HC Deb 19 April 1932 vol 264 cc1412-6

I must now proceed to show how this remarkable result, which has produced a profound impression upon instructed opinion in all parts of the world, has been brought about; and, of course, in all cases the figures I shall take in making my comparison will be those of the September Estimates, and not those of April last. Taking first the Expenditure side, hon. Members will recollect that, under the Finance (No. 2) Bill of 1931, the Fixed Debt Charge was reduced from £355,000,000 to £322,000,000. That was due mainly to the fact that the provision for the Sinking Fund and the second half-yearly payment of interest on the American Debt were excluded from the Fixed Debt Charge, in accordance with the Hoover Moratorium; and it was also due to the fact that powers were taken to borrow for the redemption of the Victory Bonds which were tendered in payment of Death Duties. The reduced charge included a sum of £32,500,000 of Sinking Fund in order to meet our contractual obligations, and the whole of this has been duly provided from revenue.

When I come to the Supply Services, I find there one of the major factors in the happy result to which I have already alluded. Last September, the sum arrived at for Supply Services, after taking into account the increase due to the decisions which stopped the borrowing for the Unemployment Insurance Fund and the Road Fund, was £473,800,000 in round figures. That showed an increase of £34,000,000 over the sum estimated in the preceding April; but from it the National Government proposed to make economies amounting to £22,000,000, bringing the figure down to £451,800,000. But then there were Supplementary Estimates amounting to £514,000, which again raised the level, and so the final figure stood at £452,300,000. How far have the Estimates been realised? I would ask the Committee to recollect that we made a number of concessions in pay cuts, which cost us substantial sums, but, in spite of that, the economies have been more than made good, and, in addition, the reduction in the figures of unemployment came to our aid, so that in the end we were able to show, instead of economies of £22,000,000 savings amounting altogether to £34,500,000, the final Exchequer issues being £439,200,000. It will be seen, therefore, that the savings on the Expenditure side are responsible for more than the £9,000,000 by which we have exceeded the surplus anticipated by my Noble Friend, thus satisfactorily confounding the sceptics who believe that politicians only keep one kind of promise, namely, that they will spend more of the taxpayers' money than their predecessors did.

Now let us glance at the Revenue side. I will refer first to the less important items—Sundry Loans and Miscellaneous Receipts. Sundry Loans show a small falling off of £1,500,000, due to the postponement of certain repayments by Colonial Governments, which have since been received and which will be brought into account in 1932. Miscellaneous Receipts show a decline of nearly £13,000,000. That is owing to the fact, to which I have already alluded, that I only paid in £12,750,000 from the Exchange Fund, and, as the total amount, including accrued interest which was in the fund, was £37,750,000, there remained, at the beginning of the present financial year, exactly £25,000,000. I shall return to the subject of this account at a later stage in my observations. The Committee will not be surprised to notice that there is a reduction in the receipts of the Post Office of £700,000, which, of course, is due to the general decline in business.

I now pass to the Customs and Excise, which brought us in a satisfactory total of £256,052,000, showing an increase of £3,000,000 over the September estimate of £253,000,000. As no doubt hon. Members have already realised, a good part of that increase is due to measures which were not in the mind of my Noble Friend when he was framing his Estimates in September. Up to the end of March we collected from the Abnormal Importations Duties £1,165,000, from the Horticultural Products Duties £164,000, and from the 10 per cent. Revenue Tariff £760,000, making in all a little over £2,000,000 from these three classes of Import; Duties. As to the taxes which were increased by my Noble Friend, namely, those upon beer, tobacco, oils, and entertainments, all of them show an increase over the estimate with the exception of beer, and even beer has not done so badly as was anticipated by some enthusiasts. We expected a revenue from the increased duty of £4,500,000. Actually we have only got £3,200,000, but, after all, in these hard times £3,200,000 is not to be sneezed at, and I make my acknowledgment to those who, as they have told me, have paid more money for worse beer rather than disappoint expectations of the country. Two more duties I must mention which have proceeded in opposite directions. Spirits continued their downward path. [Interruption.] I hope my hon. Friend will keep up his spirits. They have given me over £1,000,000 less than was anticipated. On the other hand, the recent activities of sugar importers, into whose motives I do not think I need now inquire, have provided me with £1,300,000 more than I had expected. For further details of items in the Customs and Excise I may refer hon. Members to the White Paper which will be in their hands later in the afternoon.

When I come to the Inland Revenue I find myself in face of a cheerless and unexpected deficiency in one item, namely, the Death Duties. In September my Noble Friend estimated the yield from the Death Duties for the year at £83,000,000. That was itself a drop of £7,000,000 from the sum which he had put down for this item in April. But, as a matter of fact, we only obtained £65,000,000 from Death Duties and, therefore, suffered a drop of no less than £18,000,000. Of course, the estimate in the case of this particular item must always involve a certain amount of guess work, but it is founded upon the consideration of the average of a series of years. Only this year the average has been altogether upset by the tremendous depreciation in capital values, and particularly Stock Exchange values, which was accentuated for a time by the conditions that prevailed after the suspension of the Gold Standard. It will be realised that this has damaged the revenue twice over, first of all because the total of the value on which the assessment is made has declined, and, secondly, because with the decreased valuation you bring the duties down to a lower level of charge. To those two general causes there must also be added a particular one, namely, the unprecedented shrinkage in the number of millionaire estates which came into charge during the year. It is very puzzling. I cannot explain the circumstance, unless the very rich have entered into some sort of patriotic conspiracy to cling to life until their estates regain their normal contributory value. I have been tempted sometimes, in looking at these figures, to repeat the exclamation which was made by a British general in the Peninsular War. When his men showed signs of hesitation in obeying an order to charge, he shouted out to them, "Come on, you rascals, do you want to live for ever?"

To the £18,000,000 that I have lost from Death Duties I must add another £3,000,000 for the deficiency in the Stamp Duties. They have only given me £17,000,000, the lowest yield since the War. Here, again, we see the effects of the general depression in trade, which has resulted in a severe shrinkage of Stock Exchange activities and in the diminution of new issues for industrial capital. Putting these two items together, there is a loss of £21,000,000, a figure enough to wreck any Budget in ordinary times, but, as a matter of fact, this Budget has been saved by the Income Tax and Surtax payer. The Income Tax, at £287,400,000, has given me a surplus of £15,400,000, and the Surtax, at £76,700,000, is up nearly £4,000,000, and the history of this great achievement seems to me to be highly creditable to all who have been concerned in it. It was exceedingly difficult, when the second Budget was introduced in September, to say how much of the increased taxation could be gathered in during the financial year. The revised Budget came at a time of year when the ordinary work of assessment was nearing completion, and it was doubtful, to say the least of it, whether it would be possible to translate the new graduations in the tax into the assessments in time for collection on 1st January. Even suppose the assessments could be got through in time, still it remained doubtful how far the increased amount of the tax would affect the collection itself. In the end, thanks to great efforts on the part of all concerned, the Income Tax machine turned out the assessments in record time. Then the fate of the Budget de- pended on the willingness to pay of the taxpayer himself and everyone knows how nobly he has played his part. There was a magnificent response to the national appeal for early payment, and all alike, companies or individuals, the Surtax payers or people only with small incomes, showed that sense of duty and of citizenship for which we can always rely on the British people in times of crisis.

The effect of this early payment went a long way beyond merely providing a surplus in the Budget. These payments were made much earlier in the last quarter of the year than usual. At one time they reached such a flood that the collectors were unable to keep pace with the inflow in getting out receipts, quite a new and strange form of the embarrassment of riches. But I am not unaware—in fact, I have full evidence of it in my own post bag—that these heroic efforts must have entailed enormous mental anxieties in many small households which had to find the ways and means of meeting this tremendous strain upon their financial resources. I hope, at any rate, that they have this consolation to-day, that not only have these advances effected a substantial saving in the cost of all Treasury Bills, but that the stimulus of their example has braced and reinvigorated the spirits of people in many other lands and has led them to look again to Great Britain with fresh confidence and hope in her capacity to lead the world in overcoming their difficulties. The Income Tax payers and the Surtax payers do indeed deserve our thanks, but I should like also to tender my thanks to all officers engaged in assessment and collection of the tax. They had a great task imposed upon them, and they carried it out successfully in accordance with the best traditions of the public service.