The numbers given above are those of cases in which loans have been made, The numbers given above are those of cases in which loans have been made, APPENDIX No. 19. PAPER handed in by Mr. S. H. G. Hughes, C.B.E. Notes on Progress of Shipping Liquidation. (Q. 4096.) 1. The Appropriation Account for the financial year 1924-25 reflects in part the progress made during that period in the liquidation of the Ministry of Shipping, to which the Comptroller and Auditor General refers in paragraph 71 of his Report; but as the account is on a cash basis only it may be useful to supplement this information by reference to the reduction made, during the year and subsequently, in the claims both by and against the Department, and by information as to the residue remaining. 2. At the beginning of 1924 the outstanding claims by the Department Claims by amounted to about £17 millions, excluding those against Foreign Department. Governments. This balance of £5 millions is, roughly, made up as follows: (i) Balances outstanding on ships, etc., sold ... 1,600,000 ... 1,300,000 450,000 900,000 Possible reductions in controversial claims in Total 4,250,000 750,000 £5,000,000 Of the £4,250,000 which it is anticipated should be collected in cash, the first item £1,600,000 presents no difficulty as it is well secured; £300,000 is in respect of outstanding instalments on sales of standard vessels and £1,300,000 in respect of ex-enemy vessels and is the residue of a total of £90,000,000. Of the remaining £2,650,000, about half represents balances admittedly owing by companies but retained pending the disposal of counter claims; the remainder includes claims which are only partially admitted and, if not settled by negotiation, may in some cases have to be disposed of by arbitration or by the Courts. Every effort will be made to collect the whole of the outstanding balances in this financial year (with the exception of those due by instalments under agreements-about £1,500,000) but where legal proceedings 56645 Y Claims against Department. Shipping Liquidation Staff. or arbitration are necessary and debtors are withholding balances admittedly due pending determination of their counter claims the dates of collection cannot be fixed. Provision is made for the collection of £2,250,000 this year and for the bringing to account of the residue of receipts in unexamined accounts for prior years (say £600,000). 3. Early in the financial year 1924 the total of the claims against the Department was £19 millions which was reduced by settlements to £111 millions in the following twelve months by payment of £2 millions; by 1st April, 1926, the total had been reduced to £4 millions by further cash payments totalling £1 millions. The progress in the course of liquidation is reflected partly by the reduction in the value of the claims against the Department from £19 raillions to £41 millions and partly by the cash payments of £3 millions included in the accounts. Where the withdrawal or defeat of a claim has been secured, no record appears by note or otherwise in the appropriation account. Practically the whole of the claims still outstanding (except a few in which Dominion Governments are claimants) have been lodged with the War Compensation Court, Admiralty Transport Arbitration Board or High Court, in order to protect the claimants' position, or are before arbitrators; but, as in the case of the bulk of those disposed of during the last few years, most of them should be settled by direct negotiations. It is estimated that the total sums reasonably payable on these claims amounting to £4,500,000 should not exceed 50 per cent. of this sum. Where claimants are also indebted to the Department, considerable time and labour have often to be expended in order to secure reasonable settlements. 4. The bulk of the work remaining concerns the recovery of balances due to the Department and settlement of contra claims with companies, but there are a few settlements with other Governments to be completed; although the amounts involved in the latter are substantial the volume of work is now relatively small and is being concluded in consultation with the Treasury and Foreign Office, as necessary. 5. In an interim report of the Shipping Liquidation Committee reference is made to outstanding work and extracts of their remarks are given below. 6. The staff of the Department has been further reduced and is now 77, distributed as follows: The provision for salaries in the current year's estimate is £17,000. The reduction will be steadily continued; after the end of September it should consist of permanent civil servants and a few temporary officers retained because of their special knowledge of the operations of the Ministry of Shipping. Shipping Liquidation Department, Board of Trade, S. H. G. Hughes. EXTRACTS FROM INTERIM REPORT BY SHIPPING LIQUIDATION COMMITTEE. A substantial portion of the outstanding liabilities represents sums estimated to be payable to Shipping Companies who have retained amounts admittedly owing by them for earnings of ships managed by them on behalf of the Department. The Companies have lodged counter-claims by way of set-off, and the work of the staff consists very largely in the investigation and disposal of these counter-claims. An indication of the nature of some of the claims may be gathered from the fact that a large number totalling £250,000 lodged by one Company with the Admiralty Transport Arbitration Board was settled after protracted negotiations for £90,000. We are forced to the conclusion that in some instances claims against the Department have been put forward without due regard to facts or to the legal position. It is possible that this may be due to the necessity of lodging claims within the time prescribed by the Indemnity Act, 1920, but whatever the cause the result was that a great volume of additional work was thrown on the liquidator. The small residue of claims of a non-litigious nature yet to be dealt with includes some which are much exaggerated in amount, and others on which nothing is payable. Among these are a number which are duplicates of claims already paid by this or other Departments, and therefore careful comparison of these with the Departmental records is necessary. The practice of the Department in the past has been to compromise where there has been doubt as to the facts or as to the legal position, but where important questions of principle have been involved, the admission of which, tacitly or otherwise, might have been taken advantage of by numerous claimants and have resulted in large claims on public funds, the Department have resisted any suggestion of compromise. We agree entirely with the policy that settlements should be made in all cases where this is possible with due regard to the interest of the taxpayer, but it must be remembered that as we get down to the dregs of liquidation, it is the most difficult and obstinate cases that, generally speaking, remain to be dealt with, and some of these may not be amenable to this kind of treatment. Sums recovered by Owners from Underwriters Owners did not in all cases refund to the Department sums recovered by them from Underwriters in respect of disbursements which had been paid by the Department. It has been necessary to employ a small expert staff to investigate this section of the work, and as a result some and payable £1,800,000 has been refunded in cash to the Department. Appendix B to Departgives a few typical cases of recoveries effected. Considerable recoveries ment. are still being made. Conclusions. We are satisfied that there is no waste work in the Department, that General the staff is efficient, and that the work is being dealt with as expeditiously as practicable. We think, however, that the position outlined above will show that there is still important and remunerative work to be done before the Liquidation is concluded, and the time it will take largely depends upon the difficulties which may be met in finally collecting outstanding balances due to the Department. * Not printed. Y 2 56645 |