NAVY. 48. Analysis of the Navy Accounts for the year 1921-22 reveals Qs. 4428-31. large administrative economies and rapid clearing off of War liabilities. Great progress has been made in the twelve months under review in clearing and charging against Navy Votes expenditure incurred in earlier years, which had been temporarily carried to Suspense accounts. The cash expenditure not cleared at the closing of the accounts for 1920 and 1921 amounted to £3,020,300 and £2,000,500 respectively. The corresponding figure at the closing of 1921-22 was approximately £883,000. The Committee are glad to note the progress which has been effected in this matter, and they are confident that the steps taken by the Admiralty, as explained to the Committee last year and this, to keep in touch with their liabilities will result, in the future, in much closer correspondence between estimates and expenditure. 49. Overpayments written off without Treasury sanction.—In Q. 4432. the year under review certain overpayments of allowances to officers were written off as Balances Irrecoverable by the Admiralty, although they exceeded the latest limits of the powers delegated in this matter by the Treasury to the Admiralty. In these cases the Admiralty acted under a misapprehension. They had supposed that a general authority to abstain from pressing the recovery of overpayments from men who had received money in good faith extended so as to empower them to write off the sums in question. This misundertanding has now been cleared up. 50. Pay of Mobilised Reservists.-In connection with the in- Q 4433, et dustrial emergency in the Spring of 1921, the Treasury issued seq. instructions that the pay of those Civil Servants who were mobilised as Naval, Military or Air Force reservists, should be adjusted to the extent of their Naval, Military or Air Force pay. These instructions were misinterpreted by the Admiralty in two directions with the result that overpayments were made which the Treasury declined to sanction (a) to certain reservists called up from Post Office employment and (b) to certain military reservists released on indefinite leave from their units, who were allowed to resume their civil employment in His Majesty's Dockyards. The Committee recommend that in the circumstances these overpayments (which are charged, in the first case against the Post Office Vote and in the second against Navy Vote 8. I.) be allowed to stand. They feel, however, that the difficulties which arose in these cases might have been avoided had the Admiralty consulted more fully with the Treasury. 51. Defalcations of an Acting Paymaster Lieut.-Commander, Q. 4442. R.N.V.R.-Amongst other items charged against Balances Irrecoverable is a net sum of £1,021 9s. 5d., lost through the defalcations of an Acting Paymaster Lieut.-Commander. Qns. 45844603. This R.N.V.R., who was subsequently tried and convicted. In the circumstances which have arisen there appears to the Committee to be no alternative to writing off the loss, but the Committee cannot emphasise too strongly the necessity of maintaining surprise checks of cash in the case of all officers, however blameless their previous record may be. In justice to the Admiralty the Committee would like to state that they are informed that the total amount written off from the accounts of Accountant Officers to Balances Irrecoverable in respect of cash balances or deficiencies due to gross negligence during the whole of the war only amounts to something like £5,000 out of a total of approximately £160,000,000 which the officers disbursed. 52. Naval Armament Stores.-It was the practice, before the War, to include in the Navy Appropriation Account, statements showing the values of stocks held at the beginning and end of the financial year as regards Victualling and Royal Marine Stores (Vote 2), Naval Stores (Vote 8), and Naval Armament Stores (Vote 9). This practice was discontinued during the War, but has now been resumed as regards Victualling, etc., Stores and Naval A proposal has been submitted to the Committee by the Admiralty, with Treasury concurrence, that the statement showing the value of Naval Warlike Stores, which has always been misleading and incomplete, should be abandoned. The Committee agree to this proposal, subject to the condition suggested by the Treasury, namely, that a certificate as to the adequacy of stocks should be included in the Appropriation Account. may be well to emphasise the point that the record with which it is proposed to dispense is only a record of value, which has hitherto been specially prepared once a year. The complete accounts of Ordnance Stores will continue to be kept in quantities. These accounts will be available in the future, as in the past, for the examination of the Comptroller and Auditor General, who will thus be in a position to scrutinise them on It behalf of this Committee, and, if necessary, to call attention to any excess or deficiency in the quantities held, as compared with the authorised reserves. 53. Gun Mountings.-The accounts for 1921-22 record a depreciation of £5,525, in addition to £9,925 charged in the previous year, in the value of certain gun mountings at Chatham Dockyard, owing to exposure in the open due to lack of covered storage. The Committee understand that there has been great difficulty in devising measures for protecting these gun mountings (which are very bulky) without very heavy expense. A scheme for housing them, submitted for Treasury sanction, was rejected Q. 4666 on the ground that it would cost something like £250,000. The Committee are informed that a more economical scheme has now been drawn up and they trust that the work of reconditioning and storing these expensive mountings will now be proceeded with expeditiously. 4802. 54. Contracts for Repair of Ships.-In 1914 an emergency agreement was negotiated by the Admiralty, covering the repair of ships by contractors. This agreement governed all such Q.4772repairs, whether for the Admiralty or for the Ministry of Shipping, up till the end of 1918. In January, 1919, however, various firms withdrew from this agreement. In 1920 the Select Committee on National Expenditure, reported that the Ministry of Shipping had provisionally negotiated a new basis of agreement which involved, or might involve, a reconsideration of the terms .on which repairs were effected for the Admiralty, and the Select Committee expressed the view that these matters should be settled without further delay. Since the Select Committee reported, a definite agreement has been made between the Ministry of Shipping and its shiprepairers, operating as from 5th February, 1919, and in 1922 the Admiralty concluded a separate arrangement with those firms working for them (which are not many), which had withdrawn from the 1914 agreement. The two new agreements differ somewhat from each other in regard to the treatment of establishment charges in calculating the cost of repairs. The Committee have examined the reasons for these differences of treatment and they are satisfied that they are not greater than were required in order to meet the difference in the circumstances affecting each department. 55. Services undertaken on repayment terms.-The Committee Q. 4459. learn with satisfaction that the Admiralty have recently issued instructions that in future services on repayment terms shall not be undertaken for outside parties unless deposits or instalments are obtained to cover the cost of the service. This measure will obviate the delays, not always unaccompanied by difficulties, which have sometimes been experienced in recovering the cost of such services in the past. Q. 4680. Q. 4701-2. 56. Store Accounts.-The Committee were struck by the fact that no less than six different officers appeared to give evidence. in regard to different branches of the store accounts, viz., the Directorates of Stores, of Armament Supply, of Dockyards, of Expense Accounts, of Naval Ordnance and of Victualling. The Committee inquired whether each of these officers is responsible for the stores in more or less water-tight compartments. The answer was that this is so, each Department being responsible for its own store accounts, subject, as explained in answer to a later question, to the general responsibility of the Secretary to the Admiralty, as the Accounting Officer. This division of responsibility, from the point of view of the Committee, is certainly bewildering and inconvenient, and a question of greater importance suggests itself, namely, whether it may not lead to over-lapping and to over-elaboration within the Department itself. It will be remembered that with the object of securing greater financial control within the Admiralty the functions of Accounting Officer for cash were transferred, as from 1st January, 1922, from the Accountant General of the Navy to the Permanent Secretary to the Admiralty. But the Committee is informed that this change did not affect the position and responsibility of Store Accounting Officers, and the heads of the Store Departments remained responsible for the store accounts, their position in this respect still being as laid down in paragraph 39 of the Appendix to the Fourth Report of the Committee of Public Accounts, 1889. The Committee think it is pertinent to point out that the Navy is the only Department in the public service in which the Accounting Officer does not undertake the sole responsibility of answering before the Committee all questions relating to the accounts, and it appears to them that the time has come when the existing arrangements in the Admiralty may be with advantage reviewed. They have not been able, in the time at their disposal, to investigate this matter, but they would propose to return to it next year. DOCKYARD EXPENSE ACCOUNTS. 57. The Committee have had before them the Dockyard Expense Accounts for the two years 1920-21 and 1921-22. In paragraph 90 of their Third Report the Committee of Public Accounts, 1922, expressed the opinion that the published volume of these accounts might be simplified, and suggested that this question might be investigated by the departmental Committee which is considering various matters in connection with the Navy Accounts. The Public Accounts Committee will no doubt be informed in due course of the conclusions at which this Committee and the Admiralty may arrive in regard to this point. 58. It is pointed out in the prefatory memorandum to the accounts for each of these years that it has been found impracticable to allocate to individual ships and services substantial payments made to contractors under the terms of general settlements arising out of the liquidation of war contracts. In these circumstances, the details of aggregate expenditure on new construction of Contract-built ships, and Large Repairs and Alterations recorded in Part 2 of the accounts, are not complete or comprehensive. In another respect the accounts do not accurately reflect the cost of particular operations, owing to the method adopted in distributing establishment and incidental expenditure. In the absence of the necessary data on which to make an exact allocation, the establishment and incidental charges debited against particular jobs at home dockyards have been calculated, with Treasury sanction, on the basis of the average of the ascertained percentage rate for labour, material and contract work for the three complete years prior to the war. The result is that the charges made to individual jobs under this heading are insufficient and that the heading Unappropriated Establishment and Incidental Charges is unduly swollen. The Committee is informed that a special Committee is sitting, which is about to report on the whole question of the treatment of these establishment and incidental charges, and it is expected that it will be possible to adjust this defect in the financial year 1924-25. AIR SERVICES. Q. 4708. 59. Re-arrangement of Estimates.-In February last the Q. 2. Treasury submitted to the Committee proposals for certain App. 3. alterations in the form of the Air Estimates put forward by the Air Ministry. The main features of these changes are, first, the creation of a new Vote for the Air Force Reserve, secondly, the transfer of provision for Meteorological Services from Vote 8 to Vote 6, and thirdly, the suppression of the existing Vote 9 for Experimental and Research Services and the transfer of the bulk of the Vote to Vote 3. The Committee satisfied themselves that these changes are justified on comparison with the Army and Navy Estimates and are desirable on administrative grounds, and that although they involve the suppression of the old Vote 9 they will not tend to impair Parliamentary control. They have therefore informed the Treasury that they concur in these proposals, subject to the following stipulations : (a) that the new Appendix which would give details of ex- (b) that notes should be appended to the new Vote 6 and to |