CLASS V, VOTE 2-contd.

Imperial Kenya Uganda Loan.

28. On page 378 of this volume will be found the account of expenditure out of the loan of 3,500,000l. issued in March 1924 from the Vote for Colonial Services for the construction, improvement, and equipment of railways in Kenya and Uganda in connexion with the development of cotton growing. This loan was free of interest for five years, and thereafter became repayable by an annuity running for 37 years from 31 March 1929 at the rate of 6 per cent. per annum, representing 5 per cent. interest and 1 per cent. Sinking Fund. It will be seen from the account that at 31 March 1927 a sum of 1,875,1217. had been expended on the railway works, leaving a balance in hand of 1,966,650l. (including interest of 341,7717.).

I may add that since the period covered by this account this loan has been redeemed by payment to the Exchequer, out of the proceeds of the loan for 5,000,000l. publicly issued by the Government of Kenya in November 1927, of a sum of 3,280,4667. 18s. representing, subject to minor adjustments, the present value as at 9 December 1927 of the above mentioned annuity.

CLASS V, VOTE 5.-MIDDLE EASTERN SERVICES.

Iraq Railways.

29. The position as regards the liquidation of the liability of the Iraq Railways to His Majesty's Government remains substantially as stated in paragraph 37 of my last Report. A cash repayment of Rs. 1 lakh was made in August 1927, and the indebtedness apart from stores is now approximately Rs. 27 lakhs. Periodical repayments for stores taken over by the Railways on 1 April 1923 have reduced the liability under this head, originally Rs. 30 lakhs, to Rs. 3 lakhs only.

Progress towards the settlement of these debts is slow, but the report of the expert, who examined the position locally, explains that the present financial position of the Railways does not permit of more rapid repayment.

This report also contains proposals for the future of the Railway, including the liquidation of the Imperial interest in the capital assets, and these proposals are at present under consideration.

Palestine Gendarmerie, Grant in Aid 1925-26. 212,000l. (L.E. 206,700).

30. The account of the Palestine Gendarmerie for 1925-26, which has now been furnished to me, shows receipts from Grant in Aid of L.E. 211,575 (including L.E. 4,875 of the 1924-25 grant brought to account in April 1925), and net expenditure L.E. 190,416. After meeting the deficit on the 1924-25 account, the unexpended balance, L.E. 13,551 (13,8997.), was surrendered to the Exchequer.

The Director of Colonial Audit, under whose directions the account has been examined, has certified that, subject to a few points still awaiting final settlement, the account is correct.

As stated in Treasury Minute dated 6 December 1926 (Cmd. 2775) the Palestine Gendarmerie was abolished as from 31 March 1926, and the Palestine Government was authorized to retain the proceeds of stores existing at that date and acquired out of successive Grants in Aid as a set-off against the expenses of winding up the affairs of the British section of the Gendarmerie.

It appears from the explanation on page 389 that the stores realized 17,2677. against disbandment expenses of 17,9017. ; in addition, stores to the value of 2,0321. were handed over to the new Frontier Force as a free gift. Final accounts will be submitted to me after examination by the Director of Colonial Audit.

Subhead H-Palestine, Trans-Jordan Frontier Force.

Grant in Aid, 94,4211.

31. The estimate provided for a grant to the Palestine Government of a moiety of the expenditure on the Trans-Jordan Frontier Regiment, the Arab Legion having been disbanded as from 31 March 1926.

The account for 1926, which will be audited by the Director of Colonial Audit, has not yet been forwarded to me.

Subhead J.-Palestine, Contribution to Trans-Jordan Administration, Grant in Aid, 1925-26, 103,9571. (L.E. 101,358).

32. The account of the Trans-Jordan Administration for 1925-26 shows receipts and payments as follows:

There is an unexpended balance of L.E. 18,213, which is not subject to surrender. This account is certified in the same terms as that of the Palestine Gendarmerie.

The account for 1926 covering the grant of 66,000l. has not yet been received.

CLASS V, VOTE 8.-EMPIRE MARKETING.

33. This Vote now appears for the first time in the national accounts. As shown on page 392, the expenditure out of the Grant in Aid of 500,000/ amounted by 31 March 1927 to 134,804/. 11s. 11d., of which 14,254l. 1s. 5d

CLASS V, VOTE 8-contd.

was for administrative expenses. In respect of each individual grant I have been furnished with the Minute of the Secretary of State for Dominion Affairs, on whose sole authority the expenditure of the Fund is incurred.

The expenditure is classified under six general heads, of which two relate to research and four to publicity. Detailed information as to the work of the Empire Marketing Board, with a statement of research grants approved from July 1926 to May 1927, will be found in the paper (Cmd.2898) presented to Parliament in July 1927. A later list of the principal grants approved for scientific research and economic investigation up to 30 November 1927 was circulated on 12 December 1927 in answer to a question in the House of Commons (Hansard Vol. 211, No. 136, Col. 1871). These grants amounted to a total of 821,8251., and included, besides capital expenditure, certain annual grants spread over periods not exceeding five years.

CLASS VI, VOTE 4.-WIDOWS' ORPHANS' AND OLD AGE CONTRIBUTORY PENSIONS.

34. This Appropriation Account records the first contribution from Votes on account of Widows' Orphans' and Old Age Contributory Pensions.

Section II of the Widows' Orphans' and Old Age Contributory Pensions Act, 1925 provides for the opening of a Pensions Account into which shall be carried all contributions under the Act, and out of which shall be met all pensions, etc., payable under the Act: for the opening of a Treasury Pensions Account into which shall from time to time be lodged, for investment, any sums standing to the credit of the Pensions Account which are not required to meet current expenditure: and for Vote contributions to the Treasury Pensions Account of 4,000,000l. for 1926 and for each of the next nine succeeding years, and thereafter as Parliament may determine.

The Act also provides that the Pensions Account, and the Treasury Pensions Account, shall be laid annually before Parliament.

CLASS VI, VOTE 5.-MINISTRY OF PENSIONS.

Payments to Imperial Pensioners in Canada.

35. In paragraph 55 of my Report for 1924-25 I drew attention to the establishment in Ottawa of a sub-department of the Ministry of Pensions to take over, as from 1 April 1926, the administration of the war pensions of Imperial pensioners resident in Canada and the United States. This subdepartment also undertook the payment, as agent for the Departments concerned, of other classes of pension payable out of Imperial funds. In addition, the Ministry representative in Canada has since been empowered to make and renew certain awards of war pensions after the

CLASS VI, VOTE 5-contd.

initial decisions on entitlement have been taken by the Ministry in London, and a considerable number of awards to men, widows, and dependants are now authorized locally.

The first test examination by my officers of the payments and awards made under these arrangements was carried out in Ottawa last year, and I am satisfied with the result. Various minor questions arising from this audit have been referred to the Ministry and are in course of settlement.

In view of the extent and importance of the work now performed by the sub-department, I propose to arrange from time to time for further local examinations by my officers.

CLASS VI, VOTE 10.-IMPERIAL WAR GRAVES COMMISSION.

Subhead C.-Endowment Fund.

36. In paragraph 46 of my last Report I explained the arrangements made under the Imperial War Graves Endowment Fund Act, 1926, for the formation of a Fund of 5,000,000l. to provide in perpetuity for the maintenance of the graves, cemeteries, etc., for which the Commission is responsible.

I have been furnished with an account of receipts and payments of the Fund, certified by the honorary auditors, Messrs. Deloitte, Plender, Griffiths & Co., together with a statement, which is appended to the Appropriation Account, relating to that portion of the Fund contributed. by the United Kingdom.

I am satisfied that the United Kingdom contribution is not in excess of its due proportion.

CLASS VI, VOTE 17.-MISSION OF THEIR ROYAL HIGHNESSES THE DUKE AND DUCHESS OF YORK TO AUSTRALIA AND NEW ZEALAND.

37. In a note to the Estimate it was stated that the expenditure out of this Grant in Aid would be audited by the Auditor of the Civil List, that any unexpended balance of the sums issued from the Grant would be surrendered to the Exchequer, and that certain expenses in connexion with the voyage would be defrayed from Navy Votes.

The Auditor of the Civil List has certified that expenditure out of the above Grant in Aid has been examined under his directions and found correct to a total of 6,901. 8s. 8d., and that the unexpended balance amounting to 98/. 11s. 4d. has been surrendered to the Exchequer.

I have been informed by the Admiralty that the total expenditure from Navy Votes in connexion with this mission amounted approximately to 65,000l.

CLASS VII, VOTE 3.-MINISTRY OF LABOUR.

Subhead I-Contributions to the Unemployment Fund.

38. Under Section 8 (1) of the Economy (Miscellaneous Provisions) Act, 1926, the contribution payable to the Fund from the Vote is such an amount as may be determined by the Treasury to be approximately equivalent, having regard to the estimated proportions in which contributions are payable in respect of men, women, boys, and girls, to the sum which would be produced by weekly contributions paid at the statutory rates in respect of insured and exempt persons.

Shortly before the industrial dislocation of 1926 the Ministry of Labour obtained the concurrence of the Treasury to regard the estimated proportions in which contributions were payable in respect of the different classes as equal, for practical purposes, to the proportions of the numbers of insured persons in these classes. It was then estimated that the maximum error from ignoring the varying incidence of unemployment in the different classes was not likely to exceed 3,500l. per annum. The result of the coal stoppage (which supervened) was that approximately 1,000,000 miners were continuously unemployed for several months. It appeared to me that this factor must very seriously disturb the proportions of men, women, boys, and girls in insurance, and that the application to such an abnormal situation of the newly-approved formula (based on normal experience) would result in a charge to the Vote higher than could be justified by the facts. I have, therefore, requested that the specific sanction of the Treasury should be sought for applying to the year 1926 the procedure designed for normal times.

Cost of Administration of Unemployment Insurance.

39. The actual cost of administration of Unemployment Insurance is recoverable from the Unemployment Fund, subject, however, to a maximum limit of one-eighth of the net income of the Fund in the year. It was not anticipated when the Estimate was framed that this limit would become effective in 1926, but, owing to the general strike and the coal dispute, the cost of administration greatly exceeded the Estimate, while at the same time there was a diminution of the income of the Fund. In the result the expenditure actually incurred on administration exceeded the total recoverable from the Fund by an amount which is not yet finally determined but is stated in the notes on page 476 to be 284,1821. This excess must remain as a final charge on Parliamentary Votes.

CLASS VII, VOTE 5.-FRIENDLY SOCIETIES' DEFICIENCY.

Post Office Savings Bank Fund.

40. The Act 40 Vict. c. 13., s. 14 provides that, where the amount of interest accrued in the year from the securities standing to the credit of the Post Office Savings Bank Fund exceeds the interest paid and credited