§ I now proceed to balance the Budget of 1926–27. The total estimated expenditure, including a £60,000,000 Sinking Fund, is £820,641,000. The total estimated revenue is £824,750,000. That leaves me with a prospective surplus of £4,109,000. Out of this, if there is a peaceful settlement of the coal difficulty, I shall have to meet any expenditure arising out of the Report of the Coal Commission and also to narrow the gap which will exist upon the cessation of the coal subsidy in some of the mining districts. This surplus will also have to cover the ordinary contingencies for which surpluses are reserved in every financial year. I have in my calcula- 1720 tions assumed throughout a peaceful issue from the industrial difficulties in which we are all involved. All my Estimates are based on a peace footing. That is the only basis on which any Estimate can be framed. If, contrary to the national wish and hope, a prolonged paralysis of industry should overwhelm us, I shall be forced to propose supplementary taxation in order to meet the loss which will fall upon the revenue, and I think it right to state that such supplementary taxation will comprise substantial increases both in direct and indirect taxation.
§ On the assumption, however, that these unpleasant experiences will be avoided, let us see what the position will be next year, that is the year 1927–28. The £4,000,000 provided in the Estimates of this year for the April payments of the coal subsidy will not appear next year. I am keeping in hand, say, £3,000,000 more in case it may be necessary to taper it off, and for other purposes. This £7,000,000 will not recur next year. Therefore, apart from other economies, we have a right to expect that we shall be £7,000,000 better off. The new Sinking Fund will again be reduced by £10,000,000, that is to £50,000,000. The betting tax is estimated to raise about £4,500,000 extra in a full year, and the result of the change in the basis of Income Tax from the three years average to that of the preceding year will, it is anticipated, improve the revenue by another £1,500,000 I have, therefore, a total relief or increase in prospect of, at any rate, £23,000,000. To what extent this will emerge as a definite advantage will depend, first, on how far new economies cancel the automatic growth of expenditure; and, secondly, upon how far the normal growth of permanent taxation will balance the loss by the moribund taxes and special receipts.
§ If this double equipoise is maintained both in expenditure and revenue, we should certainly find ourselves in a more satisfactory position next year than we are this year, and in any case this year we shall have made effective precautionary provisions against the future. Apart from those unforeseeable events, which play so large a part in the vicissitudes of human life, we can see our way fairly clearly through the finance of two 1721 successive years; and we must face emergencies with courage as they come.