FINANCIAL STATEMENT. (Hansard, 4 May 1914)

§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

(rising at a Quarter before Four o'clock): I am afraid I must make a larger draft than usual upon the patience and indulgence of the Committee, inasmuch as I have not merely to review the normal finances of the year, but I have to submit new proposals which will involve increased expenditure. Last year was an exceptionally prosperous year. I had based my estimates of revenue on the assumption that the trade boom would surpass anything we had experienced in this country. I came to that conclusion after a most careful and painstaking investigation. I was rather severely taken to task, not merely by the right hon. Gentleman (Mr. Chamberlain) but by other hon. Members and by the Press. I was charged with making over-sanguine estimates. However, I think I am 57 entitled to point out that all those estimates were more than justified by the results. The trade of this country reached the highest point it has ever reached. Unemployment touched the lowest point it has ever touched in the history of this country, and it is all the more gratifying inasmuch as there was hardly any other country in the world which could put forward the same claim. Our great trade rivals suffered a good deal, notably in the latter part of the year, in their trade. I estimated for an increase in revenue of £6,023,000. As a matter of fact I received £9,441,000, an increase without any precedent in the history of the revenue of this country. I budgeted for a deficit of £315,000. I proposed to take out of the Exchequer Balances £1,000,000—and the Committee will remember that £1,500,000 had been put into the balances out of the Old Sinking Fund in order to strengthen them—for Naval contingencies, inasmuch as the money was due to underspending on the Navy. By using the £1,000,000, I anticipated a small surplus. I had Supplementary Estimates of £3,371,000 to meet, and the savings on various Departments came to £1,518,000, so that I had to face a net deficiency of £1,853,000. The increase of the revenue enabled me to pay the whole of these Supplementary Estimates, to wipe out the deficit of £815,000, and to leave a surplus of £750,000, after leaving the £1,000,000 still to strengthen the Exchequer Balances. I think that is a story which must be a source of encouragement to all those who feel any doubt as to the future of British industry.

I should like to say one word about the taxation of the Budget of 1909. The yield last year from the new taxes imposed reached the figure of £27,215,000, which was considerably above the Estimate. But since then the increase in the national income has reached something like £140,000,000 to £150,000,000, and according to the testimony of that very distinguished statistician, Sir George Paish, the increase in the national savings since 1909 has reached the prodigious figure of £1,750,000,000. It was proposed that the taxes raised in 1909 should be allocated for the following purposes: First, the Navy; next, old age pensions, including paupers' pensions; next, the improvement of main-roads; and next, a Development Grant, notably for agricultural purposes. Then we had to make provision for the setting up and financing of Labour Exchanges, and national insurance, and, lastly, for the relief of local taxation. That was to in- 58 clued a national valuation for rating purposes. The revenue proved ample up to the present year for the whole, of these purposes except the last item, the carrying through of a scheme for the readjustment of local taxation, and even there about £2,000,000 or £3,000,000 has been devoted out of the taxes raised then for the purpose of relieving local councils of expenditure which otherwise would have fallen on the rates. The naval expenditure has undoubtedly greatly exceeded all anticipation. The forecast for 1909 was that the expenditure would go up to £44,000,000—it was a time of very abnormal shipbuilding—and that after the abnormal period had passed, it would revert, at any rate, to a figure of about £40,000,000. That was the basis on which the finance of 1909 was fixed, but, unfortunately, there has been an increase in shipbuilding programmes abroad. There was the Continental situation which had to be taken into account, and the anticipation which we formed then we could not realise. Otherwise I should now be in the position of making proposals for the relief of local taxation on a liberal basis without incurring the odium of having to propose any fresh taxation.