37.

38.

39.

40.

41.

The following are the full summaries of the Chinese Note and Her Majesty's Government's reply:

The Chinese Note of 13th April stated that the aircraft left Hong Kong at 12.15 hours (Peking time) on 11th April for Djakarta. The aircraft had been chartered by the Chinese delegation to the Afro-Asian Conference. There were 11 passengers on board, eight of them Chinese. While flying over the sea near Sarawak, North Borneo, the passenger aircraft burst into flames and fell into the sea. It was stated that the whereabouts of the passengers was not then known.

The Note continued by alleging that this was

"a case of completely inhuman, premeditated murder, solely engineered by the Special Service Organisation of the United States and the traitor Chiang Kai-shek."

The Note added that, long before the departure of the passengers the Government of the People's Republic of China had learned that the Special Service Organisation of the United States and Chiang Kai-shek were actively making arrangements to sabotage the aircraft to be used by the Chinese delegation in order to carry out their plot to assassinate the Chinese delegation led by Premier Chou En-lai.

Therefore, the Note continued, at 19.30 hours (Peking time) on 10th April the Ministry of Foreign Affairs of the People's Republic of China informed Her Majesty's Embassy at Peking about this matter, and requested them to bring it to the attention of the British authorities in Hong Kong and to ask them to take measures to safeguard the members of the delegation and Press correspondents aboard the aircraft. The Note stated that the members of the staff of Her Majesty's Embassy at Peking, to whom this warning was conveyed, promised to notify the British authorities in Hong Kong by telegram. Nevertheless

"the plot of the Special Service agents still succeeded."

It was alleged that the British Government and British authorities in Hong Kong bore a grave responsibility for this unfortunate incident which could not be evaded. The Chinese Note went on to demand that

"the British Government should immediately inform the British authorities in Hong Kong in order that they may take urgent measures to place under strict supervision the staff of the airport concerned in the incident and all other persons concerned, conduct a thorough investigation and arrest and punish, according to the evidence, the Special Service Agents taking part in this case of conspiracy and murder in order that responsibility may be determined, and instruct the appropriate authorities to ascertain the whereabouts of the aircraft which met with this accident and the persons on board."

The Chinese Government's Note ended by requesting a speedy reply.

The reply of 17th April stated that Her Majesty's Government had been informed of the Chinese Ministry of Foreign Affairs communication of 13th April. While Her Majesty's Government deplored this incident and the loss of life involved, they were bound, in view of the serious allegations which had been made by the Chinese Government, to make it clear at once that they did not accept any responsibility for the accident or for the consequences thereof. Her Majesty's Government protested strongly against the Chinese Government's accusations against the British authorities which had been made before time had been allowed for any investigation.

The Chinese Government's Note of 13th April had seemed to suggest that the Chinese Ministry of Foreign Affairs had informed Her Majesty's Embassy in Peking in advance of arrangements to sabotage the aircraft in order to carry out a plot to assassinate members of the Chinese delegation to the Bandung Conference, led by the Chinese Foreign Minister. This was not the case. The facts were that the Acting Head of the European Department informed the Counsellor on 10th April that the Chinese Government had received information that the Nationalists might make trouble for the party of Chinese journalists, when they left Hong Kong the following day for the Bandung Conference. The Ministry of Foreign Affairs had requested that appropriate precautions might be taken.

This information had not been amplified in any way. There had been no suggestion of sabotage. The Counsellor had undertaken to inform the Governor of Hong Kong at once and had asked for supplementary information to assist the Hong Kong police; the number of the party, where they were staying, the name of the airline concerned and the route to be taken. The Acting Head of the Department had been unable to answer any of these questions at the time.

It was agreed that a telegram would be sent at once to Hong Kong, and that any supplementary information which the Ministry could supply would be telegraphed later. Shortly afterwards the Ministry had telephoned to say that the aircraft was Indian and that the New China News Agency representative in Hong Kong would know where the party were staying. This information had been immediately telegraphed to the Governor of Hong Kong with a request that appropriate precautions should be taken.

The Note continued by stating that at about 11.20 hours on 11th April the representative of the New China News Agency had telephoned to the Director of the Special Branch of the Hong Kong police to inform him that 11 journalists and a Viet Minh delegate would be travelling by an Air India aircraft which was due to leave Hong Kong early in the afternoon of the same day. No mention had been made by the representative either then or later of any suspicion of trouble, and the communication was made in a routine manner to which the Hong Kong authorities had become accustomed. But in the light of a message from Peking, steps had been taken to ascertain the time of arrival and departure of the aircraft.

It had been learned about 12.00 hours that the aircraft was then due and would be leaving about 13,00 hours. The aircraft in fact had arrived at 12.15 hours. Additional police precautions had been taken to ensure that the party were not molested at the airport. During the time that the aircraft was in Hong Kong it had been under police guard under the command of an inspector and no unauthorised person had been allowed or attempted to approach or board the aircraft. The local manager and other officials of Air India and members of the crew of the aircraft had been present, and had supervised every aspect of refuelling and servicing. A member of the crew had remained on board throughout.

The actual handling of the luggage and the passengers had been done under the supervision of China Travel Service and senior officials of Air India. The only articles placed on board the aircraft were baggage belonging to the party and normal refreshments for passengers. The latter had been supplied by a local firm but were checked on loading by the steward of the aircraft.

The passengers had been brought to the airport by airline motorbus and, though this was an exception to normal practice, had been taken straight to the airport without having to go through Customs or immigration formalities. Similarly, without passing through Customs, the baggage had been loaded straight into the aircraft under the supervision of Air India. The aircraft had taken off about 13, 26 hours without incident. Police watch at the time and subsequent detailed inquiries have revealed nothing suspicious.

The Note also contains details of the steps taken by the British authorities after news of the crash had been received. As soon as this was known the British authorities in the area had taken energetic steps to assist in the search and rescue operations. Two Sunderland aircraft, belonging to the R.A.F. and a high-speed launch had immediately been despatched to the scene of the incident and these had been closely followed by H.M.S. "Dampier" of the Royal Navy. H.M.S. "Dampier" had carried out a search of the area, and had cared for three survivors who had been able to make their way to a small island.

The Sunderlands carried out an all-night search for the crashed aircraft centred on Great Natuna Island. Later two Sunderlands, two Lincoln aircraft and four Valetta aircraft, all belonging to the R.A.F., had continued the search, assisted by two aircraft of the Indonesian Air Force until the wreckage was located. H.M.S. "Dampier" had remained in the area in search of further survivors and had assisted in salvage operations.

The Note pointed out that it was clear that the British authorities in Hong Kong had taken all steps to ensure the safety of the passengers and of the aircraft while it was in Hong Kong. Her Majesty's Government could not, therefore, accept any suggestion by the Chinese Government that the British authorities in Hong Kong or elsewhere had failed in their duties. Pending a full investigation it was premature to assign a cause for the crash.

It was also pointed out that since the aircraft belonged to an Indian airline and the crash did not occur within British territory or territorial waters, it was not for Her Majesty's Government to conduct a formal investigation into the causes of the incident. Her Majesty's Government would, however, offer their full co-operation in any investigation which was to be carried out by the competent authorities concerned, and investigations would be carried out in Hong Kong by the Hong Kong police.

Our Note concluded that if these investigations were to succeed in establishing the real cause of the crash which had occasioned the death, not only of Chinese, but of other nationals, it would be necessary for the interested parties to furnish all the information available to them about the circumstances of this crash. Her Majesty's Government assumed that the Chinese Government would be prepared to co-operate in doing so: the information they had so far provided was clearly inadequate for this purpose.

42.

43.

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

3.35 p.m.

I now come to consider the balance of payments situation against which we must look at all I have just been saying. The past year has shown that, while it is right to run our island economy in a free and expanding mood, problems can spring from the very success which it has been our happy lot to achieve. The increase in our production, which is so important both for our export trade and for the maintenance of employment, necessitates a rising level of imports of raw materials for our factories. We are also eating more and importing more food. And we are importing more, unfortunately—and exporting less—coal. Before the war we always had a substantial surplus of coal to export to our friends and customers overseas. But by 1954 lack of coal cost us many millions in foreign exchange for imports, and still more if we take account of lost opportunities to expand our overseas earnings. More coal, more efficiently used, would be one of the most substantial reinforcements to our balance of payments which our own efforts could contribute.

The United Kingdom's balance of payments has also been affected by the alteration in the terms of trade. In my last two Budget speeches, I reported that we were profiting by the terms of trade, which had been moving in our favour. During the past year that movement was reversed. The index of import prices began to rise in April, 1954, and for February, 1955, was 7 per cent. higher than in the first quarter of 1954. At the same time, export prices did not increase until February of this year, when a rise of 1 per cent. was recorded.

The result to date has been that on the provisional estimates for the six months from October, 1954, to March, 1955, our imports c.i.f. at about £1,875 million were some £225 million higher than in the corresponding period 12 months earlier; but our exports at £1,460 million rose by only £40 million. The tables in the Balance of Payments White Paper—to which I draw the attention of hon. Members—show in detail the effect of these changes, and I feel sure that hon. Members will recognise that we have attempted to put before them the same documentation as we have tried to do very fully each year, and that with all these facts available it is not necessary for me to go into all of them in my speech.

For 1954 the United Kingdom's surplus is provisionally estimated at £160 million; but we earned the whole of this surplus in the first half of the year. The Committee should note that, although there was a welcome increase in receipts from offshore contracts, American defence aid was halved as compared with the year before—the total for 1954 being only £50 million. We are grateful for this aid, especially for the programmes designed to help our expanding Air Force; but we are proud—and I think I can speak for hon. Members on all sides of the Committee—that our own efforts, reflected in full employment and rising production, are making us increasingly independent. Those efforts have had and will have a profound effect on our economy, our morale and our influence in world affairs.

The balance of payments of the whole sterling area in 1954 shows much the same pattern of change. The provisional estimate for the calendar year as a whole shows the sterling area roughly in balance with the rest of the world; but a surplus in the first half year was followed by a deficit in the second. All this was reflected in the level of the gold and dollar reserves. During 1954 these rose by £87 million to a figure of £986 million; but the record reads differently for the two half-years. In the first six months the reserves rose by £179 million, but in the second half year they fell by £92 million. This tiecline must be seen in perspective. In this last period hon. Members must remember that we not only had to meet the normal annual payments on the American and Canadian Loans, but we also repaid in gold or dollars £40 million to the International Monetary Fund, and £39 million in part discharge of our debt to the European Payments Union. That is, in all, £79 million of debt repaid. Thus we fortified our capital account by repaying debt.

Moreover, the sterling area's reserves exist to be drawn upon in case of need. Indeed, in Sydney, Australia, over 15 months ago the Finance Ministers of the Commonwealth accepted the fact that, important as programmes of internal development are as an investment for the future—and we have all been going in for them in the sterling area—they inevitably result in some immediate strain on the sterling area's balance of payments. This impression and outlook we confirmed when we met in Washington in September of last year. The relatively small decline in the reserves must, therefore, be seen in due proportion.

I can sum it up like this, that apart from the special repayments which I have mentioned, the loss in the whole of the nine months from mid-1954 to the end of the first quarter of 1955 has been no more than £46 million—only about half the average monthly loss in the corresponding nine months of 1951–52. Therefore, at £953 million, the end-March figure, the reserves are more than £350 million above their lowest point, which they reached in April, 1952, just after I introduced my first Budget.

Nevertheless, it became clear by February that we needed to take action to moderate the growth of imports and to encourage exports. And from the result, all I can say is, thank goodness that we took action in time. To take such action the Government of the day has, broadly speaking, one of two choices. The first is to limit and control the supply of goods which the consumer at home can buy. But there is an alternative, namely, to check spending at home by more flexible methods. The former course would involve a return to curtailment of trade, both at home and abroad, a return to controls on consumer choice, even perhaps a return to rationing. We do not believe in a policy of this kind.

It is only by looking forward and outward, by expansion, by liberating the human spirit to give and do of its best, that our island people can survive. This is the road we prefer—an adjustment of fiscal and monetary policy which, without cramping or distorting the natural vigour of the economy, maintains the disciplines which are essential to an expanding community. It was in this faith that in February credit control was applied; the Bank Rate was raised, hire-purchase transactions were restricted and finance for such business was limited. At the same time, I authorised the Exchange Equalisation Account to operate with wider discretion in overseas exchange markets. This was certainly a case of putting in the troops to save sterling from being sold at too great a discount, thus losing business for Britain as well as dollars for our reserves.

I see that it has been suggested that we have departed from our policy of a collective approach with the Commonwealth, Europe and the U.S.A. to the solution of the world's trade and currency problems. This is not so. We still seek to find with our partners the best method of freeing our payments to match the widening of our trade and the opening of markets.

I am glad to say that already, in the field of the exchanges our action has produced distinct results, which have taken the shape which I had hoped for.

For example, the Committee may be glad to hear—and I hope hon. Members will smile—that the sterling dollar rate has risen from about 2· 78½ dollars in the third week of February to just over 2· 79⅝ dollars, and the rate for transferable sterling from under 2· 72 dollars to just over 2· 77⅛ dollars. That is a very considerable rise. This shows that the action which we have taken to meet the needs of our balance of payments has strengthened international confidence in our policies and our determination to carry them out. We have thereby fortified sterling.

It will, naturally, take some time for the effects of the Bank Rate and of the tightening of credit to make themselves fully felt on our balance of payments. Our import bill, as the March import figures show, will inevitably continue for a time to be affected by decisions taken and orders placed before the measures of 24th February—at any rate for a time.

But the situation has been brought under control, as, for example, is shown by the movement of the reserves since then and the latest rates for sterling. Of course, we cannot be satisfied yet, and we shall remain ever watchful.

Now we must see how the Budget fits into the picture of economic policy as a whole. Hon. Members may relax for a few minutes and enjoy the usual, or I might say unusual, but essential figures summarising the out-turn for 1954–55 and the prospects for 1955–56. The full details will, of course, appear in the Financial Statement.

I should, incidentally, call the Committee's attention to a small change which I have made in this year's Financial Statement. I am sure that hon. Members will approve of anything done to reduce the volume of Government accounts without stinting the supply of useful information. My predecessor, the late Sir Stafford Cripps, introduced the alternative classification in 1948 as an experiment and with the object of stimulating discussion on the presentation of Government accounts. Since then, other and better methods of economic analysis have been developed in the annual publications of National Income and Expenditure. I have, therefore, decided that it will simplify our accounting and avoid confusion if the alternative classification is eliminated altogether from this year's Financial Statement.

Now, for the figures. Total revenue in 1954–55 amounted to £4,738 million, which is £205 million more than my Budget estimate. Inland Revenue duties were £2,541 million, or £157 million more than the estimate of £2,384 million. About half of this excess came from Income Tax, which yielded £1,893 million against the estimate of £1,800 million. The yield from profits assessed under Schedule D was about £40 million above the estimate, and P.A.Y.E. on wages and salaries brought in £50 million more than was expected—which reflects, among other things, the rapid increase in employment and industrial activity which we have achieved this year.

The other main contributors to the higher yield were death duties, stamp duties and Excess Profits Levy, which showed increases of £24 million, £20 million and £16 million, respectively, over the estimates. The first two, death duties and stamps, are due mainly to the rise in Stock Exchange prices over the year; the last, Excess Profits Levy, is due to the clearing up of difficulties which had delayed assessments. Profits Tax and Surtax were very close to their estimates.

These high yields of Inland Revenue are matched by the performance of the Customs and Excise duties. These amounted to £1,872 million, £90 million above the estimate. About half of this increase is accounted for by Purchase Tax, which produced £342 million, or £47 million more than I estimated, a striking indication of the rising level of demand, particularly for cars and durable consumer goods of all kinds.

Tobacco produced a revenue of no less than £650 million, or £17 million above the estimate. Beer, wines and spirits yielded a total of £390 million, £9 million more than the estimate, though the Committee should note that within this satisfactory total beer was down by £4 million. Receipts from the duties under the Import Duties Act, 1932, were above expectations, yielding a total of £62 million, or £6 million over the estimate.

Non-tax revenue was lower than my estimate—£246 million, compared with £290 million. Smaller receipts from sales of the Ministry of Food's stocks are the main reason for this change.

Now for expenditure. While revenue exceeded expectations, expenditure fell short of them. Consolidated Fund Services amounted to £665 million, or £2 million less than the Budget estimate. Supply services cost £3,640 million, or £216 million less than my forecast. This shortfall was shared by both defence and civil supply. The estimate for defence was £1,555 million; actual expenditure was £1,436 million, a shortfall of £119 million, in spite of the fact that appropriations-in-aid from the sterling counterpart of economic aid and other receipts from the United States amounted to £61 million, or £24 million less than my original estimate. The reasons for the shortfall in expenditure on defence have already been described broadly in the Defence White Paper and during our debates on it.

Now for civil expenditure. This, at £2,204 million, was £97 million less than my estimate, in spite of Supplementary Estimates during the year amounting to £42 million. The savings here are spread over a large number of items, but are shared mainly by the Ministries of Food, Materials and Supply. In total, expenditure under all heads amounted to £4,305 million, a saving of £218 million.

The Committee will remember that I budgeted last year for a small surplus of £10 million. In fact, we have realised a surplus of £433 million. Of the difference of £423 million, increased revenue accounts for £205 million and lower expenditure for £218 million. Below the line receipts for the year were the same as the estimate of £191 million; but expenditure, at £692 million, was £94 million bigger. Three items account for practically the whole of this excess. The first is a larger volume of advances to local authorities by the Public Works Loan Board which involved the Exchequer in issues of £353 million, or £53 million more than the estimate.

The second item is a new one, £45 million advanced to the Post Office for capital expenditure. This follows from the Post Office and Telegraph (Money) Act, 1953, under which the Exchequer took powers to make advances to the Post Office which had previously been made by the Savings Banks funds. The third item is an increase in Exchequer advances to the National Coal Board for capital purposes which at £75 million were £16 million more than the estimate.

As a result, total net payments below the line amounted to £501 million, or £94 million more than the Budget forecast. But owing to the surplus of £433 million above the line, all but £68 million was met from revenue. Most of these payments below the line are made to finance capital expenditure by local authorities. Housing is, of course, the main item. This expenditure and the money spent by the National Coal Board and by the Post Office, are matched by an increase in the useful physical assets of the country.

If the Committee will bear with me, I will now very briefly summarise the position about the National Debt. The National Debt outstanding at 31st March, 1955, was £26,933 million, an increase of £350 million over the year. Apart from the £68 million borrowed to cover the deficit below the line—which, as I pointed out, was nearly covered by revenue—this increase was primarily due to the provision of an additional £300 million for the sterling capital of the Exchange Equalisation Account to enable it to finance the increase in the gold and dollar reserves early in the financial year. The Exchequer also issued £35 million of Government stock for coal compensation. These increases were offset by £36 million of debt redeemed by application of sinking funds and by the cancellation of £13 million of stock tendered for steel shares, together with £4 million for other adjustments.

The principal changes in the composition of the Debt are as follows: Floating Debt rose by £427 million, largely as a result of the issue to the Exchange Equalisation Account. During the year £292 million of 3 per cent. National Defence Loan, 1954–58, £413 million of 1¾ per cent. Serial Funding Stock, 1954, and £650 million of 2¼ per cent. Exchequer Stock, 1955, were converted into securities maturing in later years. As a result of these operations the amount of the three loans remaining to be paid off on maturity during the year was reduced to £234 million—that is a notable achievement. A new cash issue of £300 million of 2 per cent. Conversion Stock, 1958–59, was made in conjunction with the first of the conversion operations just mentioned. These represent, quite shortly, the principal changes in the composition of the Debt; others will be seen in the Financial Statement.

One success story of the past year of which we can all be proud is the record of the National Savings Movement. After passing through a difficult phase the Movement had begun to show signs early in 1954 of a change for the better. As the Committee will remember, I was able to report in my last Budget speech that in the first quarter of 1954 new savings had exceeded withdrawals by about £40 million, and that this was £30 million more than a year before. But in the same period this year new savings have exceeded withdrawals by £80 million—twice as good as a year ago. And over the financial year as a whole there is a net gain in savings of £120 million, compared with a net loss in 1953–54 of £12 million—an improvement of over £130 million.

I am sure that the Committee will greet this as a remarkable and heartening achievement in which we can take proper pride in this year's appraisal of our affairs. I am sure that hon. Members will wish me to congratulate the Movement on its success and thank all who work in it for the benefits their activity has brought to their country. Many of us on all sides of the Committee have taken part in the New Savers Campaign in the last six months. I am sure that hon. Members of all parties have been impressed by the hard work and enthusiasm shown by the voluntary savings workers all over the country. I have nothing but praise for their work, and I trust that the momentum of their campaign will carry them forward to still better results in the year before us.

I turn now to look forward to the year 1955–56 and propose first to look at the Budget accounts, starting above the line.

On the basis of existing taxation I estimate total revenue to be £4,844 million, an increase of £106 million over the actual yield in 1954–55. I know hon. Members' interest, but I hope they will excuse me if I go faster than dictation speed.

Inland Revenue duties in 1955–56 are expected to provide £2,610 million, an increase of £69 million on the out-turn for 1954–55. From Income Tax I expect to receive £2,009 million, or £116 million more than last year. This increase will come partly from the higher profits of the past year, and partly from the effect over a full year of recent increases in wages and salaries. The yield of Profits Tax is expected to rise by £7 million to £180 million, but the yield of the Excess Profits Levy will naturally fall, to about £25 million. I look for a further small increase in Surtax, which will bring the yield up to £136 million. Death duties at £185 million, stamp duties at £74 million and miscellaneous Inland Revenue duties at £1 million, are expected to bring in approximately the same amounts as last year.

Now for Customs and Excise; I estimate the revenue from Customs and Excise duties at £1,930 million in 1955–56, compared with £1,872 million last year. The principal items in this total which I forecast are: tobacco, £660 million; beer and other alcoholic drinks, £388½ million, Purchase Tax, £370 million; oil, £320 million; duties under the Import Duties Act, 1932, £70 million; Entertainments Duty, £41 million; and betting, £28½ million.

After taking motor duties of £80 million into account, I estimate total tax revenue in 1955–56 at £4,620 million, an increase of £128 million over the yield in 1954–55. From non-tax revenue I expect £224 million, or £22 million less than the actual yield in 1954–55.

Now for expenditure. I estimate total expenditure above the line in 1955–56 at £4,562 million—an increase of £39 million over the Budget estimate for 1954–55.

Practically the whole of this increase is accounted for by the Consolidated Fund services which, at £699 million, are £32 million more than last year's estimate. This increase arises on the provision for debt interest, which reflects recent developments in the money market, and is, of course, particularly influenced by the increase in the rates for Floating Debt.

Expenditure on Supply in 1955–56 is estimated at £3,863 million and is only £7 million more than the original estimate of a year ago—only £7 million more. Within this total, net expenditure on defence at £1,494 million is £61 million less than the original estimate of last year, despite a reduction of £42 million in the estimated receipts from American aid. Civil expenditure, at £2,369 million, is £68 million more than last year's original estimates.

I will comment in more detail on these expenditure figures in a moment. Meanwhile, I must mention that they do not include the additional cost arising from the Special and General Agricultural Price Reviews recently concluded. This cost, as has already been announced, will amount to £14 million in all during 1955–56, and will be provided, along with other changes likely to be necessary in the existing provision for food and agriculture, by further Estimates in due course.

To round off the main outlines of the picture, I must mention that below the line I expect a further increase in net payments, from £501 million last year to £584 million in 1955–56. The main factors are smaller receipts from Housing Votes and from the Raw Cotton Commission; a whole year's advances to the Post Office instead of only part of a year; larger advances to the National Coal Board and heavy payments to clear up the large arrears of compensation which accumulated while we recast the scheme of the Town and Country Planning Acts. All these much more than offset the reduction of £33 million in loans to local authorities which we can reasonably look for after their spurt in the past few months. I am estimating these loans at no less than £320 million this year.

Now to return to the Supply figure. I spoke at some length last year about the urgent need to control expenditure, and to achieve savings wherever possible, in order that the economy may carry, without undue strain, the heavy burdens which both external circumstances and our domestic policies impose upon it. The major strains are due, of course, to the continuing high level of defence costs and to the inevitable growth of the cost of the social services.

Moreover, we have had to make provision for unavoidable increases in salaries; and, although additional expenditure is involved, nobody is more glad than I that the cautious hopes which I expressed last year on the subject of equal pay have already been realised, and have been embodied in a firm agreement with the staff associations. This is now in operation. The wishes of Parliament have been carried out by this Government.

It is true that on both the defence and civil sides last year's expenditure was appreciably less than the figures I had budgeted for, so that this year's estimates represent a corresponding increase over last year's actual outgoings. Nevertheless, the fact that on a total of well over £3,800 million of Supply expenditure this year's Estimates are only £7 million higher than those of a year ago shows, I think, that during the last 12 months we have been making a special and sustained effort to curb non-essential expenditure. That effort has contributed not a little to enabling us to accommodate the inevitable growth in the cost of some of our essential policies.

Let me say for a moment or two what these are. First, defence. I said last year that we must see to it that we obtain some definite relief from the defence burden. The plans which were then in existence would have meant a considerable increase in expenditure in 1955–56. But as a result of a full review of our strategic needs and a careful scrutiny of the estimates over the whole field, provision for defence has been kept at a level which, broadly speaking, is not very different from the actual expenditure of last year. This is welcome so far as it goes; but the development of new arms, the changes which will follow the end of the occupation in Germany and the continuing reduction of American aid, all emphasise to the Committee the importance of maintaining our efforts to secure, within the new strategic framework, all possible economies in this field.

Coming to civil expenditure, I will just mention agriculture and food. There are always a good many questions about what the agricultural policy costs us, so I have analysed it as follows: the total cost of the production grants and subsidies paid by the Government is estimated at £323 million. Of this sum production grants, which go direct to farmers to help meet their bills for fertilisers, lime, and so on, account for £54 million. The agricultural price guarantees, together with a small amount for the related trading services, amount to £163 million. To this, £29 million must be added for the net cost of the price guarantee on milk for the ordinary consumer. The last three figures I have given add up to £246 million, and this—for the Committee's interest—is the measure of the cost of supporting our home agriculture. The rest of the £323 million is made up by the bread subsidy of no less than £41 million and the welfare subsidies, which include children's milk, and so forth, at £36 million.

Last year, in discussing this field of expenditure, I said that our task was to reconcile two needs—the need to secure a greater measure of financial control, and the need to preserve the stability of the farming industry, in the interests of farmers and workers, and of national security. Both needs were very much in my mind during the recent Annual Review.

The stability of the industry, and, in particular, its ability to finance improvements and adjustments in methods of production, were threatened for two reasons. First, there had been a marked increase in the costs of farming. Secondly, the farmers and farm workers have been struggling manfully under the stress of exceptionally severe and difficult weather over the last 12 months. I think that the Committee would wish me to give a special word of praise to the spirit in which the farm workers apply themselves to their varied tasks all the year round. It was not in vain, therefore, that my right hon. Friend the Minister of Agriculture made his case for increased Exchequer assistance.

Moreover, I wanted to adjust the price guarantees to help our balance of payments. Thus, we increased the ploughing and fertiliser grants, and the guaranteed prices for barley and oats, so as to reduce our imports of feedingstuffs by encouraging the growth of more of these crops at home. Together with coal, to which I referred earlier, the cost of imported feedingstuffs has been a major factor weighing down our balance of payments. We were also obliged to avoid the danger of a Gadarene herd of expensive pigs rushing us into bankruptcy, so we reduced pig prices.

The other large bloc of civil expenditure to which I want to refer is concerned with the social services. At the beginning of 1954–55, quite apart from the Exchequer contributions to the National Insurance Funds, these were expected to cost £1,260 million. They have, in fact, cost £1,278 million; and for 1955–56 it is expected that they will cost £1,315 million. Let us examine some of the other details. Comparing the original Budget estimate for last year with my present estimates for 1955–56, the Health Service shows an increase of £32 million; education, including grants to universities, an increase of £25 million; and war pensions, following the recent rise in the rates, an increase of £8 million.

The Exchequer contributions to the National Insurance Funds are also, as the Committee well knows, a growing and inescapable commitment, and in the coming year, as a result of the action taken by Parliament last December, they will demand £100 million compared with £78 million for last year. The increased cost of the items I have just mentioned amounts to no less than £87 million. This is more than the whole of this year's increase in Civil Supply, and is striking evidence of the fact that, in this field of social services a growing burden on the Exchequer is to be reckoned with.

Much of the increase in expenditure is contractual, while the remainder represents what I am convinced is a worthwhile investment in the future well-being of the country. Investment in human health, wider opportunity and increased technical skill means something more than "investing in success." It means the assurance of a happily working and socially responsible democracy.

But if we are to carry this burden, which I have specially mentioned to the Committee today, we must not only maintain the increase in the national income, but also be constantly watchful that all our existing services are administered as economically as possible. We must, at the same time, examine with a critical eye all the many additional claims which are constantly being made on the Exchequer for new services, so that the basic social needs of our people come first.

Now I will try to sum up Exchequer prospects on the existing basis of taxation. During the past year we have maintained a vigilant watch on both the totality of Government expenditure and its detailed distribution. Had we not done so I should not now be able to lay before the Committee the prospect of so favourable an Exchequer out-turn for 1955–56 on the existing basis of taxation. Expenditure of £4,562 million; revenue of £4,844 million; a surplus of £282 million.

This last is a very considerable sum. Before I can say how much of it—if any—should be given back to the hard-pressed taxpayer, I must look ahead and analyse briefly the likely demands to be made upon us abroad and at home in the coming months. Then I can give the Committee my judgment. Economists rejoice in this exercise—the analysis of demand. No one, I am sure, is more capable at it than the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell). But, for once, the language of the economists is intelligible, because it means exactly what it says—what, in fact, are the probable calls upon our resources, and what are our chances of meeting these calls, while combining a vigorous expansion of production at home with the maintenance of a healthy balance in our overseas account? I have given the Committee the picture of both.

It is not enough for us to earn abroad sufficient merely to meet the cost of our imports. We have also to repay our debts; and we have to resume our traditional position as the main supplier of capital for the development of the Commonwealth and Colonial Empire, which offer such inspiring opportunities. We have taken on heavy liabilities to the Colonies under the Colonial Development and Welfare Acts and our participation in the Colombo Plan. We are also making increasing facilities available to Commonwealth Governments in the London market.

All these external liabilities add up to a formidable call on our resources. We shall succeed in meeting this call only if we play our full part in establishing two prior conditions. First, we must seek to ensure an expanding volume of world trade in conditions which give our industry every chance to share in it. Secondly, we must be sure that British industry is equipped to take full advantage of this chance by its efficiency and initiative.

What are the prospects for an expanding and freer world trade? It may be said that we have been trying to recreate the ideal conditions envisaged by Adam Smith and Cobden; and that to attempt this in a world of selfish and protectionist lobbies is no more than ineffectual idealism. But, in fact, our policies have been open-eyed in their realism. They spring from our conviction that without a system of trade rules and open trade behaviour, applied to our competitors no less than to ourselves, our exports would be exposed to every kind of restriction and retaliation, and our island interests would be submerged.. That is why we have got together with our colleagues in the Commonwealth and our friends in Europe, in the Organisation for European Economic Co-operation, and the U.S.A. in a fresh effort to remove barriers to the free flow of trade and payments.

Last year we were concerned about the possible effects of a recession in America.

But I am glad to say that the Government and people of the U.S.A. did much to stem the threatened decline in their output; and now there is an upsurge of renewed confidence and re-invigorated production in that country. This general revival of industrial activity in the U.S.A. should benefit not only America herself but also the rest of the free world—the more so if President Eisenhower's fresh initiative in developing more liberal trade policies commands the support of all men of good will.

In Western Europe trade and production are still rising, and it was largely due to that recovery that we got through last year so well. It has been a great satisfaction to me, as Chairman of the Organisation for European Economic Co-operation, to watch, applaud and encourage this expansion in Europe—an expansion which is reflected in the current plans for further removal of restrictions on trade this year.

The Committee will wish to study the White Paper which will be published this evening outlining the Government's policy towards the changes in the G.A.T.T.—the General Agreement on Tariffs and Trade—recently negotiated in Geneva; but I can say now that the G.A.T.T. emerges from this review as an instrument better adapted to reinforce our efforts to liberate trade. The instrument is there to our hand; it is for the member countries to use it.

Looking outwards, some of our export markets may be difficult—in Australia, for example, where our friends have recently announced reductions in their imports in the interests of the sterling area's balance of payments and of their own. But, in general, there are good prospects that world markets will offer us substantial opportunities to increase our exports this year. But we shall not achieve this essential increase unless our goods stand up to competition, particularly from the U.S.A., Germany and Japan.

If we are to be competitive, above all in price, we must combine a policy of incentive and expansion with continued restraint in the demands which we make on that expansion for our own personal satisfaction. I must warn the Committee that between 1953 and 1954 output per man, over the economy as a whole, rose by about 2½ per cent.; but the increase in wage rates was over 4 per cent.

Clearly, if this tendency continues, prices will be subject to constant upward pressure, and the effects both at home and in export markets will be adverse.

We must certainly watch other personal incomes also—for example, dividends. [HON. MEMBERS: "Hear hear."] It would be as well if, before cheering, hon. Members would keep matters in their true perspective. The Committee will have observed from the Economic Survey that personal incomes from rent, interest and dividends rose last year by £60 million or about 4 per cent., while wages and salaries rose by £645 million, or about 7½ per cent.

Nevertheless, it remains true that, whatever source of income we consider, any tendency for money incomes to increase faster than productivity must lever up prices, or tilt the balance of payments against us, or both. The country should realise that there is a limit to the additions to our costs and prices which we can afford, if we are to remain competitive with our keen rivals in export markets. So much for looking outwards.

Now I come to the analysis of likely home demand. If we consider the whole range of the economy, will there be room for an increase in exports? It is in the light of this fundamental question that I must assess the claims which home demand seems likely to make on our productive capacity in 1955. I will do it under four heads, very shortly in a few sentences. How much will be taken by Government expenditure; by investment; by stockbuilding and by personal consumption, that is, by people spending on themselves?

Taking, first, expenditure, I calculate that, in real terms, Government expenditure on goods and services in the coming year is likely to be about the same as in 1954–55. Now, investment. The upward trend in fixed investment is continuing. Housing is not likely to show so great an increase this year; but investment in the nationalised industries should continue to rise at about the same rate as in the past two years, the largest increases being in coal and electricity. I have already referred to the encouraging indications that, in private manufacturing industry, demand for factories, plant and machinery is rising as the Committee wanted it to do so ardently last year.

There is no reason why the recent increase in interest rates should discourage sound long-term investment. Indeed, the need for the type of investment which will raise productivity and expand our productive capacity is as great as ever; and the conditions of orderly economic growth, which our monetary policy is designed to foster, are precisely those conditions in which long-term investment can be undertaken with the surest hope of success. We are looking, then, for a real increase in investment in manufacturing industry this year.

Summing up investments, therefore, I would say that over the whole field, public and private, I expect investment in 1955 to increase by at least the same amount as last year; but productive industry is likely to take a larger, and housing a smaller, share of this increase.

Next we come to stocks. The movement of investment in stocks and work in progress is, as always, very difficult to foresee. There was a marked increase during 1954, which as I have already pointed out, was one of the factors in our expansion. Our present rate of stock-building should be at least enough to meet the needs of expanding production. The recent change in the Bank Rate was designed partly to emphasise the need for caution in the accumulation of stocks. Thus I estimate that stockbuilding will not take more of our resources than it did last year.

Finally, I must consider the prospects for personal spending and consumption. There have been substantial increases in wages. But prices have also risen to some extent, and the restraint which we have reimposed on hire-purchase transactions should also help to prevent an excessive growth of personal consumption. Moreover, the rise in personal savings which has occurred during the last few years should be well maintained. I do not, therefore, expect personal spending and consumption to rise as rapidly this year as last.

Taking all these considerations into account, I estimate that the increase in home demand should be appreciably less than it has been in the last two years. On the other hand, the scope for increased production is at least as great as it has been in the past, if not greater. In each of the last two years output per man in industry has risen very encouragingly. Throughout the same period, new projects of investment have been put in hand, while industry has been showing itself increasingly aware of the need to raise productivity, and increasingly eager to explore the possibilities of new techniques and methods of production.

In these circumstances, and taking into account the resources of a flexible monetary policy, I judge that the claims which domestic demand is likely to make on our production will leave a margin for an increase in exports. Any incentive I can give should clearly be directed towards increasing production and, therefore, this margin.

What, then, should be my final Budget judgment? This year there are clear limits to the possibilities of large remissions of taxation, especially of indirect taxes which would encourage spending at home and so risk diminishing our export effort. With very full employment, higher social benefits, increased old-age pensions, generous support prices for agriculture, and better pay packets, our people must realise that all the good things of life are not, and cannot be, confined to Budget day. Indeed, some might urge that no tax concessions at all should be made this year. But I judge that this would be a timid policy which might prevent us from achieving the full increase in production of which we are capable.

In conditions of stricter monetary discipline, industry will have to scrutinise its plans with a shrewder and more selective eye. The plans should be all the better for that. They should, therefore, be all the more likely to show the maximum return to the whole economy from any encouragement I can give them. We do not want to smother the new spirit in British industry which many observers believe is transforming our approach to production problems. I believe that, given a continuing incentive, both management and men will accept the challenge to redouble the efforts which they are now making and so increase production and improve exports.

Since I became Chancellor of the Exchequer, three-and-a-half years ago, I have continually called for investment and expansion, and I have adopted whatever measures were within my power with this in view. There are risks in everything that is worth doing, and, on the analysis which I have made, I feel no hesitation in deciding where my duty lies between policies of expansion or of restriction. If we are to achieve the full increase in production of which the economy is capable, we must continue to provide encouragement to the whole productive effort of the country. We must seek fresh incentives to the forces of growth by the stimulation of output and productivity.

I come now to my Budget proposals. The advice which I have received this year has been almost unlimited. The representatives of industry, commerce and organised labour have sent me their annual suggestions; my hon. Friends and I have received many deputations from various interests affected by taxation, particularly by the duties of Customs and Excise. We have had before us the Second Report of the Royal Commission on Taxation.

The most obvious conclusion which my hon. Friends and myself draw from all these representations is that the sheer burden of taxation is far too great. Both from the personal angle and from that of industry, we remain one of the most heavily taxed nations in the world. I am convinced that some further lightening of the load is needed to give industry the spur to be more competitive. The question is how to choose a method of relieving the burden which is likely to increase rather than to diminish confidence in our financial policy at home and overseas.

I do not feel justified this year in making any general reductions in indirect taxation. I have considered carefully the representations that Purchase Tax is bearing heavily on some sections of the textile trade. Their difficulties are due to a variety of causes, not least to the loss of export markets. Today, I am dealing only with the Purchase Tax aspect of these difficulties.

No adjustment of Purchase Tax can be a panacea for the complex problems of any industry. But the Government have great sympathy with the difficulties which are being experienced at present in Lancashire, and also in Northern Ireland. As evidence of our desire to help, I am proposing forthwith to reduce the rate of Purchase Tax by half from 50 per cent. to 25 per cent. on piece goods and sheets, towels and other household textile articles of cotton, linen, rayon and other non-wool materials.

An important result will be to halve the tax on quality furnishing fabrics and household textiles, and so to provide a better market for these goods, thus encouraging production and aiding exports. The D allowances which may be made from the value before calculating the tax will not be affected. These changes will take effect from midnight, and they will cost me about £2¼ million this year and £3 million in a full year.

The Committee will perhaps forgive a brief digression at this point about our procedure this year. The General Election will clearly involve a change in the normal practice, since there are only a few days left in the life of the present Parliament.

The Purchase Tax change which I have just mentioned will be effected by Treasury Order, which will be laid this evening. For the rest, there will clearly be no time for the House to consider a comprehensive Finance Bill on the usual lines—that is, a Bill covering not only the Budget changes but also any adjustments and amendments of the law for which provision can usefully be made by Parliament to maintain the structure and efficiency of the taxation system.

The Finance Bill that I shall propose to the House for enactment before the dissolution will be confined to such Clauses as are needed to give effect to my Budget proposals and to carry on the finances of the nation. The Budget Resolutions that I am moving today will have the same restricted scope as the Bill. In particular, we do not intend to move the general Resolution for the Amendment of the Law, on which the Budget debate normally takes place. But we shall welcome a comprehensive discussion of the Budget proposals and the financial and economic situation; and, if the Chair will permit, the usual wide debate of this nature will be founded on the last of the Resolutions.

The scope of the debate on the Finance Bill will, naturally, be for consideration by the Chair in due course; but, given the restricted scope of the Resolutions and the Bill, I think it right to tell hon Members that there will be a corresponding restriction in the opportunities for moving Amendments and New Clauses.

This procedure follows the practice adopted on previous exceptional occasions of this kind. In order to help hon. Members who may find it useful to have as soon as possible the text of the Finance Bill, which would be introduced on the Budget Resolutions I am moving, I intend to lay a draft of its Clauses before the House today as a White Paper, and this will be available to hon. Members at the same time as the text of the Budget Resolutions. It will be for the next Government to consider whether any further fiscal legislation is necessary later in the year.

I now come to my final Budget decisions. This year I have had to bear three considerations in mind. First, if we are to continue to preserve the balance of the economy, I can afford to give away only a limited amount of my surplus. Secondly, the Budget proposals must constitute, before all else, a fresh incentive to the forces of growth and expansion. Thirdly, anything I suggest this year must, of necessity, be of a classical purity and simplicity.

I have considered carefully the recommendations in the Second Report of the Royal Commission on Taxation. I am very glad to be able to pay public tribute to the valuable and stimulating document which Lord Radcliffe and his colleagues have produced. In the light of their study of the graduation of the personal Income Tax, I should very much like to give some help to the family man. I should also like so to adjust the tax scales as to liberate as many people as possible from the complications of P.A.Y.E., especially where the amount of tax which it collects is very small.

Some of these proposals would, on margin, make no vital difference to consumer demand, but would give much needed and much deserved encouragement to individual households. So, if my first task is to lighten the sheer burden on the economy, I can think of one measure only which would enable me to combine with these objectives the type of direct incentive which I am seeking—one measure only which would be regarded as the most positive and heartening encouragement to all, employers and workers alike, who can contribute energy and enterprise to the development of the economy. This is a simple orthodox reduction of 6d. in the standard rate of Income Tax, together with appropriate reductions in the lower rates.

No other proposal would so simply and effectively suit the needs of the moment. It has several substantial advantages. To industry, it offers the prospect of a tax relief—and I attach great importance to this—of rather more than £40 million—a relief which should give fresh encouragement to expansion and a keener edge to our competitive power. To the individual, it offers relief on existing income at all levels of tax liability; and it lightens the burden of tax on any extra income which he or she may earn by greater personal effort. I trust those who benefit to save, rather than to spend, as large a proportion as possible of what they gain. The heavier the present burden of tax, the greater the relief, and, therefore, the greater the opportunity to save.

The reduction of 6d. in the standard rate will be accompanied by 3d. off each of the reduced rates. In 1953, I took 6d. off all the rates, but then I was withdrawing the increase of 6d. all round which had been imposed by the previous Government in 1951. This time, I return to the tradition that reductions in the general rates of Income Tax should be broadly proportionate to the rates already borne.

This reduction in the rates of tax will bring relief to the individual taxpayer at all levels of income. But it will do nothing, of itself, to improve the points at which tax starts to be payable. I want, therefore, to supplement the 3d. remission in the reduced rates by an improvement on the lines suggested by the Royal Commission. I have been impressed by the principles which lie behind its proposals for relief for the smaller incomes, and I therefore propose, in addition, to exempt many of such incomes from all liability to tax by increasing the personal allowance—from £120 to £140 for a single person and from £210 to £240 for a married couple—while reducing the band of income taxable at the lowest rate from £100 to £60. By this means, I shall achieve, though in a simpler way, the object the Royal Commission had in mind in proposing its scheme for a minimum earned income relief. Indeed, when hon. Members come to examine my scheme, they will find that, in most cases, the new starting points of liability will be appreciably higher than in the less far-reaching of the two schemes put forward by the Royal Commission.

Moreover, I shall apply the principle of this relief to small investment incomes—a class very deserving of help—by increasing the limit for the small income relief, under which small investment incomes are treated as earned, from £250 to £300.

Finally, I have made room, within this scheme of relief, for the family man. For him, I propose an increase in the child allowance from £85 to £100. At the same time, I propose to remove the special earnings limit applying to apprenticed children so that the same income limit will apply to all children. I am grateful to hon. Members who proposed these sorts of reform last year.

Here again, the relief which I am offering is a step along the road marked out by the Royal Commission, and is, moreover, free from the practical and administrative difficulties of its own scheme. I put this proposal forward as further evidence of my firm intention to do all I can to help parents of families, on whom the present load of taxation falls with especially discouraging severity, especially when they have several children to educate.

For the reasons which I have given throughout my speech I cannot go further, for the time being, either in reducing the total burden of taxation or in adopting the other improvements in graduation which the Royal Commission recommended. But the effect of the changes which I am proposing will be that in terms of earned income, the starting point of liability to tax will be raised for the single person, from £155 to £180; for a married man with no children, from £270 to £309; for a married man with two children, from £489 to £566; and for the married man with four children, from £707 to £823. No fewer than 2,400,000 taxpayers will be removed from liability altogether—to the considerable relief not only of themselves but also of the Board of Inland Revenue—and the load will be lightened on all those who remain liable.

Full details can be studied by hon. Members in the Financial Statement.

Alterations will have to be made to code numbers, to take account of the increased personal allowances and also of revised National Insurance contributions. This will be done as rapidly as possible, and for the purpose of P.A.Y.E. deductions the tax changes will become effective on the first pay day after 5th July.

In total, my proposals are estimated to cost £134 million in 1955–56, and £155 million in a full year. These are substantial and valuable remissions of taxation. Yet they leave me budgeting for a surplus of no less than £148 million. Rather more than half the surplus with which I began should survive at the end. This fact is, in itself, evidence of my conviction that, this year, we must set clear limits to the distribution of tax reliefs, if the continuing growth of the economy is to be nourished from firm and healthy roots.

Nevertheless, the reliefs which I have proposed are not, I think, wholly inconsiderable. They carry one stage further a process of liberation which, in the course of four Budgets, has reduced the standard rate of Income Tax by 1s., has improved the earned income relief and the age relief, has twice increased the personal allowances and the child allowance, and has provided successive measures of practical incentive to productive investment. By this Budget the Government are leading the Committee and the people of this country further along the road of confident expansion.

I am satisfied that the world at large will applaud our continuing climb back to the uplands of prosperity, and I rely on our people to respond to the trust which I have placed in their sure and steady steps.

1. Income Tax ( Charge and Rates for 1955–56)

Motion made,

That income tax for the year 1955–56 shall be charged at the standard rate of eight shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;

But the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the Income Tax Act, 1952, shall, until the sixth day of July, nineteen hundred and fifty-five, be the same as if the standard rate were nine shillings in the pound (any necessary correction being made on or after that day by adjusting subsequent deductions or repayments under that section, or, if need be, by an assessment);

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[ Mr. R. A. Butler.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 ( Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded succes-sively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Income Tax ( Personal Reliefs)

Resolved,

That, as regards personal reliefs for individuals, the Income Tax Act, 1952 (referred to below as "the main Act") and the Acts amending it shall be amended as shown in the Schedule to this Resolution;

But the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the main Act shall, until the sixth day of July, nineteen hundred and fifty-five, be the same as if those amendments had not been made (any necessary correction being made on or after that day by adjusting subsequent deductions or repayments under that section, or, if need be, by an assessment).

A. Small income relief

In section fifteen of the Finance Act, 1952, £300 shall be substituted in all places for £250 (the income limit for the full relief), £400 for £350 (the income limit for the marginal relief) and nine-twentieths for two-fifths (the fraction governing the marginal relief).

B. Personal allowances and reduced rate reliefs

Sections two hundred and ten and two hundred and twenty of the main Act shall be amended so that—

C. Child relief

Sections two hundred and twelve and two hundred and thirteen of the main Act shall be amended so that—

D. Old age relief

In subsection (3) of section two hundred and eleven of the main Act three-fifths shall be substituted for five-eighths (the fraction governing the marginal relief for incomes over six hundred pounds).

E. Dependent relative relief

Section two hundred and sixteen of the main Act shall be amended so that there shall be an increase of £20 in the sums of £85 and £145 referred to in subsection (1) of the section (as amended by the Finance Act, 1952. and the Finance Act, 1953).—[Mr. R. A. Butler.]

3. Income Tax ( Surtax Rates for 1954–55)

Motion made, and Question proposed,

That income tax for the year 1954–55 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[ Mr. R. A. Butler.]

4.55 p.m.

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