THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 12, 1931. BRITAIN'S NEW BUDGET.

New Zealand Herald, Volume LXVIII, Issue 20976, 12 September 1931, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 12, 1931. BRITAIN'S NEW BUDGET.

The gravity of the task Britain'snew Government has to perform, and the determination with which it has been attacked, are features written in large characters on the face of the second Budget of the year. The figures, as transmitted, create the one broad impression, that, of a nation girding its loins to meet an emergency which has been truly described as in its way no less perilous than the threat of defeat in war. It is a Budget of hardship—hardship for almost every section of the community. Yet, already it can be described as a national effort, for the early comment on its reception emphasises the equanimity with which proposals that involve a burden of £170,000,000 for a full year have been greeted. It is true this is the first and perhaps a superficial view of the effect the Budget revelations have had. Yet so far as it goes it is completely in key with the response the British people have been accustomed to make when there have been demands on their powers of endurance and their capacity for sacrifice in a cause represented to them as a worthy one. Next to the magnitude of the operations covered by Mr. Snowden's statement comes the downright immediate effort made to meet the position. The threat for the current year, nearly half of which has elapsed, is a deficit of £74,500.000. The Budget proposals are estimated to provide for it and leave a surplus. The forecast for next year is a further deficit of £170,000,000 if the tendencies now operating are not checked. The economies and taxation contemplated are calculated to rectify the position, so that with a reduction in the sinking fund there will be a balance next year, if all goes according to plan. The determining cause which launched action to deal with the Budgetary position was the report of the Committee on National Expenditure issued on July 81, just as Parliament went into recess. The way in which reactions to its grave warnings set the forces of economy in motion has already been described. The proposed savings, as briefly summarised in cable messages, largely follow the lines this committee recommended. In some instances items which appear in the White Paper correspond exactly with what the committee proposed. For example, the committee listed a saving on the Road Fund, by postponement and slowing down of schemes, and a lowering of "the present very high standard of maintenance," amounting to £7,865,000. The Government proposes to save precisely this sum. Elsewhere the action to be taken does riot tally entirely with the report, . though the actual list of itemised savings has been followed very faithfully. The heaviest item in each case is concerned with unemployment relief. The Economy Committee proposed a reduction of 20 per cent, in benefits, an increase in contributions and other adjustments estimated to produce a saving of £66,500,000. The Government will make a 10 per cent, reduction in benefits. This, with other adjustments, is expected to relieve the Exchequer of some £35,800,000. In further instances less is to be saved than the committee suggested, in some small ones a greater economy is proposed. The committee said £13,600,000 should be saved in education expenditure. The Government's reduction is £10,300,000. The committee forecasted a deficit next financial year of £120,000,000, and sketched economies totalling £06,500,000, leaving a gap of from £20,000,000 to £30,000,000 to be bridged. Estimating the deficit as £170,000,000, the Government proposes economics amounting to £70,000,000 and taxation to yield £81,500,000. This, with a reduction in the sinking fund the Economy Committee did not allow, achieves a virtual balance.

The Budget Mr. Snowden produced last April was notable for its almost complete freedom from increases in taxation. Petrol was the exception. The duty upon it was increased then from fourpence to sixpence a gallon, with an estimated yield of £7,500,000 for a full year. Now another twopence increase, raising the duty to eightpence, is being imposed, to bring in another £7,500,000. The last previous increase in income tax was in 1930, when the standard rate was raised from 4s to 4s 6d. Now another sixpence is to be added, while surtax, raised two years ago to a maximum of 7s 6d on incomes over £50,000, is to suffer an all-round increase of 10 per cent. When increased beer duty, tobacco duty and entertainments tax are included in the new proposals, little that escaped earlier in the year goes free now. Save for estate duty, all the main items of revenue have been called upon to contribute, the total increase being estimated at £39,000,000 for the balance of the current year, and approximately £31,500,000 for 1932-

33. As with the economies, these appear heroic measures, but when a deficit of £170,000,000 ia contemplated, nothing short of heroic measures will serve. In April Mr. Snowden was severely criticised on the grounds that he, the champion of orthodoxy in finance, had violated all the canons of orthodox finance. Instead of meeting expenditure out of revenue he had raided reserves, he had suffered loan money to be used for current needs through unemployment fund borrowing, and had made no attempt to meet the position. Now there has been a return to orthodoxy with a vengeance. The axiom of the Elconomy Committee that the nation should consider what it could afford, not merely what, was desirable, has been taken to heart. The result is a Budget that will become historic, one which epitomises all that the present national and world situation demands from the nation.