(v) Clothing.

Considerable stocks are held by the Royal Army Ordnance Department at Pimlico and elsewhere. These stocks include war surpluses of certain sizes which are being used up in relief of peace estimates and which should last for at least three more years. A priced vocabulary of Clothing exists and is kept up-to-date. The question of depreciation is not serious, most articles of clothing being held in new condition. We recommend an annual valuation of unissued stocks of clothing and clothing materials.

(vi) General Stores.

The stocks of General Stores are maintained under the charge of the Royal Army Ordnance Department at various Main and Command Depots at home and abroad. They include barrack and hospital equipment, accoutrements, harness and saddlery, tools, paints, oils and chemicals, camp equipment, ironmongery, metals, timber, cordage, musical and drawing instruments, packing materials, &c. There are some 17,000 items in all, of which 15,000 are in a priced vocabulary issued by the War Office. Considerable war surpluses exist which are expected to last another four to five years.

"General Stores "thus covers a great variety of stocks which are widely scattered. The volume of work involved in any annual valuation would be very appreciable, and serious difficulty would arise in connection with the assessment of depreciation, since much of the stock in Ordnance charge is part-worn. There would also be difficulties in regard to the pricing of items purchased locally and other articles not in the vocabulary.

We are satisfied that a complete and accurate valuation based on detailed physical review of the stocks could not be undertaken except at very great expense. An approximate valuation based, like the pre-1908 valuations, on a summary classification of stocks as serviceable (100 per cent. of new value), repairable (75 per cent.), doubtful (50 per cent.), unserviceable (10 per cent.), would be purely conventional, and the cost of framing it very substantial. We cannot think this expenditure is justified, and we do not recommend annual valuation.

Information in connection with annual purchases of General Stores and annual consumption, including the position as to surplus stocks, should, however, be given with the Estimates.

(vii) Works and Buildings Stores.

Cost accounts are kept of Works and Buildings services and Works stores are already valued annually for this purpose.

(C) AIR FORCE.

Air Force stocks are provided under the following Air Votes:

Units are supplied by direct contract. No central stocks are held, but normally each station keeps a small reserve stock which could be valued without difficulty.

We recommend an annual valuation of the reserve stocks at the stations.

(ii) General Stores.

The difficulties in the way of any satisfactory system of valuation which were discussed in the case of Army General Stores apply equally to the General Stores of the Air Force. We accordingly are unable to recommend the institution of stock valuation. Explanatory notes should be added to the Air Estimates on the lines already mentioned.

(iii) Clothing.

We recommend an annual valuation of unissued stocks of clothing and clothing material.

(iv) Provisions.

Units are supplied by direct contract or by the Royal Army Service Corps. A small reserve is held for the Royal Air Force by the Army Supply Reserve Depot at Deptford. Abroad the Royal Air Force obtain their supplies from the Army, except in Iraq and Palestine, where the troops are fed by Royal Air Force Supply Depots, which hold reserve stocks as required.

We recommend an annual valuation of reserve stocks of Provisions, where held.

(v) Mechanical Transport.

In the Air Force the term "mechanical transport is used to cover self-propelled vehicles of every description; it includes not only the commercial types held by the R.A.S.C. for the Army, but also a number of technical vehicles peculiar to the fighting units. We recommend that the former category of vehicles, so far as they are held in store, together with their spare parts, should be valued annually, but that the technical vehicles should be excluded from this valuation.

(vi) Petrol.

No central stocks of petrol are held, but at home stations and Malta working stocks are stored in tanks. We recommend that these stocks be valued annually.

(vii) Works Stores.

Stores for Works and Buildings Services are already valued annually.

(viii) Medicines, Medical Stores and Surgical Appliances.

For

There is a small war surplus in course of consumption. valuation purposes prices for many articles would have to be obtained specially from trade lists, and for reasons similar to those already stated in the case of the Army Medical Stores we do not recommend an annual valuation.

PART III.

Summary of Recommendations.

1. We are satisfied that the existing system of store control by quantities is adequate, and that the introduction of general stock valuation in the Army and Air Force would be of little departmental utility. The Admiralty already value the main. groups of stores other than Armament stores, and must in any event value the bulk of them for the purpose of the Dockyard Expense Accounts (Paras. 2 and 3).

2. At the same time we realise the need of Parliament for adequate information on stocks, and recommend the insertion in Estimates of notes regarding withdrawals from stock and the existence of war surpluses (Para. 5).

3. The War Office and Air Ministry already value stocks in their manufacturing and similar establishments and stores for Works Services (Para. 3). We recommend (vide Part II) that

valuation be also undertaken of unissued stocks of the following:

Army and Air Force.

Provisions, Fuel and Light, Petrol, Clothing, and Mechanical Transport.

Army only.

Forage.

4. Valuation of General Stores in the Army and Air Force is not feasible except at undue expense, and is not recommended. (Part II B (vi) and C (ii).)

5. Valuation of Warlike Stores is neither feasible nor desirable (Para. 4).

6. Valuation can only cover unissued stocks in the depots, &c., and cannot conveniently include stocks actually on issue with units (Para. 4).

In conclusion, we desire to express our appreciation of the valuable assistance we have received from our Secretary, Mr. P. G. Inch, in connection with our investigations, which have been of necessity of a difficult and technical nature. His services have greatly facilitated our enquiry at every stage.

APPENDIX I.

STORE CONTROL AND ESTIMATE PROCEDURE.

The effective instrument of control of stores in the Navy, Army and Air Force is control by quantity. All stores and supplies of whatever description, whether in depots or on charge to units, are individually accounted for in Store Ledgers, which are public accounts adequately vouched by receipts for issues and invoices for consignments. These ledgers and their supporting documents are audited both by a departmental audit staff independent of the storeholding department, and also by the staff of the Comptroller and Auditor-General who reports annually to Parliament on the results of his examination of the store accounts. In addition to the accounting checks, a continual stocktaking programme is carried out to ensure that the balances in the ledgers are represented by actual physical stocks.

This quantitative system of store control is also utilised for providing in the annual Estimates the amount of cash required for fresh purchases of stock. The method adopted in the case of the Royal Army Ordnance Department (which may be taken as typical of the general procedure) is as follows. In the autumn of each year, when the Estimates for the following financial year are being compiled, each of the Ordnance Depots concerned makes out an "Annual Demand" showing separately under each item stocked (1) the estimated net requirements for the ensuing year, (2) the data on which these net requirements have been assessed. The assessment is made by taking the total quantity of each article required for the remainder of the year, adding thereto (1) the expected issues for the following year (as indicated by the average normal issues for past years), (2) the authorised stock which the depot is allowed to maintain as a working margin for the particular class of article, and (3) any quantities specially earmarked as reserves. From this total the stock actually held at the date of the demand and any anticipated receipts up to the end of the current financial year are deducted. The balance represents the net maintenance requirement of the item concerned for the ensuing year.

These demands are consolidated, and the data and assessments contained in them criticised, at the Office of the Assistant Director of Ordnance Stores (Provision), Pimlico. If there is sufficient stock in hand of an item to meet the anticipated normal requirements, no cash provision is needed; if there is not, the actual quantity required is entered and the cash required for its purchase worked out. For this purpose, the latest market price available is taken from a recent contract or, in the absence of any recent figures, by consultation with the War Office Contract and Finance Branches. The basic rule, consistently adhered to in the working out of the quantities required, is that not more than one year's requirements of each article can be included in the estimate which itself of course only covers one year.

In working out his maintenance estimates in this way the A.D.O.S. (P) makes allowance for any factors known to him which indicate that the average of past issues is not in any given case a correct guide to future requirements. At the War Office, however, the A.D.O.S. (P)'s consolidated statement is reviewed by the military and financial branches and modifications are made for factors of which the A.D.O.S. (P) would not be aware, e.g., impending changes in quantities earmarked as War Reserve, alterations in the authorised scale of issues to units, the proposed introduction of new patterns, &c At the same time, though the cost of maintenance is obviously to a large extent automatic and