Q. 2931. Q. 2949 Q. 3368, etc. Civil Administration of Aden; but the Mission was in fact detained for three months by hostile tribes, and returned having incurred expenses amounting to £9,975. The India Office refused to accept the charge. The Treasury, while expressing the opinion that the prior sanction of the India Office (or, alternatively, if necessary, of Their Lordships), should have been sought, have given covering authority for charging the expenditure to the Diplomatic and Consular Vote. We think it unfortunate that this Mission was allowed to start without a clear understanding. in fact without any consultation with the Government of India as to the practical aspects of the matter and the payment of the costs. MINISTRY OF LABOUR. 42. In September, 1921, the question was raised by the Comptroller and Auditor General whether certain ex-Service men, who were being trained in Government Instructional Factories, and were actually living in Ministry of Labour Hostels, were entitled to receive a certain allowance of 5s. a week which was payable under a general Treasury authority to single men in training if, for the purpose of training, they were obliged to live away from home. The question was brought by the Ministry of Labour before the Treasury on 16th January, 1922, but by 11th May, the date on which we had evidence respecting the matter, no final decision had been come to. We are informed that this particular matter is only part of the larger question of special lodging allowances which is under consideration nevertheless we cannot but feel surprised that so considerable a delay should have occurred in effecting what appears to be a proper, if a small, economy. We should add that the apparently unnecessary expenditure has been running on all this time. MINISTRY OF MUNITIONS AND DISPOSAL AND LIQUIDATION COMMISSION. 43. Capital expenditure at a Training Factory.—Our attention has been drawn to the capital expenditure incurred in the extension of buildings belonging to a local education authority. The Ministry of Munitions originally took these buildings temporarily for the purpose of a training establishment for munition workers, and considered that the expenditure was covered by general authority for training schemes. After the Armistice the Treasury was informed that the total estimate for the scheme to 31st March, 1919, was £86,300, and this estimate was approved. The Ministry of Labour now needed these buildings for training demobilised soldiers, and for this purpose the work proceeded without further reference to the Treasury, the the total capital expenditure expenditure finally reaching £132,000. We consider it a matter for regret that the Treasury were not consulted as to the post-armistice developments of the scheme and the resultant increased expenditure, and we share the opinion expressed by that Department that there was great lack of foresight displayed by those concerned in undertaking the erection of costly buildings on land belonging to the local authority, and as extensions of existing buildings, without a definite agreement as to their final ownership. 3451. 44. Irlam Housing Scheme.-Another case in which we con- Qns. 3428sider that there was a failure to keep the Treasury properly acquainted with developments in regard to capital expenditure, and to obtain their sanction, relates to a housing scheme at Irlam. This was originally approved by the Treasury in 1918 in view of the statement by the Ministry of Munitions that "a definite and binding arrangement" had been made with a company for the transfer of ownership, after the war, on the basis of replacement cost. After the Armistice the company was absorbed by a larger concern, the directors of which did not favour the policy of direct housing of their employees, and it appeared that the "definite and binding arrangement" referred to did not amount to a legal agreement and therefore could not be enforced. Lengthy discussion took place with the company, and meanwhile the erection of houses continued without further sanction from the Treasury. The final estimate for the scheme, which has been curtailed, was £214,000. We think that the Treasury should have been formally notified and consulted by the Ministry, as soon as any doubt was thrown upon the validity of the agreement and upon the willingness of the company to honour it, in order that the question of continuing the scheme might be properly considered. 45. Rebates to Purchasers.-In the course of evidence on the Q. 3658. question of large rebates allowed to purchasers of surplus textiles owing to original defects in the goods supplied, or to their deterioration through bad storage or handling, it was indicated that during the war much material was accepted which in ordinary circumstances would have been rejected as below standard. We understand that the Disposal and Liquidation Commission hold that, although these goods are sold by them without any guarantee as to sample, it is better policy to allow compensation for defects revealed in the bulk on delivery than to reject all such Q. 3687. claims. There seems to us a danger lest the State should lose doubly, first by taking a low price because no guarantee was given, and next by allowing' compensation as if a guarantee had been given. While we recognise that the Disposal Commission will secure better prices if it is known that it deals fairly with contractors, we think, where there is no guarantee, compensation should only be allowed in exceptional cases. 46. Sale of Chemicals.-In September, 1920, the Disposals Board sold for a round sum certain stocks of chemicals, the price being based on a schedule of approximate quantities lying at various specified depots. During the negotiations the contract Q. 4721, etc. Q. 3468. Q. 3473. same was widened to include all other stocks of the character belonging to the Board. Subsequently the purchasers claimed certain stocks under this modification. These additional stocks represented a considerable value, and had become the property of the Ministry of Munitions under a settlement made with the original manufacturers in July 1919; but they had not been notified to the Disposals Board as available for sale. Had the Sales Controller, who made the contract of September, 1920, had knowledge of the existence of these chemicals he would in all probability have asked a higher price from the block purchasers. After prolonged negotiations the purchasing firm offered either to replace these particular chemicals in kind, or to pay to the Disposal Commission a sum of £8,000 in addition to the contract price of £35,000. The second alternative has been accepted. The difficulty in this case arose originally through the failure of the Liquidation Department of the Ministry of Munitions to notify the existence of the goods in question to the Disposals side. We were informed that instructions were issued to prevent the recurrence of any such oversight. We, however, felt obliged to examine the case with some care as we found that the gentleman who negotiated the block-purchase for his firm in August and September, 1920, had himself the year before acted on behalf of the Ministry in negotiating the settlement with the company which manufactured the stocks in question, and had later been appointed a Government Director of that same company. however, gave the representatives of the Disposal Commission an assurance, which they accepted, that when he negotiated the block-purchase he was unaware of what had become of the particular chemicals. He, 47. Disposal of Surplus Aircraft.—In March, 1920, a contract was made with the Imperial and Foreign Corporation, Ltd., for the sale to them of all heavier than air aircraft which should be declared surplus within a period of two years, and was assigned with the consent of the Ministry of Munitions to the Aircraft Disposal Company specially formed for the purpose. Under the original agreement the price to be paid to the Ministry was £1,000,000 and one-half of the difference between (a) the gross receipts of the purchasers from the re-sale or hire of or other dealings with the property, and (b) the gross expenditure of the purchasers in the storing or disposing of the property including the £1,000,000. The fixed price, £1,000,000, was to be paid in three instalments, the last of which was due on 12th March, 1921. The Company paid the deposit of £200,000 due on negotiation of the agreement for sale, but though it had made large sales, it failed to pay any further instalments up to the time when the matter came before this Committee last year. We were then informed that the Company had made a counterclaim against the Ministry of Munitions in respect of certain contracts which they had provisionally placed for the sale of aircraft in America and China, but which were not completed owing to legal and international complications, and that discussions were proceeding between the parties. We now learn that after prolonged negotiations a provisional Q. 3474. settlement has been come to between the Disposal Commission and the Company, under which a further payment has been made by the Company of £500,000 in respect of sales effected by the Company up to 12th March, 1922 (being two years from the date of the original agreement), while in respect of sales effected after that date the Company will pay over 70 per cent. of Qus. 3675 the receipts less expenses to the Disposal Commission, retaining and 3476. the remaining 30 per cent. Q. 3475. The position appears to to be that the gross sales and Q. 3489. miscellaneous receipts of the Company up to 12th March, 1922, Q. 3490. were £1,760,000: the Company had paid over to the Disposal Commission £700,000; its expenses of sales were £702,000, including commission to one of its own shareholders, a company which it employed as selling agents. This would leave a balance of £358,000 in the hands of the Company. We were given to understand that there was perhaps no other means of disposing of the surplus aircraft, the alternative being to reduce it to scrap, in which form it would have brought to the Exchequer much less than £700,000. While we have not the means of forming an opinion on this view of the matter, we consider that the whole transaction shows serious confusion. The original sale was, perhaps necessarily, of a very speculative character; the purchasing company proved financially unable to carry it out; a new arrangement between the Commission and the Company was made and reported to the Comptroller and Auditor General as settled, but when the witnesses came before us we found it had been abandoned and another basis altogether settled in principle, but not in detail. Further the Disposal Commission seems not to have ascertained to what countries our Government would allow aircraft to be sold, and the Treasury was wholly out of touch with the matter, having allowed its representation on a Committee of three, dealing with variations of contract, to lapse, although a question of this magnitude might at any time, and as a matter of fact did, come before that Committee. We hope such a Treasury representative will be re-appointed and that, if it is not too late, the Disposal Commission will avoid such confusion in future transactions. MINISTRY OF PENSIONS. 48. The Comptroller and Auditor General has brought to our C. and A.G.'s notice a variety of cases in which he has called the attention of Report, p. the Ministry to anomalies or defects in the Regulations governing xxxviii, etc. the award of pensions, and to irregularities or errors in their administration. We are glad to learn that the Ministry has taken Q. 4220. appropriate action on the matters concerned. It is unnecessary for us to enter into details: we limit ourselves to recording our view that the heavy expenditure under this vote calls for (and we Q. 4147. Q. 4186 Q. 1412. Q. 1417. are sure will receive) unremitting vigilance on the part of all concerned in its administration. The test identification of pensioners referred to in paragraph 37 of our Third Report of 1921 is now in general operation as regards the Ministry of Pensions and other Departments. MINISTRY OF FOOD. 49. Subsistence allowances to British Food Mission in the United States. In our Third Report of 1921 we drew attention to the payment of certain subsistence allowances in excess of the rate approved by the Treasury. We recommended that one officer should be required to refund the excess drawn over £3 3s. Od. a day, the original rate laid down for the members of that Mission having been £2 2s. Od. a day. There were at that time many other officers of our Government in the U.S.A. subject to the rate of £2 28. Od. a day, recommended as sufficient by Sir Hardman Lever, who was then stationed in New York. Nevertheless the gentleman in question spent at the rate of £4 4s. Od. a day. In view, however, of the difficulties of the case, we do not think it necessary to insist on this recommendation against the individual concerned. We also recommended that in such cases steps should be taken to enforce the responsibility of the Accounting Officer. In this particular case there was a change of Accounting Officers during the existence of this Mission, and it is the second such officer (who has since resigned) whose responsibility for the excess payment is in question. While we cannot regard him as entirely free from blame (inasmuch as he did not at once stop the excess payments when he learnt of them) we acquiesce in the view of the Treasury that his responsibility should not in the circumstances be pressed to the point of a pecuniary charge against him. We are the more impelled to this conclusion because the Treasury were themselves, we consider, to blame, first, for allowing the Mission to proceed with a loose verbal expectation of an allowance for expenses beyond the scale laid down in writing and, second, for not replying promptly and definitely to the Accounting Officer's letter of inquiry. We feel also that the representative of the Department did not appear fully to realise its importance when laying the matter before us. MISCELLANEOUS WAR SERVICES. 50. Our attention has been called to two payments :- (2) A sum of £43,917 paid for the maintenance of the |