THE COMING BUDGET.
RE is less than a week to the close of the financial rilear, and it is worth while to try to forecast the situation with which Mr. Lloyd George will have to deal in his coming Budget. Most of the elements of the problem are now public property. In particular, all the estimates of expenditure, except under the head of Consolidated Fund Services, have already been published. The cost of the Consolidated Fund Services varies little from year to year, and therefore, for convenience, this item may be taken at the same figure as last year. On this supposition, the aggregate total expenditure for the year 1914-15 will be X205,519,000. The corresponding Budget Estimate for 1913-14 was X195,640,000. Thus, apart from any further expenditure that may be announced in the Budget, the expenditure for the coming year is, in round figures, X10,000,000 in excess of the sum originally asked for in the year now ending. It is im- portant to add that this original sum has been increased in the course of the year by Supplementary Estimates amounting in the aggregate to nearly X3,500,000, so that the corrected estimate of expenditure for the current year is X199,011,000. The first question to be asked is whether the revenue now in sight for the present year will suffice to meet the expenditure now in sight. According to the last figures published in the London Gazette, the total receipts into the Exchequer down to March 21st, 1914, were X191,867,000, as compared with £183,840,000 for the corresponding period of the previous year. Thus there has been an increase of revenue of, roughly, X8,000,000 even before the financial year is quite concluded. Turning back to Mr. Lloyd George's Budget statement on April 22nd, 1913, it will be seen that he estimated for an increase of X6,023,000 over the realized revenue of the preceding year: This estimate was criticized at the time by many persons (including ourselves) as unduly optimistic, but it will be seen that Mr. Lloyd George and his advisers took a sounder view in this matter than his critics. He is already nearly X2,000,000 to the good as compared with his estimate, and the chances are that the eight working days between March 21st and March 31st will still further improve his position. To this extent, therefore, he is justified.; but it still remains to be asked whether the revenue will yield sufficient to meet the increased expenditure imposed upon the country
by the Supplementary Estimates of the present Session. That is a question which the present week will determine. As stated above, the corrected estimate of expenditure for the current year is £199,011,000. This is arrived at by adding together the Budget Estimates and Supple- mentary Estimates ; but invariably some saving is made on the sums granted by Parliament, so that we may put the probable expenditure at about £198,500,000. The revenue up to date, as already mentioned, is £191,867,000, so that, if Mr. Lloyd George and his officials in the Revenue Departments can succeed in raking in another seven millions for the last eight working days of the financial year, revenue will just cover expenditure. It will, however, be a close fit, and there is at least a possibility that the year may end with a small deficit. The more important issue is with regard to next year's finance, and here we move from the region of ascer- tained fact to the region of speculation. The question to be asked is to what extent can the Chancellor of the Exchequer calculate on a continued growth in the revenue derived from the present scale of taxation. There have been no changes in taxation for the last three years, and during these three years there has been a remarkable growth in revenue. In the year 1911-12 the Chancellor of the Exchequer received £3,469,000 more than his estimate. In the succeeding year 1912-13 he budgeted for an increase of £2,099,000, and obtained £3,712,000. In the year now ending he budgeted for an increase of £6,023,000, and, as far as can be seen, he will obtain an increase of certainly over £8,000,000, and possibly not less than £10,000,000. Parenthetically, it is worth while to note what a magnifi- cent testimony thesa figures furnish to the abounding prosperity of the country. Chancellors of the Exchequer are apt to take credit to themselves when the revenue yields more than the Budget estimate. As a matter of fact, to them discredit is rather due for the inaccuracy of their estimates. The whole credit belongs to the country itself, which has succeeded in creating new wealth with such rapidity that the old rate of taxation yields a larger revenue.
When we east our minds back to the talk of a few years ago of the decadence of England, and to the prophecies made that all her industries were on the verge of ruin, it is impossible not to feel a thrill of patriotic gratification at these proofs of the inherent soundness of our national industries and of the progressive enterprise of our people.
The facts are all the more significant when it is remem- bered that in the last year or two the country has experienced severe labour troubles, which have of necessity interrupted (and in some cases very seriously interrupted) the production of wealth. There is no reason, as far as can yet be foreseen, for anticipating that the present prosperity of trade is likely to receive a check. A few months ago there was a fairly general anticipation that the trade boom was coming to an end, but since that period confidence seems again to have revived, and most industries are busy and expecting to maintain the present level of activity. Nor is there any immediate prospect of labour disputes on so serious a scale as gravely to affect the prosperity of the country. Consequently it is legitimate to expect a very considerable growth of revenue in the current year. The actual figure which will be taken by the Treasury and the Chancellor of the Exchequer is, of course, a matter of speculation until the Budget statement is made. It is certain, however, that political reasons, if not financial reasons, will induce Mr. Lloyd George to put the figure as high as possible, so that he may avoid, if it can be avoided, the necessity of extra taxation. He has to meet, as above stated, an estimated expenditure of £205,519,000, and to this may be added grants to local authorities and to the National Insurance Commissioners, which have been vaguely promised, but not yet announced. In addition, he ought to allow, though he probably will not do so, for the practical certainty of Supplementary Estimates later in the year. This is one of the worst features of our modern finance. Twenty years ago Supplementary Estimates were habitual only for small sums arising out of literally unforeseen demands upon the public purse. Under Mr. Lloyd George's administration of the finances of the country the practice of allowing the Budget Estimates to be swollen later on by huge Supplementary Estimates has grown year
by year. In any event, an expenditure of not less than £206,000,000 ought to be allowed for. As far as can be foreseen, the revenue for the current year will not fall much short of £199,000,000, so that there would be an extra £7,000,000 to be provided next year. In view of the considerations above set forth with regard to the prosperity of the country, it would not be extravagant to estimate that at least the greater part of this sum will be made good by the natural growth of the revenue. In this event no new taxation may be necessary. It may be added that if Mr. Lloyd George, for reasons which may be apparent to the experts of the Treasury and not to outside critics, decides that he cannot count on such a large natural growth of revenue, he will probably still be able to avoid the painful necessity for new taxation by further cutting down the Sinking Fund. Unlike Mr. Asquith, the present Chancellor of the Exchequer has none of the old-fashioned Liberal enthusiasm for the reduction of Debt. He is perfectly willing to make his own political path smooth by throwing upon posterity obligations which the present generation ought to meet. He has already reduced the fixed charge for the Debt from £ 28,000,000 to £24,500,000, and be probably will not scruple to cut off more if the money is needed to balance his Budget Looking at the problem as a whole, the position from the national point of view is satisfactory in so far as it shows how the prosperity of the country, due to the enter- prise of individual British men and women, is able to keep pace with the enormous demands of the present Government upon the public purse. Those demands, it must be clearly borne in mind, are not primarily due to the necessities of national defence. The Army and Navy together in the coming year are estimated to cost £ 80,395,000. The rest of the public expenditure, includ- ing the estimates for the Civil Services and Revenue Departments and the Consolidated Fund charges, amounts to £125,124,000. These are the figures of a Liberal Budget. When the Unionists went out of office in 1905 the figures were as follows : Army and Navy, including loan expenditure, £73,000,000; other expenditure, £79,800,000; so that while the defensive expenditure has, under Liberal administration, increased by about £ 7,000,000, the other expenditure has increased by £45,300,000. Nor is this the whole story, for there will probably be a considerable sum taken in the ensuing year for capital expenditure on telephone account. For the moment, it is unnecessary to discuss how this sum of £45,000,000 is made up, or with what arguments Liberals defend it. The important point to insist on is the inaccuracy of the common Radical pretence that the growth of national expenditure is due to the demands of the Army and Navy.
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