HC Deb 09 November 1921 vol 148 cc450-3

The House will remember that the Budget revealed an estimated ordinary revenue of £1,058,000,000 and an ordinary expenditure of £974,000,000, leaving a balance upon ordinary revenue and expenditure of £84,000,000. On the other hand, with regard to extraordinary expenditure, there was an estimated revenue of £158,000,000 and an estimated expenditure of £65,000,000, leaving a balance on extraordinary revenue and expenditure of £93,000,000. These balances together, £93,000,000 and £84,000,000, made up a sum of £177,000,000, estimated surplus On ordinary and extraordinary expenditure The Budget statement, however, clearly disclosed that that was not a free surplus. It was explained that certain sums would be available for necessary sinking funds, and that figure was estimated at £80,000,000. The Sinking Fund charges arise partly for Depreciation Fund on the 4 per cent. and 5 per cent. War Loan stock of 1917 and for bonds which are surrendered in payment of Excess Profits Duty and Death Duties. That £80,000,000 is an addition to the money for sinking funds provided to the extent of about £23,000,000 in the ordinary part of the Budget.

I hope the House will clearly keep in mind that figure of £80,000,000 which is required for the Sinking Fund charges which I have described. After deducting that £80,000,000 from the surplus of £177,000,000, you had a surplus of £97,000,000. But that was not a free surplus either. There was a note given in the Budget which stated that there was to be set against that estimated surplus sums which had to be found for certain contingencies which could not clearly be estimated at the time. The coal stoppage had already begun. No man knew what its length was going to be, nor what burdens it would impose upon us, but clearly that was something that had to be provided for. There were other items, such as settlement of War obligations, notably under the Railway Agreement, with which my right hon. Friend the Member for Derby (Mr. J. H. Thomas) is familiar. Accordingly, we did not estimate that there would be anything like a free surplus of £97,000,000. We knew that surplus would be subject to the charges of which I have already spoken. For the purpose of making the position clear, I beg the House to keep in mind these two estimated surpluses, subject to contingencies, of £97,000,000 and £80,000,600.


Ninety-three million pounds.


My right hon. Friend has a different figure in mind.


It is what you yourself estimated.


What has happened with regard to that £97,000,000 surplus? It has nearly disappeared, as expected, under the contingencies which I have already described. The coal stoppage cost us very considerable sums of money, the railway agreement also cost us very heavy charges, and there have been other Supplementary Estimates required which have eaten into the £97,000,000. Indeed, the actual Votes which have been necessitated have exceeded by something approximating to £20,000,000 the sum of £97,000,000 to which I have referred, or, I ought to say, they exceed it by nearly £20,000,000, when you add what has been granted by the House for affording employment. Taking all -the Supplementary Votes together, including the £8,000,000 for unemployment passed the other day by the House, you arrive at a sum which is £20,000,000 in excess of the £97,000,000 estimated surplus. That £20,000,000, however is met by this fact. There are in sight savings upon the expenditure of the year to the extent of £20,000,000, or probably slightly over. I am giving now what I regard as a conservative figure. Accordingly, the expenditure of the year will be met by what was estimated and the £97,000,000 surplus.

The question immediately arises: Shall we at the end of the year have the £80,000,000 which we estimated to complete the amount needed to discharge Sinking Fund charges, or shall we have something less than £80,000,000, or will that £80,000,000 entirely disappear and leave us with a deficit on the ordinary Budget. I imagine that is the question to which the House really now wishes an answer, and I shall endeavour to answer it to the best of my ability. Clearly, the matter will be decided by the amount of revenue which we are able to obtain. I have seen a good many comments on the revenue of the year based upon the seven months that have just passed, and, before I go on to give my estimate of what the revenue is likely to be, I should like to say two things. In the first place, the last quarter of the year is the most important in connection with the revenue, and it is impossible on the first nine months of the financial year to draw any very accurate inference as to what the outcome at the end of the year is likely to be.

The second comment I wish to make is this: It was estimated that the revenue of this year would be £209,000,000 less than the actual revenue of last year, and accordingly you look for a decline in revenue under most of the heads under which it comes to the Exchequer. It is true that a decrease of £198,000,000 already exists in the figures for the first seven months of the year, but, for the reason I have already given, you cannot draw any very sound deduction from that fact, and I am afraid that we shall never be able to see clearly what the situation is until we see the actual figures at the end of the financial year. In point of fact, under almost all heads, our revenue during this present year has been surprisingly good. Customs and Excise have both exceeded expectations. That is a very remarkable fact. It shows at least that the reserves of wealth in the hands of the people were greater than anyone suspected. Whether they are now entirely exhausted or not is a different matter, but at least so far we have found expenditure upon the luxuries which Customs and Excise record to have been greater even than our expectations. With regard to Income Tax the yield, so far, has also exceeded last year, and the same is true of Death Duties.

There are, however, three cases in which, I think, it is obvious that revenue will not come up to our expectations. The first is a comparatively small item of £6,500,000, which is the reduction so far on the Stamp Duties. It will be obvious to everyone why the Stamp Duty receipts are reduced. It indicates that the issues of new capital have been less during these seven months. It indicates also that the transactions of the Stock Exchange are very much less than they have been in the previous year, and that conveyances of property have been either carried out in fewer instances or at very much lower prices. All these causes have gone to produce this decrease of £6,500,000 in connection with the Stamp Duty. The next item which, on the face of it at the present time looks ominous, is the amount obtained from Special Miscellaneous Receipts. Under that head, as the House will remember, come all the sales of Government stores which were acquired in the War. That was a considerable source of revenue last year, and was estimated to produce in the present year £158,000,000. Up to now only £58,000,000 has resulted under that head; but, as I have previously informed the House, this is a class of revenue which is very irregular in the way in which it comes in. Two or three very large transactions may take place and alter the whole aspect of your revenue, and, in spite of the extraordinary difference between the figures of expectation and the figures of results so far, to the best of my belief Miscellaneous Receipts will be, if not quite so good, very little less than the figure which we estimated.