult than it was in 1913. The Regular Army at home does not exist for home defence, the Regular Army at home exists in order to keep for every man we have got in India and our over-sea Possessions one man at home. Our Expeditionary Force was not based on the policy of providing six Divisions to reinforce the French in France, it was based on the fact that we had 72,000 infantry in India and six Divisions at home, providing one man for every soldier we kept overseas, with the usual complement of horse, foot, and artillery. I should say that our policy and our position to-day as regards the military problem is, if anything, a little more difficult.

Does any one seriously suggest that we could do with fewer soldiers in India? You have a Regular Army, a well-trained and most efficient Army, in Afghanistan of 60,000 First Line troops, with adequate reserves. I do not suggest for a moment that there is a chance of hostilities, but, at the same time, if there was a need for a force in India to protect the North-West Frontier before the War, that need is even greater to-day. I am not at all sure that the situation on the North-East Frontier, from the point of view of the Commander-in-Chief in India, is not a little more complicated than it was; and no one will deny that the internal situation in India is not so, anyhow. Therefore the policy which says: "Whether you like it or not, cut down your Vote for the Army, because we have had a war and the Germans are beaten" has really nothing whatever to do with the question, and is unfair to the military experts. They would have either to produce an inefficient Army, which is a real waste of money, or else they would have to throw in their hand.

I will agree most emphatically that some money could be saved perhaps on staffs, though I am not at all so sure that thinking is not a very good habit to encourage on the part of military men. The German model is most instructive at this present moment. They have got large staffs and very few soldiers. I think we cannot deny to the Germans that they know something about military matters. In this connection I should be very glad, whoever is going to answer for the Government, if he could answer this question: Is it a fact that a Committee is sitting at this moment, or is about to be appointed, with a view to reducing the War Office staff; and if so, when may we expect the Report? There are various rumours of such a Committee being in existence and of the opposition to it, and of the quarters from which that opposition comes. I believe myself, from what I have been told, that a certain economy could be effected in that direction, and I must say that if such an economy is possible, speaking as a citizen of this country, I would prefer to see the money restored to the Territorials than made an economy, because that deprivation of the Territorial Force did seem to me a penny-wise and pound-foolish policy. I sincerely hope that I am wrong, but I believe we shall live to regret it. In fact, I believe the Government have already regretted it.

I will now turn to the Admiralty. I may say that on general lines I entirely agree with what the noble Earl, Lord Oxford, said, with some exceptions. After all, here again we are up against a question of policy. When one has settled as a policy that we have to protect the seven seas and our trade routes it is a matter for experts to say what number of cruisers they require for that task. The Government of which I had the honour to be a member built five cruisers, which has been imputed to them as a crime ever since by purists. Well, if searchings of heart can condone a crime I can assure your Lordships that those Cabinet Ministers who passed those five cruisers in 1924 did condone their crime. I have never seen more worthy men struggling with adversity to quite the same extent. At the same time, the arguments that prevailed were that those cruisers were replacements, that they were a smaller number than the original number asked for, were, in point of fact, a compromise; and, personally, I dismiss the argument, and I think most people would, that they were justified because they gave employment, for in my view it is a great mistake to mix up two sets of ideas and to saddle the Defence Force with the relief of unemployment. But those cruisers were asked for by expert advisers, and the policy of the Government in those days was to protect our commerce on the seas, and to do that we were told that at any rate that minimum number of cruisers was absolutely essential.

But when we come to battleships then I am bound to say I would even go further than the noble Earl, Lord Oxford. Every form of disarmament must be arrived at by international agreement, but it does seem to me that it is for that very reason that we can approach the question of battleships with confidence. I believe there is no subject on which international agreement would be easier. After all, who keeps the battleships in these days? Is there a threat from battleships of a serious kind in home waters? I cannot see it. Great neighbouring States are proclaiming loudly that they do not want battleships. What they want is submarines, defensive ships; and, really, as far as I can make out—I am not an expert—the two countries which do keep battleships besides ourselves on any serious scale are countries with which we have got an arrangement in regard to them already—the 5-5-3 arrangement. Take the country with which we have got an arrangement of 5-5, in other words, of equality. If we admit equality with them we surely admit that we do not mean to fight them. You do not expect equality with a person you propose to fight and certainly the country which has accepted three to our five cannot mean to fight us or it would not accept that great inferiority.

It seems to me that battleships all over the world are an incubus to the countries that keep them. They are terribly expensive and, though it is well known that we are not laying down new battleships this year, our battleships do, by their mere existence, entail expenditure. I imagine I am right in saying, for example, that if it were not for these monster warships we should not need a dock at Singapore, which is a cause of expense. Battleships involve one in a variety of extra expenditure of that kind which is not present in the class of ship that I believe to be essential for the carrying out of our naval policy—namely, the protection of our sea routes—that is to say, the cruiser. On that point I have a very open mind. I would leave it to the experts. I believe that in the realm of policy we can deal effectively with the question of battleships and effect very considerable economies thereby.

Now I turn to the Air Force, which I was glad to note that the noble Earl, Lord Oxford and Asquith, did not mention. I was afraid of what his penetrating intellect might discover in regard to aviation. In few quarters, on the part of those who believe we ought to have an Air Force, has the suggestion been made that we should reduce our expenditure on the Air Force. I personally feel that this country has gone to the limit so far as policy permits in bringing down the size of our Air Force. We have made gesture after gesture to Europe to which no perceptible response has been given, but, in spite of the absence of response, we have cut down and I agree with what fell from the Prime Minister only a few weeks back in regard to the Air Force, that we have cut it down dangerously near the bone. I do not think further reduction is possible there.

The great problem of the Air Force, to my mind, is that while we have not attempted a race of armaments in that line with any other country we have been left far behind numerically. The real difficulty in regard to policy is not there. You can limit Air Forces but you cannot limit air power, and to my mind that is one of the great problems that has to be settled at Geneva—how you can limit the air power of a country or how you can deal with the question of aviation at all on the lines on which you deal with the other arms. It is a totally different problem and almost insoluble on the ordinary lines. It has really to be submitted to international agreement of a far-reaching character. I have only pointed out one source of economy and that is battleships. I admit that that is an unsatisfactory statement. I should like to think that it was possible to do more. I believe that it is possible to hope for prospective economy.

A suggestion was made the other day in another place that interested me very much. It was in regard to spending these years, when we can safely gamble on peace in Europe, in research—in devoting these intervening years to real research in regard to these matters. Though at the moment it is difficult, if not impossible, to effect considerable economies, I believe that, as the result of research, such economies would be possible. The most hopeful step in that direction has been the appointment of a Chief of Staffs' Committee. If those three gentlemen, working under a Chairman of energy and knowledge, really get down to the facts I think it will be possible, little by little, slowly at first but at an accelerating rate later on, to replace Land and Sea Forces to some extent by Air Forces and thereby effect very large economies. These questions have to be worked out with the greatest care.

It is idle to claim too much for the Air Force at this moment and would be dangerous. First of all the other Services are very deeply rooted, and in the second place I do not think, as yet, that the Air Force has quite proved itself an efficient substitute for many of the functions that are performed by the other Services. But I believe that that is the direction in which efforts can be made and if those efforts were carried out consistently and continuously I think that in the end we should save our pockets by using our brains. That I am afraid, from the Service point of view, is the only contribution that I can make to this debate on economy.

LORD JOICEY

My Lords, I am very glad indeed to have had the opportunity of hearing the noble Earl, Lord Oxford and Asquith, speak on this important question. I have heard most of the debates on this subject during the last two or three years and I am bound to say that I have not heard of any satisfactory proposal for dealing with the difficulties which have been put before your Lordships. In the country this is regarded as one of the most important of all the political questions that are brought before the different localities. Everybody seems to think that the Government during the last General Election gave a distinct pledge—that not only the Prime Minister but every Minister in the Government gave a pledge—to cut down Expenditure and people have been very much disappointed indeed that there has been no serious attempt made to do that. I know that it is extremely difficult to cut down these expenses and that it is always an unpopular thing to do.

I happen to be in business and I may say that that sort of thing is done by all large concerns whenever a depression takes place. It is always a very unpleasant thing to do, but when you consider that the Government is trustee for the taxpayers of the country it surely is their duty to make a serious attempt to cut down Expenditure in accordance with what they pledged themselves to do during the late General Election. I quite agree with the noble Earl, Lord Oxford, that we have too many Departments. I think considerable economy might be effected if some of these Departments were disposed of and the business put under the Board of Trade, as it used to be before these Departments were created.

I have had some experience of the Mines Department and I agree with the noble Earl that it is really doing no good or satisfactory work at the present time. It very often meddles, but when it meddles it very often meddles, and I think it does more harm than good to the industry. I can give your Lordships rather an interesting case that happened when the Government had control of the mines. At that time a mine owner was not allowed to order anything special without the consent of the authorities in London. One of our mines happened to have a broken rope and required immediately a new one. We communicated at once with the Mines Department in London and asked them to give authority to order another. There was delay for some time. At last I sent one of our managers to see what could be done in the matter, as it was most important that we should have the rope. He saw a representative of the Mines Department who said that the gentleman who had the power to give the order was not there, but that he would write to him the next day. We waited another fortnight or three weeks without receiving any reply. At last, however, when we pressed them strongly, they sent a telegram that we might order one half of it. Just fancy people who have been controlling mines all their lives being put under such pettifogging rules as that! I think that it would be an advantage instead of a disadvantage to close the Mines Department because you would then save all the cost which it entails upon the public purse.

I hope that the recommendations made by the noble Earl will have some effect and that the Government will begin to look into these matters to see whether they can close some of these Departments. Undoubtedly it would mean a very considerable saving. Taxes are a tremendous handicap upon the industries of the country. I notice that the other day a deputation from the chambers of commerce waited upon the Chancellor of the Exchequer. They got very little satisfaction. The Chancellor of the Exchequer said that Pensions were a very heavy charge, but he gave them very little hope of any change. The Widows Pensions were put upon the Exchequer by the Chancellor of the Exchequer himself. I think that before doing that he ought to have considered what would be the effect of that serious charge being put upon the Exchequer. Who are these gentlemen who are members of the chamber of commerce? They are gentlemen who are at the head of huge businesses in this country, productive and manufacturing businesses and even shipbuilding businesses. They are brought into constant contact with the effect of local rates and Income Tax and Super-Tax on businesses. If there are any organisations in this country which ought to have some influence with the Chancellor of the Exchequer they are the chambers of Commerce of this country; yet I do not think there is any country in which the chambers of commerce have so little power and influence as they have in this country.

I am certain that if the Chancellor of the Exchequer—yes, and many of the officials connected with the Treasury whose duty it is to frame these Budgets—would pay a little more attention to the gentlemen who are at the head of these large businesses which make the profits upon which Income Tax and Super-Tax are paid, it would be very much better for the interests of the country. If they would only pay as much attention to the expenditure of the taxes as they pay to the collection of the taxes I feel sure it would not be difficult to reduce Expenditure very considerably. In this country we pay about double the taxes that are paid in any other European country. I am satisfied that the difficulties we have at the present time in connection with our export trade are very largely due to the charges which are being put upon the industries of the country by these various social measures. If you put on our industry charges which do not have to be paid by business men in other countries we have no chance to compete with people abroad who are not burdened to the same extent as we are. I am satisfied that we ought to be a little more careful—and I think the House of Commons ought to consider this point—to consider, before passing these social measures putting heavy taxes upon our people, where those people are going to get the money from and what effect these taxes are likely to have. In my judgment very often these measures do much more harm than good.

I am not an expert with regard to our Fighting Services and therefore I would hesitate to support any proposal to reduce our fighting power, certainly so far as the Air Force is concerned. I think it would be a very great mistake indeed if we did not keep at the head of air power as we have kept at the head of sea power. We know it is the usual thing that we are never quite ready when war begins. If we were beaten at first by an enemy Air Force every factory we have might be smashed up and we would never have a chance of beating them. I think therefore it would be a great mistake to allow the Air Force of this country, which has such vast responsibilities, to be weaker or less numerous than the Air Force of any other country.

I have spoken of the various industries of the country, and I think it is right to remember that it is not the large capitalists who are represented in those industries. If you take such works in the north of England as Armstrong, Whitworth, the Consett Iron Co., Vickers and others, you will find that the individual holdings in them are not very large. I do not believe the average is much more than £600 or £700. These heavy taxes upon these industries are practically preventing them from recovering the position which they appear to have lost. Take the railways as an example. I read with great interest the statement made by Mr. Walter Runciman in which he said that 56 per cent. of the investors in the railways in this country did not own more in them than £500. When you consider that the railways of this country pay about £8,000,000 in rates and taxes, not including Income Tax, you will realise how extravagance in Expenditure, particularly local expenditure, must affect the income of these small people. The railways are having a hard struggle and how they are to come out of it is yet doubtful, but I hope that, as time goes on, notwithstanding the exceptional competition they have to face, they will be able to show such satisfactory results that at all events these small capitalists may receive some of that income on which they depend.

There have been many ways in which we might have saved money, but it is no use going into the past. Take the housing question, which was referred to by the noble Earl, Lord Plymouth. We have spent millions on housing, but any ordinary business man, before he had begun to promise all these millions, would have seen the trade unions and said: "Now we are proposing to put all this money into housing, what do you propose to do to help us?" Instead of helping us, they retained the restriction as to the number of bricks that a bricklayer is allowed to lay—about 300 bricks a day, I believe. They are really the people who have caused all the shortage of houses. Five years before the War, when Mr. Lloyd George brought in his Budget proposals, which I thought foolish, he really prevented all the small builders going on with their work. Then we had the War, which meant a stoppage for another five years. I feel sure, however, that, if the building trade unions had made up their minds to assist the Government, we might have got our houses very much more rapidly and economically than we have done.

It is not the duty of a critic to say where Expenditure could be saved; that is the duty of the Government. They have policy in their own hands and it is they who ought to discuss means of cutting down Expenditure. There is the question of what is called the "dole." I know many people object to it being called by that name, but, after all, it is the best word we can get to explain its meaning. I am one of those people—no doubt many of your Lordships hold the same views—who would not like to see anybody starve and who would like to see those who cannot get employment given a reasonable sum to prevent them and their families from starving. But, if you look at what has been done in connection with the administration of this system, you will see it is appalling. The administration of this system and the guardians has been a perfect scandal. The Government there have a good case for economy if they only had the courage to deal with it.

I know a case, which was brought to my notice the other day, of a man who in two days made £3 17s. and applied for the "dole" for the remaining days and got the whole of it. There are not hundreds but thousands of these cases. Surely the administration ought to be inquired into and that ought to be stopped. I do not believe the working people themselves believe in that sort of fraud—for it is a fraud. I know cases where deputations waited upon the management of a coal mine, which was working four days a week, to see whether they would not work only three so that they might get the "dole" for the other three. All that sort of thing ought to be stopped, and a Government which did its duty would inquire into and put a stop to it. The money is bad enough, but what is the money to the demoralisation of character? Our British workmen are the finest workmen in the world when they put their backs into it, but I am sorry to say that I see places where these men get demoralised by receiving money without working for it. I blame the Government for that because I feel sure that, if they were to do their duty, they would very soon put a stop to it. How many people are getting the "dole" who are not entitled to it? Take those who work in seasonal trades. They have all been accustomed to make sufficient in the season to keep them through the whole year. Now, as soon as the season finishes, they apply for the "dole" and get it. They are getting a great deal more money than they were accustomed to. Questions of that sort ought to be inquired into.

With regard to the taxation, it is not only the industries that are suffering. Look at what is taking place throughout the whole country owing to the Death Duties. I do not object to the Death Duties, but I think that Death Duties are largely capital and, instead of being put into Revenue, ought to go to the reduction of the National Debt. I remember Sir Henry Primrose, who was for seventeen years at the head of the Treasury when Mr. Gladstone, Sir William Harcourt and others of that calibre were Chancellors of the Exchequer, telling me that Sir William Harcourt, before he decided to put on Death Duties, took two months to consider the question and came to the conclusion that they should never exceed eight per cent. or it would be capital expenditure. There is no doubt whatever that that thirty-two per cent., which is sometimes levied, instead of going into the Revenue ought to go against the National Debt. As time goes on and we get into a better financial position, I hope that those in authority and power may realise that that is the course that ought to be pursued.

In conclusion, I would say that many people in this country do not know the mischief that is being done by this heavy taxation to our industries. Our country is almost the only country in the world, certainly the only country in Europe, which cannot supply its own wants. Those wants must be supplied to the extent of a third or a half by goods sent out from this country as exports or by our income from abroad. Our money has been decreased enormously by the Debts which have been accumulated and by what we have to pay in connection with the War. We used to be practically the greatest manufacturers in the world, we used to manufacture machinery for all other countries, but now other countries are able to manufacture for themselves, even more cheaply than we can in many cases, and can often export to us the very article we were accustomed to export to them. Surely the Government ought to realise the serious position.

You talk about the boom in trade. There is nothing, in my judgment, which would help to improve trade so much as a reduction of Expenditure. Look at the rates of the local authorities. What has the Government been doing in connection with local authorities? They must have known for a long time that these authorities were not carrying out their duties and were exceeding their powers of spending money, and yet they did practically nothing. If they had been firm at first, as they have been with Chester-le-Street, Poplar and other places, this might have had a deterrent effect upon local authorities throughout the country. I hope, now that the Government have begun to go into these matters, that they will do it thoroughly and show the courage that is necessary in the public interest. If they will do so, I am sure that they will make their position in the country very much stronger, but at present it appears to be getting weaker.

LORD HUNSDON OF HUNSDON

My Lords, may I remind your Lordships that in the Amendment that we are discussing reference is made to the importance of curtailing local expenditure? So far I do not think that the subject has been mentioned in this very interesting debate, and perhaps your Lordships will allow me to say a few words on the point, because, as a member of the Public Works Loans Board, I have probably seen as much of the local expenditure of the smaller local authorities as any one in the country, and I certainly deplore it more than most when it is excessive, because the authorities always come to us for loans.

I do not suppose that I need lay any stress on the importance of local expenditure and of the rates from the point of view of the nation. A good many people do not understand how direct taxation affects production, but everybody knows that rates are a direct charge upon the cost of production and raise the cost all through the locality. Everybody knows, too, that cheap production is essential to the prosperity of this country, if not to its very life. Moreover, the loans of the local authorities, even those that are not made by the Government but are raised in the open market, affect the national credit because they increase the number of gilt-edged securities and tend to keep down the price of Government stocks. There is a yet more fundamental reason, and that is that the whole of the assets of the country are pledged to the National Debt and are then pledged over again to the loans of the local authorities, which now amount to £866,000,000.

The theory of local government is that everybody in the district will be so much interested in seeing their affairs administered efficiently and economically that this will be done, and also that some, at all events, of the best men in the locality will undertake the work. That theory works unevenly in this country. I should say from my experience that it works better in Scotland than anywhere else but there are certain districts in England and in Wales where it hardly works at all. The Public Works Loans Board started a list on January 1, 1925, of the applications that it received from authorities with rates of over 20s. in the £. I have examined that list and I find that, in the sixteen months from January 1, 1925, to the end of April, 1926—that is to say, before the coal strike—we received 101 applications from 25 authorities whose rates varied from 20s. to 28s. 2d. in the £. I examined those authorities and I found that, of the twenty-five, none were from Scotland, 9 from England (including West Ham, Poplar, and Chester-le-Street—places that we all know about) and 16 from Wales.

One wants to examine all the different authorities and the figures relating to them before one can come to any definite conclusion, and I am bound to say, from the point of view of Wales, that I believe that the rateable value is always kept low, and accordingly the rates per £ are unusually high. I should add also that a good many of the Welsh authorities were in the colliery districts; but this was before the coal strike. These rates are prima facie evidence that the theory of local government has broken down in a good may places in England and Wales, especially when your Lordships remember that of those 25 authorities with the high rates that I have mentioned there was an average of no less than four applications each for further expenditure and more money.

It is said, of course, that it is no use urging the Government to curtail local expenditure because they have no power to interfere. It was only a fortnight ago, however, that we authorised the Treasury to pay 40 per cent. of the cost of poor relief of certain Scottish parish councils because the Government felt under an obligation to do so, since they had interfered with the local administration. This apparently was done in order to make the parish councils go in for further expenditure on poor relief, but I am glad to think that the Government have also interfered to reduce expenditure, for, as your Lordships know, they have appointed nominees of their own to supersede the guardians of the poor in some instances. I earnestly hope that they will go on with that good work, and not only so but, where it is manifest that the theory of local government has broken down, I hope that they will supersede urban district councils or borough councils or whatever they may be, at all events for the time.

Apart from active interference, I believe that the Government can do a great deal by inaction, and I think that this remark really applies chiefly to the Board of Education. If one suggests for a moment that there is to be any reduction in the cost of education all the friends of education are up in arms at once. For some obscure reason they wish to make it as expensive, and therefore as unpopular, as possible, but I want to make it as cheap as it can be, and as it is in Scotland. If your Lordships will allow me, I am going to give you a very small instance that is within my personal knowledge of the action of the Board of Education. In my village we had a Church school building which was perfectly good and had served the needs of generations of children perfectly well, though it required a certain amount of alteration to bring it up to the inspector's requirements. The building did not belong to the parish and the parish, for that reason among others, decided that they would like a county council school. It was suggested, therefore, that the county council should buy this school and make their own alterations. The answer was: "Certainly not; the Board of Education would never permit it."

Then they built a school at a very much greater cost. In the parish I am speaking of the population is practically stationary, and very small. I am bound to say that the school is an excellent one, the fittings are admirable, there are eighteen very expensive lamps, of which not more than five have been or ever will be used, and the heating apparatus is so efficient that all the children go to sleep during the lessons. This, of course, is a very small matter. The additional unnecessary cost I calculate at only £2,500, but it shows perfectly clearly that the Board of Education, that is the Government, has no intention of "making things do," as any private individual would if there was need for economy. They insist upon having the very best and up-to-date things, regardless of expense.

I could give your Lordships other cases, somewhat similar, which have come under the notice of the Public Works Loans Board. One came before us on Friday. An authority applied for a loan for building a school. Their rates were 22s. 6d. in the £. It was not a Welsh but an English authority. We said: "Why choose this time, when your rates are 22s. 6d. in the £, to build a school?" They said: "We cannot help ourselves, the Board of Education insist upon it." I suggest that the Board of Education ought not to be allowed to insist upon any expenditure when the rates are above 20s. in the £, without having the visa or support of the Treasury. The Treasury, I think, ought to check the Board of Education in their expenditure, in cases like that.

A great deal has been said about the necessity for improving the credit of this country, and thereby reducing the interest payable on the National Debt. We all know that the interest on the National Debt is internal, and therefore does not make so much difference as an external Debt, but it is a very important thing to the individuals of the nation, and it is the individuals of the nation who count. I should like to give your Lordships just one instance of where I think there is unnecessary encouragement of Expenditure and unnecessary extension of Government credit. Before 1920 the Public Works Loans Board never made advances to any authority with a rateable value of over £200,000, except for national purposes, such as education or housing, and the purposes for which we were authorised to lend to smaller authorities were very much restricted. In 1920–21, however, by Treasury Regulations, the purposes for which we could lend were very much extended, and included what we call ornamental purposes, such as walks, pleasure grounds, and so forth. Also, at the same time, we were authorised to advance 50 per cent. of the amount of any War Savings Certificates raised in that district to any authority, whatever its rateable value, and for any of the purposes for which the Board had power to lend. I notice that during the last calendar year we advanced under those Regulations forty-seven loans to various authorities for the construction of walks and pleasure grounds. It was a very small amount, not more than £100,000.

I have no doubt walks and pleasure grounds are very nice things to have, but the example was most pernicious, in my opinion. If you wish to have economy in this country you must persuade the people of this country that it is necessary; and it would not have been the slightest use to go to any of those forty-seven districts and preach economy to the inhabitants, when, by the construction of walks and pleasure grounds, your argument would be flatly contradicted, not only by the local authority but the Government itself, who supplies money to the local authority for that unnecessary expense. The Public Works Loans Board estimates that in the financial year ending this month it will have advanced, under those Regulations, £5,000,000 sterling; that is to say, partly to authorities who can borrow perfectly well for themselves, and partly for purely local purposes, such as walks, parks, electric lighting, and so on. I have no doubt that after the enormous figures to which we are accustomed £5,000,000 seems a small amount, but, small though it be, it is an unnecessary extension of Government credit, and an unnecessary encouragement of expenditure.

I am certain that when those Regulations were issued the Treasury had good and sufficient grounds for issuing them. They always have good and sufficient grounds for what they do, but I hope that they will consider the matter and consider whether it would not be right now to let these loans to local authorities, which are important things, stand on their own merits, without any adventitious circumstances connected with them. I should state that I am giving my own opinion and not speaking for or with the authority of the Board. These matters are no doubt very unimportant, but I make no apology for having brought forward unimportant matters, because I differ from Lord Beauchamp, who talked rather contemptuously of the policy of snips. I believe in the policy of snips. I believe economy in its essence is a science of small things, and I am persuaded that if those responsible for local and national administration were to pay more attention to small economies, in the aggregate the relief to the country might be of great value.

VISCOUNT NOVAR

My Lords, I think we should be grateful to the noble Earl opposite for giving us this opportunity of discussing the urgent question of national economy, but he made it impossible for many of us to support his Motion, for he has focussed his attention too exclusively upon the Defence Forces. We can admit that there is room for economy on the administrative side of both Services, but actual reductions in naval and military strength at a time when half the globe is in a state of unrest or chaos, does not seem to me practicable. We do not want to reduce our Army and Navy, although we do want to reduce the number of the modern form of camp followers, who sit in offices and absorb too much of the money voted for National Defence. The noble Earl who moved the Amendment went straight to the root of the evil. He did not minimise the waste in military administration, but he showed that what is required is not tinkering with one or two items of expenditure in one or two Departments, but a general and heroic effort to curtail national and local Expenditure by all spending authorities, from the suppression of superfluous Ministries, so powerfully urged by the noble Earl, Lord Oxford, to the cessation of huge grants-in-aid. The latest example, if a more moderate one than usual, is £1,000,000 a year for the bridges of London.

The noble Viscount, Lord Peel, has discouraged us by stating that, apart from great changes of policy the only way in which you can make a great reduction is through a voluntary agreement on the part of the Civil Service, and he did not think there was any chance of this. No more does any one else. But what such a candid admission means is that we are definitely under the heel of a bureaucracy, and, because of its numbers and its votes, we cannot hope to extricate ourselves from that unfortunate and humiliating position unless, indeed, they themselves kindly consent to lift their heavy hoof. That surely is the strongest argument yet advanced in support of the proposal to suspend recruiting for the Civil Service. But, short of that drastic measure, could we not have some watchdog Committee analagous to the Public Accounts Committee, whose duty it would be to keep an inquisitive eye on the administrative side of government and enforce what the noble Viscount, Lord Leverhulme, has so well described as a procedure usual in industry, that is to have periodical scrutinies of the costing of the work, ruthless pruning of unnecessary expense and superfluous staffing, scrapping useless forms and statistics, and introducing cheaper methods?

Sufficient examples have been given of the immense growth of the Civil Service, and it would be fair to say in many instances that two or three men are employed now where one was employed before the War—and that at a time when we are urging miners and all handworkers to double their effort in order to increase national output. In Lord Mahon's "Life of General Stanhope," he records that when that statesman went to Madrid to negotiate an understanding of vital importance with Spain he took one secretary, and when that secretary fell ill he wrote his Despatches in his own hand, and sent them home to be copied for our Ambassadors at other Courts. When our Ministers went to Paris whole hotels had to be engaged to hold their respective staffs, and the mighty buildings at Geneva testify to the number of super-subordinates and subordinates that is considered necessary to run our European Department of Foreign Affairs; while in our own State Departments every clerk has been duplicated and re-duplicated. The example of the great Departments of State sets a standard for local authorities throughout the country. Medical officers of health, directors of education, and labour exchange superintendents must all have their retinue of officials, and the whole countryside is alive with all sorts of education officers and health visitors. I believe every home in the Island is liable to be entered and inspected by no fewer than seven different officials—a medical officer of health, a health visitor, a sanitary inspector, a school board officer, an inspector of midwives, a tuberculosis visitor and a welfare nurse.

This vast expenditure is a simple transference of money from productive to unproductive expenditure, and the inevitable and immediate effect of heavy national and local Expenditure is the cutting down of staffs by private and industrial employers and the suspension of industrial development. Doubtless new departures in policy are partly to blame for some of the increases in the public service, and no one Government is responsible. It is a bad habit into which we have fallen. Every Government is eager to shower benefits upon the community, and no Government counts the cost or considers whether the benefits given with one hand are not automatically withdrawn with the other, which, in order to pay for them, dives deeper into the pockets of the individual. But, if all Governments are equally responsible, only a Conservative Government can call a halt and put a check on national extravagance. This Government has its supporters whole-heartedly behind it, and it has still two years in which to redeem the past. But nothing short of a determined effort by His Majesty's Government to set the national house in order can stay the process which is depleting our capital and sapping the industrial strength of the country.

THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY)

My Lords, I do not, speaking on behalf of His Majesty's Government, regret for a moment the debate which has taken place during these two days. On the contrary, from our point of view the more that can be said in favour of economy, the more influence that can be brought to bear upon public opinion, the better we shall be pleased. Undoubtedly, as the noble Earl who began our proceedings this evening said, the outlook is gloomy, the situation is serious. It is not, of course, surprising that it should be so; and let us always try to maintain our perspective. This, of course, is the result of two causes, one much bigger than the other—the Great War and the General Strike; and the two things together have now placed the country in a position of some anxiety. And therefore with a good deal of the speeches which have been delivered in your Lordships' House from every quarter of the House we are in agreement. We do not agree with the noble Earl, the mover of the Motion, altogether; we are all in favour of drastic economy, but we are not in favour of a reduction of armaments—not as things stand at this moment, though things might alter, when such reduction might be possible. Therefore I welcome on behalf of the Government the Amendment of my noble friend Lord Midleton. That Amendment strikes out what in our opinion are words with which we could not agree and substitutes for them other words to which we have no objection; and, so far as my noble friend's Amendment is concerned, we shall be glad to support it in the Lobby.

Although I have said, and I hope in terms sufficiently emphatic, that I agree in the great necessity for economy and in the serious character of the outlook in the country at the present time, at the same time I am quite sure nothing would be worse than that we should make our economies in the wrong direction. The noble Earl, Lord Beauchamp, and the noble Earl, Lord Oxford and Asquith, singled out as almost the principal matter upon which they think reduction could be made the national armaments. I do not think that any of my noble friends who sit on this side of the House have been able to support them. I do not want to trouble your Lordships with a great many figures at this time of the evening and at this period of the debate, but, by way of illustration, let me show how necessary it is to be careful in the statement of figures in this matter. Let me take what the noble Earl, Lord Oxford and Asquith, said to-night about cruisers. He said we had 71 cruisers. That was an error. There are 61 not 71 and of those 61 cruisers 25 were built during the War and are of such a quality that they are not, practically, of much use for the purposes of national defence.

THE EARL OF OXFORD AND ASQUITH

My figures related to the state of things to be brought into existence by 1930.

THE MARQUESS OF SALISBURY

I am afraid the noble Earl and myself are not ad idem. But take my figures for what they are worth. I said that twenty-five of those sixty-one cruisers belong to a class which is not useful for modern purposes because of the shortness of their ocean-going range. If you take those twenty-five from the sixty-one that leaves you with only thirty-six of the better-class cruisers. Compare them with the figures for other countries. In the United States they have twenty-nine such cruisers—a smaller number than ours, I admit, but not so enormously smaller as one would have judged from the speech of the noble Earl. Then Japan has thirty-three or thirty-four of such cruisers, I am not quite sure which. It is true we still have in the British Navy a superiority, but consider how different are the obligations which are upon us as compared with the obligations of the two great Powers that I have named. Is it not obvious, when you are reducing your margin to as small a one as that, considering the immense stretch of our responsibilities, that there is no great exaggeration in the cruiser programme of the Government? We cannot reduce any further unless, of course, it be that other countries reduce.

I welcome the congratulations of noble Lords sitting in all parts of the House at the action of the Government in accepting the invitation of the United States to join in the Conference which is about to sit. That may, or may not, result in a further reduction of armaments. If it does no one will rejoice more than this country and especially the Chancellor of the Exchequer, for no doubt it would mean a very great economy. But if that does not come about, can we reduce any further? The noble Earl, Lord Beauchamp, did not seem to realise how very great has been our concession on this matter already. Before the War it was a two-Power standard which we thought it necessary to maintain and, as everybody knows, we now accept the position of what is called the one-Power standard—that is to say, we hold ourselves to be under an obligation to be as strong as any other one Power. In those circumstances I think it is clear that we could not reduce. Unless there is some change in the international position we could not reduce our Navy by a single ship.

I need not say that what is true of the Navy is true of the other Services. I do not know whether the noble Earl, Lord Beauchamp, thinks we ought to reduce the Army any more. I do not think he said so. Anyone who watches the course of international politics at this moment and knows the obligation under which we found ourselves to send troops to China almost at a moment's notice, will agree that we cannot reduce any further the Army upon which we have to rely. Your Lordships will have noticed that we actually had to send a battalion of the Guards to China, showing that there is no margin of safety beyond what we have got and that it would be quite impossible to go any further in cutting down. As to the Air Force, that has been debated often in your Lordships' House and is about to be debated again, and I need not say anything except to state that our hope and intention is no more than to have as strong an Air Force as the strongest other Power in that particular arm.

We must, I am afraid, repudiate, though very respectfully, that part of the Motion to which the noble Earl asks your Lordships to assent. We cannot agree that there ought to be a further reduction of armaments. I turn therefore to the other parts of the case which is made. It is said that there ought to be a reduction of the personnel of the Public Service. I am not going to say that that is not true. I suspect it is true that there ought to be a reduction. I am quite certain that it is daily, I was going to say almost hourly, the effort of the Chancellor of the Exchequer to bring about a reduction. Although I say that, do not let us exaggerate. Speaking as I do from this Bench I must attempt to do justice to the Civil Service, who serve us so well. It would not be fair to allow criticisms to be made against them and not to say what can be said and what ought to be said very emphatically in their favour. Therefore it will be necessary for me to traverse in certain details the case which has been put before your Lordships.

A most notable speech was delivered last week by my noble friend Lord Midleton. He has identified himself for many years with the cause of economy and he has an almost unrivalled knowledge of the working of the Public Departments. Yet it is possible even for him to fall into error. Let me take as an example—I am not going to trouble your Lordships by going through all the cases with which he dealt—the first one to which he referred, the Admiralty Accountant-General's Department. I am not quite sure that I have the same figures as he has and I hope he will forgive me if there is some difference, but I think he will see that the difference does not really affect very much the strength of the argument. The present numbers, I believe, are 667, the pre-War numbers were 424; that is a difference of 243.

Your Lordships may say: "Well, it is an astonishing thing that the Admiralty Accountant-General's Department should have gone up by this last figure, almost 50 per cent." Let us analyse it for a moment. The truth is that since the period of the earlier figure an enormous number of new obligations have been thrown upon the Public Departments. Your Lordships may say that was a mistake. I suspect there have been a great many mistakes, but you must not blame the Civil Service for the mistakes. Just consider the figures for a moment. There has to be a staff for War medals and for prize money. That staff numbers forty-four. There has to be a staff for the new marriage allowances which have been introduced into the Navy.

THE EARL OF MIDLETON

Is the War medals staff still necessary?

THE MARQUESS OF SALISBURY

My noble friend served at the War Office for I do not know how many years. He probably knows the tardiness with which that great office sometimes operates and I am afraid that what is true of the War Office is probably true of the Admiralty. Then, as I was saying, there has to be a staff for the marriage allowances and for the system which has been introduced of allowing a weekly allotment of pay to be made by the sailor instead of a monthly allotment. All that, of course, is in the interest of the individuals concerned. That involves an extra staff of 97 at the Admiralty. Then pay and Pensions are now made to vary according to the cost of living. That involves the employment of a considerable staff to adjust the amounts payable and that accounts for 47 more. Then, of course, there has been a great increase in naval pensions necessarily following on the War. That accounts for 15 more. More complex and more elaborate claims from contractors have to be adjusted. That means 15 more and other extra work employs 25 more, making up altogether 243, which balances the account which I am laying before your Lordships. I see a certain doubt expressed in the faces of certain noble Lords, but these things are thrown upon the Public Services not by themselves: they are thrown upon the Public Services by a succession of Governments and by a succession of Parliaments. I would venture to say that if you want to find the principal criminal in the heavy burden which is thrown upon the country he is to be found in the House of Commons.

Several NOBLE LORDS

Hear, hear.

THE MARQUESS OF SALISBURY

The members of the House of Commons act under a sense of great obligation and a very high sense of duty, but they are actuated by a desire, which arises no doubt from their contact with their constituencies, to raise Expenditure. Instead of being, as they used to be, the guardians of the public purse it is notorious that the pressure which comes from Members of Parliament is precisely in the other direction. I am not going through all these cases, but I might show in detail, in very much the same way as I have done in the case of the Admiralty Accountant-General's Department, a similar reason why the personnel of the War Office has increased so enormously. Let me take one other case from the civil side. I think some noble Lord asked why there has been such an enormous increase of expenditure in the Ministry of Labour. The reason is quite obvious. Insured persons in 1914 numbered, roughly speaking, 2¼ millions, but insured persons this year, 1927–8, number 11¾ millions. When you are dealing with such enormously inflated figures of insured persons—a very proper thing of course—you must have an adequate staff to deal with them and the staff rises accordingly.

Now let me just give your Lordships a few general figures apart from these details. I think they will confirm something which the noble Earl, Lord Oxford, said to show how these increases have arisen. The increase of staff between 1914 and 1927, after making certain adjustments on account of the new arrangement in Ireland, is about 40,000, or 15½ per cent. Of that 40,000 14,000 are accounted for by the new Departments which have been established by successive Governments since the War. I think the noble Earl mentioned some of them. There is the Air Ministry, the Forestry Department, the Overseas Trade Department, the Ministry of Pensions, the National Savings Department and so forth. Those involve very large figures of additional staff. For example, the civil staff connected with the Air Ministry is 1,850 and that connected with the Pensions Ministry 9,700. Those account for a great part of the 40,000, and if you add to them the increased staff in the Labour Ministry and the Transport Ministry, which existed in embryo before the War but which has developed since, you find the full account of the increase.

I think one speaker to-day spoke of another Inquiry into Expenditure. There have been four Inquiries since the War, of which the celebrated Geddes Inquiry was one. There has been an Inquiry since the Geddes Inquiry, under the Chairmanship of ^*Sir John Anderson. There were three members of that body. ^*Sir John Anderson, whom your Lordships know is the chief official of the Home Office, a man of great distinction and long public service, had with him Sir Herbert Lawrence, of Glyn, Mills, Currie & Co., who distinguished himself as

^* Sir Alan Anderson. See Cols. 686–7.

everybody knows very much as a Staff officer in the War and who went back to civil life and is now a banker, and Sir Peter Rylands, fomerly a president of the Federation of British Industries. Here is an observation in their Report: The increase in the civil servants pay roll has been imposed on the taxpayer for reasons which commended themselves to various Parliaments before and since 1914. They go on to say: No power except Parliament can materially lighten the load. The point I am trying to impress upon your Lordships is that it is not the fault of the civil servant. The fault lies with Parliament.

Several NOBLE LORDS

Hear, hear.

THE MARQUESS OF SALISBURY

Speaking as I do on behalf of the Civil Service I am very glad to hear those cheers. They are very distinguished public servants and it would be a thousand pities if your Lordships carried away a wrong impression upon that point. Your Lordships will be asking what is being done about economy. I am not sure that the House realises what has been done by way of improving the system of which your Lordships have complained so much during this debate. The old system, with which the noble Earl, Lord Oxford, was very well acquainted before the War, the old Treasury system, was that the Treasury was really at war with the other Departments in matters of Expenditure. There was a sort of struggle between all the Departments and the Treasury and there was no kind of co-operation between them. It was war to the knife and I need not say that that did not make for economy. Although a great deal ought to be still done for economy, it is not by going back to the system of 1914. That was an irrational system.

Now a wholly new system has been put into operation. There is an Establishment Department in the Treasury and an establishment officer in each of the Departments. Instead of struggling with one another, there is an effort to co-operate together, and the relations between the establishment officers of the Departments and the Establishment Branch of the Treasury are harmonious. They work together instead of trying to defeat each other. They are engaged, as your Lordships would wish them to be engaged, in trying to reduce the personnel so far as they can in each Department. I should like to illustrate to your Lordships how they can be defeated by the action of Parliament. There was a great effort to reduce the staff of the Ministry of Health between 1921 and 1925, and it was reduced by nearly 2,000 civil servants. But in 1925 there came the Pension Act of that year and, although I do not say that that entirely destroyed the work which had been carried out in all those years, it did largely diminish it for that Act necessitated the addition of some 600 staff in order to carry out the obligations which were thrown upon the Ministry of Health by that Act.

It was not the fault of the Civil Service. It is the policy of Parliament which involves these things, and it is in referrence to all this that this very same body, ^*Sir John Anderson's Committee, found that the increase in the Civil Service staff since 1914 was fully accounted for by the extra work which has been thrown on the Civil Service since 1914. I agree that that does not confute a great deal of what your Lordships have been saying, but it does confute the sort of criticism which has been indulged in and which says that for the kind of work done formerly by one clerk three are needed now. If yon are to believe ^*Sir John Anderson and his colleagues, whose names I have given to your Lordships, that particular charge is not true. I impress upon your Lordships that you may blame Parliament, if you think fit, and very respectfully I rather agree with you, but do not blame the Civil Service. Do not make it appear to the public that there are a number of lazy officials doing nothing at all because you have against you ^*Sir John Anderson and his colleagues, who have definitely found that the increase in the Civil Service is definitely accounted for by the extra work thrown upon them. I hope I have established that fact.

We have it, then, that the civil servant is not a lazy good-for-nothing, indolent beggar but is doing his best, and we have it also that the Treasury by the new system under which they are working, in co-operation with the Departments, is doing its best also to reduce Expenditure, but we have on the other side the multifold new duties which are thrown upon the Departments by Parliament. I am

*See Cols. 686–7.

not saying to your Lordships that more cannot be done in reducing the staffs even as things stand. I do not for a moment put in any claim for perfection for the Civil Service and the present system. Undoubtedly more can be done and, so far as the Government are concerned, I earnestly hope and believe that we shall do our utmost to reduce still further these staffs even as they stand. But what is the real crux and what is really serious is that public opinion in the country should be convinced. That is what is really going to reduce expenditure, and it is only from the country that the real remedy can be found.

A noble friend of mine, speaking just now from behind me, called your Lordships' attention to the heavy burden of expenditure in the shape of rates which industry has to bear. I quite agree with him. I believe that that heavy burden, added to the burden of taxation, is crushing the industry of this country, but it is very difficult to convince the ratepayers' representatives of that conclusion. Any of your Lordships—I expect it applies to nearly all your Lordships—who work on local authorities know how very difficult it is to get them to check expenditure. I am afraid the fact is that the British people is an extravagant people; they are not willing to economise. They have splendid qualities of courage, organisation and so forth, but as to economy I believe it comes very hard to them indeed. It is for that reason that I hope this debate may do good. I hope my noble friend Lord Beauchamp will continue to press economy upon the House and the country. I hope he will always get the support of Lord Oxford and of my noble friends who sit behind him. Let us do our utmost to convert public opinion. If we do that, we shall convert the House of Commons, and, if we do that, we shall produce real economy. Until that time comes, the Government for their part will do their utmost, and it is in the belief that this debate may help it that I for my own part and my colleagues who sit around me will cheerfully vote for the Amendment which has been moved by my noble friend Lord Midleton, although we cannot vote for a reduction of armaments, as suggested by Lord Beauchamp's Motion.

EARL BEAUCHAMP

My Lords, I would ill requite your Lordships' patience last week if I were to stand for more than three or four minutes between your Lordships and the Division. I think it is only right that I should explain why I am unable to withdraw my form of words. May I ask the noble Marquess who has just sat down for an explanation of the figures he gave? He objected to the number of cruisers quoted by my noble friend Lord Oxford as including a number of ships built during the War. He subtracted them and he quoted another figure and he also quoted the number of ships of the United States Can he give us the assurance that the number he gave for the United States did not include ships built during the War?

THE MARQUESS OF SALISBURY

I asked the responsible official if the figures in each case were comparable. He assured me that that was so.

EARL BEAUCHAMP

I am obliged. I now understand that the number of ships which the United States possess have all been built since the War.

THE MARQUESS OF SALISBURY

The noble Lord must not say that. It is a question of actual fact: the cruisers that I quoted as belonging to the United States are comparable in armaments and strength with the thirty-six cruisers that I said belonged to the British Government.

EARL BEAUCHAMP

I am much obliged to the noble Marquess. This shows how difficult it is to pursue these questions across the floor of the House, and I admit that I probably made a mistake in including in my form of words a reference to the Civil Service in addition to armaments. I hope that when we discuss this matter next year it may be upon two separate Motions, a course which will probably be more agreeable to your Lordships' House. The blame that the noble Marquess put upon Parliament ought, I think, to be shared to some extent by the Government. I do not think it is quite fair for His Majesty's Government to absolve themselves entirely and say that the fault is wholly with the House of Commons.

I admit at once that, if I had been given some hope that something might be done by His Majesty's Government, I should not have insisted upon my form of words. A number of things have been suggested to the noble Marquess: the abolition of Departments, the rationing of Departments, the suspension of entrance to the Civil Service. None of these have met with the approval of the noble Marquess. He might have consented to the appointment of a Committee which would have seen how far these reductions were being carried out, but nothing of that kind has been offered to us by the noble Marquess, and therefore it is that I feel obliged to ask your Lordships to go to the trouble of a Division. When we discuss this matter again next year I shall be very much surprised indeed if we find, in spite of all the fair professions of His Majesty's Government, that there have been, either in one direction or another, any very substantial measures of economy.

THE EARL OF SELBORNE

My Lords, I do not propose to stand between your Lordships and a Division for more than two minutes, but I do want to tell my noble friend who leads the House how very deeply the most loyal supporters of the Government feel on this question. There is no difference between the Government and us on the subject of the limitation of armaments. We quite agree that the Army has been reduced to the lowest possible extent consistent with its Imperial duties, and we also agree that the Navy cannot be reduced further except by international agreement. Where we cannot think that my noble friend has really met the case made by Lord Midleton and Lord Oxford and Asquith is in respect of the increase of the Civil Service. None of us had any idea of casting the blame upon the civil servant. We agree with my noble friend that the fault lies with Parliament. But we cannot talk of Parliament without thinking of the Government, which leads Parliament. Is not the Government the embodiment of Parliament, and does it not draw the whole of its strength from Parliament?

When I come to the actual illustrations that my noble friend gave us, I wonder whether the House noticed that, in dealing with the extraordinary increase in the clerical staff of the Accountant-General's Department of the Navy, my noble friend gave us a list which explained the reasons of the 50 per cent. increase, but he did not tell us why there had been no corresponding decrease in the old staff, although the personnel of the Navy had been reduced by more than 50 per cent. and although the number of ships in commission is immensely less than it was before the War. I suggest that you cannot deal with such cases as Lord Midleton gave by an explanation of that kind. What we want is the spirit of economy, and most humbly do I support what Lord Oxford and Asquith said. I have nothing like his experience, but I have had some experience and I do not believe for one single moment that there will ever be a remedy for these ever increasing Public Departments except by the principle of rationing. That is the one way left to

Resolved in the negative and Amendment agreed to accordingly.

the Treasury, because I agree with my noble friend the Leader of the House that the old system of perpetual guerilla warfare led to endless friction but did not lead to economy. My last word is that all of us here support most strongly Lord Oxford and Asquith and Lord Midleton in asking the Government to abolish as many of the new Departments as possible and let their work be done by Departments of the old offices of State.

On Question, Whether the words proposed to be left out shall stand part of the Motion?

Their Lordships divided:—Contents, 28; Not-Contents, 68.

CONTENTS.
Lincolnshire, M. (L. Great Chamberlain.)	Gladstone, V.	Muir Mackenzie, L.
	Leverhulme, V.	Northbourne, L.
		Northington, L. (L. Henley.)
Reading, M.	Bethell, L.	Parmoor, L.
	Cawley, L.	Sandhurst, L.
Beauchamp, E.	Clwyd, L.	Saye and Sele, L.
Chesterfield, E.	Denman, L.	Shandon, L.
Liverpool, E.	Doverdale, L.	Shuttleworth, L.
Oxford and Asquith, E.	Gainford, L.	Southwark, L.
	Hemphill, L.	Stanmore, L. [Teller.]
Allendale, V. [Teller.]	Marshall of Chipstead, L.	Strachie, L.

NOT-CONTENTS.
Salisbury, M. (L. Privy Seal.)	Chaplin, V.	Fairfax of Cameron, L.
	Falmouth, V.	Gage, L. (V. Gage.)
	FitzAlan of Derwent, V.	Hampton, L.
Sutherland, D.	Hutchinson, V. (E. Donoughmore.)	Hanworth, L.
		Harris, L.
Bath, M.	Knutsford, V.	Howard of Glossop, L.
	Novar, V.	Hunsdon of Hunsdon, L.
Airlie, E.	Peel, V.	Kilmaine, L.
Birkenhead, E.	Younger of Leckie, V.	Kintore, L. (E. Kintore.)
Bradford, E.		Kylsant, L.
Clarendon, E.	Abinger, L.	Mildmay of Flete, L.
Cranbrook, E.	Armstrong, L.	O'Hagan, L.
Fortescue, E.	Banbury of Southam, L.	Oranmore and Browne, L. (L. Mereworth.)
Grey, E.	Biddulph, L.
Lichfield, E.	Carew, L.	Ormonde, L. (M. Ormonde.)
Lovelace, E.	Clanwilliam, L. (E. Clanwilliam.)	Ponsonby, L. (E. Bessborough.)
Lucan, E. [Teller.]
Malmesbury, E.	Clifford of Chudleigh, L.
Midleton, E.	Clinton, L.	Saltoun, L.
Northbrook, E.	Cottesloe, L.	Stewart of Garlies, L. (E. Galloway.)
Onslow, E.	Danesfort, L.
Plymouth, E. [Teller.]	Desart, L. (E. Desart.)	Swansea, L.
Powis, E.	Desborough, L.	Sydenham of Combe, L.
Selborne, E.	Dynevor, L.	Templemore, L.
Stanhope, E.	Ernle, L.	Wharton, L.
Vane, E. (M. Londonderry.)	Erskine, L.	Wittenham, L.
Westmeath, E.

On Question, Motion, as amended, agreed to.

House adjourned at twenty-five minutes after seven o'clock.