Clause I. — (Additional borrowing powers, etc.)

Part of Orders of the Day — Miscellaneous Financial Provisions Bill – in the House of Commons at 12:00 am on 13th March 1946.

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Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , Dorset Southern 12:00 am, 13th March 1946

May I pass from that point and ask the plain question: Does the annual income derived from taxation go to construct permanent Government establishments? We suppose so, but no one knows how many factories are built by the Government out of taxation, or what is their value. Much more important than that—and it applies particularly to this Clause of the Bill— is whether the people's investments in the Funds go to provide old age pensions and other annual outgoings. It may well be the case. No one has the slightest idea, and I suggest to the Committee that that is an extraordinary position, and calls for some drastic revision of the system of Government accounting.

It is easy to say that the Government have not embarked on the course of devoting a large part of the revenue to the creation of profitable, permanent assets. Much more likely altogether the reverse of that is true, and the Government are devoting the proceeds of capital savings and investment to annual expenditure without any tangible return. That is exactly what the Government did in 1930 and 1931. I suggest to the Committee that that is a vicious financial practice, which brings private firms into bankruptcy, and great States into ruinous inflation. Are the Government sliding easily down that slope? I think they are, and fatuously, too. The saying of the right hon. Gentleman the Member for Wakefield about pounds, shillings and pence being meaningless symbols, is well known already to the Committee, but there are other examples as well. There is the Minister of Works, who, during the Committee stage of the Building Materials and Housing Bill, said he had no knowledge of the financial matters of his Department. Several times the Chancellor of the Exchequer and the Financial Secretary to the Treasury have come here and said that they do not know what our commitments are, and in Bill after Bill which the Government introduce are the sinister words, "No estimate of the charge to public funds can be given."

4.0 p.m

But much more serious than attitudes and words, are the facts and figures of the present situation. The National Debt has risen over the last six years, by an average of over £2,500 million per annum, and the fiduciary issue has also increased by £150 million per annum. The note issue has gone up from £660 million in 1939 to £1.615 million today. Average weekly industrial earnings in industry have risen from 53s. 3d. in 1938, to 96s. Id. in July last year, an increase of 80 per cent. The index of wholesale prices stands at 175 today against 100 in 1939, industrial raw materials at 200 and building materials at 158. The cost of building labour has risen 70 per cent. on 1938 prices. It is true that the working class cost-of-living index stands at 131, but that scarcely represents reality, because subsidies to the extent of £300 millions are included in it. Those subsidies themselves operate in an inflationary sense. Do not these figures point to a developing inflationary situation? Manifestly a man who invested £100 in war loan in 1939, finds that it is only worth £50 or £60 today in terms of current prices of goods and services. It is abundantly clear that the pressure of Government money today is, bit by bit, destroying the value of small savings.

It is a completely false economic doc trine that high taxation and a high rate of savings prevent inflation. That is the stock argument of the Chancellor of the Exchequer, and it simply will not wash. Look at the result of both today, after six years of war. The burden of the propaganda of the National Savings Committee is that self-interest and patriotism are served by investing in Government stock. But where is the self-interest, if at the end of six years the money is reduced by half, and where is the patriotism if at the end the nation finds itself landed in a financial crisis? When do we begin to introduce legitimacy into the activities of the Chancellor of the Exchequer and his collaborators in the national savings movement? I believe that the boundary line of propriety is what I said earlier— taxation for current expenditure, savings for capital investments. There must be some mean between the extreme view of the hon. Member for Ipswich (Mr. Stokes) who regards all savings campaigns as a racket, and the more general view that such campaigns are the very essence of virtue and wisdom. To refuse the Government any borrowing powers at all would obviously be to wreck the reconstruction programme, to reduce the strength of our Armed Forces, to destroy our overseas commercial connections, our propaganda services and to impair our prestige. On the other hand, to allow the Government to pursue their present course unchecked would inevitably impoverish the pensioner, and betray the trust which millions of small savers have reposed in successive Governments.

As my right hon. Friend the Member for the City of London said just now the Chancellor and the National Savings Committee must really think out afresh what their policy is going to be over the next few months. Let their appeal to the public be selective. Let it be calculated to promote investment in permanent assets. Do not let us have any more of these vague national savings campaigns which only find expression in higher annual outgoings. I shall certainly continue to attack such campaigns as the raw material for totalitarian equalitarianism at home. Hon. Members opposite might equally well attack them as the raw materials for imperialism over seas. Let us put this so-called mandate of hon. Members opposite to a practical test. Let the Minister of Fuel and Power, in conjunction with the Chancellor and the National Savings Committee, issue a prospectus for the re-equipment of the coal mines