Q 59, et seq.

Q. 3970.

Q. 3983.

Q. 3972. Qs. 41264145.

At the same time they expressed the opinion that the Appendix giving details of the expenditure on research should be so drawn as to exhibit as far as possible a comparison between the expenditure proposed for 1923-24 and Air Vote 9 for 1922-23.

The changes in question were introduced in the Air Estimates for 1923-24 presented to Parliament on March 5.

The Committee have further approved, in principle, a recommendation of the Treasury that two additional Air Votes should be instituted for Educational and Training Services and for Medical Services in the Estimates for 1924-25. The institution of these separate Votes should greatly facilitate financial contro! within the Air Ministry and by the Treasury.

OMISSIONS TO OBTAIN TREASURY SANCTION.

60. Gifts of aviation spirit and oil to a Dominion Government. -In 1919, certain aeroplanes were sent out to a Dominion, together with aviation spirit and oil, for the purpose of a series of demonstration flights, which it was proposed to organise in the Dominion. The proposal was abandoned and the aeroplanes were subsequently presented to the Dominion, under the general authority given by the Treasury to make gifts of aeroplanes, air engine equipment and spares, as well as mobilisation equipment and motor transport, to Dominion Governments, provided the supplies were made out of surplus stocks. The aviation spirit, valued at £8,000, and the oil, valued at £1,700, were included in the gift, and the question has arisen whether it was open to the Air Council to present these supplies to the Government concerned without specific Treasury authority.

On behalf of the Air Council it has been represented that the gifts were covered by the general Treasury authority, inasmuch as the term "equipment "is technically used in the Air Service to cover oil and petrol, and that the supplies were surplus, with the qualification as regards the spirit that it would not have been surplus to requirements had it remained at home, but as it had been sent to the Dominion it was not worth the cost of transport home. The Committee, however, cannot regard this explanation as satisfactory, and they consider that, in the special circumstances, specific Treasury authority should have been obtained for the gift. The Committee note, moreover, that no attempt was made by the Air Council to ascertain whether the Dominion. Government would be willing to purchase the supplies in question. 61. Supply of Generating Sets.-A similar omission occurred in connection with a contract for a supply of generating sets for airship stations originally placed by the Admiralty in August 1918. The order included four engines at a price of £7,280, subject to increase under the wages clause if and when wages

rose. The work on the contract was suspended by the Admiralty in September, 1919, but ultimately, after the responsibility for airship work passed to the Air Ministry, it was decided that work should be resumed, and, when the final settlement was made with the contractors, payment for the engines supplied was made on the basis of prime cost plus 10 per cent., amounting to £11,072. Specific Treasury sanction was not obtained for the settlement on the new basis, and it appears from the evidence given before the Committee that the Air Council had read into a general authority from the Treasury to cancel contracts after the Armistice and thus get rid of outstanding liabilities an authority to cancel an old contract and make a new contract covering the same work. The Committee cannot endorse the action taken by the Air Council in this matter. They feel bound to add that the evidence given before them in regard to this and other cases leaves them with the impression that the Air Council have failed to consult the Treasury as fully as they might have done in cases of doubt.

62. Farm at Cranwell Cadet College.-An Air Station was started at Cranwell by the Admiralty in 1916, and farming operations were inaugurated on a small scale. Part of the labour employed was charged to Navy Votes and the proceeds obtained from the sale of the farm produce were paid into public revenues, after deducting expenditure on manure, seeds, and implements. After Cranwell was transferred to the Air Ministry, the farming operations were considerably extended in order to make the station to a large extent independent of outside sources for milk. The farm now comprises some 298 acres, and is administered by the Air Officer Commanding. The cost of running the farm including the expenditure on buildings, live-stock, farming plant and machinery has been met out of revenue derived from the farm, together with receipts obtained from the sale of the hay cut on the aerodrome. Since 1st April, 1918, when the Air Ministry was officially instituted, no credits or debits have been made against Air Votes in respect of the operations, and no accounts relating to the farm have been submitted for audit by the Comptroller and Auditor General. It appears that early in 1918 the Accounting Officer gave instructions that the position of Cranwell farm should be examined, and that a satisfactory accounting basis should be established for it. These instructions appear to have miscarried, and the Comptroller and Auditor General did not become aware of the existence of this farm until his officers conducted a local audit in the course of 1922, and the Treasury did not hear of the matter until after that. App. 34. A provisional account, handed in by the Accounting Officer. Q. 4093. shows that for the period 1st September, 1918, to 31st December, 1922, the operations have involved a loss of rather over £3,000, but these figures must be accepted with reserve, as they have not

41091

b

Q. 4074.

Q. 4172.

Qns. 4265

88.

Qns. 404756.

Qns. 422853.

yet been examined either by the Treasury or by the Comptroller and Auditor General.

This case presents variously highly unsatisfactory features. The proceeds derived from the sale of hay on the aerodrome, which were public property, were diverted to financing a domestic venture there was no headquarters control and no submission of proper accounts, and a bank overdraft was obtained without authority. The Committee are glad to learn that the Air Council have given instructions that the farm accounts be incorporated in the public accounts as from 1st April, 1923, and that a Trading and Profit and Loss Account will in future be published annually.

63. The accounts for the year record further transactions which perhaps deserve a passing mention, not so much on account. of the sums involved as because they illustrate defects in the administration of the Air Force in the period which immediately followed the conclusion of the War.

(a) Thus we learn that in 1918 two typewriting machines were hired at a period when there was a shortage of these machines, at a rent of £2 10s. a month, which the Committee is informed would not be unreasonable for a period of a month or two, but could not be justified for an extended period. In December, 1918, on learning that the Stationery Office were once more in a position to supply typewriters, the Air Ministry gave general directions that all hirings should cease forthwith. The hire of these particular machines was continued, however, in one case for one and in another case for two years, and in addition one of the machines was lost. In consequence an unnecessary payment of £120 was made from public funds.

(b) In another case the Committee found that considerable extras were incurred in connection with a contract for reconditioning mechanical transport, owing to the practice which had prevailed in Air Force units of completing service vehicles by detaching spare parts from surplus vehicles, and the difficulty of arriving at a settlement with the contractor appears to have been increased by the circumstance that the vehicles handed over to the contractors for reconditioning had not been adequately inspected on behalf of the Air Council.

(c) Comment is also necessary on another case where excessive expenditure was incurred in re-instating a farmer in fresh premises after his farm had been occupied by the Air Ministry under the Defence of the Realm Act. To enable this tenant to continue his business as a pig farmer, the Air Ministry proposed to the Treasury that the pig styes and other buildings should be removed and re-erected on a neighbouring farm, within a total cost of £1,000. This was sanctioned, as an alternative to a potential claim estimated at £2,500 to £3,000 if the business were closed down. Later it was found impossible

to remove much of the old out-buildings, and a good deal of reconstruction was carried out with new materials. For this reason, and owing to other difficulties, the operations ultimately cost over £9,000. The Treasury have declined to accept any responsibility for the large excess which has been incurred on this service and the Committee must express their regret that the Air Council should have omitted to report the circumstances immediately to the Treasury so soon as it became clear that the operations would involve so serious a departure from the proposals originally sanctioned.

(d) In another case, where it became necessary to write off Qns. 4307–8, deficiencies amounting to £2,902 in the accounts of a temporary unit, attributed to unvouched payments of travelling expenses of airmen on recruiting duties, over-issues of cash and other unvouched expenditure, the Treasury found it necessary to comment on the lack of energy displayed in following up the investigation of accounts known for some time to have been unsatisfactory, and held the opinion that an earlier determination of the position might at least have led to the arrest of the delinquent officer.

These incidents, as has been said, took place shortly after the close of the War, when the organisation of the Air Ministry was still incomplete. In view of the improvements in methods of accounting and control which have since been introduced, the Committee hope that cases of this kind will not re-appear in the

accounts.

64. Store Accounts.-In paragraph 96 of their Third Report last year the Public Accounts Committee expressed the hope that no effort would be spared to expedite the work of placing the store accounts on a satisfactory basis.

The Committee regret to be informed again this year that Qns. 4335-6. progress has been retarded by a shortage of trained clerks who can do the store accounting work, the demands of cash accounting having absorbed the greater part of the experienced staff available, The delay in reaching a satisfactory basis for store accounting has been most marked in the East, and as a result the Air Ministry have found it necessary to ask for authority to dispense Q. 4349. with accounts for a number of important Depots, covering in some instances periods as late as July, 1921. The Treasury, while recognising the difficulties experienced by the Air Ministry, Q. 4355. considered that the facts ought to be brought to the notice of the Committee. The Air Ministry claim that every case in which they have asked for dispensation relates to a period preceding the re-organisation of the store-keeping and store-accounting branches in the areas affected. The Committee feel that in all the circumstances there is no alternative but to agree to dispense with the accounts in question, but they must reiterate the hope that a much more satisfactory report on store accounts abroad will be forthcoming next year.

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62

Q. 5296.

Q. 5935.

ARMY.

65. This is the third year in which the Army accounts have been rendered on the new Income and Expenditure basis with subsidiary cost accounts, and the question naturally presents itself how far the new form of account is proving of value for purposes of Parliamentary control. The Committee learn that there is at present sitting a Departmental Committee under Sir Herbert Lawrence to advise the Army Council how far this form of account is likely to be useful and with what degree of elaboration it should be kept. The Committee therefore feel that they are not yet in a position to arrive at a definite conclusion. They regard the question as one of great importance, and hope later to revert to it more in detail.

66. A glance at the accounts will show that in many directions the figures as set out on the new basis are very illuminating. The Committee refer particularly to the details given under Head III as regards educational establishments and working expenses of hospitals, depots, etc. Perhaps the most striking of these accounts is that relating to Mechanical Transport Companies (Head III, F.v.), which shows, on the basis of figures regarded as typical, that the cost per mile for Army motor transport, including all overhead charges, ranged from 2s. 2d. per mile for light cars up to 3s. per mile for petrol lorries. The Accounting Officer informed the Committee that these costs would be made the subject of special investigation. Study of the Tables given on pages 83 and 74 as to the cost of Horse Transport and Mechanical Transport Companies indicates that on the basis of the charges raised against units a Horse Transport Company only earns its living on one day out of seven, whereas the Mechanical Transport Company earns its living about four days out of seven. Other facts which are brought out by this portion of the account and which could not be discovered from the account in the old form, are the high cost per student in some of the Educational establishments and the very heavy proportion of supervision and administration in certain Army establishments as compared with the direct operating charges. Instances will be found in the Staff College (Page 32), the Cavalry School at Netheravon (Page 35), the Army Ordnance Depots (Page 70), Engineer Store Depots (Page 72), Mechanical Transport Depots (Page 73), Supply Depots (Page 77). The Committee were glad to hear that the Accounting Officer agreed that this matter requires further examination. The costing figures relating to the hospitals also seem to the Committee to be a valuable instrument towards economy, although no direct comparison appears to them to be possible between an Army hospital which necessarily must keep a reserve of unoccupied beds to meet emergencies, and an ordinary civil hospital whose great aim is to utilize its beds to their fullest capacity.