The Press TUESDAY, JANUARY 20, 1942. The Public Accounts

Press, Volume LXXVIII, Issue 23541, 20 January 1942, Page 4

The Press TUESDAY, JANUARY 20, 1942. The Public Accounts

The public accounts for the first three quarters of the financial year, 1941-42, fully justify the commentj of the Hon, W. Nash on the buoyancy of revenue. With some reservations, they also justify his belief that collections will “enable all de- “ mands to be met” and his pleasure “ that the position is so good.” Those reservations may perhaps be summarised by saying (i) that the adequacy of revenues to expenditures cannot be considered either commendable or not commendable apart from the policies under which the money is raised and spent, and (ii) that the position is not as good as it looks, because it is not wholly disclosed. The separation of the accounts into three parts, ordinary revenue, social security, and war expenses, leads to simplicity of treatment. It also tends to obscure the total effect of the figures and the fact that the finances of the country are interlocked. The ordinary revenue account shows a larger deficit than the April-Decem-ber accounts for 1940-41 —£3,182,000 against £1.731,000; but the vaiiation is accounted for by an abnormally high exchange item, which will be compensated in this quarter, and by a new item, the transfer of £ 1,000,000 (out of £ 1,500,000) from the Consolidated Fund to the War Expenses Account. Comparison of the main tax revenue items with those for 1940-41 leaves little doubt that the estimates for the full year will be sustained or bettered. In the social security accounts, it is to be noted that revenue is down by almost exactly the amount of the difference between the Consolidated Fund transfers. To December, last year, only £550.000 had been transferred; in 1940, £1,300,000 had been transferred. The revenue difference is £755,000. Tax revenue, therefore, has been almost precisely sustained. If it continues to be, the Social Security Fund will draw, say, £ 10,750,000 in new revenue, plus £3,600,000 in Consolidated Fund subsidy, or £ 14,350,000. Medical and pharmaceutical benefits have only a little increased the non-pen-sionary expenditure, so far, and pensionary expenditure has fallen by £600,000. The total expenditure to December 31 was £7,900,000. Allowing for a sharp increase for medical benefits, in the final quarter of the year, the prospect is that the fund will again show a heavy credit balance. After the 1940-41 subsidy of £3,200,000 was taken in, the accounts closed in credit to the amount of £ 1,867,000, most of which was invested. If the same course is taken this year, an equally large sum may be available for investment. The question arises whether it is rational policy to squeeze millions out of the ordinary taxpayer, in war time, to pack the Social Security Department’s treasure chest. The Minister lor Finance had no comment to make on the figures or on the question they raise. In the War Expenses Account, finally, the war taxation figure to December 31 has largely increased, because war taxation was effective through the whole period; and, in addition to the £14,519,000 of tax revenue, £18,192,000 of loan money was available against the expenditure of £26,261,000 —more than double the comparable figure for 1940. Included in the expenditure is £6,940,000, repaid to the British Government on account of oversea war costs incurred under the memorandum of security. This, no doubt, includes the sum of £4,516,000, overdue from 1940-41 and paid, as Mr Nash said some time ago, in July last. By the end of March, 1941, £1,472,000 had been paid, so that the total, to December, 1941, is £8,412,000. But it is perfectly clear .hat this sum represents only a small fraction—being the amount that has come to charge of the expenditure actually incurred. The Budget estimate for oversea expenditure, in fact, is £31,000,000. This disparity, between the obligations actually mounting and the obligations met —duly met, certainly —is concealed by the Minister’s statement that the Government has been “ able to repay all moneys to “the United Kingdom which had “ been borrowed up to December 30 “ last,” and by his further monitory remarks on the subject. Moreover, although it might be said that war taxation to the extent of £ 14,519,000 represents a heavy contribution towards an expenditure of £26,260,000, the ratio is, for the reason just indicated, a misleading one. The true ratio is probably more like £ 14,500,000 to £45,000,000. The War Expenses Account looks a great deal sounder, both in principle and in fact, than it really is, so long as it does not show, and so long as the Minister fails to remind the public, that expenditure much in excess of the chargeable figures is being incurred. Tax and real savings provisions that might be considered adequate to the visible obligations of war expenditure are far from adequate to the whole, which will ultimately have to be discharged.