A MILLION SURPLUS

Evening Post, Volume CXXVI, Issue 26, 30 July 1938, Page 8

A MILLION SURPLUS

Next year the Employment Promotion Fund, financed from the wages tax of 3d in the £, a similar tax on income other than salary, and the annual levy of £1, will disappear and in its place there will be established a Social Security Fund,| financed similarly but with an increase of 4d in the £ in the tax on wages and other income, plus an undefined but alarmingly substantial subsidy from the Consolidated Fund. Provision is to be made in the Social Security Fund to meet sustenance payments to those who, for various reasons, are unable to work and have hitherto been a charge on the Employment Promotion Fund, but there is no provision for those who have been kept in full-time'employment with payments out of the employment funds. How, then, does the Government propose to maintain these men in full-time employment? This question has not yet been answered, and the report of the Labour Department, tabled in the House of Representatives yesterday, does not carry the matter any further. According to the Budget, disbursements from the Employment Promotion Fund last year totalled £4,239,456, sustenance payments .accounting for £1,349,162. On these figures it is apparent that a sUm of close on £3,000,000 will be needed to enable the Government to finance its present schemes of providing fulltime employment. What is the proposed source of this money? Today many men are being kept in employment by direct subsidy from the State and it seems reasonable to conclude that the withdrawal of the subsidy would end the employment. The position is not made any clearer by the conclusion reached in the report of the Labour Department that "the existence in the midst of the working community at any given time of a body of unemployed able workers appears inevitable, and, with the constant improvement in management and technology, there is a possibility that the number will increase up to that time when actuarial estimates predict a downward trend in the population figures." Here there is an admission that the unemployment ! problem is likely to be with us for many years to come, and yet the Government gives no indication of its plans to meet it. Another point emerges from the report of the Labour Department (and from the Budget). At the end of the last financial year there was a surplus in the Employment Promotion Fund of £1,158,000. The revenue for the current year is estimated at £5,377,000, an increase of £232,000 over the previous year's collections. Thus there becomes available for expenditure this year £6,536,000, which, according to the report, will be "more than is necessary" for immediate relief requirements. "The Post" has never advocated a reduction of unemployment taxation if it is proved that the funds are needed to make reasonable provision for the workless. The Government, however, claims that the policy it has pursued has removed distress from the land. And yet there has been no suggestion on its part, in spite of recurring surpluses in the Employment Promotion Fund, that there should be any relief for the taxpayer. "Any surplus cash balance at March 31, 1939, after meeting outstanding commitments, will, no doubt, be taken into account in the social security scheme," states the report of the Labour Department. If this is the Government's intention -it means that the social security scheme will be assisted at the outset by accumulated surpluses from the Employment Promotion Fund and when those surpluses are exhausted the scheme will press more heavily on the Consolidated Fund and, therefore, on the taxpayer.

The Employment Fund accounts also virtually contradict the Govern-

raent claim that all the social security benefits will be given for "fourpence more" in the pound than is now paid for unemployment. It may be fourpence more than is now paid—plus, of course, the heavy subsidy to be found from other taxation—but even the real direct cost to the contributor is greater than fourpence by the amount that the unemployment tax of eightpence in the pound could be reduced if surpluses were not accumulated.