for the defence of these countries is estimated at 440,0007., so that a net surplus of 1,131,0001. would have accrued to Air Votes but for the fact that provision was taken in the Supplementary Estimate, recently voted by the House of Commons, for meeting expenditure incurred during the industrial crisis in the early part of the year from these extra receipts instead of from savings on Air Votes.

(b) The decision of His Majesty's Government that expenditure in 1922/23, and so far as possible in 1921/22, was to be curtailed within the narrowest limits involved a drastic revision of the programme for Air Services upon which the estimates for 1921/22 had been based. Not only were all possible economies effected in the current financial year, but, in order to reduce commitments in 1922/23, the programmes for the replacement of aeronautical equipment, for new works services and for civil aviation were drastically curtailed.

(c) Prices and wages have in many instances fallen during the course of the year below the figures which were anticipated when the estimates were framed.

(d) Delays have occurred in the assessment of awards by the Royal Commission on awards to inventors, in the execution of works services, in the construction and development of experimental aircraft, engines, &c., causing postponement of expenditure until the succeeding financial year.

(e) The development of Civil Aviation has been less rapid than was anticipated, although the saving on Vote 8, due to this cause, has to some extent been off-set by the adoption of the Scheme for the grant of subsidies.

On the other hand the Air Council have been called upon to meet certain charges for which provision was either inadequate or not included, e.g., arrear charges by the Shipping Department of the Board of Trade, and expenditure consequent upon the loss of the Airship R.38, together with a diminution of the Appropriations in Aid of Vote 9. The above explanations cover the salient features of the variations on all Votes. Detailed explanations of the variations on each Vote and subhead will be furnished when final figures are available.

I have laid before the Lords Commissioners of His Majesty's Treasury Mr. McAnally's letter of 12 April last (334,535/22 F.1) enclosing tables showing the probable outturn of Air Votes 1921-22,

My Lords note that no excess is anticipated on any Vote and that the net total saving is estimated at 4,121,4487. or, deducting the net decrease of expenditure due to repayments from the Middle East Vote, at 2,990,4487.

Their Lordships note this result with satisfaction in so far as it is due to the administrative economies explained in sub-paragraph (b) of the third paragraph of the letter under reply, but They would be obliged if the Air Council could cause Them to be furnished with an approximate estimate of the total savings under this head.

In reply to Treasury letter of the 7th instant, (S. 15345) relative to the probable out-turn of Air Votes for 1921/22, I am commanded by the Air Council to acquaint you, for the information of the Lords Commissioners of His Majesty's Trasury, that they estimate that, of the total surplus anticipated, the following amounts may be ascribed to administrative economies effected during the year. Reductions in the numbers of personnel employed as compared

with the programme.

Abandonment of the Airship programme.

Curtailment of the programme for Civil Aviation.

Deferment of the purchase of new machines and of the programme

of New Works Services.

£

1,260,000

876,000

I am to explain that these figures are necessarily only rough approximations of gross savings based on the salient cause in each case and that they have been arrived at by comparison with the original programme, i.e., no deduction has been made for services not included in the original programme such as the cost of the new scheme of subsidies to Civil Aerial Transport Companies estimated at 61,0007.

I am, &c.,

The Secretary, H.M. Treasury.

(Signed) H. McAnally.

Enclosure to Letter No. 13.

ANTICIPATED OUT-TURN OF AIR VOTES, 1921-22.

(334535/22/F.E.)

SIR,

No. 16.

Air Ministry, 18 December, 1922.

I am commanded by the Air Council to forward herewith, for the information of the Lords Commissioners of His Majesty's Treasury, a statement* showing the actual expenditure under Air Votes for 1921-22 as compared with the grants for that year.

It will be seen that the gross expenditure amounted to 16,394,6807. 13s. 11d., the Appropriations in Aid to 2,770,6311. 10s. 2d., and the net expenditure to 13,624,0497. 3s. 9d., the total surplus on Air Votes being 4,787,4277. 16s. 3d.

The causes that led to the surrender of this large sum have already been explained to Their Lordships (Air Ministry letter of 12 April, 1922 No. 334535/22) the further saving of 666,000l. over the sum then considered probable, 4,121,4487., being due as to 361,000l. to the same causes and as to 305,000l. to increased receipts.

Of the 361,0007., 310,0007. may be ascribed to economies effected in addition to the sums of 1,260,0007, and 876,000l. referred to in Air Ministry letter of 26 June last.

The balance of 51,000l. is due to delay by Contractors and to other causes offset by the excess expenditure on Works Services in Iraq already reported to Their Lordships.

Detailed explanations of the savings and extra receipts under each Vote and Subhead will appear in the Appropriation Account which will shortly be forwarded for Their Lordships' information.

No virement as between the various Votes is necessary, but I am to request the sanction of Their Lordships for meeting the deficit of 12,6471. 18s. 9d. on Balances Irrecoverable, &c., from the aggregate savings on the Votes.

I have laid before the Lords Commissioners of His Majesty's Treasury, Mr. Bland's letters of the 18th ultimo (334535/22/F.E.), enclosing a statement showing the actual expenditure under Air Votes for the year 1921-22 as compared with the grants for that year, and of the 21st ultimo,† (364685/22/Accts. I.) enclosing a copy of the Air Services Appropriation Account for the same year.

In reply I am to request you to inform the Air Council that Their Lordships sanction the meeting of the deficit of 12,6471. 18s. 9d. on "Balances Irrecoverable and Claims Abandoned" from the aggregate savings on Air Votes generally.

The Secretary, Air Ministry.

I am, &c.,

(Signed) R. S. Meiklejohn.

* Copy of Paper No. 1 (pages 4-7).
† Not printed.

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL UPON THE APPROPRIATION ACCOUNT OF THE RECEIPT AND EXPENDITURE FOR AIR SERVICES for the year ended 31 March 1922, prepared and submitted for the information of the House of Commons in pursuance of the 22nd Section of the Act 29 & 30 Vict. c. 39, as amended by the Act 11 & 12 Geo. 5, c. 52.

VOTE A.

1. Paper No. 5 at page 45 gives a statement of the strength of the Royal Air Force during the year 1921-22, showing the average strength each month, based on returns rendered by the various units as on the last day of each month. It will be observed that the numbers were, throughout, below the total authorized by Parliament for the Force.

Comparison of Expenditure with Estimate.

2. The amount to be surrendered in respect of Air Services 1921-22 is 4,787,4271. 16s. 3d. as shown by the following table :

Each Vote shows a surplus on gross expenditure, the largest amounts being as follows (see page 8 of the Account) :—

These large surpluses are attributed by the Air Ministry, as shown in letters Nos. 13, 15, and 16 at pages 97, 98, and 100, to (a) the cutting down of services with a view to economy, (b) the general fall of prices and of wages, and (c) delay in the progress of certain services chiefly works, experiment and research, and civil aviation.

In the case of various subheads additional provision made by the Second Supplementary Estimate was not in fact required, as the actual expenditure was within the amount of the original estimate. The total of the additional sums thus provided exceeded 683,000l., the chief items being :

Vote 1, Subhead B, Pay, etc. of Men
Vote 3, Subhead A, Aeroplanes, etc. ..
Vote 4, Subhead B, New Works, etc...

£

214,800

156,000

103,000

The excess of actual over estimated receipts in eight of the nine Votes amounted to 1,478,744l. 10s. 10d., against which there is a deficiency of receipts amounting to 79,6031. Os. 8d. on Vote 9, making a net surplus of Appropriations in Aid amounting to 1,399,1417. 10s. 2d.

Adjustment of Special Advances to Contractors.

3. In paragraph 2 of my Report last year, I pointed out that certain special advances had been made to contractors, amounting in some cases. to 100 per cent. of work done. I have since noticed that, when payment was made for stores delivered under the contracts for which these uncovenanted advances had been made, only that proportion of the advances allotted to a particular delivery was abated from the amount of the claim in respect of it.

I represented to the Air Ministry that, in cases where contractors had received general advances not due under their contracts, no further payments should have been made until invoices fully covering the advances had been received and duly certified. The Air Ministry have concurred in my view as to the correct procedure, the departure from which was stated to have been an oversight.

Aeroplanes dispatched to India and thrown up for disposal.

4. A payment of 25,0081. 8s. Od. was made by the Air Ministry to the High Commissioner for India in February 1922, being a refund of the value of four aeroplanes, including a sum of 1,174/. 11s. 1d. for the cost of their freight to India.

These machines were part of a consignment of six which had been dispatched to India during the early months of 1920, and, having been declared obsolete for service purposes in April 1920, they were thrown up for disposal in India.

I drew the attention of the Air Ministry to this unfruitful expenditure, and asked whether, if these machines had been indented for, it was not proper that Indian funds should bear the whole cost, notwithstanding the subsequent decision of the Air Ministry to regard the machines as obsolete for service purposes: if on the other hand it was the function