BRITISH BUDGET

Ashburton Guardian, Volume 68, Issue 145, 1 April 1948, Page 5

BRITISH BUDGET

SPECULATION LESS OPEN i Little Relief Anticipated (N.Z.P. A.-Reuter—Copyright). LONDON, March 31. There is less open speculation about next week's Budget than for many years, not because there is any less Curiosity about it, but because Sir Stafford Cripps, always impassive, given few indications of his ideas, says E. G. R. Webber, special correspondent of the New Zealand Press Association. Suggestions that the Chancellor may go to the length of imposing a capital levy are receiving little support, but many think it probable that he will further increase the profits tax and the purchase tax, particularly upon luxury and unessential goods. It seems less probable, but some consider it possible, that he may depart from Dr. Hugh Dalton’s policy of freezing food subsidies, and allow them to he increased in order to reduce the nominal cost of living, and strengthen the government’s case in resisting further wage claims by the trades unions. Even optimists expect little taxation relief from the Budget, other than a possible slight reduction in the tax upon earned income. No one seriously suggests this year that food subsidies are likely to be reduced. Business is already feeling the usual pre-Budget caution. Many stores, when they reopened after Easter, reported that the public was restricting its buying in the hope that the Bud get might reduce prices. On the other hand, the shortage of cigarettes and tobacco, which has occurred before every recent Budget, has again appeared, sugesting that sup plies are being withheld in expectation of a further increase in tobacco taxation. A Deflationary Budget There appears to be only one safe assumption about the Budget—that it will be deflationary. It is generally agreed, however, that Sir Stafford Cripps faces a dilemma in deciding what measures to adopt to achieve de flation. If he imposes further taxation upon profits, dividends, and luxury goods, he may please the unions, but I will upset the representatives of capital, who are at present showing a reasonable disposition to co-operate with him. If, on the other hand, he reduces food subsidies, he may please capital, but run the risk of creating serious trouble with the Trades Union Congress, and may even provide the unions with a ready-made excuse for withdrawing their present rather grudging support of the Government’s wage-freezing policy. If he does both, as recommended by orthodox economists, he runs a grave risk of pleasing no one, or at least of not pleasing anyone of political signifiCcince. The difficulty is that, although both the Federation of British Industries and. the T.U.C. have agreed to co-op-erate with the Government in limiting profits and wages, neither can be sure that its members will follow its lead. Several influential bodies of workers have already decided to press their wages claims in defiance of the T.U.C.’s appeal, and a number of firms, who are members of the F. 8.1., have announced increased dividends in the face of the federation’s appeal to them not to do so. It therefore remains with Sir Stafford Cripps to • decide what measures, if any, he can take in his Budget to enforce the Government’s desires on both sides. Attitude of T.U.C. It is generally assumed, however, that Sir Stafford Cripps will find it politically expedient to deal with the employers before he tackles the unions. As the “Manchester Guardian” remarks, the T.U.C. is at present rather like a side man who is trying to avoid an operation, but who still hopes to find a patent medicine to cure an organic disease. The Government has diagnosed the disease, but is rather like a doctor who is anxious not to offend a profitable patient. Nominally the Chancellor may expect to , show a revenue surplus of about £700,000,000, but much of this is in non-recurring items such as the sale of surplus war stores, while the Government saving of £206,000,000 on defence is likely to be offset by the increase in cost of the new health services during the coming year. One of the Chancellor’s many difficulties is that the Budget can deal with only part of his problems and that these must all be considered within the framework of a national bal-ance-sheet and of Britain’s overseas trading deficit and debts. It is probably for this season that Sir Stafford Cripps has decided to use this year’s Budget debate not only for its traditional purpose but also as an opportunity to discuss the recent economic survey for 1948. Taken together, these will provide an opportunity for a full and detailed examination of Britain’s, economic circumstances.

EXPECTATIONS EXCEEDED SURPLUS FOR FINANCIAL YEAR (Rec. 11.30 a.m.) LONDON, Mar. 31. Britain ended the financial year with a realised surplus of £635,380,863 sterling, which is more than twice the revised estimate of £269.000,000 in the November supplementary budget. The total ordinary revenue for the year was £3,844,859,041 sterling which is a net increase over the previous year of £503,635,683 sterling. Expenditure was £3,209,475,175, including £22,000,000 for sinking funds