SELECT COMMITTEE OF PUBLIC ACCOUNTS. vii is taking shape, and its cost will be provided for out of the income of the Fund of £5,000,000 set up under the Imperial War Graves Endowment Fund Act, 1926. The contributions to this Fund on behalf of the United King- Q. 1563. dom (which will amount in all to 81.52 per cent of the total) are being spread over a period of 13 years. 1562. Q. 1571. The Votes of Parliament which will be required for this service Qs. 1556will, so long as they continue, bring the expenditure of the Commission to the cognisance of Parliament and of the Committee of Public Accounts in the usual way, but the Chairman of the Commission was unable to assure Your Committee that Parliament would have any opportunity of reviewing the expenditure arising from the Endowment Fund after it has been finally constituted. Although this date is somewhat remote, Your Committee recommend that this aspect of the matter should be considered without delay. UNEMPLOYMENT GRANTS. 11. Reduction of Expenditure.-The expenditure on this ser- Qs. 1288-90 vice, which amounted to £206,042 in the year under review, is rapidly diminishing, and for the year 1928 is estimated at £15.000. Your Committee invite the Treasury to consider whether, in the altered circumstances, it is necessary to continue to employ a separate staff for the administration of these grants. EXPORT CREDITS. 12. Polish Transactions.-The guarantee payments outstand- Para. 43 of C. & A. G.'s ing include appreciable sums in respect of certain shipments to Poland in 1921 and 1922 on which the Department had to Q-2391Report, and implement its guarantee. The unsatisfactory feature of these 2413. cases is that payment of the bills at maturity had been guaranteed by four different groups of Polish banks. Your Committee note that further dealings with these particular banks have been discontinued. CHINA INDEMNITY FUND ACCOUNT, 1926. 13. Expenses of Commission.-The account of the China Qs. 1196Indemnity Fund (H.C. No. 7 of 1928) is charged with an 1214. expenditure of £16,892 in respect of fees (£10,000) and travelling expenses paid to six members of the Advisory Committee established under Section 1 (2) of the China Indemnity (Application) Act, 1925, who examined the situation in China during the year 1926. Your Committee are informed that it was found necessary to fix remuneration on this scale in order to secure the services of certain members of the Committee, and to compensate for an absence from this country which might extend to a year. 65589 a f Para. 7 of They trust, however, that the arrangements made in this case will be regarded as altogether exceptional and will not become a precedent. INLAND REVENUE. 14. Scope of Schedules of Revenue Remissions.-As a result of certain recommendations concerning the remission of claims Report, and Qs. 123-125. for revenue contained in the Second Report of the Committee of Public Accounts, 1897, it was arranged that each Revenue Department should keep a record or schedule of every case in which they had seen fit or felt compelled for good reason to refrain from enforcing the law, and that as regards all such cases which involved loss to the revenue of £50 or more, a copy of the schedule with brief particulars should be furnished annually to the Comptroller and Auditor General. These directions were confined to remissions made in the exercise by the Treasury (or Revenue Department) of a dispensing power in favour of individuals from motives of equity or of compassion. Q. 124. Para. 12 of Q. 243. The Comptroller and Auditor General has called attention to the fact that the periodical schedules of remissions furnished by the Inland Revenue in pursuance of these arrangements do not include certain cases in which sums of tax are due from concerns which have fallen into financial difficulties, and in which a sum is accepted in final settlement of the liability to the revenue which is less than the full amount of the tax due, although greater than any amount which could possibly have been recovered by legal action against the taxpayer. Your Committee are informed that this question has been referred to the Treasury, who have decided that while these cases do not involve any exercise of dispensing power which requires the intervention of the Treasury, they are of an exceptional character, and for this reason Their Lordships have given directions that lists of any cases of this character which arise in future shall be transmitted to the Comptroller and Auditor General. POST OFFICE. 15. Telephone Exchange at Manchester: Cancellation of Contract.-Your Committee have had under consideration the circumstances in which a payment of £10,820 was made to a contractor in respect of the cancellation of a contract for providing equipment for a relief telephone exchange at Manchester. A contract for the supply of this equipment was, after prolonged consideration and examination of traffic statistics, arranged in the course of the year 1925, and finally signed on 19th December. In January, 1926, a Committee was appointed by the Postmaster General to examine the question of reducing telephone expenditure, and one of the first steps which that Committee took was to examine the position in Manchester. As a result of this examination, and in the light of later traffic SELECT COMMITTEE OF PUBLIC ACCOUNTS. ix data which had come to hand, it was decided at the beginning of March, 1926, that the Exchange could be dispensed with with comparatively small risk, and the contract was then cancelled. Your Committee are glad to learn that this review of the programme was instituted, and they trust that the fullest possible use of all sources of information will be made before new schemes of extension are embarked upon. 16. Telephones: Analysis of Expenditure on Works. In the Qs. 505-513. account which is appended to the Appropriation Account (p. 45) the expenditure under the Telegraph Acts on works for the development of the telephone system is shown simply as one lump sum. Your Committee suggest that the account might Appendix 8. usefully be supplemented by an analysis of the expenditure under the principal heads. TRADING ACCOUNTS. FISHERY BOARD FOR SCOTLAND. 17. Loss on Dredger Dragon."-The dredger Dragon Qs. 2586was purchased by the Fishery Board in 1920, out of advances 2617. made by the Development Fund, with the view of assisting fishery harbours, and particularly the smaller harbours, which find dredging carried out by private contract to be very expensive. Owing to a serious and continuing depression in the herring fishing industry, which followed close upon the purchase, the financial position of the harbours has not permitted them to avail themselves to the fullest extent of the services of the dredger which was, in fact, laid up during the whole of the year under review. In some cases also it has been necessary to remit half the cost of the work performed, and to treat the remaining half as a deferred loan at interest not repayable for a period of five years. Included in the assets shown in the Balance Sheet at 31st March, 1927, is the sum of £11,500 due, under this arrangement, from harbours which appear likely to experience considerable difficulty in meeting these obligations when they mature, and even after taking full credit for this amount the Account shows a cumulative loss of £12,000. Your Committee desire to bring these figures to the special notice of the Treasury who, they understand, subject this service to periodical review. NAVY. 18. Losses of Victualling Stores.-Your Committee had before Para. 6 of them three cases of fraud in connection with victualling stores, C. & A. G.'s following a change in the system of accounting for supplies of Report, and clothing to naval ratings on repayment. The regulations pro- 5388. vided adequate safeguards, if fully observed, but the officers in charge of the accounts, particularly in smaller ships, had not Qs. 5374 Para. 8 of C. & A. G's Report, and s. 5396443. always an expert knowledge of accounting or an appreciation of the dangers involved, and it therefore proved possible for subordinates to manipulate the records and cash. Following the frauds under notice and others which Your Committee are informed have occurred, the Admiralty have taken steps to emphasise the importance of strict observance of the regulations, and have arranged that executive officers who are called on to perform accounting functions shall undergo a short course of instruction. Your Committee trust that these measures will prove sufficient to prevent similar losses in future, but they consider that the further working of the system should be carefully watched. 19. Maintenance of Armour Plant.-The Comptroller and Auditor General has brought to the notice of Your Committee an important departure made by the Admiralty in connection with its contracts for the heavier armour plate. It appears that after the War the policy of paying a subsidy to armament firms for maintaining plant, including armour plant, was under consideration by a Committee in which the Treasury were concerned, and in 1920-21 a token sum of £50,000 was provided in the Navy Estimates for this purpose. The immediate need for assistance disappeared, however, and a note in the Appropriation Account for that year stated that the principle of such payments was not adopted ultimately. When the latest shipbuilding programme was settled in 1925 the question of idle armour plant again became pressing, and the firms concerned approached the Admiralty for assistance. The Admiralty were prepared to pay a reasonable amount of the average fixed charges of the firms to the extent that immediate orders, whether for the Admiralty or elsewhere, fell short of that proportion of the firms' total productive capacity which it was necessary to maintain in the national interests. They preferred, however, not to pay a direct subsidy but to include their contribution in the price for armour actually ordered, and prices were accordingly fixed on this basis after negotiation following upon examination of the firm's books. For the two years for which prices have been arranged, the average contribution has, it is understood, approximated to £90.000 a year. Your Committee recognise the difficulties of the Admiralty and they appreciate that some form of assistance to the armament firms appears to be inevitable in the circumstances, but they learn. with some surprise that the Treasury were not consulted, especially in view of the previous history of this matter. The Treasury suggested in evidence that on the facts before them they should have been approached at some stage of the negotiations, and in this view Your Committee entirely concur. They will be glad to learn in due course whether the Treasury consider the present arrangement to be a suitable one, and are prepared to approve its renewal if the situation remains unchanged. SELECT COMMITTEE OF PUBLIC ACCOUNTS. xi AIR SERVICES. 20. Delay in development of hydrogen-kerosene engine.-The Qs. 4337Committee of 1926, in paragraph 26 of their Second Report, drew 4370. attention to the purchase by the Air Council of a hydrogenkerosene engine, a partly developed airship engine of an experi mental type. Your Committee are informed that little progress has been made in the development of this machine during the past year, Q. 4338. as the supply of the crank shaft has been delayed in view of other Q.4359. demands which have been given priority. It appears to be im- Q.4363. possible at the present juncture to say whether the results to be obtained from the engine will justify the expectations with which it was purchased. 21. Purchase of Coke during Coal Stoppage.-Deliveries of Para. 4 of coal and coke due under Air Ministry contracts ceased automati- C. & A. G's Report and cally in all cases when the coal stoppage of 1926 began, and in Qs. 4411the endeavour to obtain necessary supplies during and im- 4491. mediately after the stoppage the normal practice of inviting competitive tenders was dispensed with in some instances and restricted in others. The Comptroller and Auditor General has informed Your Committee that the exceptional conditions then prevailing appear to him to have justified generally the steps taken, but he has called attention to the arrangements made with a certain firm to supply foreign gas coke under two contracts concluded respectively on 20th September and 8th November, 1926. Your Committee do not think it necessary to outline the case in detail, but they would point out that under the second contract the prices paid by the Air Ministry for foreign coke (which was purchased on the advice of the Mines Department) compared unfavourably with those paid by the War Office, who, however, were buying home coke. Your Committee cannot but feel that in regard to the contracts placed about this time there was insufficient co-ordination between the Service Departments. The contract placed on 8th November was for about 3,200 tons, and Your Committee are informed that deliveries under this contract were not completed until the middle or end of the following March. It appears somewhat unfortunate that this order was placed for so large an amount at a time when the resumption of normal conditions appeared to be in sight. 22. Purchase of Blue Web Equipment.-Before 1925 the Air Force was supplied with khaki web equipment which was bought by the Air Council from part worn stocks held by the War Office. Towards the close of that year the Air Ministry decided to substitute blue for khaki equipment for the use of the Air Force at home (but not abroad where khaki would still be employed). In pursuance of this decision the amount provided in the Estimates for the financial years 1925-26 and for 1926, Para, 5 of C. & A. G's 4551. |