1 March, 1928.]

that would be one proposition; whereas a lease for a relief telephone exchange expected to be required for perhaps 10 years would be another proposition. You would not try to get the same period of lease for both.

361. What I had in mind was whether you could protect yourself against the rent being put up against you if you required to continue in the premises you had already taken?-The leases falling in now I should say are all pre-war leases, and that is why the rent goes up when they fall in. It is rather difficult, I am afraid, to satisfy the honourable Member in a general statement. The subject is so large and so varied.

362. It was only with a view to seeing whether the Post Office takes such steps as it can to protect itself?-I think the Committee can rely on the Post Office and the Office of Works between them using every resource at their disposal to counteract the natural desires of the landlord.

363. With reference to Subhead E.3, page 28, "Packet Services-At Home," when a mail contract is made, is any consideration given to the question of what freight rates those companies will charge on the line on which they are carrying the mails?-No, the Post Office point of view is that the Post Office is concerned merely with getting the best terms it can for the conveyance of mails.

364. Would there be any objection on the part of the Post Office to that other question being introduced when the contract was being made?-I think there would. Some years ago we had a controversy with the Government of the Union of South Africa on that very point. The Union of South Africa wished the Post Office to be parties to a mail contract in which certain conditions in regard to freight rates of private produce were made a term of the contract, and the considered decision of the Post Office -I think with the consent of the Trea-sury-was that rather than be put in that position in which the conveyance of mails might be subsidising private interests, they declined to be party to the contract altogether.

365. I was referring more particularly to home services. Would that same consideration have the same weight in the question of home services?-I think that is perhaps rather a question for Ministers. So far as the Post Office as a Department is concerned, its business is the conveyance of mails, and only

[Continued.

the conveyance of mails. But if Parliament or the Government for the time being should decide to use a mail contract in order to obtain extraneous advantages for other business they could do so, but it is not the business of the Post Office.

366. As things are at present you only consider yourselves carriers of mails? -That is so.

367. Would you mind telling me where Abu Zabal is? It is in Lower Egypt not far from Cairo.

368. Is that a new station?—No, I think it was built 10 or 12 years ago.

369. I see the rates of pay have been increased there. Is there any special reason for that ?-I think the increase was due to the fact that it was difficult to get men to go there, or to stay there, at any lower rates. The station has now been disposed of. It was not a popular station.

370. On page 32 there is a reference to a loss on exchange of foreign coins inserted in automatic coin collecting boxes. Does that represent the difference between what you ought to have got if the proper coin had been inserted and what you in fact got by way of the coin that was inserted? That is so.

371. Do you find that those boxes are improperly used to any great extent ?Do you mean in this particular way, or in other ways?

372. I mean in this particular way.Well, this shows the measure of the loss. In one year it was £115. It is a comparatively small loss. I am surprised it is not larger.

373. Is that spread over the whole of the country?-Yes, it is spread over the whole of the country.

374. It was not in one particular town that this happened?-Oh, no.

Mr. Ellis.

375. With regard to the item on page 32, "Excess contributions for National Health and Pensions and Unemployment Insurance, £252"; surely that is not a loss. Will you not get a credit for it? Those are what I think may be called illegal contributions. It is rather a complicated question.

376. One might be misled by the heading. It looks to my mind an overpaid demand. Is that right? These were contributions paid in respect of people who were afterwards found not to be insurable, or to be insurable at some other

1 March, 1928.]

rate than the rate at which the contributions were paid. I think I am right in saying that this figure includes two things: (1) The employer's part of the contribution which was paid and afterwards found not to have been payable, and (2) the employee's contribution in so far as it is not recoverable from the employee. And as a rule it is not recoverable from the employee.

377. If too much has been made surely there is something due back to the State to the employee?-In some cases the Ministry of Health and the Ministry of Labour are prepared to refund; in other cases they are not. They are restricted in certain ways.

378. Putting you on the same basis as other employers?—Yes.

379. Where those refunds take place 1 suppose you get a credit for that in another year?—Yes.

Sir Assheton Pownall.

380. How does it come about that we have motor cars as far afield as Abu Zabal in Egypt? That was to enable the staff at Abu Zabal to get into Cairo. Abu Zabal is an isolated station in the desert, close to the Canal, and the staff had a station Ford.

381. Have we many motor cars for outlying stations of this nature?-That is the only one out of this country.

382. With regard to Subhead H.2, page 31, I thought we had some arrangement with regard to guarantees for SubPostmasters who had deficiencies ?-I think that has all been abolished. believe there was at one time a guarantee fund for Sub-Postmasters.

I

383. I thought they had to give guarantees before they were allowed to become Sub-Postmasters, and that those guarantees could be fallen back upon in a case of deficiency? That was abolished some years ago.

384. There is one case at Shepherd's Bush amounting to £752. That is a serious item?—Yes.

385. There is an item also of a deficiency in Wages Account at the Eastern Central District Office amounting to £187. At the Eastern Central District Office it is presumably a fairly senior person who looks after the wages. It seems a very big shortage?—That was a curious case. It was a case of the theft of one or two bundles of currency notes. 386. The word "Deficiency" is

[Continued.

used in this explanation?-The word "Deficiency is used, yes. That is technically correct, because I think it was only discovered when the accounts would not balance. But it is a little misleading. It was really a theft, by some person unknown, of a bundle of currency notes which was left for a moment on the pay table when nobody was watching.

387. There is also a case of fraud amounting to £951. Do you remember if anything was done in the way of prose'cution with regard to that?-That went on over a series of years, and two men were prosecuted and convicted, and one disappeared.

Major Salmon.

388. In reference to dispensing with the idea of insuring Sub-Postmasters, why was that brought about? What was the reason for that being abolished?-I am afraid I cannot remember. It was before my time. But I should imagine, as in so many forms of this kind of insurance, the Government find that in the end it bears the cost itself, and if it bears the cost itself there is no object in paying a profit to the insurer.

389. What I rather meant was this. I was under the impression that some years ago a man who wanted to be a Sub-Postmaster had to take out an insurance on his own account?-A fidelity guarantee?

390. A fidelity guarantee. Why has that been stopped?-(Mr. Watson.) A Parliamentary Committee considered it in 1914. It was an appeal from Sub-Postmasters as a matter of fact. Actually

of course the cost in effect fell to be paid in one way or another by the Post Office. The amount of a man's remuneration had to be sufficient to cover the cost of insurance.

391. Did that indeed prove to be the fact? That was the fact.

392. Just one point with regard to motor cars. Are we running a large fleet of motors on our own?--(Sir Henry Bunbury.) Quite a considerable fleet.

393. Do we also contract out as well? -Yes.

394. Do you find you are able to do it cheaper mile by mile by employing your own commercial vehicles instead of contracting out?-We only do it where it produces a tangible saving. Whether the actual all-in running costs mile by

6 March, 1928.]

prepared and placed before the Committee on the 26th February, 1926, and the decision to cancel the contract for the Manchester relief exchange was taken on the 1st March, 1926.

398. That, I think, is in reply to something I asked you from the Chair?-Yes, I think so.

399. Looking at page 40 of the Post Office Commercial Accounts which we have before us to-day, Sir Malcolm, paragraph 1 of your Report refers to the principles observed in the compilation of the accounts, which throws us back on the Memorandum which is to be found on pages 4 to 8. I think you would probably like to add something to that, Sir Malcolm? (Sir Malcolm Ramsay.) My object in mentioning that was that I might make it clear to the Committee that my certificate to these accounts is given subject to the general objects which they have in view and the principles observed in their compilation. Many of the figures, as the Committee have been informed in previous years, are in a sense hypothetical; they rest on apportionments. Take, for instance, the division between telephone, postal and telegraph services, which are done very often by a common staff. The charge is apportioned between the three. The accounting officer could hardly, then, claim the accounts to be mathematically and demonstrably correct, but they do as far as the circumstances permit exhibit the result which the Post Office would work to on commercial lines as far as the analogy is applicable. There are other items which contain an element of hypothesis. For instance, on part of the capital employed in the Post Office no interest is actually paid, and when we come to construct these accounts we have to take a hypothetical rate. That is all I wish to add on that paragraph.

400. Mr. Phillips, have the Treasury anything to say on that paragraph and the Memorandum on pages 4 to 8?(Mr. Phillips.) No, we have no observations to make.

401. Sir Henry, have you anything to say? -(Sir Henry Bunbury.) Perhaps I might say this. Accounts which rest on apportionment are not hypothetical in the same sense in which an assumed charge, for example, the charge for interest, is based. I should prefer to use the adjective" approximate " rather than 'hypothetical in dealing with matters of apportionment. (Sir Malcolm Ramsay.) I should agree.

65589

[Continued,

402. That is the only comment you would like to make Sir Henry? (Sir Henry Bunbury.) Yes.

403. Coming to the other two para graphs of your Report, Sir Malcolm, would you like to say anything on the earlier preparation of Accounts, and the wireless receiving licences?-(Sir Malcolm Ramsay.) On paragraph 2 of the Report, I feel bound to point out in continuation of what I have just indicated to the Committee, that on a very minute examination the cash expenditure as taken up in these Commercial Accounts is not quite reconcilable with the final cash expenditure brought to account in the Post Office Appropriation Account. The difference, however, is, as I say here, in the region of one-hundredth of 1 per cent. That is to say, there is less than £700 which figures in the Appropriation Account which has not been worked into this Account. The reason for that was that it takes some time to prepare the Commercial Accounts, and in order to avoid delays of publication the Post Office began to compile them before the final figures on the cash Appropriation Accounts were settled. That is one point I have to make on paragraph 2. The other point is cognate. There are one or two trifling errors I discovered in the course of my audit, but to have put them right would have involved an amount of alteration quite out of proportion to the result, and therefore I let them stand. The particular error I have in mind is one of £15,000 which was picked up in the course of my audit, but as that would have meant some eight or nine consequential alterations I let it go rather than delay the whole volume of accounts because the amount is quite trifling in relation to the total

404. And in any case that was only a clerical error, I think?-It was due to a clerical error. I think the explanation was that two columns got transposed. A figure was taken out of the wrong column, which involved a difference of £15,000, but that will be taken up and adjusted in next year's Account, and it will not be a cumulative error.

405. Then paragraph 3 refers to wireless receiving licences?-On paragraph 3, the Committee will remember that last year it expressed the wish that the revenue from wireless receiving licences might be cut out of the telegraph service account.. This particular change has been given effect to partly in the account now before

B

6 March, 1928.]

the Committee, and for this reason. The year covered by the account is a year of transition. For the last nine months of the old system of wireless they have continued the account on the old lines. On the 1st January, 1927, the British Broadcasting Corporation came into effect and as from that date they have given effect to the wish expressed by the Committee by cutting out the revenue from wireless except for 12 per cent, which is paid to cover expenses of collection.

406. The change over of course ran with the calendar year?-Yes, it changed over on the 1st January, 1927.

407. Have the Treasury any comment on the paragraphs, Mr. Phillips?—(Mr. Phillips.) As regards paragraph 2 the point is this. As the Committee are aware our cash accounts, in their final form-they are then called Appropriation Accounts have to be rendered by the 30th November, and therefore if the Commercial Accounts were held back to await the final cash figures their preparation would start very late. As a matter of fact it is found it is quite good enough if we take the cash figures out of the books as they stood on the 30th June, which gives a possibility of considerably advancing the date of publication of the Commercial Accounts without introducing more than a very trifling error. As regards paragraph 3, the reason we thought it better to leave in the 12 per cent. is simply that, as we understand it, that appears on both sides of the Account. The 12 per cent. appears on the revenue side as a separate item. The expenditure to which it relates is included on the expenditure side though it is not separated out from the other items of expenditure. It appears to be fair to allow the telephone account to show the

[Continued.

statutory date. So that in any case the choice lies between producing accounts based on the state of the books as at 30th June, or failing to comply with the provisions of the Act. I submit that all the advantages are in one direction.

409. You have nothing to say on the wireless receiving licences ?-No.

Mr. Briggs.

410. I would like to ask Sir Malcolm this question for my better understanding when we come to the Account of the wireless receiving licences. Whilst the percentage of 12 per cent. on the total income is based on the different incomes for the three months and the nine months, are the gross sums of expenditure comparable between the three months and the nine months? When one comes to the Account I take it one can make comparisons?-(Sir Malcolm Ramsay). Yes, that is so. The Accounting Officer will deal with that in detail when you come to the Account.

411. The Memorandum on the interDepartmental Services makes reference to the telegraph services rendered to other Government Departments. How is the value of the postal services arrived at? (Sir Henry Bunbury.) Public rates less one-sixth.

412. How are the numbers arrived at? -By test weighings with an obligation on the Department to report quite exceptional postings.

413. Further on it makes reference to the work done by the Office of Works which is done without any charge apparently, according to this paragraph. It says: "The cost of these services is borne on the Votes of the respective Departments." If I remember rightly, when we had the Office of Works before us two years ago, with another Department I think it was the Stationery Office-we were told the Office of Works charged a commission.-They charge for their general establishment expenses in certain cases, but the reference here is to the ordinary work which the Office of of Works does as building and maintenance contractor to the Post Office, and the Stationery Office as contractor for office supplies to the Post Office. Those expenses are provided by Parliament on the Vote of the Office of Works, and consequently not provided on the Vote for the Post Office. Consequently they are paid for out of the Vote for the Office