§ I now come to the prospects for the year 1948–49 on the existing basis of taxation. I estimate expenditure for the year at £2,976 million. This is £205 million less than last April's estimate, and £233 less than the actual expenditure last year. This difference is the net result of substantial decreases and increases of individual items.
§ It is important that the Committee should realise that there are big and important savings forecast over a wide range of Government expenditure. The principal of these show the following savings by comparison with last year's estimates: National Debt (Interest Provision) million; Defence £206 million; War Pensions £7 million; Board of Trade commodity services million; Civil Defence and National Fire Service £17 million; Foreign Office (German Section) £55 million; Foreign and Imperial services—due to the run off of war terminal expenditure—£28 million; Fuel and Power (temporary services) £9 million; and Shipping and Inland Transport £25 million.
§ There are thus real and large savings, amounting in all to no less than £400 million, or nearly 13 per cent. as compared with last year's Estimates. Against these must be set the necessary increases of expenditure. These include £30 million for education, which no one will begrudge, and £14 million for housing. There are a number of miscellaneous increases, including, as a substantial item, the excess cost of the Post Office over 53 postal revenue, amounting to £8 million in all. But the big increase is the £143 million required for the new National Health Service. The total increases amount to about £195 million, or roughly half the total savings.
§ We have, I think, done everything practical to make as large a contribution as possible by economy of Government expenditure. We do not propose to cut the social services, as that is not in our view a fair or a desirable thing to do. We are proud of our record on the social services, and are anxious to improve on it. We must, however, have regard to the fact that, for the present, Defence expenditure is necessarily running at a high level—though it is coming down—and that we have already initiated, since the war, extended social services, which have not yet by any means reached the limits of their claims on our resources. We cannot, at the present time and in the present difficult situation, reduce materially the cost of rationing and other administrative controls. If any critics take the view that we should still further reduce Government expenditure, I hope they will be prepared to give details of the precise expenditure that they say we should reduce.
§ Taking the several heads of expenditure, I propose to provide £500 million for interest and management of the Debt. Miscellaneous Consolidated Fund services will take £34 million; £693 million is provided for Defence—the details of which have recently been fully discussed. Civil and Revenue Estimates require £1,749 million, a net increase of £23 million over last year's estimates, but a net decrease of £50 million on actual expenditure. All these items total, as I have said, £2,976 million. I have just given the figures for the Debt and Defence; the rest can be analysed as follows: £408 million is accounted for by grants to local services—the increase here, of £32 million, over the 1947–48 Estimate is mainly accounted for by the growth of expenditure on Education; National Health Services, Insurance, Old Age Pensions, Family Allowances, and other social services, require £409 million—this is an increase of £145 million over last year's Estimate, entirely due to the bringing into operation of the new National Health Service; War Pensions are £87 million; the Ministry of Food accounts for £320 54 million, as against £334 million in the original Estimate last year, but here it must be borne in mind that the special item of £100 million for the Argentine came fortuitously into last year's accounts.
§ Food subsidies are estimated, in round figures, to amount to £400 million for the year. We have decided to continue these subsidies at this level, because we are convinced that though, in theory, they may be inflationary, in practice, they have, in the particular circumstances of today, precisely the opposite effect, since they restrain the demands, which would otherwise inevitably arise, for increased personal incomes to meet the increased cost of living. It must be remembered, in any consideration of cost of living figures, especially in comparison with other countries, that we are providing this sum annually out of taxation, which is equivalent to something like 12s. to 14s. a week for every family in the country, in addition to at least a like sum by way of social services.
§ If we add to the figures I have given £29 million for the cost of tax collection and £11 million for the excess of Post Office cost over revenue, the figures so far mentioned in this analysis add up to £2,457 million. This leaves £519 million of the total Budget Expenditure of £2,976 million still to be explained. The comparable figure for the 1947–8 estimate was £661 million, so that there is a net saving on these items of £142 million or 21½ per cent. over this group. An analysis of this total of £519 million will be found in Tables VIII (c) and (d) of the Financial Statement. It is too long to go into in detail at present. It covers a very wide range of services, some of them still affected by war circumstances, and in these we can look for further reductions. They will all continue to receive close examination throughout the year, to see what further economies can be made, but not at the cost of reducing the value of the social services.