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I come now to the momentous question: What am I to do with our surplus. I have given a great deal of anxious thought to the question of the distribution of the surplus, and I have formed the impression that a good many other people have been devoting their attention to the same subject. Quite a large proportion of them have been good enough to give me their advice, frequently coloured, as one would expect, by their own experience or their own interests. I hope that I have allowed my mind to consider freely all the suggestions that have been made to me, but in the end I came to the conclusion that I must found myself upon two general principles. The first of these principles I do not think I could put in better words than were used last December in an article written by my predecessor, Lord Snowden:
A surplus now must in justice be devoted, as far as it will allow, to relieving those classes who suffered when the crisis was acute.
The fact is, that the cuts in the rates of unemployment payments and in salaries and the additional taxation which was imposed at that time were considered by the Government of the day as a temporary expedient to meet a temporary emergency. They were accepted by the people of this country in that spirit. I do not myself interpret that understanding so literally as to feel compelled to put everything back exactly where it was before 1931. That would be to fetter the discretion of the Chancellor of the Exchequer in a way which would go far be-
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yond what is reasonable. Broadly speaking, however, I have considered myself precluded from considering other claims for relief, however well founded they may be, until something like the equivalent of restoration has taken place.
§ Hon. Members will have realised that the resources at my disposal this year are not sufficient to enable me to effect complete restoration, and that is where the second principle comes in. The measures to which I have alluded may be divided into two categories. On the one side there were the increases of taxation, and on the other side there were the various cuts in the rates of unemployment payments and in emoluments. My second principle is that, since I have not enough to effect complete restoration, what I have should be distributed as fairly as possible between these two categories in proportion to the contribution that each of them made.
§ I take first the question of the cuts. I propose to introduce legislation and Supplementary Estimates to provide for the restoration of one-half of those cuts as from the 1st July next. Leaving out the unemployed for the moment, the cost to the Treasury of this concession will be £5,500,000 in a full year and £4,000,000 this year—£4,000,000 being therefore the amount of the Supplementary Estimate.