29 May, 1924.]

difficulty you have as the Cinderella department; but I have put down these points in the hope of being able to get these figures, because if I were in charge of a big business the first thing I should want to know was what it was going to cost and whether I was getting value for the money. If the Chairman does not wish me to put the questions

Chairman.] I have no power to stop it; but is not the real basis of the estimate of the cost, and the value that the Nation is getting for that cost, the number of efficient machines that are ready to fly at any moment divided into the total cost?

Colonel Assheton Pownall

5861. Surely we could get that figure very easily indeed; it is simply the total of the Air Estimates divided by the number of planes which, in the ordinary way, were available for service; that would give us the cost?-The number of efficient machines, including those efficient in reserve, or not?

5862. Oh yes, certainly?-The number of efficient machines: efficient on mobilisation?

5863. Yes; provided, of course, there were pilots for them?-But you see the point that arises at once, that there are the standard training machines being flown, the Avros, and constant expense in connection with them, and they probably would not be used on mobilisation except for training; it is very necessary, of course, to have a considerable number of training machines to pass out the large number of pilots we should have to train immediately on mobilisation.

5864. I understand there are 2,000 in one case and 3,000 in the other; it simply means two separate little sums instead of one sum?-If the Committee will leave it to me, I will try and produce a note that is to some extent informative. I do not know if it would be proper for me to suggest it, but if Sir Fredric would like to come to the Air Ministry, I would be happy to put before him everything in the fullest and frankest way.

Sir Fredric Wise.] I do not want to go to the Air Ministry.

Chairman.] You will put in these notes, and Sir Fredric can say whether they satisfy him.

Sir Fredric Wise.] I should like to know the pay roll and the cost of training

and so on.

[Continued.

Mr. Arthur Michael Samuel. 5865. Would not you say quite frankly that the difficulty in meeting Sir Fredric's wishes is that the two factors he gave you are not comparable, or that it is difficult to compare the two factors?— The number of hours flown in a particular year and the total expenditure charged against the Air Vote in that same year? I find a considerable difficulty in reference to that. There is one item obviously, right at the start, and that is the capital expenditure in that year. so far as your expenditure is properly described as capita! presumably that, as such, ought not to be charged against it; on the other hand, we have existing capital which is not being used, on which there is no charge in the year of account; we would have to make an allowance for that; we should have to have a capita! valuation and a percentage on that, and per contra you wipe off the actual capita charges in the account.

In

ask Sir Malcolm

or

can

type of aeroplane (with its due reserves) costs per year, and how many hours it will fly in peace time. Something like that should, I think, be possible, and that, I think, is what is in the honourable Member's mind: some unit by which you can compare the number of efficient aeroplanes with their cost. (Sir Walter Nicholson.) May I put it in this way, we will, at the Air Ministry, work out something that we consider will substantially meet the wishes of the Committee, and be, from our point of view, a reasonable basis of comparison in successive years; and then in a future year we will be ready with a comparable figure, and the Committee in future years will be able to say, "There is this variation as compared with last year." That is substantially, I take it, what the Committee wants.

Chairman.] Would that satisfy you, Sir Fredric?

Sir Fredric Wise.] Yes.

29 May, 1924.]

Chairman.] If it does not, you will be able to raise the question again.

Mr. Black.

5867. With regard to Vote A, for 1922-23, you were nearly 2,000 men under your estimate of 31,000; can you tell me how much you are under the estimate for 1923-24? In spite of being, on the average, 2,000 below in the year 1922-23, the next year you went up to 33,000?-Of course those figures will appear in the Account next year.

5868. If you do not mind my putting the question?—I am sorry, but I have not that figure.

5869. What I want to find out is, really, whether it is the habitual custom of the Air Ministry to over-estimate 2,000 or 3,000 men each year, as compared with what they want; because I shall want the Estimates to be reduced, if that is so?-Ï have already, I think, to some extent met that point. I said that we hope and anticipate that we shall approximate, as time goes on, a good deal closer to the actual.

5870. The Estimate for this current year is another 2,000 more, so you have gone up from the year ending 1922-23 from 28,500 actually employed to to the number that you are estimating for this year, namely, 35,000. Are you taking steps to enlarge the Service so that you will employ 35,000 men, which is a 25 per cent. advance?-We are taking steps. The number that we are probably working to at the present moment, with a Vote A of 35,000, is something like 34,500 or less.

you

5871. I want to ask whether depend, for your airmen who fly, upon the boys who come into the Service for training and probably get educated for it, or do you take men on to train for flyers? Are you speaking of the officers?

5872. No, I am speaking about the airmen ?-None of the non-commissioned officers who are being trained and employed as airmen pilots now, have entered as boys and passed through Halton. Halton was only started in 1919, and the first lot of boys came out of Halton, on completion of their training, in 1922, speaking from memory; and to the best of my belief, none of them have yet become pilots. Of course, they will in future.

5873. Is it the policy of the Air Ministry now not to employ further men in

[Continued.

that way, but to look to the boys at Halton for recruiting the flyers required in the future?-I think it is probable that in ten years' time the very great proportion, and possibly all, of the airmen pilots will prove to be men who were entered as boys at Halton. I do not

think I could say more than that. It has not been laid down as an absolute policy that none except Halton entrants shall be trained as airmen pilots.

5874. You told us that there were 2,000 actual competent pilots in the Air Force? -2,000 is the approximate number.

5875. When I come to the Vote for 1923-24 I see it says 16,000 airmen ?— Might I ask what figure you are referring to?

5876. That is on page 7 of the Estimates. I want to know what these 16,000 are comprised of, when you say you have only 2,000 competent pilots?-The 2,000, except for about 100, are, of course, officers, who are not in this figure at all.

5877. Then really these are not airmen, are they; is that a mis-description of them?" Airman" is a name comparable to "sailor" or 66 soldier.

5878. It includes the mechanics?—Yes, it includes everything.

5879. That explains my difficulty?—The distinction is between "officers of the Air Force" and "airmen."

Colonel Assheton Pownall.

5880. I think all of us seemed rather surprised at the large number of men it was necessary to retain on the ground in order that one man may fly. Have you any comparable figures at all with regard to the French? I do not ask for them with regard to expenditure, because, obviously, their rates of pay and everything are so different to ours; but with regard to men in the air as compared with men on the ground to keep them in the air; comparable figures with France might be of interest?-We have repeatedly tried to get something which is of some use in that way, and it is extremely difficult owing to the fact that all the ancillary services, and what in the Navy they call the "pulleyhauley" work, is done in France in the case of the Naval arm by the Navy and the Military arm by the Army; so it is impossible to get comparable figures. 5881. There is a difference in condi. tions?-Yes.

29 May, 1924.]

5888. £1,081,000, is not it?-Yes, and the excess of the actual over the estimated receipts in aid is £830,000. The Committee will see at once that the excess on the Appropriations-in-aid is proportionately very much in excess of the excess on the gross. The gross is much more significant, because the gross depends on an estimation of services during the year, whereas the Appropriation-in-aid are an estimate of sums which will be received that are largely not in our control.

5889. Of course.-In fact, the excess on Appropriations-in-aid was, to a considerable extent, due to two very large items: the receipts for stores issued to India unexpectedly, and a windfall of a very large amount from a French repaymeut in respect of services during the war.

[Continued.

5890. I do not attach much importance to that; we will deal with the Appropriations-in-aid afterwards. I would like you to explain the £1,081,000 out of £15,000,000, which is a very large overestimate? It is large and it means, unquestionably, that there has been too great optimism in estimating: I mean optimism in the sense of hoping to get further advanced with services than has actually been the case.

5891. The next paragraph deals with the statement of experimental work, and if we look at page 71, we shall find that is very carefully expanded. We found fault with it last time, and said that it very short, and this is put in in consequence ?—Yes.

was

Sir Fredric Wise.

5892. You have an experimental Department, and a research Department, have not you?-No, experimental and research work is one thing; it is a description of one thing, but I do not mean to say that pure research and experimental work cannot be dissociated.

5893. Have not you a Directorate for each? We are setting up an organisation this year by which they are separated; that is to say, that technica! development is being dissociated to some extent from scientific research; but, of course, there might be experimenting under each head.

5894. But, roughly, it will be two Departments. There will be an experimental Department with a Directorate and a research Department as well, do! understand?—At Headquarters; that is So. At the R.A.E. the organisation is not yet worked out, but it is doubtful if there will be any definite division at the R.A.E. at Farnborough.

5895. It is something new? - Yes, probably at Farnborough the differentiation will take the form of separate costing rather than an absolute division of the staff into two sections under the superintendent.

Mr. Black.

5896. How are these figures arrived at all the way down this page; who puts the price on these things: Experimental flying, Aeroplanes, Instruments, amounting to £212,000?-It is an ordinary system of factory costing; there is an accounting staff there. The costs are allocated to the job and the overheads are apportioned. It is a normal system.

29 May, 1924.]

[Continued.

C.B.

5898. I would like to ask Sir Malcolm if he is thoroughly satisfied that all these items do represent the market value of these particular productions?-(Sir Malcolm Ramsay.) So far as experimental work goes I should say you get no market value at all, because you cannot compare it with anything in the market; but this Table shows the actual money that has been spent out of the Vote on these various items: Labour, Material, cost of Supervision, and all the usual oncosts that are brought in in balancing and analysing the output of any factory on modern lines. Those statements are as reasonably correct as the Committee could expect. The Committee last year rather pressed the Air Force to amplify this statement, and this is the response to the wishes of the Committee.

Sir Fredric Wise.

5899. What are those contracts that are let out in connection with the item, Technical supervision of contracts"? -(Sir Walter Nicholson.) I presume that they are small works jobs done in the establishment by Contractors which involve the special fitting of scientific plant and so on, and therefore involve the labour of establishment personnel.

5900. You let out so much of your experimental and research work to the outside contractors?-No, that is not experimental and research work. Some of that may, conceivably, be let out; but that would not appear in the Farnborough Account at all. Possibly also, and doubt no this is the main explanation, it may refer to special experimental machines being built by a contractor; if they send out personnel from the R.A.E. to supervise that at the contractor's works, obviously their time and expenses have to be charged up against the aircraft establishment.

Chairman.

5901. You get in the next paragraph of the Notes, to a very complicated and difficult question, which I have endeavoured to master. I think it would be a great advantage to the Committee if you would just, in your own words, explain the method by which you transfer those charges for Iraq and Palestine, and I think there are also some for Turkey, which appear in different forms in your Account, and make them again appear Appropriations-in-aid. Tell us the system. It is a very difficult thing to understand how these charges which are made appear again as Appropriations-inaid. I am sure it would be better if Sir Walter would verbally explain the system to us? The Committee will no doubt stop me if I do not give them what they require; but, briefly, the outline of the system is that the defence subhead of the Middle East Vote, which is accounted for in bulk by the Colonial Office

as

Sir

5902. It is the Colonial Office and not the Foreign Office; there is no mistake about that?-No, it is the Middle East Department of the Colonial Office. John Shuckburgh, who has been before the Committee has already dealt with that, I believe, in bulk. That covers the expenses of the activities of the Air Force and the British Army in Iraq, the Indian troops in Iraq, and the local Levies, the native troops officered by British Officers. All those four are really in a different position. The Air Force expenditure, first of all, includes the general services which are common to all defence requirements in Iraq; that is partly a matter of convenience, and partly of principle, because the Air Officer commanding in Iraq is in charge of the defences, and the Air Ministry is responsible for advising the Secretary of State for the Colonies as to the defences in Iraq. The consequence of that is that charges, for instance, of the Medical Service, the Works Service, the Transport Service, and so on, which are really performed on behalf of the Army, the Indian troops, and, to some extent perhaps, the Levies also, appear definitely as part of our gross expenditure in our Votes.

5903. Is the expenditure met by you, or is it met by the Authorities of the Colonial Office in the first instance? Who pays out for these services as they occur? The payments as they occur are made by us.

29 May, 1924.]

5904. By you?-By the Air Force.

5905. And you have your Accounting Officers and Pay Officers and all that out there? Certainly, and our audit staff, and so on. We are responsible for the Accounting of the Defence Services as operated as a whole.

5906. And you render the account to the Colonial Office?-That is so.

5907. And they repay that, and it appears in your Appropriations-in-aid? -Yes; our gross expenditure appearing on the debit subheads of the Votes is balanced by Appropriations-in-aid which are credited to us by the Colonial Office from the Middle East Vote.

5908. Under particular headings Iraq, India, Turkey or Palestine?-Iraq, Palestine and Transjordania are joined together; they are not separately shown in the Account.

5909. I suppose there is no actual repayment made to you by the Colonial Office? It is all a transaction in the books of the Exchequer.

5910. It is merely that you spend the money, and you do not receive anything from the Colonial Office although you spend it on behalf of the Colonial Office, but that money is credited to you as not belonging absolutely to your own establishment charges, and therefore it is accounted as an Appropriation-in-aid; is that it? Yes. Of course, I think it is rather for the Comptroller and Auditor-General to explain the details of the Exchequer transaction; but like all these big inter-departmental transactions it is a proceeding in the Exchequer books.

5911. Could you tell us your view of it, Sir Malcolm?-(Sir Malcolm Ramsay.) As I said last year, I have always disliked this method of having a separate Vote for the Middle East; but it was a decision of policy for which the Treasury were responsible, and it was discussed last year by this Committee. I stated

my view that I disliked this complication by which the Air Force spends the money gross and recovers it by a book credit and charges it to the Middle East Vote of the Colonial Office, who have a representative who comes here and answers to this Committee.

5912. Do you think there is any advantage in it? I would like to ask the Treasury about that?-The idea was that Parliament should have before it, as far as possible, an assembled statement of the complete cost of the Middle East

[Continued.

policy, regardless of which hand spent which part of the money. That is the broad object of having those charges collected in a separate Vote under the Colonial Office. The reason was also given in evidence last year, I think, that as the Colonial Office is responsible for the policy, the Colonial Minister should answer for the expenditure to the House.

5913. The Colonial Office is debited, by it operating as an Appropriation-in-Aid here, with money which it has had no hand in expending?-Subject only to the broad decisions of policy. It is only fair to say that the broad decisions of policy are settled by the Government, and in that the voice of the Colonial Secretary would be a very large one, if not the predominating one. He has to settle ultimately whether we stay in the Middle East or not.

5914. But extravagance or careless expenditure might occur in this particular account which he could not control at all? No, I agree with that; and that is one of the points I tried to make last year that the Officer of the Colonial Office is not in touch with the detailed expenditure, but Sir Walter's people are, and Sir Walter is the agent. (Sir Walter Nicholson.) I think Sir Malcolm will agree that that objection is perhaps a little bit technical, because, although Sir John Shuckburgh may, as a matter of pure technicality, be responsible to this Committee for accounting for that expenditure, when he comes before you he says in effect: Apply to Sir Walter Nicholson for the details of this," and when I come before you I do not for a moment attempt to put it back on Sir John Shuckburgh. (Sir Malcolm Ramsay.) I quite agree.

5915. Would the Treasury just tell us what their view of this is? Do they think it is a good arrangement?-(Mr. Watson.) The view that was put before the Committee at the time Sir John Shuckburgh was under examination was, that the time has not yet come when the Treasury could say that the advantages which were likely to follow from having the whole of the charges shown in the Middle East Vote had ceased.

5916. We have really dealt with pages 6 and 7, unless there are further questions to be asked on this point. Sir Walter Nicholson has explained the somewhat exceptional circumstances, and we hope these over-estimates will diminish? -(Sir Walter Nicholson.) We hope that