534 ENGLISH FINANCE 



Asquith left the Debt service at 28 millions, in 1912-13 only 24.5 millions were 

 applied to that object. There is also the necessity to replace the 1,650,000 which the 

 transfer of the Establishment Licences involved, which sum was now omitted from the 

 gross expenditure. This would leave about 355 millions of increased expenditure to be 

 provided for in 1912-13, as compared with 1908-9. For the reduction of the Sinking 

 Fund it was pleaded that Mr. Asquith had provided so largely during the previous three 

 years; but obviously the new expenditure which was decided upon called for a larger free 

 income. As usual, such a transfer as that of the Licences and the suspension of the 

 Sinking Fund disguised and understated the increase of expenditure. 



As the Debt, the Consolidated Fund services, grants to local taxation, and such 

 fixed services, show a decreased total, the increased total expenditure must be sought 

 in the supply services for each year. Expenditure under " Capital " does 

 T ?P Tre "ai. n t ca ^ f r further notice, for with the exception of operations for telegraphs 

 tun. and telephones, that expenditure had not been allowed to continue. Turn- 



ing to the supply services, the Army took 28.8 in 1905-6; 26.8 in 1908-9, 

 and 27.8 million's in 1912-13. We may look back usefully to 1895, and find that the 

 Army then cost 17.8 millions: The Navy, too, which took 17.5 in 1895, required 

 33.3 in 1905-6; 32.2 in 1908-9; and 45 million's in 1912-13. The Revenue depart- 

 ments, which cost 3.1 in 1905-6, took 3.3 in 1908-9, and 4.2 millions in 1912-13. 

 The general Civil Services, which took 28.4 in 1905-6, needed 32.3 in 1908-9, and 

 nearly 50 millions in 1912-13. These facts enable us to trace the increased expendi- 

 ture, and the swift channels in which it ran. Army expenditure is still below that of 

 1905-6, though l million above 1908-9; but since 1895 the cost had increased by over 

 56%. Naval expenditure is now nearly 12 millions more than 1905-6, and 13 Ynil- 

 lions higher than in 1908-9; comparing with 1895, it has increased by 27^ millions, or 

 15% in a little over 17 years; As for the Civil Services and the Revenue departments, 

 together, which cost 315 millions in 1905-6 and in 1912-13 about 54 millions, we find 

 that as the cost was only 35.6 in 1908-9, some i8| millions of the increase had been 

 registered since then, and 23 millions or so (about 71 per cent) since 1905-6. If to the 

 35 millions taken from the Sinking Fund, and 1.6 millions less for licences placed in the 

 total, we add the increases on Army, Navy, and Civil Services, the additions made from 

 1908-9 to 1912-13 amount to about 375 millions. 



A further analysis of the i8| millions added to the cost of the Civil Services, as 

 shown in 1912-13, is required. About i million was on account of the Revenue de- 

 partments, a large portion of which, 530,000, means the Valuation department of the 

 Inland Revenue. Old Age Pensions, 12} millions, is however the largest item. Na- 

 tional Insurance and Labour Exchanges appear for 2.8 millions (and the cost of medical 

 benefits seemed likely at the end of 1912 to be 1$ millions more), while Education takes 

 ij millions. The rest of the 18? millions of increased expenditure, about 1.3 mil- 

 lions, may be traced to the various official bureaus. 



This analysis of the trend of expenditure during 1908-9 to 1912-13 will serve to 

 exhibit the position as conceived at the opening of this period. The House of Commons 

 had been committed to a large and somewhat indefinite expenditure on Old Age Pensions 

 for which no permanent provision had been made; a further extension of the social 

 programme was in contemplation; there was uneasiness in the international situation, 

 and a prospect of the growth of armaments; administration was becoming more expen- 

 sive. What steps were taken to adjust the national finance to the national needs? 



Expenditure depends largely on policy, and the taxation to meet it is intimately 



related to that policy. The measures taken to raise revenue in the budget of 1909, 



afterwards found in the Finance Act of 1910, together with the Constitu- 



1908-13.' tional crisis which resulted, will always be famous in English history. 



Before giving a summary of the changes made in the revenue laws it may 



be well, however, to give a brief account of the revenue to the end of this period. 



The revenue in 1908-9 was left at 151.5: it was 131.6 in 1909-10, and 203.8 in 

 1910-11 (both abnormal figures, as explained below); and in 1911-12, 185 millions. 



