ECONOMY CUTS ARE REVEALED

Ashburton Guardian, Volume 70, Issue 12, 25 October 1949, Page 3

ECONOMY CUTS ARE REVEALED

The public galleries were packed with tense, expectant faces as Mr Attlee rose to announce measures necessary to make the devaluation of sterling succeed and halt the advance of inflation. ✓ Mr Attlee said the Government had decided to take action which would have a total disinflationary effect of about £250,000,000 sterling a year. Mr Attlee said that capital expenditure would be cut by about £140,000,000 sterling a year, general control of building would save £35,000,000 sterling, and the Government had decided on reductions of expenditure that, together with the increase of the profits tax, should produce well over £100,000,000 sterling for next year’s Budget. Mr Attlee said the reduction in the education charge would be spread .over England, Wales and Scotland. State expenditure on agriculture could be reduced in 1950-51 by about £6,000,000 ’sterling, and the vote for the Ministry of Supply could be . reduced by about £6,000,000 sterling. Administrative expenses of the Ministry of Food would be reduced by about £1,700,000 sterling. This would be done mainly by reorganisation arid concentration of divisional and local offices, and the dropping of some refinements of control. Annual savings of £BOO,OOO sterling would be secured by revising the register of electors only once instead of t.wipe a year, and over £1,000,000 sterling would be saved by economies in! the information services and the British Council. Mr Attlee said the estimated cost of -the Festival of Britain would be cut %y ' £1,000,000 sterling. The Government would defer the ijitroduction of certain parts of the legal aid scheme. Mr Attlee said that old-age pensioners would not have to pay Is per perscription for medicines.

Defence Expenditure

Turning to defence expenditure, Mr Attlee said it had been possible to make reductions which, in spite of the effect of devaluation, will produce a saving at the rate of £30,000,000 sterling a year. A forecast of future defence expenditure would be announced later. ' The Prime Minister said that the prices of some less essential foods would rise. These would include dried and frozen eggs arid raisins. At the end of the winter, price control of fish Would be removed, and the present subsidy eliminated, a saving of £7,000,000 sterling a- year. The subsidy on animal feeding stuffs, now running at the rate of £36,000,000 sterling a year, would be abolished in February.

Referring to the dollar import programme, Mr Attlee said the Government had settled the new programme at the reduced figure of 1,200,000,000 dollars a year—a cut of 25 per cent, on the 1,600,000,000 dollar programme running before July. He was referring to cuts on dollar purchases already announced by Sir Stafford Cripps, and not to any new cut. Mr Attlee said the cuts he had announced were interim measures which would be reveiwed before the next Budget. Explaining the capital expenditure cut, Mr Attlee said the 1948 value of

NEW PERIOD OF AUSTERITY LIVING ■ i • . . } (N.Z.P.A. —Copyright.) (Received This Day, 9.30 a.m.) LONDON, October 24. Addressing a crowded Parliament to-day, the Prime Minister, Mr Attlee, revealed economy cuts totalling £280,000,000 sterling for Britain’s new period of austerity living. The economies would include a £30,000,000 sterling cut in defence expenditure.

Mr Attlee suggested that industry’s joint consulting machinery should be used to consider whether, in appropriate cases, higher production could be obtained by working longer hours. The drastic economies Mr Attlee announced included: HOUSING —£35,000,000 sterling a year.

EDUCATION—£S,OOO,OOO sterling, part of which would be obtained by charging Id more for school meals, and the curtailing of transport facilities for students.

, HEALTH SCHEME —£10,000,000 sterling, obtained by making a charge of not more than Is for each prescription under the National Health Scheme.

FOOD —£7,000,000 sterling by increasing the price of dried and frozen,eggs and removing price-control on fish. ADMINISTRATION— £40,000,000 to £50,000,000 sterling by the curtailment of unessential services and drastic administration economies,

Many industries should seriously consider the question of working hours. Industry's joint consulting machinery should be used to consider whether, in appropriate cases, additional output could be obtained by working longer hours —under existing agreements or under special arrangements.

Measures Considered Inadequate

goods devoted to fixed investment was. about £2,000,000,000 sterling, and the figure might approach £2,100,000,000 sterling for the current year. Cabinet proposed in 1950 to reduce this rate by about £140,000,000 sterling a year. Many of the cpts were most distasteful, but they did not affect the main structure of the welfare of the Siate.

The Leader of the Opposition, Mr Churchill, asked why, if the Government’s proposals were practicable and adequate to the country’s need, .they were'not put forward two or three years ago when the Opposition had asked for a check to be put on unbridled and even fantastic expenditure. Mr Churchill said that if Mr Attlee had announced the withdrawal of steel nationalisation,.-it would have shown that the Government was approaching these grave matters on a national and not a party basis. Mr Churchill added that any proposals which seem needed for the good of .the country wilj be supported by the Opposition, even though they are unpopular. Mr Herbert Morrison announced that the following motion would form the basis of a debate on Mr Attlee’s announcement on Wednesday: “This House approves the lines of action to deal with present economic difficulties as outlined in the Prime Minister’s statement.”

The economy measures announced by Mr Attlee are not nearly as farreaching as had been expected and, .as a whole, will be widely criticised as utterly inadequate, says Reuter’s financial editor.

Government spending has been cut by only £90,000,000 sterling, he says. Most of .this small saving will not apply until the next financial year, starting next ’April. Many economists calculated > that to bridge the dollar gap the British Goyernment would need to cut its spending by not less than £300,000,000 or £400,000,000 sterling. Similarly, cuts in capital expenditure will not take full effect until the second half of 1950. Larger cuts in Jhat, field made at this stage in the 1947 crisis had almost no effect. The biggest of to-day’s cuts was the removal of the subsidy, now costing £36,000,000 a year, on animal feed. Still to be decided is whether this will mean lower profits for farmers or higher prices for consumers. Whichever way it falls, it will be disinflationary', since food subsidies are not to be increased on this account. The correspondent adds that in the city to-night there was some relief at the absence of “anti-capitalistic” taxes which had been vaguely feared in some quarters, but there is deepdisappointment at what is regarded as the grave inadequacy of the measures as a whole.