4.0 P.M.
I now come to the Debt. The National Debt, from the Estimates I have submitted to the Committee will, at the end of the present year—31st March, 1919—amount to £7,980,000,000, Previously, in counting our liabilities, I have deducted altogether the advances to the Allies and to the Dominions. I do not propose to take that course to-day. We cannot ignore what has happened in Russia, though even now I do not admit, and do not believe, that we should regard the debt of Russia as a bad debt, because sooner or later, in spite of what is happening now, and whether Russia should or should not be divided, there will be an ordered Government in that country. The natural resources of Russia are great. Those resources can only be exploited with the aid of capital, and, whenever there is a Government, foreign capital will be required, and they will realise that it will be unobtainable unless previous debts are paid. It is very necessary, I think, in dealing with the national accounts, to treat them in the same way as a business firm would treat its own accounts, and for the time being we must make allowance not only for what is happening in Russia, but for the possibility that at the time the War ends we may not be able to rely on receiving immediately the interest due to us by all our Allies. In making this calculation, therefore, I propose to take off half the debt of the Allies as if that were our liability. At the end of next year the total debt due by the Allies to us will be £1,632.000,000. I propose to deduct half of that, namely, £816,000,000. I deduct also the debt due by the Dominions in full, £244,000,000, and the obligation of India in full, £64,000,000, making a total of £1,124,000,000. That would make on this basis a Debt for which we would be liable of £6,856,000,000, and I will say in passing—I have not mentioned it before—the gross amount of our National Debt at the end of last year was approximately £5,850,000,000, or, taking it in the same way, £4,926,000,000 net liability. The amount of our liability at 31st March next will be, as I have said, on this basis, £6,856l,000,G00. Take 5½ per cent. on this amount as the rate of Interest and Sinking-Fund, the total comes in round figures to £380,000,000. This, added to the normal expenditure, makes a total amount to be paid out of Revenue of £650,000,000.
How is that to be met? Taking the existing taxation alone, my advisers have given me as an estimate £540,000,000. They have made that estimate carefully, but, of course, it does include a. recovery from the absence of war conditions. It includes recovery of Customs and Excise and some increase in Inland Revenue. As regards the latter, the income on our gross debt itself adds to the revenue we receive, but, however conservative that estimate may be, it is obvious that mistake is possible, though, as I have said, it has been made with the utmost care, and on the whole on a conservative basis. Taking this estimate, there remains a deficiency to be met, if we arc to fulfil the conditions which I have laid down, by new taxation on the full year of £110,000,000. We become so used to these enormous figures that, possibly we can hardly realise what this means; but the Committee will realise, when I remind them that this addition to taxation which I propose this year is something well over 60 per cent. of the total tax revenue in the last year before the War. To make good this deficit of £110,000,000, I shall propose new taxation which in a full year will bring in £114,000,000, without taking account of another tax for which I have made no estimate, and to which I shall refer later.