Amendment of Law.

Part of Orders of the Day — Ways and Means. – in the House of Commons on 22nd April 1937.

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Photo of Mr Robert Rankin Mr Robert Rankin , Liverpool Kirkdale

I desire to say a few words concerning certain aspects of the Budget in regard to which I find some concern outside the House. That concern is not based upon nor connected with the large sums which now have to be spent in strengthening our national defences. I find that it is concerned with the ever-increasing permanent cost of our social services for, splendid though many of those services are, it is difficult in some cases to find any full or adequate return. The concern of which I have spoken is intensified by the tendency in the past of successive Governments, of all parties, to use the capital resources of the country, including the Death Duties, for the annual expenditure of the country, quite irrespective of the requirements of sound finance.

Less than 10 years ago, in the financial year 1929–30, as pointed out by the well-known economist Mr. Kiddy, the total expenditure by the Exchequer was £701,000 excluding Sinking Funds. Last year it was £790,000 also excluding Sinking Funds. The actual rise in Supply expenditure was, however, much greater than £90,000,000, for the amount required last year for Consolidated Fund Services was £106,000,000 less than in 1929. It must be pointed out that whereas last year's extra expenditure on the Votes for the Fighting Services represented an increase over 1929–30 of £73,000,000, the Votes for the Civil Service and social outlays increased by no less than £123,000,000, and that notwithstanding a substantial decline under the head of War Pensions. When in 1932 the Government effected an annual saving of at least £30,000,000 by converting 5 per cent. War Loan into, a 3½ per cent. issue, and effected large savings in subsequent debt conversions, the investor was comforted by the thought that compensation would be forthcoming in the shape of reduced expenditure and lower taxation. But although for a brief spell Income Tax was lowered by 6d. to 4s. 6d. in the £, it was soon raised to 4s. 9d. and on Tuesday we heard that it was to be raised again to 5s. so that the taxpayer, nearly 20 years after the end of the War, is suffering a loss of income with practically no relief in taxation.

The last occasion on which the word "economy" was mentioned in this House was during the crisis of 1931, when economies were effected to the tune of about £70,000,000. As a consequence, confidence both at home and abroad was restored and balanced Budgets were the foundation upon which the present trade recovery of this country has been based. There was, however, something besides lack of equilibrium in the national balance sheet which was responsible for the financial crisis of 1931. That something was, among other features, indifference to the growth in unproductive expenditure and eagerness to obtain the bulk by revenue by direct taxation. Today there are signs that these tendencies are reasserting themselves. This consideration would not weigh so greatly in the country if there was a clearer recognition of the need for economy in nonessentials. The yield from Income Tax and Sur-tax at the present time may remind us that there is a limit to the yield from direct taxation, while, similarly, the recent setback in gilt edged securities is also a warning that even cheap money cannot sever the close connection between extravagance in national expenditure, high taxation and the state of the national credit. I should like to repeat that I believe the concern outside this House is not aroused by temporary necessary abnormal expenditure on armaments for defence, but by the permanent increase of permanent expenditure not warranted by the facts and requirements of the present day situation.