A HOPEFUL BUDGET
IF the excitement of a Budget speech is measured by the new burdens it imposes on the tax-payer or by the relief it offers, then Sir John Anderson's statement must be judged unexciting. But from any other point of view it was instructive and impressive, showing not merely where we stand in the task of financing the war, but how this country must comport itself, in respect of ex- penditure, production and consumption, in the transition period between war and peace. We are on the brink of that change, but at the moment we are still ,at the peak of war expenditure and in no position to relax ; the Chancellor has to provide for that expenditure on the fullest scale in this Budget, but does not exclude the possibility of a revised Budget before the year is ended, when the course of world events is clearer. For the present we must continue to make no less a sacrifice than has been required of us throughout the war. In the whole of that period no less than 42 per cent, of the personal income of the community has been contributed to the war.by taxation or saving. In the year that has just ended the proportion of expenditure that has been met out of current revenue has reached the record of 53 per cent. ; and at that or approximately at that rate we must continue to pay till the end of the war with Germany, when the consequent reduction in war production will enable the Chancellor to offer some relief. The assumption that "the end of organised hostilities" will come in the early summer made it possible for Sir John Anderson to hazard a conjecture .that expenditure may be down by about £500,000,000, and a hint that something may be done in relief of the tax-payer later in the year. Some small concessions, which will not considerably affect the revenue, are in fact offered forthwith. The Chancellor recognises that many small and new enterprises have been hard hit by the incidence of excess profits tax, and therefore he offers a modest relief to businesses whose total profit is less than £12,000. To encourage the synthetic chemical industries the 'duties on hydro- carbon oils will be removed. Of great value to all concerned in trade with America is the arrangement made for the avoidance of a long-standing impediment—double taxation. This has been effected in the only satisfactory way, namely, by the negotiation of a treaty with the United States which provides for reciprocal action. At present no reduction in the motor tax is contemplated, but the decision has been taken to change over to a new basis for calculating the duties on motor-cars and goods vehicles. As to the future, Sir John Anderson was careful to explain that a pessimistic view of the coming burden of taxation is not necessary. It is encouraging to hear a Chancellor saying that he does not want a psychology to grow up based on the expectation of perpetual relentless taxation, and that he looks forward to the early alleviation of the existing heavy obstacles to enterprise. But at the same time he dwelt insistently on the nature of the conditions which must be satisfied. We have incurred heavy foreign liabilities, and the home consumer cannot run away with too many of the goods which are imperatively needed for the export trade. The balancing of accounts by an enterprising export trade is one of the first essentials.
Then, again, in the home field we can only afford to increase consumption gradually as we decrease our expenditure on war. The first step on the road to relief will be a resolute reduction of expenditure by war departments as quickly as the reduced calls of the war will permit. It will be necessary to think less and less of lavish State expznditure regardless of costs, and more and more of economy under Treasury control. (A caveat should be entered on the need of pursuing this necessary policy with discretion, and not in the too ruthless spirit of the "Geddes Axe.") It is well to be reminded that in peace as in war we shall always have to make a deliberate choice as to how our available resources are to be used. We can never consume more than there is. There will always be three calls on our resources—those made by the Govern- ment for all purposes, including the social services, those made for the capital equipment of industry, and those made by the ordinary consumer. In view of the fact that there will long be expenditure on the final stages of the war, that there are urgent needs for capital equipment and rehousing, and that our foreign accounts are unbalanced, it should be realised that it will be many years before we can return to the copious days of normal peace. We must therefore expect only a gradual relaxation of taxation, and it will be indispensable that savings should continue on a substantial scale. The people of this country can only hope to reap the full fruits of reconstruction by stages, foreseen and understood, beginning with consumption still restricted and production gradually mounting and becoming more fruitful as equipment is improved, reaching perhaps only in the third period of a long-range plan the age of plenty, which is our goal. The Chancellor is on the watch against inflation. He sees how it can be avoided if the wage-earner refrains from excessive demands. The prospects are hopeful enough if the nation remembers the lessons of the war, and braces itself for the strenuous tasks of peace. The first of those tasks, unless we are to relapse into an unworthy self-absorption, is the relief of a stricken Continent Our resources should prove equal even to that. IF the San Francisco Conference has been given an encouraging send-off by President Truman, it has met under a shadow cast by Marshal Stalin. Hopes for the success of the Conference should stand high. The resolution of the Three Great Powers at Moscow, followed by the long and detailed discussions at Dumbarton Oaks, have provided the essential groundwork, and though certain pro- posals, such as the veto conferred on each of the Great Powers in the matter of sanctions, are regrettable, there is general recognition that they must be accepted, at any rate as a temporary measure. But the whole basis of the success, not only of the Conference but of the World Organisation that should emerge from it, is agree- ment between the Great Powers. And the hard fact is that the Conference opens with unconcealed disagreement between the three principal Great Powers on a major issue. The treaty signed by Marshal Stalin and leaders of the Polish Lublin Government would be in every way an excellent document if those leaders were the generally acceptable spokesmen of the new Poland. The document, however, is vitiated by the fact that they are not, and that to enter into such an engagement with them begs the question in dispute between Russia and the western Allies, and is an open departure from the Yalta agreement. Already the agreement had been undermined by the refusal of facilities for negotiation to the British and American members of the Commis- sion of Three, and by the rejection of all suggestions made by Britain or America, including that for the admission into the Polish Government of so moderate and Russophil a Pole as Mr. Mikolajczyk. Nor has any apparent effort been made to clear up the disappearance of the Polish Resistance leaders. It had been hoped, and it is still hoped, that the attendance of Mr. Molotov at San Francisco, and his talks (of which the first has already been held) with Mr. Eden and Mr. Stettinius, would lead to a solution of this intractable problem ; but nothing could have been better calculated to accen- tuate the difficulties than the renewed emphasis on a fait accomph when Russia's recognition of the Lublin Government was re-affirmed by the conclusion of the twenty-years' pact. To have taken such action at such a moment is undoubtedly to throw a cloud over the proceedings at San Francisco, which can only be removed if Mr. Molotov gets authority from Moscow to carry out the terms of the Yalta agreement.
Planned Production in India
It is satisfactory to know that on the economic side, if not yet on the political, the Government of India is well advanced in its plans of reconstruction. In India it is desirable for the Govern- ment to take the initiative over a wide range of economic activities on a scale which in Britain might be thought excessive even by some Socialists. Rapid industrialisation is recognised as essential if the standard of living is to become tolerable, and it is to be planned on the basis of a planned national economy. The Govern- ment will embark on its new policy of centralisation by taking over twenty main industries from the provincial governments, and bring- ing them under the Central Government. It is not only arma- ments industries, public utilities and railways, already for the most part in State ownership, which will be managed by the State, but also many other basic industries, such as those producing iron and steel, cars, tractors, machine tools, and many other commodities. In suitable cases the Government will provide loans where private capital is not forthcoming. It should be noted that it is proposed to deal in advance with the problem of the location of industry by licensing new factories and allocating industrial targets in such a way as to spread activities over the various regions, and produce a balanced economy in each. In regard to modern industry, India may still be regarded as a new country, but one with vast potentiali- ties. By planning ahead many evils may be averted, and by spending wisely much suitable production may be promoted. It would be a remarkable thing if India, starting in a certain sense from scratch, were able to achieve the objects of the planner more fully than can be done in this country, which is tied to conditions largely prescribed by its past. The declaration of policy drawn up by the policy committee o the Labour Party for submission to the party conference at Whitsun is more moderate in its demands than those made at the conference of last December. Thus in its programme of nationalisation it does not propose to include the land, or all forms of banking, being content for the moment to demand that the Bank of England should be nationalised. The industries which are specifically named as ripe for public ownership are fuel and power, gas and electricity, inland transport, and iron and steel, while in regard to monopolies
and cartels in general the committee demands public supervision with the aim of advancing industrial efficiency. When it speaks of public ownership it does not make it at all clear whether it proposes direct State management, or—what is quite a different thing—management by public utility corporations ; nor is its in- tention made clear by the recognition of the danger of "red tape,' and the consequent need for "the better organisation of Govern- ment • departments." In favouring the adoption of the Uthwatt Report, it is in line both with the Liberal Party and a section of the Conservative Party. It adopts a virtuous if not very precise attitude to a wide range of enlightened activities, in regard to which one might suppose that it had a monopoly. When it insists on the raising of the school age to D5 at the earliest moment, it does not mention the fact that nothing prevents Mr. Butler from doing so at once except the physical impossibility of improvising school accommodation and teachers. Can the Labour Party produce rabbits out of hats? Indeed, the manifesto to a great extent relies on the peculiar virtue of being Labour. All would agree, for example, that "the nation needs a tremendous overhaul." "All parties say so," the statement admits, but—" the Labour Party mean it." The basic fact is that while the nation is anxious to get back as many freedoms as possible, the Labour Party is constructing several new strait- waistcoats for it.
Rent Control
The present law relating to rents and the rights of landlords and tenants is infinitely complex, and depends on a multitude of Acts of Parliament ; innumerable grievances have been created by provisions which were intended to remove grievances. A review of the whole situation such as has been undertaken by the Inter- Departmental Committee on Rent Control was urgently needed.
and action should be taken upon its report before demobilised men return to complicate the problem. The principle rightly accepted
by the Committee is that rent control must continue in some form as long as there is a serious shortage of houses ; and this leads to the conclusion that legislation should envisage control for a period of ten years, though relaxation in some circumstances might be called for sooner. Clarification of the law is just as necessary as amendment, and for that reason the proposed consolidation ot the Acts into one comprehensive Act is highly desirable. One of the most fruitful causes of dispute today is the law relating to the recovery by a landlord of possession of a house for his own occupa- thin ; at present a Court has to decide who will suffer the greater hardship. The Committee would settle this in favour of the landlord if he was in possession in September, 1939, but enables the Court to grant three months' grace to the tenant. All that one can say about this conclusion is that it will probably remove more grievances than it will create. One of the most .difficult problems is to find a means of controlling the rents of houses 'or parts of houses let furnished, and the solution is found by resort to tribunals appointed by the Secretary of State, some 230 of which will be needed ; it will be for these to fix fair rents for both furnished and unfurnished lettings. This, and the provision that local authorities should prepare and keep registers of current rents, imply a formidable nation-wide organisation, but one not too great in proportion to the magnitude of the problem. Early legislation is necessary. There are many debatable points, most of which can only be settled on the principle of the least hardship to the greatest number.
