§ The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)I rise to discharge one of the most disagreeable tasks that has ever fallen to my lot. It is no pleasure to call upon people to make sacrifices or to bear additional burdens, and only a consciousness that those sacrifices and those burdens are necessary to avert far greater sacrifices and burdens makes my task this afternoon tolerable. Hon. Members will remember that in February of this year I gave the House of Commons and the country a grave warning of the serious budgetary position. On the eve of the Adjournment, fortified by six months of further knowledge and experience, I repeated that warning. An unbalanced Budget is regarded as one of the symptoms of national financial instability. When the depressed countries of Europe were in financial difficulties, and when help came to them from outside, it was always made a condition of such help that they should set their budgetary position in order.
It is undoubtedly the fact that foreign countries have been looking with nervousness upon the national financial position of this country; but I would point out to the House that, apart from that, apart from all foreign implications, an unbalanced Budget is a very serious thing for this country itself. Apart altogether from outside opinion, it would be necessary for ourselves to put our financial position into one of undoubted security and stability. A deficit itself may not be a very serious matter, because unexpected expenditure might be necessary during the currency of the financial year—expenditure unforeseen when the Budget was introduced. It is not a deficit at the end of the year that matters so much, as whether measures are taken or not to meet that deficit. The serious thing is whether the country takes steps to meet that deficit and to balance its Budget. If it fails to do so, 298 then naturally grave doubts arise as to the financial stability of the country.
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It is undoubtedly a fact that nationally we have, for some time past, been living beyond our means, and living to a considerable extent upon our capital. The trade depression of the last 10 years has reduced the yield of taxes and at the same time increased expenditure. Seven years ago the Unemployment Insurance Fund was paying its way. It was paying off debt. This year it is costing the Exchequer about £100,000,000. The national income has been falling rapidly. There are something like 3,000,000 persons, one-time producers, now inactive. Profits, upon which national revenue must largely depend, have fallen 20 per cent. during the last two years, and in many industries wages are being paid out of capital. Now this is the problem that I have to solve, and it can be solved only in two ways, either by reducing expenditure or by increasing taxation—or by a combination of both. We have been under the delusion during the last few years, in these times of unparalleled depression, that we can maintain the expenditure of prosperous times. Our total national and local taxation is now very nearly one-third of the total national income. Now whatever measures you may take to restore solvency in our national finances, the country must face up to the position, and I am going to do it this afternoon.