FINANCIAL STATEMENT. (Hansard, 20 April 1937)

§ The Chancellor of the Exchequer (Mr. Chamberlain)

In my financial statement this afternoon I shall follow the usual practice of reviewing the figures of the past year before considering the problems of the future. The Committee are already fully aware from the Debates on the Defence Loans Bill and the Defence Estimates, that last year, this year and for several years to come, the national finances have been, and must continue to be, dominated and governed by one overshadowing consideration, namely, the vast expenditure upon Defence in which we are engaged. That statement is illustrated at once by an examination of the out-turn of the last Budget. When I struck my final balance a year ago, I expected that, at the close of the year, I should find myself in possession of a small surplus, in spite of the fact that I had made provision for an increase of more than £50,000,000 in the Defence Services; but very early in the financial year it became apparent that that provision would be insufficient, and in July, in speaking upon the Third Reading of the Finance Bill, I indicated that a deficit was practically certain.

The actual realised Budget deficit was £5,597,000. If we are to get a true picture of the relations between current revenue and expenditure we must bear in mind the amount that is included in the expenditure for redemption of debt. It will be recollected that I made no specific provision in the Budget last year for the payment of the contractual Sinking Funds, and authority was given me by the Finance Act to borrow for that purpose; but in the end that power was not required. The £224,000,000, the amount of the Fixed Debt Charge, was found to have provided a margin, over and above the cost of management and interest, of £13,127,000, sufficient to meet the contractual Sinking Funds of £10,196,000 and to provide for a margin of £2,931,000. The true surplus, therefore, of current revenue over current 1602 ordinary expenditure, other than debt redemption, was £7,530,000. I might summarise the experiences of last year by saying that, broadly speaking, revenue fulfilled my anticipation, and that if it had not been for the excess of Defence expenditure over the provision I had made, which amounted to nearly £8,000,000, I should have ended the year with a formal surplus of nearly £2,250,000, after providing over £13,000,000 for the redemption of debt.