Orders of the Day — Finance Bill.

Part of the debate – in the House of Commons on 26th May 1938.

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Photo of Mr Albert Alexander Mr Albert Alexander , Sheffield, Hillsborough

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof: this House regards with concern the continuing policy of unbalanced Budgets, and cannot assent to the Second Reading of a Bill which, while permitting excessive profits on rearmament and subsidies to private industry to make increasing inroads on the public purse, penalises road transport and adds to the already heavy burdens of people of small means, instead of raising the necessary revenue from the taxation of great wealth. We, as a House of Commons, have had a few weeks since the introduction of the Budget by the Chancellor of the Exchequer to consider in somewhat more detail the financial position with which the nation is faced, and I am bound to say that the more time one has for reflection upon that position, the more serious the outlook appears to us to be. We are faced in Europe to-day with a very serious position. We speak almost daily of international crises, and one cannot possibly separate the difficult international position from the problem of finance which the country has to face. It is hardly more than rough justice that the present Chancellor of the Exchequer should find himself compelled to bear the burden in the House of Commons of responsibility for the Government's proposals for the finance requisite at the present time, because he had so much responsibility for the foreign policy in the last six years which has contributed to the difficult situation which we have to meet.

The financial crisis on which I desire to speak to-day-it is certainly a financial crisis that the nation is called upon to face-is in' large degree subject to two main causes. It is very largely due to the special contribution which His Majesty's Government call upon the country to make for armaments and, secondly, it is due in no small degree to the fact that ever since the National Government have been in office-even during the years when the present Prime Minister was Chancellor of the Exchequer—they have failed, in spite of the original purpose of their election in 1931, to deal with the finances of the nation on the basis of balanced Budgets. We make the first and the primary point in our Amendment the serious position which is created by this continuing series of un balanced Budgets, and at the outset this afternoon I wish to examine briefly the situation which has been created in that respect.

In 1931, when the Labour Government went out of office, there was a total dead weight of National Debt of rather more than £7,400,000,000. To-day, before we begin to speak of the borrowing which will come in the present financial year, if I read the figures aright, the national dead weight debt stands at over £8,000,000,000 —£8,026,000,000. We have, therefore, over £600,000,000 increase in the dead weight debt. One of the answers that is made from the Government Bench is that we must not overlook the fact that the figures in the dead weight debt include the extent to which public credit has been used for financing the Exchange Equalisation Fund. I do not think the House as a whole is very happy about the position of the Exchange Equalisation Fund. It is true that we are indebted to the Chancellor of the Exchequer for having met a promise to submit certain information, which I gather is rather old, to the Public Accounts Committee, but the House itself has no real information as to what the ultimate position is likely to be in respect of the £550,000,000 which has been met from public credit in order to manipulate our position in relation to the pressure which arises from time to time from different international sources in regard to our exchange. The fact that we have to face is that we have not been able to provide for that work out of revenue. We have had to add to the National Debt the figures required for that purpose. We are, therefore, faced to-day with an increase in the National Debt already of over £600,000,000.

The Chancellor of the Exchequer has been quite frank and honest about the present Budget, and that is one of the few things on which I can be complimentary to him. He admits that the Budget is not balanced, that even before the special steps were forshadowed by the Prime Minister, arising out of the annexation of Austria by Germany, we had projected borrowing £90,000,000 in the current financial year for armaments, which we could not meet out of revenue, and we have to face, in addition, the cost of Supplementary Estimates for the increased effort, the provision of funds for air-raid precautions and to meet any necessary charge which may arise during the financial year in regard to food storage. It seems clear to me, therefore, that the sum to be borrowed will not be £90,000,000, but is much more likely to be £115,000,000, and may reach £120,000,000. Therefore, at the end of the current financial year, on 31st March, 1939, it seems to me that the total dead weight debt will already have reached a figure of round about £8,150,000,000.

The total cost of the armament programme was originally estimated at £1,500,000,000, but almost every authority who has examined the proposals of the Government admits that the cost will be much nearer £2,000,000,000. We have to contemplate borrowing another £300,000,000 or £400,000,000 in the course of that programme. That means that, even as we hope may be the case, if the international situation may become so auspicious that we can rest upon our armaments provision, we shall have a total dead weight debt of something like £8,500,000,000 to £8,600,000,000. That is an extraordinary position for the country to have to face at the end of eight or nine years of a National Government, which claims to be national because it is said to represent all parties—a Government which was brought in for the specific purpose of restoring financial confidence and financial stability and the return, as was said in 1931, to ways of orthodox finance. When I consider the relationship of the picture we have to face today with what were the circumstances in 1931, then I say that the financial crisis we have to face to-day is far worse in proportion and far more difficult and serious in its nature, because of the way in which revenue resources have already been tapped by the Government, than was the position in 1931. It is to that situation that we want the House of Commons to address its mind to-day.

Let me examine the position for a moment. I have said that in 1931 our total deadweight debt on national account was just over £7,400,000, but in regard to revenue resources to be tapped to meet the demands at that time let us consider the situation in relation to what it is today. The Government come before us with a Budget which has raised Income Tax from 4s. 6d. to 5s. 6d. in the £. In addition, it has added to the burden of Income Tax the National Defence Contribution of Is. in the £ on practically all industrial and commercial profits. It is therefore, over a wide field of the ordinary Income Tax revenue producing resources, a tax of 6s. 6d. in the £. But in addition, following the fiscal policy for which it had no real mandate in 1931 but which it has steadfastly pursued, it is raising from the general taxpayer, from the consuming public, something like £110,000,000 a year more in taxation of commodities than was raised from that source in 1931. It is doing that in spite of the fact that in the interim it has had the good fortune to convert £2,000,000,000 of War Loan stock at an annual saving of £30,000,000, every penny of which apparently for the last five and a-half years has been liquidated in current expenditure.

Let me add something else. I come back to a point which was the subject of a little exchange of views between the Chancellor and myself at the end of his wind-up speech on the Budget Resolutions. When the Labour Cabinet met in the time of the so-called crisis of 1931 it was presented by the Treasury with a Bill which the Treasury said the nation had to meet.