§ I now turn to the Exchequer figures for the coming year on the basis of the present tax rates.
§ On this basis, Inland Revenue duties are estimated at £4,035 million, and Customs and Excise duties at £2,860 million. Motor vehicle duties are expected to contribute £180 million, and other revenue £277 million. Total revenue, on the basis of existing taxation, is, therefore, estimated at £7,352 million, which represents an increase of £462 million over last year's receipts.
§ On the expenditure side, Consolidated Fund services are expected to cost £839 million, an increase of £49 million on last year's estimate. Of this increase, £35 million represents the extra cost of servicing the National Debt and £15 million is the increase in Northern Ireland's share of the revenue.
§ Total Supply expenditure, as published in the Estimates already presented, is estimated at £6,549 million. This is an increase of £410 million, or 6.7 per cent., over last year's Budget estimate. The details are set out in the Financial Secretary's Memorandum, which we are continuing to improve and to develop. The biggest absolute increase is that of £161 252 million in the Defence budget: this is equivalent to nearly 9 per cent., including something over 3 per cent. for higher pay and prices.
§ The next biggest absolute increase is that of £93 million in non-specific grants to local authorities—the general grant, of which about 80 per cent. is for education, and the rate deficiency grants: the increase here is equivalent to about 10 per cent. of local authority rate income. The hospitals provision is up by £59 million, or about 11 per cent. The provision for universities and colleges of advanced technology is up by £34 million, or about 25 per cent.: the increase in the Vote for the universities alone is bigger than this entire Vote was 10 years ago. The Estimates for the roads are up by £32 million, or nearly 20 per cent.
§ These are the biggest increases. On the other side there has been a reduction of £44 million for agricultural support, due to the strengthening of market prices, and the saving of £29 million on the grants to the British Railways Board.
Total expenditure above the line in 1964–65 is estimated at £7,388 million. The estimate for total revenue being, as I have said, £7,352 million, there would be, on the basis of existing tax rates, a deficit of £36 million above the line. This compares with an estimated deficit of £90 million and a realised surplus of £73 million for last year.
§ The figures I have just quoted do not include the cost of developments which have taken place since the Estimates for 1964–65 were framed. First, the results of the Agricultural Price Review, which were announced on 18th March, will add about £7 million net to the cost of agricultural support by the Exchequer in 1964–65, and £4 million to the cost of welfare and school milk; and there will be additional expenditure of about £4 million on the hill sheep subsidy.
§ Secondly, agreements on Civil Service pay reached on the Civil Service National Whitley Council in February and March will cost an additional £17 million or so this year.
§ Thirdly, approximately £7 million will be needed to implement the salary recommendations of the National Incomes Commission for academic staff in universities and the colleges of advanced technology.253
§ Fourthly, there will be additional expenditure in 1964–65 on the fifth Polaris submarine, though the amount cannot be precisely estimated at this stage.
§ These additional items of expenditure must all be borne in mind. So, too, must the possibility that there may be further unforeseen additions to expenditure, as well as savings, during the year. Any necessary Supplementary Estimates will be presented to the House in due course.
§ The Estimates for receipts and payments below the line have been published in the recent White Paper—Cmnd. 2295. Net payments are expected to be £858 million, an increase of £307 million on last year's out-turn.
§ Here, I must call attention to a major change from last year. This arises from the new arrangements for lending to local authorities under the recent Public Works Loans Act. The effect on the Budget estimates as presented is to add about £165 million to the below the line deficit. As I have said, this is estimated for the coming year at £858 million; but on last year's basis it would have been roughly £700 million. This transfer of local authority borrowing from the market to the Exchequer does not affect the economy or the economic judgment upon which tax changes are based, as the addition to Exchequer borrowing is counterbalanced by an equal reduction in local authority calls on the market.
§ The effect of all this is that, at present tax rates, the prospective overall deficit, or net borrowing requirement, including the £165 million additional borrowing on behalf of the local authorities, would be £894 million. Those are the figures for last year and the estimates and revenue and expenditure for the coming year which set the framework for the main part of my Budget statement.