§ The net result of the minor changes about which I have been speaking is to increase the revenue by £1,025,000, thus reducing the deficit to £20,266,000. I may say at once that I propose to cover that deficit out of the revenue of the year. In ordinary times and under normal conditions a statement like that would go without saying, but these are not ordinary times. In ordinary times 53 I might have been content to make provision for a gap, which is not of immoderate dimensions, in this Budget and to leave the finance of future years to be decided when conditions could be more accurately foreseen than they can he now. But we are already entering upon new commitments which, in the course of the next few years, are going to involve an expenditure of very great sums, and if now I were to remain silent as to the methods by which that cost might be financed, it seems to me very possible that the public might draw quite erroneous conclusions as to their effect upon the trade and industry of the country. Therefore, while anything I may say now cannot commit any future Government or, indeed, any individual who may hereafter hold the office I am occupying to-day, I think it is only right that I should give the Committee an outline of the ideas which, as it seems to me now, ought to govern the method of financing the future cost of the defence programme.
§ Some of the figures which I have given to the Committee contain features which cannot but be gratifying to all classes of His Majesty's subjects. The buoyancy of the revenue has enabled me to provide not only for a substantial and a sustained increase in social services, but for the heavily increased cost of defence which in the last two years has risen by no less than £44,000,000. We have been able to pay this increased premium for our security without adding to our burdens which, indeed, have been considerably lightened in the course of those two years. All the same, if we had been able to keep the Estimates for the defence services at their previous level, we should have had available to-day a large sum of money for the relief of taxation. To that extent it may be said that the present generation of taxpayers is already shouldering its own liabilities at a very serious sacrifice to itself.
§ In the Statement relating to Defence which was presented to Parliament in March the Government entered at some considerable length into the reasons for which they deemed it necessary to enter upon the largest programme of defence ever undertaken by this country in peace time. To put it in a single sentence, we had to fill the gaps which had been left 54 by the deliberate policy of successive Governments over a long period of years, and we had to prepare ourselves against new risks involved in its initial stages by the policy of collective security to which we have been looking to rid us ultimately of the spectre of war. It follows that the defence programme arises out of two causes: first, a gap, a legacy left from the past, which the past in its time was either unwilling or unable to bear; and, secondly, the development of a new policy the benefits of which we hope will inure to posterity but the initial cost of which will have to be met at once. Both of these circumstances are exceptional and both, in my judgment, are such as to make it inequitable that the whole cost of this great programme, which has to be carried through in a very short time, should fall upon the revenue which has to be extracted from the people in the course of a single five-year period.
§ On the other hand, it also seems to me to be neither just nor in accordance with the sound principles of finance upon which the improvement in our fortunes has been built up that we should light-heartedly push off the whole of this burden on to the shoulders of those who are to come after us. Unless it is possible to come to some agreement upon a general scheme of disarmament, the cost of defence is going to rise swiftly during the next few years to a peak, and after that it will begin to descend. The important point to bear in mind is that it will not descend to the old level. As was stated in the concluding words of the White Paper, it must be anticipated that the annual cost of maintenance of the reorganised forces will in all likelihood substantially exceed the £158,000,000 which was provided for in the original Estimates of this year.
§ It is clear that in each year we must find out of revenue this rising cost of maintenance. How much in addition to that we ought to find out of revenue for the emergency expenditure in any particular year, I am not now prepared to assess. It must depend upon conditions which cannot now be accurately stated. But in coming to a decision in the future it seems to me that it will be necessary to bear in mind that to raise taxation to a level which would seriously cripple the industry of this country would be to do a very ill service to posterity. I conclude, then, that in future years, a part of this emergency expenditure, the amount of 55 which must be determined from time to time in the light of the considerations I have put before the Committee, may properly be met out of loan. If in the meantime we have shown our readiness to bear our proper share of an exceptional burden by utilising for that purpose our expanding revenue and, perhaps, by submitting to some fresh sacrifices, then I am positive we will neither suffer loss of credit in the present nor incur the reproaches of our successors hereafter.