REPORT.

TO THE LORDS COMMISSIONERS OF H.M. TREASURY.

MAY IT PLEASE YOUR LORDSHIPS.

INTRODUCTORY.

1. We beg leave to report that we have carefully considered. the questions referred to us in Your Lordships' Minute of the 14th June, 1923.

2. We have held 75 meetings and have examined witnesses representing the Stationery Office (including the several printing works operated by that Department), the Foreign Office, the India Office, the Admiralty, the War Office (including evidence on behalf of the Ordnance Committee Press, the School of Military Engineering, Chatham, and other military presses), the Air Ministry, the Inland Revenue, the Victoria and Albert Museum, the British Museum, the Natural History Museum, the Post Office Savings Bank, the Ordnance Survey Department, the Federation of Master Printers of Great Britain, Messrs. McCorquodale & Co., Ltd., Messrs. Hazell, Watson & Viney, Ltd., Messrs. James Truscott & Sons, Messrs. Harrison & Sons, Ltd., Messrs. Wyman & Sons, Ltd.

3. We have visited the Government printing works at Harrow and at Hare Street, Bethnal Green, the Foreign Office Press, the India Office Press, the Admiralty Chart Factory, the War Office Press, the Meteorological Office Press, the Inland Revenue Press, the British Museum Press, the Victoria and Albert Museum Press, the Natural History Museum Press, the Post Office Savings Bank Press, and the Ordnance Survey Press. A Sub-Committee was set up to enquire into the costing and accounting systems in force at the various State Works. Their findings were adopted by the main Committee and are appended to our Report.

4. The subject of our enquiry falls into three principal sections, viz. :

(i) General printing,

(ii) Stamps and security work,

(iii) Map and chart printing,

and these are dealt with separately in our Report.

5. During the course of the enquiry, our attention was drawn. by the Chancellor of the Exchequer to disclosures made in the

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Law Courts of arrangements entered into by certain contractors in connection with Government stamp-printing contracts, and we were requested to elicit such further details of the case mentioned as possible, and also to look closely into the circumstances in which the present contracts for printing stamps and Treasury notes were placed, with a view to ascertaining how far the present prices can be considered really competitive The Chancellor added that "the Government will be glad of any assistance that the Committee can give them as to how we should circumvent in future any arrangements of this kind in connection with Government printing contracts." We have considered the evidence placed before the Courts in the case to which our attention was drawn, and have examined certain witnesses in connection therewith, and our views and recommendations on this separate issue are incorporated in our Report.

CHAPTER I.

(i) The Growth of State Printing Requirements.

6. The Stationery Office was established in the year 1786 as a direct result of Burke's Act for Economical Reform (1782). Prior to that date the chief Government Departments obtained their stationery and printed matter from holders of patents granted by the Crown, and complaints of inferior quality and high prices had been frequent. As a result of these complaints the Treasury gave its consideration in 1785 to a scheme for organising and conducting a Government Stationery Office. The scheme was adopted, such Offices as were not served under the existing patents being supplied under the new arrangement as from 1786, and it was provided that, as existing patents expired, the Departments served by them should automatically obtain their supplies from the newly established Stationery Office.

7. A code of Regulations for the guidance of the Stationery Office was issued by the Treasury in 1787. The stationery, etc., then supplied was to the value of some £17,000 per annum, the number of Departments coming wholly or partially under the new arrangement being eleven. It was provided in these Regulations that every article should, when possible, be purchased from the actual maker and at the usual credit given to wholesale stationers.

8. The salaries and working expenses of the Stationery Office were for some time defrayed by a levy on the various Departments in proportion to the value of the material supplied, the proportion of the levy to the value of the supplies being in 1789 as high as 37 per cent. This had been reduced to less than 15 per cent. by 1797. To defray the initial cost of purchase, imprests were obtained from the Departments supplied.

9. From the commencement the Treasury exercised close control over the Stationery Office and frequently issued Minutes directing methods of purchase, etc. In 1800, when the last of the important patents (namely, that which had been granted in 1720 for the supply of material to the Secretary at War, Treasurer of the Navy, Stamp Office and other minor Departments) expired, a set of new Regulations was issued, instituting an improved method of keeping the accounts and also directing that all stationery requirements were to be procured from the manufacturers at wholesale prices.

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10. A further Treasury Minute, issued in 1807, directed that there should be public and open competition invited by advertisement for the supply of paper, parchment, pens and sealing wax, and that the lowest tender in all cases should be accepted. This was further extended by a Treasury Regulation issued in 1812, which applied the rule to cover all descriptions of stationery. It was not until 1817 that a Treasury Minute directing that printing and bookbinding work should be put up to public contract was issued, and, following on the first tenders, the printing requirements were executed at 40 per cent. and the binding at 20 per cent. less than the former prices paid.

11. In 1823 some further Regulations were issued by the Treasury. By that time the work of the Stationery Office had very considerably increased, and the methods of accounting, owing to the system of charging up to each Department the purchase price of every article supplied, had become very involved. The new Regulations provided, inter alia, that the funds for purchasing departmental supplies should be made the subject of an annual Vote to be submitted to Parliament. In the following year (1824) the first Vote for Stationery and Printing was taken ; it amounted to £59,760; the Vote taken for 1925/26 amounted to £1,563,809. The establishment of the Stationery Office in 1824 numbered 44; it now numbers 1,718.

12. For the purpose of providing for the printing requirements of the Public Service the Departments were divided into four classes, as follows:--

Army Pay Office and other Offices not included in the three former classes.

It was laid down that these classes should be put up for contract, to be entered into for a period of three years certain; that no person would be allowed to tender unless he had been engaged in business on his own account as a master printer for at least twelve months prior to putting forward his tender, and that the lowest tender for each class was to be accepted. It was also stipulated that all printing was to be executed upon the cheapest possible quality of paper.

13. The next development arose from the decision of the Government to take over certain services of a national character which, at the time, were carried out by contractors. Thus, in 1838, following the recommendations of the Committee on Revenue Enquiry, who expressed their disapproval of the Money Order business (which was set up in 1792) being any longer carried on by private persons for their own profit, the Money Order business was taken over by the State. In 1840, the introduction of the Penny Post made a further addition to the printing requirements of the Government. This involved the establishment of the system of pre-payment by means of adhesive stamps in place of the costly and unsatisfactory arrangement previously in use, which entailed the collection of postal charges from the addressee. It was not entirely novel, since, as far back as 1802, the duty on patent medicines had been collected in a like manner, by the affixing of stamps, produced at Somerset House.

14. The control of the manufacture of stamps, both postage and fiscal, was vested in the Commissioners of Stamps whose powers were merged subsequently in those of the Commissioners of Inland Revenue, and their production and also that of stamped stationery, which made its first appearance in this country in 1841, has been entrusted throughout to contractors, with the exception of a comparatively small quantity of work executed by the Inland Revenue Press at Somerset House. Prior to 1879, the system of public competition had not been used in this class of printing. În 1878 the attention of the Commissioners of Inland Revenue was called to the inferiority of stamps then in use, and the Commissioners decided to invite tenders from leading firms in the trade. Since 1879 the system of competitive tendering for this class of work has continued.

15. Further substantial additions to the printing requirements of the State were caused by the founding of the Post Office Savings Bank in 1861, the Telegraph Acts of 1868 and 1869, conferring upon the Postmaster-General the power to acquire and work all electric telegraphs in the United Kingdom (powers which were extended to the operation by the Government of the Telephone system some ten years later) and the introduction of Postal Orders in 1881.

16. As time went on, it was found that the principle of open competition by advertisement for the printing requirements of the Public Service, with the compulsory acceptance of the lowest tender, led to certain inconveniences, and the system of extensive competition by invitation was substituted, only those contractors being invited to tender whose capabilities were well known. This plan was sanctioned by the Treasury in 1860. The alternative systems were discussed before the House of Commons Committee on Government Purchases in 1873-4, and it was subsequently decided that the more important contracts for printing, binding,