I beg to move, in page 2, line 10, to leave out "three" and to insert "two."
I do not want to detain the Committee long in moving the Amendment which stands in my name and in the name of my hon. Friend the Member for Leigh (Mr. Tinker). We have put down this Amendment partly to call attention to the wrongful way, in our view, in which the war is being financed, and partly in an endeavour to persuade the Chancellor to alter the rate of interest which is stated in Clause 2 (3) by reducing the percentage to be paid from 3 per cent. to 2 per cent. I know I should not be in Order in wandering over the whole field of how money should be raised, but we do wish to point out that the Government have power to take over the lives and property of everybody, and we submit that the way in which the war is at present being financed allows the moneylenders to profiteer and nobody else.
It appears to us that the whole method is wrong, and the Chancellor would do well to take into consideration what we have to say. I would like to point out that at present the Chancellor, under this Clause, borrows by Treasury bills, but there is no arrangement which prevents the banks from converting the money, when repaid or at some future date, into War Loan or some other loan at a higher rate of interest. Our submission is that the right way to finance this war is by interest-free money, and we would have preferred to have moved a Clause to that effect.
The hon. Member must not, under this Amendment, go into any details as to the general question of financing the war. The Amendment covers a very limited point indeed. It is merely an Amendment to the maximum rate of interest permitted in the case of transactions which are perfectly well known and well established.
On that point, Sir Dennis, surely we have the right to show where it would be saving money for the nation if a less rate of interest were fixed, and to give examples; surely there is nothing wrong with that?
I fully appreciate how narrow the limits are, and I will endeavour not to stray. I was only mentioning that matter in passing. I would, however, call the attention of the Committee to this point. The alteration which we suggest, the reduction from 3 per cent. to 2 per cent., would have a very substantial effect on the cost of the war when you consider the sums involved. For instance, at the rate at which the National Debt is now' increasing this proposal would represent a saving of something of the order of£20,000,000 a year. We do suggest that there is no reason for this high rate of interest. The Chancellor of the Exchequer has it in his power to control the Bank rate. He can put it down to 1 per cent. and make money cheap, and it is outrageous in our view that a 3 per cent. rate of interest on any borrowings should be included in this Bill at this stage of the war. I do not wish to detain the Committee, in view of, the fact that I shall not be allowed to cover the whole of the range which I had wished to cover, but unless we get some promise from the Financial Secretary to the Treasury that an alteration will be made in this respect, my hon. Friend and I feel disposed to divide the Committee on this Amendment.
On this matter I think the Committee ought to be aware of what our intention is. We believe that there is no reason to pay any interest at all on these sums, but we recognise that it would be very hard to convince the Committee of that, because the idea of interest has got hold of the public mind. But we do say that 3 per cent. is too high a rate of interest and that 2 per cent. would be sufficient at a time like the present. The State has full power now to take over everything that is necessary for the prosecution of the war. If the Government want man-power or anything else, they have the right to take it. Has not the State an equal right to take over control of all money? In that case why should the Government ask people to lend them money at interest when they have the power to take it? To my mind the question of money ought not to enter into this matter at all. The State's resources ought to be complete and there should not be any question of paying any interest on borrowed money.
Let me give one or two illustrations of what I mean. The public are invited to lend money to the State and are told that if they lend the money they will get 3 per cent. for it. The man who has a few pounds at his disposal responds to that and says, "All right, I will lend my£100" or whatever the amount may be. At the same time the man who has control of large sums of money will lend his£1,000 or his£10,000 or some larger sum, and he is getting a far greater amount in interest than the other man. The man who lends£100 gets£3 interest on it in the year; the man who lends£1,000 gets£30 interest in the year. It is true that he may have to pay back£15 by way of Income Tax, but he is still getting£15 against the other man's£3. We are demanding sacrifices from the people of the country in this war. We are saying to them, "Give all you have." There is no restriction on what people can give. But while demanding these sacrifices, we are saying to other people, "Lend us your money, and we will pay you a certain rate of interest."
I think if Parliament and the country realised what this meant, they would not tolerate it any longer, and at a time like the present, when the Consolidated Fund Bill comes before us, we have an opportunity of drawing attention to it, and we intend to do so. As my hon. Friend has said, we are prepared if necessary to go into the Division Lobby on this Amendment for the express purpose of drawing the attention of the nation to what is behind all this. I take part in meetings on behalf of what is called the War Savings Movement for the purpose of showing that the people are behind the war effort. I know in my own mind that the lending of money makes no difference at all, but I attend meetings for the purpose of getting people to show that they are determined to carry on the war, and I give all the help I can. As I have already said, the question of money has no real bearing on the question at all. The question of money ought not to be brought into consideration in this matter, and nobody, because he happens to be better off than others, ought to be able to make a profit out of the present position of affairs. That is what is happening now. You have the wealthy man making a profit while the poor man or the moderately well-off man is asked to give his all. I support the Amendment moved by my hon. Friend.
I have listened with some surprise to the speech of the hon. Member for Leigh (Mr. Tinker). I do not think I have ever heard more inaccuracies in such a short time, in so many words, about so little. What the hon. Gentleman really proposes is that all depositors in the Post Office Savings Bank should have their rate of interest cut by one-half per cent., and probably a large proportion of his constituents have deposits in the Post Office Savings Bank. People have been asked, in good faith, to subscribe to War Savings Certificates on which the present rate of interest is 3 per cent., free of Income Tax, or in effect, 6 per cent. The hon. Member proposes to this Committee that we should tell the millions of people who have subscribed on those terms, that faith will be broken with them.
The hon. Member spoke of people making sacrifices. The other day he was asking for an extra 3s. a day for coal-miners. I have not the slightest objection to the coalminers having it, but what is the use, in those circumstances, of talking about sacrifices, and what is the use of saying that the rich man—I do not happen to belong to that category myself—makes no sacrifices? The so-called rich man has had his income cut in half since the war started; some have had their incomes cut by nine-tenths. Broadly speaking, the only people who cannot subscribe a shilling towards War Savings Certificates, or any other form of national investment, are the people called millionaires, because their pre-war commitments exceed their net income. It is sheer hypocrisy to suggest that people who are getting perhaps twice the money that they got before the war, are making sacrifices. There is no sacrifice in such a case, and it is dishonest, if not unfair, to the people of this country, in the present condition of things, to make a speech of the kind to which we have just listened.
I do not know whether the hon. Members who have put forward this Amendment have, as the hon. Member for South Croydon (Sir H. Williams) alleges, made a number of inaccurate statements, but I think the hon. Member himself has made a few extravagant ones. I seem to remember a table recently prepared by the Treasury which went to show that the number of higher incomes assessed for Income Tax and Surtax during the war had increased over the number which existed in the prewar period. It looks to me therefore as if some people, other than coalminers, are making a very good amount of profit out of the war.
I am referring to gross incomes. If you refer to a miner's gross income of£4 3s. a week or whatever it may be, you must also refer to the millionaire's gross income if you are to deal with them on the same plane. We have heard and read a lot about the "poor rich," but they are better able to maintain their standard of life than some of the "poor poor."
I wish to direct the attention of the Committee to a matter which I think merits serious consideration. As the Committee knows, most of this money on which we are asked to pay three per cent. is in short-term borrowings other than Treasury bills, for which the Government pay only something in the nature of£1 per cent. With the war expenditure increasing and therefore a large amount of money inflation there is a bigger volume of money on which we are compelled to pay up to 3 per cent. To show the casual way in which the Treasury deal with this question of interest on borrowings, it is only necessary to recall what happened on a previous occasion when my hon. Friend the Member for Leigh (Mr. Tinker) pointed out that the 5 per cent. which was then the figure, was too much, and the Treasury immediately reduced it to 3 per cent., thereby, I suggest, proving conclusively that there was room for cutting the rate of interest. When we consider the 2½per cent. paid on Post Office Savings Bank deposits, we must remember that they are almost entirely small deposits. If we are to continue the interest system—and my hon. Friends, be it noted, have not advocated cutting out interest altogether—then I think we have to make some discrimination between the small saver and the large saver.
The Committee must be aware that today the money industry is probably the only industry which has not been seriously affected by Excess Profit Tax. To-day this industry is making huge pro- fits owing to the inflation of Government expenditure. I suggest that my hon. Friends are quite right in suggesting to the Treasury that to-day, when they are paying only about 1 per cent. on Treasury bills, they ought to reduce the interest on the next class of short-dated securities with which this Amendment deals to 2 per cent. at most.
The hon. Member is going outside the subject of this Amendment. If in addition to looking merely at the word "two" or "three" in the Amendment he will look at the sentence of which that word forms a part he will realise that no question arises here of differentiation between the rate of interest paid on small deposits or large deposits or matters of that kind.
But in reading the Bill I find in Clause 2 Sub-section (3)
Any money borrowed otherwise than on Treasury bills shall be repaid, with interest not exceeding three pounds per cent. per annum…
Then it goes on to say:
…at any period not later than the next succeeding quarter to that in which the money was borrowed.
It seems to me that the 3 per cent. we are asked to pay is not for long-dated securities as we understand that term but for comparatively short-dated securities. I suggest that in transactions of this kind, which are somewhat analogous to Post Office Savings Bank deposits, there is some similarity between the trustee savings deposits and the Post Office Savings Banks which are a form of short-dated security, and this type of security on which the Government ask us to pay up to 3 per cent. Whether the Committee agree with me or not, I think the time is coming when the country will not be content to see the National Debt swell and increase, thereby increasing our capital liabilities and at the same time incurring increasing interest liabilities from year to year. I suggest to the Treasury that on technical grounds alone, apart from questions of equity, the Treasury might consider reducing the 3 per cent. inserted in this Bill to the 2 per cent. advocated by my hon. Friends.
I wish to ask a question. As you, Sir Dennis, have pointed out, this is a very narrow Amendment, and I do not intend to follow either the hon. Member beside me or the hon. Member behind me on the question of the poor poor and the poor rich. I would only say that the poor poor are better on than before the war, as they deserve to be, and that as long as the poor rich can afford to clothe and house themselves and give their children food, it is all they ought to expect in time of war. I think that the principle of the matters raised in the Amendment is of very great importance, and perhaps my hon. Friend can indicate that at some future date, for example after the resumption, he will speak to us on the whole question of long and short-term borrowing policy, because there are certain disturbing factors about it which it would not be in Order to mention now.
I hesitate to intervene too soon, but it is clear from what has been said that Members who have spoken on this Amendment are under a complete misapprehension as to what the Sub-section deals with. It has nothing to do with medium or long-term borrowing. It has nothing to do with War Loans or War Bonds or Savings Bonds, because these are raised under the National Loans Acts, not under this Bill at all. Therefore, while I appreciate the skill with which the hon. Member for Ipswich (Mr. Stokes) raised the issue which is always at the back of his mind, I cannot go out of Order in replying to it. What this Sub-section refers to are what are known as the Ways and Means Advances, which are day-to-day borrowings. As a matter of fact a large number of our Ways and Means Advances represent the idle balances which are in the hands of other Government Departments, that is, inter-Departmental borrowing, and lending which, of course, does not cost anything at all. It is only common sense that money should be used if available in any Department and then put back again. There is no expense there at all.
The only part on which there can be any argument at all is the case of advances by the Banking Department of the Bank of England on this very short-term basis. A reply was given to my hon. Friend the Member for East Stirling (Mr. Woodbum) on 16th January, 1940, when he asked
what were the rates payable. The reply was:
The present rate of interest payable on Ways and Means Advances from the Banking Department of the Bank of England is ½per cent. per annum. If exceptionally large amounts are borrowed, the payments on the excess amounts would be higher, but not exceeding 1 per cent. per annum."—[OFFICIAL REPORT, 16th January, 1940; col. 20, Vol. 356.]
That is what we are talking about. Actually, during the present war advances from the Banking Department have been on quite a small scale. In fact, I can inform hon. Members that during the four months April to July this year the amounts have averaged only£4,000,000 outstanding on any given day. Therefore the hon. Gentleman will see that the theme of his speech was really concerned with an entirely different matter.
It is only Ways and Means Advances from the Banking Department. As the hon. Member for Leigh (Mr. Tinker) pointed out in his speech, last year he persuaded the Committee to change the figure in this Subsection, which is a common form of Clause and which exists in all Consolidated Fund Bills, from 5 to 3 per cent. That figure of 5 per cent. had been in Consolidated Fund Bills for 71 years. As it bore no relationship at all to what in fact is the cost of these Ways and Means Advances, my right hon. Friend accepted that in the circumstances of to-day 3 per cent. was perhaps a tidier sum for the reason that it is the maximum at which we have been borrowing on long and medium terms, and therefore, it was most unlikely ever to be reached for this type of borrowing. The limitation has not been effective, and there is no reason to suppose that it will be. The hon. Member says that as 3 per cent. is not reached, why not change it to 2? I would answer that by saying that 3 per cent., because it is the maximum figure for other borrowing, is a reasonable figure to insert here. No one expects it to be reached.
On the other hand, it is reasonable to think that in Consolidated Fund Bills, which come before us regularly year by year—in war-time we have to take them more frequently; in peace-time it is usual to have two each year, one to cover the main Estimates and the other to cover the Supplementary Estimates—the Committee should agree that a figure like this should be stereotyped for a number of years. Certainly there is no point in changing it from time to time. Indeed, it would be difficult to say at any particular moment in normal times, to forecast ahead, whether it might or might not be desirable that the figure should be changed. In point of fact it is not reached at the present time, but it seems better that we should let it stand as it is now and not change it. There are certain disadvantages in constantly chopping and changing these figures in formal Bills of this kind; and, as I have explained, we are not borrowing at anything like that rate, nor are we likely to. The Noble Lord asked whether we could have, at some stage or other, a discussion on the general borrowing policy of the Government—short, medium, and long. I can only put the Noble Lord's point to my right hon. and learned Friend the Leader of the House. I am neither the Chancellor nor the Leader of the House. I cannot explain the matter now, but I can well believe that there would be some advantage in having some of these matters discussed, although I would point out that we are not far distant from the time when the Budget was opened, and when it was possible to discuss these matters.
The ordinary peacetime system, by which we have a discussion on these matters on the Budget, is hardly applicable to the circumstances at these times. I hope that this point, which is not a frivolous but a substantial point, will be considered. As several of my hon. Friends have suggested, we should have not once a year but more often, a more or less full-dress Debate on our financial position.
I will certainly convey that point to my right hon. and learned Friend. The Noble Lord will agree that we do take Votes of Credit from time to time, and that opportunity for such discussions is given then.
Is it not a fact, Sir Dennis, that under the Rules of the House it is not possible on a Vote of Credit to discuss this matter in all its aspects? I feel that the noble Lord is right in his suggestion, that we should have an opportunity for a dis- cussion with a broader sweep on the whole question.
The right hon. and gallant Gentleman has said that discussions of this kind can take place on Votes of Credit. Am I right in supposing, Sir Dennis, that on Votes of Credit we may discuss only the spending, and not the raising, of the money?
I am not in the least convinced by the right hon. and gallant Gentleman's so-called subtle argument. It only makes me think that instead of substituting "two" for "three," I should have put down to substitute "one." However, provided that I can get a categorical assurance from the right hon. and learned Gentleman the Leader of the House that we shall have a whole day to discuss this matter after the Recess, I will withdraw my Amendment.
In the first place, that is, strictly speaking, irrelevant. In the second place, I am not prepared now to give any Ruling on what may or may not be discussed on a Vote of Credit.