The National Accounts
The tale of the Civil Estimates of proposed expenditure in 1947-48 is at last complete, and together with the Service Estimates which have already been presented in the House of Commons they show the size of the bill which the nation will have to foot in the next financial year. The total ordinary expenditure will be £3,15o,000,00o, as compared with about £3,700,000,000 in the year now ending and L5,475,000,0o0 in 1945-46. It has already been announced that expenditure on the Services will be about £294,000,000 less next year than :this. Civil Estimates published in the past week show a fall of £338,500,000 in the net estimate for the Ministry of Supply and a rise of £35,244,0oo in the net estimate for the Ministry of Food. Food and other subsidies are expected to cost £313,00o,000. Also announced this week are a number of relatively small falls in the estimated expenditure on the Control Office for Germany and Austria, on the cost of shipping and inland transport services arising out of the war, and on U.N.R.R.A. How will the total bill of £3,15o,000,000 be met? One thing is clear. If there were no changes to come in the present scheme of taxes it would not be met at all. In all probability there would be a deficit of about L50,000,000. As compared with a probable deficit of over £400,00o,000 in the financial year now ending that does not sound much, but since the situation of suppressed infla- tion now prevailing calls at least for a balanced Budget and preferably for a large Budget surplus, the wiping out of the prospective deficit presents (or should present) the Chancellor with a real problem. How he will solve it, or even whether he will try to solve it, remains to be seen. Since some reduction in the standard rate of income tax and some increase in earned income allowances can hardly be avoided, the obvious way to avoid a deficit is to increase direct taxes, the most obvious victim of all being the tobacco duty. Such a policy would make the Government rather unpopular with its own supporters, but Mr. Dalton has something of a reputation for saying unpleasant things with an air.
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