§ The general account which I have given of the background of our finances makes it plain that our financial problems will not suddenly disappear at the end of the war and certainly not at the end of hostilities in Europe. So long as the war with Japan continues, the end of hostilities in Europe will make a much smaller difference to our war expenditure than might be supposed. We shall still require a great effort to beat Japan promptly over the vast area of the Eastern war. At the same time we shall be faced with demands for expenditure on some of those programmes of social and economic development upon which we are now working. The Committee therefore will not expect the Chancellor of the Exchequer, on the morrow of an armistice, to come down to this House and celebrate the occasion with proposals for the immediate reduction of taxation. Nor should we build up exaggerated hopes of an early lightening of our war-time tax burden. By pre-war standards, the general burden of taxation will have to remain high for some considerable time to come.
§ Nor will the demands of the post-war period end with high taxation. We are 671 not likely, indeed, to be able to meet our expenditure entirely out of revenue at first. We shall have to borrow. If we are to maintain the soundness of our present financial policy and to achieve borrowing without inflationary loss of values, saving will, also, have to continue on a high level. The need for saving will be reinforced by a shortage of consumption goods until industry has changed over from war to peace conditions. Unless we consistently follow a policy which will keep purchasing power within reasonable bounds, we shall face a runaway rise in prices, a feverish boom and then disillusion and bitterness. It would be no good to rely solely on Government controls to prevent that happening. Controls must start with self-control. If self-control is weakened, Government controls will be fighting a long battle against every form of selfishness in every section of the community.
§ But though we cannot expect, as individuals, an immediate easing of the burden of taxation when hostilities cease, there are vital preparations for reconstruction which we can make in the field of taxation, as in other fields. We must prepare such measures as we can devise to give industrial enterprise a fair chance to meet the challenge which the future holds for all of us. Industry is entitled to know where it stands, and there is, in my judgment, a very definite contribution which taxation policy can, and should, make to the problems of reconstruction.