The British Budget

Press, Volume LXXXVI, Issue 26092, 20 April 1950, Page 4

The British Budget

; The British practice of publishing, before the Budget is presented, a . review of the last financial year I and the estimates of some depart- . ments’ expenditure for the coming i year (the trend disclosed allows ! missing departmental estimates to I be filled in fairly accurately) per- ! mits fairly accurate Budget forecasting. It was apparent, when review and estimates were seen recently, that unless there were some major revision of financial policy the Chancellor of the Exchequer would have little scope for movement in this year’s Budget. There has been no major policy change—which is not remarkable in view of the Government’s precarious hold on office and the uncertain length of its term—and consequently there is no reason for surprise that the shape of the Budget is little changed. Broadly, Sir Stafford Cripps sticks to the policy the Labour Government has followed in the last few years of taxing at

an exceedingly high level to cover expenditure and to provide a substantial surplus, anti-inflationary in effect, to meet part of the cost of capital expenditure. There have been some minor adjustments, including concession to income-tax payers in the lowest group. It is calculated that the cost of this concession will be more than covered by increasing the petrol tax by 9d a gallon on a doubled ration of petrol. A purchase tax is to be put on commercial motor vehicles to re- , strict sales on the home market and to encourage exporting; the purchase tax on higher-priced motor vehicles is reduced. Beer duty remains the same, but beer will be stronger. The feebleness of these manoeuvrings shows the cramping effect of the Chancellor’s adherence to past policies. Because he has taken no obviously wrong decisions within his chosen policy, Sir Stafford Cripps deserves credit. He has not made extravagant taxation concessions to the lower income groups as sops to voters of the probably near future; he firmly says that subsidies must be held at near the £400,000,000 mark, thus denying his Government one easy, though temporary, method of lowering living costs; he has refused to Budget for less than the substantial surplus he holds to be necessary to counter inflation and to cover adequate capital expenditure. With a party behind him watching the effect of the Budget on General Election prospects, a man of less probity might have bowed to political expediencies to serve the occasion.

Britain’s need, unfortunately, is for much more than a standstill Budget that holds, however firmly, to a given line. It should be the province of the Budget to provide the financial incentives which stimulate personal and corporate efficiency in industry and commerce, and the opportunities for saving, business and private, which sustain industrial re-equipment. Little can be done in this direction without much greater economy in public expenditure; and upon this Sir Stafford Cripps emphatically turns his back. There will be more public expenditure this year—£Bl,ooo,ooo more—and it will be covered by the normal increase in taxation yield which is expected from a rising national income, 40 per cent, of which will go to the Exchequer. The incentive to efficiency that Britain needs cannot be provided while taxation remains at this level. Britain’s general situation, as discussed by the Chancellor in his Budget speech, is certainly more satisfactory than seemed possible last October when devaluation was -resorted to; but it is not so good that the search for efficiency and the drive for production can be relaxed. World conditions are changing. Buyers are becoming more careful and more critical. Marshall aid is tapering off. In these circumstances prudence demands that some margin of safety be sought and found, and that taxation should somehow be forced below its present level, a level which no country can bear except for short periods and in special circumstances. Sir Stafford Cripps has given no sign that he recognises this.