HC Deb 26 April 1938 vol 335 cc44-6

I begin, therefore, with the outturn of last year. The revenue has amounted to a total of £872,580,000, representing an increase over the Budget estimate of nearly £9,500,000, and an increase of nearly £48,000,000 over the yield of the previous year. I will, if I may, make one further comparison. This total of £872,580,000 of revenue receipts in a single year is five times greater than the comparative figure a quarter of a century ago.

Taking the main heads of revenue, Customs and Excise produced £335,261,000, which is £2,250,000 above the estimate, and £14,500,000 more than the revenue of 1936£37. To some extent this yield of Customs and Excise was inflated by forestalments. But in general these figures bear witness to the improvement in trade and industry which characterised last year as a whole. The surplus was due principally to beer and tobacco, especially tobacco.

Viscountess Astor

Oh, no.

Sir J. Simon

Tobacco produced not far short of £83,000,000—£5, 500,000 more than the previous year. The duties on beef and veal and those levied under the Ottawa Agreements Act also yielded appreciably more than was expected. On the other hand, spirits drooped, and in fact yielded nearly £500,000 less than in 1936. Sugar also was disappointing. But, on the whole, the Customs and Excise revenue has more than justified the optimistic view of the prospects taken by my right hon. Friend a year ago. Inland Revenue duties yielded £471,346,000. That is almost £3,750,000 more than the Estimate. This £3,750,000 is the net result of a remarkable surplus on the yield of Income Tax of nearly £10,000,000 offset by short falls of £5,000,000 on Stamp Duties, £1,000,000 on Surtax and £500,000 on National Defence Contribution.

I must call the Committee's special attention to the Income Tax yield. The Income Tax yield of just £298,000,000 is, of course, very satisfactory indeed. Half of the £10,000,000 surplus that it shows is due to the fact that the incomes and profits of 1936 which came under charge in 1937 were greater than were estimated. The other half is to be attributed to an unexpectedly high proportion of payments made of tax due on 1st January before the end of the financial year. I made inquiries, and I am assured that this was not brought about by any exceptional pressure on the part of the collector. It is the general experience that the rate of collection of tax improves in times of good trade, and my advisers believe that this rapidity of collection in the early months of this year may also reflect the taxpayer's recognition that the present time is one in which it is of exceptional importance to the national finances that taxes should be promptly paid. The Committee will see that from my point of view there is another side to this; in so far as unusually prompt payments have brought the money in before 31st March that has increased the realised surplus, but has left over for collection in the present year a smaller amount of arrears. I have to allow for that.

Now I come to Surtax. The Surtax yield of £57,000,000 was £1,000,000 short of the estimate. It represents, however, a growth of about £3,500,000 over the yield in 1936 and of course the Committee will not forget that the Surtax lags a year behind the Income Tax. Accordingly the expansion of profits and incomes that contributed to the unexpectedly high yield of Income Tax in 1937 would in general have had no effect on the yield of Surtax last year. The out-turn of Stamp Duties has been extremely disappointing. They yielded only £24,000,000, as against a Budget Estimate of £29,000,000 and as against an actual yield of £29,000,000 in 1936. The drop is almost entirely due to a falling off in those Stamp Duties that are associated with Stock Exchange transactions. With regard to motor vehicles the duties yielded £34,500,000, £500,000 over the Estimate.

I come next to the Post Office. The Post Office net receipt was estimated at £11,800,000. On the expenditure side, the other side of the account, there was an estimated payment of £300,000 to be made to the Post Office Fund. That would have left an estimated net Budget receipt of £11,500,000. The actual net Budget receipt was £11,295,000, but it was arrived at in a different way, for that £11,295,000 included a transfer from the Post Office Fund to the Exchequer of £825,000. This is a complicated matter and the explanation of this result is that while the Post Office revenue continued to show a substantial expansion (though it fell somewhat short of the Estimate) Post Office expenditure has appreciably exceeded what it was estimated to be, mainly, I believe, owing to the requirements of the long-term development of the telephone system. These variations do not affect the liability of the Post Office Fund to make good to the Treasury the statutory amount of the fixed Exchequer contribution. The Committee will see from the Blue Print that Crown Lands brought in £1,330,000. Sundry Loans brought in £5,250,000, and Miscellaneous Revenue £13,500,000. These show increases of £13000,000 and L2,500,000 respectively as compared with the Estimate.

What is the general reflection, the general conclusion that should be drawn from this survey of last year's revenue? Good as the total revenue results for last year undoubtedly are, it would not be right to treat them as proving that the year was one of progressive and continuous improvement throughout. Income Tax and Surtax, of course, at the time they are received into the Exchequer reflect conditions of an earlier period. If one wants to get a better indication of the actual conditions one gets it from such items of revenue as Customs and Excise. Judging by this experience and especially in view of the knowledge of my advisers as to how the year has worked itself out it would appear that the first six months of the year were more prosperous than the second six months, though the latter were still good, and this is a trend which must be noted in forecasting the immediate future.