MR GAITSKELL’S BUDGET

Press, Volume LXXXVII, Issue 26395, 13 April 1951, Page 7

MR GAITSKELL’S BUDGET

“Not As Severe As

Expected”

(Rec. 10 p.m.) LONDON. April 12. Political commentators of the first Budget of the Chancellor of the Exchequer (Mr Hugh Gaitskell) and his presentation of it to the House of Commons, agree that he came through the ordeal with flying colours. In general, they interpret the proposed measures to pay for rearmament and curb inflation as not nearly as severe as had been expected. Newspapers, as a whole, are restrained in their comment and make little harsh criticism. Their chief ground for complaint is the Chancellor’s decision to increase the tax on distributed profits and to withdraw the initial allowance for depreciation which the former Chancellor (Sir Stafford Cripps) granted two years ago. This point is approved bv the Labour Party organ, the “Daily Herald." which is the sole voice in approval. "The increase is wise and just.” it says. “It will check rising profits.”

The “Daily Telegraph,” on the other hand, c'aims that these two points are the most controversial of the whole Budget. It says that the purpose of withdrawing the depreciation allowance is to discourage civilian investment in n°w plant and machinery because of the heavy demand imposed on the outnut capacity of the engineerin'’ industry by th« needs of export and rearmament. .“The aim is correct in itself. but the question is whether the depreciation allowances are in any case adequate to provide for minimum replacement needs at the present greatly enhanced cos’s." It a'so says that the big increase in the distributed profits tax further singles out for penalisation the ordinary shareholder vffio had taken enough knocks already.” “The Times” says that industry is likely to be “staggered" by the s're of these two new impositions. On the depreciation allowance, it says Mr Gaitskell has neglected the fact that the initial allowances served to offset the loss suffered by business because of the increased costs of replacement. Cn the taxation of business profits, it says that Mr Gaitskell has gone well beyond the limit of what can be sustained. except perhaps for a short period in abnormal circumstances. It foresees "starvation of industry, contraction, high prices, poverty, and unemployment."