Healey announces huge cut-back in U.K. spending

Press, 24 July 1976, Page 6

Healey announces huge cut-back in U.K. spending

International

NZPA-Reuter London The British Labour Government has announced cuts in Government spending totalling £IOOOM. The mo\e got a mixed reception from politicians and a “not severe enough reaction from businessmen.

Th* cuts, effective in the financial year beginning next April, are intended to restore confidence in sterling, which has depreciated by 12, p»r < •nt since March, and. •ustatn an economic recovery by Britain without refueling inflation They ate also a, med at reducing borrowing. The economies will mean fewe r new roads and hospitals. a quicker reduction of food subsidies, cuts in edu-i cation programmes, higher charg«.-> for teeth and spectacles in the National Health Service, and EIS7M saved on capital investment in nat-, ionalised industries. De'ence costs, previously cruneu. will he axed by a further CIOOM. This led to the veteran Labour peer. Lord Shinwell, a former Defence Minister, declaring in .he House of Lords that

ring population, and the highi est figure since World War (Two. >; rhe Conservative Opposi-i Irion officially welcomed the’ 'cuts as “a significant step in 1 I! the right direction.” But; ! businessmen were angry; about the Government’s! • decis- .n t<> slap an effective! , "payroll tax” un industry! : which would yield £1000M; ;in a lull year. i The rise in employers’! I national insurance contribuI tions for their staff was in ’ j fact a tax on employment] which would mean less! ;monev for investment andi jobs and hit exports, said] I the Confederation of British, (industry. The foreign exchange markets teported disappointment J with tn-’ Chancellor’s meas;‘ures. Sterling closed at i5U51.7835, a net loss of 10 ! points on the day. Leading shares dipped slightly, by a] • j few pence. ,

Brita-n security could be placed in jeopardy. But a Government spokesman, Mr! Ord Shepherd, said the cuts; iwould mean that some housing and building plans for; the Deience Ministry would’ be postponed by about 12 months The Chancellor of the Ex-' chequer (Mr Denis Healey),* •vho has been under strong' Labour pressure to "cut; with i conscience," piacated some members of the ruling! party by leaving social-! security payments such as I State pensions, and aid for; dev-'opmg nations untouched He also ruled out! rises .n personal taxation. This did not stop the Left-' wing Tribune Group, how-; ever, from complaining, in a istatemer.i that the package; would mean higher prices' and increased unemploy-; ment. There are at present! 1,463.00 c people out of work — 6.3 per cent of the work-j