The Government's preoccupation with national defence problems was made obvious in the drafting of the Budget for the 1938-39 fiscal year, which calls for an expenditure of £944398000 upon the armaments programme alone. This shows an increase of £81500000 upon the estimates for the past year.
Of the total sum, the Army received £77,373,000, while the Nav; got ££3,810,000 and Air Force, 72976000. More than £19,000,000 were allotted to cover payments of pensions in the three services. The total does not include—£90.000,000 which the Government intended to collect by means of loans.
To cover the increased expenditure, Sir John Simon, Chancellor of the Exchequer, increased income tax rates from five shillings and six pence, the highest rate since the World War. He also raised the tax upon tea by two pence per pound, and the tax upon motor fuel by a penny per gallon.
Futhermore, Sir John announced the constitution of reserve stocks of raw materials and the institution of measures to improve both the active and passive defence systems.
Text read from the printed page and cleaned; old type leaves the occasional error.