28 February, 1928.]

[Continued

99. But I thought you said the women only did Old Age Pension work?-Women do Old Age Pension work in the large towns.

100. You will know there are so many pensions in the large towns. You start on the basis that in a large town there are x pensioners for whom the women do the whole work? Yes.

101. Wherever the women are, they do the whole work?—Yes.

102. Could you submit a report to this Committee showing the number of pensioners that the women look after in the respective towns?-I could not give you that from any material in my possession, but I expect I could get it.

103. It would be material to have.

very interesting

Chairman.] What is the point of the request, Major Salmon? Where does it lead you?

Major Salmon.] We shall be able to see the total number of pensioners that are supervised and dealt with by the 400 women staff. It will be interesting then to see that of the 1,064,000 pensioners, being the total number of pensioners, the number x are dealt with by 400 women in large centres.

Mr. Ellis.] But you will only get an average.

Major Salmon.

104. What I understood from Mr. Cunningham was that this work involves some 10,000 officials to deal with it?Excuse me, I hoped I had made it clear that you could not earmark all these 10,000 to Old Age Pension work. (Mr. (Mr. Phillips.) Or anything like it. Cunningham.) Or anything like it. (Sir Malcolm Ramsay.) You see, these officers do Old Age Pensions work, as part of a series of miscellaneous duties. An officer

65589

on tour round his district might on one day look at a distillery and visit a spirit store and a pensioner. They take Old Age Pensions in their stride. (Mr. Cunningham.) They may even take a collector's office. (Sir Malcolm Ramsay.) They have a beat where they discharge a miscellaneous group of duties, and the number of pensioners must be casual in any particular district.

105. I quite see the difficulty; if we had the return it would not help us with outlying districts to make any comparison.

Sir John Marriott.

106. Does not the Post Office contribute very largely to the expenses of Uld Age Pensions? (Mr. Cunningham.) Yes, the Post Office do all the paying.

107. I mean this is only a portion, surely? The services rendered by other Departments are shown in the Estimate. The Post Office reckon about £250,000 for their services.

108. So that their services are enormously in excess of yours?-No, ours are £500,000 for the officers.

109. I see. And theirs are £250,000?— £257,000 is the figure in the Estimate.

110. Are there any other Departments which contribute? The Ministry of Health and the Registrar-General's Office verifying the ages of claimants and so forth.

111. Could you give us the total cost of administering the Old Age Pensions Act?-£840,000.

112. To which you contribute £500,000? -Yes, £500,000 in round figures.

Chairman.

113. You have given us the contributory items, Mr. Cunningham. Is it correct to say that so far as the local authorities are concerned or the local machinery, they make no outlay at all. You cover that completely through your Local Committees? For example, the meetings of the Local Committees are held on the premises of Local Authorities very often, and the officials of local authorities are the servants of these Committees?-Yes.

114. Is it correct to say that all their outlay in respect of the administration of Old Age Pensions is met by your Department, or otherwise?-It is met out

A 3

Chairman.

120. Sir Malcolm, paragraph 6 of your Report dealt first of all with remissions? -(Sir Malcolm Ramsay.) It deals with remissions on which both the Inland Revenue and I are agreed as to the definition. Every year for many years there has been a return made to me of remissions which come under a definition laid down in the Report of the Public Accounts Committee of 1897, and this paragraph refers to that list and analyses it. I do not think I need add anything to it. The great part of it you will notice relates to income tax. Either there was no real liability or the liability was too doubtful to attempt proceedings, or the estates were in bankruptcy or liquidation; there were some cases of poverty and cases where assessments had been made on certain salaries which the Board were satisfied would never be paid.

121. We have discussed this, of course, in recent years from time to time. Have the Treasury any remarks? (Mr. Phillips.) I only have to say that whenever we see an opportunity of getting rid of a class of extra-statutory remissions we try to do so by putting a clause in the Finance Bill. They do disappear from time to time.

Mr. Briggs.

122. Sir Malcolm, I understood you to say just now that you and the Inland Revenue were in agreement with regard I have to procedure. been reading paragraph 7 of your Report? (Sir Malcolm Ramsay.) My answer related solely to paragraph 6. That is why I said, as far as paragraph 6 is concerned, the Inland Revenue and I have been in complete agreement. I did raise a point on paragraph 7 where they took a different view, but it has now been settled to my complete satisfaction, as I will tell the Committee in a moment.

Chairman.

123. Probably it would help the Committee, Sir Malcolm, unless you see a difficulty about it, if I were to say we would deal with the two paragraphs together. In that case perhaps you will complete the picture? On any showing there were certain remissions which the Board agreed should be included in the list, but in recent years various arrangements have been made (which will be very familiar to the Chairman amongst other people), in cases where there were difficulties in collecting tax. I raised a question with the Inland Revenue whether those particular cases did not come within

the category of remissions which ought to be included in the list furnished for this Committee. They were inclined to doubt that view, and correspondence has passed with the Treasury who say that these particular classes of remissions do not come under the original understanding, but as a matter of fact they think it advisable that a separate list of these peculiar and special cases should be submitted in order that I may scrutinise it on behalf of the Committee. The par

ticular type of cases which we corresponded about is explained at the top of page 5. There were those, first of all, in which a round sum was fixed with reference to the amount of duty and the interest already accrued, payable by instalments over an indefinite period of years, without further charge of interest. Those cases arose very largely out of circumstances with which you, Sir, are familiar-difficulties arising particularly out of the War in connection with shipping companies who were technically liable for huge sums and it became improbable that they could pay without being forced into bankruptcy, and the Treasury authorised the Inland Revenue to compound for a sum which very broadly speaking covered the duty but not including interest. Then the second type of cases was a little different. As I say in my Report, the feature was that part of the Revenue claim was abandoned upon condition that the balance was paid by a definite date. The feature of all these arrangements was that there seemed to be little prospect of enforcing the liability without driving the taxpayer into bankruptcy and jeopardising the whole claim, and the Treasury took the step of directing the Inland Revenue to take their bill and settle it quickly. I think that is a proper description of it. The arrangement now is that a list of all these remissions is to be sent to me so that I can call the attention of this Committee to anything unusual. The matter was fully explained in correspondence.

The Inland Revenue wrote to the Treasury stating the whole case, and the Treasury reply has just been received. Perhaps if the Committee wish that correspondence might be handed in*; I do not know whether the Chairman would have any objection?

124. I was going to ask Mr. Phillips if he would care to add anything on the correspondence, or on the rules that we

65589

* See Appendix 3.

[Continued.

laid down with the Treasury in 1924 covering this class of case?-(Mr. Phillips.) I do not think I can put in any statement about those rules. So far as the Treasury are concerned, we agree on the practical point with the Audit Office. We think this is an exceptional class of case which the Inland Revenue ought to pick out and submit separately to Sir Malcolm in order that he may examine them. We do not quite agree that there is any use of the dispensing power in these settlements. The type of case we have in mind is this. Where a

sum of say £10,000 is due from a particular firm, and it has become abundantly evident that if the Inland Revenue were to take them through the Bankruptcy Court the material amount they would receive would be say £4,000; in those circumstances it appears to us reasonable that the Inland Revenue should have authority to settle the claim for £4,000 or whatever better sum they can get. In doing so we do not think there is any use of dispensing authority for the benefit of the individual taxpayer. But, as I say, we consider that nevertheless this is an exceptional type of remission, and the cases ought to be segregated in a list and submitted annually to the Audit Office for their information.

125. Sir Ernest Gowers, would you like to add anything? (Sir Ernest Gowers.) I would like to add this. Nothing that we have said or done in this correspondence arises in the least from any reluctance to report these cases. (Sir Malcolm Ramsay.) I am not suggesting that. (Sir Ernest Gowers.) I think it as well to make it clear to the Committee by way of justification for our omission to report them in the past. We did not think they were the type of case that fell within existing Treasury instructions, and the Treasury agreed with us. But they thought it would be as well if they were reported in the future, and in future we shall report them.

Mr. Briggs.] May I suggest that paragraph 9 of Sir Malcolm's Report also rather hangs on paragraph 7.

Chairman.

126. Yes, that has reference to the closing down of Excess Profits Duty. Sir Malcolm, paragraph 9 is very largely information, I think? (Sir Malcolm

A f

Ramsay.) There is no criticism in it of any kind. It is purely informative. 127. Very well, I will put that paragraph to the Committee also.

Mr. Briggs.

128. The only question I wanted to ask on that paragraph is if the £95,000,000 mentioned there will be operated on the procedure that is to be settled by their Lordships' direction, as reterred to in paragraph 7?-(Sir Ernest Gowers.) I am not quite sure I follow the question.

Chairman.

Your

was

129. Unless I have misunderstood Mr. Briggs, what is meant is this. As regards the £95,000,000 of arrears mentioned in paragraph 9, there will not be the application of this rule of settlement on the best terms you can get to other than perhaps a limited extent. question, Mr. Briggs, I think, whether that will apply to the whole £95,000,000. That would not be the case, I think?-Oh, no, only where the facts made it applicable. I ought to explain that we do not anticipate collecting more than a very small portion of the £95,000,000. It consists of paper assessment, which will produce nothing like that amount when we come to look into it.

130. It has been made perfectly clear in the House all along that only a miserable fraction of this sum will ever be obtained.

Mr. Briggs.

131. In paragraph 6 there is a reference to £120,000 in 126 cases. Those are fairly large amounts, averaging about £1,000 apiece. Could you tell me what is the largest amount in those 126 cases? -The largest I see at the moment is £3,103.

132. Did that come under sub-paragraph (a) or sub-paragraph (b)? That is the largest under (a). There is a much bigger one under (b). There is one of £25,000 under (b).

[Continued.

amount of duty in assessment, but unpaid at 31st March, 1927, of more than £95,000,000? When are we going to bring it down to reality and to knowing where we are? It is a gradual process; I cannot say when the process will be ended. It is being gradually brought down to reality all the time. The number of cases of which notice was given under the Act of 1926 that they were to be regarded as undetermined was 10,000 out of a total of perhaps 60,000 or 70,000. That has now been reduced to 6,300. But the £95,000,000 includes both cases in which the assessments are undetermined, and also cases in which assessments are determined, but we have not yet been able to collect them.

134. My point rather is this. Do we show this, except in this Report, as an asset anywhere?—No.

а

135. This is merely brought forward as a book entry?—It is merely piece of information. It does not appear in any account.

136. How much was it in 1926? Was it the same figure or a larger figure?I do not know that the information was given in 1926. I am afraid I cannot tell you that off-hand.

137. Do you anticipate that in 1928 we shall have a different figure to the £95,000,000?—Yes.

138. But you do not anticipate there will be any time when you will be able to say that is wiped off, that it is recognised as a bad debt and wiped off accordingly?-I am afraid it will be a long time before we can say there is no outstanding question as regards Excess Profits Duty.

139. Perhaps that is putting it too widely, but this appears a very large sum of money? Yes, but it is not really. 140. It is more ornamental than useful? -I am afraid so.

Mr. Roy Wilson.

141. You say in paragraph 7 that the cases of remission fall into two classes. In both those classes is there any arrangeIment with the debtors that in the case of their not fulfilling their undertaking either (1) to pay in instalments over an indefinite period of years, or (2) to pay the balance by a definite date, failure to meet their obligations means that the whole claim is reinstated?-Oh yes.

142. You can proceed further in case of failure to meet their obligations?Oh yes, it is a definite bargain.

143. Another question on this sum of £95,000,000. You have said that this amount of £95,000,000 does not represent really anything like what you are going to get?-No.

144. Is it not possible after this long lapse of time in the case of Excess Profits Duty to bring that figure of £95,000,000 down to very much more like a real figure, because the years have passed and you must know more or less in a large majority of these cases what is the assessable sum for Excess Profits Duty that you are going to get ?-It is very difficult. If I may say so, the fault is not so much on our side as on the taxpayers' side. There are a few experts in this matter, which as you know is almost incredibly complicated. They are employed in turn by the firms who want to get their assessments right, and therefore we have the greatest possible delay in coming to grips with the matter.

145. It is distinctly misleading to anybody not in the know to see that figure of £95,000,000 as the amount of the claim when as a matter of fact it probably is not a claim at all?-I agree that these are merely paper assessments. To begin with, the assessments may be reduced, secondly, even if the assessments are confirmed there may be repayments to set against them, and lastly, when you get the correct figure it may prove irrecoverable.

146. My point is that it is not presenting an accurate statement of the fact to say that the amount of duty in assessment but unpaid at 31st March, 1927, was £95,000,000. Would it not be more accurate to indicate in that paragraph that that sum of £95,000,000 was a claim which has not been substantiated or agreed? It is not my paragraph. It is Sir Malcolm's paragraph. (Sir Malcolm Ramsay): Sir Ernest Gowers is not responsible. The fault is mine if it is a fault. I think technically it is the correct way of describing it, but I see that it might be misleading people because, though assessments have been raised, they have not been agreed.

147. It would have been at any rate more informing to this Committee if it had read: "The amount of duty assessed, but not agreed, and unpaid at the 31st March, 1927, was more than £95,000,000 "?-Yes, that would be more popular way of describing it, but I do not want to say too much about duty which is assessed but not agreed. I hesitate to say that. With all respect,

a

[Continued.

I should leave out that phrase. In what I say to the Committee the Committee gets the full story. I do not always publish it for public reasons.

148. My reading of it is accurate, is it not, that it is assessed but not agreed? I ask that just for our information?Yes, that is so. I should like to make it quite plain to the Committee that sometimes my reports are reticent simply because they are supplied to the Press and commented on before the witness has had an opportunity of coming here; therefore I very often, having stated the bare facts, hope that the Committee will give me an opportunity of amplifying my paragraph and telling the whole story, and then let the Committee report when they have heard all the facts.

Chairman.] The Committee remembers quite well that these are all public documents, including the Report of the Comptroller and Auditor General, so that we have no protection in that matter at all.

Mr. Gillett.

148A. I do not quite understand whether these cases of remission refer to the cases of loss owing to fraud?-No, they are quite different.

Mr. Ellis.

149. May I ask one question of Sir Malcolm. You spoke, Sir Malcolm, a little time ago about an increase in the number of categories. I presume the ordinary method is that if in the old category anything were questioned the explanation was given to you?-I would raise a question, and if I thought the type of case did not come within the categories which are recognised I would ask for an explanation, and then if I were not satisfied I would mention it to the Committee to investigate it further.

150. That is what I wanted to get at. We are really dependent on your opinion as to whether you ought to have a justification or not, otherwise it would not come before us? That is so. This Committee, as the honourable Member will recollect, has always been like the House of Commons itself, extremely jealous of any exercise by the Executive of anything in the nature of a dispensing power. With regard to taxation, Parliament has always taken the line that if you are going to remit taxes due you must do it so far as you can under statutory authority. There was a great movement after 1897