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Dockyard Expense Accounts.
Prisons, England and Wales, Scotland and Ireland, Manu-

facturing and Farm Accounts, on pages 331, 348, and 369

of Civil Services Appropriation Accounts (H.C. 7/1923). Postal, Telegraph, and Telephone Services Commercial

Accounts (H.C. 14/1923).

FORM OF THE ACCOUNTS. 4. The accounts in the present volume have, in the main, been prepared in accordance with the general Treasury directions referred to in previous years' Reports. As stated in my Report last year, there is some lack of uniformity in the case of some of the war services accounts, charges for interest, &c., having been omitted in certain cases, for reasons given in the notes to the respective accounts. In the case of certain other services which have now terminated, interest on capital advances has ceased to be charged as from the approximate date of decontrol or cessation of ordinary trading operations, and before the completion of disposal of stocks.

VALIDITY OF CERTAIN WAR CHARGES AND LEVIES. 5. The income shown in some of the cumulative Trading Accounts in this volume includes considerable sums derived from charges made for licences, etc., under the Defence of the Realm Regulations or Orders made thereunder.

As the legality of the procedure through which this income was obtained has been called into question, a Bill (War Charges, Validity) is at present before Parliament to make valid certain charges of this nature, particulars of which are given in the Memorandum to the Bill (Cmd. 1843).



Cost of Admiralty Supervision. 6. Each factory bear's a charge of £500 for the cost of general control and financial duties, rent, &c., at headquarters.

In reply to an inquiry as to the adequacy of the charge, I am informed that steps will be taken to revise the amount in the accounts for 1922-23.

Surplus Property and Plant. 7. In the accounts of the Royal Naval Cordite Factory last year a large proportion of the total charges for interest on capital, insurance, depreciation, and maintenance of buildings and plant, was written off in the Production Account instead of being charged to manufacture, because only a portion of the establishment was in use. This procedure has been extended in 1921-22 to the accounts of the Royal Naval Torpedo Factory.


a 2

The amounts written off in the Production Accounts for the year on this basis are :

R.N. Torpedo Factory £53,924 3 10
R.N. Cordite Factory

£242,769 12 5

Revaluation of Stocks. 8. The book values of stocks of raw materials purchased at high prices have been written down, with Treasury approval, to approximate closely to current market prices, the amounts written off in the accounts under review being : R.N. Torpedo Factory

£39,601 12 11 R.N. Cordite Factory £130,779 16 11


Expenditure not charged to Production. 9. During the dispute in the coal mining industry in the early part of the year 1921-22, the production of cordite was suspended, and the only processes carried out were those for the completion of partially manufactured cordite.

The products of the period affected by the dispute, viz., 1 April to 1 October, 1921, were priced at the unit costs of manufacture in 1920-21, and the difference, £52,484 16s. 6d., between the value on this basis and the actual manufacturing expenditure, has been excluded from the debits to manufactures, and is written off in the Production Account under the heading

Expenditure during Coal Dispute not applied to Production.'


10. The accounts on page 5 record the cost, to 31 March, 1922, of the two oil tank vessels which were contracted for by the Admiralty in 1920 at a fixed price of £310,000 each. The work was undertaken primarily with a view to finding employment for dockyard employees who would otherwise have been dismissed, and followed upon a recommendation of a Committee presided over by Lord Colwyn appointed to consider how far it might be possible to utilize any facilities which the Admiralty might have available in the Royal Dockyards for the construction of merchant ships.

The accounts are provisional, and trading accounts, showing profit or loss, are to be framed after completion of the work, but as the cost at 31 March, 1922, is shown as £655,810, it appears to be inevitable that a heavy loss will be incurred on the fixed selling price of £620,000. The Navy Estimates for 1922-23 include £114,600 for further direct expenditure on these ships, and the provisional figures in the cost accounts for overhead charges will probably have to be considerably increased.

MEDITERRANEAN AND AMERICAN STEEL. 11. The accounts of Mediterranean and American steel for the period to 31 March, 1921, printed on pages 37 and 38 of the volume of Trading Accounts, 1920-21, were stated to be provisional in nature, and the possible curtailment of further investigation was indicated.

In view of the inaccuracy and incompleteness of existing records, the preparation of final figures, which could be certified as an accurate representation of the results of trading, was deemed to be impracticable, and, with Treasury concurrence, the issue of a final Trading Account for steel acquired by the Admiralty during the war, and sold to shipbuilding contractors, has been abandoned.



12. The final account of the Flax Production Operations of the Ministry of Agriculture and Fisheries was contained in the volume of Trading Accounts for 1919-20 (pages 60 and 61), and was referred to in paragraphs 7 and 8 of my predecessor's Report on page xi of that volume (Cmd. 1368) and in paragraphs 111 and 112 of the Third Report from the Public Accounts Committee, 1921. This account showed that, although the Ministry's operations had ceased with the sale of the factories and stocks, sums amounting to £409,000 were outstanding in respect of that part of the purchase price which was payable by instalments. Owing to the collapse of the flax market, the purchasers have been unable to meet their liability to the Ministry to complete their payments, and in the present condition of affairs it is feared that only a comparatively small sum will be received in discharge of this total of £409,000 and of the accrued interest thereon. The estimated loss of £1,172,603, shown in the above account, will accordingly be considerably increased.

The above account showed an estimated receipt in respect of the sale of Headwell Flax Factory and Stocks, but the Ministry's foreword, on page 38, to an account of this Factory which appears in the present volume, relates the circumstances in which the Factory and Stocks were taken back by the Ministry from the original purchasers. The loss in the period of this account, viz., 1 November, 1920, to 31 March, 1922, is £26,581, mainly due to depreciation in value of Stocks, Buildings, and Machinery.

FARM SETTLEMENTS. 13. The summaries of the Farm and Estate Accounts of the various Farm Settlements (pages 93-95) show that the aggregate losses from the commencement of operations to 31 March, 1922, amounted to £153,626 on the Farms and £95,916 on the Estates,

total of £249,542.

14. The developments due to the change of policy with regard to these settlements, referred to in paragraph 18 of my Report last year, are set out in the Ministry's Annual Report for 1920-21 under the Small Holding Colonies Acts. This Report, which gives the position at 30 June, 1922, shows that, out of a total acreage of 25,593 acres held by the Board, 7,671 acres had been disposed of by sales, lettings, or transfers to County Councils (a further reduction has been made since that date) and that, as regards a further area of 4,942 acres which had not yet come into hand, the Ministry, in view of existing financial conditions, had prepared no plans for its development as small holdings.

The conditions under which the Kilmington, Kinson, and (the greater part of) Titchfield settlements have been transferred to County Councils for a nominal consideration in each case are set out in paragraph (2) of the Ministry's foreword on pages 55 and 56.

It will be observed also from the foreword to the Arable Dairy Farm Accounts on page 108 that operations have been discontinued at all but three of these Farms.

BOSBURY ESTATE. 15. As stated in paragraph 20 of my Report last year, the Bosbury Estate is being administered as a Trust under the Sailors and Soldiers (Gifts for Land Settlement) Act, 1916, Section 1 (1) of which provides that all expenses incurred in relation to any such trust are to be defrayed out of the trust property, or the proceeds of income thereof, or out of moneys borrowed on the security of the trust property.

The temporary loan from the Small Holdings Account, by which the Estate was at first financed, as explained last year, has now been repaid (interest being waived by the Treasury) out of the loan to the Estate from the Vote for 1921-22 for the Ministry of Agriculture and Fisheries. The Treasury have decided in the case of this latter loan (approximately £38,000) that as the Estate cannot, at any rate for some time, meet the charges for repayment nor for the full amount of interest, interest shall for the five years from 1 April, 1921, be charged on £15,000 only, at a rate of 5.1 per cent. per annum, and that the matter be reviewed on 1 April, 1926.


16. It will be seen from paragraph I. of the foreword on page 124 that, except for two early individual accounts published in the volume of Trading Accounts for 1919-20 (Cmd. 1368), the Combined Account of the Board's Small Holding Colonies includes all Estate Account transactions from the commencement of operations up to 31 March, 1922. The Combined Estate Balance Sheet shows the total loss for the whole period, without exception, viz., £72,128, which is approximately equal to the charges for interest on capital and administrative expenses.

The Trading Account and Balance Sheet of each estate have been duly examined by my officers.

No charge for depreciation of buildings appears in the account for the reason, I am informed, that the bulk of the buildings have been, or will be, sold to the small-holders. In the case of the remainder, adjustment will be looked to in future accounts.

Reference to the heavy expenditure incurred on the various schemes of Land Settlement has already been made in paragraph 31 of my Report on the Civil Services Appropriation Accounts, 1921-22 (H.C. 7/1923).

17. As mentioned in paragraph III. of the foreword the Board has temporarily managed farms on certain of the Estates comprised in the Combined Estate Account before the settlement of the small-holders. In view of the varying periods covered by these farming operations, which in many cases terminated before 31 March, 1922, the presentation of a combined Farm Account, and in particular of a combined Farm Balance Sheet, was considered to be impracticable. The aggregate loss on these operations between 1918 and 1921 was £45,818.

18. The Combined Ingoings Account on page 125 relates to Settlements where the Board did not farm the land, and shows the progress made at 31 March, 1922, in clearance of the debits in respect of payments by the Board to outgoing tenants for crops, manures, grass seeds, &c., such payments being in part recoverable from the incoming small-holders.

In some cases charges against the incoming tenants, to a substantial amount, have been outstanding for a considerable period, and I am informed by the Board that the difficulty in settlement is due to the fact that holders took entry at a time when agricultural values were abnormally high and, further, that the position in regard to ingoing obligations cannot be divorced from that arising in connexion with the heavy annual burdens consequent on high building costs, which is under the consideration of the Treasury.


RAW MATERIALS. 19. Of the eleven Raw Material Accounts presented by the Disposal and Liquidation Commission the following eight : Home Wool, Kips and Raw Hides, Tanning Materials, Leather, Flax and Flax Seed, Raw Jute, Cotton and Cotton Fabric, and Food Containers, show transactions during 1921-22. The accounts for Manila Hemp and Chemicals and Drugs were closed on 31 March, 1921, while the Colonial Wool Account was closed on 31 December, 1920, realization accounts being then opened to record the clearance of the assets and liabilities handed over to the British Australian Wool Realization Association under profit-sharing arrangements. These realization accounts are printed at pages 138 and 139.

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