BRITISH ECONOMIES

Manawatu Standard, Volume LI, Issue 207, 3 August 1931, Page 7

BRITISH ECONOMIES

PLAN TO CUT EXPENDITURE. DRASTIC PROPOSALS. CABINET DIFFERENCES FORECASTED. (United Press Association—By Electric Telegraph.—Copyright.) (British Official Wireless.) RUGBY, July 31.

Exceptional interest has been aroused in the report of the Economy Committee, which was presented to the House of Commons this afternoon. The committee, under the chairmanship of Sir George May, has made an exhaustive survey of the national finances, and its recommendations cover proposals for substantir.l reductions in the State expenditure on social services, national insurance, and Civil Servico and teachers’ salaries.

The Prime Minister, Mr Ramsay MacDonald, was asked by Mr Baldwin today what course the Government proposed to take on the report. Mr MacDonald replied that Cabinet had set up a committee to consider the report during the recess. The committee consists of the Prime Minister, the Chancellor of the Exchequer, Mr Snowden; the Foreign Secretary, Mr Arthur Henderson; the Dominions Secretary, Air J. H. Thomas; and the President of the Board of Trade, Mr W. Graham. Tho Economy Committee was appointed in February by the House of Commons to make recommendations to the Chancellor of the Exchequer for effecting forthwith all practicable and legitimate reductions in national expenditure consistent with the efficiency of the services. The committee, under the chairmanship of Sir George May, coinprised seven members, none of.whom is a member of the House of Commons, and the main report is signed by five members, subject to minor reservations by one of them, while a minority report, which displays disagreement with the majority on several aspects of public expenditure, is signed by the remaining two members. In submitting their major recommendations, involving an immediate saving, the signatories to the majority report state that they reached the conclusion that the anticipated borrowing in 1932 on behalf of the unemployment fund and the road fund should be regarded as a revenue liability, and on this basis it was estimated that to produce a properly balanced Budget in 1932, including' the usual provision for the redemption of debt, a deficiency of £120,000,000 had to be made good by new taxation or by economies. An immediate saving of £96,578,000 is anticipated from recommended economies, which cover pay and pensions, defence, development schemes, social services, and miscellaneous expenditure.

UNEMPLOYMENT INSURANCE.

The most substantial contribution to this total is £66,500,000 which, it is recommended, should be saved by reductions by 20 per cent, of unemployment insurance benefits, increase of weekly contributions for workers, employers, and the State in the case of men, an extension of the scheme to include certain classes now outside it, and an application of needs tests to all applicants who have exhausted their insurance rights, but are still within the insurance field.

A saving of £13,600,000 is contemplated by the proposed reduction of teachers’ salaries and education grants, an increase of secondary school fees, and a reduction of the growth of education expenditure in the coming year. Various measures of retrenchment, including a reduction of doctors’ capitation fees in connection with national health insurance, are estimated to save £1,000,000. ,A saving of £7,865,000 is estimated from recommendations for the postponement and slowing down of road schemes and the lowering of the present high standard of maintenance. A saving of £500,000 is contemplated by the reduction of various grants made through the Ministry of Agriculture and Fisheries, of £478,000 by restricting the activities of the Forestry Commission, of £400,000 by abolishing the Empire Marketing Board, and £250,000 by the limitation of the grant to the Colonial Development Fund. The largest items of economy under the heading “Pay' and Pensions” are the abolition of preferential bonus paid to Government industrial employees in dockyards and ordnance factories, £325,000; the introduction of 1925 rates for all personnel of the fighting services, £2,199,000; the introduction of a revised cost of living deduction for officers of the fighting sendees, £400,000; reduction of the pay of police, £125,000. Under the heading of “Defence,” savings estimated at nearly £1,000,000, are recommended through the reductions of expenditure on research and technical development, inspection costs, clothing allowances, and other items.

A reduction of the percentages of wireless licenses receipts paid to the British Broadcasting Corporation is estimated to yield £475,000. In addition to the recommendations for immediate savings the report considers measures with a view to limiting increases in expenditure in the future. It is proposed to abolish the Road Fund into which the proceeds of motor taxation at present are paid, future grants for road developments to be made by annual Parliamentary vote. As a step towards placing housing on an economic basis, subsidies are to be reduced and the local administration of education is to be reorganised. The Department of Overseas Trade is to become increasingly self-supporting by policy of recovering cost of services from beneficiaries. The report recommends re-examina-tion of the distribution of the burden of defence within the Empire at a future date when the financial situation overseas is more favourable.

With regard to the gap between the anticipated deficiency of £120,000,000 and the economies proposed amounting to £96,000,000, the report says that if it were possible to arrange that all classes in the community should suffer an all-round reduction of income, whether derived from earnings or investments, the majority would not hesitate to ask for the sacrifice, hut tliev could not justify the singling out of Public Servants and pensioners for special sacrifice.

Increased taxation may therefore be necessary, but, if possible, the burden on industry must not be ,further increased, and the hope is expressed that a further means of economy may be discovered.

In finally recommending the above proposals the report points out that “in the existing difficulties much expenditure is unwarranted which at another time might be wise, for only by the strictest regard to economy can trade be restored to pre-war prosperity

and unemployed be reabsorbed in in-, dustry.” Two suggestions added are for _a, comprehensive review of the financial) position before Parliament more often, than in the annual Budget and the establishment of a standing) Finance Committee of the Cabinet toj support the Chancellor of the Ex-] chequer in his task of keeping tnq financial implications of policy well in, view. BENEFITS TO UNEMPLOYED. (British Official Wireless.) RUGBY, July 31. In the course of her reply for the Government in the debate on health) insuarnce in the House of Commons, Miss Susan Lawrence, Parliamentary] Secretary to the Ministry of Health, admitted that making all for special circumstances such as un-i employment and the growth of expenditure in the benefits under the health insurance scheme, it did not seem to be justified by the health of. the nation. There were a remarkable number of sliort illnesses,, and tho increase in the benefits paid to young men was unexpected. The position of the central fund was being zealously discussed at the moment with the approved societies, and a levy on societies was one of the possibilities under consideration. The Minister of Health, Air Arthur Greenwood, added that he believed a tighter administration would lead to a considerable improvement. LABOUR RIDICULE. LONDON, Aug. 1. The Economy Report has been received with ridicule and contempt in Labour circles. AVhile all interests are affected, teachers, medical men, police, members of the Air Force, and others protest most. Labour riiembers of the House of Commons express an opinion that the recommendations are already dead. The Daily Telegraph’s political correspondent says: “There is reason to believe that many members of the Cabinet are determined to resist the so-called attack against the social services. The report is certain to create , acute .differences in the Ministry.” _ Conservatives express the opinion that the programme, drastic as it is, will not meet the situation without the introduction of an emergency tariff. LONDON TIAIES'S COAIAIENT. (Times Cables). LONDON, Aug. 1. The Times says: —“No one hitherto has more heartily agreed than Air Snowden with the Economy Committee’s principal contention of the majority that the Budget must be balanced at all costs. “The report proposes some questionable methods, including the abolition of the Empire Marketing Board, which is part of a solemn engagement with the Dominions, whose consent is necessary. Unpleasant suggestions_ are dictated by the fact that Parliament lias shirked reform of the spending services. There will be general agreement regarding the all-round sacrifices necessary to meet the national emergency, and any contraction of the social services should be deliberately designed as a preface to lowering the cost of the national debt. The report should force all parties to realise how much prejudice and theory, must be discarded before Parliament can accept the responsibility of the performance of the task.”

Sir George Ernest May, Bt. K.B.E. was born in 1871. He was manager of the American Dollar Securties Committee from 1916 to 1918, and Deputy Quarter Master General of Canteens, War Office, from 1917 to 1919. He is a Director of the British Overseas Bank, and a member of the Council of Institute of Actuaries.