CAB129-37 — Page 483

Page 483

Page 483

Page 483

Circulated 8/11/49 at 1pm

NIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMEN

·Page 484 of 1097–

SECRET

C.P. (49) 221

8TH NOVEMBER, 1949

CABINET

-Page 484 of 1097-

COPY NO. 31

9

PUBLIC EXPENDITURE

Memorandum by the Lord President of the Council

Events of the past few months have underlined the fact that in present circumstances the burden of a Socialist Chancellor of the Exchequer has become exceedingly heavy. He is responsible for the Budget, for the control of public expenditure and for the entire co-ordination of our economic and financial policies at home and abroad. In addition he is in effect the supreme currency manager for a group of countries spread across the continents and responsible for a large part of the world's trade. In this last capacity he has no authority beyond his own persuasive powers and in negotiating with the much stronger and more prosperous dollar world he has not even the backing of a decent minimum reserve of gold and foreign exchange.

2.

His lack of elbow-room in foreign negotiations is almost matched by his lack of elbow-room at home. Circumstances have conspired to drive public expenditure, most of it desirable on merits, up to levels demanding taxation fully as high, as can be borne if revenue is to be maintained and savings encouraged. Thus there is little margin for readjustments, however necessary, and the whole structure of public finance tends to grow rigid. Unless we can relax this pressure, everything else we have done and plan still to do will be imperilled. It is, of course, obvious duty of all of us who are responsible for the spending of public money to regard ourselves as Ministers for Economy as much as for our own Departmental concerns. By trying to look at our own Estimates with a Treasury eye before allowing them to go forward we can do much to assist and relieve the Chancellor, and to help to restore financial equilibrium.

3.

an

The statement which I made with the concurrence and authority of the Prime Minister and the Chancellor of the Exchequer in the debate on the economic situation on 27th October, that there would be "a thorough comb-out of every service and every Department as the Estimates for the next financial year come forward", was well received by the House, and we can be confident that the more public evidence we can give in the next few months of action on these lines, the higher our standing as a Government will be. But if we do not take such action our reputation for sound progressive administration may well be gravely damaged.

Admonitions to Economy

LL.

We must make it clear that we are anxious for economies to be effected in the field of Government, expenditure and no doupage 484306109will impress upon their Page 484 da to press on with action on the lines indicated in the Prime Minister's recent memorandun (C.P.(49) 216).

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