That, for the purposes of any Act of the present Session relating to insurance against unemployment, it is expedient—
I beg to move, in paragraph (2), to leave out the words "and interest on" ["the principal of and interest on any such securities"].
Then I shall propose, at the end of the Resolution, to add the words
the interest on any such securities not to exceed the rate of four per cent.
The purpose of these Amendments is one which I have been putting before the House by questions and in other ways for the past year. I fail to see why, with the money market as it stands, the Government should continue paying higher rates
of interest than are necessary on money borrowed to carry out certain things which have to be done by the Government in the country. By a reduction of 1 per cent. on the amount the right hon. Gentleman requires, as suggested in the Amendment—because the Consolidated Fund Bill agrees to pay a sum not exceeding 4 per cent.—there will be a probable saving of £300,000. In these days, when the Government are constantly talking of economy, when Committees are reporting in favour of cuts in various Departments, when Members in all parts of the House—and I am glad to see the right hon. Baronet the Member for the City of London (Sir F. Banbury) in his place, as I am certain as an economist he will back me up in the Amendment I am moving, because it proposes to save money for the community—when Members in all parts of the House are preaching economy, we shall, by accepting this Amendment, effect the result aimed at in every direction by those who are advocating economy and saving. The Government itself has in various methods, and the Government spokesmen have in various speeches pledged themselves to economise. I am suggesting a way in which they can do it.
I know it has been said in other matters in which a reduction of interest has been suggested that that would be a repudiation. Such an argument cannot be advanced against this Amendment, because in this case it is proposed to raise new money, consequently the rate of interest being paid on sums already borrowed by the Government will not be affected. A certain amount of money is required to be borrowed in order to carry out the purposes of this Fund. £30,000,000 has been mentioned as the figure. I imagine that not nearly that amount will be required, since part of it has already been borrowed and spent. Of course, that may reduce the sum which I suggest can be saved by the reduction of interest. Nevertheless, the main purpose I have in view is to have some Government Department commencing this policy of paying no more in interest than is absolutely necessary. The Bank rate has been reduced within the past few months by 2½ per cent., but we are still paying the same rate of interest as before the reduction of the Bank rate. [HON. MEMBERS: "NO!"] Yes, we are, according to the statement of the Chancellor of the Exchequer, who ought to know, and the Geddes Report, which has been submitted to this House by gentleman renowned for their business capabilities as well as their wonderful financial interests. I am prepared to take the word of those experts, as much as that of amateurs like the rest of us in this House who were not on that Committee. The Bank rate having been reduced, and also the rate of interest on deposits in banks, I cannot see any justification for the Government's offer to pay the same rate of interest on money that they want to borrow to-day as they were paying in 1919, and even in 1918, the last year of the War. [HON. MEMBERS: "NO!"] My hon. Friends will have their opportunity when I have finished, and perhaps it will be better if, rather than merely interjecting "No," they produce some evidence. The rates of interest in other categories have been reduced, and I cannot see why this Government, pledged as it is to economy, should continue to pay the higher rate. The policy of the Government ought to be to secure for itself money at the lowest rate possible. [HON. MEMBERS: "Hear, hear!"] I am glad that my hon. Friends agree now, and perhaps we shall find them in the same Lobby with us when the Division comes. Precedent for similar action has already been established by this House in previous Parliaments, when it has been shown how the matter can be solved. The Government itself, with all the resources of the country behind it as security, is surely in a position to borrow money more cheaply than any other body in this country, either municipal or business. The rates of interest on Government securities have generally been lower than upon industrial securities, but the rate of interest to-day, even in the case of those securities which have not been converted, is already too high in view of the reduction in the price of money and in the cost of living. It may be utterly a heresy, so far as it affects the financiers of this House, but I fail to see why the taxpayers of this country should be invited to pay a higher rate of interest than is absolutely necessary. [HON. MEMBERS: "Hear, hear!"] I am prepared, if it be found impossible to get money at the Tate of interest that I suggest, to take it at whatever rate can be got.
I know it is not the Amendment, but I am putting in a saving Clause. I am making that statement to the House because I do not wish anything to interfere with the payment of unemployment benefit. It is purely an expedient, not a matter of principle. I do believe that the money can be obtained for this lower rate of interest. I have already pointed out to the House that the French Minister of Finance has announced that he is only going to pay 3½ per cent. upon any new issues of National Defence Bonds and Treasury Bills issued by the French Government. [HON. MEMBERS: "What is the price of issue?"] I am stating the rate of interest. The price at which they are going to be issued has not been announced. [HON. MEMBERS: "Hear, hear!"] The Minister has simply stated to the general public and the investing public that he is not going to pay more than 3½ per cent. Hon. Members seem to think it a matter for rejoicing that we should go on paying high rates of interest. Men who in this House at other times boast about their business acumen and pose as great financiers, telling the House that it ought to economise and giving the Government the benefit of their business qualities and experience, now sneer and scoff at the idea of a lower rate of interest upon moneys that are to be borrowed by the Government. [HON. MEMBERS: "No!"] I may be wrong, but that, at least, is how it appears to me. I am approaching this subject from the point of view of one who moves among the people, and who finds a great deal of criticism directed against the Government for continuing the payment of high rates of interest, and it is as one of the people, and as a representative of the public that I am putting this Amendment forward and carrying on the campaign. I am doing that interest upon money that is borrowed to carry on Government schemes should be at a lower rate than is being paid at present. That is surely a perfectly straight and clear issue. [Interruption.] If you want money you know where you can get it.
It is for the Government to say they cannot get it. If I were in the Chancellor's shoes, I would get it for a great deal less. [An HON. MEMBER: "Would the Co-operative Societies lend it at 4 per cent.?"] Cooperative Societies pay even less than 5 per cent., and many are paying less upon the money invested in their shares. There are in the Savings Banks several hundreds of millions belonging to the working classes upon which only 2½ per cent is being paid.
Why should you offer 5 per cent. to the financiers when you are only allowing the working man 2½ per cent.? You are only paying 2½ per cent. to the working men who invest their savings. There are millions which can be obtained by the Government if through the Post Office they would offer a higher rate of interest. If they would offer 4 per cent. on money deposited in the Post Office Savings Bank, they would get all the money required to carry on these schemes. There is no use in saying you cannot get money unless you pay more than 4 per cent. The thing is absurd and hon. Members know it. They represent the financial classes. They are here to get the highest rate of interest they can for the people they represent and move amongst. Then surely I am equally interested in saying that the people who are to bear the burden of paying the interest are not going to be taxed the heaviest amount possible when it is possible to get money at a lower rate of interest.
I beg to second the Amendment.
Hon. Members will recollect the sacrifice made by the taxpayers to preserve the financial stability of the banks in the first hours when the War broke out. If an estimate was made of the exact amount of money it cost the British taxpayer to preserve and carry on the moratorium, running into hundreds of millions, I should have thought those great bankers, who have emerged not only unimpaired but with greater resources and greater profits than any other section of the community, might very well have saved the necessity of the Amendment by saying to the Government that on an issue such as this, for a cause such as this, they would lend the money at such a rate of money as would merely repay working costs. With conditions so desperate as they are to-day, it will mean millions of pounds to those who only open their doors at the bidding of so much per cent.
I am certain that if we could get a little of that common patriotism which is so often spoken of and demanded of other sections of the community, it would not be necessary to move such an Amendment as this. The Government should have regard to the money deposited by the common people in the Post Office. We may be wrong in our views and we do not claim to be right, but we do ask of the great financiers who sit in the House and jeer, that, for the benefit of the layman and of the man who has come from the mines, the lathe and the dock, and does not understand all the intricacies of finance, they shall, in order to disarm suspicion, point out what crude financiers we are and how it is impossible that money can be got as we have suggested. That might save time. We do not get up for the sake of wasting time, and we do not repeat ourselves. Here is a unique opportunity to convince the laymen on this side of the House that our proposition is fundamentally unsound and is based on an utter misconception of the working of the financial system. During the Debate on Wednesday night the hon. Member who moved this Amendment "drew" the Minister of Labour on one or two of the proposals that are to eventuate in the near future. If necessary I could quote resolutions that have come to me within the last 48 hours as a result of that Debate. Under the unemployment benefit scheme it is proposed automatically to disqualify 90,000 men who have been receiving benefit.
The excursion of the Mover of the Amendment into the realms of finance leaves a little to be desired in the way of practicability. He used the expression "If I were in the shoes of the Chancellor of the Exchequer."
My imagination fails to conceive what would happen after that. As the guardian of this Fund, I cannot resist the inclination to thank my hon. Friend for his anxiety on behalf of the Fund. I do not think he realises what he is doing by this proposal. Perhaps I had better read the last paragraph of the Financial Resolution:
and to borrow money for such advances by the issue of such securities as the Treasury think proper, the principal of, and interest on, any such securities to be charged on and payable out of the Consolidated Fund or the growing produce thereof.
The two Amendments of my hon. Friend the Member for Govan (Mr. N. Maclean) would make it read this way:
the principal of, and interest on, any such securities to be charged on and payable out of the Consolidated Fund or the growing produce thereof, the interest on any such security not to exceed the rate of four per cent.
That is how the Resolution would be reconstructed. My hon. Friend wishes to see to it that I should not have to pay more than 4 per cent. for money which I borrow from the Treasury and that might be all right as far as it goes. It would save me about one per cent. on what I have now to pay in respect of borrowed money. But my hon. Friend knows, that by his Amendments he is doing much more than that. His main purpose I have indicated, but in order to carry it out, the Treasury must go into the market for this purpose and borrow the money at 4 per cent. and thereafter, I should only repay the Treasury at the same rate for the money which I want. If the Treasury went into the market for the purpose of raising this particular Fund, they would not get any money at all. My hon. Friend dwelt upon the necessity for economies, but he will see that his economy, in this instance, would be at the expense of the people who are going to receive benefit. Observe what the Actuary's Report says:
The rate at which the debt will be repaid must, of course, depend upon the course of unemployment and the conditions governing receipt of benefit, but so far as can be seen at present, it is unlikely that the Fund will become solvent until several years after July, 1923.
Does anybody suppose the Treasury or anybody else will go into the market for what must be a long loan on such terms? The actuary's words are, "unlikely to
become solvent until several years after July, 1923." Here is a reason of practicability which I must consider in my fiduciary capacity. It is a long loan, and how can it be advanced at 4 per cent.? I do not suppose my hon. Friend really contemplated that. His main purpose is that I shall not pay back to the Treasury at more than 4 per cent., but that is not the only result of the Amendment. The Amendment is far more sweeping than that, because it would mean in effect that the Treasury should go into the market for a money loan which would not be repaid in any case until several years after July, 1923. As an hon. Member said, they could not get sixpence.
I think my hon. Friend was a little uneasy upon that point, because he made a statement to the effect that if it could not be done or was impracticable, he did not wish to be charged with robbing people of their benefit. As to the other point about the repayment to the Treasury at 4 per cent., even if that were feasible, look where we should be. Every social service which requires a loan to carry on its operations could come at once and say, "We also want 4 per cent." Does the hon. Member carry in mind the charge involved against the Treasury by a difference of 1 per cent.? The figure of £300,000 has been mentioned. That may be right—I will accept the figure for the purpose of this argument. Take only the narrower point as to the repayment of the loan, and leave out the broader point, that the proposal is outside the region of practicability altogether. What charge would there be on the Treasury? Why, all the other dual services, such as the Ministry of Health, would all demand the same terms and, from the point of view of business, it would be quite impossible. I hope, for he sake of my hon. Friend's future success in the shoes which he suggested he might some day occupy, he will not press this to a Division.
An hon. Member opposite said he would like a little explanation about this and I can give him an explanation in the course of two or three minutes. With regard to the Post Office Savings Bank, he does not seem to be aware that the whole of that money is already in possession of the Government, except for some little floating balance kept to pay out money on demand. He does not understand the difference between the taking of money repayable on demand and the taking of money for a long period. Supposing you were to raise the interest of the Post Office Savings Bank from 2½ per cent. to 3½ per cent. and that that attracted a large amount of money. What would happen if, owing to some strike or lock-out or anything else it was necessary for all the people to withdraw their money? They would have the power to withdraw it at two or three days' notice, and where would the Bank get the money? The Yorkshire Penny Bank is an instance of it. Some 10 or 12 years ago they gave some 2½ per cent. or 3 per cent. on deposits, repayable on demand, and they invested their money in very first-class securities which gave them ½ per cent. more. But these were long securities, and for a variety of causes there had been a fall in the value of long securities, and they could not realise when the demand came, and they had to go to the other banks to help them out of their difficulty, and the bank has practically closed. It was absolutely well conducted, but in the wrong way, on the belief that you can take money repayable on demand and realise it again on a long security, and that is what you cannot do. I do not know whether the hon. Member for Dartford (Mr. Mills) has understood it, but if not and he applies to me some day in the Lobby I shall be glad to explain it.