5073. But it does not, it seems to me, justify a virement of the kind here indicated? No, I think it does not; I am with you there to the extent that it is hardly right to speak of a net surplus here.

5074. I think each individual Vote ought to show its own result; in fact, it purports to show its own result. On this service you spent more than your Vote; you have really spent.—There is £27,000 over-spent there.

5075. £18,000.-I think you will find that is met in the Treasury Minute by authority being given to use surpluses arising on other Votes to meet a deficit of £18,000.

5076. You have actually used £1,146, which was the excess arising in Appropriations in Aid, so that you show at the end, instead of £18,000 odd overspent, £17,000 odd overspent. It might be a very serious matter?-I think, Sir, the position would have been clearer if we had printed the Treasury Minute as part of the correspondence; I rather think that ought to have been done.-(Mr. Millar.) I think it was too late for the account, if I remember right. That was the final Minute.

5077. I wish you would consider whether it is not wrong to print under the head of Appropriations in Aid money which has not really been appropriated, and whether Appropriations in Aid, where they exceed, ought not to be shown as either less than the Estimate or equal to the Estimate, and, if shown equal to the Estimate, any excess receipts should be shown as Extra Receipts? (Mr. Watson.) Either when it is surrendered altogether or utilised for the purpose of meeting a deficit on other Votes, which could be done under the Appropriation Act, of course. (Sir Malcolm Ramsay.) You could put them in as a separate table somewhere.-(Mr. Watson.) I think that would be more correct. (Sir Malcolm Ramsay.) There is a small Paper No. 2 given on page 8 which gives all the relative figures, and it would be possible to add a note and say, "Appropriations in Aid in excess of the Estimate have been used pro tanto to set off deficits on various Votes."-(Mr. Watson.) That would be covered if were in a position to print the Treasury Minute giving authority for virement confirmed by the Appropriation Act, and a statement similar to that Minute is rather needed to explain the account.(Mr. Bland.) I should like to say that although the matter might very well be

we

[Continued

done as the Chairman suggests, the Air Ministry have not really erred in those two Votes so far as I have really followed the practice up till now, by using a net sulplus to meet a net deficit.-(Sir Malcolm Ramsay.) That is so; I do not think the Chairman suggested that. 5078. I think that that has been the practice hitherto.

Sir William Barton.

5079. One general question: Does all this amount to this, that the Air Ministry are allowed a degree of latitude greater than is shown to other Departments?(Mr. Millar.) They are allowed the same degree of latitude as the War Office and the Admiralty in this respect.

5080. That is really the question I wanted to put. Thank you very much.— That is statutory, of course, under the Appropriation Act.

Chairman.

5081. Can we go now to Vote 9 on page 103: "Accounts for the Erection of Airship Establishments"? These were loans to contractors, and, as I understand, in all the three cases the contractors had the option, and availed themselves of the option, of handing over the establishment instead of repaying the loan: is that so, Mr. Bland? (Mr. Bland.) Yes, that is

SO.

5082. In two cases a settlement of the Accounts has been made, I think, and in the third case the settlement will be made shortly has that been made yet?-No, the position has been reported upon, but the final settlement has not been reached.

5083. There was one of those establish ments stopped as far back as 1917: is that the one which is still unsettled, or is it one of the ones which have been settled? I am afraid I am not sure which. As regards the village, that rather comes in the second paragraph. 5084. I am not on the question of the village, but on the question of the Establishment first. One of those Establishments has not been built: which is that? Is that Flookburgh? No, the outstanding case is Inchinnan.

5085. On the second part of the paragraph as to the model village, of the £90.000 spent on the village your Department told us last year they spent another £5,000 in order not to leave the houses without roofs and that sort of thing?Yes.

5086. Now what is the position—are the houses occupied, and are the rents likely to bring us in, in the course of the year, more than this 1 per cent., or are we to be content with 1 per cent.?-I am afraid the rents remain very low. They were really fixed by the Admiralty before the Air Ministry took over the Flookburgh village. They were fixed on the recommendation of Messrs. Vickers, who at that time were intending to take over the factory when it was finished.

5087. They have not taken factory? No, they have not.

over the

5088. You say here that the village has been taken over by the Office of Works so far as administration is concerned, but the property remains the property of your Department, I presume, or the Government's property, at any rate?—

Yes.

5089. What is the prospect with regard to this village? Are we going to maintain it permanently, receiving 1 per cent., and letting this firm get the benefit of it for their workmen? Of course, we should be very glad to dispose of it, because it is so located that there are really no offers. (Mr. Millar.) I think this has really passed out of the sphere of the Air Ministry. The position is that the Office of Works have taken over the management, and they have been instructed to negotiate for sale of the houses or any portion of land on the understanding that they should get into touch with the Disposal Board, who would be responsible for the sale of the village as a whole if they got the chance of making such a sale.

5090. How do you say the Disposal Board comes in?-The Disposal Board will endeavour to sell the whole village as a going concern if that is found possible. If that is not found possible, the Office of Works will continue to manage and will sell off particular houses or particular plots of land as they get the opportunity, having regard to the fact that they must

[Continued

do nothing which interferes with the possible sale of the whole village. We want to get the whole thing off our hands at almost any terms and cut our loss. 5091. Sir At Reginald Blair: the present moment is there any likelihood of getting more than 1 per cent. during the current year?-I think you will have to ask the Office of Works that question.

see

5092. Chairman: Let us take the figures on Vote 9, please. On page 34 there are the and "Experimental Research Services"; on page 35 we took the big question of principle, and on page 37 I you have got here, "Production Work, Grant £130,000, Expenditure £65,000"; what do you mean by Production Work?-(Mr. Bland.) That is work done by the factory at Farnborough for the Air Force, chiefly producing aeroplanes and spare parts.

5093. This is again in the nature of a net item, is it not?-Yes, the credit which goes to this Subhead is built up of charges against Vote 3 and other Subheads of Vote 9.

5094. Are the Treasury satisfied that this is a proper case for a net Subhead? —(Mr. Millar.) Yes, Vote 9 as a whole

5095. I am on subhead E on page 37 ? -Yes, Vote 9 as a whole shows the total expenditure on Experimental Services. The factory at Farnborough is mainly concerned with producing experimental types of machines, and so on, and, so far as it does that, this expenditure is a proper charge to this Vote, but it also undertakes a certain amount of normal production work which is not experimental, for the Air Force generally, and that is deducted from the gross Subhead here and charged up against the relevant Vote, namely Vote 3. We show gross, for the information of Parliament, the total expenditure at Farnborough and we deduct the expenditure for the general purposes of the Air Force other than experimental.

5096. You mean you show it gross in the Estimate?—Yes.

Chairman.

5097. Mr. Bland, I think last time we had got to the end of paragraph 11 of the Comptroller and Auditor General's Report? (Mr. Bland.) That was so.

5098. We now come to the question of "Losses by Fraud, etc.," in paragraph 12 on page 104.-There were one or two things about which I was to make inquiry; I do not know whether you propose to take them later.

5099. We might take them now in case they are forgotten.-For instance, on page 60, Paper No. 9, I was to make some inquiries into several points.

5100. As to the extra remuneration?Yes. Taking the first batch on that page, these were all cases in which Air Ministry officials held acting appointments in higher rank.

5101. In the Air Ministry, not in other Departments?-In the Air Ministry; they held acting appointments in higher rank than their own, and the extra remuneration represents the difference between the pay of their proper rank and their acting rank. The first, for instance, was an Assistant Secretary who held the post of Director of Contracts.

5102. Is that a higher position than Assistant Secretary?-Yes; the rank of Assistant Secretary is now common to the Heads of Branches and Divisions in the sense that a Principal used to be before the reorganisation of the Civil Services.

5103. He was acting temporarily only? -No, he was appointed Director of Contracts, but he was given it as an acting

post because in the uncertainty about the reorganisation of the Department they did not want to have a confirmed post.

5104. In case it should not be necessary to continue it permanently? That is so.

5105. Is the Treasury satisfied that that is the proper procedure?-(Mr. Millar.) Yes, we are satisfied; we did not know at the time whether a Contracts Department for the Air Ministry would continue as a permanent arrangement, and I do not think that has been finally settled to this present day. (Mr. Bland.) No, because Sir Alfred Mond's Committee on the question of a General Supply Department for the Army, Navy and Air Force is still sitting and inquiring into the possibility of pooling, among other things, the Contracts work.

5106. You were going to tell us also what was the pay of the Wing Commander of the Medical Service who received £125? Yes. His Air Force pay was £839 10s. a year and he had allowances which, as you would understand, varied a little according to circumstances but they averaged £222, and then he got a special allowance from the Air Force funds of £200 a year, but as he only served for part of the year he got £125 of that £200.

5107. Was this the case of a man acting in a higher rank, because apparently it is the case of a gentleman with more than a thousand and fifty pounds a year who gets extra pay for something for what? It is said to be as Director of Medical Research. Does that come within the duties of a Wing Commander in the

Medical Service if he is asked to do it?No, because his pay and allowances represent his services in the Air Force, but when he became temporarily a Director of Medical Research that was an Air Ministry post he was filling and he got an allowance in respect of that, and the advantage of putting it in this shape was that we could fit it exactly to the period during which he served as Director of Research.

5108. He was not doing the duties of both posts at the same time? No, he was not acting as a Wing Commander of the Air Force, but I think that would apply to any Air Force officer serving at Headquarters at the Air Ministry. He is paid in his rank, but he draws a slightly better pay because of filling the post of a Director or Deputy-Director in the Air Ministry where his duties are more responsible. (Mr. Millar.) That is the recognised procedure in all these De. partments.

5109. Then you were going into this question, I think, of the Director of Works and Buildings; he seemed to have a very large staff and a question was put as to whether it was justified by the amount of work that Department has to carry out and whether a saving could not be effected there. You were going to look into that?-(Mr. Bland.) That was so, and the figures I have got before me are these, that in the year 1920-21 which we are talking about, the number employed on the Director of Works Headquarters Staff, and by Headquarters I mean in the Air Ministry, was 169, and their cost was £84,144. The Works Programme for that year amounted to £3,796,000. I do not know whether the Committee would really like me to read the figures or would prefer that I should put in a statement which would make the matter clear.

5110. I think the Committee would like to have just enough figures to guide us on the general principle of the matter and then the fuller figures can be put in?-Taking the current year 1922-23, we have reduced that 169 staff to 111 costing £56,634.

[Continued

Programme to below 2 million pounds. Therefore you might say that that should not involve a corresponding increase in the Air Ministry itself and, as I have shown, no more it does; we have actually got a very substantial decrease. But per contra, in Irak we have had to provide for no less than 266 Works Staff in addition to the 181 which we should otherwise have required, and that 266 Staff in Irak costs £260,000 the whole staff being in respect of a Building Programme of 3 million pounds.

5113. Does the Director of Works and Buildings control that Irak work at all? -Only in a very indirect and supervisory capacity, that is to say that proposals for fresh buildings are always submitted to him, he looks into them from the technical expert point of view, he makes reductions, he makes criticisms, and he sees that the thing is correctly handled from the point of view of the accommodation allowed by what we call our Barracks Synopsis, and in other ways he criticises and controls, as far as he can from London, what is going on in Baghdad.

5114. That is for the current year, but what are the prospects? Do you expect that this Department can be still further reduced? I may say that I am quite certain that as soon as the Building Programme in Irak is completed, which should be by next November, there will be a very substantial reduction indeed in this out-station staff away from the Air Ministry itself. Whether the Air Ministry staff will come down further depends a little upon the policy whether the Air Ministry is to be allowed to put up at home permanent barracks and permanent aerodromes for the squadrons.

5115. We have got a statement from the Treasury on this matter. Have you seen it, Mr. Bland?-No, I have not.

5116. Then I will read it.-(The Committee Clerk.) It might be better to take this up after the Committee have received copies of Mr. Bland's printed statement.

5117. We have got Mr. Bland's verbal statement now, but not his printed statement; what is the view of the Committee on the subject?

Mr. Marshall Stevens.

5118. I would like it read.-(Mr. Mullar.) Perhaps the most convenient course would be for me to give the gist of this statement on the present occasion.

Chairman.] It is so short that I do not see there can be any harm in reading

it, and after we have heard it read we can decide whether we will adjourn the matter or deal with it at once. (At this point the Chairman read the Treasury statement, copies of which were circulated to the Members of the Committee.) Now, gentlemen, I think the position is this, that if you like to ask any questions on these statements now is the time to do it. If, on the other hand, you prefer to reserve what you have to say until you have seen Mr. Bland's statement in print, there will have to be an opportunity later of going into it if necessary, and we can make an opportunity quite easily. I do not myself feel that I can ask anything more at the moment until I have been able to read Mr. Bland's statement, but that does not bind anybody else.

Mr. Marshall Stevens.] It is so appalling to me that this expenditure is going on in the matter of Works by the Air Ministry that I feel bound to ask questions.

Chairman.] Certainly.

Mr. Marshall Stevens.

5119. What is the number of hangus you have available in this country to-day -have you any idea?-(Mr. Bland.) I could not answer that off-hand.

5120. Notwithstanding that, you have an expenditure going on now running into millions?-This is, of course, in the direction of providing accommodation for the personnel, that is to say, barrack accommodation and also permanent sheds or semi-permanent sheds for the aeroplanes. They are not in the nature of a temporary hangar at all; these are actually iron structure sheds for aeroplanes and also large depots for stores with some hospital accommodation, and a variety of other buildings such as would be required for a ground army. It is not only a flying force, you see; it is a force which, although it flies, lives very largely indeed on the ground.

5121. On the first question you raised as to the permanency of the buildings, what is the number of hangars you have in this country which could be made permanently available for the next 20 years. --When you use the word "hangars,” I wonder if you mean the same as I do by an aeroplane shed. There was a temporary hangar which was very much in use during the war and to which we have rather restricted the term "hangar" in the Air Ministry.

5122. I am referring to buildings which

[Continued

I myself have bought and have reerected permanently to be used for purposes of warehousing for the next 20 or 30 years, and of which I understand you have a great number available in this country. To what extent do you know the number that is available now?-I am afraid I could not answer that off-hand at all; I can get for the Committee the information about the number of stations at which we have aeroplane accommodation quite readily, of course.

5123. What use do you make of the Commissioner of Works in regard to your buildings?-We do not make any use of the Office of Works.

5124. Can you suggest any reason why you do not?-Because we have our own Building Department and our building requirements are highly specialised.

5125. In what way are they specialised if they are barracks?-The barrack part of it is not so specialised, of course.

5126. Where are they specialised if they are hangars?-They are outside the ordinary activities of the Office of Works, I think.

5127. Have not the Commissioners of Works put up many buildings of the same class as a hangar?-Would they not be more of the nature of factories and workshops?

5128. During the war, I mean, they have put up such buildings?-I am not aware that the Office of Works have actually carried out contracts of that kind, because I think most of them were done either by the War Office, the Ministry of Munitions, the Admiralty or ourselves, the Air Ministry.

Mr. Stewart.

5129. Has every Department got a special lot of architects for that particular work?-I do not think you could call our people architects exactly; they are engineers, and they are supposed to have sufficient knowledge of the building trade as well as the other rather more expert trades like the electricity and sanitary services, which, of course, they must know in order to be able to put up even a small barrack.

Mr. Marshall Stevens.

5130. You have a staff of 111; that is the figure you gave?-111, yes, but that is not all of the high supervisory ranks.

5131. Would you mind telling us what the 111 consist of?-That, I am afraid, I could not tell you off-hand.