The First PESC Report: 1960–61

Mr Selwyn Lloyd became Chancellor of the Exchequer in July 1960, arriving at the same time as the Plowden Committee’s first set of interim reports. Mr Lloyd was probably unique among post-war Chancellors in bringing with him into office his own ideas about how to handle public expenditure: he favoured long-term planning of public expenditure and taxation, so found the Plowden Committee’s advice welcome. He also wanted to simplify the Estimates and Accounts, and the Plowden Committee’s advice fitted well with this. He wanted to create a single tax for companies, instead of income tax and profits tax, and set the studies on foot that led to Mr Callaghan’s corporation tax in 1965; and he wanted to merge income tax and surtax, an extremely difficult reform to accomplish, ultimately done in Mr Barber’s 1971 Budget. Mr Lloyd took the unpopular step of bringing the surtax threshold into line with the fall in the value of money, raising it from £2000 to £5000: he began the removal of Schedule A tax on resident owner-occupiers: he introduced the short-term capital gains tax. He introduced the ‘regulator’ to permit changes in indirect taxes between Budgets (and the abortive ‘regulator’ to change employers’ insurance contributions, quickly abandoned).