§ Before passing to my proposals to bridge the deficit, I must briefly review the prospects for next year, that is the year beginning on 1st April next. Of course, the Committee will understand that we cannot 18 months ahead estimate with precision what the exact yield of taxes will be, or what the exact expenditure will be, but from the best data that we have available, I can submit to the Committee what, I think, is a fairly accurate approximation to what the position would be if any changes were not made when the Budget next year is submitted to the Committee of the House of Commons. I have not thought it prudent, in making these Estimates, though we hope for a revival of trade, to count upon such a recovery in framing my Estimates. As a basis of comparison, I take the original Budget Estimates presented by me last April, and not the revised Estimates which I have just given. I have, first of all, to take into account the fact that last April, in order to avoid the imposition of new taxation, I utilised certain sources for revenue purposes which cannot again be called upon. I took £23,000,000 from the Exchange Account. I expected to get 301 £10,000,000 by the acceleration of payments of Income Tax under Schedules B, D, and E, and I had £4,000,000 from the Rating Relief Suspense Account. These amount altogether to £37,800,000. This, as I have said, will not recur.
§ I have framed the Estimates for revenue for next year: Inland Revenue duties, Customs and Excise, on the assumption that there will be a fall of £35,000,000 in Inland Revenue, £4,000,000 in Customs and Excise, and £7,000,000 in Miscellaneous Receipts. That is £46,000,000 altogether. The increase of expenditure which I should have had to face upon existing services, including the increase of transitional benefit by £10,000,000, that is next year, from £30,000,000 to £40,000,000, cannot he put at less than £17,000,000, and the cessation of borrowing for the Unemployment Insurance Fund and the Road Fund would involve an additional Budget charge of £70,000,000. Adding these items together, that is, a non-recurring revenue of £37,000,000, loss of revenue £46,000,000, increase of expenditure £17,000,000, and the cost of transfer of borrowing to Votes £70,000,000 a year, gives the appalling figure of £170,000,000 deficit on next year's Budget.
§ This forecast of the possible deficit is much larger than the figure which has gained currency during the last few months—the figure of £120,000,000. That difference is due to unfavourable developments since the estimate was framed. In the first place, the earlier figure allowed for a reduction of revenue on account of Inland Revenue only, or rather on account of Income Tax only, but as I have just pointed out a complete and later survey of the possibilities of the yield of all our taxes next year has compelled me to take a less optimistic view. Then the Hoover plan, which has affected our balance sheet on both sides, was not taken into account by the May Committee and the unemployment figures have become worse, and we are basing our estimates upon a higher figure than the figure that was taken by the May Committee.