Orders of the Day — War Debts

Part of the debate – in the House of Commons at 12:00 am on 22nd November 1949.

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Photo of Mr Stephen Swingler Mr Stephen Swingler , Stafford 12:00 am, 22nd November 1949

We are indebted to the hon. Member for Leek (Mr. Harold Davies) for raising once again this question of war debts. As he said, it has been discussed on a number of occasions in this House since 1945, but we are entitled to go on raising this question, because it is one that has not yet been dealt with properly. We are entitled to underline the extent to which we are suffering today from the costs of war, and from the fact that Britain bore a disproportionate part of the cost of the 1939–45 war. The hon. Member for Leek recalled the famous declaration of President Roosevelt in 1942, when presenting his Lend-Lease Report, in favour of applying the principle of equality of sacrifice to the United Nations; that the burden of the war should be equally and fairly spread by the same sort of fraction of the national incomes of the United Nations being spent on war.

In fact, it has turned out, taking into account Lend-Lease and reverse Lend-Lease, that Great Britain bore a disproportionate burden. If, in fact, that principle of equal sacrifice had been applied, there is due to this country the sum of £6,000 million for what in fact was over-spent if exactly the same fraction of the national income were applied to the Powers that fought against Fascism. That is not my figure, but the figure given by Congressman Herter in his report. There is nothing I wish to add to the analysis so ably outlined by my hon. Friend the Member for Leek, but I want to make a completely different point which, I think, is relevant.

It is not only true that Britain paid a disproportionate amount of the cost of the Second World War, and has suffered as a consequence of that a piling up of debts and sterling balances—as my hon. Friend the Member for Stroud (Mr. Parkin) has been discussing—but it is also true that we are already paying a disproportionate amount of the cost of the next war. It should be emphasised that today under the heading of defence, and the meeting of world-wide commitments, and by contributing to arrangements under various Acts and treaties, this country is bearing a disproportionate burden. This country is a heavy d6btor nation as a result of suffering the whole course of two world wars and the enormous losses sustained in the Second World War including over £6,000 million of British overseas investments, as well as the actual physical destruction and the piling up of these debts and so on. It is an amazing situation, therefore, that this country should today be paying a higher proportion of its national income for defence—in the opinion of some people in preparation for the next war—than any other nation in the world except the Dominion of Australia.

According to figures recently published in Report No. 1265 of the United States House of Representatives Committee on Foreign Affairs, which is available to hon. Members, Britain is spending 7.6 per cent. of her national income on defence, compared with an expenditure of 6.4 per cent. by the United States, between 4 per cent. and 5 per cent. by France, 3.2 per cent. by Belgium and 2.0 per cent. by Canada. I quote those figures from memory, but I think that I have quoted them correctly. It is, I think, true that the Australians are spending some 11 per cent. of their national income on defence. It is also true that the Netherlands have a very heavy defence budget this year which I think is roughly the same percentage of national expenditure as the figure for Britain.

What is true—and again this is on the authority of the House of Representatives Committee on Foreign Affairs—is that if an average percentage were struck of expenditure on the defence preparations of all the Atlantic Pact countries, this country could reduce its budget by £147 million. We are spending £147 million more for defence than we would have to spend if President Roosevelt's principle of equality of sacrifice, worked out in terms of the national income of each country and the amount being spent on defence—that being regarded as a common effort—were applied. We find that the United Kingdom, having suffered the consequences of two world wars, having paid out a higher proportion than the other United Nations for the Second World War and, four years after that war, now bears a heavier burden in its defence budget in relation to its national income than the other countries in the common effort, including countries which are far wealthier and which have far greater resources.

When that situation is appreciated, very little more need be said to account for the British crisis of 1949. We need to go into little more than these results of past wars and the problems arising out of defence in the past, the present and the future, in order to appreciate the position. The problem is aggravated by the fact that the trend is for the cost of war to become heavier. The cost of the last war per day per man equipped was far heavier than the first war, and in the next war it will be a hundred times greater. Anyone who has studied the defence budgets of different nations—and particularly that of this country with its global commitments—knows that the enormous cost that we have to pay is not merely due to our world-wide commitments, because Britain had these Imperial commitments during the inter-war years, but is due to the fact that modern equipment is vastly expensive and rapidly becomes obsolescent. The cost of equipment—of wireless, tanks guns and planes—increases rapidly.

This burden of defence hangs like a millstone round our neck while we struggle to reconstruct after the world upheaval caused by the last war. On this question we must implore the Economic Secretary and his colleagues to become more tough-minded. We cannot continue to bear these burdens. If nothing can be done quickly to apply the principle of equality of sacrifice to the past, something can be done about the present. Something can be done about piling up debts in the present. In view of the criticisms made about the causes of our economic crisis, we are tntitled to demand that in any arrangements, in commonly agreed foreign policies and commonly signed treaties and so on, we should not have to bear a disproportionate part of the cost.

To my mind, we are entitled to demand more than that. We are entitled to demand that we should have to pay less than what is strictly our fair share, because we have borne a disproportionate amount of the cost in the past. We are entitled to say that we should be allowed to pay a smaller fraction of our national income for military preparations than other countries which are better situated or which suffered less from the economic point of view. In any case, we are entitled to demand that this Government should stand up for some kind of fair shares. We are entitled to say that it is wrong in every way that this country in its present situation, in receipt of Marshall Aid, and "carrying the can" as it does in various parts of the world, should have to spend 7.6 per cent. of its national income on defence when the United States spends only 6.4 per cent., Canada only 2.0 per cent. and France only 4.6 per cent.

There are people who say that we should spend more, that we should provide more men for the forces and commit ourselves even further in Western Europe. We are entitled to demand that there should be some form of equal sacrifice in regard to manpower, costs and so on, in connection with that policy, just as we strive to get the application of the principle which was enunciated by the President of the United States of America. That is no reflection on or criticism of American policy. It was, after all, the great American war leader whom we all salute, President Roosevelt, who generously enunciated that principle of equality of sacrifice in the national income in trying to pay for the war—in a way in which wars have not been paid for in the past—as a common war effort. I think we ace entitled to consider this picture as a whole—not merely the sterling balances and how they should be dealt with as a separate problem, or merely the war debts that have piled up, as well as the prospective war debts that may pile up in future—together with the general strain on the economy of the country of payments for past, present and future wars.