46 PER CENT. LESS FOR DEFENCE

Press, Volume LXXXIII, Issue 25161, 17 April 1947, Page 7

46 PER CENT. LESS FOR DEFENCE

The proposed defence expenditure, including the Ministry of Supply’s military spending, represented a reduction of 46 per cent, on last year’s expenditure. said Dr. Dalton.

The estimated expenditure of the Civil and Revenue Departments at £1,726,000.000 was £47,000,000 more than last year’s. The Government would spend £40,000,000 less for the hire of ships, £6.000,000 less for civil defence, and £89,000,000 less for the United Nations Relief and Rehabilitation Administration. The extra £29.000,000 to be spent on education would cover the cost of raising the school leaving age—a reform long promised, and too long withheld. Dr. Dalton said that the increase for housing and the national health service’s preliminary expenses would be £25,000.000. for pensions £23.000,000, and for family allowances £4,000.000. He had been told that there were 200,000 more eligible babies than the actuaries had allowed for. The Ministry of Food estimate was £50,000.000 more than last year’s expenditure. because of the cost of living subsidies, which would total £425,000.000. including £392.000,000 for subsidies on food prices which would be £44.000.000 more than last year. Subsidies on utility clothing and footwear prices would total £33.000,000 against £19.000.000. Commenting on these subsidies. Dr. fJalton said: “We might seem to be towed along independent of our own decisions by the rises in prices all over fhe world, and also hitched to the out v ate a . nc * generally discredited cost living index. The policy of subsidisin’’ the old index paid good dividends, put we must review it afresh. A new 3nt l e T be brought into operation and I shall keep the old index steady ana stable until it passes out of use in a few months.” Dr. Dalton pointed out that revenue represented . £ 1 Is 7d for every £1 of t expenditure, but “if we are ~ balance the Budget over a series of t> ears We must earn the right to a •budget deficit in another year by re-

cording a Budget surplus this year. The net effect of the taxation changes must be to fortify, rather than weaken, the revenue for both this year and even more for future years.”

Dr. Dalton continued that Government borrowing this year would be for the replacement of maturing debts or for new capital development. He expected to borroxV £50.000.000 for the National Coal Board. £200.000,000 for housing loans, and £90.000.000 for temporary houses. There would be large financial operations for the compensation of owners in industries and services which were being taken into public ownership.

Referring to the cheap money policy, Dr. Dalton said that he expected to have public opinion increasingly behind him when it was realised that on the continuance of the maximum rate of 2£ per cent, depended all hope of serious tax reliefs in future.

“There is no other way in which the Budget can be balanced.” he said.

• Dr. Dalton said that no other country faced such a tough external problem as Britain —a strange ironical result of the war in which Britain bore the brunt without thought of the cost and saved many others from defeat. He feared that the 1947 overseas deficit would be a good deal higher than the £*00.000,000 in 1946 unless vigorous action were taken to reduce it. The hard currency deficit was likely to increase because of the rise in prices, particularly in the dollar countries. He was prepared to examine the whole question of motor taxation between now and the committee stage of the Finance Bill, subject to losing no motor taxation revenue.

Dr. Dalton concluded by saying that the tax reductions would cost £80.000,000 this year and £96,000,000 in a full year. The tax increases would bring in £106,000.000 this year and £149,000,000 in a full year. He counted on a balance of £22.000,000 this year and £53,000,000 in a full year, thus raising the prospective surplus this year froi i £248,000,000 to £270.000,000.’ Dr. Dalton spoke for 3hr 3min.