ENGLAND'S FINANCIAL RECORD
By VISCOUNT SNOWDEN THIS is a Christmas Number of The Spectator. It would be out of harmony with the spirit of the season to indulge in party controversy. There is much in the national and international situation which causes grave disquietude; but for the time being it is more agree- able to turn to other matters from which we can derive satisfaction and encouragement.
A survey of the financial record of this country since the end of the War fills one with admiration for the courage and fortitude with which the nation has faced its difficulties and made tremendous sacrifices to over- come them. No other country was left with such an onerous burden as a legacy of the War. " We shouldered not only our own costs of the War but accepted vast commitments on behalf of our Allies. The Peace left us with an incredible Debt of £8,000 millions and National Taxation four times higher than before the War. Both our War Debt and War Taxation were twice as high as that of any other country which had been our Ally in that tragic adventure. If before the War any financial authority had contemplated such an expenditure on War, and such a burden of debt and taxation, he would without hesitation have said that it would be beyond the capacity of the country to bear, and would certainly involve national bankruptcy.
But after the end of the War and until the world financial crash came in 1929 Great Britain was suffering comparatively little from the consequences of the War and from the heavy burden of debt and taxation, that is by comparison with what might have been expected. The revenue receipts were being fairly well maintained ; taxation was being reduced ; debt was being redeemed by a substantial annual amortisation ; our foreign trade was moderately well maintained ; the savings of the people were higher than ever before ; the Building Societies were expanding their activities beyond all precedent ; and by all appearances the standard of living of all classes had risen from pre-War days.
These times were full of paradoxes, and it was difficult to find explanations of many of the phenomena. Perhaps the most plausible explanation was that much of the national expenditure found its_way back into the pockets of the people and became available for personal expen- diture. The huge payment of about £300 millions a year for interest on the National Debt was a transaction of that description, as the Debt was almost wholly internal.
The same reasoning applies to many other large items of post-War national expenditure. The sums now spent on what we call the " social services " amount to a colossal figure, and the increase has taken place mainly since the end of the War. It might have been assumed that the burden of the War Debt and the heavy taxation required to meet the charges for it would have had the effect of deterring expenditure on the social services. But the contrary seems to have been the result. This is probably due to the awakening of the social conscience to the existence of grave evils.
From 1900 to 1910 the sum spent by the National Exchequer and the Local Authorities on social services rose from £32 millions to £55 millions. By 1920 the figure had risen five times, and by 1981 it had reached the incredible sum of £490 millions, apart from expenditure out of loans for capital purposes or out of capital receipts. An examination of the items making up this huge expendi- ture reveals some interesting facts. The only item which can be attributed directly to the War is the cost of War Pensions, which amounts to about £45 millions a year. The expenditure on Education has risen from £17 millions in 1910 to £103 millions in 1931 ; on Old Age Pensions (non-contributory) from £6,300,000 to £40 millions ; and the new Widows and Pensions Scheme involves an expen- diture of over £36 millions a year, to which the State makes a contribution of £13 millions a year.
There is no country in the world which has social ser- vices at all comparable with our own. Although much may yet remain to be done to make them more generous in some respects, it may be said with pride that we have mitigated the hardship of undeserved poverty for which little or no provision was made in the days before the War. In addition to the vast expenditure on what may be strictly called the social services the State has spent enormous sums since the War on the improvement of social amenities. There has been a revolution in trans- port, and to facilitate this the State and the Local Authori- ties have spent on the maintenance and improvement of the roads and the making of new and magnificent high- ways a sum of over £500 millions since the War. Though so much urgently needs to be done to improve Housing conditions, we must record the fact that over two million new houses have been built since the War, largely with financial assistance given by the State and the Local Authorities. The State subsidy to Housing alone since the War has amounted to about £200 millions. All the vast increase in expenditure on the services mentioned has been incurred by a nation heavily burdened by national taxation and local rates. National taxation is four times higher than before the War. All classes of the community have borne this added burden with highly commendable fortitude and resignation.
When the financial crisis came upon us in 1931 the country was called upon to make unparalleled sacrifices, and it rose to the occasion with a courage which showed in a magnificent way the indomitable spirit of the British race in facing great tasks. The nation was called upon to balance a Budget with a deficit of £170 millions, and by economies and increased taxation spread over all classes that gulf was bridged. That was done at a time when most other nations with larger deficits were shirking their troubles by adding to their debt. It is worth noting, on the contrary, that in this difficult situation we made provision in this Budget for a sum of £32,500,000 for repayment of debt out of revenue which needed over sixpence in the pound on the income tax.
During the War, and since the War, this country has taxed itself per head of the population twice as high as that of any other country. In Income Tax and Sur-Tax more than half the annual income of a very rich man is taken by taxation and at his death half his estate is appro- priated by the Exchequer. Customs and Excise Duties, which are paid in the main by the working classes, amount to more than the total National Revenue before the War. The amount now spent upon the Social Services is more than the whole national expenditure in those years.
These facts show something of the sacrifices which the taxpayers are making for the cost of the War and for the cost of raising the standard of life of the poorer section of our population.
But there is one other fact which must be mentioned because it shows perhaps more strikingly than anything else the determination of the British people to respond to every appeal to maintain national solvency. The success of the operation by which £2.000 millions of 5 per cent. War Loan was converted into a 31 Stock was the most g;gantic and most successful transaction of the kind ever undertaken. It involved a considerable loss of income on the part of the holders of the old Stock, many of them comparatively poor people, but the response was practically unanimous. This transaction has enabled a reduction of sixpence in the pound on the Income Tax to be made.
Looking back on the financial record of our country during the last fourteen years we have every reason to congratulate ourselves upon it. We have maintained the reputation of Great Britain for financial probity and borne heavy burdens to meet our obligations. Most striking of all, we have at the same time pursued a steady policy of social amelioration which has brought succour to millions of the poorer part of our population.
It is pleasant to look on this side of the picture, for it shows that the hearts of the British people arc sound at the core.
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