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Prospects For 1951–52

Volume 486: debated on Tuesday 10 April 1951

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Having thus, I trust, dispersed any vague optimism which these last year's figures may possibly have engendered about the future, I must now ask the Committee to study this prospect more closely—again, for the moment, on the basis of the "above the line" figures in the conventional form of accounts. On the expenditure side, at any rate for a Chancellor, it is indeed a chilling prospect. Against Exchequer issues for the year 1950–51 of £3,258 million, I estimate total expenditure for 1951–52 at no less than £4,197 million, an increase of £939 million.

How is this to be explained? First, there is an increase of £40 million in the Consolidated Fund services, representing the first payments of interest in December next on the United States and Canadian post-war loans. There is an obligation on us to make these payments unless we request, and the request is granted, the waiver of interest payments which is possible under the loan agreements in certain circumstances. Since we cannot obviously say at the moment whether circumstances later in the year would justify us in requesting the waiver, I think the Committee will agree it is clearly necessary for us to make provision now for the payment.

Next comes defence. The published Estimates, which provide £1,114 million, show an increase of £337 million over last year's out-turn. Civil Estimates also provide for other defence preparations outside the strictly military sphere—nearly £20 million for Civil Defence against only a few millions spent last year; about £50 million as against £5 million or so last year for capital expenditure on industrial capacity for defence production; and £143 million as against £13 million last year on the stockpiling of food, raw materials and strategic supplies. I must also allow for the additional cost in 1951 of the accelerated defence programme announced in January. I put this additional cost at about £160 million. The details, of course, will emerge later in the year, as and when Supplementary Estimates for the services concerned come forward.

The result is that the estimated cost in 1951 of defence and Civil Defence is about £1,295 million, which accords, of course, with the preliminary figure of £1,300 million given to the House by my right hon. Friend the Prime Minister last February. Adding the other items that I have mentioned—£50 million for capital expenditure for defence production, and £143 million for stockpiling, I arrive at a total estimate for defence preparations of about £1,490 million, an increase of about £690 million over last year's expenditure in the same field. Since the total excess of this year's Estimates over last year's out-turn is £939 million, and about £690 million is due to defence and another £40 million for Consolidated Fund services, there remains about £210 million as the increase in the remainder of the so-called Civil Estimates.

This increase over last year's out-turn is, of course, due largely to the special factors of 1950–51, including the change in stocks to which I have already referred. It is interesting to note that the Estimate for this year in respect of the items which make up this residue of expenditure, that is, after taking out defence and the Consolidated Fund services, is no greater than the figure for the corresponding services in last year's original Estimate. Moreover, in making this comparison between a group of what are broadly called Civil Estimates and another similar group, we must remember that even this residue includes items which are certainly quasi-military in character, and that some of these show increases this year; for example, an additional £10 million for relief and rehabilitation in Korea, our contribution to the United Nations' Fund. I shall have more to say later about the level of civil expenditure this year—especially that portion of it which is in no way related to defence.

But, for the moment, what is the prospect on the revenue side on the existing basis of taxation, that is, what we have to set against the expected expenditure on the other side? I estimate the total tax revenue for this year as £3,877 million, an increase of £147 million over the actual tax revenue received last year. In some cases we face a reduction. For example, I put Customs and Excise at £1,590 million, compared with £1,630 million, because, as I have already explained, the yield last year was, to some extent, inflated by abnormal clearances before the Budget. Beer, and other alcoholic drinks in particular, are expected to bring in £368 million only, as against £398 million last year, a drop of £30 million.

While Customs and Excise are down by £40 million, Inland Revenue duties are estimated to be up by £187 million—£2,225 million in comparison with £2,038 million last year. This big increase is a reflection both of higher profits made in 1950 coming under charge to tax this year, and of a higher total wage and salary bill in the current year. Motor licences I expect to yield £62 million, approximately the same amount as last year. On the other hand, we have to allow for some decline in non-tax revenue, which I expect to bring in £221 million as against £248 million last year.

When we include this, the total estimate of revenue for 1951–52 on the existing basis of taxation amounts to £4,098 million as against last year's out-turn of £3,978 million—an increase of £120 million to be set against the increased expenditure of £939 million. The result, when estimated revenue of £4,098 million is subtracted from estimated expenditure of £4,197 million, is a Budget deficit, "above the line" on the conventional basis, of £99 million. This deficit of £99 million may be compared with a surplus of £720 million last year of revenue over expenditure, so that we are faced in total with a deterioration of £819 million.