Expenditure Arising Out of the War.

Orders of the Day — Supply. – in the House of Commons on 10th March 1942.

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Motion made, and Question proposed, That a Supplementary sum, not exceeding £250,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1942, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made therefor by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war.

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I would suggest that with the approval of the Committee we should take this Supplementary Vote and the Vote of Credit for £1,000,000,000 together. We have done it on previous occasions, and it has met the general convenience.

The Deputy-Chairman:

I think that will be quite convenient to the Committee.

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

The Committee will recall that when on 26th December last I asked for the fourth Vote of Credit for £1,000,000,000 for the financial year 1941, I explained that it was impossible to say with certainty at that point of time whether the sum for which I was then asking and which, with the earlier Votes which had been agreed to, made up a total provision of £4,000,000,000, would prove sufficient to meet our requirements till the end of the current financial year—that is, to the end of the present month—or whether I should have to come to the Committee again at about this time for a further Supplementary Grant. It is now clear that the £4,000,000,000 which we have already had will not be sufficient to carry us all through the year, and after most careful examination of the figures of current and probable expenditure, I have come to the conclusion that I must ask the Committee for a further Grant of £250,000,000 in respect of the financial year now nearing its close. Of the £4,000,000,000 already voted this year, we had up to last Saturday, 7th March, issued from the Exchequer some £3,770,000,000. In addition, some £110,000,000 has been expended from balances of the previous year's issues, and this sum also has to be covered by the current year's Supply grants, with the result that we must regard the true figure of expenditure to date as £3,880,000,000. During the past six weeks our total expenditure has been at the rate of about £14,500,000 a day. We have been spending from the Vote of Credit at the rate of approximately £88,500,000 a week, or about £12,500,000 a day, of which the Fighting and Supply Services account for £68,000,000 a week, or nearly £9,750,000 a day. It may well be, as the Committee will appreciate, that this rate, considerable as it is, will show a still further rise in the next few weeks. While it is permissible to calculate requirements on the basis of average expenditure over a period of weeks when one is dealing with fairly lengthy periods, the Committee will appreciate that this method is not appropriate in dealing with the restricted period of three weeks which we now have to consider, and I must allow some margin to provide against extreme fluctuations of demands by the Departments in this particular period. With all these considerations in mind, I have reached the conclusion that I must estimate the requirements of the Vote of Credit for the current year as being not less than £4,250,000,000, and I accordingly ask the Committee to approve the Estimate now before them for the net sum of £250,000,000.

The Committee will notice that I have used the word "net" in referring to the amount of this Estimate. This is because, in arriving at the figure at which we have estimated our requirements for the year as a whole, we have made a deduction in respect of surplus receipts (that is, receipts in excess of expenditure) on certain Services, mostly of a trading nature, which are directly financed from the Vote of Credit. Some of my hon. Friends will no doubt remember that in the last war it was the practice to allow surplus receipts of this sort to remain in the hands of the Departments to be used towards meeting subsequent years' expenditure on the respective services, but on reconsideration of the point in connection with the arrangements for the present war it has been thought preferable, and certainly more in accordance with modem accounting principles, to bring these credit items to final account within the year of realisation in a way which preserves the essential flexibility of the Vote of Credit machinery and at the same time presents to Parliament a clear picture of net cash requirements year by year. I may say that for the current year these surplus receipts are expected to amount to about £25,000,000.

If the Committee agree to this Vote of £250,000,000, it will, as I have already said, bring our total grants for Votes of Credit for the current financial year to £4,250,000,000. In that connection I should like to recall the figures which I quoted to the Committee a year ago when I was asking for the final Supplementary Vote for that financial year. I then pointed out that the Votes of Credit of that year would reach the figure of £3,300,000,000, whereas in the last war the largest sum granted was £2,500,000,000, in 1918, though this was not all spent, owing to the conclusion of the war in that year. We have, therefore, now left still further behind the highest amount of expenditure in the last war, and our requirements continue to increase. I would also again draw the attention of the Committee to the continuing growth in the daily rate of expenditure in the present war. Two years ago our daily rate of expenditure was £5,000,000, £4,000,000 of which was for the Fighting Services. A year ago that rate had risen to over £10,500,000, of which £8,000,000 was for the Fighting Services. To-day., we are spending on the war about £12,500,000 a day, of which nearly £9,750,000 is for the Fighting Services. Our daily expenditure is, therefore, two and a half times greater than it was two years ago, and in the last year has increased by no less than £2,000,000 a day. Even if the size of this increase is difficult sometimes to comprehend, we can at least appreciate these comparisons which I have given to the Committee, and can at the same time mark the magnitude and the considerable increase in our war effort which they reflect.

Photo of Mr Henry White Mr Henry White , Birkenhead East

Will the Chancellor of the Exchequer indicate whether those global figures which he has mentioned include anything in connection with the Lease-Lend expenditure?

Photo of Mr Henry White Mr Henry White , Birkenhead East

If so, the effort is really very much greater.

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I think what I have said is correct, but I will verify the point. I now turn to the requirements of the coming financial year, 1942. Before very long it will be my duty as Chancellor of the Exchequer to present a full account of the financial out-turn of the present year and my forecast and proposals for the year 1942. I feel sure the Committee will agree that this is not the appropriate time, but that the annual Budget statement will present a more suitable opportunity for giving my estimate of the rate of expenditure which the war may impose upon us during this critical year. For the moment I am asking for a vote of £1,000,000,000 to carry us through the opening months of the year, and at the present rate of expenditure this will probably be exhausted by about the middle of June.

I have, as many of my hon. Friends on the Committee will recall, when presenting successive Votes of Credit on previous occasions, endeavoured to give the Committee a reasonably complete picture of the general financial situation, but in the present instance, when we are within a few weeks of my Budget Statement, the Committee will, I know, appreciate the reason if I refrain from going into details other than those directly associated with the Vote of Credit. I think I have said enough for the Committee to realise that the task of the Chancellor of the Exchequer does not lighten with the development and extension of the war effort, and I need only now say that, as regards expenditure, it remains a paramount necessity that the money provided for the war effort should be wisely spent, that consumption should be reduced as a national duty, that all extravagance and waste should be eliminated, and that no Government Department or undertaking and no individual servant of the Crown, or any other person, should be open to the reproach of squandering public money or dissipating materials and man-power available for the war effort.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Take a look at the advertisements.

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

For the rest, my main preoccupation must continue to be the avoidance of inflation. Without in any way falling into the error of anticipating my Budget statement, I may say—and it will, I think, be obvious to the Committee from such signs and portents as are available for them—that in this respect we have not been unsuccessful. Much remains to be done, and we cannot afford to relax, but against the rising figure of war expenditure we can certainly set such factors as the buoyancy of the revenue and the continued progress of the National Savings Movement. We are in the midst of a strenuous campaign of Warship Weeks. These weeks, whatever may be said of them by way of criticism in certain quarters, serve greatly to bring home to the people of our country the great importance of saving, and they certainly lay the foundation of that regular weekly saving which is so vital to the maintenance of a firm financial front and thereby to the success of the war effort and the security of our people. The National Savings Movement has done much to bring home to all of us that it is our duty to refrain from all unnecessary expenditure and to restrict our consumption of goods and services to the absolute minimum. That, I think, is a lesson which cannot be taught too often. It is a theme the truth of which is becoming more and more self-evident with the progress of the war, and it is a touchstone of our success or failure in the financial sphere. I am confident that here, as elsewhere, the spirit of our people will be equal to the task with which we are faced and that they will be only too willing to play their full part in these matters which are so vital to the successful issue of the war. I would like, in conclusion, to say that I confirm the statement of my hon. Friend the Member for East Birkenhead (Mr. Graham White) that the Vote of Credit figures do not include the assistance which has been obtained under the Lease-Lend arrangement and if that is taken into account, it means, of course, that our war effort is so much more than appears from the figures which I have presented to the Committee.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

We have listened to-day to the Chancellor of the Exchequer with the grave words of the Foreign Secretary still ringing in our ears—words which have sunk deep into our hearts, and will sink into the hearts of all the people of this country and make them realise, to a greater extent than ever before, what this war is being fought about and how it is necessary to prosecute it to a victorious end. The Chancellor, naturally, has not seen fit to-day to go into those details with which he has enlightened the Committee when presenting Votes of Credit on previous occasions, but I should like to ask him, and perhaps he will reply to me either at the end of this Debate or at a subsequent stage of the proceedings on this Vote, certain questions as to the com- parison of expenditure now with that in the previous war. I think we are coming very near the time when the Votes of Credit which have been issued in connection with this war will equal the total of those issued in the war of 1914–18. It would be interesting to know whether in these two Votes that are being considered we have reached or surpassed the total figures for the previous war. I should imagine that in the three years of war which will have nearly elapsed when the second Vote of Credit which we are being asked to approve has come to an end, we shall have reached a figure somewhere near the total expenditure in the war of 1914–1918.

Now I come to the yield of the revenue during the current year. I think we must all congratulate ourselves on the fact that, already, several weeks before the end of the financial year, the anticipated revenue has actually been attained. It would be interesting to know from the Chancellor whether in any previous year in the history of this country, the whole of the revenue for the year had already been reached some six weeks before the end of March. Of course, before we indulge in any complacency on this matter, we have to remember that expenditure has also gone up by leaps and bounds. Although the revenue will greatly exceed the Chancellor's estimate, the amount by which expenditure will be in excess of the estimate will, I fear, be even greater, and we shall therefore have a larger deficit on the year than the Chancellor of the Exchequer foretold. But the buoyancy of the revenue illustrates a point to which I have referred on previous occasions and which continually needs explanation to the general public. They always find a difficulty in understanding how it is, when we are making these enormous demands, that the tax revenue not only fulfils the estimate of the Chancellor, but exceeds it by such a large amount. Of course, the two facts are inter-related. The enormous expenditure of the State goes to individuals in the form of incomes and therefore provides them with the wherewithal to pay their taxes and to pay them with promptitude and in some cases to pay in excess of what has been anticipated.

Photo of Mr Andrew MacLaren Mr Andrew MacLaren , Stoke-on-Trent Burslem

The dog feeding on its own tail.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

That is so, and that is not anything to be particularly complacent about. As my hon. Friend points out, it is something in the nature of the dog eating its own tail. In spite of the good position of the revenue, it is essential that the public of this country should still put every effort into the Savings Campaign. The Chancellor of the Exchequer has properly stressed the importance of that campaign, and no doubt he will continue to stress it as the year goes by.

I am glad to realise from what the right hon. Gentleman told us to-day that the avoidance of inflation is a matter with which he is still very much concerned. We have met a considerable part of our war expenditure out of tax revenue, but only a very small part, really, when all is said and done. The avoidance of inflation must depend not only upon the success of our tax revenue, but upon the campaign to bring in war savings. For that reason, in spite of what must appear to the public as a sort of necromantic finance, it remains essential for the public to do their part in strengthening our position and preventing inflation, and that can be done only by economising in everything that is unnecessary for the purpose of sustaining a healthy life.

Photo of Mr John Wardlaw-Milne Mr John Wardlaw-Milne , Kidderminster

I agree fully with what was said by the right hon. Gentleman who has just spoken; it is a little difficult, in the circumstances of to-day, to think seriously about questions of finance. There is no question that the money for which the Chancellor asks must be found. I think the Committee should give attention, however, to certain points which the Chancellor touched on, particularly in regard to inflation, in connection with the raising of these very large sums of money. It has always been said that lack of money never prevented any country from going to war. I suppose the financial condition of Germany was one of the reasons why our pundits who looked at these matters closely in pre-war days thought that that country would never be able to wage war. It is perfectly true that lack of money does not make it impossible for any Government to go to war. [An HON. MEMBER: "It needs only raw materials and labour."] Certainly the astronomical figures of our present-day finance reveal that finance has little bearing upon our own ability to wage war.

With that fact in mind, I am bound to say that it is not amusing to look back to the years before the war, and to remember that Chancellors of the Exchequer in Governments of all kinds and parties steadfastly refused to devote what to-day seems the miserable little sum of £100,000,000 for Empire development, money which would have brought us a definite dividend. No Chancellor of the Exchequer, whatever his political faith, was even able to think of making Empire development in this way a charge upon the national revenue. In considering the money being provided in these days, we have to keep in mind two very important aspects of the question. The first is whether we are spending the money wisely, and the second is what effect this expenditure will have upon our national finances after the war.

As to the first matter, I can only say what I have said before, that the very hard-working Members of the Select Committee on National Expenditure do their very best, within the terms of reference which the House has granted to them, to see that the Chancellor of the Exchequer is advised where waste is taking place. I think that is very good work, but, after all, they can only report to the House; the House itself is the real guardian against waste and cannot pass on that responsibility. In the present financial situation, the Government could do more to bring home to the people the absolute necessity for avoiding extravagance. For too many people do not realise yet the seriousness of our position and the urgent necessity for economy in every direction. War Weapons Weeks and appeals to save are excellent, but there is still more that the Government could do. Some people live in the happy idea that war-time is an awfully good time. They are doing well because they are getting good wages or good profits. It is a first-class show: why interfere with it?

Photo of Mr Andrew MacLaren Mr Andrew MacLaren , Stoke-on-Trent Burslem

That is a fine reflection upon peace.

Photo of Mr John Wardlaw-Milne Mr John Wardlaw-Milne , Kidderminster

It is the duty of the Government to bring home to the people a real idea of what war means. The second aspect is our post-war position. I read in the papers the other day that a member of the Government said that certain Ministers had been asked to consider post-war conditions, and, that being so, the rest of them had better get on with winning the war. A good many people in the country, however, cannot be actively engaged in fighting the war, and therefore the best of their brains should now be devoted to consideration of what our financial position will be in the post-war period. It is a very serious subject. The bulk of the people who are making sacrifices by saving money and investing it in various Warship or Tank Weeks, do not appreciate that what happens after the war will really decide whether their present economies will give them any permanent future value. Unless action taken now and after the war controls inflation definitely and finally, all the saving will have been in vain. People are having to be educated to the necessity to make these savings. I do not wish to suggest that they should be frightened, but certainly they should be told about the equal necessity of putting our financial house in order after the war, so that their savings and sacrifices will be of some value when that time comes.

It is clear that there will be two phases to be met with, after the war is over—assuming that the optimism that we shall win the war within a reasonable time is justified. In the first phase, there will be a vast amount of money in circulation, but practically no goods for that money to purchase. Goods will be in very short supply, and there will be grave dangers unless the Government of that day, if it be the Government of to-day or another, are prepared to continue for some considerable time the restrictions and the strict ordering of people's lives which have been found necessary in war. I say that because I know that there will be a very natural outcry, immediately the war is over, to remove all those restrictions. There is not one of us who will not want them removed. We shall all hate them and want to get rid of them at once, but if they are removed too quickly, the result will be inflation. It is bound to follow, in that event you cannot possibly avoid it, because there will be such a plethora of money in the hands of the people and such a very small amount of goods for them to buy.

Ultimately that period will pass, and after, say, two or three years the very reverse of that position will arise. Goods will come into greater and greater supply, demand will decline, and unless the Government are extremely careful how they manage their financial affairs then, the result will be another period of unemployment and distress. I do not want to emphasise these things too much today, but I do want to press the point that all our financial policy should be framed with those factors in mind, because one never knows—though I cannot say I am an optimist in the matter—when there might be sudden changes or a sudden collapse of the war, and in that case, if we do not look ahead, we may be placed in very considerable difficulties.

In conclusion, I believe that every chance this House has of impressing upon the people of this country the seriousness of our present position should be taken. It is very easy to believe that all is going well. Far too many people believe that everything will be all right on the night, that in a few weeks we shall recover everything. I do not hold that view; I view our situation as a very serious one indeed. Success is a question of production, and production only will enable us to win this war. These immense sums of money are being spent, and unless we can be quite certain that they are being spent to the best advantage, we shall not be able, at any rate within a reasonable time, to move towards the kind of victory we all long to see. I suggest that on such occasions as this, when we are voting huge sums of money, it is not inappropriate to tell the people quite plainly that though they may raise the money, it will be wasted if they are not careful, if they do not put into this effort every ounce they have to achieve the production without which victory is impossible, and further, that if inflation is not avoided by very careful Government action now and after the war, the result will be that their savings will be of no value to them in the end

Photo of Mr Henry White Mr Henry White , Birkenhead East

I rise only for a moment or two to express my complete agreement with what was said by my right hon. Friend the Chancellor of the Exchequer when he indicated that this was not the occasion for a Budget discussion. The House must concern itself strictly with the question of credits. I should like to emphasise what has just been said by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) with regard to the great importance of maximum production, and also, which I think is equally important for it is not yet sufficiently realised, of minimum consumption by the people of this country, if necessary by the imposition of far greater restrictions than have yet been devised. It must be brought home to every citizen of this country that he is now more important, from his own point of view, from that of the nation and of the possibility of there ever being any decent living in the world again, than he has ever been before. The citizen is very important on account of what he can do, and, oddly enough, he is equally important because of what he can do without. That aspect of the matter is one which is not sufficiently realised at present.

Those who have preceded me in this Debate have already suggested that it is necessary to have a clear idea of what we are fighting for. That again is a matter which is of the greatest possible consequence at the present time. The days when we said that we had only one war aim, and that was to defeat Hitler, are gone, and that slogan has passed away on to the rubbish heap. It is very important that the people should realise that there is no sharp division between war and peace, but that the greater awareness of all sorts of things which has been forced upon us by the war should stimulate our war effort to the maximum and should also carry on into the peace. On that, I think, everything depends. When the war comes to an end there will be some 8,000,000 or 9,000,000 people the mainspring of whose existence will have snapped overnight, and it is essential that we should have an ordered scheme of what we mean to do. I do not wish to pursue the matter further now; I merely wish to emphasise the importance of dealing with extravagance and waste in every form. I wish I could say that there was none, but we have evidence of it on a large scale in the Beveridge Report in regard to the use of man-power, and we have it in small matters of detail. Each one of us should realise that we are not entitled to criticise unless we can look into our own minds and realise that both as regards action and refraining from consumption we are doing everything we can.

We in this land are a curious people. We have shown in this war that we are frightened of nothing. We were fright- ened of nothing when we decided to carry on the war, unarmed and alone, and the people in the blitzed areas have shown that they are frightened of nothing. Yet now we find ourselves refraining from making the maximum effort. In the matter of savings, let me give a few instances which I have come across within the last week or two. The savings effort is being hampered at this moment by a complete misunderstanding of the incidence of Income Tax, and although I should not wish to pursue the matter, because it would not be in Order, I should like to express the hope that my right hon. Friend the Chancellor is looking into such matters, in connection with Income Tax and wages, as are interfering with savings and maximum effort. Only last week I was accosted by a man in the street who had evidently been making his first acquaintance with Income Tax, and he said, "I am not going to work overtime for Kingsley Wood.' "That was the slogan in the street. It took me quite a little time to convince him that he was on the wrong line, and I do hope that serious consideration is being given to this matter. I will leave that matter there, because I may be getting on to dangerous ground.

Going back for one moment in my mind to the two first war Budgets, the complaint made then was that the expenditure was wholly inadequate as a representation of our war effort. That could not be said to-day, although I rather deprecate placing too much confidence in comparisons with our expenditure in the last war. We must, however, be satisfied that the expenditure is on the war and our war effort. Apart from matters of extravagance, we must realise that expenditure in this war, in its very nature and direction, is very different from what it was in the last war. We have advanced, and what we must do now is to satisfy ourselves about the expenditure of this money. It will not be withheld by the Committee; they will vote any sum asked for, provided they are satisfied it is being wisely spent and with no waste or extravagance.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

I wish to put a series of short questions to the Chancellor, which perhaps he may be able to answer in the course of the Debate. We are to-day discussing a Vote of Credit. What is credit? What I wish to point out to the Chancellor is that what we are proposing to do, at his request, is to vote this vast sum of £1,000,000,000 merely on the credit of the nation, that is, the assets of the nation, the goodwill of the nation, the integrity and the character of all the people constituting the nation. We are not merely borrowing from the banks. Will the Chancellor please appreciate that it is possible to conceive that perhaps he is wrong, or has been wrong, and other Chancellors before him, in thinking that it is always necessary to pay interest on your own credit? He will save a large amount of money for the nation if he adopts a different course. I want to put one definite question to him. It was put to the Brains Trust recently, I believe. The Brains Trust refused to answer, though I cannot believe that Prof. Joad would admit that he does not know everything. The question put was this: "How is it that we can lend millions to Ethiopia and China in war-time when in peace-time we have such difficulty in balancing the Budget? How is it we can lend these millions, and where can I find out more about this? "Can the Chancellor explain to the Committee where all this money does come from? It seems to me that it would clarify the minds of a great number of ignorant people like myself. We have heard talk to-day about inflation. That has formed the subject for a good deal of argument in Budget Debates. I want to put this to the Chancellor in his efforts to keep his Budget balanced up. That great authority Mr. Montagu Norman on 9th October broadcast to the nation on the importance of National War Bonds and National Savings. Mr. Norman explained, as the Chancellor has explained, that we are spending money at the rate of £13,000,000 or £14,000,000 every day. He said: We may estimate by and large that over half that sum has been provided from taxation and from other sources. This leaves something like £5,000,000 a day to be found and that sum must, I think, be subscribed in loans of one kind or another, or come from a source which I hesitate to mention. He then went on to explain the source he hesitated to mention, which was by inflation. Does not Mr. Norman thereby mean that by depreciating the value of money he is enabled to collect double the quantity and so claim that he has balanced his books? Really, a man who says that sort of thing ought not to be left in charge of a sweetshop; it is a most inadequate reason for causing inflation. If I were asked to go into the Lobby on this Vote of Credit, I would go into the Lobby against the Government because they have not shown themselves competent to be allowed to handle such vast sums.

The Chancellor spoke about War Weapons Weeks and the importance of making them a success. To go deeply into that subject would be out of Order I wish to ask the Chancellor of the Exchequer whether he is aware of what some banks and people like the Prudential Assurance Company are doing in connection with these weeks. They are offering to buy for individuals £1,000 of War Loan on payment of an annual premium of only £82 odd. I have in my hand a collection of interesting literature, among which is a letter from the Prudential Assurance Company offering support for a Warship Week in my constituency by investing to the credit of the Warship Week an amount equal to the aggregate of the sums assured by means of all ordinary branch proposals written for 3 per cent. Savings Bond policies during the three weeks before the week and the week itself. The Prudential says: By this method towns similar in size to Ipswich have had an additional subscription of £100,000 from this company. This is an extraordinary method whereby you can help yourself. I agree it is an extraordinary method. I hope that the Chancellor will close down on it, and assure us that that form of subscription is not to be allowed. He refused to do so at Question time. It is important that he should know how much is genuine savings and how much is bank-created credit. I do ask that lie should give his serious attention to this, or we shall find that there is going on what went on in the last war: bogus loans for the purpose from banks and insurance companies.

I come to the question of Treasury control. As a producer of things which the Government want with which to conduct the war, I find myself in great difficulty. Every intelligent manufacturer knows that in order to plan your output you must know well ahead of time what it is you are required to produce. Anyone in the heavy engineering industry knows that in peace-time you have not the slightest chance of fulfilling your plans unless this is done, and unless you know your plan at least a year ahead. I wish to call the Chancellor's atttention to this difficulty which some of us experience. Supply Departments are restrained from placing their orders because the Treasury holds them up. I can give chapter and verse of a case in my own knowledge in which, in principle, a product required was agreed upon in September last year. The quantity involved was not large, something of the value of about £250,000. Both the Department and the manufacturer were aware that that would be the best plan, but although that was agreed upon, it was not until a fortnight ago, the end of February, that sanction was received from the Treasury that the purchase should be made. I submit that this is altogether wrong and that Treasury control should be speeded up. In point of fact, in this particular case this has more to do with production—

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I do not think we can go into contracts any further here.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

I wish to point out that the Government are conducting the war inefficiently. If I am required to support a Vote of Credit of £1,000,000,000, I am entitled to suggest where their methods should be improved. If I am not entitled to discuss that, I do not know what I am entitled to discuss. I am only criticising the dead hand of the Treasury, which I fear is still all too persistent.

I turn to the question of waste. A deputation of competent workmen came to see me the other day about the construction of an aerodrome. Their attitude was one of intense indignation, because it had been put in the public Press that men on the job were playing cards. It happens to be true that they were playing cards. I want to tell the Chancellor why. Their complaint was that the Air Ministry would not make up their minds where they wanted various things up and down the aerodrome. Things were constantly being interrupted, pulled down and put up again. On top of that during the recent hard period, when most of the work to be done was digging, about 300 or 400 people were taken from the town to the site by motor buses. They could not dig, so they played cards. In the evening they came back again. Is the Chacellor aware that spending Departments are spending money in that way? How he expects War Weapons Weeks to be a success when people realise all the waste which is going on I fail to understand. I know that it is not a matter which we can discuss in detail to-day; but if the Chancellor wants the right sort of effort put into the war, he must consider the incidence on all these people of Income Tax.

Those people who came to me with the grievance to which I have referred said to me, "Last summer, in the long days, we were working for long hours, and earning a lot of money. Now we are on short time, because the weather is bad; but this is the period when we are required to pay heavy Income Tax." I suggest that the incidence of Income Tax should be changed, so that it shall be paid out of current earnings. I hope that the Chancellor will consider that matter in connection with the forthcoming Budget. We have heard a great deal about equality of sacrifice and the necessity for everybody to pull his weight, to save every possible penny, and to consume as few goods as possible. I suggest that the Government have not done anything like enough in giving a lead. There is nothing imaginative in the policy they adopt. I will read a suggestion from a letter which I happened to write, and which the "Manchester Guardian" happened to publish, in 1937, long before I thought of trying to join this august Assembly. Discussing the possibility of war, I wrote: As, presumably, the young men of the country will be invited to risk their lives, in return for a purely nominal monetary reward, no doubt the Government will also conscript all labour, irrespective of class, to work in the common good, from the Governor of the Bank of England downwards, in return for a purely nominal wage.

An hon. Member:

From the Governor of the Bank of England upwards.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

I was thinking not of their status, but of the size of their incomes. It is quite time that the Government made a forthright statement on those lines. Personal expenditure has to be restricted. It is idle to go to the ordinary man and say, "You must work long hours, for seven days a week, if the people at the top, Cabinet Ministers and the like, are allowed to splash money about at their will." [Interruption.] Perhaps the Chancellor is not himself guilty; but some restriction is required.

I have the greatest hesitation in voting sums of money to a Government who are prepared to allow such happenings as we have had recently to take place without any explanation. I do not see why people should be asked for money to build warships when two of the largest go down and we have no adequate explanation from that Bench as to who misdirected them. I do not see why people should be asked for money to support a Government which, with knowledge of what was happening in Hong Kong, left soldiers and civilians there to the mercies of the Japanese to serve no useful purpose at all.

Photo of Captain Edward Cobb Captain Edward Cobb , Preston

Does the hon. Member suggest that if we did not vote the money, these things would not have happened?

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

No, but I suggest that Hong Kong should have been evacuated. I agree that the Government were not directly responsible for those deplorable events; but had there been any real strategy those things would not have happened, because Hong Kong strategically could not be held and ought to have been evacuated months ago. I do not believe that the Government have any real plan or any real long-term strategy of any kind whatever, and they are showing no leadership. On that account, if there were a Division I should vote against the Motion.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

As one of the few Members who on previous occasions have voted against Votes of Credit, I think it well to say a few words on this matter. I and my colleagues have taken occasion to express our dissatisfaction with the voting of such credits to the Government for carrying on the war. We hold the same opinion still. We have possibly even less faith in the reconstructed Government than we had in the Government in its previous form; and that was infinitesimal. I have listened to the Debate, and I have a great deal of sympathy with what has been said by my hon. Friend the Member for Ipswich (Mr. Stokes). He said many of the things that I had intended to say myself. I was interested in the speech of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). While he was speaking, my mind went back to the last war and a famous by-election in Aberdeen. I thought his speech to-day was in great contrast to the speeches he made then as a peace candidate. Evidently there have been many changes in the minds of men in. regard to basic ideas since then.

I want to refer to what the Chancellor said about the bouyancy of the revenue and the good results of the National Savings Campaign. I interrupted him, and asked whether he had seen the magazine "Vogue" and the advertisements there, which showed that some people are spending extraordinary sums—advertisements about very expensive fur coats and that sort of thing. There are ion pages in this magazine, which is printed on very fine paper. I think it is published at 2S. 6d. While the rest of us are under a penalty of £100 if we throw a tram ticket on the street in an absent-minded moment, to allow this sort of thing to go on seems to show an absolute lack of any sense of reality on the part of the Government. Here is a question that millions of people are asking. When we hear on the wireless the amount of money that has been contributed in the way of savings, people say, "The Government have taken us, and have placed us in this or that job; they have taken our sons and daughters for the Army, the Navy, and the Air Force. Why do they have to go round begging for people to lend money? Why do they not take the money in the same way? Why are the Government prepared to conscript human life, but not to conscript wealth?" I hope that the Chancellor of the Exchequer will give the people of this country some reasonable answer to his question, which is in the minds of the people.

I have a great deal of sympathy with regard to what was said by my hon. Friend the Member for Ipswich when he was speaking about the great financier of this country, Mr. Montagu Norman, who has been responsible for so much of the trouble in the world to-day. The fact that successive Chancellors have believed that lie was a wise man has been responsible for so much trouble. I do not want to pursue this, because I notice that the Chairman is becoming very uneasy in his seat, and I do not want to give him any trouble at all. But I do want to say something with reference to the remarks of the hon. Gentleman the Member for Kidderminster (Sir J. Wardlaw-Milne), who warned the Chancellor of the Exchequer, when he was bringing forward Votes of Credit like this one to-day, that he ought to be thinking of the days that would succeed the war and that there were possibly two situations which would eventuate after the war. What struck me as I listened to him was that the hon. Member for Kidderminster thinks in terms of going back to a pre-war world, and that just as it was in 1918, so it will also be in the autumn of 1942, or the beginning of 1943, when peace comes, though one is not so hopeful about that. He thinks that events will just happen the same, and he hopes that the Chancellor of the Exchequer will realise that the Government have to plan in connection with those events. The hon. Member for Kidderminster will possibly be greatly surprised at how things come at the end of the war. The way the Government are going on, their lack of foresight, vision and efficiency, the waste and extravagance, the way in which, all the time, they pander to the rich and well-to-do in the community, and the disasters that have taken place in, the field will lead to., the conclusion of two great events which will overthrow the Government and the section in the community who are mainly represented in the Government.

We have to think in terms of a Socialist Britain after this war and not in the terms suggested by the hon. Member for Kidderminster. If we are to have victory, then the only real victory that can come to the people of this country is the victory of a Socialist Britain. If we do not have a Socialist victory, then things will be just the same as in 1918. What came to the ordinary people in this country in 1918 were unemployment, misery, greater and greater poverty, with home after home broken, and unless we get on this occasion a Socialist Britain we shall not secure a real victory. Naturally, I do not think that the present Government are a Government that will give us a Socialist Britain. I am not willing to vote £1,000,000,000 to a Government that has no idea of the bringing into being of a new Socialist order. I would only give a vote to a Government in which I had faith and which had before them an idea of the creation of a Socialist Britain and also the association of that Socialist Britain with other Socialist countries of the world and the laying down of a great world Socialist federation.

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing

The hon. Member for Camlachie (Mr. Stephen) has made special reference to the point that he cannot understand why the Government should conscript lives and fail at the same time to conscript capital. I wonder what the hon. Member really has in mind when he uses the expression, "the conscription of capital." Surely, if at any time in our history, this is the time when my right hon. Friend the Chancellor of the Exchequer has conscripted capital. I will give the hon. Member two points which illustrate what I have said. When we talk about the wealthy classes we must take people at the highest point. There are supposed to be in this country one or two who have an income of£150,000 a year.

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing

I agree with, and endorse, that sentiment, but let us see how much of that £150,000 my right hon. Friend the Chancellor has left to the individual. My right hon. Friend takes, in direct taxation, Income Tax and Surtax, no less than £142,844, and the man with £150,000 a year, if there be one, is left to-day with £7,000 a year.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Does the hon. Member realise that, if they conscript my life, they take me, and I have to go into the Army, and they do not leave me with this proportion?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I think we have followed this illustration much too far.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

In this case, the man is left, according to the hon. Member's own statement, with what he regards as the small sum of £7,000 a year.

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing

It would not be in Order on this Vote for me to develop that point further, and I observe that the hon. Member for East Stirling (Mr. Woodburn) also desires to say something. I assure him that I shall develop it when we deal with the Budget Statement, because I wish to show that it is against the national interests that capital should be conscripted to the extent to which it is conscripted to-day

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing

As this will not be in Order, I shall raise it on the Budget Statement. What I desire to do to-day is to raise two points, one of which was raised by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) when he referred to inflation. I do not think that there will be any difference of views in regard to how essential it is to prevent inflation. The Government have done all that it has been possible for them to have done to prevent inflation, and it is not so much the Government to-day but our own people who must play their full part in the prevention of any inflation which might accrue in the future. They can do that by one means only, and that is by saving to their utmost limit. My right hon. Friend the Chancellor will agree with me that it is to the wage-earning classes that he has to look for the major portion of his savings, for it is they, and they alone, who have increased incomes, The advantage is twofold. Not only does my right hon. Friend receive the money to contribute towards the payment of the war, but at the same time the investor is putting aside credits which will enable him to purchase consumable goods after the war.

I would like to congratulate the Government on their money policy and the success they have achieved. Unlike the last war they have, during this war, been able to raise their credits on the basis of under 2 per cent—actually 1⅞ per cent.—per annum, whereas in the last war money was borrowed at an average rate of no less than 51 per cent. per annum.5½ The saving in interest to-day reflects the greatest credit upon the Treasury. The Treasury to-day have complete control over all foreign exchange. They also have complete control over the raising of loans for any purpose other than that of war, whereas hon. Members will recall that in the last war large loans were effected in all directions and money escaped from this country abroad to remain there. To this day it has not been returned. That is not possible to-day.

As I have said, I claim that great credit reflects upon the Treasury. I would, however, like to strike a note of warning. When the war has come to a successful conclusion it will be absolutely vital that my right hon. Friend should continue to keep a close control in finance for a fixed period after the war, and he must resist any pressure to get rid of them so soon as war is over. One must bear in mind that thousands of millions of pounds are being loaned to the Government at a low rate of interest—2½ per cent.—against no less than 6 per cent. on Treasury bills in the last war. It is the duty of my right hon. Friend to be able to assure those who invest in Government securities to-day that those securities shall, in fact, not suffer some serious depreciation when the war comes to an end. Therefore, I submit it is essential that the Government should continue to control finance and to control the rates of interest which shall be paid, in order that our credit after the war shall not be impaired. My right hon. Friend will recall that it was not during but after the Great War our difficulties arose when inflation commenced, not during, but after the war, due to lack of those controls when there was a demand for consumable goods at a ratio considerably in excess of the goods which were or could at that time be produced. The result was that with more buyers than there were producers the available goods increased in price, in inflated values, and it brought in its train the difficulties to which I have referred.

In conclusion, I would like to make one reference to the total cost of the interest and administration of the National Debt to-day. If we cast our minds back to the 17th century, it was in the year 1697, after a succession of wars, that the National Debt stood at £20,000,000, which was regarded at that time as a burden in excess of what the country could bear. The whole weight of the National Debt then was less than the cost of one and a half days of the present war. In the last financial year the weight of the National Debt was £230,000,000, and my right hon. Friend estimated that for the financial year ending at the end of this month the cost of the National Debt would be £255,000,000. After two and a half years of the most expensive war in the world's history the cost of the National Debt is £37,000,000 less than it was ten years ago. That reflects great credit on my right hon. Friend, on the Treasury and on the Bank of England. Therefore should the' same rate of increase continue in the months that are in front of us, it would not be until October, 1943, that the weight of interest upon the National Debt would be equal to what it was ten years ago, that is, in 1931. I would only add in my closing words that the Chancellor should continue on the same lines and see to it that the country's interests are conserved and the necessary controls continue for a period of time when this war comes to an end.

Photo of Mr Robert Richards Mr Robert Richards , Wrexham

As the Chancellor has pointed out, we are precluded to-day from reviewing the position of the Exchequer generally. The Budget, however, is looming ahead, and we shall have an opportunity then, I presume, of reviewing the field more broadly than it is possible to do to-day. I rise to make one appeal to the Chancellor. Last year, along with his Budget, he produced a most interesting White Paper which gave us the analysed facts concerning Government expenditure, together with an estimate of the national revenue—that is, the revenue of the people of this country as apart from the Government's revenue. I think it is right that we should expect the Chancellor to repeat that gesture, as I hope he will, because it is really very difficult to know exactly what the Government are doing when we have these colossal figures thrown at us, unless we know at the same time what is happening to the national revenue. The Vote to-day is a complete account for this present year and is in anticipation of the demand which, as the Chancellor has said, shows no signs of diminishing, for a part of next year. It is natural that certain doubts should have been expressed concerning this colossal expenditure, and it is natural that we should wish to be quite certain in our own minds that this money is being wisely spent. There are all kinds of opportunities for mis-spending money, and we have heard instances given in the Debate.

It is the duty of the Exchequer, a duty which I think they recognise as part of their work, not merely to collect the money, but to see that it is well spent. In looking through the White Paper which the Chancellor issued last year, I was rather interested to find that hitherto, on the whole, we have managed to finance this tremendous expenditure out of current accounts; that is to say, we have dipped into our capital very little in financing these tremendous sums. I know that the taxation that is being levied does not now bear the same proportion to expenditure as it did two year's ago. As the debt goes up and the sums grow ever larger, the proportion that is obtained from taxation, unfortunately, grows less, but if we take together taxation and loans —and as the Chancellor has pointed out, many of the loans undoubtedly represent genuine savings —and if we can retain that position of financing by means of taxation plus loans that are genuine savings, I do not think we need fear inflation in the least. But we must not be too optimistic. I think there is already evidence of a certain amount of inflation. If I may be heterodox, I do not know that a limited amount of inflation will do any great injury; it is only when inflation gets completely out of control that great damage is done. There is another side to inflation, and it is this, that with prices mounting, everybody knows it is easier to meet the very heavy taxes that are being imposed on the community. A limited measure of inflation does not of necessity entail the criticisms that violent inflation would necessarily incur.

If, before the Budget is introduced or when it is introduced, the Chancellor will produce a White Paper showing exactly what is the relation of the tremendous sum of £4,250,000,000 to the income of the country generally, I am sure his kindness will be much appreciated. It is very gratifying to find that the national income is growing, as we would expect it to grow. It is true that soldiers have been taken out of industry, but other people have been taken in, and I think that the position is balanced. The increase in the number of hours- worked, and a greater willingness to put more time and energy into work, has led to a growth in the national income, and this makes it easier for us to pay the heavy taxes with which we are burdened. There is, however, another side to the picture which is not so satisfactory; it is that we are still consuming a great deal more than we ought to consume. An appeal has already been made to the Government to bring about a drastic reduction in consumption. If we can increase production and at the same time reduce consumption, there will be a decent balance which, in the circumstances, I think, we can venture, from a purely economic point of view, to lend to the Chancellor for the purpose of prose- cuting this terrible war to a successful conclusion.

Photo of Mr Ian Orr-Ewing Mr Ian Orr-Ewing , Weston-Super-Mare

I was very interested in the closing remarks of the hon. Member for Wrexham (Mr. Richards). I cannot agree with his optimism about the possibility of continuing to pay wages at a very high rate while those who receive the wages are not prepared: of their own free will, to put more than a certain proportion of the increased wages into some form of savings. Nor do I believe that the vast majority of wage earners will voluntarily restrict their consumption of those things the consumption of which we wish to see restricted. If I could feel that they would do this, I would not, either in the past, at present, or in the future, have been pressing, or press, for some form of general industrial conscription.

I wonder very much what would have been the amount of this Vote if, at the outbreak of war, we had had some system of general industrial conscription in this country. I wonder what would have been its effect in terms of money and credit, and also what would have been the actual production rate at the present time of those who would have been conscripted under a measure of general industrial conscription. I believe that the difficult and grinding time through which we are passing, and which we shall have to continue to go through, is the very time at which to apply such a system. I cannot conceive of anything else that would bring home to the people as a whole more drastically, more violently, the fact that we are up against the toughest proposition this country has ever had to face. Quite by chance, I was the only Member of the House, and, therefore, the first Member, who, 12 months before the introduction of clothes rationing, suggested in a speech that such a step should be taken by the Government. I do not imagine for one moment that the Government took that step as a result of anything I had said many months before, but I advocated the step for exactly the same reasons as now I urge the Government to face the necessity for general conscription to-day.

I believe it is by taking such a step that we can cure two ills that are rife at the present time. The first is a lack of realisation of the power of our enemies and consequently, the danger in which this country stands, a lack of realisation of the necessity for putting forth the last ounce of effort if we are not only to stay our foes, but drive them back to the evil places from which they have come. Secondly, I believe that by taking this step we should be able to envisage a reduction in the amount of future Votes of Credit, not because the rate of production Would decline, but, partly, because, for psychological reasons, the amount produced would be greater, and, partly, because we should have a lower rate, a lower deck, above which it would not be considered right or proper for wages or salaries to rise.

Photo of Mr Ian Orr-Ewing Mr Ian Orr-Ewing , Weston-Super-Mare

I think incomes would have to be dealt with by an entirely different method; obviously, they would not come within the general scope of conscription. It was the final remarks of the hon. Member for Wrexham that caused me to refer to these points. I come back to the danger of inflation, not only now, but later on. Would not many of the problems with which we shall be faced after the war in the industrial field, problems of re-employment, and so on, be far better faced if we had such a system as I have suggested in force from now on? I believe that even if the Government have not the courage—I believe they should have the courage—to put a system of general conscription into effect now, they will be forced to take that step immediately after the war. It will be forced upon them under far more difficult conditions than exist to-day.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

As hon. Members are very interested in this subject, can the hon. Member make a little more clear what he means by industrial conscription,. as distinct from what operates to-clay?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I do not think we can go very much further on this question, or we shall be dealing with legislation.

Photo of Mr Ian Orr-Ewing Mr Ian Orr-Ewing , Weston-Super-Mare

I am most grateful for that warning. I should not for one moment attempt in the limited time available to outline what I mean or what the effects would mean. The most I can do is to refer to it.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

May I draw attention to the fact that legislation has already been passed for the conscription of man-power and property? This could be done by an Order.

Photo of Mr Charles Williams Mr Charles Williams , Torquay

It involves making an Order, and I do not think we can discuss that.

Photo of Mr Ian Orr-Ewing Mr Ian Orr-Ewing , Weston-Super-Mare

I can only say that I was thinking as much about the financial effects and causes of any proposals I have touched upon, as about the actual conscription of labour in the physical sense.

The Chancellor of the Exchequer has talked about the savings problem. I believe that a great deal more could be done by way of encouraging savings and by way of the collection of savings in the countryside, if some short statement could be made as regards the effects of wartime taxation on the farming community, who at the present time are very much at sea as to what effect, for instance, the Excess Profits Tax is going to have on their industry. Some are equally at sea as regards the effects of Income Tax. I do not believe for one moment, and I would not like it to be suggested, that the farmer is attempting to avoid, either the payment of tax justly due on the profits he makes, or putting in any savings he can offer to help the war effort. I believe, however, that he would be prepared and be able with a clearer mind to contribute more to warship weeks and savings weeks if his position under the Excess Profits Tax was made clear to him. He is in a very different position from any other producer in the country. It is almost impossible on a rising market, such as at the present moment, to get any fairness in striking the value of a beast in January last and January this year, especially when the beast has added to its own value by the mere fact of its growth. Again, a dairy cow may have depreciated in value, but, in fact, by market conditions its price has increased. All these things should be taken into consideration in examining the taxable position of the farmer. I know that he is gravely worried, and until that worry is removed from his mind the amounts coming forward for war savings must be limited. I ask the Chancellor of the Exchequer to make some sort of statement to clarify the position. It would both help the war effort and reduce the necessity for larger Votes of Credit in the future.

Photo of Commander William King-Hall Commander William King-Hall , Ormskirk

I listened with some interest to the speeches of my hon. Friend the Member for Camlachie (Mr. Stephen), my hon. Friend the Member for Ipswich (Mr. Stokes), and the hon. Member for Weston-super-Mare (Mr. Orr-Ewing) because of the community of thought which seemed to run through them. I suggest that if the two hon. Members on this side would speak on the other side of the House and advocate their views and call them the new Conservatism, they might find a remarkable degree of support. A number of Members have commented on the fact that during this war we have succeeded in raising loans for the conduct of the war at a rate of interest approximately half of that which was needed in the last war. I think the financial authorities, the Chancellor of the Exchequer and his financial first-lieutenant, are entitled to the congratulations of the House on the skill with which the financial ship has been navigated in this war, within the limitation of what has been made possible by general Government policy. Of course, when on 22nd May, 1940, the then Lord Privy Seal said that the Government demanded complete control over persons and property, not just some persons of some particular class of the community, but of all persons, rich and poor, employer, workman, man or woman, and all property"—[0FFICIAL REPORT, 22nd May. 29.40; col. 152, Vol. 361.] I am bound to say that I was one of those who thought something really drastic was going to happen in the conduct of the war. It is clear that the powers exist for us to have an even lower rate of interest, or, for that matter, no interest at all, in the raising of loans. Although these powers were asked for and were granted by the House of Commons in one minute under two hours, I am bound to say that on the financial side, as on other sides, every usage of power has been as if it involved the Government in the spending of a coupon of popularity. In this matter the Government have made a profound psychological error.

The Chancellor of the Exchequer referred in his speech to the connection between the whole credit position of the Government and Warship Weeks, and, of course, some of the money we are being asked for to-day will be spent on the organisation and expenses of those weeks. He told us that these weeks had done a great deal to lay the foundation for continuous Saving Group movements, which are of such importance and of so much value. I agree with that, and, if I say something on the less satisfactory aspects of Warship Weeks, Tank Weeks and various other special efforts, I wish to make it quite clear that I do not wish in the slightest degree to involve in this criticism the thousands of devoted voluntary workers all over the country who have put in such an amount of work in an attempt to meet the desire of the Chancellor of the Exchequer for saving and non-spending. But there is another side to this question to which publicity needs to be given. I have opened 12 or 15 of these various weeks—I shall have opened another five by the end of this week. There are certain misunderstandings which exist. I know they are known to the Treasury and that it is the Treasury's desire that publicity should be given to them. One is the misunderstanding that any value to the State is obtained by selling industrial securities and investing them in Government bonds—

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I am afraid we cannot discuss that point on this Vote of Credit.

Photo of Commander William King-Hall Commander William King-Hall , Ormskirk

I am only referring to the remarks that the Chancellor made when he described various aspects of Warship Weeks and emphasised his desire for new savings, which he said were the only things that mattered.

Photo of Mr Charles Williams Mr Charles Williams , Torquay

We can use it as an illustration but cannot go into details.

Photo of Commander William King-Hall Commander William King-Hall , Ormskirk

I was going no further than to point out that chairmen of Warship Weeks have told me that it is the Chancellor's desire —

Photo of Mr Charles Williams Mr Charles Williams , Torquay

That is the point. We must not talk about Warship Weeks in their details.

Photo of Sir George Benson Sir George Benson , Chesterfield

I take it we can talk about anything which involves expenditure arising out of this Vote of Credit?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

Yes, in a broad way.

Photo of Sir George Benson Sir George Benson , Chesterfield

We can go even in detail into the expenditure itself?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

Yes, the expenditure itself

Photo of Mr Pierse Loftus Mr Pierse Loftus , Lowestoft

Are we allowed to discuss the methods by which the Vote of Credit will be implemented and how the money will be raised?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I think we had better wait until that comes, but it does not sound as if it would be in Order.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

Are not the costs of Warship Weeks borne on this Vote? Surely we are entitled to insist that they should be carried out efficiently, and discuss it to that extent?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I believe they are not borne on this Vote.

Photo of Sir George Benson Sir George Benson , Chesterfield

It is perfectly true that there is an Estimate for the War Savings Committee, but it is a very inadequate Estimate, and the activities of the War Savings Committee are paid for out of this Vote of Credit. There is an enormous number of Votes which are inadequate, or even token Votes, and they are financed out of this Vote of Credit. The hon. Member for Ealing (Sir F. Sanderson) referred to the cost of the National Debt as £255,000,000 this year, but he overlooked the fact that a very large amount of it is borne on the Vote of Credit and not on the Estimate. That is an example.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

If it is any help, I can give the information that Cd. 6,279, Votes of Credit, 1941–42, presented by me in May, 1941, on page 56 gives figures of the cost of Civil Revenue Estimates dealing with the National Savings Committee. Whether any part of the supplementary £250,000,000 that we are asking for for the year is going in that direction or not I am afraid I cannot say, but I should think it quite likely that some may drift in that direction.

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I think we had better wait until the actual point arises. It seems to be a matter of doubt, and perhaps we had better keep to a fairly short illustration.

Photo of Mr Pierse Loftus Mr Pierse Loftus , Lowestoft

Did not the Chancellor of the Exchequer suggest, with the concurrence of the Chair, that we were discussing both Votes of Credit simultaneously?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I think that is so, but I do not see how it affects the matter.

Photo of Commander William King-Hall Commander William King-Hall , Ormskirk

I will confine my remarks to illustrative matters. A number of Members have referred to the fact that one of the things that occur in these Warship Weeks which is not in the interest of the Treasury is the fact that large institutions and banks send down or instruct their branches to invest sums of money, and that has a most unsatisfactory result from the point of view of the Chancellor. A target is given to a town, and on the first day the people are told that 25 or even 50 per cent. has already been subscribed, and they go away under the impression that they have made a splendid start and that there is very little more for them to do, but in fact nothing has happened at all in the way of new savings. People should be told that unless during the week public houses, cinemas and retail shops have the worst week's business in living memory, the town has done nothing at all. That is the real test. I suggest that the Chancellor should recognise that there is a new temper in the country and should stand up more boldly than he has done before and say, "Grand totals mean nothing to me. I am only interested in saving which represents non-expenditure." We should modify the technique of begging and not lay so much emphasis on the fact that it is very profitable to the investor to lend his money for a cause which is greater than life itself.

I should like to offer the Chancellor two practical suggestions, because I feel that it is no good generalising. One must crystallise generalisations into suggestions which the Minister can accept or reject. I wish the Government would use their influence to persuade people to ration themselves in tobacco, alcoholic liquor and entertainments, so as to bring about the decrease in spending which the Chancellor has said is one of his objectives. I think 5s. a week for tobacco, 10s. for drink and 10s. for entertainments should be ample for anyone. Secondly, the Chancellor will be looking around for some sort of appeal to take the place of these War-ship Weeks. I offer him the idea of Sacrifice Week. It would work as follows: Find out from the banks and public utility concerns the expenditure per day in a given district, and let the Treasury or the Savings Association say that the town should make a voluntary 10 per cent. cut during the week and at the same time conduct a great drive for savings. Let there be competitions as to which town spends less per head during the week. I believe that if this great nation-wide organisation of War Savings would approach its task in future less from the attitude of "Alms for the sake of Allah, alms "and much more from the attitude of "Bring out your possessions and lay them on the altar of sacrifice," they would get even better results than they have done in the past. The country is longing for a call, for orders for stern sacrifice in every aspect of the home front, and in no aspect less than on the financial front.

Photo of Sir George Benson Sir George Benson , Chesterfield

One thing that the Chancellor invariably says when these Votes of Credit for —1,000,000,000 come round with their melancholy regularity is that the money must be spent efficiently and economically. I do not think anyone will disagree with that sentiment. On the other hand, they may be very sceptical as to whether it finds expression in actual practice, and I think it is our duty to the country, as the House of Commons charged with the control of finance, to see that when the Government ask for these enormous sums at short intervals we should scrutinise carefully and in detail whether the actual money is spent adequately and efficiently or not. It is very difficult to know nowadays what expenditure derives from an Estimate and what out of Votes of Credit. There is scarcely a Department or an Estimate which in this period of vast and rising expenditure is not greatly dependent on the Vote of Credit.

Let us take, for instance, the question of the National Savings organisation. An estimate of something like £250,000 was passed, but the actual expenditure this year is £1,000,000. Three-quarters of the expenditure of the National Savings organisation will come out of this £1,000,000,000 Vote of Credit. If we are to insist on efficiency not merely throughout industry but in Government Departments, it would be well if we examined how far efficiency applies to a department of which the Chancellor is the titular and actual head. The Chancellor said that savings were the touchstone of our financial organisation, but if he thinks he is getting value for the £750,000 which he will spend out of this Vote on the National Savings organisation, he is labouring under a grave delusion. The National Savings organisation gives nothing like value for the money that the Chancellor is pouring into it. I am not talking about the amount of savings, but purely about the state of efficiency of the organisation itself. The truth of the matter is that the National Savings organisation is in a state of chaos. It is almost entirely in a state of chaos for one reason, and that is that the head of this organisation, Lord Kindersley, is utterly and completely incompetent and ought to be removed immediately. Unfortunately, Lord Kindersley's incompetence is not of the type which reduces him to a cipher; it is the kind of incompetence which makes him a stumbling block and a hindrance to the whole organisation.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I do not know whether the hon. Gentleman by bringing this matter round in this way is implying that my right hon. Friend and I are responsible to this House for Lord Kindersley.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

That is how I understood the hon. Gentleman was bringing himself into Order, but if he is under that impression it is only right for me to say that I cannot possibly accept the kind of criticism he is now making against Lord Kindersley.

Photo of Sir George Benson Sir George Benson , Chesterfield

I would not throw any burden on the right hon. and gallant Gentleman which his shoulders are not broad enough to bear. I am not discussing whether the Chancellor or the Financial Secretary is responsible for the state of the savings organisation. I am merely pointing out that complete disorganisation and chaos of the Savings Movement is owing almost entirely to the incompetence of the head of that organisation. Whether the Chancellor appoints Lord Kindersley or not, I do not know. I am not concerned about who appoints him. What I do know is that the Chancellor is responsible for Lord Kindersley and therefore for his inefficiency. That is the point with which I am concerned. I am not concerned with who appointed him and who can get rid of him. The Financial Secretary repudiates responsibility. If he would only repudiate Lord Kindersley, it would be much more to the point. I have no doubt that we shall ultimately find out who has imposed this appalling incubus on the Savings Movement.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

If the hon. Gentleman is trying to put Lord Kindersley on the basis of a civil servant, which I thought he was trying to do, I could not, of course, accept that sort of criticism as being ultimately directed to a person in the Chancellor's employ. If he is making, a general statement and not implying that Lord Kindersley is in a quasi-Civil Service position, that is another matter.

Photo of Sir George Benson Sir George Benson , Chesterfield

I am fully aware that Lord Kindersley is not a civil servant. Everybody knows that he is the voluntary head of that organisation, that he volunteered his services, and everybody knows, too, that he can be removed by the Chancellor of the Exchequer. I am not concerned, however, whether Lord Kindersley is a civil servant or a volunteer. What I am concerned with is his incompetence and inefficiency.

These are strong words, and I propose to give facts to justify them. I am not concerned with the amount of savings that are raised, save in so far as they are an illustration of the inefficiency and incompetence of the savings organisation and of the appalling complacency with which savings and the savings organisation are regarded. In the calendar year 1941 we raised £612,000,000 in small savings, which is £123,000,000 more than in the calendar year 1940. That was given as an example of enormous strides. As a matter of fact, it is a proof of the fact that we had not increased the efficiency of our savings organisation by one jot for the simple reason that the increase in small savings was a mere reflection of the growth of the wages roll of this country. In other words, we collected in 1941 practically the same percentage of the national wages roll as we did in 1940. There was no increase in efficiency.

Let me give another figure. I am sorry to have to introduce figures, but this is an important matter and I can only make comparisons by figures. In the three months ending 28th February we collected £144,000,000 in small savings. In the corresponding period 12 months ago we collected £137,000,000. There was thus an increase in the 12 months of £7,000,000, despite the fact that the total wages roll of the country went up by £500,000,000. It may be said that Income Tax has interfered. Let us see what the facts are. If and when Income Tax on wages is running smoothly, it will produce something like £2,500,000 a week. Let us assume that it has run completely smoothly since 1st January; that gives us £20,000,000. These two amounts, totalling £27,000,000, are again merely a reflection of the increase in the wages bill. What has happened is that the Chancellor has got no advantage out of his taxation of manual incomes. He has merely substituted an irritating form of exaction for a voluntary form of exaction. Here again we have a very large increase in the wages roll of the country, but the results show that there is no increase in saving efficiency; on the contrary there seems to be a decrease. The truth of the matter is that the central office under Lord Kindersley is utterly incapable of either organising or directing the Savings Movement. After 2½ years of war, and when they are entrusted with a function of immense importance, they are completely ignorant of basic and essential data. They have not made the slightest attempt to collect data and to find out facts.

Let me give a few details. This organisation has divided the country into 1,250 local savings areas. I do not know whether hon. Members will believe me, but even now they do not know which are their good areas and which are their bad areas. All they know is the weekly savings per head of the population in those areas. These savings vary enor-mously with localities. I was at their headquarters some little time ago and ran `my eye over a large number of long columns of figures showing the weekly savings per head. I found that they varied from 1s. 2d. per head to 12s. 6d., and I asked what was the explanation of this extraordinary variation. They did not know. They assumed that it had something to do with the prosperity of particular savings areas. The only real basis of comparison between one savings area and another is not the population but the wages and income available for savings. There is no other possible comparison. If you want to extract money from an area, you want to know how much money there is there. They have not yet taken the trouble to make any estimate of the wages rolls in the local savings areas. They have not even taken the trouble to approach the Board of Inland Revenue and ask, "Can you tell us the income assessable to tax in particular areas?" It has not even occurred to them that such figures would be valuable. One knows that in some areas the figures would not mean very much, but they would give valuable approximations. What one would have would be a fair estimate of the money available there instead of an inspissated fog.

One thing which they have produced is a large map of England which looks as though it had smallpox. It is covered with various coloured dots. They showed it to me with great pride. I said, "What does it show?" They said, "It shows that the mining areas are doing badly." What they meant was that on the basis of population per head the mining areas were doing badly. But there are various explanations of that. I can give one offhand. As a rule, mining areas are rather isolated places where there are no secondary trades, and the young people, and particularly the girls, are sent away. The result is that in a given population the number of wage earners is very much less than, say, in a munitions area where both men and women are employed. Secondly, a mining area is not infrequently one where the density of population is very low and it is well suited to take in evacuees. The population of a savings area is calculated according to the number of ration books issued by the Ministry of Food, but in a mining area there is a stripping away of a large percentage of the wage earners and the importation, possibly, of a very large number of non-wage earners, which gives a far smaller pool of wages from which to collect savings. That may be a correct explanation of the position in the mining areas, I do not know, but the tragedy is that the National Savings Committee do not know either. They know nothing. Not only do they not know, but they are content to go on wallowing in ignorance.

I know that they work hard. Every week, from every one of those 1,250 savings areas, comes a flood of meaningless figures, meaningless because there is no background with which to compare them. There is one valuable figure which they ought to have and that concerns the street savings groups. Anyone who has been in touch with savings areas knows perfectly well that the sheet anchor of our savings movement will have to be the street group. Go to any war savings week campaign and ask, "What do you want me to talk about?" and they say at once, "Oh, talk about street groups." The only way of getting at the women who spend the money on things upon which we do not want them to spend it, is through the street groups. Every week they get meaningless figures of the savings per head, but they do not take the trouble to get the increase or decrease in the number of street savings groups more than once in six months.

Let me give one other example. They are trying to build up a new organisation —the old peace-time organisation was negligible— and there can be only one basis for it, and that is accurate facts and plenty of them. I asked what statistical department they had at headquarters. They have two persons with some statistical experience and six clerks. As soon as I heard that, I telephoned to the Board of Inland Revenue. The Board of Inland Revenue is not building up a new machine, but has a machine which has been running on ball bearings for a century. It has compulsory powers and throughout the country it has a highly-skilled and technical staff. It cannot do with fewer than 60 persons in the statistical department at headquarters, yet Lord Kindersley is trying to build up a new voluntary movement with a statistical department consisting of two persons with statistical experience and six clerks. This example gives some idea of the importance which this organisation pays to facts and to accurate information.

I am well aware how difficult is the job of running a vast voluntary organisation. Anybody who, like a member of the Labour party, has worked in voluntary organisations all his life, knows how appallingly difficult it is to keep the machine running. It is not impossible to do so, and it can be made very efficient, providing you have efficient staff work. The efficiency of a voluntary organisation depends entirely upon the efficiency of your staff work. The National Savings Organisation has a very large paid staff.

I have dealt with the small importance which this organisation attaches to data compiled with knowledge and accuracy. Let me look for a moment at its staff work. The country is divided into 12 savings areas—not the local savings areas but the divisional areas. At the head of each is an area commissioner, and below him is a number of sub-commissioners. In each constituency, town or village, the local organisation is in the hands of a voluntary organisation with a voluntary secretary. The voluntary secretary is the key to the whole organisation. Everybody who runs a voluntary society knows that the local secretary can make or mar it. If you ask one of the commissioners, or deputy-commissioners, in the Savings Organisation: "What is your main trouble? "you will get but one answer: "Inefficient secretaries. "If you ask: "What is your next trouble?" the reply will be: "Inability to get rid of the inefficient secretaries, due almost entirely to the obstructive policy of the head office. "The Chancellor of the Exchequer may look a little surprised at that statement, but perhaps he will let me tell him what happened in one case.

In one area, and I will not say any more about its position than that it is on the south side of England, the organisation in a fairly large and important market town was in the hands of a completely inefficient secretary, a rather important person, but hopelessly inefficient and lazy. The area commissioner went there to try to get this person removed and to get some competent and efficient person in his place. He failed. The secretary in question wrote to the head office, protesting. What did Lord Kindersley—or whoever it was—reply to that letter? Did he back the regional officer? Did he point out that if the work was not done efficiently it would be as well to make a change? No; he sent back a letter of apology and requested that local inefficient secretary not to take any notice of "the indiscretion of a subordinate official." That instance is typical.

The position now is this: If any savings secretary, no matter how inefficient or incompetent, in a local area has any social standing, the area commissioners leave that secretary alone and do not attempt to remove him, because they know that they will merely get a rap over the knuckles from the head office for doing so. The heart is being knocked out of your regional commissioners. It is being knocked out owing to the inefficiency and incompetence of Lord Kindersley and his head office organisation. Perhaps I have spoken too long, but I have given one or two facts; there are numbers of other facts which anybody who is making inquiries can find out. I put this question to the Chancellor of the Exchequer: How long is he going to allow Lord Kindersley to remain there, to uphold incompetence and to radiate paralysis?

Photo of Wing Commander Archibald James Wing Commander Archibald James , Wellingborough

As far as I have been able to listen to the Debate, I think that not sufficient has been said about the lamentable failure of the Chancellor of the Exchequer in one or two very important directions, and I propose to be critical for a few moments. It seems to me that the Chancellor of the Exchequer, as long as he has been in that office, has failed lamentably to curb extravagance and to look at that aspect of expenditure from the public purse which is his responsibility. That failure makes it much more difficult to encourage saving or to expect people to make sacrifices. The initial mistake was the failure to insist upon stabilisation of wages and prices. A memorandum was issued by the right hon. Gentleman's Department nearly two years ago, stating that it was necessary that prices and wages should be stabilised, but, as far as I can discover, virtually nothing has been done to put that memorandum into practical effect.

In another direction, the Chancellor of the Exchequer appears to have displayed a very high degree of sheer political cowardice. The spirit of the country is far in advance of the spirit of the Government in this matter, because the country is ready to make sacrifices, but people are not told how to do it. People are being urged to save. I have spent the past week-end in my constituency at Warships' and Weapons' Weeks. Yet there is hardly a rural area in which people have not before their eyes examples of the most shocking waste in aerodrome construction. Wherever you go in the Midlands, you will find people saying: "Why should I save or make sacrifices while hundreds of men up there, at so and so, are drawing enormous wages and are not producing the results?" One is always being told—I do not know whether it is true—that the Minister of Labour says he does not mind what he spends, so long as he gets results, and that is a justifiable point of view if you get the results. But the payment of these fantastic wages to utterly unskilled labour does not produce results. That is the tragedy of it.

There is a tendency all over this country, due to the weakness of the Chancellor of the Exchequer, for people to say, about the war, "What am I getting out of it?" This war is becoming a profiteering ramp on a vast scale. The Chancellor of the Exchequer gives out honeyed words, and appears to have no sense whatever of his responsibility to the taxpayer and to posterity, for tackling this terrible evil. If he is frightened by the Minister of Labour, as he apparently is, let him get out and make room for somebody who is not frightened. If he is not frightened, let him tell us the reasons for his failure and why a solution of this fundamental problem of stabilising wages and prices escapes him. Another form of extravagance which is having a most deleterious effect on the willingness of people to save is the fantastic wages which are being paid to unskilled youths.

Photo of Mr Gordon Macdonald Mr Gordon Macdonald , Ince

The hon. and gallant Member appears to be repeating wild statements about high wages. Instead of continuing to do so—which is not a helpful attitude—will he bring forward specific instances in which such wages have been paid?

Photo of Wing Commander Archibald James Wing Commander Archibald James , Wellingborough

I gave specific details, chapter and verse, to the appropriate Department of the Ministry of Labour, to which the Minister of Labour referred me, and they have been checked and could not be denied. Will my hon. Friend accept that? If he likes to see me afterwards, I will give him a file which will enable him to see for himself whether I am accurate or not. I was referring to this matter only in relation to savings. I ask the Chancellor to realise the harm that is being done in the country by his failure to encourage savings by curbing waste, and if he himself has not got the courage to tackle this matter, will he please make room for someone who will do so?

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and Eastern

Expenditure is really the measure of our war effort, and one would welcome a higher expenditure than is disclosed in this Vote of Credit if one could be sure that all the extra money represented additional effort. There is, however, very serious ground for doubting whether that money does in fact represent increased effort in proportion to the Vote of Credit. A great deal of attention has been devoted to saving, but I suggest that it would have been better if we had devoted more attention to not paying the money out, so that we should not have to take it back. There is no doubt at all that expenditure is the side on which this great expansion of money can be kept down.

Money is really a counter which represents activity, and the mere multiplication of the counters does not multiply activity at all. I have told friends of mine who suggested that we should receive more for this and more for that, that it would be an easy matter for the Chancellor to agree to every demand for more money. It is one of the simplest things in the world to go on printing more and more notes, or for the banks to issue more and more credit, but that does not add one pound of tea to the tea-box or one ounce of sugar to the larder, and it certainly does not add one piece of material to the war effort. Therefore, the mere multiplication of money is of no avail, and if the Chancellor allows the multiplication of money to go on, nothing can prevent the inflationary results that he would so much deplore.

Now, of course, it comes to a question of measuring the war effort, and I am of opinion that it must he done, principally, in the field of organising the man-power of the nation. It must be done by curtailing the power of individuals to use man-power for their private purposes. I agree to some extent with what has been said by the last speaker, about the reactions in the minds of the workers. If money is being poured out without control, even to themselves, they have the utmost contempt for the idea that they ought to save to pour out more. It is a curious thing that, even if a man is getting money for nothing, he does not like the idea of himself paying money to somebody else for nothing. Therefore, the efficiency of the conduct of the war in regard to man-power is of tremendous importance, not only from the point of view of results, but also from the point of view of the morale of the workers and of the nation.

There are one or two outstanding examples which may not be of great consequence as regards the number of men involved, but are important as regards appearance. Most hon. Members will remember the great dispute known as the General Strike. It was a curious thing that as soon as the tramway men began to go back to work during that strike, the impression was created that the whole strike was collapsing, although tramway men were not an essential part of the hold-up of industry. But it struck the public imagination, and there is no question that the holding of race meetings, to which people who are apparently living in idleness, seem to be able to drive motor cars in great numbers, or the flaunting sales of jewellery which have taken place —with the obvious implication of the use of labour to manufacture it—together with many other examples of that kind, are extremely shaking in their reactions on the people generally.

I would, therefore, suggest that the Government ought to take some of these outstanding examples and do something about them. The hon. and gallant Member for Wellingborough (Wing-Commander James) referred to waste in connection with aerodromes. I have now spent over two years on the Select Committee on National Expenditure, and all the time of that Committee, divided into eight sub-committees, has been spent on investigating just that sort of charge. Of course the question as to whether labour is working here or working there is not, in the present state of society, a matter for the worker. The managements of aerodromes or of the contracting organisations do not, in the great majority of cases, allow the worker any share whatever in the management, and the men that he was talking about, if they exist in the numbers he indicated, will have nothing but contempt for the inefficiency of the management of the organisation to which they are attached. It must, therefore, resolve itself into a question of the tightening-up of the responsibility of the people who are handling the country's labour. That starts right at the beginning.

My own opinion is that this country is too much committee-ridden, as far as running the war is concerned. There is too much shifting about from pillar to post to find out who is responsible for doing the job. A greater statesman perhaps than any we have in our midst to-day—Lenin—once said that committees were all right for settling policy, but were the worst means in the world for carrying it out; there must be personal, individual responsibility. I think this idea has to be introduced into the whole war effort. Some person must be given a job to do, and if he does not do it, we should either kick him out or punish him for not doing it. That idea must go right down through the whole of the war effort. More than that, there are people drawing incomes in this country who are not carrying out the responsibilities for which they draw the incomes. They are continually "passing the buck," and it goes along a whole series of steps until the poor Minister at the top has to make decisions which a man down at the bottom should make right away on his own responsibility.

The Governor-General of Burma has just issued advice to people throughout Burma that they must take decisions and he will back them up. Must we wait in this country until the Germans are on our own soil before the Government tell their subordinates that they must make decisions and get on with the job? It is simply intolerable in an engineering works, where a production engineer has a piece of copper, and because there is a small stain upon it he cannot put it into the job until he sees the inspector. If it happens that the inspector is a girl, and does not think that that piece of copper ought to be used, she passes it to the next inspector, who has never seen a mark like that on copper before, and who says it cannot go in. Eventually it reaches the chief in the Ministry, and after a long delay they are told to put it in, because the mark on the copper turns out to be the result of some raindrops falling on it when it was in a railway truck, and makes no difference in its use. The man who is using it knows that, but because of the long system of checks by people who do not know their job, production is delayed and waste and irritation are caused. It is just those little things that are harassing and irritating people all over the country.

I would, therefore, suggest that it is necessary for the Government, through its production departments, to insist on cutting out a great number of the intermediaries between the Government and getting on with the job. The fewer people there are between the man who has ordered the job and the man who produces it, the better. I think it is true to say that, even at this late date, there is not a sufficiently close co-ordination between the idealist who plans the perfect job and the man who has to carry it out. The man who wishes to design a perfect aeroplane will naturally design everything on a Rolls Royce standard, but the man who has to produce the machines on a mass production basis must eliminate from that ideal design, every unnecessary spit-and-polish fitting that can be cleared out. In the Air Department I think there is still a tremendous amount of spit and polish. One example, which, fortunately, happened before the war, shows what waste can take place in this matter. The petrol tank of an aeroplane has a screw cap just like the petrol tank of a motor car. The engine of an aeroplane must be finished to the highest degree of physical accuracy because of the need for extreme dependability—perhaps to one-ten thousandth of an inch in some cases. At the Air Ministry the man who designed the perfect aeroplane stipulated the same degree of accuracy for the petrol tank cap as he stipulated for the engine itself, with the result that the aluminium cap, which should have been produced for is. 3d. cost 5s. Of course, it did not cost 5s. but by the time you got the micrometer gauges and all the inspection which become necessary the price went up exactly four times. Greater care has to be taken that the people who are designing are in touch with the people who are producing, in order that all these stupid frills shall be eliminated from production in the midst of war.

With reference to another point in regard to the expansion of our expenditure, I am not satisfied that the Chancellor has yet sufficient control over the purchases that are being made outside the normal trade channels. There is a possibility that a considerable increase in currency is taking place by the use of r notes for illicit transactions up and down the country. One hears stories of people going about with cases full of ordinary Treasury notes, purchasing wood and other materials without any bookkeeping transactions. If that is so it means that a large amount of the extra currency now demanded in the country is not required for the trade of the country but to bolster up illegal trade, the participants in which dodge everything—Purchase Tax, Excess Profits Tax, and Income Tax. One hears stories, and I have evidence which I am not at liberty to divulge here, of many details of what is going on. I suggest to the Chancellor that we need to break down the water-tight compartments which exist between his Income Tax inspectors, the Purchase Tax investigators and all the other inspectors under the Treasury. There ought to be the possibility of any one of these officials who discovers illegal transactions reporting to the Department which has power to take action to stop it.

I suggest that the investigation departments of the Treasury should be looked at from that point of view. I am satisfied that, if they were given the powers, his own officers are capable of bringing a great deal of this illegal trading to a very quick end. I made a suggestion in a Question which I repeat now. It ought to be made illegal for anyone to pay in cash on a transaction of, say, £20 or over. There should be a limit to the amount, and it should be possible to punish a person who is caught in a transaction which is unjustifiable and is in the interests of a black market or anything of that kind. The last point with which I should like to deal is the question of waste in connection with the collection of working men's Income Tax. I think the Chancellor will agree that Income Tax, because of the faulty methods of collection—

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

That is a matter which should be discussed on the Finance Bill, not on a Vote of Credit.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and Eastern

I am not discussing the raising of money, but the spending of it on clerks and other people who collect Income Tax, which, I take it, is part of the expenditure of the nation.

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

That would seem to come more suitably under Supply than on a Vote of Credit.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and Eastern

The point I wish to make is that in cutting down wasteful expenditure it is necessary to economise in the labour of the Civil Service. A great deal of the labour in the Civil Service and in the Chancellor's own Department is taken up with this elaborate system of collecting workmen's Income Tax. I have to accept part of the responsibility because I believe I was the first person to suggest that it should be collected weekly, although at that time I did not understand that it would be impossible to collect it when it was earned. If it is not collected when it is earned, this means that elaborate calculations have to be made before it can be levied. I would like to suggest ways of saving some of that expense as far as the Civil Service is concerned.

It should be done by altering the method altogether. Instead of the sum being collected at the end of the year, it should be collected provisionally at an earlier period, and, if necessary, an adjustment could take place at the end of the year. I am satisfied that the workers themselves would be prepared to agree if that were done on a pro rata basis. In the case, say, of the single man with £2, nothing would be collected at that moment; and similarly in the case of a married man with £3, and a married man with a child who has £4, and so on, up the scale. If the Income Tax could be collected at a rate per pound and not by the system of allowances, I am satisfied that the efficiency of the system would be increased, and that the amount the Chancellor would receive in the long run would be very much greater. From the point of view of production, much waste would be saved because workers in production would not be harassed trying to calculate their Income Tax, nor would they be worried whether they were getting fair play in its collection. I hope the Chancellor will take note of what has been said in this Debate on this subject. I have interpolated it as skilfully as I could, because the matter will not brook delay. In time of war we have to surrender formality for the sake of getting on with the job, and I am using this opportunity to impress on the Chancellor, while there is still time, the need for introducing a better and more efficient way of collecting that Income Tax with a view to saving himself worry, the Civil Service expense, and getting production with a minimum of interruption.

Photo of Mr Pierse Loftus Mr Pierse Loftus , Lowestoft

I have listened to every speech in this Debate, and I would like to make some comment on some of the contributions to what has been a very widely ranging discussion. First, as regards my hon. Friend the Member for Stirling and Clackmannan (Mr. Woodburn) who urged that we should act in this country now upon the message sent out by the Governor of Burma, Sir Reginald Dorman-Smith, I thoroughly endorse that suggestion, and also the plea that we have to enforce a sense of personal responsibility. Men must be given definite jobs, and if they fail they must be discharged. If you are to introduce that principle, it must be introduced in the Civil Service. These great Government Departments must be divided into sections, with a man responsible in each section for making decisions for the section, instead of referring questions to the head of the Department. If the man does not make decisions he must be displaced. There were various references by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) and my hon. Friend the Member for Wrexham (Mr. Richards) to the question of inflation. I thought my right hon. Friend the Chancellor of the Exchequer was a shade optimistic about that. I hesitate to use the word "complacency," or to apply to him certain lines by Rudyard Kipling. I certainly do not apply them to him directly; but I must say that, occasionally, listening to speeches from the Front Bench, these lines run through my mind: Whatever we do we shall fold our hands, and suck our gums, and think well of it.Yea, we shall be perfectly pleased with our work; and that is the perfectest hell of it. I would not as I say apply that to my right hon. Friend, but there was a touch of undue optimism in what he said. After all, deposits have risen by nearly £1,000,000,000 since the outbreak of war, and prices of every kind of goods not controlled have been and are, rapidly rising. That is a sign of an inflationary tendency. I echo the appeal which was made by my hon. Friend the Member for Kidderminster and my hon. Friend the Member for Ealing (Sir F. Sanderson). They pointed out that grave trouble, and the danger of inflation, would come at the end of the war. My hon. Friend the Member for Kidderminster went in some detail into the question of how it should be avoided. I would endorse his suggestions. I thoroughly support the idea that for long periods after the war, when there is a shortage of consumption goods, we should maintain, and perhaps even increase, the strict Government control which now exists, and then, as goods come on to the market, gradually relax the control, keeping purchasing power and prices regulated in accordance with the increased quantities of consumable goods coming on the market.

We must get value for this huge Vote of Credit. Are we getting that value today? No hon. Member believes that we are. No hon. Member believes that sufficient sacrifices are yet being made by the country. My hon. and gallant Friend the Member for Wellingborough (Wing-Commander James) who, I regret to see, is not in his place, appeared to contradict himself when he said, first, that the spirit of the country was far in advance of the spirit of the Chancellor of the Exchequer and the Government in imposing burdens and sacrifices, and, then, that this war was, for a great multitude, becoming a profiteering war. We must arouse this country to a new and better spirit. If we want this Vote of Credit to be so spent as to get the utmost return, we must, somehow or other, revive the spirit of Dunkirk. Everyone of us knows that the spirit of the country to-day is nothing near that of flaming zeal which existed in June, 1940. I feel that, in view of the news that we receive daily and hourly, in view of the appalling statement that the Foreign Secretary made in this House today, we have to rouse this nation to a sense of dedication, to a high resolve to sacrifice everything and spare nothing and give all we have and all we are to fight this war to the end. My hon. Friend the Member for East Birkenhead (Mr. Graham White) said something about bringing home to our people what we are fighting this war for. Surely that is unnecessary. Surely the statement of the Foreign Secretary alone is enough to convince our people what we are fighting against.

I feel that we are fighting this war for the continued life and the continued influence of the great Christian civilisation of Europe, a civilisation which embodied all that was best in Greece and Rome, which spread throughout the world, and which in every country has brought human ideals of mercy, justice, and pity. I feel that we are fighting to save our lives and liberties, and I feel that we are also fighting for the great heritage which our fathers gave us during the past centuries, not only the material heritage but the heritage of spiritual values. We have to sacrifice many things in this fight and we require inspiring leadership. The Prime Minister carried the great burden at the time of Dunkirk, but we cannot rely on him or any one man, however eloquent or distinguished he may be. Every Member of the Government should introduce in every possible speech that note of urgency, that note of appeal, that crusading note; and I regret a little that my right hon. Friend the Chancellor did not use the opportunity to-day to emphasise the urgency and the need in a far wider sense than he did. He can use an opportunity of such a speech to help to raise the morale of the nation. I know that it would be out of Order to deal in any detail with the subject, but I think it a pity that my right hon. Friend did not cast aside all the old conventions about not anticipating the Budget and so on, conventions inapplicable at a time like this, and suggest, in an aside, that he would, before the Budget, deal with the question of the workers' Income Tax thereby using it as an instrument to raise the morale of the nation.

I hope that my right hon. Friend will realise, in introducing the next Budget, that one of the factors that lessens morale and hinders the full spirit of self-sacrifice in our people and, above all, in our work-people, is that the consciousness of the unemployment which followed the last war has bitten deeply into our people, and that many in the Army, the Navy and the Air Force, and in the factories and mines to-day are filled with fears as to what will happen after the war and whether they may not again be thrown upon the scrap-heap. Of course, the right hon. Gentleman cannot in his Budget speech give a detailed blue-print of a new system that will avoid that kind of thing, but he can raise morale by giving definite assurances that he will so use and adjust the financial instrument—and will begin doing so to-day—that never again can that state of affairs arise which we saw to our shame in that long armistice between the two wars. I can assure my right hon. Friend that throughout this country and the Dominions there are men awaiting such an assurance from the Government and that it would be helpful in raising the morale of the people. There have been references, most of which were ruled out of Order, to war weapons' weeks and therefore I will not go into that subject. I would only say that the speech of the hon. Member for Chesterfield (Mr. Benson), which was full of detail, deserves some reply and some study. I cannot say whether the facts he gave were correct or not and I cannot join in the criticism he made of the chairman of the National Savings Committee, but his point deserves an investigation and a reply. There are other subjects upon which I would like to touch. My hon. Friend the Member for Weston-super Mare (Mr. Orr-Ewing) referred to Excess Profits Tax on farms. These again are points that I cannot go into, but they deserve investigation.

My final point is that surely, in this war, when we see a vast amount of debt piling up, we should see to it that the burden on the future will be made as low as possible, both for us and our children and our grandchildren. Is it just or expedient that the State should pay the same rate of interest on genuine savings invested by people as it does on the created credit of institutions? Surely, on the created credit, it should pay the cost of creation and there have been hundreds of millions of such credit created. The Chancellor of the Exchequer should adopt the advice tendered by the "Economist" three years ago and repeated constantly, that that created credit should be at a 1 per cent. maximum. It is true that my right hon. Friend pays 1⅛th per cent. to-day on these deposit receipts. That is admirable, but these are in due course changed into 2½ per cent. or 3 per cent. long-term loans. It means that, despite new technique and the strict control by the Treasury of interest rates, we are financing this war exactly by the same methods as the last war, except that the rate of interest is 2½ per cent. or 3 per cent. instead of 5 per cent.

Again, I appeal to my right hon. Friend. People, when they realise that we are adopting similar methods in the financing of this war to those which were adopted in the last war will think there is a possibility, indeed a probability, that after the war we may have like results: colossal unemployment and deflation. That is another reason why I beg of the Chancellor of the Exchequer to be perhaps a little more progressive and to introduce a little more of the new ideas of the modern world, not only in his methods of finance, but also in the speeches he makes. I ventured the last time that I spoke in this House on 8th January to say that I believed that we had to face disasters in the near future. Unfortunately, my words have proved true.

I believe that we have a bitter and a hard time before us. It is the duty of each one of us, and of every member of the Government, to mobilise every possible ounce of public opinion, including the clergy and so on, in order to make our people realise the truth of what is happening in the world to-day, and how, unless we are careful the prestige of and domination by Europe and European civilisation, will end and, unless we are very lucky, the great Empire we have inherited will pass away from us. I think that much can be done to help in that matter. I hope that every member of the Government will, in future, speak very bluntly to our people, because I believe the people would rise to the height of a great occasion if their leaders told them the unvarnished truth of what is facing them and us to-day.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

The hon. Member for Lowestoft (Mr. Loftus) returned to a subject which was discussed by a good many of the early speakers in this Debate, namely, the question of the Warship Week, which has raised a good deal of the Money needed by the Chancellor of the Exchequer. It has been stated that a good deal of this money is not genuine savings. The Chancellor of the Exchequer steadfastly refuses to let us know what proportion he considers to be a genuine saving, but I would go as far as to say that not less than 90 per cent. is not genuine savings. I do not know whether he could make out a case to prove that 10 per cent. of the money raised represents savings in any sense of the word. It comes from the banks and is returned to the banks.

When one raises a subject like this, he is told that he is attacking the bankers, but such criticism is nothing of the kind. We have the finest banking system in the world, and I would not like it interfered with until the party with which I am associated has an opportunity of presenting a better one. It is the best and soundest thing we have. Nevertheless, the Chancellor of the Exchequer is insisting by his methods upon the banks receiving twice the interest for which they ask on their money. It must be a sad reflection for some of those innocent admirals who are going round the country. I have talked with some of the admirals and they are positively bewildered. They give the impression that, in some way, we can get more battleships if people put their money into war loans. Of course, it has not the remotest connection with the building of ships. You will not get an extra rivet and people ought to understand that. It is time we stopped deceiving the people. The Prime Minister once said that our people could take it and he gave it to them, but on this question of finance we continue to tell people silly fairy tales and they innocently believe they are helping the war effort by taking money out of deposit on which they get no per cent. interest and accepting 2½ per cent. interest on it. The Chancellor says that small savings are very important indeed. Lord Kindersley went so far as to say that there was too much money sewn up in old stockings—

Photo of Mr Andrew MacLaren Mr Andrew MacLaren , Stoke-on-Trent Burslem

That is where his brains are.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

I cannot think of anything more inane than Lord Kindersley's statement. If there is any man in this country who is patriotic it is the man who sews his money up in an old stocking and puts it away. It is in effect lending it to the Government free of charge. To say that it should be brought out and used at 2½ per cent. interest is sheer nonsense and is not true. These poor admirals go round the country persuading people to invest their money in War Loans and all they have done at the end of the week is to double the cost of the interest on that money. Money does not mean a thing to-day until it is translated into terms of man power. That is true wealth, and the Chancellor made that clear to-day. Last week we had 120 warships weeks and I took a rough estimate of the number of people who would be giving their services in all good faith. I estimated that as much energy and free labour would be put into these weeks as would amount to the man-hours in a factory employing 7,000 to 8,000 people. Think of that labour put into production. At the end of the week all that these people achieved was to increase the cost to this country from£11,250 to £25,000 on every £1,000,000 which was raised.

Photo of Sir Arthur Baxter Sir Arthur Baxter , Wood Green

Is not the hon. Gentleman taking a chartered accountant's view of all this? War savings weeks have a great energising and vital influence. They make people believe—[Laughter.] I am sorry to hear that laughter from the other side. At one moment we are being lauded for raising a criticising spirit and then we have a chartered accountant's speech and laugh at it.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

I would like to quote from an ancient philosopher who was asked what was to be gained by telling an untruth. He replied, "Not to be believed when you tell the truth." The time will come when we shall have to tell the truth and people will not believe it, because they have been lied to so much. We are saying to them that they must not spend their money and that they have no right to spend it. There should be nothing on which they can spend it. The Chancellor has no right to say to me that I must encourage the production of goods, if people are not to buy my goods. The intelligent thing is to tell me to stop manufacturing. You have no right to use a single man-hour in this country which is not for the war effort. We had to say, "Too late" in Singapore, Java and Burma. Let us cut out all this nonsense and rubbish. It does not stand a moment's investigation. Week after week people are going out to tell others to save money and the only effect of these savings weeks is to double the interest. I wish the Financial Secretary would listen—

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

I think sometimes it would he most helpful if the right hon. and gallant Gentleman would listen. He-exercises his wit too frequently when he should be exercising his intelligence. It is a very serious matter. He has encouraged other people to spend hours in increasing the cost of raising money in this country. We have a banker sitting here and I am sure he will corroborate what I am saying. He and his colleagues have emphasised this, time after time. We employ thousands of people in bookkeeping for these savings weeks and the net result is that the money ends up where it began—in the bank. I am sorry that the Chancellor is not here—that he has run away. I have discussed this matter before and perhaps he feels guilty about it—

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing

Is that really fair to my right hon. Friend, who has sat here for four hours and has only just gone out to get something to eat, as everybody knows.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

I did not mean that seriously. I do not get on too badly with the Chancellor. I did not mean to be offensive.

Photo of Sir Arthur Baxter Sir Arthur Baxter , Wood Green

The hon. Member was merely exercising his wit.

Photo of Mr Alfred Edwards Mr Alfred Edwards , Middlesbrough East

The Chancellor has emphasised this question of man-power. There is waste of man-power in Departments which come under his control. I wonder if the Committee will believe me when I say that the Government, at this moment, are paying a man £1,000 a year to sweep a cook-shop floor. He may not be doing this at the moment, but he is a man who occupied a high position in the Civil Service and had to join up. On doing so he was given a no more useful job than that of sweeping a cook-shop floor. Then he was put on to clerical work— almost unskilled labour. The Government, of course, make up his salary to what it was before he was called up so that he continues to draw £1,000 a year for his unskilled labour. If the Chancellor took the trouble to find out he would discover a number of cases like that. When I spoke last, on production, I showed how waste had taken place through Treasury interference and I invited the Chancellor to investigate this matter. He did so, but he did not come out of it graciously. The fact is that the Treasury, through their obsolete methods, at the time of the Atlantic sinkings took very grave risks through interference and delay in a matter in which there was no financial risk and in which therefore they had no right to interfere. I wish the right hon. Gentleman would follow up things like that and stop this waste of time and man-power.

I was sitting in the office of a Cabinet Minister a few weeks ago, and I pointed out to him the dead waste, through the interference of a Department, of 800,000 finished shells. The Minister said: "How did you get that evidence?" and I replied: "If you give me authority I will get the actual report." The Civil Service does not know what speeding-up means. Everybody is being urged to realise that there is a war on and that we are in danger of defeat, yet I cannot find anyone in the Civil Service with any sense of urgency. In regard to the wastage of man-power, if the Chancellor will read the reports of the Select Committee on National Expenditure, on which I have laboured unceasingly for two years, reports to which the Departments have paid only the slightest attention, he will find plenty of scope for speeding-up things and eliminating wastage of manpower.

Another case to which I want to refer concerns the secretary of a company with which I am connected, a brilliant man who was an accountant, although not a chartered accountant. As a result of incompetency, there was a case of swindling recently involving £500,000. It was agreed that there ought to be some kind of check on these things, but there was a shortage of accountants. Now, the young man to whom I have referred offered himself for interview, and got an interview, but because he was not a chartered accountant—although he was a first-class accountant—he was not allowed to do a job that might have saved hundreds of thousands of pounds. The Government have spent 12 months in turning a first class accountant into a third-rate mechanic. That is a waste of man-power. Only a few weeks ago I was talking to a chartered accountant who described to me his job in the Army by saying, "I spend my days cheating soldiers out of their legitimate allowances."

The Chancellor should realise the great scope he has for eliminating wastage in Government Departments. Ministers come and go, big business men come and go, but I have yet to hear of a civil servant—and they are mainly responsible—being removed. Everyone knows that primarily they are the men who carry the great responsibilities. [Interruption.] The Secretary of State for War must have been one of the most brilliant men there, and I shall be interested to see how he develops when he comes to the House. I hope he will have great success. I have no objection to new precedents in these days. We ought to insist that the Chancellor should resolve money into terms of man-power and man-hours, and put a magnifying glass on to the Government Departments where there is more waste than in any other place in the country.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

My hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) referred to the use of man-power in connection with Warship Weeks. Although one must recognise that enormous sums have been collected in this manner, and although one cannot be too grateful to those individuals who have given their time and service to the country in this way, one must feel that the time has come when different methods ought to be employed. It seems to me to be humiliating that Admirals, senior officers and others should have to beg the public to do what it is enormously in the public's interest to do, to invest money at a fair rate of interest in the best security in the world. It is true that local propaganda has its value and that processions give a little colour, but I think that on balance, at this stage of the war, we ought to employ different methods and allow the gallant officers and others concerned to devote their time to something more directly connected with the prosecution of the war. I suggest that the method which the Chancellor should employ should be collection through the machinery of the Finance Act. There would be no difficulty in obtaining the money. What people want now is to be compelled. They realise that this is no time for deciding whether they will or will not invest. The State ought to say, "Your duty at this time is to do this thing," and people will respond. Without depreciating the great efforts that have been made during the last few years by all connected with the National Savings Movement, I feel that the time has come, when the present effort is over, to adopt methods more in keeping with the gravity of the times.

Photo of Mr Irving Albery Mr Irving Albery , Gravesend

Will the hon. Member tell us what methods he suggests?

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

The Finance Act is the method I suggest. I suggest that the Government should do it through the machinery of the Inland Revenue and make use of the Finance Act. A certain amount was done through the Finance Act last year, and I suggest an extension of that means.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The Committee has had a fairly long Debate for a Vote of Credit. Generally we deal with such Votes of Credit very much more briefly, and then discuss other matters, but on this occasion hon. Members have referred to a whole variety of subjects. I have noted one or two of them—Warship Weeks, indiistrial conscription, the advertisements in "Vogue"—curiously enough, raised by the hon. Member for Camlachie (Mr. Stephen), an expert no doubt—extravagance, Mr. Norman, post-war conditions, Income Tax for workers, inflation, the black market, and various other topics.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I will come to him in a moment. It is quite beyond my competence to deal with most of these topics, and in fact, it would be difficult for me to deal with them, because the hon. Member for East Middlesbrough (Mr. A. Edwards) took grave exception even to my whispering to my hon. Friend sitting next to me to make quite sure I understood what the hon. Member meant in one of his more obscure sentences. Apparently, the hon. Member wishes me always to be as solemn as an owl. My hon. Friend the Member for Lowestoft (Mr. Loftus) wanted me to introduce into my speech a sense of urgency. I think that that sense of urgency on this occasion will be brevity.

Very few questions have been asked, but the right hon. Gentleman the Member for East Edinburgh (Mr. PethickLawrence) asked how we are getting on compared with the expenditure in the last war. It happens that I have the figures with me, and I can give an answer to that question. The right hon. Member wants to know whether, with this Vote, we have passed the expenditure up to the end of 1918. I am not sure whether he means the two Votes together, but I will give him the facts, and he will see the position. The House granted, from 1914 to 1918, £8,742,000,000, of which £8,417,000,000 were actually spent. By the addition to the existing Votes of Credit of the Supplementary Vote of £250,000,000 which we are now discussing, the House will have granted to the Government up to the end of this financial year £8,050,000,000. Therefore, up to the end of this year it will be within measurable distance. If we include the £1,000,000,000 we are now discussing, which is the first grant for the next year, the House will have granted £300,000,000 more. That is the general position.

It is interesting to find that these are the figures and to be reminded that the cost of the borrowing which is involved in these Votes is very different from the last war. Even for the shortest loan we had to pay 5 and 6 per cent. in the last war. We have not reached anything like that in this war. In fact, the actual costs of borrowings during this war have gone down, because we have been able to get, instead of 3 per cent. for 19 years on the first War Loan in March, 1940, 3 per cent. on Savings Bonds, which ran for 25 years, and are therefore cheaper to that extent. It is remarkable to find there is that great difference, even though the totals so far are somewhat alike. The hon. Member for Ipswich (Mr. Stokes) asked a whole lot of questions; needless to say, he gave me no notice of them, and, therefore, he will not expect me to answer them without notice. He asked me a question which had floored the Brains Trust. Apparently I am supposed to be able to answer off-hand what they were unable to answer.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

May I correct my right hon. and gallant Friend? I did not say the Brains Trust refused to answer. I explained that in the general conspiracy of silence about monetary affairs the Brains Trust were probably not allowed to deal with the matter, although, no doubt, Professor Joad would protest that he knew the answer.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

Professor Joad would have asked what exactly we meant by "money." I understand the question to be, How is it that we can lend and spend so many millions to-day when in peace-time we had some difficulty in balancing our Budgets? That raises a question which neither I, the Committee nor the hon. Member would wish to discuss now, remembering the sense of urgency and that the hon. Member wishes to get on with the next Business. Of course, there is one simple answer, and that is that financial matters and economy in war and in peace are on a very different basis. In war-time we are not attempting to balance a Budget in the sense in which peace-time Budgets have to be balanced. All war-time methods of finance are quite different.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

That was not my question. I asked where the money came from.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The hon. Member for Kidderminster (Sir J. WardlawMilne) said we would hesitate before the war to spend £1,00,000,000, and if the hon. Member had the same point in mind—

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

Then I need not pursue it any further, beyond repeating that it is not sensible to try and put financial matters in the same category in wartime Budgets as in peace-time Budgets. That really is the short answer to the question.

I do not know why the hon. Member for Chesterfield (Mr. Benson) launched such a tremendous, vigorous attack on Lord Kindersley. I must say that I thought it was somewhat uncalled for; nor can I see what useful purpose is to be served by it. After all, Lord Kindersley is the head of the savings organisation. The hon. Member and anyone else is entitled to criticise what is done this way or that way, but the broad fact remains that the Savings Movement has achieved magnificent success in bringing in vast sums of money, both from the small savers and the larger savers, to help the war effort. Lord Kindersley is the head and has been most active until his recent unfortunate illness, and he certainly has the fullest confidence of my right hon. Friend, as he had of his predecessor, in the work which he is doing. The hon. Member for East Middlesbrough and other hon. Members ask what was the good of Warship Weeks.

Photo of Sir George Benson Sir George Benson , Chesterfield

I gave a number of instances of gross incompetence in the head office of the War Savings Committee. Does the right hon. and gallant Gentleman deny the accuracy of these statements, and does he in spite of them think that Lord Kindersley has the confidence of the Chancellor of the Exchequer?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

When the hon. Member makes a statement as being true, I have to accept it. I have had no time to check it up and find out what are the facts. I am merely saying the organisation has done most wonderful work and that Lord Kindersley has the full confidence of my right hon. Friend. As regards the hon. Member who criticised the general trend of Warship Weeks, there again everyone is entitled to his own opinion. I am certain that a number of people have been very glad to use the platforms provided by these Warship Weeks to address their constituents and people in other parts of the country to bring home a sense of urgency in this war.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

Hon. Members have certainly had a lot of pleasure out of these meetings. After all, various distinguished people who are asked to take part in these meetings have to use the best arguments which present themselves to their minds, and it seems to me that sufficient emphasis has not been placed on the vital need of spending less. The important part is that people should not make any claims on the manufacturing capacity of our country or its man-power, and, certainly, "Spend less" should be the fundamental motto which we ought to try and put across at these weeks. If the remarks made to-day tend to make others who may be speaking in the future pay more attention to that point, they will certainly have done no harm. The fundamental idea of these weeks is to try and bring home to the people the need to spend less by refraining from consumption, and it is by using the machinery of bands, demonstrations and so on, to which my hon. Friend the Member for Wood Green (Mr. Beverley Baxter) referred, which help to drive it home. Not all are so highbrow and intellectual that they do not like these things. I am glad that in London's Warship Week there are to be large numbers of bands and demonstrations. Some hon. Members ask why we do not have bands, and other hon. Members ask why we have them.

The hon. Member for Ipswich contradicted himself in two consecutive sentences. In one sentence he asks the Chancellor why he does not have far less Treasury control, because some contract in which he was interested has been delayed for months, and in the very next sentence he says, "Why does not the Treasury have more control because of the scandalous things that are happening at an aerodrome that he knows?" It is difficult to please everyone when they take such different views according to circumstances. So it is with regard to bands. Some people want more and some less. The fact remains that having these Warship Weeks, more than any other savings effort of that kind, fulfils a useful pur- pose, because it uses local patriotism for what we always have in mind in this savings campaign—increasing the number of savings groups and trying to see, not that the money raised in that week reaches a particular total more or less, but that thereafter the amount of money collected week by week goes up as the result partly of new groups created during the savings week and partly because of the general propaganda and the interest that has been aroused, together with the acceptance of the message that people's duty is to spend less money in war-time on every kind of expenditure in order that thereafter week by week the regular flow of savings may be increased.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Will the right hon. and gallant Gentleman arrange for a band to open the proceedings on the Report stage of this Vote?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

That might be quite a good idea., though somewhat novel, but far more Members would object than would approve the suggestion.

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

Is it the burden of the right hon. and gallant Gentleman's argument that money put into Warship Weeks by banks is saving?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

"Bands" was the word—not"banks."

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

The criticism has been made of the amount put in by banks during Warship Weeks. Will the right hon. and gallant Gentleman answer that criticism?

Photo of Mr Pierse Loftus Mr Pierse Loftus , Lowestoft

Will my right hon. and gallant Friend deal with the point which has been raised so often, why created credit should bear the same rate of interest as genuine savings, why it should earn more than 1 per cent.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

When my hon. Friend says "raised so often" I think he means raised so often by himself. As regards contributions by banks, I should say it depends on whether the money is regularly invested or not. There is no reason why banks should not invest their money at that time as well as anyone else if it is money intended for investment.

Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

Before the right hon. Gentleman leaves this point on interest, may I ask if it is not a fact that bank money comes into existence by the Bank of England purchasing investments and when settlement takes place the seller pays into his Joint Stock Bank the draft he has received from the Bank of England which creates a deposit, and this in turn is pyramided up nine times by the joint Stock Banks? If so, does it not mean that the Bank money, quite properly brought into existence by this financial operation, and upon which the Government pay 1⅛ per cent. when lent to the Treasury, is equivalent to over 10 per cent. on the actual money provided by the Bank of England, and not 1 per cent. as mentioned by the hon. Member for Lowestoft?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I cannot accept that.

Another point that I wanted to deal with is how far it is right and proper that in these savings efforts people should be encouraged to liquefy some existing investment and place the proceeds into War Savings. I think it is probably true that there are some people who, unfortunately, think they have done their full duty if they have done that. I hope everyone who is taking part in these functions will stress that the object is that everyone should be spending less. A really good War Savings Week in a particular area is probably best tested if, after it is over, every shopkeeper says, "It is the worst week I have ever known." [Interruption.] It is quite right that hon. Members should support that attitude, because, after all, the shopkeepers will suffer as much as anyone else if anything goes wrong with our financial affairs or with the possibility of our victory. The first thing to do is to persuade people that the business in hand is to spend less and, secondly, that no useful purpose is to be served in transferring existing savings from one pocket to another.

It may swell the total, but it does not do any good. What we require is new savings, that is to say, getting what we can week by week out of the incomes of the people. So I still think, in spite of the criticisms which some hon. Members have made, that these efforts which are being made up and down the country are well worth while. They bring home, or give an opportunity for others to bring home, to the people some of the more important aspects of the war as well as the financial, and they provide a platform on which a great deal of useful speaking can be done, and my right hon. Friend is only too grateful to those who have supported him in making speeches of that kind. They certainly have helped in the chief object, which is to draw off increasingly as far as possible genuine savings to help the war effort.—[interruption]—I do not like to give figures offhand now. I do not know whether they can be given or not, but certainly not impromptu.

Whatever you can stop people from spending is all to the good for the war effort, because, after all, we are dealing to-day with very large figures. The cost of the war has increased and increased and increased. My right hon. Friend is making every endeavour to see that there is no extravagance and no wasteful expenditure. We are grateful to the Committee of Members of the House who give us advice on this subject. My right hon. Friend would wish me now, as always, to repeat that, if it comes within the knowledge of any hon. Member that there are such cases going on, whether they are on the Select Committee or not, no one would be more glad than he that he should be informed in order that we and other Ministers can do our best to find out what can be done to stop it. Beyond that and keeping a very watchful eye on expenditure, I do not know that there is very much more to be done.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

What happened to the Report of the Committee on National Expenditure and its criticisms, and will the Chancellor of the Exchequer no longer connive at the hushing-up of cases such as the Militia camps scandal?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I must repudiate the suggestion that my right hon. Friend is conniving at the suppression of anything. I entirely repudiate that. The Select Committee has brought forward a great deal of information and given a lot of useful advice, primarily to this House, whose servant it is. It is the business of the Departments to go through the Committee's Reports, and at regular intervals they make reports to the Committee of what they have done.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

As the word "connivance" involves a grave accusation, it is only right that I should justify it. The Government of which the Chancellor is a member was responsible for suppressing the report of the Departmental Committee on the Militia camps scandal.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I am sorry, but these are not matters within my personal knowledge.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

The Treasury ought to know.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I daresay the Treasury does know. It has a great many things to deal with. I only said that I, as a Minister interrupted in the middle of a speech, am not in a position to say one way or another, because I do not know. The hon. Gentleman would not want me to say I did know if I did not. I am certain, however, that my right hon. Friend has not connived at anything of that kind. I do not know the details of the case the hon. Gentleman has in mind, but I say it is not the kind of accusation I should expect to be made about the Chancellor in Debate.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I only hope that the Committee will allow us to have this Vote, because I understand that there are some Supplementary Estimates on which some hon. Members want to address the Committee.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Will the right hon. and gallant Gentleman give some answer to the question why this money is not taken compulsorily, as the lives of men are?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

A great deal of money is taken compulsorily through the Income Tax, as the hon. Gentleman is probably aware.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

Will the Financial Secretary answer the Question which I specifically put to the Chancellor during my remarks, whether the Government approve of the practice in which assurance companies are indulging of offering £1,000 worth of war stock for an annual premium of £82 odd?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The hon. Gentleman produced this in the course of his speech. I do not know whether they do or do not. No such offer has been made to me, and I am not able offhand to make any statement in regard to it. There is a Report stage of this Vote of Credit, and if there are Questions which require an answer, an answer will be given, but I hope the hon. Gentleman will not press me to make statements about things on which I am not at the present moment fully advised.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and Eastern

Is the right hon. and gallant Gentleman prepared to give any indication that he will consider the question of the machinery of the workers' Income Tax?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

My right hon. Friend has answered Questions at Question time about that.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

I would like to call attention to the matter I raised a moment or two ago. That is, that on the admission of the Financial Secretary to the Treasury, it has no knowledge apparently of the fact that the Committee on National Expenditure

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I cannot have that. I said that I have no personal knowledge. I did not say anything about the Treasury.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

As the Chancellor is now present, I will repeat what I said. The Committee on National Expenditure drew attention to very grave scandals—there is no other word for it—in the Militia camps contracts. I take it that the Treasury is there to be the watchdog of the taxpayer. Apparently it has connived at the firm which is mainly responsible for these scandals and which was struck off the War Office list being put back on that list, and it is now upon the list of the Ministry of Works and Buildings.

Photo of Mr William Gallacher Mr William Gallacher , Fife Western

The right hon. and gallant Gentleman said that the Chancellor was thankful to Members for making speeches. I want to ask him whether his right hon. Friend is thankful to the hon. and gallant Member for Preston (Major Churchill) for the speech he made about the Municheers, and whether any action will be taken?

Question put, and agreed to.