Chairman.

7908. On the last day we had just approached paragraph 14 on page x of the Comptroller and Auditor-General's Report. This deals, Sir Malcolm, with Stock Accounts, and I think the relevant pages of the Accounts are 124 and 125?(Sir Malcolm Ramsay.) Yes, sir. This paragraph gives a broad picture of the Stock Accounts. I may say that I give there certain figures purporting to represent the value of certain stocks of clothing, equipment and barrack stores, and munitions, but they are extremely broad approximations; they may be over-esimated because they are broad estimates which I have arrived at largely by deduction from such information as is accessible to me.

Major Salmon.

7909. With regard to this estimate of £20,000,000 for clothing, perhaps Sir Herbert could give some explanation, because I know they do not have any records as to how much the total value of stores is. Perhaps he could give us it the other way round, and tell us how long a period the clothing will last?-(Sir Herbert Creedy.) As a matter of fact we have made an effort to get a valuation of the clothing by telegraphing all over the world. Of course, it does not pretend to be more than an approximation, and the figure has been put at about £6,000,000.

7910. What the Comptroller and Auditor-General estimates at £20,000,000, you estimate at £6,000,000?—Yes. (Sir

29 July, 1926.]

[Continued.

Malcolm Ramsay.) That is why I put in a caution; the £20,000,000 is the sum at which it ought to be valued, according to the latest indication, if the bookkeeping has been right, but obviously the books cannot be right. Probably a lot of stuff was issued and not written off charge during the war, and it may be that a great deal of the stores is old. (Sir Herbert Creedy.) And a great deal of it represents stocks that have been thrown up for disposal and not cleared in the Account.

7911. And not cleared from the Account? Yes.

7912. Will it ever be cleared, or have they reached the period of clearance?This figure will not appear again.

Sir Fredric Wise.

7913. What is the date of your Estimate?-About April of this year.

7914. 1926-Yes. It was after the discussion at the Public Accounts Committee in the Autumn of last year, when the figure of £26,000,000 was quoted by Mr. Baker, that we thought we would try to find out how far that corresponded with reality.

Major Salmon.

7915. Does not this go to prove that there must be something radically wrong if the Comptroller and Auditor-General should give us such a large figure, and in effect it is only £6,000,000. Surely the system of book-keeping must be at fault which permits such a wide margin. Perhaps the Treasury can explain it.-(Mr. Fass.) There is going to be a Committee set up. You will remember last time we discussed this question of stocks, Sir Herbert said that he accepted the Treasury suggestion that there should be a Committee representative of the Army, the Navy and the Treasury, with an outside commercial expert, to consider how best a valuation of stocks of this character could be arrived at.

7916. Then we had better postpone this? (Sir Malcolm Ramsay.) I mentioned this £20,000,000 to bring out the fact that it is an accounting figure;

to

work up the round figure of £94,000,000 which is put down as the lump sum value of unappropriated stores you must allow something in the neighbourhood of £20,000,000.

56645

(Sir

7917. Then perhaps the £94,000,000 is too high? I have no doubt it is. Herbert Creedy.) I am quite sure it is. (Sir Malcolm Ramsay.) I never myself believed in this round figure valuation, and I have said so time after time.

7918. Who is responsible for fixing the £94,000,000?-That is in the Account which you will see on page 125.

7919. Who is that Account provided by? -The Accounting Officer.

7920. So that it is the Accounting Officer who is responsible for the figures we are discussing at the moment?—(Sir Herbert Creedy.) This figure appears for the last time, and it was not thought worth while to correct it in detail as it was only really an academic figure at the present moment; but I think I have always maintained-in fact I said it at the first meeting this year-that the £100,000,000 was only an approximate statement which was not intended to be accurate; it was, if I might use the phrase with regard to so large an amount, a token figure.

7921. If that token figure is so varied as 6 is to 20, it is unfortunate from a public point of view that £100,000,000 was ever mentioned. (Sir Malcolm Ramsay.) I personally never believed that the stores were worth £100,000,000 at present day prices; but that was the figure taken for the purposes of accounting.

Mr. Pethick-Lawrence.

7922. Do I understand a Committee has been appointed to discuss this matter?(Mr. Fass.) No, it has not been appointed yet; we are waiting an official letter from the three Departments appointing representatives; then we have to select an outside commercial man and get him to agree to serve, but I hope to get that Committee in being by the end of September and to be able to report, long before you close your work at the end of the Session.

Chairman.

7923. Paragraph 15 deals with rental values. We have referred to this, I think, Sir Malcolm in previous years?-(Sir Malcolm Ramsay.) Yes, there is nothing new in this. I see the Account is going to be modified, so I do not think the Committee need go into this at any length.

U

29 July, 1926.]

Chairman.] At all events there is a footnote on page 102 which is relevant.

Mr. Briggs.

7924. These buildings unoccupied to which this footnote refers, is not a new feature, and at the same time it is not a very satisfactory feature, because one sees no improvement; the figure is exactly the same, within £1,000, as it was last time.-(Sir Herbert Creedy.) The figures relate to unoccupied lands as well as buildings.

7925. It is unoccupied £391,000, as against £390,000.-Some of those are rather curiously included as unoccupied, for example Catterick; that is unoccupied because we are building on it, but we have to have the land before we can build; as you know, there is a continuing programme of building at Catterick, and to that extent the land which is not yet built on is unoccupied, and the value of that is put in this figure. 7926. In this amount are there many principal buildings which are not being used and which are not likely to be used? -There are a few scattered barracks that are unoccupied, and many coastal forts, and some war-period hutments.

7927. Is it your desire to get rid of this? We are trying to get rid of all property that we are quite certain we shall not want permanently.

7928. Then these figures would show that apparently you have not been successful in getting rid of any during this last year? (Mr. Fass.) From time to time war property is disposed of, but at the same time other property becomes surplus, so that it is a business that goes round and round. (Sir Herbert Creedy.) It is not necessarily the same property lying idle.

7929. It is not in fact the same?-No.

Sir Fredric Wise.

7930. How much has Catterick cost you per acre? I am afraid I do not carry that in my head. It has been bought from a considerable number of proprietors; it was not one complete purchase.

7931. You do not know the approximate amount? No, I am afraid I do not, but I will make a note to let you know.

Chairman.

[Continued.

7932. It was partly a moor, was not it? Yes, some of it, but in the neighbourhood of Hipswell, and at Catterick itself, the land has more than mere moor value.

Major Salmon.

7933. With reference to Catterick, you say you do not consider it is occupied while you are building, but it was occupied during the war by the Department; I mean the part where all the hutments were?-But we had not bought it; we had probably taken that under the Defence of the Realm Regulations; now we have bought it. It was not ours before the war.

7934. Notwithstanding you have hutments there, and that you were in contemplation of buying it, you still call that part of the unoccupied land?-We had not it in contemplation to buy it then. We did not contemplate buying Catterick till the Irish Free State became a separate entity and we had to withdraw from the Curragh; before it was simply used as a temporary camp like Ripon.

Sir Fredric Wise.

7935. It is now your biggest camp, is not it? It is not so big as Salisbury Plain, but it covers a considerable area.

Major Salmon.

7936. Do you make use of this land?Yes; we have acquired it for manœuvre land; we tried to get land as cheaply as possible on which troops could be trained.

Chairman.

7937. Paragraph 16 relates to financial adjustments between the India Office and the War Office, of which we have already heard? (Sir Malcolm Ramsay.) Yes, Sir. This paragraph sets out the various sums which have been included in the Account. Taking them in order, the first is the payment to India for Indian troops serving at Colonial stations; as I say below, that has been agreed for the year 1923. Item (b) is the Imperial share of the cost of the Aden Garrison; that has not yet been agreed. Item (c) is £63,000 for sea transport, and I am still waiting for a

29 July, 1926.]

[Continued.

7938. How long have you been waiting? This Account is dated 1926, and it goes down to the 31st March, 1925, and I have not yet got it. (Mr. Crosland.) I believe that certificate has been received now, but has not yet been passed on. (Sir Malcolm Ramsay.) Then, taking the payments by India, I think I am right in saying that no final arrangement has yet been made as to these items, which involve considerable sums in respect of the period after the 1st April, 1919.

Chairman.

7939. Have the Treasury any view on this, Mr. Fass?-(Mr. Fass.) No, Sir; we are aware that negotiations are being very actively pursued between the Secretary of State for War and the Secretary of State for India at this very moment towards a settlement.

on

7940. Would you like to add anything

the paragraph, Sir Herbert?-(Sir Herbert Creedy.) There are really three categories of questions: those arising out of the war, which we hope are very far advanced towards settlement; those dealing with capitation payments for home effective charges, which are still under discussion between us and the India Office and progress has been made; and, thirdly, the series of questions connected with Aden, which are under the personal consideration of the Secretary of State for War, the Secretary of State for India, the Secretary of State for the Colonies, and the Treasury; so very definite progress has been made, even in the last few weeks, since this Report was written in fact.

7941. Paragraph 17 relates to the question of ante-dated Commissions to University Graduates. (Sir Malcolm Ramsay.) There is not much money concerned in this, but it is rather curious. On an examination of the Pay Accounts of the Officers concerned, I noticed that the ante-date allowed under the Regulations was six months greater than what the Treasury had sanctioned. The Army Council then undertook to put the matter before the Treasury and ob

56645

tain their covering sanction, if they were willing to give it. (Mr. Fass.) We have given it, because the ante-dating_was within the recommendation of Lord Haldane's Committee, to which we had given our adherence. If the War Office had come to us originally with the antedates they allowed we should have sanctioned them.

7942. What about the point regarding the published Regulations?-What happened was this, that the War Office put up a proposal to us which was not exactly the carrying out, as I understand, of Lord Haldane's Committee's recommendations, which we had approved. We merely approved the Scheme which they put up to us. There was a mistake somewhere. The intention was to go beyond what was put up to the Treasury, but still within what Lord Haldane's Committee recommended, and it was on those grounds we said, "We will give our ex post facto approval to the ante-dates which we had not allowed before."

7943. Paragraph 18 is with reference to Special Advances to Contractors. Is there anything you wish to say on this. paragraph, Sir Malcolm; this was referred to, I understand, in 1923.- (Sir Malcolm Ramsay.) I report this as a variation from the arrangement reported to, and approved by, the Public Accounts Committee. The Committee agreed to a proposal that discount should be claimed on special advances to contractors calculated on the estimated average period by which normal payments were advanced. I gather that the Army Council found it rather difficult in practice to fix, in every case, a period by which normal payments, within the literal meaning of the words approved by this Committee, were advanced, and they have adopted an alternative practice of charging interest up to the date of the actual delivery of stores. I do not take any exception to this arrangement. It has the great advantage of giving you a definite date to which you can work. There are difficulties connected with estimating the average period by which payments are advanced, because you have to make an estimate of the time which would normally be occupied in inspecting the stores after delivery, and so forth. The practice adopted by the War Office does shorten the period in respect of which interest is charged, but

U 2

29 July, 1926.]

it does give a convenient working date which admits of no ambiguity or dispute.

Mr. Briggs.

7944. Have you found, Sir Herbert, that Contractors, being aware that this charge is being made, have calculated for it in their prices? (Sir Herbert Creedy.) No, I have no knowledge to that effect. I have not heard that it has that effect.

7945. You have not observed any such tendency?-No. (Mr. Fass.) This is an uncovenanted advance which is made subject to discount.

7946. The advance is not appropriated at the time the contract is entered into? -No, the contract price is not due at the time the advance is made. (Sir Herbert Creedy.) The advance is made to suit our convenience. The contractor would not be aware, at the time he tendered, whether the question of an advance would or would not arise.

Sir Fredric Wise.

7947. Does this apply to big and small sums?-(Sir Malcolm Ramsay.) The rule is that discount or interest is only charged in respect of sums of £5,000 and upwards. (Mr. Watson.) That is so.

Chairman.

7948. Am I right in saying, on the question Sir Fredric Wise has raised, that a little Paper was put in last time as to the terms?-(Mr. Fass.) Yes, last

year.

7949. The terms covering this very point? Yes.

Sir Fredric Wise.

7950. I remember the Paper, that is why I raise the question: why should not it be on all sums?--It is a question of inducing a contractor, for the convenience of the taxpayer, to accept a payment which he is not expecting and to which he is not entitled.

7951. I know, but he is getting the money?-(Sir Herbert Creedy.) Very often it is only for a month or two that he gets it; it is not long.

7952. It is not business. not the taxpayer benefit?

Why should

£5,000 is a

[Continued.

lot of money?-(Mr. Fass.) I have not in my mind the amounts of the advances, but I imagine there are very few cases in which it is worth the trouble involved, or the administrative machinery involved, to make an advance of less than £5,000.

Major Salmon.

7953. The point I should like to raise on this is what strikes me as being the unbusinesslike proposition that a Government Department should force a Contractor to take money before it is due. For the convenience of the Government you say to a contractor: "You have got to give me a discount because I advance money which you do not want." It does not seem to me to be a fair business proposition, and it does not seem to me to be a good thing from the Government point of view?— (Sir Herbert Creedy.) If we did not work on yearly estimates in compartments, probably most of these cases would not arise. It is to avoid having to surrender money and then ask the taxpayer to re-vote it next year. In an ordinary business I do not think such a question presents itself.

Chairman.

7954. Is not your change designed to safeguard any question of loss in regard to advancing money before the date due. I do not quite follow the arrangement? (Sir Malcolm Ramsay.) It is to get rid of money at the end of the financial year and avoid having to revote it. It is really for the convenience of the Chancellor of the Exchequer to get the money spent in the same year in which Parliament has voted it, to avoid upsetting the Budget and to avoid big carryings over to the next

year.

Mr. Briggs.

7955. You cannot force the money on a contractor if he does not desire to have it? We cannot, but it is a great convenience.

7956. One realises the convenience, but a contractor cannot be compelled to take money that he does not require?(Sir Herbert Creedy.) No, certainly not.