§ Having now completed my review of our economic condition, I come to the Budget itself, and I will start by giving the Committee the outturn for 1949–50. The main figures I am about to quote will be found upon pages 4 and 5 of the Blue Paper.
§ The Committee will notice that we have continued this year the alternative classification of receipts and payments which is designed to show the true revenue surplus. A good deal of technical work has been done with regard to this alternative classification, but it has not yet, I think, reached a stage when we can with any certainty select the best permanent form for our Budget accounts. It is for that reason that we have this year continued the two alternative forms.
§ The surpluses actually realised last year were, above the line, £549 million, true revenue surplus £518 million and overall surplus £62 million. Those all mark, as the Committee can see, an improvement upon the estimated figures, of £470 million, £492 million and £14 million, respectively. But though the out-turn is better than we expected, this does not mean that the original expenditure estimated was not exceeded. In fact the total expenditure exceeded the total estimates by £67 million, but this was, fortunately, more than offset by increases in revenue.
§ Total revenue exceeded the estimates by £146 million at £3,924 million. Customs and Excise Duties exceeded by £27 million in a total of £1,520 million. There was a shortfall in tobacco of £25 million, due to our cutting back the dollar purchases of tobacco last year, a very small excess of £6 million on alcoholic liquors and a surplus of £42 million on Purchase Tax. This latter reflects the increased sales of consumer goods to which I have already referred. The Betting Duties provided £2 million less than the estimate mainly due to the reduction in the average amount of stakes in the football pools. On the Inland Revenue side the receipts at £2,111 million show a small excess of £26 million.
55§ Income Tax receipts were £52 million below estimate, due to an over estimate of profits for 1948. The continual rise in profits which had taken place since 1939 was halted during 1948, but this fact did not become apparent until after the estimates had been made last year. In view of this, it is at first sight surprising to.find that the yield of Profits Tax and Excess Profits Tax actually showed the largest excess of all—£57 million over the estimate of £240 million. The explanation of this apparent contradiction is threefold: First, quicker progress in clearing arrears of Excess Profits Tax; second, accelerated collection of Profits Tax; and finally the fact that the investment income of companies generally has proved much greater than was expected.
§ Surtax produced £10 million over the estimate, and Death Duties £14 million more. The yield of other taxes was reasonably near to the estimates. Non-tax revenue yielded £237 million, against the estimate of £145 million. This is, of course, a notoriously difficult field for estimating. The major increases of receipts over estimates were: £35 million from the sale of surplus stores, £30 million from trading services and £27 million miscellaneous revenue. Perhaps the most significant single individual item was a payment out of the surplus arising from the wool disposals scheme.
§ Coming now to the expenditure side, the outturn exceeded the Budget estimates, as I have said, by £67 million. The Consolidated Fund services were £11 million more than the estimate, but the major increase was on supply expenditure which, at £2,837 million, was £56 million more than the estimate. The House had an opportunity of examining and discussing the various Supplementary Estimates which contributed to this excess a few weeks ago, and I then stated that I could not give the figure of saving to set against the £170 million supplementaries until after the end of the year. That figure of saving was £114 million—so the net increase was £56 million.
§ There is one item below the line on the expenditure side to which I must refer, as it shows so marked a discrepancy from the estimate. This is loans to local authorities. The estimate of £220 million was exceeded by £52 million. We decided, as the Committee knows, to continue the favourable rate of interest on these loans, 56 at 3 per cent., to assist local authorities particularly to keep down their rents of new houses. This favourable rate of interest seems to have led some local authorities to draw more freely on the Local Loans Fund than was warranted by their actual needs, thus taking undue advantage of the special facility which we were providing for them. This could not, of course, be allowed to continue, so that steps were taken to ensure that local authority drawings on the Fund would match more closely their real needs.
§ It must be recognised that some of the internal reserves upon which the local authorities have hitherto been able to draw are now exhausted, so that we must expect their demand for loans to be somewhat higher than it has been. We believe, however, that with the continued co-operation of the local authorities the sum we intend to provide for the coming year of £279 million should suffice to meet all their needs.