6 March, 1924.]

[Continued.

628. I know it is not, but it is a further stage of this work?-Might I remind you that the late Government did appoint, in June of last year, a Committee, in fulfilment of the pledge which was given when Harrow was set up, with Terms of Reference which cover the whole of the printing work carried on by the State; and that Committee is now sitting. (Mr. Codling.) I might perhaps explain that I think it would be very difficult to work into this Account anything to do with the sales of Government publications, because I sell Government publications printed at the works and printed by contract, and it would be practically impossible to separate the two.

Chairman.] It could not come into this Account, but it is a matter that might be shown.

Member the whole system if he would like to come over to the Stationery Office.

633. You are thinking of amalgamating all these different Stationery Offices, but the main thing is that, having so many different offices, by this system you can see the cost of one office as against the other?-I shall always keep my own Accounts separate.

Chairman.

634. Next year we shall have the amalgamated Account, and these points about interest on advances, and so on, will be dealt with and included.-(Sir Malcolm Ramsay.) I should think they would be.

Mr. Arnold Williams.

635. If we have amalgamated Accounts I think we should also have separate Trading Accounts. If you have these Accounts amalgamated, and there is a profit on one Department followed by a loss on another, we shall never trace it at all. I think it is most advantageous to show that the Foreign Office Press, for instance, made a profit; and I think we ought to be able to ascertain that?-The intention is to have separate Trading Accounts for the different branches and to have a Balance Sheet for the whole.

Sir George McCrae.

636. Who fixes the prices of these publications? If I remember rightly the Census Return is priced at £6 76. 6d. or something of that kind. Who fixes the price; is it the Stationery Office?-(Mr. Codling.) The Stationery Office fixes the price under Treasury regulations.

637. Having regard to the cost of production, I suppose?-That is so.

Sir Henry Craik.] Now you are touching on a far larger question than this Profit and Loss Account. I say it is a scandal that these Appropriation Accounts should not be purchasable by any citizen, with a right to have it at less than 17s. 6d. That is a point I intend to bring before the House of Commons. I think it is a disgrace.

6 March, 1924.]

the beginning of the undertaking on all the advances for plant and working balances? (Sir Malcolm Ramsay.) No; that particular item is only for the year. This is the Profit and Loss Account for the year only. That £6,000 is the interest for one

year.

639. On the advances of money for buying plant and so forth?-That covers the interest on the capital advances for plant. It is roughly 5 per cent. on the value of the capital, you will notice: 5 per cent. on £124,000.

640. There is nothing for working capital?-No; I submit there ought to be a charge for the working capital which is floating about in the business, but it has not been charged.

641. Are you providing that in the Account for next year. Has that been settled with the Treasury; if it has been settled we need not pursue it?-The Treasury ruled that the Account should not include interest on advances for working expenses.

642. Could you tell us why the Treasury held that view? (Mr. Watson.) We agreed first of all with regard to the working capital that a certain credit should be given to the Stationery Office on account of the Trading profits that have been made and which remained in the business, and as regards the balance of working capital they should be given credit for the value of work turned out by the different factories and made over to the Stationery Office. Further, as regards materials supplied by the Stationery Office they should be given the ordinary period of credit that would be taken by a Contractor in paying his bills for materials, and if they were given that usual period of credit for paying bills, they would have turned out work from the factory sufficient to cover the whole cost of those bills before the payment became due. Broadly, these two reasons were the reasons on which we agreed that interest on working advances need not be charged.

[Continued.

about it, and put it right, if necessary, in the next Account.

644. We had better deal with the Accounts now, but we have gone into the matter rather fully on Hare Street so we shall probably not have to spend such a long time on the Accounts of Harrow.

Sir Fredric Wise.

645. Where do you buy your materials? -(Mr. Codling.) Do you mean such things as ink, and so on?

646. Yes, everything?-We buy them from the available market.

647. Do you buy them from the market? -Yes.

648. Is Harrow working full time?Yes, now.

649 Your extra capital, I notice, is about £18,000 odd. Why did you have a revaluation of the plant?--The necessity for valuing the plant was that the Harrow plant was brought together from various sources; some of it was plant which was there when the factory was first taken over by the Government for food rationing purposes; some of it was plant which had been used for military purposes, which was utilised when it came back from overseas; some of it was bought; and for the purpose of getting a correct Account it was decided that the best thing to do was to have the whole thing valued as at the date when Harrow was set up as a Government Printing Works, in June of 1920.

650. There is no good-will?-No.

651. Who received the fee of £1,260 ?The valuer.

652. Who was the valuer?-An outside valuer, Mr. Ruddock.

653. I notice in your Works Balance Sheet for 1920-1921, H.M.S.O. Princes Street, is a creditor for £49,000, and in the Balance Sheet to the 31st March, 1922, it appears as a creditor for £90,000. Could you explain that?-(Sir Malcolm Ramsay.) It is roughly the loss for the year that they have increased their debt by.

654. Plus new works?-Yes, that is the main item.

Sir George McCrae.

655. I suppose you would agree that the system of taking the contract rates instead of a competitive tender does not ensure the same amount of check on the expenditure charged?-(Mr. Codling.) I do not think it makes any difference.

656. Where you have a competitive tender you have something to compare

6 March, 1924.]

[Continued.

with it. Taking contract rates is rather a bit of a lottery is not it?-Before it is decided to place a contract with the Government Printing Works the Works have to estimate what that work would cost them to do.

657. In the Comptroller and Auditor General's Report he says: "It should be pointed out, however, that the new system does not secure that the cost of every job is covered by the price allowed.” Now that is a very serious matter. I should like to ask what proportion of your production is done for outside people. I gather that you do perform work for outside bodies?-Not for what I might call private outside bodies.

659. Public institutions?-No, only for Departments which are financed out of Parliamentary Funds.

659. So that is really all State work you are doing?-It is all State work I am doing.

669. So if there is any loss there is no one profits by it outside?—No.

Mr. Arnold Williams.

661. I understood you to say that you are working full time at Harrow; is that right? Yes, now.

662. And that, therefore, you can refuse some work; there is more work offered to you than you can do?—I do not quite know. I offer work to myself, if I may

Jay so.

663. You keep your works fully occupied the whole time?-Now, yes.

664. Prima facie then you are turning some work down?-I have a fluctuating margin from which to select work to put into the Works.

665. Do you never turn work down, and send it to a Contractor to do, because you have not got the time to do it?-I am always turning work down in that sense, in that I am sending work to Contractors; because more than half my work is, at present, done by Contractors.

666. Am I right in assuming you turn away the worst part of the work and do the best part yourself?-If a Contractor puts in a very low price.

667. You let him have the job?-I let him have it.

668. That rather proves that, so far from working on this narrow margin, we ought to be working on a much wider one. I cannot get away from the fact that I have never seen a set of Accounts yet where the wages paid were 95 per cent.

of the total sales. It is really astounding to me, and I do think the Comptroller ought to look into that question and see what is the explanation ?-Is not that explained by the fact that for Harrow and Hare Street for these particular years there were losses?

669. No, it does not explain it at all; that is the result. What I want to get at is the cost, and to see what the cost is? -(Mr. Watson.) I think really the case is that in common with other works the Stationery Office was accepting what price they could get for the production turned out; and during this period the price they could get was not sufficient to give an adequate gross profit on the actual cost of doing the work. In the succeeding year, which was really part of the same exceptional period, they made a very considerable gross profit, and a very considerable net profit, on their Works as a whole.

671. I notice there is an entry both in the case of Harrow and also in the case of Hare Street, "Cost of supervision." In the case of Hare Street the total wages paid do not appear to have altered, but in the other case, in the case of Harrow, the total wages paid have considerably increased. Can it be said that the cost of supervision rises proportionately to the total of the wages paid?-The Honourable Member is talking about Headquarters Supervision?

672. I am talking about the item "Supervision"; in the case of Harrow for the year 1922 it is stated as £3,126 136. 8d., and in the Account for 1921 it is stated as £1,730 9s. 4d. ?—The first Account was for nine months.

673. Even that would not explain the whole of it, would it?-(Mr. Watson.) I think the reply, generally, is that the cost of supervision ought to diminish taken as a percentage on the total cost of the work; as the total value of the work increases it should be a less percentage.

6 March, 1924.1

674. That is not so in the case of Hare Street, while the wages fell, the cost of supervision rose?-I thought you were comparing Harrow with Harrow.

675. So I was, but it does not work out in the same way with regard to Hare Street? It may be because of mistakes during the year which the Stationery Office were made to put right in the subsequent year. There has been a good deal of discussion on the subject of this supervision charge, and additional charges have been placed in the Account. I think that would probably explain the increase at Hare Street.

676. I take it the necessity of increasing the working staff in order to meet increased orders would not automatically lead to an increase in the supervision cost? (Mr. Codling.) No, not necessarily.

678. In the Accounts for 1920-1921, on page 176, it says "Stock in hand, 15th June, 1920, £2,578." If the Works were only started in June, 1920, where did that stock in hand come from? There 16 no previous Account. This is the first Account of Harrow. If you started with a stock in hand, on the 15th June, 1920, of £2,578, where did you get it from?Harrow was really a Stationery Office possession at the time this Account was started, the 15th June, 1920; and there was stock lying there which was valued and brought into account.

679. From a previous factory?—Yes. 630. May I ask whether this is right. on that same Account wages appear as £131,394 and stock £2,578, coming to £133,900; the sales and work in progress come to £136,300; so that actually there is only £2,020 altogether between the two Accounts for the whole of the overhead expenses for the 10 months; and, therefore, the net loss of £32,000 on sales of

[Continued.

£101,000 seems to me to be, although starting a fresh business, phenomenal : you have actually paid wages to within £2,000 of the total turnover. It seems to me if it had been a private firm they would have gone into bankruptcy the first year; but, of course, I do not press it. (Sir Malcolm Ramsay.) I might perhaps mention to the Committee that Harrow, like other infants, had its difficulties and its teething troubles, and eventually they had to get rid of the local manager, and a new manager was appointed, who is now in the room. Since then the work has gone much smoother, and that is largely why last year there was a handsome profit. The two first years were very difficult, for the works were not used to the greatest advantage.

681. Can we have an assurance from the witness that in the future there will be substantial profits made, to the best of his belief; have we turned the corner with regard to these serious losses? I find that £53,932 has been lost in a year and 10 months, and I want to know that that reign of terror is over and that we have entered into smooth sailing with regard to the trading?-(Mr. Codling.) That has all been wiped off; but, however optimistic I may feel, I should not like to give a guarantee in regard to any commercial undertaking.

682. How is it that on the Hare Street Account you take 10 per cent. off the machinery in the Depreciation Account, and in this Account you only take 8 per cent. off the machinery.-The 8 per cent. on the Harrow machinery was the depreciation rate fixed by the Valuer who made the valuation of the plant there; but I might perhaps say that the rate of depreciation is taken uniformly now through all the works; it is taken on the basis of the Master Printers' Federation method; and that is 10 per cent. on diminishing value.

Colonel Assheton Pownall.

683. What happened in the ensuing year? I gather from the Comptroller and Auditor General that a handsome profit has been made. Can you tell us what it was in the year after the one under review?-For the year 1922-1923 the profit at Harrow was £49,688.

684. Can you give us a similar figure for Harrow to that which you gave for Hare Street for the nine months ending 31st December, 1923?-The profit at Harrow (of course this is estimated) on

6 March, 1924.]

[Continued.

the same lines as at Hare Street, subject to audit, is just over £48,000. The profit at Hare Street was £2,400; the profit on the Foreign Office Press, £4,300; on the War Office Press, £120, and the Kingsway Press, £203.

685. Is that for nine months or 12?— Nine months.

686. So you have quite turned the corner financially?—Yes.

687. Under Sundry Debtors" there is, "Trade, etc., £2,921 ". I understood you only sold to the Stationery Office or public institutions. What is this amount of nearly £3,000 owing from Trade and other Debtors? That is made up in various ways. It may be for the sales of waste paper, or for certain special work put out for which the works were not equipped,

688. It seems a very big sum to have outstanding, if practically all your trade is done with public institutions and the Stationery Office; you have nearly £3,000 owing to you at a given date?-That may be sums owing to the Works.

689. Owing to the Works?—Yes.

690. For work which you have supplied to the Trade presumably?-(Sir Malcolm Ramsay.) I can tell you the item for next year, which will give you an indication; next year the figure is £1,500 which is rather less. There was the sale of waste paper, and the Ministry of Labour owed something for a Trading Scheme; one of the Contractors who assisted in printing the Telephone Directory owes the Harrow works money, and so on, and there is an item for con

Chairman.

structional work which the Harrow people have done for the Office of Works. Mr. Arnold Williams.

691. I have just had the Accounts for March, 1923, put in my hands, and there is a profit there of £53,000 on Harrow and a loss of £5,000 on Hare Street. How can you explain that. The wages again in Harrow are 60 per cent. of the total sales, but in Hare Street they are 88 per cent. for the same year again. It does seem to me almost incredible that last year we lost £21,000 and this year made a profit of £49,000. Is there a possibility of mistake with regard to the work in progress, or something left out last year? There are very few items left out that would affect the Account to that extent. (Mr. Codling.) I think, possibly, some explanation would be that the work is put to Harrow or to Hare Street according to which is the better equipped for doing it, and it may be that the unprofitable work is left with Hare Street and the profitable work sent to Harrow. I do not try and adjust the work so as to show a profit on each place; I try and adjust the work to do the best for the joint undertaking.

Mr. Arnold Williams.] At any rate that does help Sir Henry's point: that last year we made a net profit of 25 per cent. I do not know whether there is a possibility there of doing something; but it does seem to me, at any rate, that any work you do with a narrower margin than 224 per cent., you are losing on, or getting very near it.

692. This Account is on page 180. What work is done at this Press?-That is work for the Meteorological Office, Charts and Diagrams, and so on, of winds and temperatures.

693. And that will continue? That will continue.

Sir Fredric Wise.

694. Were you working full time at

the Kingsway Press?-Practically; it s a very small staff and a very small plant. 695. Your sales in this year compared with 1921 are down considerably; how is that? (Sir Malcolm Ramsay.) There was a new contract for lithographic work at lower trade prices; that is the main item in the falling off.

696. You mean that the contract did not extend into this year, 1922?-That is so.