HL Deb 19 March 1946 vol 140 cc194-205

2.44 p.m.

THE LORD CHANCELLOR acquainted the House that the Bill had been endorsed with a Certificate from the Speaker that it is a Money Bill within the meaning of the Parliament Act, 1911.

Order of the Day for the Second Reading read.


My Lords, in the absence of both my noble friends, Lord Pethick-Lawrence, who leaves for India to-day, and Lord Pakenham, who has fallen a sudden victim to seasonal influenza, both of whom are responsible for the conduct of Treasury business in your Lordships' House, it has fallen to me this afternoon to propose the Second Readings of the two financial Bills which come before us to-day for consideration. Fortunately, I think I may claim that so far as this House is concerned these two Bills are largely non-controversial.

The first of these Bills is the one now before us, the Miscellaneous Financial Provisions Bill. No Bill that I have ever seen was more aptly named, for it covers a number of financial provisions varied in character and distinct in nature. To begin with, we take power under the Bill to continue and extend the present borrowing powers of the Government. During the war it was necessary annually to pass a National Loans Act to give the Treasury power to borrow whatever sums were needed to meet the supply granted them by another place. Under those powers the Budget deficit was annually made good by loan. Under Clause 1 (1) of this Bill, the Government are empowered to raise any money required for the service of the year ending March 31, 1947, together with an additional sum not exceeding £250,000,000. Of course your Lordships will recognize that what this clause actually means is that we take power to borrow the amount of the actual deficit on the forthcoming Budget. The additional power to borrow up to £250,000,000 is taken, as hitherto, in order to cover any gap that might occur between the end of the financial year 1946–47 and the next Bill empowering the Treasury to raise a loan for the purpose.

Clause 1 (2) empowers the Treasury to charge the Consolidated Fund with liabilities, including the payment of interest, accepted under agreements with other Governments concerning obligations arising out of or in connexion with the war. Clause 2 of the Bill provides that payments by the War Damage Commission under the War Damage Act, 1943, or by the Board of Trade under the same Act after March 31 next, shall be charged on the Consolidated Fund and raised by borrowing rather than met out of the annual votes. I should say that the amounts and conditions of payments under the War Damage Act are not affected by this clause; the only change is the source from which payments are to be made after March 31 of this year. It is provisionally estimated that payments by the War Damage Commission amount to some £400,000,000, and by the Board of Trade to some £100,000,000, but the actual issues each year will be disclosed in the accounts rendered to Parliament under subsections (2) and (3) of this clause.

Clause 3 of the Bill increases the Civil Contingencies Fund from £1,500,000 to a maximum of £250,000,000. A repayment must be made of all such issues to the Exchequer not later than the last day of 1950. The increase in the Civil Contingencies Fund is necessary owing to the extraordinary times and circumstances in which we are living following the catastrophe of the war. The purposes for which this Fund, when so increased, may be used, fall under three heads. First, to advance funds for urgent services in anticipation of Parliamentary provision being made available; secondly, to provide working capital for a trading department; thirdly, to provide working balances, as distinct from the trading departments' working capital, for the operations of overseas branches of departments. Every transaction will ultimately come before Parliament for approval, and the provision here only makes it possible to anticipate Parliamentary approval. It certainly does not absolve the departments concerned from obtaining Parliamentary approval for what they had spent.

Clause 4 relieves the Defence Votes of their liability to repay the relatively small sums borrowed under the Defence Loans Acts passed before the war. As my honourable friend the Financial Secretary said in another place, it would be rather illogical if now, having spent vast sums on the prosecution of the war, these relatively minor payments still had to be met out of the Annual Defence Votes. The last clause of the Bill, Clause 5, provides for an increase of £500 per annum in the salary of the Comptroller and Auditor-General, bringing it into line with that of the heads of other principal Government Departments. I hope I have made the purposes of this Bill sufficiently clear to your Lordships to enable me to ask the House to give this Bill a Second Reading.

Moved, That the Bill be now read 2a.—(Lord Henderson.)

2.52 p.m.


My Lords, just as our good wishes go out to Lord Pethick-Lawrence on his journey, I think our sympathy goes out to the noble Lord who has had to move the Second Reading of this Bill at such short notice, as also it goes out to the noble Lord, Lord Pakenham, whom we very much hope to see back in his place. The noble Lord has been a very adequate substitute. He said quite rightly that this was a Bill which he thought your Lordships would pass. He was also modest and almost deprecatory in his commendation of the particular provisions of the Bill. He said he had never known a Bill before which covered a multitude—I thought for a moment he was going to say a multitude of sins; but it certainly does cover a multitude of potential sins in the way it is drafted. Quite seriously, it seems to me and I think it will seem to those of your Lordships who have studied this Bill, that this is a typical example of doing the right thing in the wrong way.

Of course the Government must have borrowing powers. We cannot balance the Budget this year and certain contingencies have got to be provided for. But observe how vast and how vague are the powers which this Bill seeks to take. In Clause I (I) powers are taken to borrow the whole of the money required for the whole of the Estimates of all kinds for the coming financial year. The noble Lord has said, no doubt quite rightly, that of course the total amount of borrowing power will not be needed and will not be used. Why, then, come to Parliament and ask for power to borrow far in excess of what it is either the need or the intention to use? I know the argument about anticipating the Budget statement, and I was going to say I will deal with it in a moment but let me deal with it now. Naturally the noble Lord cannot get up here and anticipate the Budget statement and tell us exactly how much is going to be met out of taxation and how much is going to be met out of borrowing, but we know that a large part is going to be met out of taxation, and surely without in the least anticipating the Budget—we have the whole of the Estimates for all the Departments before us; we have got away from the Vote of Credit now—it would be more regular and better, instead of taking this enormous and vague sum, to take some global figure which will cover what is estimated as likely to be required. I would say with great sincerity to the Government that appearances in these matters are very important when you are urging economy and efficiency upon everyone else. Not only is that power taken but another £250,000,000 is thrown in for luck apparently.


Good measure.


Good measure. In case the whole of the Budget expenditure, £4,000,000,000 or whatever it is, is not enough, let us have another £250,000,000 in the kitty. That may be the way the noble Lord conducts his finances, but it is not the way to conduct the finances of this country and it is not the way finances of great undertakings ought to be conducted.

By Clause 3 a further £250,000,000 is added to the Civil Contingencies Fund. That is why I say, though borrowing powers are necessary, this is doing the right thing in the wrong way. Let me put two or three propositions to justify that, from which I do not believe for one moment the noble Lord will dissent. In the first place, we are committed to an absolutely vast expenditure in the various schemes which either have been passed or are being passed. There are tremendous commitments which are going to be a great tax upon this country. I think if we all pull together we can bear it, but surely when we are committed in that way that does impose on all of us, and particularly upon the Government, the duty of strict economy and careful estimating in other fields. I said a moment ago that it was very important not only to do this in reality, but to give the appearance of it. We have got away now from the Vote of Credit of war-time and everything is, or is supposed to be, in- cluded in Estimates. That is in order that there may be a careful assessment of what is needed, that Parliament may know as far as possible before it votes the money on what it is going to be spent, and whether the Estimates are wisely and economically framed. This broad power to borrow up to the whole amount of Budget expenditure with another £250,000,000 added for luck or good measure, whichever you like to call it, gives the impression of very loose finance.


I do not want to interrupt the noble Viscount unnecessarily, but the £250,000,000 is for the gap between the end of the coming financial year and the introduction of another Bill providing money for these purposes. It is not for the coming financial year. It is not something lying around to be used if wanted.


I quite appreciate that, but there is a very considerable argument for saying that you should come to Parliament if and when you need it. I know there is a precedent for this, but the noble Lord is not going to be hidebound by precedent—at least I hope not, or he will not occupy for long his very elevated position in his Party. But it surely is sounder, instead of taking these sums which perhaps sound trivial today but which are pretty considerable sums, to come forward with a Bill for the amount just as this Bill is before us now, when the Government know what they are going to require.

Let me put another argument to the noble Lord which I am sure he will accept. We hope we are going to progress towards balanced Budgets. We cannot do it this year and probably not next year, but we do hope some day and as soon as may be to come to a year of balanced Budgets, if not balanced every year at any rate balanced for a reasonably short cycle. You do not, I submit, help to achieve the aim of balanced Budgets if you take borrowing powers far in excess of what is necessary. Let me put another proposition, from which, I am sure, the noble Lord, and I think probably most of his colleagues, if not all, would not dissent. Government borrowing ought to be the minimum of what is needed. A great deal of capital has got to be raised for industry. A strong appeal and a very proper appeal has been made by the Government to everyone in industry to go forward and do all in their power to produce goods. That is going to require a great deal of capital expenditure. Surely at such a time Government borrowing should not only be but should appear clearly to be the minimum of what is required for Government purposes, and should not have large uncertain balances left over. I think that it was Sir Michael Hicks-Beach who once said that getting estimates that a Department did not really require was like asking to be given a biscuit and then going about to find a dog to which to give it.

This kind of legislation in this form would certainly have come under "Black Michael's" condemnation. And the Government themselves have really endorsed all that I have said, because they are saying to industry to-day: "There must be control of your borrowing powers, of your powers to raise money. There is not enough credit to go round and meet all purposes, and therefore credit must be rationed. If you want to make a capital issue of more than £50,000 you must come and justify it to the new committee or committees which are going to be set up and to the Treasury" If that is what the Government are saying to industry to-day, surely they ought themselves to set an example. What would they think of an industry which was desirous of raising capital if its representatives said: "We know that we want so much, but we think that we may want a million or two more—we do not know" Of course, they would not be allowed to do that. Surely it is rather unreasonable to be taking up the attitude to industry which I have outlined, to put restrictions upon industry in the matter of borrowing and raising new capital, while at the same time the Government bring forward a Bill which gives them power to raise a great deal more money than they will need. I have dealt with subsection (I) (a) and I think I have met sufficiently the argument, which indeed had no reality in it, that you could not anticipate the Budget statement.

Let me now refer to Clause 2, which relates to the power to raise money for war damage expenditure whether on buildings or on chattels. Perhaps the noble Lord, when he replies, would clear up one point that was not quite clear to me when he quoted the figure of, I think, £400,000,000 as the amount of war damage. Half the contributions were made by the Government—that is roughly, I know. There are special provisions up to £200,000,000, but for all practical purposes, half is provided by the Government and half by the premiums which are charged. Did the noble Lord mean that £400,000,000 was the amount which would fall on the Government, or that that was the total amount which would fall on the composite fund?

Before I leave that, though I appreciate that this Bill does not deal with how and when the money is to be distributed, I think that I should have the sympathy of the House if I put in a plea that payment might be speeded up. It really is rather hard on people that payments should be delayed. All of us were compelled, and quite rightly, to insure our premises—houses, shops, or whatever they may be—but we have to wait for payment in respect of war damage although the Government have collected the money. The Government have had the money in the form of premiums, but the payment does not come speedily to those entitled to it although damage has been done. When you come to the insurance of chattels, that was an offer made to people and they were strongly advised to take advantage of it. "Here," said the Government—we were all together in it, I agree—"is a great opportunity. We give you the opportunity of insuring your household goods, so that if you are bombed you will be able to get money and buy some more."

I, personally, have been one of the lucky ones. I have not had my possessions bombed. But, as I understand it, you do not get the money when you are so unfortunate as to be bombed. It is said: "Well, there are not so many goods in the shops" But that is really no reason for not paying up. If goods are in short supply, they can be put on ration, as indeed they are. You cannot buy sheets and things of that kind without a docket. So, if this were done, people would not be able to get more than their share. But what does the noble Lord think would be said to an insurance company which had collected its premiums, and when an accident happened to a policy-holder, that is to say, an event happened in respect of which they had received premiums from the assured, the insurance company said: "We do not think that we are going to pay you for two or three years, although we have collected your money" The company would find themselves in Court at once, and judgment would be given against them. There are many things to-day that we put up with willingly, but it does make it harder for everyone if what they think are little injustices—and in many cases they are not so little—are added. So, I would, if it is not out of order—certainly it is not out of time—make an appeal to the Government to see if they cannot speed up the payment of this money.

I come, finally, to Clause 3, which provides for £250,000,000 being used for increasing the Civil Contingencies Fund. That seems a very large sum. Again, I know that there is a post-war precedent—I think it was established after the last war—for increasing the Civil Contingencies Fund, which is a very necessary Fund. But the Civil Contingencies Fund never has been regarded, and never ought to be regarded, as a substitute for Estimates. As I understand it, the object of the Civil Contingencies Fund is that if something sudden, unexpected and unforeseen happens which demands a payment then there should be the opportunity to pay at once where the payment can do immediate good—as a general rule it will not be anything very large—and to justify afterwards. I know of a case arising out of a hurricane in a Colonial Dependency. There may be similar cases in this country. Something happens where obviously humanity requires that a quick payment should be made; that is the kind of thing which ought to be dealt with out of the Civil Contingencies Fund.

The noble Lord spoke, I think, of trading accounts, and said that extra capital would be required. With great respect, I do not think that is a proper use to make of the Civil Contingencies Fund. It seems to me, if the Government are going in for these great trading businesses, that it becomes all the more important that they should estimate correctly, and that what they desire to spend should be shown in the Estimates, and not, as the noble Lord says, after it has been done, it may be long afterwards. Supposing that a trad- ing department has made a wrong Estimate, and finds it cannot realize some of its assets as quickly as it had expected, or that world prices have moved and that a larger sum of working capital is needed, then I submit that now we have got back to Estimates we ought to follow the ordinary recognized peace-time practice of producing a Supplementary Estimate for that. We ought not to create a reserve fund of £250,000,000, which any department can draw on if it has estimated badly or finds it has expenditure which it has not foreseen, without any Estimates given to Parliament, and merely come to Parliament maybe long after the money has been spent.

I have dealt with this Bill at greater length than the noble Lord who introduced it, because while your Lordships no doubt will pass it, I do think it does involve really very important principles and very important practice. I am sure that the noble Lord will agree with me when I say that there is great importance (I dislike the word but it becomes a cliché) in the "atmosphere" which you create, the impression which is created in the country, the impression indeed which is created in your department or your own business. If the impression gets abroad that there can be a loose estimate, that there is a comfortable sum of £250,000,000 (or whatever it may be) on which you can draw, if you have been either extravagant, or improvident, or bad in your forecasting, whether in a Government Department or business, or your own ordinary housekeeping accounts, it is a thoroughly bad thing. The country cannot afford this at the present time either in the Government or in business. It is because this Bill is so loosely drawn and takes much wider powers than are required that I am very much afraid that kind of thing is going to give the wrong impression in the country. I must say I do profoundly regret that the Bill has not been drawn more straitly and more strictly to meet what are the legitimate needs of the Government.

3.15 p.m.


My Lords, I am sure that all of us will agree with the general principles, or at any rate with some of the general principles enunciated by the noble Viscount in his speech. I feel, however, that he was labouring somewhat under heavy weather when he tried to make out a case against the Government for seeking these borrowing powers in Clause I. During the war these borrowing powers have been given to the Government year by year. It is true that the war is over, but I would ask your Lordships to remember that we are not back to normal peace conditions yet. We are in what is usually called a "transitional" year, and because of the transitional conditions I think that the Government can make out its case for again asking for conferment of these powers. It is perfectly true, as the noble Viscount said, that the powers would in theory enable the Government to borrow up to the whole amount of its requirements in theory. In practice that would not be the case at all. The practice would be exactly the practice which has been adopted during the war. The borrowing is required to meet the deficit between revenue and expenditure as approved by Parliament, and the amount that will actually be raised under this authority will depend on the revenue deficit of the year.

There are hopes—at any rate, it was said in another place that the Chancellor of the Exchequer confidently expects—that during the next financial year, that is 1946 –7, the proportion of Budget expenditure to be met from borrowing will be appreciably less than it will be in the present financial year. Having said that, I do not think that your Lordships need have any fear that the powers which you are asked to confer upon the Government will be used in any other way than has been specifically declared, both in this House and in another place, and as is indicated in the terms of the Bill itself. The noble Viscount asked me about payments for war damage. The actual position I understand is that all contributions as they were paid were taken into revenue. There is no fund. The whole of the £400,000,000 must be raised and issued. It is with that in mind that the provision is included in this Bill. There was another point which the noble Viscount raised, and that was with regard to the advances made for trading departments.


Before the noble Lord leaves that, I asked him if he could give us any hope of payment because he will hardly advance the fact that he or we spent the whole of the pay- ment as a reason for not paying anything out under the policy.


I apologize; I had overlooked that point the representations which the noble Viscount has made will be on the records of this House, and I will see they are brought to the attention of the Chancellor of the Exchequer. That is all I can undertake to do at this moment. With regard to the last point raised by the noble Viscount, namely, the question of trading—


We ought to have a proper estimate.


The noble Viscount with his experience of the Board of Trade knows perfectly well that it is not possible in existing circumstances to indicate or to estimate precisely what trading departments may require. There is nothing new in what the Government are proposing. It is true that the amount is, £1,500,000 at the present moment. It is true that it is proposed to increase it to £250,000,000. But I would remind the noble Viscount that at the end of the last war similar action was taken and the amount on that occasion was £120,000,000. I am sure that all noble Lords in all parts of the House will agree with me when I say that the conditions in which we live at the present moment are infinitely more difficult than those which followed the last war and it is far more difficult in the present circumstances to estimate for the future than it was at that stage. The Government of that day thought it necessary to have £120,000,000. The Government of today for equally good reasons think it desirable that there should be a fund of £20,000,000. I hope your Lordships will accept the recommendation of the Government.

I would only add one point which I think may be of interest to the noble Viscount. The question was raised in another place, and I think it has a bearing on this matter of the moneys advanced in this way. The question was raised about publishing trading accounts year by year. It was indicated in another place that the Government hoped as soon as circumstances permit to restore the normal practice of submitting trading accounts as was the case before the war. I think I have covered all the points which have been raised. My noble friend opposite may not be convinced, but I think I have given reasonable answers to all the points raised.

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