A Tory Budget

For the first time in 50 years, because of Britain's economic crisis, Budget Day had been moved up early, before the new fiscal year begins. Members of the House of Commons overflowed the benches and squatted on their haunches in the gangways when Chancellor of the Exchequer Richard A. Butler strode in with an old red dispatch box in his hand. The ragged little red box was the same one in which keepers of the British Treasury since Gladstone's day have brought the annual budget to the House. Never did it contain one that was more grimly awaited.

A Little Lubrication. The day was crucial also for "Rab" Butler, who, at 49, is already crowding Anthony Eden as heir to Winston Churchill in the Conservative Party. The ordeal of the budget speech has made some politicians (outstanding example: Gladstone, in 1853), and unmade others. Rab Butler, a dryly confident man, disdained the traditional liquid comfort allowed Chancellors of the Exchequer on Budget Day: Disraeli nipped brandy; Gladstone used to ease the long, wordy way with sips of a mixture of eggs and sherry; Winston Churchill drank a weak mixture that looked suspiciously like brandy; Sir John Simon felt the need of a concoction of honey, lemon and brown sugar; abstemious Sir Stafford Cripps drank orange juice.

Rab Butler, as cool and austere as a London winter, primly sipped from a glass of water, and launched into a speech that was to veer Britain away from six years of Socialist economics.

New Sacrifices. Quickly he reviewed the past twelve months of Laborite rule: "Unfortunately," he said, " 'Great Expectations' was followed by 'Bleak House.' " Then he painted a picture of Britain's bleak house--a massive rearmament program piled on top of an already overstrained economy, a country galloping toward hopeless indebtedness to the outside world and runaway inflation at home. Matter-of-factly he called for new sacrifices.

P: A -L-100 million cut in British imports.

P: A drastic increase in the British bank rate--from 2 1/2% to 4%--to make bank borrowing costlier and credit tighter.

P: A hefty (30%) excess profits tax on business and industry.

P: A 9-c- increase in gasoline taxes. Gas will now cost 59 1/2-c- a gallon. Also increased: taxes on tickets to cricket and soccer games, telegrams, telephone calls.

So far the news was bad, but not catastrophic; the House rustled with uneasy expectations. But Chancellor Butler was not yet done. "We mean to try to take a new line to get us out of our difficulties," he told Britons. "I am asking you to face up to the reality of what things cost . . ."

On the Opposition benches, the Laborites stirred uncomfortably as Rab Butler recalled some words of Sir Stafford Cripps --words that were critical of the great funds the government was spending on food subsidies, a wartime device which the Laborites continued in peacetime to keep prices low in the marketplace. Then Butler let the ax blade fall.

A Nine-Cent Loaf. The new government, he announced, will cut the annual outlay for food subsidies from -L-410 million down to -L-250 million, a slash of 39%; prices will be allowed to rise in the marketplace accordingly. It means, Butler reckoned, that the food bill of every Briton will rise immediately by about 21-c- a week. Sample increases: milk from 14-c- to 15-c- a quart; stewing beef from 23-c- to 28-c- a pound; bread from 7-c- to 9-c-.

The Opposition exploded with a roar. "Woolton! Woolton!" stormed Laborites, shaking their fists at the Peers' Gallery where, next to the Duke of Edinburgh, looking down on the budget proceeding, sat Lord Woolton, one of the powers in the Tory Party. As wartime Minister of Food, Woolton had introduced food subsidies ; during last autumn's election campaign he said emphatically that the Conservatives did not plan to cut them. "More broken promises!" cried a Labor M.P.

Rab Butler was howled down three times before he could proceed. But soon, unruffled and undiscouraged, he continued with some good news. The government intended to ease the burden by:

P: Raising family allowances from five to eight shillings ($1.12) a week for each child after the first.

P:Increasing old-age and widows' pensions.

P: Reducing income taxes in the middle-and lower-income groups, and exempting 2,000,000 Britons from paying any income tax at all.

A Big Carrot. Here, in the rejuggling of subsidies and taxes, was the key to Rab Butler's budget. After six years of Socialist Labor's policy of "fair shares for all," Britain was switching back to an economy based on greater rewards for harder work. The new taxes were rigged to encourage overtime work, which in the past had been discouraged by tax rates. If it encourages coal miners, for example, to produce only 10% more coal, that alone would go a long way toward erasing the deficit in the international balance of payments.

"Restriction and austerity are not enough," concluded Rab Butler. "We want a system which offers us both more realism and more hope." He sat down to thunderous cheers from the government side of Commons.

His policy was both courageous and clever--courageous because it risked the Conservatives' popularity by putting up the food bill, clever because it softened that with concessions and incentives that the Opposition would find hard to attack. Example: exactly half of the -L-160 million saved by cutting food subsidies will be given back to the people in the form of increased social benefits. The Laborites, convinced that they were watching the beginning of the shrinking of their welfare state, pounced to the attack. Their theme, as set next day by former Chancellor Hugh Gaitskell: the budget "is a lamentable move to take from the poor people and give to the wealthier."

But it was outside the House of Commons, in the terrifying maze of supply & demand, production and incentive, sterling and dollar, that the real test of Britain's new policy would be made. On that testing ground, the contents of Rab Butler's little red box last week scored an almost immediate, if tentative, success. Three days after the budget box was opened. Britain's pound sterling climbed in the world market to its highest level since before devaluation in September 1949. In New York, it rose to $2.81 1/8, more than a penny above par.

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