Election Budget

Budget Day is a solemn, expectant occasion in the House of Commons. At 3:35 p.m., Chancellor of the Exchequer Richard A. ("Rab") Butler stepped up to the dispatch box and opened the battered, red leather case in which every British Chancellor since Gladstone has carried the British budget. He was greeted with Tory cheers, for with a general election a month away (May 26), they had hopes of good electioneering news.

Then everyone sat back for the dull part. Reason: London's Stock Exchange does not close until 4:30 p.m., and no Chancellor tips his hand until the day's trading is finished. Accordingly, Rab Butler started slowly. In 3 1/2 years of Tory stewardship, he reported, real wages have risen 6%, earnings of industry 9%. production 10%. But "problems can spring from the very success which it has been our happy lot to achieve."

Liberating the Spirit. Butler warned that the terms of world trade are shifting unfavorably for Britain: imports are costing too much, exports not earning enough. Result: the sterling area's gold and dollar reserves, which rose by $501 million in the first half of 1954, fell by $258 million in the second half. Butler's recent efforts to halt the drain (TIME, March 7) appeared to be working. "But we cannot be satisfied yet," he said. "It is only by looking forward and outward, by expansion, by liberating the human spirit to give and do of its best, that our island people can survive." Laborites jeered; taken slightly aback, Butler (a highly sophisticated man) looked sheepish. Such rhetoric is rare in British budget speeches, which are generally regarded as sound only if they are drab.

Butler then invited M.P.s to "relax for a few minutes," while he turned to the masses of figures that are the heart of the budget. Many members did, nodding in their seats. But the moment the Stock Exchange closed at 4:30 p.m., the House came wide awake. Butler reached the question that had been tantalizing Britons for weeks: Would he reduce taxes?

Easing Burdens. The answer, said Butler, is yes. "The sheer burden of taxation is far too great. Some further lightening of the load is needed to give industry the spur to be more competitive." With a surplus in the Treasury of more than $1 billion. Butler lightened Britain's heavy tax load for this year by $375 million. His chief tax cuts:

P: A reduction of sixpence (7-c-) in the ordinary tax rate of nine shillings to the pound. This reduces the ordinary income-tax rate from 45% to 42 1/2%, on both individual and business incomes.

P: A 15% increase in tax-free allowances, thereby freeing 2,400,000 lower-income-group Britons from paying any income taxes at all.

P: Tax concessions--worth $112 million a year--to corporations. This would provide industrialists with more cash to invest in plant expansion.

P: A slash in the purchase tax on household textiles, other than wool, from 50% to 25%. This would help the Lancashire textile industry, which is in the midst of a serious slump (TIME, April 25).

Butler's peroration sounded like a campaign speech: "I am satisfied that the world at large will applaud our continuing climb back to the uplands of prosperity, and I rely on our people to respond to the trust which I have placed in their sure and steady steps."

Challenge from the Left. Most Britons greeted the budget with subdued approval. The consensus of London's newspapers, back on the streets after 26 days of a Communist-directed strike (see PRESS), was that Butler had steered a middle course between economic orthodoxy, which would have frowned on tax reductions at a time when inflation threatens, and political recklessness, which might have tempted him to make still bigger reductions. "This seems to be a good budget,." wrote the cautious Financial Times. Tory politicians agreed.

But Laborites were also determined to make capital out of the day. Leading the Labor attack was Economist Hugh Gaitskell, 49, able Chancellor of the Exchequer in the last Labor government, whose own economic views are in fact so close to Butler's and vice versa that British editorial writers have coined a word for them: Butskellism. Gaitskell, in a well-delivered reply, accused the Tories of 1) favoring business and stockholders at the expense of "the man who gets his income from the sweat of his brow," and 2) doing nothing "to relieve the suffering caused by the rising cost of living."

"The war," roared Gaitskell, wagging his finger at Butler, "brought to all of us a greater sense of social unity . . . a determination to do away with out-of-date injustices and inequalities. The Labor government reflected that feeling in legislation." But in the last three years, he charged, "the whole process has been reversed. We accept the challenge of the forthcoming election--eagerly, gladly!" The Manchester Guardian was moved to remark: "Mr. Gaitskell cannot only hope eventually to lead the Labor Party. He might well run off with it if Mr. Attlee stumbled."

Gathering for the Fray. The election campaign will start in earnest in a week's time, when Parliament is dissolved. Already the party chieftains are gathering for the fray. Clement Attlee flew home from Canada and told reporters: "It is going to be a good fight. We have a very good chance to win." Sir Winston Churchill, vacationing in Sicily, announced that he would return to help his successor, Sir Anthony Eden.

Churchill also sent word that he was resigning from the leadership of the Tory Party. Unanimously, Eden was elected his successor. The balloting took place in Westminster's Church House, hard by the House of Commons. When it was over, Sir Anthony delighted the rank and file with his first campaign speech: "A return to Socialism," said Eden, "means more nationalization, more controls and more interference with the life of our people. If anyone charges me with having chosen a moment of Socialist disarray in which to call the general election, I can only reply that I did not know what month to choose when the disarray might be less."

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