Manawatu Daily Times Exit Britain’s Labour Government

Manawatu Times, Volume LIV, Issue 6636, 25 August 1931, Page 6

Manawatu Daily Times Exit Britain’s Labour Government

The Ramsay MacDonald Cabinet lias resigned. The reason given for the fall of Britain’s Labour Government is that the Cabinet was not prepared to inflict on the members of their own party the drastic economies which the balancing of Britain's Budget demands. The majority of the members of Cabinet, according to one message, were opposed also tp the formation' of a National Government, presumably because this would also commit them to the economies which they know to he inevitable but which must fall heavily on the class from which they receive their support.

The latest message, however, shows that Mr. MacDonald is willing to incur the wrath of his followers, and presumably Mr. Snowden will do likewise.

Great Britain, staggering under the burden imposed upon her in supporting 2,500,000 unemployed, with her expenditure soaring alarmingly and taxation already at a severely high figure, is faced with the task of adjusting the national accounts to meet the baffling complexity of her economic situation. The most powerful single influence on her present plight, the world depression, is not amenable to her control. There remains only the possibility of improving the national outlook by recourse to domestic sacrifice in accordance with a policy of a kind which the Government has so obviously been avoiding for a long time past.

The problem of finding the means to maintain and develop an elaborate system of social services, and at the same time provide substantial sums for debt redemption, is difficult enough in times of relative prosperity. When, however, the Unemployment Insurance Fund is absorbing £100,000,000 a year and unfavourable trade conditions and other factors are causing a serious shrinkage in revenue, the position is simply critical. It is plain that Great Britain is confronted by a national emergency. If that e/iergency inspired the same over-mastering sense of imminent danger as the outbreak of a great war would, the nation would be welded into unity and the choice of a line of defence would settle itself. The action of economic forces, however, is less direct and not so obvious, and consequently it is doubtful whether the people of Great Britain are even yet fully conscious of the serious condition of the national finances. 9ihe Government’s practice of late of spending money lavishly, with relatively little effect on unemployment,' but with great and incalculable prejudice to future Budgets, is the subject of pointed comment by Mr. Harold Cox, a noted economist, in an article in the Contemporary Review. His view that the country cannot expect to -escape from its present difficulties until it abandons the policy of giving the masses of the population something for nothing through its social services and asking the taxpayer to provide the money is expressed with great force. Great Britain heads the list of the principal nations of Europe in respect both of the amount which she raises by taxation and of her expenditure on social services. If her index figure with regard to taxation per head of population be taken as 100, the corresponding figure in France is 64, and, while it falls as low as 30 in Italy, it is only 50 in Germany. Similarly the index figures in respect of social services per head are: Great Britain 100, Germany 48, France 17, Italy 4. How serious the growth of public expenditure has been is demonstrated by a comparison of pre-war figures with those of the present day. In the last financial year before the war the total expenditure in Great Britain was £197,000,000. The Chancellor of the Exchequer’s estimate for the current year is approximately £885,000,000. War debts and war pensions, of course, account for a large proportion of this increase, but Mr. Snowden has himself estimated that for the current year the excess of the normal expenditure—exclusive, that is, of the charges ascribable to the war-—over that of 1913-14 will be more than £300,000,000. Last year Government grants to the Unemployment Insurance Fund amounted to nearly £26,500,000, and for the current year the -estimate is £45,108,000. Nor is that the full tale of extravagance in this connection, since the fund is piling up an enormous debt in this account which will filially have to be met by payments from the national exchequer.