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Prospective Surplus

Volume 436: debated on Tuesday 15 April 1947

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The £292 million of Miscellaneous Receipts, added to the million of Other Revenue which I mentioned just now, gives us a total of £503 million for revenue other than Customs and Excise and Inland Revenue. I, therefore, estimate the total revenue for 1947–48, on the existing basis of taxation, at £3,429 million as against an expenditure of £3,181 million. This gives me a prospective surplus of £248 million. The Committee will, I think, be surprised and gratified at this result, which is so much better than even the most wishful of our friends would have expected. Last year, I prophesied that we should find ourselves, this year, "within striking distance" of a balanced Budget. Those words of mine now seem, in retrospect, to be a characteristically cautious understatement. "Within striking distance," I said, Major Milner. We have already struck. We have already taken this objective of a balanced Budget, and we are now advancing into open country, well beyond it. This year, we shall not only balance the Budget; we shall have a good balance in hand. I trust this surplus will act as smelling salts under the noses of those who, both in this country and outside it, have lately been showing signs of despondency, if not of fainting fits, at the thought of our financial future. We have, and I make no concealment of this, a very tough external problem to face, of which I shall speak later; but as far as our domestic affairs are concerned, this Budget surplus, of close on £250 million, is a clear sign of our internal financial strength, which all the world should note.

Putting it another way, I pointed out, 12 months ago, that in 1944–45, the last full year of war, for every pound of Budget expenditure we paid 10s. 8d. from revenue, and thought that was a good show. In 1945–46 for every pound of expenditure we paid 12s. from revenue. In 1946–47, the last year, which has just closed, a fortnight ago, we paid 17s. id. from revenue. This year, on the existing basis of taxation, we shall collect no less than 21s. 7d. of revenue for every pound of Budget expenditure. That, I think, is not too had.

I must, however, at once warn the Committee that this prospective surplus cannot be regarded as available for wholesale tax reduction this year, and this for two reasons. In the first place, many of the receipts are non-recurrent; many of them will come in once for all. It is not yet clear whether, on the existing basis of taxation, we should have another surplus next year. We cannot yet see sufficiently clearly the pattern of next year's financial yield. This year the surplus is real; it is as real as last year's deficit, but it might, like some of the elements which have gone to create it, be non-recurrent