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UNDER
LOCK A N D
KEY.
It is requested that special care may be taken to
ensure the secrecy of this document.
MOST SECRET.
CP.
255
COPY NO.
(51).
C A B I N E T
.
ECONOMY.
DRAFT WHITE PAPER.
Note by the
Secretary.
The a t t a c h e d r e v i s e d d r a f t embodies the amendments
recommended by the Conference of M i n i s t e r s a p p o i n t e d f o r
t h i s purpose ( R e f e r e n c e Cabinet 55 ( 5 1 ) Conclusion 5 ( e ) )
and approved by the Cabinet a t t h e i r meeting y e s t e r d a y
( R e f e r e n c e Cabinet 54 ( 5 1 ) C o n c l u s i o n 1 ) . . '
I t i s p r o p o s e d t o r e d r a f t p a r a g r a p h No.6. on page 14
on the Road Fund as f o l l o w s , i n o r d e r t o b r i n g the d r a f t s
i n t o the form adopted f o r the o t h e r s e r v i c e s : t!y
"(l)
Withdrawing promises of a s s i s t a n c e out
of the Road Fund to a number of schemes
which have been approved f o r grant-.'"""" "'""
81
'*
( 2 ) A u t h o r i s i n g a l o c a l a u t h o r i t y to g i v e
n o t i c e c a n c e l l i n g any " n o t i c e t o t r e a t "
s e r v e d upon o c c u p i e r s of l a n d In connec­
t i o n w i t h postponed r o a d improvement
schemes.
(3)
G i v i n g f a c i l i t i e s f o r an e x t e n s i o n of '
time l i m i t s imposed by s p e c i a l A c t s o f
P a r l i a m e n t or Orders having the e f f e c t
of an Act of P a r l i a m e n t , . "
( S i g n e d ) M.P.A.
HANKEY,
Secretary,
Cabinet.
TO BE
KEPT
UNDER
LOCK AND
KEY,.
It is requested that special care may be taken to
ensure the secrecy of this document.
MOST SECRET.
CP.
255
COPY NO.
(51).
C A B I N E T
.
ECONOMY,
DRAFT WHITE PAPER.
Note by the
Secretary.
The a t t a c h e d r e v i s e d d r a f t embodies t h e amendments
recommended b y t h e C o n f e r e n c e o f M i n i s t e r s a p p o i n t e d f o r
t h i s p u r p o s e ( R e f e r e n c e C a b i n e t 53 ( 3 1 ) C o n c l u s i o n 3 ( e ) )
and a p p r o v e d b y t h e C a b i n e t a t t h e i r m e e t i n g y e s t e r d a y
( R e f e r e n c e C a b i n e t 54 ( 3 1 ) C o n c l u s i o n 1 ) . . '
I t i s p r o p o s e d t o r e d r a f t p a r a g r a p h N o . 6 . on p a g e 14
on t h e Road Fund as f o l l o w s , i n o r d e r t o b r i n g t h e d r a f t /
i n t o the form adopted f o r the o t h e r s e r v i c e s : ­
"(l)
W i t h d r a w i n g p r o m i s e s o f a s s i s t a n c e out \
o f t h e Road Fund t o a number o f schemes \
w h i c h have b e e n a p p r o v e d f o r grant-.""""'"""^ I ­
*
I
(2) Authorising a l o c a l authority to give
n o t i c e c a n c e l l i n g any " n o t i c e t o . t r e a t "
s e r v e d upon o c c u p i e r s o f l a n d i n c o n n e c ­
t i o n w i t h p o s t p o n e d r o a d improvement
schemes.
(3)
G i v i n g f a c i l i t i e s f o r an e x t e n s i o n of '
t i m e l i m i t s imposed by s p e c i a l A c t s o f
P a r l i a m e n t or Orders having the e f f e c t
o f an A c t o f P a r l i a m e n t . . "
(Signed)
M.P.A.
HANKEY,
Secretary,
Cabinet.
M
o n
E
the
His
M
O
R
A
Measures
Majesty's
N
D
U
M
proposed
b y
G o v e r n m e n t
to secure
R E D U C T I O N S
N A T I O N A L
I N
E X P E N D I T U R E
Presented to Parliament
by the Financial Secretary to the Treasury
by Command of His Majesty
LONDON:
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1931
Price
Cmd.
Net
Memorandum on the Measures proposed by His
Majesty's Government to secure Reductions in
National Expenditure.
T h e following memorandum is divided into two parts. In the
first, the proposals of His Majesty's Government to secure reductions
of expenditure are explained and a.summary, of their effect is given.
In the second, the points which require legislation in connection with
these economies are set out and explanation given of the, action-which
will be taken under the powers squght in the National Economy Bill.
Summary
of
Effect
Expenditure
of
the
Measures
explained in t h e
for
Reduction
Succeeding
of
National
Paragraphs.
It is intended that the economies in pay, &c, shall take effect
from the 1st October, 1981. Effect will be given to the other
economy measures at the earliest possible dates and consequently, in
addition to the savings shown below for 1932, there will also be a
substantial saving in the current financial year. The exact figure
cannot be precisely estimated, but it is anticipated that it will be
some £22,000,000. The full saving for 1932 is as follows : -
Saving in 1932.
.­-
Reductions of Salaries, of Ministers,
£
Members of Parliament, Judges,
Civil Servants and Members of the
Defence Services
...
4,534,000
Defence Services (in addition to reduc­
tions of £3,(514,000 in pay and
5,000,000
pensions)
10,300,000
Education (Great Britain)
Ministry of Health and Scottish Depart­
rnent of Health
...
1,250,000
500,000
Police (Great Britain)
...
150,000
University Grants
655,000
Agriculture (Great Britain)
...
...
478,000
Forestry
250,000
Empire Marketing Board
250,000
Colonial Development Fund
500,000
Unemployment Grants ...
...
...
Unemployment Insurance—
(a) Beduction of expenditure from
the Unemployment Fund ...
25,800,000
(b) Increased income of the Uneni­
ployment Fund from contri­
butions of employers and
workmen
.:. ' ...
...
10,000,000
Boad Fund
...
7,865,000
Miscellaneous
...
...
...
"...
2,500,000
Total
70,032,000
Reductions op Salaries of - Ministers and Members of
Parliament, Judges, Civil ' Servants and Members of the
Defence Services.
-
The Government propose that as from the 1st October,
1981, all ministerial salaries shall be reduced : by 20 per cent,
on salaries of £5,000 a year and over, by 10 per cent, on salaries of
112,000 a year and over, but less than .£5,000 a year, by .7J- per cent,
on salaries of £1,000 a year and over, but less than £2,000 a year;
iind that the allowances now payable to members of the House of
Commons shall be reduced by 5 per cent.
They propose, further, that abatements on the same graduated
scale—10 per cent, or 20 per cent., as the case may be—shall'be made
from the salaries of Judges and of officers of the four Crown
Services whose substantive pay is £2,000 a year or more.
With regard to the remuneration of members of the Crown
Services whose pay is Less than £2,000 a year, the Government have
decided to follow throughout the recommendations of the Committee
on National expenditure.
In the case of the Civil Service, provision has already been made
in the 1931 Estimates by the late Government for a 10-point drop
in cost of living bonus as from the 1st March, 1931, and for a further
5-point drop as from the 1st September. Assuming continued
payment of bonus at the rate to which it was reduced on the
1st September during the whole of 1932, there will be a further
saving that year of £800,000, in addition to that, secured on the
istimates for this year.
In the case of the Defence Services, the changes to be made will
take effect as from the 1st October and are briefly as follows :—
(i) Steps will be taken through the normal negotiating
machinery to review a preferential bonus of from 2s. to
4s. a week which has been paid in the Eoyal Dockyards
and Ordnance Factories since 1924.
(ii) New rates of pay, introduced in 1925 for the men and lower
ranks of officers in the services, were not then applied to
the existing personnel.
The 1925 rates will now be applied to all personnel.
(iii) Deductions made from the pay and pensions of officers in
respect of the fall in cost of living since 1919 will be
revised and brought into harmony with the current cost of
living index. The deduction from the 1st October, 1931,
will be based on the average of the index.figures published
for the six months the 1st March to the 31st August, 1931,
and will be 11 per cent! instead of the. 8 per cent, now
in force.
;
(iv) The pension rates of men in the Services will in future be
determined by the Scheme in force at the date when the
man enters upon his final engagement which qualifies
Wt.
so 40 9/31 F.O.P. 5955
s 3
him for pension. Men who before the 1st October, 1931.
had entered upon their final engagements to complete time
for pension will be entitled to reckon service prior to that
date on the rates introduced, in 1919.
(v) The increased rates of reserve pay authorised in 1919 for
Anny and Air Force reservists will be reduced as from
the 1st October, 1931, by 25 per cent.
The total savings in 1932 compared with the estimates for 1931
arising from the reductions of salaries of Ministers, Members of
Parliament, Judges, Civil Servants and Members of the Navy, Army
and Air Services are estimated to be £4.534,000.
Defence
Services.
A total reduction, including the reductions in emoluments and
pensions already specified, will be made in the Estimates for the
Defence Services in 1.932 of £8,600,000.
The Service Departments will secure savings on services other
than pay and pensions to the amount of approximately £5 millions.
They will secure these reductions in ways which will have the least
effect on the efficiency of the Services, but it must be appreciated
that, in view of the extensive reductions which the Services have
made in recent years, these further reductions can only be secured
with great difficulty, and many of the reductions made will not be
of a continuing character.
Education.
A total saving of £9,400,000 in a full year will be made in the
expenditure of the Board of Education.
(i) Grants in respect of the salaries of teachers will be calculated
on the assumption that as from the 1st October, 1931, there is a
deduction from the aggregate salary bill. The May Committee
recommended that such deduction should be 20 per cent. The
Government has carefully considered the position, and has reached
the conclusion that the deduction should be 15 per cent.
(ii) The Grant in respect of elementary teachers' salaries is
60 per cent. This grant will now be reduced to 50 per cent., but,
as this reduction of percentage would, notwithstanding the reduction
of salaries, increase the salary charge borne by local authorities,
adjustment will be made elsewhere in the grant formula with the
object of meeting this difficulty.
. (iii) The present 50 per cent, minimum limit of grant for
elementary education will be abolished.
(iv) In,addition to the above specific measures, by a general
slowing down of the service and other economy measures the
increase in. the Education Estimates in 1932 compared with 1931.
which would otherwise have been £2,250,000, will be restricted to
£1,000,000-a reduction of £1,250,000.
The reductions of expenditure made in England and Wales will
involve automatically a reduction of 11/80 of the savings in the
grants made for Education in Scotland.
Thefinancialeffect in thefirstfull year of the proposals which
have been adopted is as follows :—
.
.
.
.
.
.
.
(1) Abolition of 50 per cent, minimum limit of
grant for elementary education ...
...
(2) Reduction of 15 per cent, from the aggregate,
of teachers' salaries and revision of grant
formula for elementary education (he.,
50 per cent, for teachers' salaries and
revised capitation grant per unit of average
attendance) and allowing an increase of
grant to poor areas ...
...
...
...
(3) Reduction of grants for higher education in
consequence of 15 per cent, reduction from
the aggregate of teachers' salaries
(4) Reduction of growth of education expenditure
in 1932
...
...
...
Total
Add 11/80 in respect of savings in Scotland
Total
4
1,450,000
5,987,500
712,500
1,250,000
9,400,000
1,300,000
10,700,000
Owing to the manner in which Government grants are paid,
only 90 per cent, of these savings will accrue in thefinancialyear
1932, and, after allowing for the effect on grants in 1932 of the
savings to be made in the current year, the saving in 1932 will be
£10,300,000.
The reductions are to come into force as from the 1st October,
1931. It is estimated that the savings in the current year will be
approximately £3 - 5 million in England and Wales and £ - 5 million
in Scotland.
University
Grants.
1
The Vote for grants to Universities and Colleges will be reduced
in 1932 by £150,000. The above sum of £150,000 represents an
accumulated balance which would normally be used for non­
recurrent purposes and can be withdrawn without reducing the
annual recurrent grants to any of the University institutions.
Ministry
of
Health
and
Department
of
Health
for
Scotland.
The savings to be secured on these votes will amount to about
£1,250,000 in a full year and to about £475,000 in the remainder
of the financial year 1931-32.
National Health Insurance.
Remuneration of Insurance Doctors and Chemists.
Since the 1st January, 1924, the remuneration of insurance
doctors has been at the rate of 9s. a year for each insured person
included in a doctor's list.
It is proposed that the rate of 9s. should, from the 1st October,
1931, be made subject to a deduction of one-ninth, and that the
product of this deduction should be applied towards meeting
expenses of administration of the National Health Insurance Acts
which are now met out of moneys provided by Parliament.
The amount which will be realised by this percentage deduction
is estimated for Great Britain at £425,000 in the financial year
ending on the 31st March, 1932, and at £850,000 in a full year.
A similar percentage deduction will also be made as from the
1st October, 1931, from the remuneration at present payable to
insurance chemists and the sum realised by this deduction will also
be applied towards meeting the expenses of Health Insurance
administration at present borne by the Exchequer. This sum which
will be realised by this deduction is estimated to amount to about
£50,000 in the financial year 1931-32 and to about £120,000 in a
full year, subject so far as England and Wales are concerned to the
reconsideration of the present contract with the chemists which
expires in December 1932.
Exchequer Grant to the National Health Insurance Central Fun
It is proposed to withdraw the grant of £142,000 per annum
which would be payable to the Central Fund as from the
1st January, 1932, under the provisions of section 68 of the National
Health Insurance Act, 1924. The Government are, however, anxious
that this Fund, which was constituted for the purpose of assisting
Approved Societies who are found to be in difficulties on valuation,
shoukb be in no way weakened. They propose therefore that the
Health Insurance part of the contributions payable by the employers
of insured persons over 65 years of age which at the present time is
paid into the Pensions Account under the Widows', Orphans' and
Old Age Contributory Pensions Act, 1925, should be transferred to
the Central Fund.
The sum which will be transferred amounts
approximately to £300,000 a. year.' t
Miscellaneous.
It is expected that there will be some slowing down of
expenditure as the result of the measures for regulating development
of expenditure which, are being taken by the local authorities. It is
estimated that the savings on this account will amount to about
.£150,000.
Police.
The expenditure on. the police falls half on the rates and half on
I he Exchequer and the Exchequer consequently receives half the
benefit of any savings secured in the expenditure on this service.
Savings in expenditure amounting to £2,000,000 are to be made
in two equal instalments, the savings to the Exchequer being thus
£500,000 in the first year and £1,000,000 in the second year. Some
of this reduction of expenditure will be secured by the introduction
of lower rates of pay for now entrants to the service and various
administrative measures, but savings of this order cannot be secured
without substantial sacrifices on the part of serving members of the
forces. The May Committee recommended a reduction in the pay
of all ranks at the rate of 6J per cent, in the first year and
.121- per cent, in the second year, but after consultation with the
English and Scottish Police Councils, on wdiich the police authorities
and all ranks of the Service are represented, it has been decided
to make instead supplementary deductions from pay on a graduated
scale according to rank, commencing at 5s. weekly for constables,
whose scale ranges from 70s. to 95s. a week. These deductions will
continue for a year from the 1st October, 1931. The detailed
measures for effecting the additional savings of similar amount to
be secured to the second year are reserved for further consideration.
Ministry
of
Agriculture
and
Fisheries.
The provision for 1932 will be reduced by £580,000. This will
involve the discontinuance of grants to landowners forfielddrainage
and water supply schemes, a reduction in the sums available for the
assistance of Drainage Authorities and Catchment Boards, the
postponement of new developments in agricultural research, and a
reduction in the scale of grants to Local Authorities for the provision
of agricultural education. Expenditure on National Mark activity
will he reduced, and it will be necessary to postpone the Government
grant towards the cost of reconstructing the Royal Veterinary
College.
It is not proposed to ask Parliament to vote a Supplementary
Estimate this year for the purposes of the. Agricultural Land
)
(Utilisation) Act, and n o
purposes, of. I his A c t .
provision
r
will
be m a d e
'
in
1932
for
the
.
O n t h e F i s h e r i e s side it w i l l . b e i m p o s s i b l e to i n c l u d e p r o v i s i o n in
1932 for -operating t h e , n e w F i s h e r i e s B e s e a r c h s h i p . T h e possibility
of p l a c i n g , . t h i s i , s h i p , at t h e disposal of the industry f o r research
purposes is b e i n g e x a m i n e d .
. ,
,
'i
';,
­
;
. ...-
.
Agriculture
(Scotland).-
A s a v i n g of £ 7 5 , 0 0 0 w i l l bo m a d e i n t h e case of the D e p a r t m e n t of
A g r i c u l t u r e for S c o t l a n d on s o m e w h a t s i m i l a r l i n e s .
Forestry.
T h e e x p e n d i t u r e of the F o r e s t r y C o m m i s s i o n in 1932 will be
reduced by £478,000.
T h i s reduction w i l l be secured by restricting
afforestation w o r k and acquisitions a n d b y s u s p e n d i n g t h e provision
of forest w o r k e r s h o l d i n g s . Care w i l l be taken that the C o m m i s s i o n e r s '
n u r s e r i e s of y o u n g p l a n t s are n o t p r e j u d i c e d .
Empire
Marketing
Boakd.
T h e g r a n t to t h e E m p i r e M a r k e t i n g B o a r d w i l l b e r e d u c e d next
year by- £250,000.
T h i s r e d u c t i o n is a d d i t i o n a l to s a v i n g s which
w i l l be secured o n the gross V o t e s for t h e A g r i c u l t u r e D e p a r t m e n t s
i n r e s p e c t of services n o w financed b y g r a n t s m a d e b y t h e Board
t h r o u g h thbse V o t e s .
Colonial
Development
Fund.
T h e g r a n t to t h e C o l o n i a l D e v e l o p m e n t F u n d w i l l be r e s t r i c t e d to
£750,000 next y e a r (saving £ 2 5 0 , 0 0 0 ) .
T h e Advisory Committee
w i l l be i n v i t e d to concentrate their r e c o m m e n d a t i o n s o n schemes
w h i c h , w i l l g i v e t h e g r e a t e s t and s p e e d i e s t benefit to this c o u n t r y .
Unemployed
Grants.
A s decided b y t h e l a t e G o v e r n m e n t t h e last date for applications
b y L o c a l A u t h o r i t i e s to t h e U n e m p l o y e d G r a n t s C o m m i t t e e for
g r a n t s towards s c h e m e s of w o r k . f p r ; t h e . r e l i e f of, u n e m p l o y m e n t was
circumstances
.,the.30th
June,
1 9 3 1 , , t h o u g h ;.:mt... exceptional
applications after that date in respect of, w o r k tp b e g i n b e f o r e the
31st D e c e m b e r , 1 9 3 1 , are b e i n g e n t e r t a i n e d , p r o v i d e d that good
r e a s o n is shown w h y e a r l i e r application could n o t b e m a d e .
There
' are a t ' "present a p p r o x i m a t e l y .900 . applications o u t s t a n d i n g of an
;
;
estimated value of about .£14,000,000. The rates of grant are being
reduced and, except in regard to schemes for which a grant has
already been definitely promised, the revised rates will in jio "case
exceed 25 per cent, of the cost of the scheme. It is anticipated on
this basis that only schemes of the highest economic value will be
proceeded with, and this factor coupled with the reduction in the
rates of grant will result in an estimated saving to the Exchequer
of £500,000 in 1 9 3 2 - 3 3 as compared with the amount which it would
have been necessary to provide had existing rates of grants been
continued.
1
Unemployment
Insubance.
The measures proposed in respect of Unemployment Insurance
and the estimated economies( ) in the financial year 1932-33 are as
follows :—
l
(1) A reduction of weekly benefit rates (except that for the
dependant child) by 10 per cent, rounded off to the
nearest 3d.
The following table shows the present and proposed weekly rates
for the several classes of insured persons now entitled to benefit,
together with the present weekly rate :—
Present
Eates.
Man
Woman
Adult dependant
Child dependant
Young Man
Young Woman
Juveniles—
Boys aged 17
Girls aged 17
Boys aged 16
Girls aged 16
s. d.
0
15 0
9 0
-2 0
14 0
12 0
17
...
9
7
6
5
0
6
0
0
Proposed
Bates.
.s...,,d..
15 3
13 6
8 0
2 0
12 6
10 9
8
6
5
4
0'
9
6
6
The saving estimated to result from this reduction is £12,800,000.
(2) An increase of weekly contributions to lOrZ. each from
employers, employed and the Exchequer in the case of
men, with corresponding increases in the case of w-omen
and other classes of contributors.
(')Tho e s t i m a t e s of e c o n o m i e s a r e b a s e d on a n a s s u m e d a v e r a g o i i v o r e g i s t e r
o f 3,000,000 d u r i n g t h e financial y e a r 1 9 3 2 - 3 3 .
'. The present and proposed weekly rates of contribution for the
several classes of insured contributors are as follows:—
...
...
8
7
4
7
6
34
10
9
5
9
. 8
ii
d.
7
G
34
6
5
3
d.
10
9
5
9
8
4h
d.
71
6A
3
1
64
si
d.
10
9
5
9
8
4J
Total con­
tribution.
a
(B
- W
O
w
d.
22?r
19*
11:1
19A
164
9J
Proposed.
Proposed.
d,
Present.
d.
Proposed.
Proposed.
Men
Young M e n '
Boys
...
Women ...
Young Women
Girls
Present.
Contributor..
Contributor
Present.
Km ployer's - Employed, Exchequer
contriperson's.con- contribu­
bution.
tribution.
tion.
d.
.'iO
27
15
27
24
13.',
(3) A limitation of insurance benefit (as distinct from transitional
payments) to 20 weeks in a benefit year [or 39 weeks
without a fresh waiting period], after which a fresh
insurance qualification would be required.
The effect of this limitation is to transfer claimants from insurance
. benefit to the transitional class—not in itself to reduce the total
payments made (as to which, see (4)).
(4) A needs test for transitional payments given after insurance
rights, have expired.
This will apply to persons now drawing transitional payments and
to those coming on to transitional payments in future, including those
who do. so because they have reached the 26 weeks' limit of
insurance benefit. They may, however, continue to receive
assistance in cash up to the same rates as under the Insurance
Scheme if they show that they are in need of it. The procedure
contemplated is that when unemployed persons come to the end of
their" insurance benefit and desire to claim further payment, they
will attend at the Employment Exchange to prove unemployment
and satisfaction of other conditions as at present. Under the pro­
cedure referred to, the Exchange will request the Public Assistance
Authority for the district to assess their need and to determine' the
amount payable" (riot exceeding the rate' for ordinary benefit) and
such determination will be final. The amount, so determined will
be paid by the Employment' Exchange and the payment will be
charged on the Exchequer.
The estimated saving'under this head is .-£10,000,000
we­
(5) There will be no borrowing beyond the statutory limit already
authorised, and any sum necessary to balance the accounts
of the Unemployment Fund is to be provided by means of
Grant from the Exchequer out of current revenue.
The estimated amount of this Deficiency Grant for the financial
year. 1932-38 is £22,200,000.
Summary of Unemployment Insurance Finance.
On the basis of the continued payment of Benefit (including
Transitional Benefit) at the rates and on the conditions at present
in force, and with an average live register of 3,000,000, the financial
position of Unemployment Insurance in 1932-33, apart from
economies, would be approximately as follows :—
£
Benefit at existing rates
130,500,000
Interest on debt at £115,000,000
5,700,000
Administration
7,100,000
Total expenditure
Towards this sum Employers and Employed Persons
would contribute at existing rates
...
...
143,300,000
.28,500,000
Sum to be provided by Exchequer ...
...
...
114,800,000
The savings proposed to be effected, including the
removal of anomalies by regulations under the
Unemployment Insurance (No. 3) Act, 1931, will
reduce this expenditure as follows :—
Removal of Anomalies, under the
£
Act of 1931
3,000,000
Needs test for transitional pay­
ments
...
10,000,000
Reduction in rates of benefit
...
12,800,000 .
25,800,000
89,000,000
Increase in Contributions
Employed Persons
of
Employers
"...
Leaving as a charge on the Exchequer
1932-33, after allowing for economies
and
" 10,000,000
in ­
-.. 79,000*000
This charge would be made up of three parts, as
follows—
., ' . '
Exchequer contribution on
the
£
.,
1.9,300,000
"Equal Thirds" basis"....'.
Deficiency grant, being the sum
r,
required to balance the Unemploy.
ment Fund for the year'
' ...
22,200,000
Transitional payments
.. .... , 37,500,000..,..
...
79,000,000
The saving to the Exchequer
£79,000,000, or £85,800,000.
is thus £114,800,000 minus
ROAD FUND.
The expenditure from the Eoad Fund sin 1932 was estimated (if
existing policies remain unaltered) as £27,865,000, plus the general
Exchequer contributions paid under the Derating Scheme from the
Eoad Fund. This sum of £27,865,000 will be reduced to a round
figure of £20,000,000-a saving of £7,865,000.
It was estimated that the Eoad Fund would have required a loan
from the Exchequer next year of £10,000,000 to enable it to meet
its obligations, and under existing practice, the Exchequer would
have itself borrowed this £10,000,000 in order to lend it to the
Eoad Fund. The sum required from the Exchequer will now be
reduced to about £2,250,000, and this sum will not be borrowed by
the Exchequer, but will be provided out of a vote of Parliament.
It is intended, also, that in the current year the sum which the
Eoad Fund will require will be provided by a Vote and not borrowed
by the Exchequer.
In order to secure the reduction of Expenditure which is essential
in the altered financial circumstances certain new schemes must,
of course, be postponed and schemes in progress slowed down or
curtailed.
MISCELLANEOUS.
The Treasury has issued a circular to Government Departments
calling for a stringent review of their expenditure with a view to
supplementing by further economies the specific decisions of the
Government on major issues.
It is expected that this review of miscellaneous economies will
produce a total of savings next year of £2,500,000.
II.—ACTION TO BE TAKEN UNDER THE POWERS SOUGHT IN THE
NATIONAL ECONOMY BILL.
It is proposed that Orders in Council should be made to deal
with the following matters (described in more detail in the first part
of this memorandum), in respect of which statutory powers are
required before, the economy measures proposed can be carried
into e f f e c t : ./"
1. iReductions of Salaries, ,dec.
(1) Authorising reductions of salary on the scale proposed in
oases where such salaries are fixed by statute.
(2).Eepealing ,an existing provision fixing soldiers' pensions on
.the scale in force at the time of their first enlistment.
:
2. Education.
, .
'
:
(1) Abolishing as regards Elementary Education the obligation to
pay a minimum 50 per cent, expenditure grant to Local Education
Authorities under section 118 (2) of the Education Act, 1921.
(2) Scaling down by 15 per cent, the existing contractual rights
to salary of teachers in grant-aided schools or institutions.
3. National Health Insurance.
. . - ''
...... : ..
(1) Applying the saving in the cost of medical benefit (doctors
and chemists) towards ' the payment' of the expenses incurred by
Government departments in the administration of the National
Health Insurance Acts.
(2) Withdrawing the Exchequer grant to the National Health
Insurance Central Fund under section 68 of the National Health
Insurance Act, 1924.
(3) Transferring from the Pensions Account under the Widows',
Orphans' and Old Age Contributory Pensions Act to the Central Fund
the health insurance part of the contributions payable by employers
in respect of insured persons over 65 years of age as from the
1st January, 1928.
I. Police.
(A note will be inserted later if it is found that the economies
proposed in the case of the police require legislation.)
5. Unemployment Insurance.
(1) Reducing the rates of benefit.
(2) Increasing contributions.
(3) Limiting the payment of Insurance Benefit to 26 weeks in a
benefit year [er^9zwSeks-withoufc-a waiting period.]. - ­
--(4-)- Applying X' ""means " test to applicants for Transitional
Payments.
8
(5) Providing for a Deficiency Grant from the Exchequer,
6. Road Fund.
In order to effect the reduction of prospective expenditure out of
the Eoad Fund which is required by His Majesty's Government,
it will be necessary for the Minister of Transport to be invested with
power to withdraw promises of assistance out of the Eoad Fund tb
a number of schemes which have been approved for grant.
It is proposed, however, to. provide that, the . Minister shall
not withdraw the promise of Road Fund assistance to any [work on
which a local authority is already committed, to '.'a-: substantial
liability," which will be defined quantitatively in terms of a
prescribed percentage of the total estimated cost of the particular
work. Assistance towards any expenditure or liability actually
incurred by a local authority will be continued at the agreed rate.
With regard to purchase of land it is not contemplated that,
except by agreement, grants promised to a local authority for
purchase of land for highway improvements will be varied if the
authority is under any liability in connection with the purchase.
It is proposed to empower the Minister to authorise a local
authority to give notice cancelling any '' notice to treat'' served
upon occupiers of land in connection with postponed road improve­
ment schemes, and to indemnify the authority accordingly.
Various major works towards which grant has been promised from
the Road Fund are subject to time limits imposed by special Acts
of Parliament or Orders having the effect of an Act of Parliament.
Where action by the Minister entails the postponement of such
schemes, it is proposed to give facilities for an extension of time
for the completion of the work not exceeding in all three years.