This Supplementary Estimate is divided into two parts. The first part is the increase of war bonus, on which I shall say something presently. It is following on the war bonus agreement, the principle of which was approved by a Vote of this Committee in December last, but by far the larger amount on the Paper is styled provision for increase analogous to war bonus in the case of temporary clerks. Various questions have been asked in this House at different times on the rates of remuneration of the temporary staff employed in the Civil Service, their claims to what has been called bonus having been urged. With them the question of bonus does not arise and, as I have explained from time to time in answers to questions, the temporary staff has always been paid at a consolidated rate calculated, so far as is practicable, on what is a fair rate of wage at the time they were taken into employment. The temporary clerks in the Civil Service were taken on from quite early days in the War, and with the increase of the work during that period and the creation of new departments it was inevitable that their numbers should increase very largely. Recruited as they were at different times for different Departments, it was also inevitable that there must have been the greatest difficulty in getting a proper relation between the salaries that were paid to men in one place and men in another. Various endeavours were made in the year 1917 to get some kind of fixed rate for the work they did, but when we came to the period of the most rapid rise in the cost of living we were faced with the difficulty that in order to give them a legitimate increase it had to be done by way of negotiation, not of bonus, but of the rate of pay.

The numbers involved on this Vote are in round figures 110,000. That is a decrease of 18,000 on the staff that would have been included twelve months ago. I hope that that decrease may be continued during the next financial year, but I am afraid it must be the case that some time will elapse before the temporary staffs cease to be a part of the machinery of the Civil Service. The figure of 110,000 is a large one, but it must be remembered that the process of organisation is going on at present and is being pushed forward as fast as practicable with a view of discovering the numbers which should be on the permanent establishment of every office, having regard to its function to-day and the duties that will lie upon it, so far as we can see, in the years to come. I very much hope that this may be the last revision which will have to be made, although it is only fair to advise the Committee that at this moment there are certain claims pending to be dealt with by the Arbitration Board of the Civil Service, to whom these cases have been referred since the beginning of the War when the parties concerned are unable to come to an agreement. The question of the war bonus, of course, is on an entirely different footing. I do not want to repeat myself and be more tedious than I can help, because I made a tolerably full explanation in December of the system of the war bonus and the methods of its computation; but perhaps, in view of the debate which will follow, it may be well to emphasise a few of the salient facts connected with it. As was brought out in the discussion on the Vote for assimilations the other day, we have to remember that the rates of pay in the Civil Service, speaking generally, are pre-war rates. What has been done to enable civil servants to meet the increaed cost of living has been done, not by rates of pay, but by war bonus. It is important to get that clearly into our minds. What would have been the alternative if no scheme of war bonus had been devised?

I put it to the right hon. Gentleman and to the Committee that we had better make up our minds whether we are to discuss the policy of the war bonus or only the justification of this Supplementary Estimate. If the right hon. Gentleman thinks it advisable to discuss the question of policy, the Debate will be continued by other hon. Members. I should have thought that the only question before us was the justification for the increase of £800,000.

On a point of Order. Every day this bonus goes on the circumstances are so much modified and changed that the principle of the application of the bonus comes to be a matter for reconsideration when a Supplementary Vote is asked.

Perhaps nobody in the Committee appreciates more than I do the difficulties of the Chair in these Supplementary Estimates, because I have had a considerable amount of experience in that position myself, but I would put it to you, Sir Edwin, that, as my right hon. Friend has just said, the circumstances on which alone the justification for these increases which are now asked is based are changing every day, and I do not quite see how my right hon. Friend the Financial Secretary can justify to the Committee the sum for which he now asks unless he tells us how the position was based and how it stands to day. As far as I am concerned, in any Debate which follows I shall endeavour to keep myself as strictly as possible within the limits which you lay down.

I think it will be possible so to guide the discussion that we may have sufficient scope without offending the main principle, and that is that the House has decided the policy, and although £800,000 is a large sum, it is not large in comparison with £11,850,000 which has already been sanctioned. We want to get the right kind of discussion without going too widely into the main principles involved.

I am much obliged to you, Sir. The war bonus itself, as the Committee will remember, was calculated with reference to the index figures of the cost of living, which are the ruling figures in the case of wage adjustments through some of the largest industries in the country, but the point that presents itself to the public, and the point which must be criticised in this Committee, is this, that at the moment when you are having a progressive fall in the cost of living, you are still being asked in this Committee for a considerable increase in that bonus. I think that is the point that has troubled many Members of this Committee, and which judging by some of the comments I have heard outside, is very incompletely understood. When a bonus is given, based on an alteration in the cost of living, if can be done in one of two ways. It can either be adjusted with tolerable frequency on the figures of the cost of living as they are at the moment of adjustment, or it can be calculated with reference to a past period. In the long run the result of these two methods equalises itself, because, as I said in answer to a supplementary question the other day, what you lose on the swings you make on the roundabouts. If you adjust your bonus, as is done under this agreed scheme which we are debating to-day, and give it in relation to the cost of living over the past few months, it means that whenever the cost of living is rising you are paying a less bonus than people would be entitled to if the cost of living were calculated at the moment the bonus is paid, and similarly, when the cost of living falls, you are getting more than you would get if calculated at the date when the bonus is payable. The sharper the rise or the sharper the fall the greater and more striking is the difference between what a man receives and the actual figure of the cost of living at the moment that he receives it. That is the explanation of what has puzzled many people as to why at this moment, when the cost of living is falling, the rate at which the bonus is calculated should be one considerably in excess of the figure to-day.

We have to bear in mind that through last year the bonus rate lagged behind the rise in the cost of living This year the reverse action takes place, but if the fall continues there will be a very substantial drop when the next adjustment comes to take place in the autumn, and I do not think I should be out of order in just mentioning the fact that in budgetting for next year we have calculated on a figure of 120 for the autumn, and on that figure, coupled with the high figure ruling to-day, we have taken the Estimate for the bonus throughout the ensuing twelve months. There is one other thing, I think, we ought to bear in mind. A great deal has been said about the amount that is paid in the Civil Service and the large salaries that many of them get. I do want the Committee to realise that, so far as the bonus is concerned, by far the greater amount of what we are voting goes to people in receipt of less than £300 or £400 a year.

If a man's salary is £2,000 a year, does he still get a bonus?

Yes, I will come to that, but the class that is in receipt of a pre-war rate of wage of 30s., 40s., or 50s. a week, and figures like that, is by far the largest class that is represented in the quarter of a million civil servants to whom this Vote applies. I know that exception is taken in some quarters to the bonus being paid to men in receipt of a higher salary. With regard to salaries themselves, it would be out of order to discuss that question to-day on this Vote, but the Chancellor of the Exchequer is perfectly prepared to explain that when the occasion arises, and he is anxious that an occasion should be made to discuss it in connection with the Report, which I have had issued, of the right hon. Member for Paisley (Mr. Asquith) and his colleagues. Incidentally, I may remark that in that Report, hon. Members will remember, it is laid down very clearly that, in giving their opinion that the salaries they mention are only adequate for the work performed at the present time, the salaries are taken together with the War bonus as paid at present. When the civil servant is enjoying an income in the neighbourhood of£1,800 a year and upwards—and the numbers are very small—the limit of the bonus allowed is £500.

I said something in December on this point. Unfortunately it was a very early hour of the morning, and there were very few Members in attendance, and it is possible that it would not be waste of time if I repeated very briefly what I said then. I do not believe in my own experience—and I think it is the experience common to Members in this House—that any class has suffered more from the rise in prices and the cost of living than men in the class represented in the higher places in the Civil Service. It is the class which finds itself in receipt of what is a higher salary in middle life, by which time, in most cases, they are in the middle of educating their family, and they have entered into commitments. They have found it an extremely difficult task in the position in which they are to make both ends meet, and, to my mind, they fully deserve everything that has been done for them in the way of this bonus The strain that has been thrown on the Civil Service during the War and the period of reconstruction following, is a strain of which, I venture to say, no one can have any conception who has not worked with them, and many a man in the incessant work and worry of these last six or seven years has permanently impaired his health. Do not let anyone say, "Oh, yes, but there are other people who have done the same thing." We are not responsible for them, but, as a Government, we are responsible for our own servants, and, so long as I have anything to do with the Treasury, while I shall use every endeavour to guard the taxpayers' money, I am not going to see some of the most valuable servants of this country sweated. I recognise frankly and freely that there may be—there probably is—a difference of opinion on this matter It is quite right there should be, and others may hold opinions contrary to mine as strongly as I hold mine, but I do hold that opinion very strongly.

I have no hesitation in commending this Vote to the Committee. I believe that every item in it is justifiable, and I believe that this arrangement of bonus, which ensures that with the fall in prices and the cost of living you get a corresponding automatic fall in remuneration, has been made without that incessant struggle that we should have had going on through all the grades and all the Departments, constantly fighting on wages question while prices were falling. I think this arrangement is one that is in the best interests of the Service itself because it ensures to them peace, and as much content as is compatibl with the human sphere, and it is done, in my view, at no exaggerated cost to the taxpayer. I do believe that if there had been no arrangement of this kind, and if the Government had had to fight on wages questions all the time that the cost of living was rising, and then to fight again all the time the cost of living was falling, it would have cost this country a great deal more money, and it would have cost an infinite amount in efficiency.

I put down an Amendment to reduce this Vote for a very special purpose, and it will only take a minute or two to elaborate it. Let me say at once, there is no desire whatever to reduce the salaries of these hard-worked officials, for whom I have the utmost sympathy, especially the junior grades. I will use an illustration to show my object. In the case of a clerk who got 10s. a day in 1914, or £182 10s. a year, the basic rate of pay to-day becomes £355, and if we add the seven-twenty-sixths which is now claimed in this Supplementary Estimate, it brings his salary to-day to about £402 10s.—a rise of £220 on £182 10s. A naval officer on 10s. a day in 1914 is to-day getting £292, and his basic rate is £270. I ask the Committee not to reduce the salary of the civil servant, but when we come to the Committee stage of the Navy Estimates to help me to rectify this gross injustice to the junior officers of the Navy. I do not move my Amendment.

I beg to move that the Vote be reduced by £100,000.

I wish to direct my attention to the main point of this Vote and the speech of my right hon. Friend in defence of it. I shall take care, Sir Edwin, not to make undue use of the laxity which you have been kind enough to give. My right hon. Friend began by taking the question of the wages paid to the temporary clerks and the numbers of these temporary clerks, and he gave as a possible suggestion that they might be decreased. I would give my right hon. Friend one very strong piece of advice, and that is that the last thing you can in justice expect from the permanent head of a Department is that he should turn round to those who have helped him throughout much heavy work and say to them: "Now I am going to tell half of you that I have no further need of you, and that you may go out of the door." You are asking the permanent head of a Department to do what human nature cannot do. You must take the thing out of his hands, and give him orders which he cannot resist that the numbers are to be cut down. You will never get it done until you do that. For let me tell the House as an old permanent head—what is certainly my own feeling about it—that no man with a heart or soul could go to those who have helped him during times of stress and trouble and tell them they must go. You must bring pressure from the outside, from someone who can lay down the rule, impose it, and make it effective.

I come to this question of war bonus. So far as the lower ranks of the Civil Service are concerned I am quite prepared to say that the justification my right hon. Friend made is in many cases a real and a good one, and I should be the last to decry this bonus to those who have comparatively small salaries. But let us remember that even in that case there are considerable anomalies, injustices, and wrongs to the taxpayers. Men with salaries of £600 to £800 a year, who never thought of any increase, have suddenly found themselves in the possession of a salary of £900. I know one case of a man who is a practising barrister who engaged to act as the secretary of a Departmental Committee during the War. His own suggestion was that the salary for this temporary work should be fixed at £60 a year. To his astonishment, not only is he paid as a continuous and a permanent officer after the War, but he is receiving £900 for this temporary work, which only occupies a small part of his life—this £900 instead of the £600 for which he bargained. Can my right hon. Friend really justify such a thing as that? There are many cases of a similar sort amongst various grades of the Service. I am not going to make an attack upon my right hon. Friend the Financial Secretary. No one has more at heart the real interests of the Civil Service, in which I spent some 30 years or more, and I am glad that he should do what he can to raise that service. I appreciate that he does all this from kindly motives, but let us really know what are the facts.

The right hon. Gentleman said that the numbers of the higher posts in the Civil Service are very small compared with those in civil employment. But do you exempt millionaires from the higher taxation because they happen to be few in number? The real question is, how it affects the spirit of the Civil Service. The members of the Civil Service are animated by a desire to do what they can in public work, by an ambition which enters into the very heart of it, to do the best possible for the public good. I assure the right hon. Gentleman that if he will go back to the times to which I refer and consider the traditions then, the amount of salary was the last thing taken into account. We had a permanency. We had most interesting work, in the large effect it produced upon the community generally. We had most pleasant relations with our political chief, and we had a position, I am glad to say, which was generally a respected one. If we had believed that our object was chiefly to demand increases of salaries on the scale of the great commercial occupations, we would have introduced a lower spirit into the Service. You cannot compete with the commercial world in the salaries to civil servants, and it is no use trying. By so doing you might attract a certain number of men who know how, at the given moment, to use a chance successfully. But will you attract the sort of men who will be absorbed in their work, who will think of that far more than in private interests, and who will keep careful watch against running any risk for the State, or any danger to its welfare?

I remember one great political leader whom I had the honour of serving, a man manly and wise, Mr. W. E. Forster; I remember one day he was speaking of this matter, when he said: "I will tell you what I value most in the Civil Service, and I value you so far as you possess it: that is the faculty of foreseeing where you may be going. Do not commit the State to something which is dangerous; look ahead." "Make that your principle," he said. On the other hand the man in commercial life looks to seizing the advantage of the moment. He knows how to get an advantage over his neighbour for himself. No blame to him! But that is not the function of the civil servant. I think that security of tenure, honourable work, intense interest in it, and that recognition that is given by your political chief, is the reward of the Civil Service, which ought not to make those in it seek to have salaries which raise them above the average level of the professional classes. I assure my right hon. Friend that I am speaking for the Civil Service. I am speaking their mind—I am speaking the mind of several actual civil servants who have imparted their views to me, and who are now serving, and find themselves em- barrassed by the position in which they are now placed.

Let us clearly understand that circumstances have changed in regard to this thing. When these bonuses were before us in December last we did not know what was the fact, that there had previously been a very large increase of salary to civil servants. A Committee was appointed last year at the head of which was the right hon. Gentleman (Mr. Asquith). That Committee could only have been appointed with one object, and that was to revise and increase the salaries of the higher posts in the Civil Service. A large step forward was made in the mere appointment of that Committee, but I think I am right, and that the Committee will agree with me, when I say that before a move forward, or any active step in a movement of that sort had been taken, the House of Commons ought to have been taken into the confidence of the Committee. That Committee was appointed without the knowledge of the House of Commons. We never knew of it until about three or four weeks ago when we were told that such a Committee had sat and when, only this week, eight or nine months after the Committee had reported, its Report for the first time was placed on the Table of the House. That Committee increased the salaries of the higher posts in the Civil Service by 50 per cent., salaries of £2,000 being increased to £3,000. They get in addition a bonus of £500 or £750, and I say that they are raised altogether above the level of the professional middle class to which they belong. This bonus has put them in a position of exceptional privilege in which they are embarrassed to find themselves. We know quite well that there is not as much money in the country as there was before the War, and therefore somebody must go short. I agree that the people who suffer most are the professional middle class to which the civil servants belong, but do not you injure the rest of that professional middle class if you increase one small section of it to a range of salaries entirely different from what has hitherto prevailed? We used to think that £2,000 a year was a very large salary, and a great many men in this House, including myself, still think of it as a salary which we have never yet reached and which we would be very glad to reach. These higher civil servants have all the advantages of a secure position, the certainty of a pension, an honourable status, pleasant relations with their political chiefs, and quiet work, however strenuous—and I know how strenuous it is, having often spent all the night here under the gallery and worked the whole, of the next day—and that you should raise their salaries to£3,750 or £4,000 a year is something that ought not to be done by the Treasury without taking the House into consultation.

1.0 P.M.

This bonus occupies an entirely different position now that we find it is added to salaries not only of £2,000 but of £3,000 a year. We are told that it goes up and down according to the cost of living. It does for the lower civil servants, but the higher civil servants have a minimum of £500 or £750, which is not more than 15 or 20 per cent. of their salary, so that unless the cost of living goes back absolutely to the level of 1914 no reduction in the bonus of the higher civil servants will ever take place. I shall be glad if my right hon. Friend will correct me if I am wrong. The bonus in the case of the higher Civil servant does not bear that relation to salaries which it does to the salaries of the lower officials, and, unless the cost of living be reduced to 15 per cent. above the level of 1914, their bonus of £500 or £750 will never be affected. You are, by paying these lavish salaries, doing something to change the whole position and attitude of the Civil servant. Do not say that you cannot keep these men, because they will be attracted to commercial life. You will not bind them by money if they are not interested in their work. I do not suppose any Civil servant ever reached the head of his Department without having a chance to go somewhere else, but they declined because they had a secure position, the prospect of pension, and they enjoyed the work and the public influence which they exercised over the life of the nation. If you think that you are going to keep men and get good work out of men who have half an eye always hankering after the money bags of the City and who bargain with you whether you give them £500 or £1,000 more, you will not have the old Civil servants. You will have a richer, more luxurious, more ambitious Civil servant, but you will not have the whole Service animated with unselfish motives, and I am convinced that in asking my right hon. Friend to reconsider this matter I am speaking for the good of the Service and that I have the sympathy of many who are now in it.

I would like to draw attention to the actual position which is not really very obviously disclosed on the Papers before us. The original sum asked for was £9,500,000. There was a subsequent sum of £2,350,000, and, with this Grant which is now requested, there will be a sum of £12,650,000. That is not all, because there are savings under other departmental heads which have been added to these very generous sums.

Savings on public services?

Certainly. Savings which ought to fall into the Treasury and which have been appropriated to this object. That amounts in the first place to £151,000, and the exact words used in the Estimates of November are these:—

"£150,000 is from the savings anticipated on the original Departmental Vote."

There is a similar note in the Estimate now before us:—

"The sum of £300,000 is being met from the savings anticipated on the original Departmental Votes."

Adding these together the sum on which we are now asked to put the final seal of our approval is £13,100,000. I am stating that so that the Committee may know exactly where we stand. There are only two other points I want to make, and I will do so very briefly. The first is to remind the Committee of the condition of affairs which prevailed when this question was first launched. I am not going into questions of policy. It is only a statement of fact. It was in 1919. The Committee reported somewhere about a year ago, and the scheme was finally put into operation on the Estimates of last year. Therefore this great, wide, and generous proposal was first germinated in the severer days of 1919–20, when money was being poured out in all sorts of directions, and what people thought was money was being poured in also from all directions. We are at last very slowly but surely coming to know what the real state of affairs is. It is a very disagreeable experience, but it is one which has to be gone through, and the sooner it is done the better. My third and last point is to compare with that state of affairs the condition of things obtaining to-day. I see they were on the unemployment registers 1,065,000 persons at the end of January and every day has added to the number. That employment return comes under the comparatively limited scope of the researches of the Employment Exchanges, and these are returns of unemployment dominantly of the manual workers. We are therefore really comparing the position, as I think we are entitled to do, of the general community with the special class of civil servants. Let us take that class and their position. Among the black-coated class, as I think they are described, unemployment is rampant and severe, and that is a point which few are able to realise, but which we hear every day in our business experience; we know where the pinch is and the tragedy there is behind doors which are not open to the public. That is the right comparison to make. Whit I am suggesting to the Government is that they ought to invite the civil servants who are within the ambit of these conditions to see whether they will not regard it, as I certainly do, as their duty to share the general deprivation. I am not for a moment depreciating the great services rendered by the Civil Departments of the State—not for a moment. Under normal conditions I should be very glad to see these or similar conditions prevail. But is this the time to do it? That is the only point I want to make. Again, I have to ask what signs His Majesty's Government are showing of any effort to co-ordinate the cost of government to the severe conditions of the general community. I do not see any, and I am quite certain an appeal to the general sense of justice of the community would support the suggestion that payments, justifiable in normal flourishing conditions, should be postponed until better days come.

One realises, when taking part in this Debate, especially in supporting an Amendment in terms hostile to these payments, that one has a thankless task. At the same time there is no one of us in this House, not even the representative of a University, who has not amongst his constituents a very large and increasing number of persons who are struggling quietly and suffering quietly to pay the heavy taxation now imposed, and who are precisely in the same position, from a social standpoint, as the higher members of the Civil Service, but who have not an opportunity of getting a solatium like this. They have to do their daily work just the same as these gentlemen who look forward to a pension at the end of their career. It is these persons whom one is bound to have in mind when dealing with Estimates of this kind, and I would ask the Treasury to tell the Committee why there should be a special class which should be indemnified, for that is what it comes to, and very substantially indemnified, from the results of the War. The right hon. Member for Peebles (Sir D. Maclean) has told us that the scheme was only started after the War had ended—in 1919. I would like to know what representations were made by these members of the Civil Service, of whom one is bound to speak with much respect, which enabled them, after having passed through the sufferings of the War, the period of high prices and of rationing—and possibly rationing enabled them to get food which otherwise they could not have obtained, to get this alarming rise.

Profiteering was rife then.

No doubt hon. Members opposite probably are wearied with hearing these measures discussed in the House, but the fact of the matter is the Treasury watchdog has been bitten by the poacher's cur and has got the virus in his system, and he is wanting to have a legalised opportunity of doing what the poacher does illegally. Is there any reason for extending this bonus beyond the grade for which it was originally intended? One knows the history. The Whitley Council, which was set up for purposes connected with industrial disputes, consists, as applied to the Civil Service, of Treasury officials on the one hand—civil servants participating in the bonus—and, on the other hand, of the very able men who are in the Civil Service, not as heads, but engaged in the routine work of the various departments. Therefore, one cannot regard the agreed decisions of a Whitley Council in the Civil Service as equivalent to the decisions come to in a Whitley Councl between employer and employed. What has been done cannot be undone, except that the time has come when we must limit the existence of this system. My right hon. Friend talked about what you lose on the swings being gained on the roundabouts, but I was tempted to interject that you lost on both under this scheme.

The cost of living, as we all know, is going down, but, notwithstanding the fact that the index figure had gone back something like 15 points, yet, by reason of the arrangement come to by this Whitley Council, with community of interests, we are to have stabilised for six months from the 1st of March a bonus based upon an index figure of 265, when on the 1st of March the index had gone down to 251 and was still falling. If you were to take the actual figure for the four months preceding the 1st March last, you would find that it had gone several points below that, so that you are now paying—no doubt it is part of the arrangement come to by the Whitley Council—a bonus based on an index figure 20 points at any rate above what it really is at the date when you are bringing the scheme into effect When you add to that the fact that that figure is stabilised for six months, while the cost of living is falling, as we are thankful to think, every week, you are simply aggravating the mischief. The time has come when these matters should be overhauled, and, while providing for those whose income is so limited that they must be helped towards meeting the increased cost of living, you should certainly revise the giving of this bonus to those in the higher Civil Service; and when I say higher, I am not talking about £3,000 a year, but persons with £1,000 a year. I have in my hand a circular which is a perfectly gratuitous piece of extravagance on the part of the Treasury. It is a memorandum issued to the various Departments by the Treasury, advising the extension of this bonus to the higher civil servants. I have also m my hand a circular letter issued by Sir Frederick Willis, on behalf of the Ministry of Health, and addressed to the clerks of local authorities. It is dated the 21st June last, and runs as follows: It does not stop there. This meddlesome Department, the Ministry of Health, has sent its circulars of this description not merely to municipal authorities, but to conservancies.

I am afraid we must not discuss what the Ministry of Health has done. This is merely a question whether or not a war bonus shall be fixed for the Civil Service.

The others hinge on it, and what was done in the Civil Service will be done in the other cases.

Whether it hinges on it or not, it cannot be discussed now.

It is quite sufficient for me to have made the point. Now I come to the Treasury letter of the 17th August. It says:

"I am directed by the Lords Commissioners of His Majesty's Treasury to refer to Treasury circular No. 28/20, of'14th May, 1920, applying the bonus scheme recommended by the Joint Committee of the National Council for the Administrative and Legal Departments of the Home Civil Service"—

It is limited there to the administrative and legal Departments, but, with that acumen for which the legal Departments are famous, it has managed to extend itself to the whole Civil Service—

"to all officers in receipt of salaries not exceeding £1,000 per annum, or on scales of salary exceeding that amount to which awards Nos. 84 and 101 of the Civil Service Arbitration Board were applied. It was stated in paragraph 4 of the circular that the case of officers on rates of salary not in excess of or rising to more than £1,000 to whom awards Nos. 84 and 101 were applied, would form the subject of further consideration, and that a subsequent communication would be made in their case with retrospective effect. His Majesty's Government have now decided that the bonus scheme recommended by the above-mentioned Committee shall be applied with effect from 1st March, 1920, subject to the qualifications mentioned in the following paragraph, to all Civil servants to whom awards 84 and 101 of the Civil Service Arbitration Board have been applied. The maximum bonus payable under this scheme will be limited to £750 per annum in ordinary cases, and in the case of certain posts, the salaries of which have been recently under review by a Special Committee appointed by His Majesty's Government under the presidency of the right hon. H. H. Asquith, the bonus will be limited to the existing maximum of £500 per annum. Further, the amount of these maxima of £750 and £500 will not be subject to revision at four-monthly or six-monthly intervals, as in the case of bonuses below the respective maxima, but they will be reconsidered after they have been in force for a year, i.e., on 1st March, 1921, though it must not be understood from this that they will necessarily be increased it the cost of living is then higher than it was on 1st March, 1920."

Then they deal with superannuation and the payment of the future bonus. Then there was a subsequent circular of 21st September, issued by the Lords Commissioners of the Treasury and referring to the cases of still higher salaries. This system has been going on substantially without the authority of Parliament. Parliament was never asked to authority it before it was incurred. The mischief has been done, and now of course we come to the question whether or not we can do other than pay the bill that is presented to us. But on behalf of those who are struggling day by day, not merely to meet the cost of living but to pay the abnormal taxes which are put upon them, I enter my strong protest against this system which saddles us with liabilities without any opportunity of saying aye or nay to them. One of my constituents sends me an indignant letter accompanied by an extract from a paper which is not renowned for loyalty. It is described by my correspondent as a Bolshevik rag. [HON. MEMBERS: "Name!"] You can draw your own conclusions pretty thoroughly when such an appellation is used. The heading of this is "Inquisitive M.P.'s and the Cost of Living Bonus." We are threatened apparently that we have no right, and that if we take upon ourselves to claim the right to investigate this matter we shall suffer for it, and then we are told, what has been summed up so delightfully by the right hon. Gentleman, that if you lose on the swings you make up on the roundabouts. We are warned not to attempt to enter into a discussion of this war bonus. I have not attempted to do it with regard to those below £500, for whom it was intended to provide for the exigencies of the moment, but for all over that, and I have pointed out glaring cases in the Ministry of Health. I have asked the Minister whether in any fresh scheme he will see that the bonus is reduced and that as the salary increases so the bonus recedes, and I have never been able to obtain any encouragement to believe that that will be so. We are faced with this abnormal increase for a service which my right hon. Friend (Sir H. Craik), speaking as it were from knowledge from within, and with recollections of a distinguished career in the Civil Service, has told us the Civil Service itself does not desire. They are quite content with their interest in their work, with the knowledge that they have a pension at the end of their official career to go on doing their work without vieing with commercial circles, and trying to make the best bargain they possibly can for getting money from the public. My own observation is that the higher Civil servants and the higher temporary Civil servants have not only done themselves uncommonly well from the point of view of the financial reward they receive, but in the distribution of the honours of the British Empire they managed to secure a very large share to the exclusion of those who have voluntarily given up their lives during the war. In the interests of those whom I represent, and who can ill-afford this increased expenditure, I enter my protest against this Vote.

I rise to support this vote on behalf or the Labour party. I listened with great interest to the Parliamentary Secretary explaining the different points, and giving us information as to the numbers who were taking part in the war bonus. I should like to dispose of one point before dealing with the points put forward by the hon and learned Gentleman (Sir H. Nield). An hon. Member behind me made comparisons between the Civil servant who was receiving 10s. a day and a bonus and the naval officer who was receiving 10s. a day. I think he quite forgot that the Civil servant has to maintain a home and a wife and family out of his 10s. and bonus, whereas the naval officer is maintained by the Government.

The naval officer has to pay his full messing bill. He certainly has not his food provided by the Government nor his clothes. He has to pay for the most extravagant uniforms.

The hon. Gentleman opposite devoted most of his time in criticising the bonus that is being paid to the higher officials. He wanted to know how the Parliamentary Secretary could justify this bonus being paid to the higher officials. I do not believe it is for the Parliamentary Secretary to justify why this bonus should be paid to the few, and after all they are only a few, highly paid officials. The majority of the men who receive this bonus are, I should think, between 90 and 95 per cent. of those employed in the Civil Service. The question is whether this House is going to honour agreements which have been entered into by those representing the Government and those representing the Civil servants under the Whitley Council. If we are not going to honour agreements how do you expect that we are going to get contentment among the Civil servants, any more than you can get it among the other industrial workers of the country? It is impossible to get contentment and to get these people to take the interest in their work that you would expect them to take. I think the hon. Gentleman has not really studied this question, because from 1914 the cost of living has been continually enhanced, and although every industrial worker in the country was getting advances in wages in order to meet the increased cost of living, although employers who were controlled by the Government had had their profits fixed on a pre-war basis and also a certain amount in reference to the Excess Profits Tax, although we have had profiteers who were exploiting the people, these men up to 1916 never received one penny bonus.

The hon. Member is now discussing the main Vote. He suggests that the right hon. Gentleman has not studied the question since 1914. What we are concerned with now is a discussion of the £800,000, supplementary to the £11,000,000 already voted. The hon. Member must direct his remarks to that.

I will do so. The agreement has been entered into between the representatives of the Government and the representatives of the Civil Service. The arrangement is that these men are to be paid on a retrospective index figure of the cost of living issued by the Board of Trade. Supposing that the increased cost of living was 120 per cent. on the 1st January and 130 per cent. in April, these men would have their rates fixed on the retrospective basis of four months, and, although the rate of the cost of living had increased to 130 per cent in April, they would only get paid 120 per cent. because of the index figure of the four months calculated in January. Therefore, seeing that the cost of living is coming down, you have to make provision to pay these men for the increased cost of living that was in existence four months ago. That is the sum that is asked for now by the Financial Secretary, and it is justified in accordance with the agreement entered into by the representatives on the Whitley Council.

The civil servant must live exactly the same as we have to live, and it is a terrible struggle. In certain industrial districts where you have a scale, if I was getting £3 a week and my scale gave me 100 per cent. increase, I should be getting £6 a week as against £3, whereas the Civil Service arrangement only gives a certain percentage over 35s. per week. The arrangement is that if you get 35s. per week wage you are paid the full 130 per cent.; if you get £108 per annum you are only paid 60 per cent., and if you are above the £108 per annum you only get 45 per cent. All industrial workers have been receiving the full bonus, no matter what their wages may be, whether £2 or £3; but these people are even down to 45 per cent. if they are on a scale above £108. The right hon. Baronet (Sir F. Banbury) is a great economist, but I would point out to him that he cannot get economy at the expense of human suffering. These people have been suffering, the wives of these men have been suffering, and the children have been suffering. If we are going to economise on human suffering, the future is going to be darkness and despair so far as these people are concerned; but if we want the best out of them we must give them the best salaries and the best conditions that can possibly obtain. Therefore, I have much pleasure in supporting this Motion on behalf of the Labour party.

I have much pleasure in supporting the reduction moved by my right hon. Friend, and I would point out to the hon. Member who has just spoken that although it is perfectly true that the wage-earning classes have had very great increases in wages, one of the results of those increases is that a very large number of the wage-earning classes are not getting any waives at all, but are unemployed. I would also point out that when the hon. Member speaks about suffering he apparently forgets the very large number of people who, having worked all their lives and having saved money and invested that money in ordinary safe securities, which have all decreased in value and some of which have decreased in dividends, are receiving less than they were receiving before the War. There are a very large number of people who are working hard now, people of the professional classes, who are receiving less than they were before the War, and who have to pay out of their pockets and out of their earnings in order that the civil servant may be in the same position that he was in before the War.

Better.

I agree that probably he is better off.

He has got an increase of salary as well as a bonus.

The hon. Member forgets that a very large part of the country is poorer than it was before the War, that a very large number of people are poorer than before the War, and that a very large number of people are taxed much more heavily than they were taxed before the War, unless they happen to be miners in South Wales, who refuse to pay. These people who are receiving nothing are not grumbling, but are endeavouring to do their duty. Why should a particular class be exempted from that suffering which everybody else has to share? I fail to see any justification for it. What does a war bonus mean? It means a temporary gift or allowance made during the War. We are not at war. Why should this bonus go on and why should it be increased? We are told it is because of the increased cost of living. It has been said that it is a mean thing to say that because one brance of the Civil Service fixes the index figure of the increased cost of living and that those who fix the index figure benefit by it with the rest of the Civil Service, that they will not be quite as accurate in fixing that index figure as they might be. I do not for a moment suggest that there is anything wrong in the fixing of the index figure, but human nature being what it is, it is not wise that the people who are going to benefit by an increase in the index figure should be the people who fix it. It is unbusinesslike.

No man should be judge in his own cause.

It does not mean that the particular people who are doing it are perhaps not so straightforward as they ought to be, but it is not a right thing to say that a man is to fix the amount of the bonus which he himself and his fellow-workers are going to get. I have unfortunately been unable to find the Report of the Select Committee on National Expenditure upon this question. I was myself a Member of that Committee, and I remember perfectly well the evidence that was given before us. The evidence was to the effect that the figures of the cost of living upon which this increase was justified were founded upon a suppositious idea that a certain working-class family before the War had certain things. Those things, so far as my recollection goes, included the best English mutton, the best English beef, and the best butter, and made no allowance for substitutes. I am sorry that I cannot put my hand upon that Report, but I am informed in the Library that it is out. I cannot quite remember the figures, but the evidence was something like this. While the increased cost of living was then given at about 120 per cent, above the pre-War level, the real rise was about 70 per cent., if you took into account the substitutes which might be used. Why should not these people, use substitutes, as all of us are doing who are not fortunate enough to be members of trade unions or to belong to the Civil Service? Hon. Members opposite seem to forget that you cannot go on doing this sort of thing and yet remain solvent. You are only taking money from the pocket of one man and putting it into the pocket of another.

I would suggest another point to my right hon. Friend. The idea that the salary paid to a man is to fluctuate from six months to six months on a statement as to what the cost of living is, is an entirely wrong one. A man ought to be given what the is worth, irrespective of the cost of living, and he ought to know what he is going to get, and not to be in a state of uncertainty whether his salary at a given moment will be £600, £550, or £650. He cannot regulate his expenditure or exercise that thrift which he ought to exercise and which is necessary if the country is to recover its former prosperity. There is another thing. Where a man was receiving before the war 20s. or 25s a week, there is no doubt at all that the increase in the cost of living bears so hardly upon him that he could not live even if he accepted substitutes. But where a man is getting £400 or £500 a year that does not apply. It means that he may not smoke so many pipes or go so often to a cinema, or have so many pints of beer or whiskies and sodas. We have all got to deny ourselves. I hope we all do. There is no doubt that the vast majority of people that do not belong to the two privileged classes I have already enumerated are denying themselves a very large amount of the pleasures of life which they enjoyed before the War. I see before me an hon. Gentleman who sits for Oxford University (Sir C. Oman), and I would like to ask him—I do not know whether he is going to speak—whether it is not a fact that there are a large number of people in the Universities who have had no increase in their salaries at all and whose salaries are probably not very high, at any rate, nothing like those of civil servants. I do hope, therefore, that if the Government are really in earnest in attempting to reduce the expenditure of the country, they will not endeavour to reduce it by cutting down the fighting forces which are imperative to the life of this country, but by reducing the number of civil servants, and by telling the others that they must make the same sacrifices as the majority of people are making.

I should be very wrong if I did not express on this Vote the feeling of absolute suppressed rage and bitterness that prevails among my constituents at any attempt to raise the higher salaries of the Civil Service. I belong to a body which in any other country in Europe would be part of the governmental system, a public service institution, but which in England is fortunately autonomous. I represent the Universities, and more particularly the University of Oxford. I wish to point out that, as the right hon. Baronet (Sir F. Banbury) said, we there had our salaries fixed by Royal Commission in 1880, and that they have never been increased by one penny since. They range from a minimum of £80 a year for the scholar to a maximum of £900 a year for the senior professor. We look upon ourselves as an institution of the realm, and as important as any Civil Service branch. We wish to know why people whose salaries range to two, three, and four times the highest possible sum payable by the University should have an extra bonus. As a professor of Oxford at £900 a year, I am almost astounded when I hear that men receiving £1,800 or £2,000 or £3,000 a year are going to get a £500 bonus. It is. absolutely unjust that these large sums of money should be thrown to the Civil Service, while an institution quite as important to the nation as any branch of the Civil Service has not received a penny of increase since 1880.

The word "bonus" stinks in our nostrils. It seems that everybody, whether it is a trades union or a body of Civil servants, who can combine, to blackmail the Government, has been screwing out of that Government enormous sums of money. We alone, as one of the greatest institutions of the Realm, have received nothing. Can you wonder if we are bitter when, not the small clerk with £200 or £300 a year—we sympathise with him—but people receiving salaries running into thousands are to be given an extra allowance? I object to my constituents in their dreadfully reduced conditions of life—they are exactly where they were in 1880, or rather, with vastly reduced spending power owing to the decreased value of money—I object to their paying one penny for the benefit of the higher placed Civil servants, whose salary before the War was two or three times that of the highest that could be given in the University and who are now receiving four or five times as much. I represent one of the great branches of the new poor, and I think it is a very deserving branch, a branch that has not gone howling for bonuses, a branch that is poor but proud, a branch that does not wish to rob its neighbour for its private profit, that is endeavouring to endure, though it is reduced to an infinitely less happy position than it occupied before the War. It has not gone howling to this House for help and for doles. As long as we of the Universities are in this position, we cannot sympathise with the granting of these larger sums to the higher placed denizens of that happy body, the Civil Service, and I am bound to follow the right hon. Baronet the representative of the Scottish Universities (Sir Henry Craik), who spoke not only as one connected with the Universities but as an old Civil servant, in deprecating the giving of more money to these people.

I am sure hon. Members will not accuse me of any lack of sympathy with the universities, but I am bound to point out that it is altogether wrong to lead an attack upon the narrow question of a war bonus increase and make the ground of that attack the impoverished condition of the universities of this country. My hon. Friend who has just spoken has poured scorn on the Labour party because in his opinion they brought pressure to bear on the State. Very little inquiry will show that at no distant date the two oldest universities in this country intend to come forward with a request for £2,000,000 or £3,000,000 of public money, and to press that claim as strongly as they can. I want to make our position on these Benches perfectly clear. I think I express our doctrine when I say that in the light of the changed conditions which have followed the War we want to see all sections of the people make what I shall call proportionate sacrifice. The part of the case in the discussion of this bonus which fills me with some anxiety is the position of the more highly paid civil servant. It is the only part of the case made by my right hon. Friend the representative of the Scottish universities (Sir Henry Craik) with which I agree. The principle we have got to. lay down is that in this matter, as in all other matters of payment by the community, we want the civil servants to bear roughly that proportion of sacrifice which we have asked from other sections of the people, and it is not unfair to suggest that the more highly paid civil servants and the higher salaried classes generally should be asked not to expect that recognition of the changed conditions to the same extent as it is expected by the more poorly paid.

I am sure my hon. Friend appreciates my position. It is not that they should not have the additional bonus, but that that bonus should come on the top of a salary which has been previously increased by 50 per cent.

2.0 P.M.

As far as I am personally concerned, I agree that that case should be reconsidered, and it is the one part of the argument made from the other side with which I agree. The right hon. Baronet the Member for the City of London (Sir F. Banbury) committed, as I am sure he will now acknowledge, a serious error in referring to the basis on which this additional bonus is paid. He went out of his way to say it is altogether wrong that the index figure should be fixed by people who had a monetary interest in the remuneration which would be based upon that index figure. Surely every hon. Member in this House will agree that the index figure which is the basis of the whole point at issue is fixed after careful and reliable investigation by men who have nothing but the public interest to serve, and that in point of fact, so far from being regarded as excessive, the index figure has been criticised by many of the most distinguished thinkers in this country as a figure which is too low, certainly from the point of view of the urgent necessaries of life. Then the right hon. Baronet (Sir F. Banbury) also went out of his way to say we should simply give every man what he was worth. I am not unwilling from our point of view to take that basis. I am only going to suggest that if you apply it strictly to the City of London the amount of unemployment in the City will be even greater than it is to-day. Coming to the precise point on which the dispute has turned, this is a sliding scale based, not on a long period, but on a fairly long period compared with many of the scales now in operation. We have got four months to consider, and the difficulty in this discussion is that included in this Supplementary Estimate there is really a part which we can quite accurately call arrears of payment. Under the agreement entered into we are absolutely bound to make that good, otherwise the Government would be guilty of the repudiation of an agreement reached by a perfectly representative body in the State. The arrears are therefore admitted, but it is not unfair to push the argument a little beyond that, and remind the Committee this afternoon that in the consideration of this bonus and this supplementary payment we have also to bear clearly in mind the basis which was the pre-War salary on which the whole structure has been raised. Does any hon. Member suggest that even according to the standard of pre-War times we overpaid the civil servants in this country? I have never heard that seriously argued, and that is what is fundamental to both the payment of the bonus and the payment of this supplementary amount we are now considering.

I am not going to weary the Committee with further argument, but in order to make the point perfectly plain I am going to take a typical case which closely affects this supplementary amount. I am going to take a case which is by no means the worst in the Civil Service, but which is a fair average representation of what is actually involved in these problems. I take the case of the men engaged in the research and statistical department of the Post Office. This illustration better than any other that I have seen in recent times bears out the contention which was made by the Financial Secretary to the Treasury. What is the actual percentage over the pre-War basic salaries for these men? When the cost of living has risen to 135 per cent., salaries up to £90 per annum got a bonus of 135 per cent., salaries up to £200 per annum got a bonus of 91 per cent., salaries up to £300 per annum got a bonus of 75 per cent., and so on up to the case of salaries of £600, when the bonus dropped to 60 per cent. It is perfectly plain, and this applies both to the original and supplementary amounts, that the only grades of Civil servants whose position has been fully safeguarded from the point of view of the increase in the cost of living are the poorest grades in the Civil Service.

I am not suggesting that that is unfair. I am not going into that argument. I am only pointing out that here you have only one section of industrious well-doing people who have been fully safeguarded by an increase of 135 per cent, in respect of the great rise in the cost of living. Hon. Members opposite have said, "Why should you safeguard this class of the community, and make good to them the whole extra burden due to the War, when no other section of the British people has got that safeguard?" My reply is that we have done nothing of the kind. We have made it good only to one section of the Civil Service, and we have given a much lower recognition of the changed conditions to other sections. Even if that argument were not true—and it is supported by all the facts—I would be willing to base this supplemental amount to-day on what appears to be perfectly fair and safe grounds. The Ministry of Labour have estimated that over a very large part of British industry the highest increase gained in respect of the advance in the cost of living and other con- ditions was from 180 to 190 per cent. There are, of course, higher cases, but I am taking the percentage on a larger class. For a great many other classes the percentage increase is very much lower, and the conclusion they reached was this, that the great body, taking an average of all in the country, are receiving to-day only an increase of something between 120 and 130 percent. If that is true, the conclusion we are forced to recognise beyond all doubt is that the lowest section of the Civil Service in point of salary have only gained what was the average amount of increase in this country during the War, and that all the other sections have got less than that. But we are compelled to recognise these facts, and not to abuse this class because of the position of other classes whose hardships, especially those of the Universities, we all admit, but to do our duty by the men and women who belong, after all, to a service of which we have every reason to be proud, the best Civil Service we can find from one end of the world to the other.

This Estimate is divided into two parts—war bonus for civil servants and war bonus for what are called temporary clerks. We have been informed, so far as civil servants are concerned, that there has been in addition to this bonus an increase of salary. I presume that that increase of salary will mean eventually an increase of pension, and I would like to ask if the bonus that is added to this increase of salary also means that there will be an increase of pension calculated on the additional bonus? It is noticeable that the largest amount of the Estimate is in connection with temporary clerks. That, I presume, will eventually disappear. They are called so far as I can see here the heading of "manipulative classes" would give that information if I understood it. I would like to get it when the right hon. Gentleman comes to reply.

The reason I ask the question is that I have been informed that there are certain clerks in the Ministry of Pensions, for instance, who will be in receipt of this bonus and other clerks who are temporarily employed. I refer particularly to ex-officers who are in receipt of temporary pay for the work they do, about £300 a year more or less. A great deal of the argument used to-day has been in favour of giving an additional bonus to those who are in receipt of a salary of about that amount. I am given to understand that a great many of these ex-officers who have got to live on this money while they are so temporarily employed do not participate in this bonus. I would like that information. I have come to the conclusion, from all the speeches I have heard, that the Department responsible for introducing this Estimate should reconsider the whole situation from the standpoints that have been adumbrated by the various speakers. There is a great deal of truth in what has been said. We have from time to time been asked by the Chancellor of the Exchequer when speeches have been made against taxation, "Show me where taxation can be reduced." Here is an Estimate which it is abundantly evident to me has not been thoroughly thought out by those responsible for it. I think that it should be withdrawn for the present and gone into thoroughly and re-presented to this House.

We all appreciate the great services rendered by the civil servants to this country to which the hon. Member for Central Edinburgh (Mr. W. Graham) paid so high a tribute. We all desire that these servants of the State should be adequately remunerated, having regard to the existing condition of things; but there is another side to be considered, the position of the persons who pay, a very large section of whom so far from having received any increase of their income since the War, are worse off than they were before. Reference has been made to many of the professional and middle-class people who are called upon to pay these large increases. My hon. Friend the Member for Oxford University (Sir C. Oman) has drawn a striking picture of the position of the teachers in the University of Oxford. As a member of the sister University of Cambridge, may I say that a similar position prevails there? The teachers in the two ancient universities, concerned with, perhaps, the most important branches, not merely of education but of research, which exist in this country, have not had one farthing added to their remuneration since 1880, for one reason because their remuneration was fixed by statute forty years ago. I suppose that every other person in this Kingdom, including teachers in elementary schools and in secondary schools, and no doubt in the new universities, has had his remuneration largely and very often quite properly increased.

Not in the new universities.

That makes the case all the stronger. People engaged not only in the old universities but in the new universities are in receipt of the same salaries as they had before the War, and some of those salaries were fixed 40 years ago. What are those salaries? We have heard to-day of civil servants who are to get over £3,000 a year and a considerable war bonus in addition. I think I am right in saying that the highest sum which the average lecturer or professor at Oxford or Cambridge receives to-day is something like £600 to £700 a year, and in some cases up to £900. With the exception of one or two specially endowed professorships—and it may be that they are not the most important—there is not one of them in receipt of anything like £1,000 a year. Those are the men who are asked to pay for this increase in the remuneration of civil servants. When the hon. Member for Central Edinburgh (Mr. W. Graham) referred to proportionate sacrifice, I think he had not sufficiently regarded the sacrifice which the porer classes of the taxpayers have been called upon to make—taxpayers who have had no increase in their remuneration since the War. The Report of the Committee presided over by the right hon. Member for Paisley (Mr. Asquith) is a very remarkable document. It is a great pity it was not before the House in December last on that Saturday when the House sanctioned this increased bonus to the Civil Service. The document was produced in July, 1920, and it actually recommended an increase of £1,000 a year to each of 21 heads of Departments of the Civil Service who were already in possession of £2,000 a year. The methods of reasoning by which the right hon. Gentleman and his colleagues arrived at this recommendation are surprising. One of the reasons was, in substance, that it would enable the Civil Service to compete with the commercial world in retaining the services of able men. I do not believe that the salaries of civil servants ever have been or ever can be fixed by a comparison with those which they are likely to get in the commercial world. It is not the ground upon which many enter the Civil Service. Many enter it out of interest in the affairs of State; many enter because of the prestige; many enter out of regard for the fact that they will have a secure position, will not be liable to dismissal or to the fluctuations of trade and commerce, and because they will have a pension at the end of their days. These and other advantages very properly induce persons to join the Civil Service at a far lower remuneration than is given to men in commercial life. When the right hon. Gentleman (Mr. Asquith) relies upon an argument of that sort to justify an addition of £1,000 a year, to 21 civil servants already receiving £2,000 a year, it throws a singular light on his Committee's recommendations. I see that the Report says that the Committee has left for examination by the Treasury the question of appropriate adjustment of the pay of persons in the Civil Service in receipt of less than £2,000 a year.

I cannot allow the hon. and learned Gentleman to pursue that argument. He seems to be going back to the Report of the Committee and to a discussion of the general remuneration of civil servants. We are considering only this additional supplementary sum by way of war bonus.

If it is legitimate to ask, I would ask whether increases have been given, similar to those recommended by what we call the Asquith Committee, to the persons in the Civil Service receiving between £500 and £2,000 a year? That has a very material bearing on this discussion, and would enable us to decide whether we ought to pay this increased bonus to men who have already got a permanent increase in their salaries. The Report of the Asquith Committee was in the hands of the Treasury on 20th July, 1920. When the discussion of the war bonus took place in December, no mention was made of the fact that certain civil servants had already got this 50 percent, increase. I would ask the Financial Secretary to the Treasury to tell us why that was so. We are asked to-day to sanction payments which have already been made, or are agreed to be made. That is the fundamental vice which underlies a great part of the public expenditure. I beg the Financial Secretary to the Treasury, who I know is anxious to make reforms and to give the House of Commons some real power in deciding expenditure, as far as possible not to embark the Treasury and the public on expenditure until we have had an opportunity of considering it. Unless that is done, we shall never have effective control of expenditure. We have a pistol presented at our heads. We are told, "This money has been paid and you must pay the bill." What power have we? I ask the Secretary to the Treasury to abandon that ambitious, extravagant, and most unbusinesslike method of doing business and to see that, whenever it is possible, before money is spent or agreed to be spent we shall have an opportunity of considering it. As regards those civil servants in receipt of under £500 a year, it may well be that they are fully entitled to their bonus, and I am not challenging it, but as regards those over £500 a year, who have already had this large increase in their permanent salary granted by the Treasury, is there any necessity for an increase in their bonus? We are asked to sanction a further increase from the 1st March, 1921, in this bonus, and I take it that it is open to this Committee to say they will not grant this further increase.

I do not wish to enter into that wider field which has been traversed in the discussion, but rather to put one or two questions on the subject of the figures presented in this Estimate. I quite appreciate the justice of the right hon. Gentleman's argument in explanation of the seeming paradox arising on this Estimate from the fact that an increase is asked for in the war bonus at a moment when the cost of living shows a substantial decrease, but I want to question the figures which are supplied for the period under discussion. This increase in war bonus is retrospective and relates to the period November to February last, a period of four months. If we consider the index, figure at that period in conjunction with the ruling of the Committee on this subject presided over by the Chairman of Ways and Means, I think it can be demonstrated that the increase to this amount is not justified. The average index figure for the period under discussion was 165·1 and that for the preceding four months—July to October—was 158; that is to say, in the period under discussion we find an increase of 7·1 in the index figure over the preceding period of four months. The Committee presided over by the Chairman of Ways and Means laid down that there was to be an increase in the war bonus of one-twenty-sixth for every rise of a full five points. Under sub-head 1 we find that in fact there has been a rise of two-twenty-sixths. That indicates that there should have been a rise of 10 points in the index figure, which only, however, rose 7·1 points, and it would therefore appear that the increase to this amount is not really justified. On the wider issue, all I can say is that I join in the protests already advanced against the principle that one class in the community alone shall be sheltered from the effects of the economic stringency and that a class which is largely responsible for that stringency because it has the spending of the public money. I therefore join the hon. and right hon. Gentlemen who have protested against the privileged and exceptional position in which the Civil Service is placed, and I shall be grateful to my right hon. Friend if he can explain why the increase is apparently more than is justified even by the very generous scheme to which the Government adhere.

I am very much surprised at this proposal. I represent a working-class constituency, where there are a great many working men, and a great many unemployed, and a still greater number of men on short time, and it is an intolerable thing that any Coalition Member should be asked to support a proposal of this kind, that men in receipt of large salaries should get these substantial bonuses. Indeed, if it were not so tragic, it would almost be ridiculous. After all, what is the cost of living based on? Here I may say a word in regard to those who fixed the cost of living. I have no doubt they did their best, but they themselves were affected by it, and it is the beginning of jurisprudence that no man should be judge in his own cause, and it is highly improper that these officials should have fixed the cost of living figure. I do not care if they were born with wings on; they should not have had the job when it affected themselves. The cost of living was based very largely on food, and the highest cost of living never affected the man with the large income more than £1 or £2 a week at the outside, unless he had a large family; and in regard to the cost of clothing, which was part of it, he had no need to go to these costly twenty guinea tailors for his clothes. Mr. Mallaby-Deeley has been open to him for quite a considerable time. [HON. MEMBERS: "Order!"] Well, a certain tailor's shop, which is very good economically, has been open, to which many of us have resorted, and there is no purpose in this except to provoke a very bitter feeling in the present state of affairs. A civil servant or a schoolmaster, or anyone who has under the new Education Act become a civil servant, finds his lot to be a totally different one from the ordinary lot of a man who has to struggle for his living. The Lord's Prayer, "Give us this day our daily bread," has no meaning at all for him. He gets it; it falls like manna to him; no prospect or gloom of unemployment ever visits him; it is not even perhaps good form that he should perspire at his occupation. He cannot do it; he is bound up with red tape; he has got to fulfil just his allotted task. The difficulties of life do not face him in the same way, and it is a certain type of temperament that does not like the rough and tumble of life. It is the same in France, where the average Frenchman's one idea is to get security and then get his pension. I wish we could see a complete reform of the Civil Service so that they would get their old age pension—

We had better not go into a general discussion on the reform of the Civil Service or their duties generally. We had better confine ourselves to discussing this Supplementary Estimate.

Therefore, I say that, having all these advantages, why should they at this time of day be getting a further war bonus? We started all wrong with war bonuses. The country should have started the Civil Service with war minuses on the ground that we were incurring enormous expense and could not afford it. I do not wish to encourage the Civil Service by giving higher pay. John Stuart Mill said it was always unwise to attract the highest abilities to the Civil Service, because it meant tyranny. The position of these war bonuses is monstrous. The other day I elicited by a question that the permanent staff under the Secretary for Scotland were getting practically 50 percent, higher pay than the chief, and it caused great resentment and indignation in Scotland. This increased war bonus is asked at a time when unemployment is rife everywhere, when all classes of the community have been turned topsy-turvy by the change in values and when taxation is so heavy. That these higher paid men with over £500 a year should come at this time of day and demand a further bonus, when most of them have had their salaries increased by 50 percent, is one of the most astounding propositions that has ever been put before this House. The Treasury, who also share in the war bonus, ought to be the guardians of the public purse, but are not fulfilling the functions of guarding the public purse in the way they did in days gone by. I do not envy those who support this increased bonus when they go before a working class constituency where people are unable to get even the humblest necessities of life.

I am very loath to intervene again, but there is an important point I omitted to mention. As I look at it, pensions are based upon not only the salary but the War bonus.

That is so.

I put this one specific case of a person with, say, £1,200 a year retiring within the next four or five months. He gets a War bonus of £750. He is allowed 75 per cent, of his War bonus, which amounts to £562 10s. That, added to his £1,200, makes a total of £1,762. He gets half that—£881—for the rest of his life, fixed and unalterable. It does not even vary with the sliding scale according to the rise and fall in the cost of living. What justification can there be for that? It is a most amazing position. Under the pension schemes of great railways and so forth, pensions are exclusive of War bonus. If they were to run their pensions schemes on these lines in any great undertaking they would become practically bankrupt. The reason this can go on is because the purse of the State is supposed to be bottomless. I would ask the right hon. Gentleman if I am right in this case I have put, and, if so, what possible defence can there be for it?

I quite expected that this discussion would cover a great deal of ground, because there are naturally a number of questions on which Members wish information, and are entitled to have it, but which can only, with difficulty, be brought within the ambit of this particular Vote. I think that is particularly the case with regard to the question my right hon. Friend opposite has just asked, but I am going to answer it. The scale of pension is payable on 75 per cent, of the amount of bonus payable at the date of retirement, subject to exception in cases where pension has to be calculated, under the Superannuation Act, on the average salary for the three years preceding retirement. I will say no more about that, because it does not arise out of the Vote.

I have been very struck during the whole of this discussion at the interest which has been taken in the question of the bonus to the most highly paid members of the Civil Service, and the sub-current of feeling underlying that as to the actual increase in the salaries. I think it only right that I should say a few more words on that point, because some of the speeches have shown that the speakers were a little under a misapprehension. The whole subject, as I explained, will be discussed at a later date, when the whole terms of the Asquith Report can be gone into. The number of people who are affected by the scale recommended in the Asquith Report—I have not the exact figure yet—will not, in any circumstances, amount to more than 50.

The question of principle is affected.

If I could be absolved from giving figures in this House, my task would be much easier. In the same way, the line of £500 was taken in this Committee. But of all the money with which we are dealing, the number of people who are in receipt of salaries in excess of that amount, as I stated last December, only comes to two per cent. of the total, and the money paid in bonus to these higher paid officials does not come in this Vote at all, because it is not a fluctuating amount. The £500, of which so much has been said, was agreed to as reasonable by the Chancellor of the Exchequer. It was considered reasonable in the Asquith Report, and it comes up annually for revision. That is the position as regards that. My hon. and learned Friend the Member for York (Sir J. Butcher) asked what increase in permanent salaries had been given in respect of salaries from £500 to £2,000 a year. That does not directly arise, but I think it only fair to say that, apart from the definition given under the Asquith Report, whatever changes there are in salary in the various grades between, say, £500 a year and £1,800 a year, they are strictly calculated on the pre-War basis of remuneration, and, as with the case of the lowest paid grades, in our opinion, no increases have been given which would not have been given in any reconsideration of rates of pay before the War.

There has been some criticism on the lines that it is a wrong proceeding for the Whitley Council, composed as that of the Civil Service is, of a number of civil servants themselves, paid servants of the State, fixing, as has often been said, their rates of bonus. There are two answers to that which the Committee may or may not consider satisfactory, and they are solid points. The one is that the Whitley Council did not deal with salaries exceeding £500 a year and the other answer is—I think I mentioned the point in connection with the Vote on the assimilation of the Civil Service—the House of Commons—and here I speak in the presence of Members of great experience—has never concerned itself directly with these matters of the remuneration. The office which has always dealt with salaries, and it has had a perfectly free hand to deal with them, has been the Treasury. The Treasury functions through its Minister, the Chancellor of the Exchequer. He is responsible to this House for what he does.

If the Chancellor of the Exchequer in the exercise of that undoubted right of his is guilty, in the opinion of the House, of waste of money in this or any other way, the House has a perfect right to call him to account. Some of my hon. Friends have spoken as though it might, in some days gone by, have been the practice for the House of Commons to decide on these matters of rates of pay which in themselves arise so directly and are so complicated. The practice which has existed for so many years is the only practice that is feasible. It is, however, on occasions like this when large sums are being dealt with, that the House of Commons gives free expression to its views, and I fully admit, as I always have, admitted, there is room for divergence of opinion. I would remind hon. Members who have spoken, and perhaps may not have heard what I said at the first, that really there is only one alternative to this agreement, and that is a system of haggling and bargaining with the rise and fall of the market wage. I still maintain that we have chosen the better part. I believe that the working of the Whitley Council will tend to the improvement of the whole spirit of the Service. It is a very great thing that the Government, through their responsible Minister and his advisers, should be brought into direct, and personal, and continual contact with the most of those who earn salaries from the Government. It makes for a better spirit—for peace, and, as I said before, I am certain it makes for efficiency. I do not propose to say anything more about the mere chances under this system of the bonus being at the highest point when prices are falling. I have explained that, and I understand from what has been said that hon. Members are fully cognisant of that circum stance.

I was asked by the hon. Member for Harrow a point in which he thought we were wrong in regard to the actual calculation of the figures. I think the error into which he has fallen is that he has omitted to notice that the rise or fall depends upon the variations of every five full points, and that variations of less than five full points in either direction are ignored. If he remembers that and looks at the figures again he will find the average figure on which the, bonus is assessed for the period of falling prices, July to October, was 155, and this last bonus, 165, gives two points, which make up the 2/26ths.

Before we go to the Vote I should like to have the opportunity of making what I believe is almost a solitary speech on this occasion in favour of this Vote. [HON. MEMBERS: "No!"] I heard the powerful speech of my right hon. Friend at an earlier stage in the proceedings, and the effect of that powerful speech, so far as I could follow, was to provoke in all parts of the House with one or two exceptions, a serious opposition to the Vote. With regard to what my right hon. Friend has just said, I would point out to him that in this matter we are really discussing a question, as everybody has recognised, of broad principle. It is not a question of the smallness of the numbers concerned. Although I do not agree with the general position of my hon. Friend who moved the reduction, I do warmly agree with him in the suggestion that a great deal of the opposition elicited has been due in the first place to the feeling, very general in the House, that in this matter the House is in the position of having a pistol at its head, being invited to ratify, or find the money, to which the House has already been committed in advance. That is a position which the House of Commons—and individual Members, always, and not unnaturally—resents and against which we protest.

I notice that my hon. and learned Friend the Member for York (Sir J. Butcher), while he made a very strong protest, was careful to add that it might not be possible to give this House previous information in all cases. I am bound to say that I can give at least one case in which it would have been almost impossible for this agreement to be made at all if this House had been brought into consultation at an earlier stage. Before my right hon. Friend opposite (Sir D. Maclean) asked a question, I had been anxious to ask the same question, and I only suggest to my hon. Friend that while the important question of pensions, as he says, does not arise, it is almost impossible to discuss this Vote without having the pensions in our minds. I would suggest, without trespassing upon what is beyond our scope, that, while the pensions should have relation to the bonus, that portion of the pension attributable to bonus should be susceptible, as time goes on, of review according to the cost of living. If I understand it aright, this Estimate is necessary to carry out an agreement. I have acknowledged, and I entirely recognise, the difficulty in which the Committee is placed, but, if I am right that it is in substance the honouring of an agreement, then I suggest that the Committee will be very jealous of going back on that agreement. Listening to the speeches of hon. Members, I have been impressed with the fact that some of them seem to me to fail to recognise the new relation, as I conceive it, that the War has established between the Civil Service and ordinary business. I conceive it to have been quite true that there has been always an acknowledged gap between the rewards offered by the Civil Service and the rewards offered by business. That has been always acknowledged, but the gap unfavourable to the Civil Service has been compensated in the past by those elements to which various hon. Members have referred, the elements of the permanence of their work, their pension rights, and the rest of it. It has, however, been overlooked that the gap which hitherto has corresponded to the circumstances has now been exaggerated and has been made excessive by the War, both in range and in pressure. Therefore, you have had aggravated by the War to an extreme extent that tugging between the Civil Service and outside occupations which, in my judgment, cannot be for the good of the Civil Service. I confess myself to be frankly amazed to hear my hon. and learned Friend, who sits below me (Mr. Macquisten), say that he thinks it is a mistake to suppose that the best brains ought to be in the Civil Service; their place is in business. I confess that I cannot take that view. Let us make no mistake about it. If we do want the best brains in the Civil Service, we must be prepared to pay for them. I will only refer to one instance. Hon. Members will remember that in all our discussions about unemployment, for instance, time and time again it came back to the fact that half our difficulties are due to the fact, and everybody knows it, that we do not pay our Civil servants enough to get a sufficiently good class of men. Therefore, I hope very much, first because this Estimate is honouring an agreement, and, secondly, on the broad question of endeavouring to attract the best brains into the Civil Service, that the Committee will give my right hon. Friend his Vote.

3.0 P.M.

I only want to say that if speeches have not been made from this side of the House it is because we have been anxious to get on to the next business, and it must not be understood that because my colleagues behind me have not spoken we are not thoroughly in favour of this Vote. The speech of the hon. and learned Gentleman who represents the City of Cork (Sir J. Butcher) rather amazed me. The burden of his argument was as follows: "The professors at Cambridge and Oxford have been badly treated. They have had no bonus. It is very unjust. Let us be equally unjust to the Civil servants." I think that is a fair deduction to draw from the speech delivered by my hon. and learned Friend. The hon. and learned Gentleman who represents the Springburn Division (Mr. Macquisten) said that he represented an industrial constituency where there was a great number of unemployed. I represent a great industrial constituency where there is also a great number of Unemployed, but I am satisfied that they would rather be unemployed than see an injustice committed on any section of the community. It would be an unjust thing to prevent the civil servants having their War bonus.

Would they prefer to starve?

I desire to say, with some experience of the Civil Service, that you run the risk of your best men leaving it, because they can do better in industrial life. The Financial Secretary to the Treasury told us that before an individual advance can be given it has to go before the Chancellor of the Exchequer. My experience was that it was like getting blood from a stone to get anything from the Chancellor of the Exchequer, and I hope that the Government will succeed in the Vote that they have placed before the Committee.

rose in his place and claimed to move,

"That the Question be now put."

Question, "That the Question be now put," put, and agreed to.

Question put accordingly, "That a sum, not exceeding £700,000, be granted for the said Service."

The Committee divided: Ayes, 39; Noes, 183.

Original Question put, and agreed to.

Resolution to be reported To-morrow; Committee to sit again To-morrow.

The first Amendment on the Paper in the name of the hon. and gallant Member for Leith (Captain W. Benn), providing for the payment of the money collected into the Consolidated Fund, is outside the scope of the Bill.

You, Sir, say that the first Amendment on the Paper is outside the scope of the Bill. Does that ruling apply also to my Amendment later on, providing that the money shall be applied to the relief of distress among unemployed persons, and to the widows and dependants of ex-service men in the United Kingdom? May I ask in what way it is outside the scope of the Bill? As I understand it, the Bill deals with the disposal of the money. Under certain Clauses of the Peace Treaty there is provision for reparation and for disabled ex-service men. That is specifically mentioned in the Peace Treaty, and I suggest that this House would be in order in laying it down htat the money shall be disposed of otherwise than is provided for in this Clause.

According to the Bill its object is to apply any moneys which may be derived from these payments towards the discharge of the obligations of Germany under the Treaty of Versailles. These obligations are not confined to the United Kingdom, they apply to the whole of the Allies, and if the money were paid into the Consolidated Fund then it would go to the United Kingdom alone. To pay money for the relief of distress and of unemployed persons is not to provide for meeting the obligations of Germany. This ruling therefore applies equally to the Amendment of the hon. and gallant Member for Hull, which provides that the proceeds of the tax shall go to the relief of distress among unemployed persons in the United Kingdom.

On that point of Order. You, Sir, say that the proceeds are to be applied towards the discharge of the obligations of Germany under the Treaty of Versailles. One of those obligations is to pay an indemnity to this country, and the object of my Amendment is to secure that the amount collected in this country shall be paid to this country. I have another point; I am not quite sure whether it is in order. In view of the conflict between the statement made by the Prime Minister in this House, from which we understood there was to be no pool, and the statement made by M. Briand in France that there is to be a pool, are we not precluded from discussing that view if my Amendment is ruled out of order?

It is quite clear to my mind that there is a pool, which is to be divided between the Allies in certain proportions. The hon. and gallant Gentleman's Amendment would make the money payable into the Consolidated Fund, when it might be used for the payment, for instance, of my salary.

I naturally do not desire to press this too far, but may I point out that the Amendment says, "used to discharge the obligations of Germany to the United Kingdom only." Your salary is not one of the obligations of Germany to the United Kingdom May a direct your attention to the point which I made before, namely, that this is a Bill for the discharge of the obligations of Germany under the Treaty of Versailles, and all that I ask in my Amendment is that a particular obligation should be the one referred to.

That would be earmarking the money for our own purposes, and would be excluding the Allies from any share in it. That, clearly, would be contrary to the Treaty and beyond the scope of the Bill.

May I ask whether the Prime Minister the other night did not distinctly plead that the Government should be left with a free hand to enter into conference with the other Powers as to the disposal of this money? If your ruling is correct, is it not the fact that the hands of the Government are absolutely tied, as to the disposal of this money, by the Treaty which has been made by them and the other Powers?

The House has no knowledge of what occurred in Committee. I presume that the statement to which the hon. Member refers was made in Committee? I have no knowledge of that; I have to use the best intelligence that I can, apart from assistance from statements made in Committee.

I beg to move, in Subsection (1), after the word "prescribe" ["as the Treasury may from time to time prescribe"], to insert the words —to the allied and associated Powers with regard to the agreement of those Powers on similar legislation being passed in their Legislatures for the collection of the indemnity. I think that the House is entitled to know at this stage of the proceedings what reply has been received from those Powers. When we discussed this in Committee only a very short time had intervened, because, presumably, from what the Chancellor said, those queries were sent in the form of cable messages, and it would be reasonable to allow a certain interval of time for replies. On a vitally important matter of this kind, however, I do not think that the Chancellor of the Exchequer or the Government is entitled to ask the House to proceed with the Report stage of this Bill unless we have some information as to what these allied and associated Powers are going to do, and therefore my first point is, quite shortly, will the Chancellor give us this information, which he was unable to give us during the debate in Committee, when he said that there had been no replies? I think that every hon. Member of the House would feel that before we come to a clear considered decision upon the effect of this Bill we must know what position the other Powers are taking up, and that we cannot come to a decision without knowing.

My second point is a perfectly general point, and is the one upon which we base our argument. This Bill is a Bill to give certain economic sanctions to the allied Powers—in this case to ourselves—in order to achieve a result. In contradistinction to that general proposition, I say that, unless you have united action among the alied Powers, that economic sanction cannot function. It is the duty of the Chancellor of the Exchequer—who very shortly may be in the responsible position of leading the House—to point out to the House in what way this economic sanction can function if Great Britain is the only Power that passes this legislation. There is the parallel case of the League of Nations. The whole function of the League of Nations would be shattered unless it had united action behind it. If only one of the Powers associated in the League of Nations were to take action, say with regard to a potential or prospective or impending war, there would be no value or strength in its action. Therefore, I repeat that you cannot have an economic sanction unless you have united action among the allied Powers.

My third point deals with the allied Powers with which we are most intimately concerned, namely, France, Italy and Belgium. On that point we are entitled to hear from the Chancellor of the Exchequer an explanation of the discrepancy between the statements made in this House with regard to the operation of the Bill, and the statements made in the French Chamber. You, yourself, Mr. Speaker, have said that you interpret the Bill to mean that there is a pool, but I would remind you—and you invite being reminded because you said that you had not been able to look into the discussion of the question in Committee—

I said that the House had no cognizance of what had taken place in Committee.

Perhaps I put it the wrong way. When we discussed this last the Prime Minister said quite deliberately that the money accumulated by the operation of the Clauses of this Bill would be used primarily for the payment of a percentage of the British Indemnity, and that was cheered, because hon. Members felt that there was some security having a bird in the hand rather than two in the bush, and they felt that if they had that money paid into the Treasury it could be used for that purpose. We are entitled to know at this stage of the Bill whether the interpretation of the Prime Minister or the interpretation of one of his partners in this Allied arrangement, the Prime Minister of France, is correct. If this Bill becomes an Act, will the money that is collected in this country be put into a pool, and will France, Belgium, and Italy be entitled to dip into it as well as ourselves? What was said was that if German trade developed as it had been developing, German imports would probably rise to £60,000,000, and, therefore, through the operation of this Act, we might secure anything between £20,000,000 and £30,000,000. That would obviously be collected from British importers of German goods. There can be no other explanation of that phase of the transaction. I want to know whether of the 50 per cent. of German imports which is placed in the hands of the Chancellor of the Exchequer, either Belgium, Italy or France will be able to dip their hands into it as well as ourselves. Does it mean that we shall only get our proportion of the indemnity, which is 22 per cent.? Before we come to any decision the House is entitled to that information. I will not elaborate the point about the importance of Antwerp to Belgium as a distributing port of German goods, and as to the point whether it will be worth the while of Belgium to agree to a similar arrangement. I pointed out in Committee that if they did, it would probably militate against her prosperity. [HON. MEMBERS: "Why?"] Antwerp is the port of Belgian industry. Antwerp was largely sustained by the export through it of German goods. If they prevent those German goods going through by agreeing to legislation which would impose a 50 per cent. penalty, they would reduce the prosperity of that port. The case with regard to Italy has been discussed. We know how poverty stricken Italy is and how, owing to its geographical position, it would probably be very much more to her advantage not to agree to this arrangement. Unless those four Allied Powers agree to the arrangement two results will follow. The first is that there will be a considerable injury to the trade of this country, and the second is that the operation of this Act will be an ineffective penalty as against the Germans.

The hon. Member asks whether since we last considered the the measure any reply has been received to the telegrams sent by the Foreign Office to the Allied Governments. I am told that up to the present the only reply received has been from Portugal, which has expressed her intention of enforcing a similar policy. From the other countries no reply has yet been received, and I should not have expected to receive it on a matter of such importance within the short space of time that has elapsed. Then the hon. Member said in his view the Bill cannot function as a sanction unless there is unanimity among the Allied Powers. I do not know whether he means complete unanimity, but at any rate unanimity among those named in his Amendment. In the first place the Bill may operate in one of two ways. It may operate as a sanction or as a means of collection of reparation. In which of these two methods it operates depends no doubt upon the action of the German Government. If they like to draw the penalty upon themselves they will so draw it. If they like to avoid the penalty and to pay the balance of their debt for reparation the Bill will not act as a punishment, but as a method of collection. I think it not at all improbable that before very long we shall find the Bill is acting in the second way. Even today I have had some indication from a good source that such a contingency is not improbable in the mind of men who are much concerned with business relations between the two countries. I do not want to lay too much stress on it. It is quite possible that that may not be the result, and I will assume that it is not. Then you say, unless other people act besides ourselves it is not an effective penalty. Of course the wider its application the more effective it is as a penalty, but I think our market has always been so important a market to Germany, and having regard to the restrictions which prevailed in other, markets and the absence of purchasing power in Russia, Austria and a large part of the Balkans, our market becomes a so much more important part of the possible market of Germany that even if we stand alone it is a not ineffective penalty if we exclude German trade from this market until satisfaction is given to our demands.

The third question the hon. Member put to me was as to the method in which the British Government proposed to deal with the proceeds secured under the Bill. He asked me for an explanation as to some difference, of view reported to have been expressed by M. Briand in the French Chamber. I have not seen any full report of those observations, and I should not like to undertake an explanation of a speech by an allied Prime Minister when I do not actually know what he said; but taking the reports as they have appeared in this country, they do indicate a certain difference of view if the reports are accurate. The position of His Majesty's Government and the intention of His Majesty's Government was quite clearly stated by the Prime Minister on the Committee stage of the Bill, and I cannot do better than read his actual words:

Is it not a fact, Mr. Speaker, that you have just ruled that this interpretation now given by the Chancellor of the Exchequer is outside the scope of the Bill?

I have not ruled that. I said I was not aware of what had been said in Committee.

The Chancellor of the Exchequer has just explained that there is no pool. [HON MEMBERS: "No!"] Is it not a fact that you have ruled that this Bill, in the terms in which it is drawn, makes a pool necessary?

I did not understand the Chancellor of the Exchequer to say that there was no pool. It seemed to me that it is quite clear that there is a pool. Then afterwards, when the money is in the pool, the Commissioners of Inland Revenue are to pay into such special account as the Treasury may direct, and apply in such manner as the Treasury may direct, the moneys available. I do not know what the Treasury may direct or in what manner they may direct that these moneys shall be applied. They clearly would direct that these moneys should be paid out of the pool.

This is a very important matter. I understand that your ruling was that on the title of the Bill all money arising from the provisions of the Bill had to be paid according to the provisions of the Treaty of Versailles. That is to say, they had to be divided amongst the Allies. That is what I understood you to say, and that, therefore, any Amendment to direct that the money should be paid to this country in discharge of German obligations to this country was beyond the scope of the Bill. I may have misunderstood your ruling. I now understand from the Chancellor of the Exchequer that the Government conceive that under this Bill they will have power to divert the whole of the money received under the Bill, up to a certain amount, to this country and this country only. If they have not the power under the Bill it becomes rather an important matter for the House to know exactly where it stands.

There is some confusion about the use of the word "pool." There are different kinds of pools. You may pool every payment received from Germany in respect of reparation or other services rendered. That is one form of pool. On the other hand, you may form a pool of all receipts taken under this particular Bill. That is what the Bill proposes to do. All receipts under this Bill are to go into a special account at the Bank of England. What is to happen after it is in the pool is not specifically directed by the Bill.

That is not in accordance with the statement of the Prime Minister. He said:

"I do not agree with my hon. and gallant Friend that in that case the whole amount ought to be put into the pool. I do not accept that in the least."—[OFFICIAL REPORT, 16th March, 1921; col. 1580, Vol. 139.]

The Chancellor of the Exchequer is now telling us that all the money must go into a pool.

I am very sorry that I still fail to make myself clear to the hon. Gentleman, but I hope I have made myself clear to other hon. Members. The other day Members of this House, when they spoke of a pool were thinking only of a common pool of all Reparation receipts, from whatever service. I understand the pool of which Mr. Speaker has spoken to be the special Treasury account into which the receipts under this Bill are paid. The fact that two different things were being spoken of as a pool has caused confusion to arise. The position of the Government, as explained by the Prime Minister and as repeated by me, is that these particular receipts are to go into an account at the Bank of England, and that is to be applied to the payment of our own claim of reparation to the extent of that claim in any one year, and that if there be a surplus the disposal of that surplus is to remain over for discussion amongst the Allies, when we know better what the circumstances may be. That is why we expressly refrained for the reasons declared by the Prime Minister from putting specific words into the Bill, and we begged the House not to tie our hands now, when there are an infinite variety of contingencies which we cannot foresee, or at any rate we cannot tell which one of these contingencies may actually operate. We asked the House not to tie our hands, when we did not know what other Powers are going to take the same action; whether all the Powers will do it, or not, and whether all the Powers which take action will take it in an equally drastic way; and we asked the House to leave us free to discuss with our Allies when the facts are known, and probably when Germany has made proposals, what should be the distribution, the allocation, of the surplus, if there be any surplus, arising out of the operation of this Bill, when our own claim in any one year has been met.

There is confusion in the minds of some of us about the pool. We understand that under this Bill all the money that is contributed by us and any money contributed by other of the Allies who may adopt the scheme goes into the common pool.

No.

We understand that under this Bill all the moneys contributed by us and all the moneys contributed by other Allies who may assume this obligation go into a common pool. [HON. MEMBERS: "No!"] That is what we understand.

Both the Prime Minister and myself have expressly said that that is not the intention of the Government. I cannot make it clearer, and the hon. Member must not complain that he has been misled if after such a plain statement he still misunderstands.

I do not in the least complain of being misled. Nothing could be franker than the right hon. Gentleman's statement; but what we understand by the Bill is that the money we contribute is to go into one pool into which all the money paid by our Allies will go. That is our understanding of the Bill, and that is the view taken by M. Briand, clearly stated in his speech. We were desirous of retaining for ourselves, if the pool is in force, our share. I proposed an Amendment for that purpose, and I was told by Mr. Speaker that I could not move the Amendment because the Bill provided for the Versailles pool.

It does not go into the Versailles pool. In order to avoid confusion let us call it a "special account," let us get rid of the word "pool." It is paid into a special account. The whole of the money in that special account may be paid out to meet our claims, or part of it may be applied to meet the claims of our Allies. Under Sub-section (3) of Clause 1, that is still left open. It does not follow that because it is paid into the special account the whole of the money in the special account is to be devoted to British demands only.

Then it becomes a point of Order. I proposed that the whole of the money in the special account should be devoted to our share of the indemnity. You, Sir, ruled that that Amendment was without the scope of the Bill. I understand that that is exactly what is going to happen.

That is the whole of the money in the special account. The scope of the Bill does not provide for that. The Bill does not limit it to the obligations due to Great Britain.

On a further point of Order. My Amendment said,

"and such moneys shall be paid into the Consolidated Fund and used to discharge the obligations of Germany to the United Kingdom only."

When those are discharged there remains a surplus for the discharge of other obligations. Why therefore was the Amendment out of order?

The Amendment seized the whole and left no surplus.

As we proceed further into this Bill the more confused we become and the more confused the Government becomes as to what really is the Government policy. It is perfectly clear that the Government policy has changed and that they have attempted to stand in two entirely opposite and contradictory positions. The Chancellor of the Exchequer has asked us not to use the word "pool," so if I might I would call it a puddle in order to keep it perfectly distinct. There is the great Versailles pool, and there is this confused little puddle, it may be of water or there may be golden sand in it, but the Chancellor of the Exchequer cannot at this moment explain exactly what it is to be. It would be, at any rate, an act of courtesy to do so. The Chancellor may resort to the famous retort used in the last analysis and complain that we have not the capacity to understand what he is trying to say. If we are reduced to that we shall be very sorry. I put it to the House that the Chancellor of the Exchequer ought to be able in clear and unmistakable language to tell us what is the attitude of all our Allies. All he can tell us is the good tidings, the glad news that Portugal is with us. With great respect the Chancellor of the Exchequer ought to be in a position to tell us something more than that Portugal approves and is sympathetic. Is there no news from Montenegro or Czecho-Slovakia or Timbuctoo? Are no other peoples coming in to solve this problem, at a time when the whole world is looking to the responsible Governments, when we have nearly two million people unemployed, and know nothing of what the condition of world markets is going to produce? All he can tell us is that, on a great policy of this kind, Portugal is with us.

The Chancellor of the Exhequer has told us nothing at all of the history of this proposal, how it developed among the Allies and what was the original intention of the Government. When I put this question to him he said that I was asking a string of questions. They were very simple questions, not at all knotty ones. I asked whether Italy agreed to this, whether France agreed to this, whether Belgium agreed to this, and whether Japan agreed to this? I also asked whether America agreed to this? I asked if he had received negative replies in this matter, and if so would he be good enough to tell the House. This is a most important question, not a party question at all, but a question of business. What are the business reasons which these business communities have for refusing to join with us in what I consider to be, not business but extraordinarily unsound and uneconomic proposals? The Chancellor of the Exchequer says that is a string of questions. Apparently questions asked in a string do not require answers, but I should like to ask the Chancellor whether I am right in assuming that the real purpose of this proposal was to make a threat to Germany to bring her to her senses. [HON. MEMBERS: "Why not?"] I am in favour of that. I should like a league amongst the Allies to say to Germany, "We shall put these restrictions upon trade until you have carried out the Treaty of Versailles." But the face is that instead of waiting for our Allies to put this iron ring around their trade, we have taken a course which really will put economic pressure on ourselves. We are standing alone, gesticulating with a big revolver which we know is not loaded, and our Allies are standing aside while we do this cinema act, this spectacular thing which has no business in it, no economic priciple, and far from having anything to do with a pool will not merely not put anything into a common pool, but will not put anything into the British Exchequer. It will merely penalise ourselves.

Go to Berlin with Hogge.

The hon. Gentleman suggested that I should go to Berlin. We are accustomed to be described as pro-Germans when we talk commonsense.

Hoch; hoch!

I would say with great respect to my hon. Friend, who comes from Scotland, that I would recommend him to go, not to Berlin but to Scotland, and take an electoral decision on this matter. They are hard headed business men there. I believe that he has been assisting in taking electoral views. If this is one of the planks on which the Government is going to stand I hope he has received the message of Scotland on this matter. The original purpose of this Bill was that it should he put in the form of a threat to Germany. The threat has failed to be an effective threat. We must have common action between ourselves and our Allies. But, as the Chancellor of the Exchequer says, we have decided to go on whether or not we have the approval and support of our Allies. With what result? The Chancellor of the Exchequer says it will leave us free. May I put the point of the British business man who trades with Germany, that you are binding him hand and foot and delivering him bound and broken and ruined to his foreign competitors in Europe? Surely the Chancellor of the Exchequer agrees with that. I hope he will give us another very simple explanation, an explanation we are capable of understanding. He will be rejoiced to hear that this 100 per cent. at least against German goods will save the Government from the difficulties of its anti-dumping and key industries proposals and will fasten upon the fiscal system of this country the fetters for which he stands. That explanation I accept and the ridiculousness of the whole proceeding will be evident to every business man in the country within six months of this day.

I think there is good ground for some confusion in this matter. There is confusion in two respects. There has been some confusion between what I shall call the European pool and the British pool. There is also some confusion, I think, between what are the intentions of the Government and what is actually carried out by the Bill. I think the right hon. Gentleman (Mr. Chamberlain) has most clearly explained what the intentions of the Government are in this respect. The intentions of the Government are that the whole proceeds of this measure shall be paid into the British pool, the special account, and that they shall be used in the first instance for liquidating the British share of the reparations up to the full extent of that share, and if there is any surplus that may or may not, as the case may be, be paid into the European pool. That is the intention of the Government, but the other question remains, do the words of the Bill make that secure, because we know that after the Bill has passed it is not the intention of the Government, but the actual and literal provisions of the Bill as they would be interpreted in a court of law which count? The Bill provides according to its short title that this surplus shall be applied to the discharge of the obligations of Germany under the Treaty of Versailles. It does not say they shall be applied to the discharge of the British share of the reparations. Who is it that is the proper authority to decide how the German reparations shall be distributed? If this money is to form part of the general fund available for reparation, who is to decide how it shall be applied? I submit that it is the Supreme Council which decides how the various moneys provided in one form or another by Germany shall be applied, and that the matter which will be final in this respect will not be the intention of the British Government as to what it shall do with this money, but will be the Supreme Council of which we are only one element.

4.0 P.M.

The point that my hon. Friend (Mr. MacCallum Scott) has been making with such clearness is most important, and if the House will listen to me for one moment I will try and put to the Chancellor of the Exchequer how important I think it is The intention of His Majesty's Government is, I think, that sums which come into the Treasury under this scheme are to be paid into a special account to be applied in such manner as the Treasury may direct towards the discharge of the obligations undertaken by Germany under Parts 8 and 9 of the Treaty of Versailles. Parts 8 and 9 I have in my hand, and the relevant article is 237. "Successive instalments paid over by Germany in satisfaction of the above claims will be divided by the Allied and Associated Powers in proportions which have been determined upon," and that, as we know, is 22 per cent. If the intention of my right hon. Friend (Mr. Chamberlain) in regard to this special account is that it shall be in the power of His Majesty's Government either to take the lot or only 22 per cent.

and leave the balance over, then I say we must alter the terms of this Bill, because the Bill does not contain the power for the Government to do that. As I read the Bill they must pay over the whole of these funds to come in under the operation of this Bill in trust under the Treaty of Versailles, and they cannot, unless this Bill is amended, leave the Government an option.

I follow exactly what my right hon. Friend the Member for Peebles (Sir D. Maclean) has said, and I agree, but what is not clear to me is this. We have a right to take 22 per cent. under the Treaty. Why are we going to close that year? The next year there may be bad trade. We ought to carry forward whatever we have over. I do not wish to argue the point, but I think it is a point which might be made clear.

That really raises a different point. The question is whether this Bill should come into effect before similar Acts have been passed by our Allies.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 39; Noes, 204.

I beg to move, in Subsection (1), after the word "prescribe" to insert the words principle is generally admitted. I am convinced that for every £1,000,000 by which you reduce your imports you will reduce by £2,000,000 your exports. That is in the ordinary way, but in the special conditions now prevailing the diminution of trade will be added to very largely, and that is going to affect many of my constituents. I have over two miles of dock frontages in my division. The House will realise, therefore, what a diminution of trade means to the transport people concerned. There is a far greater issue than that. It is likely to affect the very important matter of the London market. As we all know, London has established a reputation for itself as one of the greatest marketing centres in the world, and if you do anything to interfere with that market it means the transfer of a part of that business to other places. We are now experiencing a good deal of competition from places like Antwerp. The more obstacles you put in the way of your own trading the more you will assist your more active competitors of whom Belgium to-day happens to be one. I do not say it is a perfect proposition—I do not believe it is—but it is a suggestion, and if it elicits some more valuable suggestion it will not have been made without advantage.

I have made this proposition because I want to give some inducement to the Ger man importer accustomed to buy in the English market to continue trading with us. There is another question I would like to ask. What would be the effect on the German importer, if he is also an exporter, if he receives, as he will receive, in payment for the goods he has exported these Exchequer documents? Will he not attempt to hand those documents over in payment to the British exporter for the goods which he has exported? If so, I do not know if there is any way which can he devised by which some mode of exchange could be operated so that they could be cashed and where the German could receive some consideration in order to induce him to remain a customer of this country. Personally and frankly, I do not see how it can be done. I have not the assistance, which the Chancellor has got, of a trained and fully equipped staff, but I throw the suggestion out for what it is worth, because, of all other matters before us, one does not want to reduce the trade of this country, if we can possibly avoid it, at the present time.

I beg to second the Amendment.

The last proposition that was put by the hon. Gentleman amazed me. It was that we should make the receipts negotiable instruments. A more complete way of making this country pay their own part of the reparation I cannot conceive.

We pay it in any case.

If the hon. Member thinks that, no doubt he will vote against the Bill, but I think he will admit that there may be differences of opinion about that, whereas there cannot be two opinions about this proposal, that it would make this country pay the reparation in every single case. However, the precise Amendment which is moved runs entirely counter to the spirit and purpose of this Bill, whether you look upon it as a sanction or as a means of collecting reparation, and for that reason it is obviously impossible to accept it. This Bill is a proposal that 50 per cent. of the purchase price should be paid into a special account at the Bank of England, but this Amendment runs absolutely counter to that. I think the hon. Member who moved it wished it in the long run to have the wide application which is the only one that is reasonable, because trade is not done by pure barter, and what he really means is that the rate ought to be reduced by 25 per cent. wherever goods move to and fro. That means, in effect, that instead of putting the rate at 50 per cent., it is proposed to put it at 25 per cent. If that is a good argument, it is an equally good argument for reducing the rate from 50 per cent. to nothing per cent. I think I have said enough to show that the Amendment is wholly inconsistent with the purpose of the Bill, and it is quite impossible to accept it.

Amendment negatived.

I beg to move, in Subsection (1), after the word "prescribe," to insert the words

"Provided that when payments are made under this Section in respect of articles on which an Import Duty is chargeable under the Finance (No. 2) Act, 1915, the Import Duty upon such articles shall not be payable."

I put this Amendment down for a simple reason. As the House will remember, under the Finance (No. 2) Act, 1915, an import duty of 33⅓ per cent. is placed upon certain articles coming from abroad into this country. Among those articles, I need only remind the House that such things as motor cars, musical instruments and other articles are included, and upon those a duty now has to be paid of 33⅓ per cent. To make my point quite clear, I will take one concrete example. Supposing a piano is bought by a British importer of the value of £100. That will be subjected at the moment to a duty of 33⅓ per cent. The price, therefore, to the British importer, would be £133⅓. But, under this Bill, the Government now have another arrangement which would operate in the business transaction. Of the original £100 paid for the German piano, the Government take £50, and £50 is paid by the British importer to the German exporter. On the top of the £50 which is paid by the British importer to the Government, there is obviously the duty of 33⅓. That makes £83⅓. Look at that transaction from the point of view of a German importer. The duty becomes not 33⅓, but 166⅔per cent. So that on all articles which at the present time have to carry an import duty of 33⅓ coming from Germany, you would work an entirely prohibitive tariff. I invite the Chancellor of the Exchequer to see what that means. It means, obviously, that that type of article would not be imported into this country from Germany.

Use a British one.

That is exactly why I have raised this point. I do not want to discuss the question as to whether you should use British work or not. The point is that this Act of Parliament we are passing is to collect revenue, and if we use all British work, as my hon. Friend opposite suggests, then you will collect no indemnity. That is the point I invite the Chancellor of the Exchequer to meet. If you by the operation of this Act put a prohibitive tax upon articles from Germany, then the Government neither receives the duty nor do they receive the 50 per cent. which they expect to receive under this arrangement. My Amendment, therefore, proposes that on those articles, and only those subject under the Finance Act of 1915 to the 33⅓ per cent. duty, that that duty should be withdrawn in order that the rest of the amount should be received by the Government, and, therefore, swell the indemnity.

The Amendment, as explained by my hon. Friend opposite, is intended to be confined to particular duties. Why this Amendment is not intended to be applied to all duties, I do not understand. The hon. Gentleman seems to have a peculiar affection for the McKenna duties. Let me, however, without dwelling upon that distinction, deal with the real substance of the Amendment. I wonder whether he sees what he is doing? He proposes that wherever there is a Customs duty on goods coming from Germany of 33⅓ per cent., that-two thirds of the 50 per cent which they would otherwise give to the Reparation Fund shall be foregone, that two-thirds shall be paid, it is true, into a special account, but that the British Treasury shall be poorer by the same amount.

Oh, no!

That is the effect of the proposal. But for the Amendment of the hon. Gentleman 33⅓ per cent. of the value of the goods would go into the British Treasury. You say that 50 per cent. of the price which by this Bill the German exporter would receive shall be paid to a special reparation account, therefore the Treasury is to forego the 33⅓ per cent. That is the Amendment.

No, no. It is your interpretation.

If I am really beating the air and not dealing with the Amendment, I hope the hon. Gentleman will interrupt me. He knows, I am sure, that I am trying to meet him fairly. He proposes that when payments in respect of articles on which duty is charged—that is the McKenna duties—are chargeable, these import duties upon such articles shall not be paid. In other words, wherever the German export is subject to the McKenna duty the Treasury should lose that duty. That is just as much as to say that, instead of the German exporter paying 50 per cent. of his purchase price into the Reparations Account, two-thirds of the 50 per cent. shall be paid by the British Treasury. The hon. Member is consistently concerned in the discussion of the Government's proposals lest any part of the sum which we gain by the Reparation Fund should ease the burden of the British taxpayer.

The right hon. Gentleman overlooks that one of our main contentions is that the British consumer is going to pay a large proportion of this 50 per cent. Unless the German agrees to it, it will be nothing but a tariff. That being so, the burden of my hon. Friend's argument is simply that in this case if we do pay 50 per cent. the tariff will amount to 83 per cent. in the case of these goods. That seems to me to be a sound argument.

The answer which has been given by the right hon. Gentleman illustrates and reinforces the criticism which I have made before. The case of the right hon. Gentleman is that if the existing tariff of 33⅓ per cent. be abolished and this impost be substituted, the income which now goes into the British Treasury will go into this Reparation Fund. That is to say, it will have the same effect exactly as a tariff. I do not see how my right hon. Friend can escape from that conclusion. He has pointed out that if this be substituted for a tariff, it will raise and collect for another purpose money which is at present under the tariff being paid into the British Treasury. That is the case which he has made. We have a tariff existing now, a tariff of 33⅓ per cent. on German goods. The proceeds of that tariff are part of the tariff revenue of the country and are paid into the British Treasury. The case which he makes out is that if that tariff be abolished and if this impost be substituted, then the money which is now being raised by a tariff and paid into the British Treasury will be raised by this Act and be paid into a different fund.

My hon. Friend has misunderstood my argument. I say that if you forego your tariff receipts under the McKenna Act that which you will get in the Reparation Fund will be balanced by that which you will lose in the Treasury, and that is the same thing as if you voted money out of the Treasury into the Reparation Fund.

The language which the right hon. Gentleman used was that the British Treasury would then be paying the German Reparation.

It would not be actually doing it, because the Reparation Fund would remain exactly as it is under this Bill, but the British Treasury would be poorer by the loss of the duty, and that really is the equivalent of voting money out of the British Treasury for the Reparation Fund.

The case which I have made is that the result of this impost will be that prices will be increased in this country, and that therefore a certain revenue will be provided at the expense of the consumer in this country. A part of the revenue which proceeds from this Bill will be provided by the Germans—they can afford to lose some of the large profits they are at present earning—but a large proportion will be raised at the expense of the consumer in this country in exactly the same way as the revenue which goes into the Treasury by an ad valorem duty such as this 33⅓ per cent. is raised at the expense of the British consumer in this country. I may be wrong, but as far as I am concerned the statement which the right hon. Gentleman has now made in answer to this Amendment confirms me in the view which I have previously taken.

I would like to put one point. The value of the goods as defined later on in the Bill is to be the sum which an importer would give for the goods if the goods were delivered to him at the place of importation. That suggests that it is the value of the goods after the 33⅓ per cent. has been paid, as they cannot be delivered to him until the duty has been paid.

The hon. Member is mistaken. The duty would not be paid at the place of delivery. The duty would be paid only when the goods are landed here.

I should say they would be delivered at the port of importation after they had been delivered on the quay and set free by the Customs authorities to be taken away by the new owner. I suggest, therefore, if £100 worth of goods were sent from Germany the charge on those goods as the result of this Bill would be one-half of £133 6s. 8d.

No.

I should have thought that that was the meaning of the words. Has this point been considered by the authorities, or is it only the opinion of the right hon. Gentleman himself?

It has been considered, and it has been interpreted that the duty is not to be added to the value of the goods as assessed for the purposes of making the 50 per cent. deduction.

Then I think that ought to be plainly stated in the Bill, otherwise there will be no end of difficulties.

I think there is some force in what has been said by the hon. and gallant Member for Aberdeen (Major M. Wood). The wording of Clause 3 is, I submit, cognate to the problem under discussion, and there it is provided that it is at the place of exporta- tion that the price is to be fixed. Take the case of a piano exported from some place in Germany. The invoice price would be fixed at that place, otherwise the deduction would have to be made upon the added cost of insurance, freight and duty. The discussion which

has just taken place has disclosed a slight drafting error in the Bill. I shall vote against the Amendment, but I rather think the words "importation" and "exportation" have been transposed.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 35; Noes, 196.

I beg to move, at the end of Sub-section (1), to add the words

"Provided that the payment to the Commissioners shall be made at the same time and on the same terms as shall under the contract of purchase regulate the payment to the person to whom the purchase price of the goods in question is due, unless in the opinion of the Commissioners such time and terms are unreasonable."

The point of this Amendment was discussed in a somewhat different form during the Committee stage, when the Chancellor of the Exchequer found himself unable to meet the point of view that was then raised, that it was necessary for the importer of these goods not to be penalised in the way the Bill would penalise him when he had imported his goods on the basis that he had a certain amount of credit. Whether that credit was 50 or any other number of days those conditions would no longer apply if, on the arrival of the goods in this country, he was called upon to furnish 50 per cent. of the value of such importation on the spot. In reply to the point that was then raised the Parliamentary Secretary to the Board of Trade said:

"There may be certain hard cases in which the importer is unable to discharge his obligation until he has re-sold the goods, and that that fact has been taken into account in the original transaction. The Customs already, however, have the power necessary for meeting that kind of case, that is to say, the ordinary power to accept a bond in place of a cash payment. I can assure my hon. Friend that in any case where there would be hardship, and where it is equitable that the Customs should accept a bond in place of immediate payment, the transaction can be arranged in that manner."—[OFFICIAL REPORT, 16th March, 1921; col. 1498, Vol. 139.]

I was very much surprised to hear that statement. I have made inquiries as to the form of procedure, and though I put the question to different forwarding agents and people who are accustomed to that kind of business, not a single one was able to give any explanation, nor did a single importer know about such an arrangement. I am delighted to know that such an arrangement in fact does exist, but I think it will be well for the Parliamentary Secretary to give a little further information on the point. I understand that His Majesty's Customs are making very anxious inquiries now about the ports of London and elsewhere as to the available sites which may be found for the purpose of putting these imported goods in bond, pending the payment of the money. If facilities are to be provided for the removal of goods on satisfactory bonds being entered into, that is very satisfactory; but if, on the other hand, the putting of these goods into bond means the taking of streets of warehouses and that large staffs will be necessary to maintain them, it opens up an alarming prospect.

I beg to second the Amendment.

I cannot accept the Amendment, but I think I can give an assurance which will satisfy my hon. Friend that reasonable facilities will be given for meeting the class of case to which he refers. He completely misunderstood my hon. Friend if he thinks that my hon. Friend or His Majesty's Customs contemplate the erection of immense new bonded warehouses. My hon. Friend spoke of giving bond. That does not mean putting goods into bonded warehouses. It means the bond that will be ordinarily required as security for the payment of duty when the goods are allowed to be cleared. It is not a question of putting them in bond in warehouses or any thing of that kind. I think the hon. Member will see that we have met his case when I tell him that instructions will be given by the Board of Customs to the local Customs officials that on reasonable cause being shown payment may be deferred on bond or other securities being given, for a period not exceeding three months. If any extension of this period is desired, the application would be referred to headquarters for consideration, and would be allowed in cases of special hardship, but only in cases of special hardship. On a man producing proof in regard to this point, and on giving security, 90 days would be considered a reasonable period in which to make payment to the Customs under this Bill. I cannot allow an extension beyond 90 days at the discretion of the local officer; but the Board of Customs itself as the headquarters would have the option of giving a further extension if any real hardship would be involved in not doing so. Of course in cases where the terms of payment to the Germans are cash it would be expected that the importer would pay cash to the Customs.

I hope my hon. Friend (Mr. Kiley) will accept the offer made by the Chancellor of the Exchequer. It only shows the utility of the discussion. I merely want to say that I notice the Prime Minister last night said something about people keeping the House up uselessly on a Bill of this kind. That is the sort of thing which is strongly resented, and I am very glad my right hon. Friend has met us on a perfectly simple, ordinary business point.

I beg leave to withdraw this Amendment. There is one point—

The hon. Member is not entitled to make another speech.

Amendment, by leave, withdrawn.

I beg to move, in Sub-section (3), to leave out the words "the Treasury" ["as the Treasury may direct towards"] and to insert instead thereof the word "Parliament." This raises a question which has already been discussed. I move it formally in case the Chancellor of the Exchequer desires to make any remarks. Otherwise I beg leave to withdraw it.

Amendment not seconded.

5.0 P.M.

I beg to move, at the end of Sub-section (3), to insert the words

"Provided that obligations to the United Kingdom shall be a first charge on such account."

It refers to the same matter as I raised in an Amendment that I put down, but which was drawn up in a form which was out of order. The intention is quite clear It is that of all the moneys collected under this Bill our proportion should be the first charge. Why, it may be asked, do we wish to put it into the Bill? We think it necessary because there is a very wide difference of opinion expressed by the leading statesmen of the Allies on this arrangement. The Prime Minister, in a speech quoted by the Chancellor of the Exchequer earlier in the Debate, said, "It is not our view that we ought to be compelled to pool the amount." M. Briand, speaking in the French Chamber, according to the "Times" account, affirmed that for the countries which adopted this course there would be a pooled amount in which the percentage of the Spa Agreement would be maintained. Let us see how it works out. Our import trade—we have only returns of the pre-War figures, so I must take those—is very considerably in excess of the amount of imports by France; in fact, it is almost twice as much. If that proportion is maintained in the post-War trade, we should collect under this arrangement twice as much money as the French; but under the Spa Agreement, whereas the French get 60 per cent. we only get 22 per cent. of the indemnity. The net result would be that we should be collecting two-thirds of the money and of that we should have to hand over three-quarters to France. Hon. Members may say, "We are quite prepared to have our Customs used as the collecting medium for the benefit of our Allies." But those of us who think that this is going to be a charge, not upon the German importer but, as we fear, upon the consumer, believe that it is most indefensible to proceed to levy by means of a tariff a charge upon the consumer and then to devote three-quarters of that tariff to the French indemnity fund. That appears to us to be utterly indefensible. The operation of the Bill, we think, if it is to be spread over many years and to become a part of the fiscal machinery of this country, will be extremely harmful. Take the case of sugar imports. About half the sugar imports of this country before the War came from Germany. That meant cheap sugar. Sugar is, next to bread, perhaps the most important thing in the ordinary daily life of poor people. The figures show that Germany is preparing to re-supply us with sugar. If you are going to tax it it means that the consumer of sugar, that is to say everybody, pays the duty. I do urge that the Government should accept this Amendment. It is going to carry out what we understand to be the policy of the Government as expressed by the Prime Minister and as expressed by the Chancellor of the Exchequer to-day. Therefore I contend that it is an Amendment in accordance with the Government's expressed intention.

I just want to add one observation. This fact I am going to say I do not think will be disputed in any part of the House, and will not give offence to our friends on the other side. The interest of this country is, ofter all, to stimulate trade between this country and Germany. The right hon. Gentleman (Mr. Chamberlain) hopes that he is going to raise money by this means, and therefore it will be in the interest of the Government in certain cases to reduce the percentage of import charges and make things easier in other directions, so that there will be a flow of trade between this country and Germany. I think the Chancellor of the Exchequer will agree with me. The only thing is the right hon. Gentleman hopes to tax it on the way. The French idea of it as expressed by their spokesman and quite honestly expressed, for they have their point of view—a reasonable point of view—is to weaken Germany. They do not want the Germans to recover their ordinary industrial and trading prosperity before they recover their own. That is a very natural point of view, but the fact remains that it is opposed to ours. The Prime Minister seems to have foreseen this in his speech the other day when he said it might be found expedient for the French to take their share of the reparations by other means, such as direct labour in the devastated areas. The position is this. We will be doing our utmost to bring about a flow of trade that we can tax, while the French will be doing their utmost to keep Germany weak commercially, and yet a certain proportion of the money we raise will be paid into the general fund for the relief of the French taxpayers. If that is the case, I think we ought to safeguard our people by such an Amendment as my hon. and gallant Friend's. We ought to see that the first charge on this fund is earmarked for the relief of our ex-service men, our wounded men, our pensioners, and so forth. The Prime Minister just after the Armistice gave a pledge to the hon. Member for South Shields (Mr. J. H. Wilson) that the first money received from the Germans would be earmarked for the relief of the widows and dependants of the men who were sunk by the German submarines. The Seamen's and Firemen's Union at that time said that they would not permit the carriage of German goods on any British ship until some reparation was made to the widows and dependants of the men who were killed in illegal warfare by German submarines, and I supported them in that. But we have had from Germany some £500,000,000 at the lowest, or, according to the highest German calculations, were £1,000,000,000. I do not go into the exact sum. It depends on the price of the ship's coal, and so forth, handed over. But not a penny of that money has been given to the dependants of these seamen, and the Government are still considering the matter. Here is a fund which we are going to form from import duties on German goods. We are entitled to ask the support of the House iii giving a direction to the Government that it should be earmarked as a first charge to pay the obligations to our own people, of which I have just mentioned one. I had an Amendment, which you quite properly ruled out of order, that it should go to the unemployed. The Chancellor of the Exchequer goes so far as to admit that there will be some inconvenience to our trade caused by this Bill. I call it hunger and misery to our workpeople. I would like any hon. Member to call a public meeting in his constituency and tell his constituents that we are raising money by this means, and that before our own needs are met some of it is to go into the Exchequer of another country which, rightly or wrongly, was doing its utmost to secure German trade. I hope that the Amendment will be accepted by the right hon. Gentleman.

I am mot going to follow the hon. and gallant Gentleman (Lieut.-Commander Kenworthy) all over the large field which he has traversed on this Amendment. The Mover of the Amendment (Captain W. Benn) illustrated his argument by the case of sugar. I do not want to dwell on the matter, but I do not think the illustration particularly happy, because there is no importation of sugar from Germany.

The Board of Trade Returns show an import of 263,000 cwts. for 1920.

A little learning is such a dangerous thing.

I go by your figures.

This is not sugar of German origin, but sugar from Czecho-Slovakia and Poland.

It is returned as German.

I am not disputing the Board of Trade statistics. They are very apt to mislead even the most intelligent of Members.

It would be subject to the 50 per cent.?

No, if would not. Germany is not producing sugar in sufficient quantities to export any. On the contrary, she is importing to fill up the measure of her own consumption. That, after all, was only an illustration, and it does not affect the merits of the hon. and gallant Member's argument. The Amendment goes begond what he himself described as that which he wished to do. He wishes to put into statutory form what the Prime Minister said the other day was the present intention of the Government, but his Amendment would provide that everything we receive under this Bill should be devoted to the satisfaction of the United Kingdom share of reparation under the Treaty of Versailles until the whole of the United Kingdom claim had been exhausted. That is not what the Prime Minister indicated as his policy. It was that in any one year we should take our share for that year, and that if there was a surplus then the disposition of that surplus should be left for future settlement. I do not want to spend time on that or to lay stress upon it, because, of course, the hon. and gallant Member might offer to make his words conform to the declarations of the Prime Minister, and still I should ask the House not to put into this Bill bindng and statutory declarations as to the application of this money. We are dealing with a Bill necessarily uncertain as to what the conditions may be in a few weeks or months or years. Until the Bill comes into force, and perhaps for some little time after, you cannot tell what the policy of the German Government may be. You cannot tell what the policy of the German exporters may be, and you cannot tell at present what the policy of other legislatures may be. Under those circumstances, for this House to tie the hands of the Government in all future negotiations would be a great mistake. Like the Prime Minister, I do not say it might have a fatal result, but it would be a great inconvenience and might prove to be very mischievous. After all, there is a common purpose to all of us. Our common purpose, whatever differences there may be as to the means employed, is to bring Germany to reason and to come to a satisfactory arrangement. Is not that in itself a sufficient reason for not putting binding statutory obligations into the Bill as to the exact way in which we are to treat the moneys received under the Bill?

I think it is quite probable that a scheme of this kind may be propounded by the Germans as the best way of meeting their obligations, certainly in so far as people like ourselves are concerned, where it is not possible for them to make us reparation in kind. Whether that be so or not, I beg the House not to tie the hands of the Government in any international negotiations which may take place at a future time by now putting in statutory obligations, the effect of which they cannot see. There is only one further observation I want to make, and I am afraid it is of a more contentious kind, although I do not make it in any contentious spirit. My real difficulty in arguing with the hon. and gallant Gentleman on the Front Bench opposite (Captain W. Benn) and the hon. and gallant Gentleman behind him (Lieut.-Commander Kenworthy) is that we are poles apart about the merits of the Bill. For reasons which I appreciate, they definitely decided not to vote against the Second Beading of the Bill or against any critical point.

No.

I must deal with them separately, I see. Anyhow, that was the case with the hon. and gallant Gentleman on the Front Bench opposite; the hon. and gallant Gentleman behind him did not vote against the Second Reading, but would have liked to; he would have if he could have found another Member to act as a teller.