§ Twelve months ago I had to report to the Committee that the outturn of the year resulted in a deficit of £32,000,000. This year I am in the happy position of being able to present almost exactly the opposite case, for I find myself at the end of the year in possession of a surplus of £31,148,000, being the difference between the revenue of £724,567,000 and 907 the expenditure of £693,419,000. But this surplus of £31,000,000 does not really represent the true figure. Last year, £224,000,000 was provided for the service of the Debt, and, in accordance with the law, the whole of that sum was issued from the Exchequer; but the actual cost of interest and management of the Debt was just under £213,000,000, and, after meeting the payments to the United States Government of £3,300,000, I was still left with sufficient funds to defray out of the Exchequer the statutory Sinking Funds, which amounted to £7,700,000.
§ It was therefore unnecessary for me to use the power which I had been given by Parliament to borrow for the purpose of meeting the contractual Sinking Funds; they were paid, instead, out of income, and the real surplus may be put at about £39,000,000. As I shall explain at a later stage, we cannot expect that this abnormal cheapness of interest rates on the National Debt will continue indefinitely, but in the meantime I think it may fairly be counted among the gains which have resulted from the earlier measures taken by the Government to restore the national credit.
§ I will now give the Committee a brief account of the accounts for 1933–34. Beginning with the expenditure side, the Consolidated Fund Services other than Debt amounted to £10,719,000, and Supply Services to £458,700,000; and these two figures, together with the Fixed Debt Charge of £224,000,000, built up the total expenditure of £693,419,000. There was a saving on the Supply Services of £4,500,000, which was more than sufficient to cover the Supplementary Estimates of £3,400,000 which were found to be necessary. There was no exceptional saving upon any of the Votes, but I may mention that the decrease in unemployment which was such a feature of the year, and especially of the latter part of the year, was reflected in the fact that the expenditure on transitional payments was down by £3,300,000, and it was also found to be unnecessary to issue to the Unemployment Fund the deficiency grant of £1,300,000 for which I had provided.
§ On the revenue side, the receipts showed an excess over the Estimates of £25,800,000, towards which Customs and Excise provided a surplus of £17,000,000, including £7,000,000 from the duties under 908 the Import Duties Act, the Ottawa Agreements Act, and the Irish Free State (Special Duties) Act. I do not think it is to be wondered at that our estimates of the yield of these duties were not very accurate. We had an extremely short experience of the working of all these Acts, and what experience we had had been somewhat disappointing; but, in the event, the expansion of trade and the rise in the price level produced their effect, and we got a surplus of nearly £4,000,000 from the Import Duties Act, over £2,000,000 from the Ottawa Agreements Act, and £1,000,000 from the Irish Free State (Special Duties) Act.
§ The next largest increase in Customs and Excise revenue came from beer. It yielded nearly £5,000,000 more than I had expected. The Committee will remember that last year I lowered and remodelled the Beer Duty, in the hope of arresting that downward trend in the revenue which had been going on since 1929, and which had shown a precipitate fall after the emergency Budget of 1931. For that purpose I so rearranged the duty as to make it possible both to reduce the price and also to improve the quality of the beer, in the hope that, if I could not increase the consumption, I should at any rate stop the decline. I am glad to say that my anticipation has been more than fulfilled. The price of beer has been reduced by 1d. a pint, and the gravity of all beers has risen by 1½degrees on the average, a figure which, I may say, masks an even higher rise in the case of particular beers, because there has been, as was rather to be expected, a certain shift in taste during the past year from the heavier to the lighter beers. Consumption was reinforced by the expansion of trade and by the climatic conditions of last year; which resulted in its being increased by about one-sixth. I need only add that I understand that the brewers generally, in accordance with the promise which was made to me by the Brewers' Society at the time of the last Budget, have purchased substantially more British barley, or malt made from British barley, in the last year than in the previous year.
§ The Oil Duty produced a surplus of £2,700,000, and towards that the new duty of 1d. a gallon on heavy oil produced a surplus of about £750,000. There was also a surplus on spirits, wines, 909 tobacco, silk, and liquor licence duties. On the other hand there was a deficit on tea and sugar. In the case of tea, the shortage, which amounted to about £350,000, is no doubt due to the restrictions on exports from India, Ceylon, and the Dutch East Indies, which have resulted in a considerable rise in the price of common tea. In the case of sugar, where the deficit amounted to nearly £1,000,000, that is to be ascribed mainly to the fact that a greater quantity of sugar came from the different parts of the Empire, carrying with it of course a preference, and therefore produced less income to me than if it had come from foreign sources.
§ Inland Revenue at £392,000,000 gives me £14,200,000 more than I had anticipated. I must point out, however, that that increase was not derived from Income Tax and Surtax. Of those two staple sources of revenue, Income Tax produced £229,000,000 and Surtax £52,500,000, and the produce of the two together was within seven-tenths of 1 per cent. of the figure at which I put the estimate. The fact is that in the case of these two taxes we are dealing with past profits and income, and therefore we can be sure that we can estimate beforehand with very considerable accuracy what the revenue is going to be. In the present case we knew that we had to take into account a fall in profits and income. We knew also that we should receive a smaller instalment in the January payment. Our anticipations have in fact been completely fulfilled by the actual outturn of the year. I would like to say that Income Tax payers have again shown a most commendable readiness to meet their obligation to the community, and there has been a definite improvement in the rate of collection which I hope now is going to be a permanent feature of the system.
§ It is the Death Duties which have provided the greatest excess in revenue received over revenue estimated. They produced £85,250,000, which was no less than £10,500,000 more than I had expected. But no doubt the Committee are aware that this was due to the fact that during the year we received the largest payment that has ever come from one single estate in the whole history of the Death Duties. We cannot expect a repetition of that occurrence another year. Stamp Duties reflected the increased Stock Exchange 910 activities and gave me £22,700,000 against the £20,400,000 which I had expected. I do not think I need make any comment upon any of the other items which constitute Inland Revenue, except perhaps to remark, that, in the case of Excess Profits Duty and Corporation Profits Tax, which have both been repealed, we are now only collecting arrears and those arrears must naturally be a continually dwindling asset.
§ The net receipt from the Post Office under the vigorous administration of my right hon. Friend the Postmaster-General, was £13,100,000, showing a net increase over the estimate of £1,400,000. I would like to say that in every month of the year the postal receipts were higher than in the year before. The Motor Vehicles Duties did better, which is another encouraging sign. Crown Lands fulfilled expectations, but Sundry Loans and Miscellaneous Receipts showed a shortage of £7,000,000. This however was mainly due to the fact that certain items of miscellaneous revenue for which I had estimated in the Budget did not actually fall into the year's receipts.
§ That completes my review of the income and expenditure for the year. As I have already stated, the result was a surplus of £31,000,000, which according to the law must be devoted to the redemption of debt, and will very nearly make good the £32,000,000 which I had to borrow in the year before in order to meet the deficit of that year.