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I now turn to the food subsidies—an important element in expenditure, on which much has been written and spoken, by persons other than myself, for the last month or two. Last April, I said in my Budget speech that I estimated the total of the food subsidies at £392 million, and that I hoped to keep the actual cost to the taxpayer this year within that estimate. The next day, the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), speaking from the front Opposition Bench, with the evident approval, as I remember, of hon. Members opposite, said this about the food subsidies:
Our national economy will never be on a satisfactory basis until they have been reduced to negligible proportions."—[OFFICIAL REPORT, 16th April, 1947; Vol. 436, c. 202.]
That is still the view of hon. Members opposite. That is the official Conservative opinion. I gather that is the general view. [Interruption.] I want to know how much support these independent Members on the Front Opposition Bench have got. Returning to the same subject, on 7th August, the same right hon. Gentleman declared that it was absolutely essential that I should make a determined effort to deal with what he called the "running sore of the food subsidies," and he added that these subsidies had created—and this is his phrase—a situation
as unsound and debilitating as if, in fact, we were all living on charity."—[OFFICIAL REPORT, 7th August, 1947; Vol. 441, c. 1703.]
That was his view and the view of hon. Gentlemen opposite. I have noticed that, since then, some newspapers have been running quite a sustained agitation in favour of the withdrawal of these subsidies, or, at least, of a very large reduction in their total. We on this side of the House do not take the same view of these subsidies as the right hon. Gentleman and his supporters.
§ We do not regard the food subsidies as being in themselves a waste of money, or a harmful distortion of our economy, or an insidious and debilitating form of charity to those who receive them. On the contrary, in a society such as ours, still disfigured by large inequalities of wealth and of need, these subsidies act, as it were, as a supplementary social service, as a stabiliser and as an equalising and tranquillising factor in our affairs. On this year's estimate of £382 million, they are worth no less than £8 per head of our population—as I said last week in reply to a Question—or 12s. 6d. a week in aid of the household budget of a family of four persons. The food subsidies have played an indispensable part in smoothing our transition from war to peace, which is not yet complete. Their complete abolition or drastic reduction at this time cannot be contemplated.
§ But, like all other good things, we have to consider how much we can afford to spend on them from time to time, taking everything into account in our national finances. The cost of the food subsidies rose from £99 million in 1941–42, the first full year in which they were paid, to £198 million in 1944–45. My predecessor at the Treasury, in his last year of office, was spending on food subsidies double the first full year's expenditure of Sir Kingsley Wood when he was Chancellor. In my period of office I have not quite doubled the expenditure of my predecessor in his last year. The cost rose to £266 million in 1945–46, to £345 million in 1946–47, and to £392 million this year. I intend to find that sum this year, but, in present conditions, it would be impossible to justify a further increase. If we were to let this upward drift continue unchecked, it could pull any Budget out of balance. And, as I have said already, it is imperative to have, next year, not only a balanced Budget, but a large Budget surplus. We cannot undertake indefinite and unlimited commitments, either for food subsidies or for any other item of public expenditure. The thing must be planned and accurately estimated. We cannot freeze prices here, particularly the price of imports, regardless of what is happening to prices outside this island. To some extent we can insulate, and have insulated, ourselves from the outside world and the effect of what is going on there. We will continue to try to do so; but we cannot do so to the complete 397 extent which I have indicated, and, for this reason amongst others, it is clearly impossible to decide at present what should be our expenditure on food subsidies next year.
§ In our administration of the subsidies the prices of particular articles and the rates of subsidy on each have never been regarded as unchangeable. They have, indeed, been constantly changed by ministerial orders from the Ministers concerned. We must maintain this discretion and flexibility within the agreed total expenditure. We must make the best use of that agreed total in the interests of those concerned. There is also, as I said last April in my Budget speech, and as past practice shows, much to be said for reducing the number of separate commodities on which price subsidies are paid, and concentrating the agreed expenditure, in larger amounts than would otherwise be possible, upon a small number of the most essential foodstuffs. That line of policy we will continue to pursue.
§ I would add that not all food subsidies are direct price subsidies. The total of £392 million of which I have spoken includes £33 million for the subsidy on animal feedingstuffs; £18 million for acreage payments to farmers in respect of various crops; and £8 million for subsidy on fertilisers. In addition, £38 million are being paid this year for milk and other vitamin subsidies for nursing mothers, infants and school children. This last payment is an integral and most valuable part of our social welfare service. I hope that there will be no dissent whatever from the view that, whatever else is modified, that expenditure should certainly not be modified in any degree.
§ I have been speaking so far about food subsidies. The subsidies on leather, cotton and wool, which come to £33 million, this year, will disappear next year. My right hon. Friend the President of the Board of Trade has already opened discussions with some of the industries and trades concerned, to ensure increased efficiency in these industries, tighter price control than now exists, and lower costs, particularly in distribution. In any case, whatever may be the outcome of these discussions with the trades concerned, it will be some months before any goods made of materials no longer subsidised appear in the shops.
398§ Looking at our national expenditure as a whole, there will, of course, be some increases next year, following introduction of the National Health Service and the new block grant. There will be an increase in expenditure on education, following the raising of the school leaving age, and possibly in other items. But I am working for a solid reduction in the total, a reduction so distributed between the items as to avoid damage to essential social interests. The Committee will also appreciate that some increase in national expenditure next year will be balanced by equal reductions in the expenditure from local rates, reductions which will lift the heaviest burdens from the backs of those least able to bear them, particularly in the poorer industrial areas and in the rural areas, and will place those burdens on the broad back of the nation as a whole. Next year there will be reductions in the rates all over the country, and the biggest reductions will come where the rates now are highest and the ratepayers poorest.
§ So much for expenditure. Now I will turn to the revenue, and to the increases in taxation which I propose. It is past four o'clock and the Stock Exchange will soon be shut.
§ Mr. Osborne (Louth)It closes at three o'clock.
§ Mr. DaltonThen it is already closed, and it is safe for me to proceed with this part of what I have to say.