HL Deb 19 February 1930 vol 76 cc622-36

THE EARL OF LIVERPOOL, who had given Notice to call attention to the urgent need for economy in public expenditure, and to move for Papers, said: My Lords, the second Motion which stands in my name seems to me to be rather a corollary of the first Motion, and for this reason, that every single industry at this moment is depressed, and the reason why industries are depressed is the excessive taxation on everybody in the land. Your Lordships very well know, although I must quote the figures, that the United Kingdom heads the list per head of taxation paid by her population. The sum is £15 2s. 8d. Australia comes next with £12 19s. 9d. and is followed by New Zealand, with 1,300,000 inhabitants, with £12 7s. 11d. Incidentally the latter is prosperous. Compare those figures with those of our Allies in the Great War. France pays £8 5s. 10d. and I think I am right in saying that a short time ago she was bankrupt. The United States pays £6 1s. 11d. and Italy £3 8s. 9d., and our late adversary—we won the War—£5 6s. 5d.

The Chancellor of the Exchequer, in his broadcast to the country on February 9, did not conceal his anxiety as regards the question of retrenchment. He said we have a debt of £7,620,840,000, on which we have a yearly charge of £350,000,000, added to a charge of £113,500,000 for the Fighting Services; but he made no allusion in that speech to a very large sum of money—namely, the sum of money that we have to find for the Civil Estimates. We notice that for 1929–30 these same Civil Estimates increased by about £13,500,000. The Government probably hopes for further reduction in the Fighting Services, but I who have been in one of those Services all my life think you have got nearly down to bedrock in the matter of reduction. If you are going to have any Fighting Service at all it must be efficient; or else you had better get rid of it altogether. We earnestly trust that the Naval Conference will be a success, but I cannot see, even if it is a success, that there will be a material sum available to meet the very high liabilities which we are incurring at the present time. To revert to the Civil Estimates for one moment, are we going to have a continual increase at this rate of £12,000,000 a year, and if we are where is the money going to be found? It seems almost incredible that while you are trying to decrease Expenditure you are always up against an increase in the Civil Service. I think I am right in saying that every single First Lord of the Admiralty who has ever gone inside the Admiralty has gone in with a determination to reduce the civil occupants of the office, but he has always come back defeated.


We got it down a little.


I am very glad to hear it. It seems to me that sufficient emphasis has not been placed upon the high rate of Income Tax, Super-Tax and Death Duties. I am quite prepared to hear the noble Earl say that the Liberal Government brought in the Death Duties, to which I would retort that the Conservative Government increased them, and it is an undoubted fact that moneys taken in the higher grades of direct taxation would otherwise be saved and be utilised for the promotion of industry and the reduction of unemployment. It is fair, I think, to say that beyond a, certain point every £1 raised by direct taxation diminishes employment pro tanto. If I have said this as regards the present situation, what about future Budgets? How are we going to balance our future Budgets, if the ordinary means of taxation will not suffice to meet and balance these Budgets? In combination with Lord Newton, about two or three years ago, I tried to find a new avenue of taxation, and I am sorry to say (I do not say it in any sort of abuse of the Civil Service), I believe that if you had made better use of the tax which was put on betting you would not only have cleaned up the whole system—and, mark you, those who were opposed to it were not the right rev. Prelates on that Bench, nor the bookmakers, nor the Jockey Club, but the opposition came from quite a different source. The tax had been conceived in the minds of humble individuals, and it did not meet with the approbation of the officials who had to carry it into effect. When I left the conference at the Treasury with Lord Newton we were convinced that, unless the then Chancellor of the Exchequer did a lot of spade work, that particular tax was going to be a failure, and a failure it has been.

We cannot go on indefinitely spending money where we have not got it. It is all very well to live up to a high standard of social life for our people, but there comes a time when you have to cut your coat according to your cloth, and it seems to me—I speak outside of all Parties—that all Governments go to the country at a General Election and make specious promises which mean a large expenditure of money which the country cannot afford. I was looking at the returns of trade for last year, and I noticed that the excess of imports over exports in 1929 was £382,294,336. I am quite aware that it is rather a fallacious figure, because we do not know what allowance has to be made for re-export and re-imports, and I am uncertain whether the Board of Trade have got those figures for 1929 yet. Therefore, I wish to ask whether the Government thinks that we were on the wrong side last year: that is to say, was there a balance, after all those things had been taken intro consideration, of imports over exports? The previous year there was a balance on the wrong side, but 1929 makes a better showing when compared with 1927 than when compared with 1928. A great many foreign countries have reduced their public expenditure, and, as far as I can make out, we are one of the few countries which have never done anything towards reducing it. When will the Government go to the country and say the time has come to cease spending? When they go on spending like this it is reflected in our municipal undertakings and all our local undertakings. As far as I can see when the Chancellor of the Exchequer gets bored about the size of his Budget he passes on without hesitation some of his Budget to the county councils or the municipal authorities, and says: "You can bear the burden." It goes straight on the rates. I think no one will contradict that.

The noble Lord who is going to reply probably will ask: "How will you economise?" I should start by small beginnings. I remember as a small boy that two very eminent politicians in another place, one on the Conservative side in Lord Salisbury's Cabinet, and the other in Mr. Gladstone's Cabinet, were arguing how they would save money, and one of them went in for saving the pennies, but the other said: "I am going in for saving the farthings." I suggest to the Government that they should start with the Act of 1881, and instead of laying it down by law that all our letters sent to us on the county councils must be registered, that burden should be taken off, and they should not be registered. It would save several hundreds of pounds yearly. There is another way in which the private individual could have his pocket saved. I refer to the money that has to be paid by the High Sheriffs of Counties. I think I am correct in saying that the High Sheriff of Lancashire has to pay as much as £2,000 a year. All that money could be diverted into another channel, either into the pockets of the owners, who would thus be able to employ more labour, or for the resuscitation of our depressed industries. I should like to express the hope that this Government, and every succeeding Government, instead of trying to see how much money they can spend, will do all in their power to save money and so allow our industries to compete on equal terms with foreign countries.


My Lords, I am sure that noble Lords who sit behind me will have heard with pleasure the speech of the noble Earl. They will agree with me that it is fortunate that we have the support of the Liberal Party in our demand for economy. Because I do not want to be critical, but when I saw the programme of the Liberal Party at the last Election, I was not quite so sure that they would practice the strict economy which we have heard is so desirable. I have already had occasion, when we were dealing with the Widows', Orphans' and Old Age Contributory Pensions Bill, to call your Lordships' attention to the statement of Lord Arnold, who was in charge of the Bill, and who, I am sorry to say is not in his place today. I felt rather strongly on the subject. I commented with some emphasis upon the recklessness with which it seemed to me that His Majesty's Government were sliding down the slippery slope of extravagance in that particular, and in other particulars as well. I seem to remember that a very prominent Minister in the present Government said that if you really want a thing you can afford it. That seems to me to be a somewhat wide statement. It would be much more true to say that if you want a thing you cannot have it unless you can afford it. I do not think any one would deny that that is a truism in regard to private life. I know I have wanted lots of things, and either I have bought them and found that it caused considerable difficulty, or else I have had to do without them. That has possibly been the experience of many of your Lordships. But if that happens in private life it seems to me it is very difficult to apply different rules of economy to public affairs.

I do not think the noble Lords opposite would deny that the policy which they are recommending to your Lordships in another place must result in increased expenditure, and therefore in increased taxation. The noble Earl has told us that we have aready the largest per capita taxation in the world. He said everybody in this country pays something like £15 in taxation, and, if taxation is raised, that amount will be greater. And this at a moment when trade is falling—everybody admits that—and when, in consequence, unemployment is rising by leaps and bounds. I think your Lordships must have seen the returns this morning. They are even less satisfactory than others that have been published in the recent past. Is it not arguable that this fall in trade and this increase in unemployment are connected (I will not put it too high) with the avowed policy of expenditure— and of extravagance, if I may say so without seeming rude—which the present Government seems to favour?

It does not seem to me that any real effort is being made by the Government to consider their financial position, to examine where they really stand—what money they have to rely on, and what their income is—no effort to measure Expenditure by the Income they are likely to obtain. And this is even more surprising because the Chancellor of the Exchequer has expressed concern in regard to the tremendous burden of taxation which the country has to bear. We are told—I do not know with what truth, because we have not heard anything for certain yet, but it has been strongly rumoured—that Mr. Snowden proposes to throw away no inconsiderable portion of the Revenue which is now obtainable, and which is derived from Safeguarding and from the McKenna Duties—that is to say, if he gets the chance. I understand that possibly some of his colleagues may have something to say on the subject, but perhaps we shall hear a little more about that later on.

Of course I should be the last person to accuse noble Lords opposite of extravagance and not to admit that every Government is attacked on this point. Having said that, I must also say that I should be very much surprised if my noble friend opposite is able to put up so good a defence on behalf of the Government as my noble friend Lord Salisbury, then Leader of your Lordships' House, was able to make some time ago when a similar attack came from noble Lords on the Liberal Benches. We all know that accusations of extravagance are levelled against all Governments, especially Governments in recent years. We know that we had to meet attacks of this kind in our time. We are perfectly aware, everybody naturally admits, that public Expenditure since the War has reached a very high level; indeed, it is useless to deny that it has been at an alarming point for a good many years past. But I do not think that anybody would deny, I think we would all admit, that during the time of the late Government not only was direct and indirect taxation reduced, but the incidence of taxation, that is to say the unfair system of rating, was very radically reformed and put upon a sensible, reasonable and modern basis.

The noble Earl seemed to think that the Chancellor of the Exchequer—I do not know whether he meant the present Chancellor of the Exchequer or his predecessor—was inclined to take something from the burden of the taxpayer and place it on the shoulders of the ratepayer. In this instance I venture to suggest at any rate for the late Government that the contrary was the case, and that the unfair burden which then fell upon the ratepayer was taken from his shoulders and placed upon a rather broader back. If we go back to a year ago and look at the trade returns, the unemployment returns and so forth, we shall see, and I do not think it is denied, that unemployment was then falling, that trade was improving and that the cost of living was decreasing. I saw the other day that the cost of living had decreased by two points. I am not sure whether that means two points from what it was when the present Government came into office, or only two points on the last return, or whether it has not increased since the present Government came into office in spite of the statement that we saw in the paper the other day. Undoubtedly, unemployment is increasing and trade and industry are not in that flourishing condition that we would wish to see them in.

That being the state of things, and I do not think it is seriously argued that it is not, surely the cardinal point in the policy of any Party—it does not matter whether it is the Party which constitutes the present Government, the Party of the noble Earl who brought forward this Motion or that of noble Lords behind me—is that it should be economical and that there should be a stoppage of all fresh expenditure until unemployment is reduced and trade improved. That point, surely, should occupy the immediate attention of His Majesty's Government. Until you call a halt in your expenditure and reduce your outgoings in money you will have to pay for it by more and more unemployment. There is no other way. You cannot get away from the fact that expenditure must fall upon the industry of the country. There is no other source from which to find money. The fiction has arisen in some quarters that there is a peculiar hoard stuck away somewhere belonging to certain people, of whom we have heard a great deal but I do not think any one of us has ever met, known as the idle rich; that they have put away a large sum of money out of which all these schemes of the Government can be financed. When people come to look for this hidden source of income, this buried treasure, they do not seem able to find it. I am afraid there is not very much in the pockets of the idle rich which would enable the Government to finance their numerous commitments.

During the period of some ten years I served in about half-a-dozen Departments. Four of them were spending Departments. Two of them were Defence Departments, the War Office and the Admiralty. Two others were the Ministry of Health and the Board of Education, Departments which also have large expenditure, and expenditure in regard to Social Services. I know very well and noble Lords who sit on the Liberal Benches and the Benches opposite know very well the duties which Ministers have to undertake in administering their Departments. They are faced with the duly of studying economy on one side and very real needs on the other. I am not denying that a great many of these reasons for expenditure are very real; but Ministers have to judge between the two, between the necessity for economy and the desirability for expenditure, what is really in the public interest. Every Minister has to remember in judging the two lines of Horace— "Te semper anteit Soeva necessitas." It must always be remembered that the soeva necessitas, dire necessity, must govern our judgment of expenditure which any Department is able to undertake.

Let me mention the War Office. The noble Earl referred to economy in defence and suggested that it would be very difficult for noble Lords opposite to make such economies in the expenditure on defence as would enable them to finance their social schemes. We were also told the other day that the noble Lord opposite who, I understand, will reply for the Government had obtained very large sums for his Department. I do not know how he managed it. My recollection of the War Office and Admiralty is that it was exceedingly difficult to get money from the Treasury for what were considered, and no doubt really were, very necessary and useful purposes. Indeed, during the time I was there our Estimates showed a fall each year. In each of the four years that I was at the War Office I think we reduced expenditure on the Army by no inconsiderable sums. I remember standing at the Box opposite in a white sheet and receiving considerable criticism from noble Lords on the Liberal Benches about certain economies which were made in the Army, most of them, I think, in the Territorial Force.

As I have said before, everything depends upon the state of your industries. If your industries are prosperous you have money to spend. If they are not prosperous you have no money to spend and you cannot get it. If industries are booming and employment is plentiful you can indulge in what may be necessary and desirable in a way which is not possible when your industries are failing. So I say that the first duty of this or any other Government—I am not thinking of any particular Government or Party—is to consider the state of the industries of the country, and to regulate our Expenditure entirely by the condition of prosperity or the reverse in which you may find them. I do not think I have anything more to say and I will not further detain your Lordships.


My Lords, it has been my privilege to listen to many debates on economy in your Lordships' House. I have seldom listened to a better tempered debate or one less animated by Party spirit. It has this common feature, that while in Opposition we all advocate economy and while in office we are all accused of not practising it. There have been many interesting points raised by both noble Earls who have spoken, and in a very courteous manner they have implied that the present Government is the most extravagant of all Governments. In fact, the noble Earl, Lord Onslow, felt sure that we could not put up half as fine a defence for our brief Administration as the noble Marquess, Lord Salisbury, put up some two years back for the then Administration. There have been references also to the crushing burden of Income Tax under which we suffer. I would like to remind your Lordships that. whatever the Income Tax may be six months hence, the fact that it stands at £15 per head to-day is only the result of nearly five years of Conservative Government, and we have nothing to do with that large sum. I do not think the noble Earl will deny that when we handed over to the Conservatives at the end of 1924 there was a surplus for the Budget, and there was also a considerably lower figure of national Expenditure than was the case when we took office in June of 1929. I do not think anybody can contradict that statement. It stands out from the figures.

I do not propose to detain your Lordships long to-night, because the hour is comparatively late, and, indeed, I am not really competent to go into all the details that were put forward by the noble Earl, Lord Liverpool; but there are some points with which I must deal. Both noble Earls who have spoken have referred generally to the necessity for economy. Neither of them has suggested any economy on the Fighting Services. I think the noble Earl, Lord Onslow, stated that he remembered the War Office in old days and said that it was cut to the bone. The noble Earl claimed that his Government had reduced Expenditure by considerable sums each year. The Admiralty also has no doubt affected some slight economies. To my mind, really the only item of Expenditure on which it is possible to effect real reductions is the Fighting Services. Noble Lords opposite may complain that we next year stand committed, I think, to an Expenditure of something approaching £21,000,000 extra on Social Services. But how is that £21,000,000 made up? Of it £14,000,000 is accounted for by the Unemployment Insurance Act. I would ask your Lordships, who are always very fair to political opponents, to consider why it is necessary for us to find £14,000,000 next year on that account. In the year 1925 everyone of your Lordships will remember how the then Chancellor of the Exchequer, by methods which have been described as ill-judged, wavering and even as profligate, took a course in regard to unemployment insurance which has put that Fund in jeopardy, and on the verge of bankruptcy ever since. Without increasing the Government's contribution to the Fund, he reduced the contribution from both employers and employees, and then again, in 1926, not content with that, he put the whole system upside down once more by the application of a so-called Economy Act, under which the contribution of the Government was reduced.

The net result of these two proceedings was that the Fund lost revenue to the extent of £8,000,000 a year each year, thereby increasing its debt and also increasing the interest due upon that debt. It is literally no exaggeration to say that the proposals of the present Government under the head of unemployment insurance could be adequately met out of the money, and could be more than met out of the money that was lost to the Unemployment Insurance Fund by the reckless finance, based on borrowing, of the late Chancellor of the Exchequer.


Is it not more due to the fact that there is 100,000 increase in the unemployed?


Not at all. They are not the basis of the calculation. If the noble Earl will forgive me, these figures I have given are based on definite Treasury statistics, worked out some time ago. I do not think it is possible to refute them. £14,000,000 is what this country has to find on Social Services in connection with unemployment insurance, and I do not believe a single noble Lord opposite would deny the necessity for paying that money. The finest speech I ever listened to in defence of the English working man was designed to prove that a very miscroscopic percentage of them were shirkers. It was made by a member of the late Conservative Government—I think he was Parliamentary Secretary to the Board of Trade—Mr. Williams. He made that speech in Canada, and he proved to the satisfaction, not only of his fellow delegates of the Imperial Parliamentary Association, but to that of large Canadian audiences, that the British working man was a very worthy fellow, and that the percentage of shirkers was less than 1 per cent. The noble Earl has complained that we are going to spend a great deal of money next year when, as he says, we have not got it, and that it is one of those luxuries we ought to go without. But unless we do pay this money for the benefit of the unemployment insurance scheme undoubtedly very hard treatment will be meted out to those same worthy people—harsh treatment to 99 per cent. while it is just possible the 1 per cent., the shirker, will get what he deserves.


You have increased the benefits.


Does the noble Marquess claim that those benefits are excessive for a worthy man such as the British working man? They may be excessive for a shirker. As regards the remaining sum needed to make up the £21,000,000 to which I have referred, £5,300,000 of it is required for widows' pensions. I need not remind the noble Earl opposite that it was the Conservative Party that brought in widows' pensions. We have merely extended them and I do not believe that the noble Earl would deny that the extension we have made is justifiable. There are many people who think we ought to have extended them even to spinsters. I have not yet heard a proposition about an equally worthy section of the community consisting of bachelors, but can noble Lords opposite assert that we have been extravagant in these respects? In common justice we had to find the money. We are endeavouring to effect economies on the Fighting Services on the only basis that is justifiable. I am speaking now as an old soldier of many years on the General Staff and as a man who is just as keen as any one on keeping this country's prestige and security as high as possible, and my first argument is, and always has been, that the only way to effect economies on the Fighting Services is by scientific methods. I deny that it is possible to effect immediate economies on armaments, largely because of the reaction on employment. The only real method of approach is by gradual substitution of scientific methods, of machines for men, such as has been going on at the War Office for the past five years, and such as I hope will go on in the Navy which the noble Earl champions so vigorously.


It has been going on for more than five years in the Navy.


That is good news; I am delighted to hear it. But it must be done by scientific methods and it can only be applied gradually. I believe we can effect economies in the Fighting Services by a vigorous application of those methods. Personally that is one of the economies to which I am bending my mind as energetically as I can. There is also the same necessity for scientific methods in regard to business, to trade and commerce. Consider what His Majesty's present Government are doing in this matter. We have set up an Economic Advisory Council. It is going to cost the country very little money—£6,500 a year is the outside figure—but it does consist of some of the most eminent men in the country, whose functions are to advise the Prime Minister and to consult the Departments. The Treasury Minute says that it shall consult Departments and outside authorities in regard to any work in hand or projected and shall collate such statistical or other information as may be required for the performance of its work. The Council shall also cause to be prepared a list of persons with industrial, commercial, financial and working-class experience, and persons who have made a special study of social, economic and other scientific problems. It is a scientific body, and it is only with the help of such a body that you can really achieve economy.

Noble Lords on the other side talk of economy, but why did they never think of setting up such a body as this?—because it is obviously the only method of approach to the question. I must not detain your Lordships longer. I am not really an economist, but I am deeply interested personally in many aspects of economy. I have only referred somewhat sketchily to what is passing in my mind, but I hope I have given a sufficiently full answer to the noble Earl. He ranged over a variety of subjects like the Betting Tax and other tainted methods of raising money and of saving it; but I need hardly say that it is quite impossible for me, even if I were in a position to do so, to give a forecast of the next Budget. I can only conclude with a quotation from a speech made by the present Chancellor of the Exchequer not very long ago to show how he views the necessity for economy. I dare say many of your Lordships have acquaintance with my right hon. friend and know that he is a man with considerable force of character. In dealing with my own Estimates I have been petrified by his tenacity of purpose and amazed at my own moderation. He said:— I will sanction no expenditure, especially at a time like this, which I do not believe to be imperatively necessary. … Our main consideration at the moment is that the State should use all the power it has to help the restoration and increase the prosperity of industry. That sentence seems to me to sum up the admonitions which the present Government have received from the opposite side of the House.

I need hardly say that no Government likes putting on taxation. Every Government wants to get popularity by economies. Every Government wants to maintain the prestige and security of the country and every Government wants to develop trade. We all of us have our problems. Every Government has them in turn, but I can hardly think of a better summary of our purpose than I have given from the Chancellor of the Exchequer's speech at Leeds the other night. I do not know if the noble Earl will press his Motion for Papers. I have none to give him that are of any use. I can give him some quotations from answers made in another place by the Chancellor of the Exchequer, and of course he can get the Command Paper on the functions of the Economic Advisory Council, but I suggest that they will not be of any particular use to him.


I only want to say one thing. The noble Lord told us what they are going to spend. I think he gave a figure of £21,000,000. But he has not given any sort of idea of what they are going to save.


I ought not to neglect to answer that question. I cannot tell exactly what we are going to save. I should very much like to know myself and if I knew I would tell the noble Earl. We hope to save a certain amount of money on the Fighting Services, but how much will largely depend upon negotiations which are going on at this present moment and it is quite impossible for me to make any definite statement.


My Lords, before withdrawing my Motion I should like to thank the noble Lord opposite for the way he has dealt with the question, though I do not quite concur in all his views. I am an old soldier, like himself, and I hope he is not going to reduce the Fighting Services below efficiency. With a great deal of what he said on the subject I quite agree, but I hope he will not reduce the two Fighting Services—I am not speaking about his new toy—too greatly. There is just one other point, and that is about education. I think he mentioned a figure of £14,000,000, but there is a variety of other things in prospect. For my sins I am a member of a county council and as recently as last Wednesday I asked what the Education Bill was going to cost the county council. I was told it was going to cost a very large sum and that it would increase the estimates of the county council considerably. I only mention that as one item. He may have some other plaything to throw at us, and I notice that all these playthings cost money. At the same time I should like to thank the noble Lord for what he has said, and to say that I think it a far more satisfactory answer than the one I received to my previous Question.

Motion for Papers, by leave, withdrawn.

House adjourned at twenty minutes past six o'clock.