An Industrial Budget
NOTHING comparable with Mr. Churchill's Budget for range and significance has been produced since Mr. Lloyd George's Budget of 1909. Mr. Lloyd George chaotically embedded in the finance of 1909 a scheme of social reform and called his effort the People's Budget. Mr. Churchill calls his latest Budget the Producers' Budget, and that is strictly what it is—an ably directed and economical effort to set the essential industries of the country on their legs again and by so doing to reduce unemployment.
From the very nature of the case this Budget, like Mr. Lloyd George's of 1909, is political as well as financial ; it involves an overhauling of the whole machinery of Local Government. The working out of all the details will appear in separate Bills, and no one can yet say how far these details will be open to criticism. What we can safely say at present is that Mr. Churchill has chosen the general methods of helping industry with extraordinary discrimination and expounded them with a brilliance that captured the whole House of Commons. If the Opposition should impede the passage of this Budget merely because it is produced by a Unionist Chancellor of the Exchequer, they will do a very bad turn to their country and will never again be able to say with the least plausibility that Unionists have no constructive ideas and do not attempt in any positive way to solve the problem of unemployment.
Should this industrial Budget do all that Mr. Churchill hopes of it, a considerable part of the Socialist's occupa- tion will be gone ; but that is no reason for an honest Socialist to oppose it. The parties which accuse Unionists of stupidity and want of faith and imagination are the last people who have the right to condemn a scheme from which the benefits will accrue slowly, though they ought to be immense and permanent. Mr. Churchill is not the man when he throws his bread upon the waters to keep hold of it with a very short but trustworthy piece of string. He looks far ahead ; he has attempted no bribery by attractive remissions of taxation such as have often been resorted to by a Government nearing the end of its time. His only baits are extra allowances to Income Tax- payers for children and a small reduction of the duty on imported sugar—both of them benefits which carry their own justification.
The soul of the Budget is, of course, the enormous relief to the rates on manufacturing industry and agri- culture. We have so often discussed the question of the rates on industry, not only from the point of view of their sheer burden, but from the point of view of their anomalous incidence, that we need not survey the ground again. We are confident that if there is any magic formula for producing a spurt in industry it is to be found in reform of the rates rather than of any other class of direct taxation. As for agriculture, our views were satisfied to some extent by past remissions, but the entire abolition of rates on land and agricultural buildings is a logical culmination and is extremely -welcome. For many years we argued—with little enough support—that the rating of agricultural land was an outrage, for it was really a rating of the raw material out of which the farmer produced his finished article. In some but not in all unions the manufacturer was rated on his machinery, but in every union the farmer was rated on the very means of production.
Of course, it will be said by the Opposition that the effect of the abolition of rates on agricultural land will be greatly to increase the value of the land and therefore to enrich the landowners. The Opposition will go on, no doubt, to demand that instead of the new petrol and paraffin duties for raising funds for the relief of rates there shall be a fresh attempt at taxing site values. We can only hope that the Opposition will not be listened to ; it is obvious that the ownership of agricultural land is not very profitable to anybody ; and as for the taxation of site values as a means of raising money, even Mr. Lloyd George admitted years ago that the principle had failed.
For years past the rates have been driving employers in the heavy industries, particularly, of course, in the north of England, to build factories in new places where they can escape the rates. The result for those who remain in the rate-burdened areas is that their case is worse than ever. They have to pay more than ever. The emigrants cannot be blamed, but the whole process is like a nightmare for irrationality. The factories in the over-rated urban districts were originally put there. for the simple reason that the site was highly desirable —it was near coal and near some great port. No remot4 district could be so desirable in itself—apart from the rates. Obviously the remedy is to do what Mr. Churchill is proposing. If the heavy industries can be brought back to life, the industrial future of the nation will be very bright, for, even while the " heavies " have been languishing, all kinds of new trades, not dependent upon the proximity of great coal-fields, have been springing into life, especially in the south of England. If the heavy industries and the new industries can both do well we ought to be better off than ever. All this may sound too good to be true, but this is what Mr. Churchill has in his mind, and we are grateful to him for it. The remission of three-quarters of the existing rates will cause life to run through many valleys of dead bones.
The basis of Local Government Reform, which Mr. Neville Chamberlain has already made familiar, is larger rating areas. The relief of the able-bodied poor will no doubt pass to the County Councils. It will be a good day for every large city when we can get rid of the principle that the contingent beneficiaries of Poor Law Relief vote their benefactors into office. All through the administration of Public Assistance, from the to downwards, money is allocated, not by elected but by appointed officials—until we arrive at the Poor Law. At the same time we ought not to be blind to the fact that though there have been countless abuses in the great towns, Guardians, particularly in country districts; have done noble work and have often put matchless experience of social conditions at the disposal of the State. The knowledge and ungrudging labour of the parson's wife, the doctor's wife, and so on, ought by no means to be lost under the new arrangement.
The Opposition is sure to demand that the whole relief of the poor shall be a responsibility of the Treasury and not of the County Councils. That is a most dangerous proposal. As completely as possible it would put local responsibility out of sight. Even as it is, there may be some danger in Mr. Churchill's plan. Local expenditure will come more out of general taxes and less out locally raised money. The public must see to it, there- fore, that local bodies are not composed mainly of men who have become indifferent to the amount of the rates.
Other striking points in the Budget are the return to the old method of paying off the National Debt, the new/ mode of presenting the national accounts and the fusion of the Treasury note issues with those of the Bank of England, on which subjects we have commented in our " News of the Week.". Finally, let us say a few words to the motorists. There will no doubt be an outcry against the increase in the price of petrol, but the money has to be found somewhere, and Mr. Churchill, faced with the necessity of collecting money from those more able to pay in order to relieve those less able to pay, has fixed upon the motorists. We not merely hope, but believe, that motorists in the mass will accept the new tax uncom- plainingly in the national interest. The standard price of petrol on Monday was ls. Oftd. a gallon. The new duty of 4d. a gallon will not bring petrol nearly up to the price at which it stood only two years ago, namely, ls. 74-d. Besides, a chance will now be given to the home producers of motor fuel. It may not be fanciful to say that here is the small beginning of a new era for the by-products of the coal-fields.
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